Why Tesla Stock and SpaceX JUMPED | LFG
Overall Thesis
Recent Elon Musk-related developments including affordable Model 3 launches in Asia, upcoming Cybercab event, and potential energy infrastructure initiatives present growth opportunities for Tesla and related companies.
Narratives
Kevin sees a confluence of bullish catalysts for Tesla, including a cheaper Model 3 launch in Hong Kong/Macau, an expanded robotaxi permit in Clark County (Vegas), and Thursday's Cybercab event which he believes will be the catalyst for real robotaxi scaling. He frames vehicle sales as the core of his Tesla valuation, with FSD and Optimus as optionality, and views the recent 4.6% stock bounce as a sign the news is being well received.
Key Arguments
- Cybercab event on Sept 3 may announce scaling of robotaxis beyond Texas/Florida into Vegas
- Clark County lifted the 10-vehicle robotaxi cap, raising it to a 5,000 permit ceiling
- Cheaper 'simplified' Model 3 launching in Hong Kong/Macau at ~$26,100 could boost delivery numbers
- Tesla and SpaceX stocks correlate ~67% of the time, so positive SpaceX news lifts Tesla too
- Core Tesla investment thesis is vehicle sales driving ecosystem adoption (solar, Powerwalls), with FSD/Optimus as optionality
Kevin discusses GE Vernova's strong power segment margins and growing gas turbine capacity as a beneficiary of the data center power crunch, noting the stock dipped slightly on news that Elon Musk/SpaceX may enter turbine blade manufacturing. He highlights strong free cash flow and margin expansion but stresses he holds no position and flags cyclicality risk.
Key Arguments
- Power segment margins up ~240 basis points over the last year, likely driven by data center demand
- Gas capacity ramp accelerating from 3 GW to 5 GW, a 67% increase in output, seen as both margin and revenue accretive
- Free cash flow yield around 5% on $12 billion forecast FCF, described as 'pretty dang good'
- GE Vernova disputes Elon's claim that blades/vanes are the sole bottleneck, arguing broader manufacturing capacity constraints exist
Kevin briefly characterizes Enphase as a beaten-down, interest-rate-sensitive stock that also carries an embedded 'call option' on solid-state transformer technology tied to data center growth. He suggests it's worth further study but does not give a specific price target.
Key Arguments
- Stock described as 'dirt-cheap' after being hurt by high interest rates
- Embedded optionality on solid-state transformers linked to data center power solutions
Hedges & Caveats
- New Model 3 pricing only available in Hong Kong and Macau, not the United States
- Tesla vehicle sales remain the core valuation driver with Optimus and FSD as optionality
- Robo-taxi permits in Vegas remain capped at 45 mph and exclude airport trips
- Asian EV market is highly competitive with BYD and other manufacturers
- Chinese vehicle tariffs currently prohibitive for US market entry