Tesla Inc. (NASDAQ:TSLA) remains a significant holding for The Future Fund despite position reductions, according to Managing Partner Gary Black, who cited concerns over the impact of price cuts of its electric vehicles on earnings.
What Happened: Black revealed that while Tesla has been among the fund's top positions for The Future Fund Active ETF (NYSE:FFND) since its August 2021 launch, the fund trimmed its Tesla holdings from 12.2% in October 2022 to 4.6% as of Nov 8.
The decision came as Tesla's fiscal year 2025 earnings estimates declined by 59%, leading to underperformance against the Nasdaq 100 index.
"We don't sugarcoat the negatives, and remain highly disciplined about valuation," Black wrote on X, explaining his measured approach to Tesla investment. He noted a cautious stance until Tesla's robotaxi technology proves viable.
Despite the reduced position, Tesla joins other tech giants in The Future Fund's top-performing holdings for 2024. NVIDIA Corp (NASDAQ:NVDA) leads with a 198% gain, followed by Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) at 28%, Eli Lilly and Company (NYSE:LLY) at 43%, Salesforce Inc (NYSE:CRM) at 22%, Netflix Inc (NASDAQ:NFLX) at 63%, and Tesla at 29%.
The fund maintains a strategic approach to position sizing based on a target 2:1 upside/downside ratio. Black emphasized the importance of balanced analysis, stating that the fund aims to present both bullish and bearish arguments to inform investor decisions.
Black's communication style has occasionally put him at odds with some Tesla bulls, though he maintains that constructive criticism within the investment community should be welcomed rather than attacked.
2/ We call things how we see them — both good and bad — and that's why some bulls in the $TSLA community don't like us. We don't sugarcoat the negatives, and remain highly disciplined about valuation. We try to summarize both the bullish and bearish arguments to help you with...
— Gary Black (@garyblack00) November 10, 2024
Why It Matters: Despite the recent challenges, Tesla has continued to be a significant player in the electric vehicle market. The company's stock has seen a 49.65% increase over the past year, maintaining its position as the EV market leader.
However, Tesla's EV technology has recently come under scrutiny. The National Highway Traffic Safety Administration has raised concerns about Tesla's social media promotion of its Full Self Driving technology, which depicts disengaged driver behavior.
Meanwhile, Tesla's future plans, such as the construction of a Gigafactory in Mexico, could be affected by the recent U.S. presidential election results. Despite these challenges, Tesla's market cap has soared above $1 trillion, propelling Elon Musk's wealth to over $300 billion.
Price Action: Price Action: Tesla's stock closed at $321.22 on Friday, up 8.19% for the day. In after-hours trading, it rose an additional 0.49%. Year-to-date, Tesla's stock has climbed by 29.31%, according to data from Benzinga Pro.
