Source: Barron's Weekly Author: Ed Lin The second largest public retirement fund in the United States recently made significant adjustments to its stock investment portfolio listed in the United States. The California Teachers' Retirement Fund increased its investment in Chinese e-commerce company, pdd holdings (PDD.US), and bought more shares of Discover Financial Services (DFS.US) and Williams-Sonoma (WSM.US) in the first quarter, while reducing its holdings of American Airlines (AAL.US) stocks. The California Teachers' Retirement Fund disclosed this stock trading information in a report submitted to the Securities and Exchange Commission. "Our public equity investment portfolio uses both passive and active strategies," the California Teachers' Retirement Fund said in a statement responding to a review request. "The portfolio's positions may change for various reasons, including fund managers' realignments of the active or index weights they require, or as a result of corporate mergers, stock splits, name changes or similar company actions." As of April 30, the fund managed assets of about $332.5 billion, making it the second largest public pension fund in the United States in terms of assets under management.
$Tesla (TSLA.US)$CEO Elon Musk believes that autonomous driving technology will forever change personal transportation, as well as the fate of his electric car company.
Now Musk needs to make autonomous cars really "run."
Previously, Musk said in Tesla's first quarter earnings call, "I think (achieving fully autonomous driving) may result in the biggest asset appreciation in history." Autonomous cars can be used more frequently, rather than parked in parking lots, to make money for car owners or online car-hailing operators.
"What I mean is that if someone doesn't believe Tesla can solve (autonomous driving) problems, I think they shouldn't be a Tesla investor," Musk said.
Musk has been fully committed to autonomous driving cars for years. His confidence in Tesla's ability to achieve true autonomous driving seems to be growing. Tesla will launch its autonomous driving robotaxi on August 8 and showcase its technology. Recently, Musk also visited China and obtained a permit to sell Tesla's highest-level driving assistance function to Chinese users.
Morgan Stanley analyst Adam Jonas pointed out in a report that artificial intelligence calculations can accelerate the development of autonomous driving technology. He values Tesla's software and autonomous driving taxi business at about $161 per share, higher than the valuation of $67 per share for the auto business. In addition, Jonas also valued Tesla's fixed batteries and other businesses.
Currently, Jonas is bullish on Tesla, with a "buy" rating and a target price of $310.
Guggenheim analyst Ronald Jewsikow is bearish on Tesla's stock, rating it a "sell" with a target price of $126. However, he agrees with Jonas's view that Tesla's stock valuation is shifting from the electric car business to the autonomous driving car business.
Jewsikow wrote in a recent report, "Tesla is becoming an investment based on autonomy. It's a challenging balance to ask investors to buy into a company's future vision with limited evidence while ignoring the 'deterioration' of the company's light car business."
"Deterioration" refers to the decline in electric car sales. In the first quarter of this year, Tesla delivered about 387,000 vehicles, a nearly 9% year-on-year decline. Jewsikow expects Tesla's second-quarter deliveries to be 409,000, down from 466,000 in the same period in 2023. The market's expectations are relatively optimistic, with second-quarter deliveries expected to be close to 450,000 vehicles.
Against the backdrop of declining sales, the prospects for autonomous driving cars are even gloomier. Jewsikow wrote, "People have high expectations for Tesla's autonomous driving taxi. However, we don't have much confidence in the market space or timing of this business." Tesla may need five to ten years (to land and promote autonomous driving taxis). He also added that a five-year delay could cut the value of the autonomous driving taxi business in half.
Another potential variable is that on June 4, Musk confirmed that his artificial intelligence company xAI is using chips, and these chips come from Tesla. If so, Tesla shareholders may have to reduce the potential value of autonomous driving car and other artificial intelligence related businesses in Tesla's valuation model.$NVIDIA (NVDA.US)$Bank of America analyst John Murphy explained that if Tesla buys AI solutions from third parties (such as xAI), it will not receive as much economic benefit as developing AI technology itself.
Investors don't know when autonomous driving cars will be available, how they will be used, and are uncertain about the existence of other interfering factors in the future. Currently, bulls and bears of Tesla are engaged in a fierce debate on this issue.
Tesla investors are no strangers to debates and controversies. According to FactSet data, about 21% of analysts have given Tesla a "sell" rating.
$S&P 500 Index (.SPX.US)$The average "sell" rating ratio of component stocks is about 7%. About 42% of analysts give Tesla stock a "buy" rating, and the average buy rating ratio of S&P 500 component stocks is about 55%.
In other words, higher-than-average "sell" ratings and lower-than-average "buy" ratings indicate that Tesla is a controversial stock on Wall Street.
Currently, analysts give Tesla stock an average target price of about $183, with a highest target price of $310 and a lowest target price of $85. The $225 price difference is almost 130% of Tesla's recent stock price. Compared to the range,$Microsoft (MSFT.US)$the target price difference is about 40% of the recent company stock price.
As of the June 7th close, Tesla's stock price rose 1.68% to $177.94; the S&P 500 index and the Nasdaq index fell 0.02% and 0.09%, respectively.
Since the end of April, Tesla's stock price has been hovering in this range, when the company announced better-than-expected first-quarter earnings, and the stock price rose at one point.
Piper Sandler technical analyst Craig Johnson wrote in a report that Tesla's stock is now above the 10-week moving average, which is a good sign.
He added that Tesla's stock price will tend to $190 before the annual shareholder meeting on June 13, when investors will vote on Musk's 2018 compensation plan.
The above plan was worth about $56 billion when it was awarded, but was invalidated by a Delaware judge in January of this year on the grounds that the information disclosed to shareholders was insufficient.
The latest development is that Baron Capital CEO Ron Baron stated on June 5th Eastern Time that he will vote to restore Musk's 2018 compensation plan.
"Musk is the ultimate 'key man' in the key man risk. Without his relentless efforts and uncompromising standards, there would be no Tesla," Baron declared in an email, adding, "If shareholders want to protect and increase their investment, they must approve Musk's compensation contract again."
After the annual shareholder meeting, Tesla will release its second quarter earnings in July and the Robotaxi, which will debut in August, will also affect the company's stock price trend.
Editor / jayden