Warren Buffett sat down for a 2 hour interview with CNBC last week and discussed his book. Here’s a fascinating look into his mind and what he holds value in when investing his money. He has this same loyalty to Coca-Cola.
Here’s what he said:
“If you’re an Apple user and somebody offers you $10,000, but the only proviso is they’ll take away your iPhone and you’ll never be able to buy another, you’re not going to take it. If they tell you if you buy another Ford car, they’ll give you $10,000 not to do that, you’ll take the $10,000 and you’ll buy a Chevy instead.
It’s an incredibly valuable utility. That doesn’t mean it can’t be misused by kids, and Tim Cook cares about that. Everything can be misused. But I think Tim Cook cares about that.
I think that Tim Cook is one of the classiest CEOs. He understands the business and he has a product, which Steve Jobs basically invented, but Tim Cook has managed that company in an extraordinary way.”
– Warren Buffett
In today’s letter:
- Tesla leaves investors worried: Vehicle margins are down, but aligned with automakers
- Weed beats Chocolate: Barnes & Noble is back, Google CEO warns about AI
- Create hack-resistant passwords: How long it takes to crack passwords
- Weekend read, On this day, MLB Projected Winner
The Dossier
Tesla’s Road Ahead: Navigating Profit Margins, Market Cap, and EV Competition
As traders and institutions eagerly awaited this week’s Tesla (TSLA) quarterly results, the automaker remained the highest dollar volume traded stock for some time. Each earnings report has generated a significant amount of speculation, prompting many to question what the latest results indicate for the future of the company.
Over the past year, Tesla has slashed prices on its vehicles multiple times, reducing profit margins to increase output and gain market share.
Here are the current prices for Tesla vehicles:
Model S Plaid: $104,990
Model X Plaid: $104,990
Model X: $94,990
Model S: $84,990
Model Y Performance: $53,990
Model 3 Performance: $52,990
Model Y Long Range: $49,990
Model Y All-Wheel Drive: $46,990
Model 3: $39,990
By doing so, Tesla has aligned its gross margins and pricing strategy more closely with other carmakers.
The average projected margins for European automakers sit at 20.1%, while US automakers are at 17.7%. Tesla’s margin now stands at 19.0%, putting the company in line with industry standards.
Revenues increased by 24% year over year, although they experienced a slight dip compared to the previous quarter. The most significant hit was to free cash flow, down 80% year over year. This raises concerns over Tesla’s ability to attract new buyers in an increasingly competitive marketplace, particularly as other automakers begin to release their electric vehicles.
Tesla has successfully built a powerful global brand, resonating with ESG supporters and Elon Musk’s fanbase. The company also has several avenues for potential growth, such as its 4,678 charging stations worldwide, automation software, extensive AI data, and a software-based approach that could lead to multiple subscription offerings.
However, the question remains: does Tesla’s current position justify a 5-10x market cap over its competitors? While time will ultimately reveal the answer, current analysis suggests that Tesla’s valuation may be too high. My belief is that the current fair market value is around $95. Though the company will likely continue to innovate within the auto industry, it may not maintain such a high multiple compared to other manufacturers.
At the close of the day after earnings Tesla shares were: $162.99 (-$17.60) -9.75% on the day.
BRAIN FOOD
Taylor Swift’s savvy move: Rejected $100M FTX sponsorship due to legal considerations
Google CEOs A.I. warning: Sundar Pichai urges society to prepare for consequences of rapid acceleration
Weed beats chocolate: Legal marijuana sales surpass chocolate sales in the US
Apple jumps into banking: Offers savings accounts as depositors withdraw funds from banks
Amazon vs. Barnes & Noble: The battle for book dominance and how B&N turned the tide
INFORMATION IN PERSPECTIVE
Hack-Proof Your Life: Create hack-resistant passwords
In the digital age, password security is paramount in safeguarding our sensitive information from malicious cyber attacks.
A password’s complexity plays a critical role in determining how long it takes a hacker to brute force it. For example, a simple 8-character password using only lowercase letters can be cracked almost instantly.
However, as you increase the length and complexity of the password, the time required for a successful brute force attack grows exponentially.
Experts recommend using a password that is at least 12 characters long, incorporating numbers, symbols, and a mix of uppercase and lowercase letters.
But why not add another 4 characters to increase the cracking time to 5 billion years?
According to data from HiveSystems.io, even the most powerful hacking tools would require multiple lifetimes to crack a password with such complexity.
In addition to utilizing complex passwords, you should also consider using multi-factor authentication and password managers to enhance your digital security.
For those that hate remembering passwords or worry about writing down and losing passwords, check out this great tool bitwarden.
HAND-PICKED
⚾ On this day: 1904 Ty Cobb makes his pro debut for Augusta (South Atlantic League)
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