Whitney Tilson’s email to investors discussing Facebook, Inc. (NASDAQ:FB) to change company name to Meta; reader feedback on Facebook; Tesla Inc (NASDAQ:TSLA)- on the road to a $10 trillion company and beyond.
Q3 2021 hedge fund letters, conferences and more
Facebook to Change Company Name to Meta
1) I suppose if I, like Facebook (FB), had behaved badly for years, harming people in pursuit of growth and self-enrichment, and all of this became public knowledge, sullying my name, I'd be thinking of changing it as well... Facebook to Change Company Name to Meta in Focus on Metaverse.
That said, what I really hope I'd do is change my ways and fix the underlying problems, rather than trying to put lipstick on a pig with a name change!
Facebook's tone-deafness continues to boggle my mind. Just read CEO Mark Zuckerberg's comments at the beginning of the earnings call earlier this week (transcript here). This is what I wrote to a friend about it:
It's consistent with what he posted a couple of weeks ago, which I addressed in my daily e-mail the next day. Totally lame and tone-deaf. No acknowledgement that there's any problem and that Facebook needs to do more.
Charlie Munger always says: "Show me the incentives and I'll show you the behavior." I don't think Zuckerberg set out to do evil, but he's consistently chosen growth (and thus his wealth) over safety.
After my friend replied that I make things sound so simple, I responded, "No, things are VERY complex. But the overall picture is clear to me..."
Reader Feedback On Facebook
2) Speaking of Facebook, I received a number of e-mails in response to my October 13 daily about more and more Americans going down rabbit holes, thanks in part to the social media giant and its peers:
- "Hang in there Whitney. You are on the right side of history and are doing meaningful work." – Les J.
- "Whitey, sadly, your analysis of the letter from that crazy woman is spot on. We're in a very bad way in this country right now, and I weep for it. Our democracy is truly at risk." – Sherwin R.
- "The 2020 election was stolen. Zuckerberg helped make it happen with half a billion dollars. Democrats were desperate to install a demented piece of crap named Joe Biden. If you want to ignore this fact you have a problem.
"If you think George Soros is a hero you are wrong. He is a financial terrorist and his Open Society Foundation was created to cause destruction and disruptions so he can make more billions shorting the markets.
"Enjoy paying for millions of illegal invaders and be ready for the next terrorist attack. Afghanistan was an American defeat. It was the biggest military and political blunder in American history. Are you ignorant enough to believe the cover up with a mountain of LIES." – John B.
- "Whitney, I am compelled to break my typical resolve never to respond to email postings. This alteration is due to your transparency today.
"I could not agree more with Mark D – especially about your consistently compassionate perspective on life and investing.
"And I am appalled by the rant from your second responder, although not surprised. When one drinks deeply from a gusher of lies as she describes that she does it will numb one's good sense and perspective of reality. I regret that she has created such a miserable environment for her life. And of course she thinks that only she has the truth.
"I do worry about our country and the threat to our democracy enduring.
"A word about myself: I am in my late 80s, a retired Baptist minister; my wife is a retired social worker. I stay engaged in a volunteer group seeking to create inclusive communities. In the 21 years of retirement, I have turned my intention to investing the funds we saved for always living within our income, and am now shocked to find that I am wealthy with an estate of several million. I subscribe to several financial newsletters and weigh the insights I derive from them.
"Again, thank you for your transparent values. It is obvious that you received excellent parenting early and education along the way. Please continue your work." – Robert W.
- "Hi Whitney, Just wondering if you realize how much bias you exhibit when you hand select the most outrageous far, far right-wing comments from a reader and then seemingly compare all conservatives to QAnon supporters.
"I am a conservative who is truly horrified by the politics of the day. I truly cannot understand how any believer in capitalism can turn a blind eye to what has happened to the democratic/socialist party and the aligning media.
"The left-wing technique of equating all conservatives to QAnon and white supremacists is quite apparent in the media, and unfortunately, your daily emails. As is so often the case, I am guessing you are completely unaware of this bias and likely lump me in with the complete whack job you chose to publish.
"All that being said, I will continue to weed through the bias to pick up your many salient financial points." – Andrew S.
To the last one, I replied:
Thank you for the feedback, Andrew.
I try to be balanced and would be happy to publish an e-mail sent to me by someone on the far, far left wing – but I haven't gotten any.
Best,
Whitney
Tesla - On The Road To A $10 Trillion Company And Beyond
3) Tesla's (TSLA) stock has rocketed past $1,000 per share, making the company only the sixth in history to surpass a $1 trillion market cap. It's truly astounding...
I have owned the first five – Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), Microsoft (MSFT), and Facebook – and sorely regret not still owning all of them. As I've discussed many times before, my sales of these juggernauts were among the greatest mistakes of my investing career.
But I don't feel the same way about Tesla.
Sure, there are times when I look back at my many warnings over the years to my short-selling friends not to short the stock and ask myself, "How hard would it have been to go long it?"
But hindsight is always 20/20 – and Tesla's stock has always been based more on the "story" than the fundamentals, so I try not to beat myself up too much...
Mostly, I just sit back with a bowl of popcorn and watch the incredible spectacle that is this company and stock – it's so entertaining and educational!
I also continue to share my thoughts once or twice a week with my Tesla e-mail list (to join it, simply send a blank e-mail to: [email protected]).
Here's the latest e-mail I sent around:
Tim Davies of Australian tech-focused $100 million fund Holon Global Investments recently published this 144-page bullish report, Tesla – on the road to a US $10 trillion company and beyond. (He also released a video here .)
I asked my analyst Kevin DeCamp (who's now made more than 150 times his money on TSLA!) to take a look and here's what he sent me:
I've seen much of this data and analysis before, but it's definitely worth at least reading the executive summary and watching the video, which is compelling.
The projections and title he chooses are clearly to attract attention (why not one-up Cathie Wood with a $3,369 current value and a $10 trillion target!), but it's a good overview to understand what's actually going on in the auto industry, especially the challenges that legacy automakers are facing transitioning to EVs [electric vehicles].
Of note is his emphasis on Tesla's impressive profitability while still producing at a much smaller scale than legacy OEMs [original equipment manufacturers] (comparing Tesla's EVs to legacy's ICE [internal combustion engine] production numbers). This will continue to improve as Tesla grows on average around 50% and its revenue mix continues to shift more toward software.
Tesla reported 28.8% gross margins in the third quarter excluding regulatory credits while facing supply chain issues and producing cars well under capacity. As I've said before, the myth that Tesla cannot make a profit without regulatory credits will continue to die a slow death. It's on its way to Apple-like margins with a much bigger total addressable market ("TAM").
I'm not convinced on his bullish developing market projections, although it's something to consider.
Best regards,
Whitney
