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Tesla AI Day: An Investor’s Perspective



Key Takeaways

  • It’s worth mentioning that Tesla has generated much of its revenue from regulatory credits.
  • The self-driving cars along with a retail version of the humanoid robot – a logical extension of the tech required of their cars – could change the business model of the company entirely.
  • Elon Musk predicted that the humanoid robot would be ready within 3-5 years for less than $20,000 and that it would transform civilization.
  • Musk reiterated many times how the public owns Tesla and that he can’t simply do whatever he wants, he could be fired, and the shareholding public always has a voice.

Tesla has been in the financial news for a variety of reasons over the last few months. There was a Tesla stock split, the company announced a recall, and the CEO Elon Musk is a constant source of buzz, a substantive Kardashian of science capable of space travel.

The celebrity CEO of Tesla, Elon Musk, enjoys putting on a show and garnering interest for the company. Unfortunately, the Tesla stock often feels the impact of Musk’s actions. However, Tesla just made some announcements that could change the landscape of artificial intelligence forever.

We’re going to look at what happened at Tesla AI Day 2022 to see what the news coming out of this event likely means for Tesla stockholders.

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What was announced at Tesla AI Day?

They started the session off by having the humanoid robot come out to dance on stage. The Optimus is designed to be a highly capable robot ready for fully scaled production, and it could sell for less than $20,000 according to Musk. While this robot is still some years away from hitting the market, it appears that the company is optimistic about its potential. Tesla is already working on the next version of the humanoid robot.

The day was mainly produced to draw the world’s best minds in AI to join the team. Since the company is actively recruiting, the event got fairly technical and some of the information likely went over the heads of most investors.

The fully self-driving car is not yet ready for the market, but the company continues to work on it, including a computing framework that has moved the computing world forward with new chips and racks. The FSD Beta has many challenges, but the company is intent on making this happen. Once the fully self-driving car is ready for the market, the company can introduce its robot taxi service which would be a mix of Airbnb and Uber.

You can read our full recap from Tesla AI Day here if you’re interested in more.

What does this Tesla AI Day mean for investors really?

Investors paid close attention to Tesla AI Day to see what’s on the horizon for the electric vehicle maker. Tesla has been criticized in the past by some analysts for how much the company relies on regulatory credits for turning a profit. The company strives to be known for more than just “cool cars” as they bring continuous innovation to the AI space.

Here are a few key takeaways for Tesla investors…

Optimus has the potential to drastically change the market

Musk predicted that this robot could sell for less than $20,000 and be ready within 3-5 years. The robot would be an additional source of income along with changing the operations of the business, if it can perform advanced tasks for the company, from technical work to administrative duties.

Musk went as far as to say that the humanoid robot would be a “fundamental transformation for civilization,” which would undoubtedly bring more efficiency and attention to Tesla if it happens. We can only predict that bringing a humanoid robot to the market would increase shareholder value.

Additional revenue streams

Suppose the company is able to add a humanoid robot and a self-driving taxi service to its business model. In that case, we can only assume that this will significantly increase the company’s revenue. Adding new revenue streams that are profitable is always good news for investors.

There’s just no guarantee that the market, and general public, will be ready for a robot taxi service, assuming the company can get past the safety and regulatory hurdles.

Tesla also brought detailed insight into how it could lend its Dojo super chip to other companies for AI training, similar to Amazon Web Service, Tesla could sell compute time on a Dojo. We will be paying attention to see how this plays out but it’s a potential multi-billion dollar byproduct of building better AI that also drives an established industry forward faster.

Investors in Tesla stock would clearly benefit from new revenue streams. While many of us know Tesla for its electric vehicles, the company generates substantial revenue from selling its regulatory credits and energy storage. A big play in cloud computing could more than replace Tesla’s revenue from selling carbon credits. For context, Tesla didn’t turn a profit until 2022, largely kept afloat by selling its emissions credits. Recently, the energy side of the business has brought in more revenue with total energy revenue for Tesla reaching $2.78 billion for 2021. Unfortunately, this revenue stream had expenses of $2.91 billion which led to a $129 million loss for the sector.

The self-driving car could change the industry

The team at Tesla has come a long way with the full self-driving car as they have 160,000 beta testers, but the company still faces many regulatory hurdles and safety issues. If fully self-driving cars and a robot taxi service can hit the market, then this would sharply increase the company’s revenue.

Elon Musk could be fired

Musk made it clear that they could fire him since Tesla is publicly traded. This is important for investors because the CEO of a company plays a major role in the share price. While it doesn’t appear that Tesla will move forward without Elon Musk any time soon, it’s important for investors to be reminded of their role in deciding on the management team of the company. There’s no telling to what would happen to the share price of Tesla if Musk were to no longer be its public face.

With all of that being said, we have to stress that most of these innovations aren’t ready for the market yet. Companies like Apple use these showcase events to launch new products that are ready for market. In contrast, Tesla discusses products that are years away from being market-ready to recruit talent and build hype.

How should we be investing?

As an investor, it’s challenging to buy or sell based on hype and speculation, though it is a core capability of the best AI investing technology. Tesla’s AI Day certainly gave us a lot to get excited about AI across the board, but the company has a long way to go with many of these innovations.

This year has also been a rough one in the stock market as soaring inflation, persistent rate hikes from the Fed, and the fears of a recession have led to extreme volatility. The S&P 500 was down 9.3% for September, the largest monthly decline since March of 2020. This news is unsettling as a tumbling stock market impacts every company. We’re also going to see how Tesla’s demand changes during this time of high inflation where many folks are thinking twice about discretionary spending.

Another way to make money from Tesla and innovations in the AI space is to invest in one of our Kits. AI-powered Investment Kits take the guesswork out of investing. Our artificial intelligence searches the markets for the best investments for all manner of risk tolerances and economic situations.

Bottom Line

Musk is a controversial figure, to say the least, from announcing that he’s buying Twitter to then changing his mind on the deal with private text messages becoming public. All of this could impact Tesla stock, so you must pay attention to company-related news as an investor.

It’s no secret that Tesla believes in the future of artificial intelligence. It’s going to be worth watching to see how the company monetizes these future products when they’re ready to launch. A humanoid robot that’s available to regular citizens would certainly change the labor market and, in a very real way, the world. That’s not just hype if the team we saw at AI day delivers, but it’s difficult to get excited about something that has such a long way to go. In addition, we’re going to be tracking the financial performance of Tesla as the company has to deal with soaring inflation and global concerns of a recession.

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DoorDash laying off 1,250 people, about 6% of its workforce – CBC News



DoorDash Inc. said on Wednesday it was cutting about 1,250 jobs, or six per cent of its total workforce, as the food-delivery company looks to keep a lid on costs to cope with a slowdown in demand.

DoorDash went on a hiring spree to cater to a flood of orders from people stuck at home during the height of the pandemic, but a sudden drop in demand from inflation-wary customers has left the company grappling with ballooning costs.

“We were not as rigorous as we should have been in managing our team growth … That’s on me. As a result, operating expenses grew quickly,” chief executive Tony Xu said in a memo to employees that was posted on the company’s website.

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“Given how quickly we hired, our operating expenses — if left unabated — would continue to outgrow our revenue.”

DoorDash has about 20,000 employees worldwide, and “some of the affected employees are based in Canada,” the company told CBC News in a statement, without elaborating.

The company joins a growing list of technology firms, including Amazon, Facebook-owner Meta, Twitter, Shopify and others that have laid off thousands of employees in recent weeks as they brace for a potential economic downturn.

British food delivery company Deliveroo said in late October that sales growth would be at the lower end of its previous forecast. In September, Winnipeg-based food delivery app SkipTheDishes laid off 350 workers.

Earlier this month, DoorDash reported a bigger-than-expected quarterly net loss of $295 million US, raising questions about the growth prospect of delivery firms as economies reopen. The company’s shares have lost two thirds of their value this year.

“Greater emphasis on its cost structure is a welcoming sign, especially given the potential for consumer spending to deteriorate faster than expected,” said Angelo Zino, analyst at CFRA Research.

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'I didn't ever try to commit fraud on anyone,' FTX founder Sam Bankman-Fried says – CBC News



The man at the centre of collapsed cryptocurrency exchange FTX made his first public appearance since the saga began, telling a New York audience on Wednesday that it was never his intention to commit fraud.

Sam Bankman-Fried, the 30-year-old founder of FTX, appeared at the New York Times’ Dealbook Summit on Wednesday, for an interview with journalist Andrew Ross Sorkin about what happened to cause his cryptocurrency firm to collapse into bankruptcy earlier this month.

The firm, once worth more than $32 billion US, entered bankruptcy protection on Nov. 11 after a whirlwind series of days that saw it go from trying to solve a liquidity crunch by merging with a rival, to having that deal fall apart and succumbing to a run on the bank as traders pulled out $6 billion in funds within three days.

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Filings show the company owes almost $10 billion to various creditors, and at least $1 billion worth of customer deposits are missing. 

Among numerous allegations, customer deposits at FTX appear to have been used as capital and collateral for loans for an investment firm called Alameda affiliated with him — an allegation that amounts to fraud, and one that he pushed back against strongly.

‘Deeply sorry’ 

“I didn’t ever try to commit fraud on anyone,” he told Sorkin, “I didn’t knowingly co-mingle funds.”

While he acknowledged mistakes were made, Bankman-Fried rejected repeated attempts to characterize what happened at his cryptocurrency firm as being in any way malicious or illegal.

“I am deeply sorry about what happened,” he said. “I was excited about the prospects of FTX a month ago, I saw it as a thriving, growing business.”

Bankman-Fried has seen his personal net worth evaporate in the debacle, from more than $26 billion a year ago to “close to nothing” today — and he insisted that he doesn’t have any of the money that has vanished.

“I don’t have any hidden funds here. Everything I have, I am disclosing,” he said. 

“I’m down to one working credit card … [and] hundreds of dollars or something like that, in a bank account.”

WATCH | Former regulator weighs in on FTX debacle: 

Former regulatory executive weighs in on FTX collapse

19 days ago

Duration 4:04

Charley Cooper, a former executive at commodities regulator the CFTC, says the collapse of FTX is a good lesson of the inherent dangers of the cryptocurrency space.

He says, to his knowledge, there are enough funds at FTX to give users their money. But his hands are tied since he no longer has a formal role at the company since it entered bankruptcy proceedings.

“I believe that withdrawals could be opened up today and everyone could be made whole,” he said.

John Jay Ray III, the restructuring expert who has been handling FTX’s bankruptcy proceedings has said in legal filings that Bankman-Fried appears to have treated the company as his “personal fiefdom” and has called the fiasco a “complete failure of corporate controls.”

Bankman-Fried has been active on Twitter since the debacle first started, but his appearance on Wednesday marks his first public appearance since the saga began.

There was speculation he was going to appear in person, but ultimately he appeared via video link from the Bahamas, where he lives.

Legal problems

Sorkin asked Bankman-Fried if he did not appear in person because he is worried about being within the reach of U.S. agencies including the Department of Justice and the Securities and Exchange Commission, both of which are probing what happened at FTX.

Bankman-Fried appeared to side-step that question, remarking instead that, to his knowledge, he can still legally enter the U.S. 

“I’ve seen a lot of the hearings that have been happening [and] would not be surprised if some time I am out there talking about what happened,” he said, adding that he “does not personally think” he has any criminal liability to worry about.

That being said, he said his legal team is “very much not” supportive of his decision to appear at the summit and speak publicly about what happened at FTX. His lawyers advice was “to recede into a hole,” he joked.

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Investors focus on Powell's comments which put gold back into rally mode – Kitco NEWS



Today gold futures are trading solidly higher as market participants react to Chairman Jerome Powell’s speech at the Hutchings Center on Fiscal and Monetary Policy, held at the Brookings Institution in Washington. Market participants focused intently on his remarks which alluded to a dynamic change in the Federal Reserve’s monetary policy.

“Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down … The time for moderating the pace of rate increases may come as soon as the December meeting.”

However, it must be noted that the reaction by investors at large seems to focus on what they had hoped to hear which is the Fed will begin to raise rates at a slower pace rather than his nuanced message that the time required for the Federal Reserve to achieve their goal will take much longer.

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“It is likely that restoring price stability will require holding policy at a restrictive level for some time … History cautions strongly against prematurely loosening policy. We will stay the course until the job is done.”

As of 6:16 PM EST gold futures basis of the most active February, 2023 Comex contract is fixed at $1784.60 After factoring in today’s double-digit advance comprised of dollar weakness, buyers in the market along with the rollover from the December to February contract month.

Chairman Powell’s speech today diminished the concern of investors as they reacted to other members of the Federal Reserve who have been extremely vocal about upcoming interest rate hikes. Specifically, recent remarks by James Bullard underscored the hawkish intent of the Federal Reserve. Last week he commented on the need for the Federal Reserve’s benchmark rate to go as high as 7% to deal with inflation. This week he said that “the Federal Reserve will likely need to keep its benchmark policy rate north of 5% for most of 2023 and into 2024 to succeed in taming inflation.”

Chairman Powell’s statements were not in conflict in any way with those made earlier by James Bullard and other members of the Federal Reserve in his prepared speech. However, the chairman was able to deliver this message in a much softer tone. Chairman Powell in essence cemented a 50-basis point rate hike at the December FOMC meeting. However, he stressed that slowing the pace of rate hikes would require that the Fed maintains a restrictive monetary policy for a longer period.

Gold’s recent rally from $1621 to just shy of $1800 is a reflection of a major change in the market sentiment of investors. It suggests that investors are focusing intently on inflation and that lowering inflation to restore price stability will be a multi-year process.

For those who would like more information simply use this link.

Wishing you as always good trading,

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