Sam Dickie: Fisher Funds expert on Tesla's share price taking a hit

Tesla's share price has taken a dive in recent months.

Donald Trump's ascension to the US Presidency initially helped boost the share price, but it's since dropped by 50 percent.

Sam Dickie from Fisher Funds explains further.

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Episode Transcript

Speaker 1 (00:00):
Braille and Bread which see Tesla's share price is a
rollercoaster and one to watch. It took off massively after
Trump was elected over in the US, but has since
fallen back almost just as far. Sam Dickey from Fisher
Funds has done a deep dive for US is hen Now, Hey,
Sam Ran, good to have you on. So why did
Tesla's share price shoot up one hundred percent in just

(00:21):
a few short months and then why has it come
back down fifty percent in a few short weeks?

Speaker 2 (00:27):
Yeah, a heck of a wild ride there, Ryan, So
it has round trip right back to where it started.
It went up for three reasons. So the first one
was at the time there was a lot of emerging
height about Tesla's autonomous vehicle or robotaxi business and it's
humanoid business actually, which we talked about before. But for example,
Google and Weimo reached key milestones they'd done forty five

(00:49):
million rides, and then Musk himself promised to launch his
robotaxi in twenty twenty six, claiming ride costs of as
low as twenty cents a kilometer, so pretty exciting stuff.
The second thing is the extraordinary animal spirits we've talked
about a few times or that retail irrational exuberance generally,

(01:09):
and posted children for that with things like meme stocks
like game Stock stop We're Ripping Again and robin Hood
the retail training platform were up over one hundred percent,
so animal spirits generally, and Tesla was caught up in that.
And the third thing was, of course, the Trump romance
and it's perceived raverified positions sitting inside the federal government's
coffers via the Department of Government Efficient Department of Government efficiency.

(01:32):
So those are the three reasons that went up. Then
reality set in, and it's a reminder that despite this
excitement about its future prospects around our thonomous vehicles, ninety
percent of its profits still come from its core business
of selling electric vehicles, and its electric vehicle business had
been going backwards. At the same time as its share
price went up one hundred percent, its earnings were being

(01:54):
cut by about thirty percent. So that sort of unsustainable
equation saw the share price sorry. The the price to
earnings ratio, a key valuation metric, on one hundred and
fifty times PE, which for context, the Ford Motor Company
trades on about seven times PE. So the whole bubble pop,
the irrational exuberance from retail event investors hit the skids,

(02:16):
and the stock price round trip right back to where
it was before Trump got elected.

Speaker 3 (02:22):
Fascinating, right, isn't it? What's what's going on with the
electric vehicle take up?

Speaker 1 (02:26):
More broadly, I saw numbers they were down I think
year today, down forty five percent Tesla sales in Europe,
you know, thirty percent or something in China.

Speaker 3 (02:33):
It's not been a great ride.

Speaker 2 (02:36):
Yeah, not being a great ride for Tesla, and they're
definitely losing market share. I mean, more broadly, EV sales
are doing a little bit better. So you and I
checked in about a year ago on electric vehicles generally globally,
and at that point in time they were growing about
ten percent. Now electric vehicle sales sort of month of
the year and year growing about twenty percent, So pretty healthy.

(02:57):
But a couple of things. Their first of Tesla's losing
market share, partly because of the blowback against against the
sort of Trump mask romance, but also generally speaking, the
penetration of electric vehicles are sort of plateaued in places
like China, Europe, and southern United States. So I'd say

(03:21):
generally speaking, evs are going okay, but Tessa's losing market share.

Speaker 3 (03:26):
And what about you mentioned earlier the autonomous vehicles. What's
happening with them? Are they taking off? Are they you know,
sort of a thing of the past now or like
back to the future that never happened. What's going on?

Speaker 2 (03:38):
Well, I mean, it's one hundred and fifty billion dollar
industry and it's still expected to be about a trillion
dollar industry by the end of the decade, so people
are still pretty bullish. I think there's a few hurdles,
of course. So Tesla, for example, is trying to go
the cheap route by solving full service driver sorry, full
fully autonomous driving in a cost efficient manner with cameras only,

(04:01):
which of course have some safety drawbacks, whereas companies like Weymo,
spun It or out of Google are using radars and lighters,
which are much more expensive. So weimo autonomous vehicle costs
about two hundred thousand dollars, whereas Tesla's proposing to sell
these for about thirty thousand. However, is a very unclear
regulatory framework globally, so the UK peered back Tesla's camera

(04:23):
only full service autonomous driving to highways only and favored
WEAIMO and half of the US states only permit autonomous
vehicle testing. So and then of course we've got the
very high profile crashes that we've all heard about, despite
the stats around significantly lower accident rates and death rates.
So still expected to be a huge growth industry, but
a few hurdles right now.

Speaker 3 (04:44):
Yeah, interesting, I suppose they're going to overcome those regulatory problems.

Speaker 2 (04:48):
What is it?

Speaker 3 (04:48):
What does all this mean for investors?

Speaker 2 (04:51):
I think the whole thing's a super interesting lesson, which is,
don't believe the hype and focus on the core fundamental
So you know, occasionally if the fundam the medals of
a company going well, you can understand why, you know,
the share price gets a bit over inflated. But when
the hype's going in one direction and that the core fundamentals,
as was the case with Teessler, were going in the

(05:12):
opposite direction, I think that's something you should take note of.
But I would say for the brave, there was far
too much hype and Tessler at the peak. But if
you are a believer and a long term believer in
autonomous vehicles, and there I say, ad humanoids well, then,
as the dust settles the stocks on his knees, now
it might be worth another look.

Speaker 3 (05:32):
Nice one, Sam, Thank you for that. Sam. Dicky Fisher
funds with us.

Speaker 1 (05:38):
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