Rob Maurer Of Tesla Daily And David Trainer Of New Constructs


Everybody, Rob Power here. Today we have the good fortune to be joined by David trainer of New Constructs David. Put out a note last week with his team on Tesla that was relatively bearish. So I thought it would be a good opportunity to have somebody on the podcast. Maybe give a different perspective than what is sort give day to day and hopefully. We can both learn a little bit throughout the course of the conversation So David a former analyst with credit. Suisse. And then for the last couple decades, he is the founder and CEO of new contracts on investment research firm so David Nathan, you want to add to that in terms of your workings INS specifically this note on Tesla. Yes sure. No. We we're an independent research firm. So we don't doing any investment banking or trading There was a time when I ran a hedge fund will be don't do that anymore. So there's there's no short position in Tesla and honestly there's there's no axe to grind here. I'm flattered to to you on the show and I'm also a big fan of cars and I think beautiful. And I think would Elon Musk has been. Has Been Great for our world. I. Think he was really a tipping point in enforcing the big autos to to move more toward electric vehicles. What let's face it. You know one has to question why they never really wanted to do it on their own how they needed external government pressure to to increase gasoline efficiency. When that at the end of the day, we just lowered the cost of ownership for their product, which is a good thing but yet they didn't do it want us to wonder why that is. So I think he lawn. With respect to Tesla Electric Vehicles and our environment has done the world huge service. Insides one lead that fan I think the cars are beautiful. I wish I had one of my kids always rave about how much how awesome they are when they ride in one of their friends parents Tesla's it's funny in in. So I think there's a lot of good that has come out of what you musk is done at this space as well as other spaces. And the beautiful green cards. So you guys are kind of approaching it from a just an overvalued perspective on the company right now. Yeah. It's it's really kind of an old school throwback to the fiduciary in investor as opposed to the speculator the trader. Look there's no doubt you know as Jim, Cramer said he he's a fan test left for the last eighteen hundred points right? I mean look the momentum. The trading aspect here's Banal and it's been a huge wealth creator. An Art perspective is very narrowly focused on the fiduciary and decide the of risk. In, a market that's been such a strong performer. Since the The deer in in March you know, I think some people we got some feedback that people were kind of looking at how to manage whether or not we're at the top or or not in this market and we thought you know look. The first thing you do is identify where there's the most risk in your portfolio. So we kind of went through we cover around three thousand stocks as well as ETF's mutual funds and we looked for like, okay where's this? Where's the where's the risk extreme and then you know especially with Tesla, you gotta take into account all these sort of the optionality, all these great things that that Tesla might do. To, justify the future cashflows embedded in the stock price. And we went through the checklist and we thought, okay, we think there's a fair case to be made here for those with fiduciary responsibilities and produce responsibilities. To Take into account. Or. Consider. The risk in the stock relative to fundamentals. Sure. I know that that's a big part of your note later on. So definitely get through to some the valuation stuff So I thought probably the best way to kind of just kind of structure. This was to go point by point. I've had a lot of listeners that have read your note and have sort of asked me to give my my thoughts on it. So I thought you know what better way to do that than have the man himself here to discuss with me so Sweet. So you've got a lot of I mean this is probably a few thousand word article here. So let's just start right at the top. So you start off by saying. Really comparing the devaluation of tesla per car sold versus other automakers. I wanted to just sort of get your thoughts on this because I think you know this perspective or this this particular metric in isolation to me isn't all that particularly meaningful us are wanted to you just sort of get your take on why Joseph Start off with this and then get sort of my thoughts as well. Yeah, we're just sort of a level center to get a sense of how rich the expectations are and in just to give some perspective our approach valuation is is as I say, tomato analysts. Would you rather be a fortune teller or critic before to tell her and we see Mr Market or the stock market is a fortune teller. Here, she is giving us a price every day, and what we do new constructs is reverse engineer what the future cash flows, the revenue, the margins, the capital efficiency, the business, all that we reverse engineer with those need to be to justify the price and so. What we like to do is kind of begin be objective perspective on evaluation is and that's what we see in this chart like there's a big disconnect. It's not to say that Tesla can't achieve these expectations but for right now, there's a lot of credit given to what the company will do in

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