Gary Black Saya Tesla Investors Will Demand Earnings Turn Positive 'At Some Point'

Investor Gary Black, managing director of The Future Fund LLC, has shared that Tesla Inc. (NASDAQ:TSLA) investors would want to see the company's earnings estimate turn positive.

Investors Would Demand Positive Earnings Revisions

The investor took to the social media platform X on Wednesday to share his thoughts, saying that he acknowledged that Tesla stock does not follow regular growth norms and "earnings revisions and valuation matter less."

However, the investor said that "at some point" Tesla's shareholders would demand seeing "earnings revisions turn positive." "Both 2026 and 2030 earnings revisions," which included Robotaxi and Optimus estimates from analysts, were negative, Black said.

He added that because of this, the valuation of the stock is solely due to "multiple expansion (from 60x one-year forward EPS in Jan 2024 to 196x today)." The investor shared that Tesla's future growth, despite the concerns, remains strong, but it was still "hard to make the valuation math work at a 2026 P/E of 196x."

Gary Black On TSLA

The comments echo the investor's earlier criticism of the stock, when he shared that he liked Tesla as a company but disliked it as a stock. He shared that his criticism stems from the fact that the automaker's competitors will offer Unsupervised autonomous driving at some point in the future, which does not justify the stock's valuation, which caused him to exit his position in the automaker.

"No other auto manufacturer could build high-quality EVs at a huge cost advantage (TSLA also traded at an infinite P/E)," Black said, revealing why he invested in the company in the first place.

BlackBerry Moment

The investor also shared that automakers not investing in autonomous vehicles risked a "BlackBerry Ltd. (NYSE:BB) moment," meaning they could be left behind by the competition.

However, he reiterated that the Elon Musk-led automaker would be the “winner-take-all" in autonomy, outlining his belief that autonomy will be adopted by multiple OEMs. He also reiterated that FSD's take rate hovered around 15%, largely due to the lack of marketing from the company.

Tesla, Lemonade Partnership

Meanwhile, insurer Lemonade Inc. (NYSE:LMND) announced it would be offering 50% reduced rates for FSD-engaged driving as part of its collaboration with Tesla, after it accessed data that showed the system was safer than human drivers.

The partnership has been criticized by investor Jim Chanos, who shared that the move was just promotional, as "true FSD" would have the company's liability, which meant that customers would not need drivers' insurance.

Price Action: TSLA rose 1.11% to $436.23 during Pre-market trading on Thursday, after it surged 2.91% to $431.44 at market close on Wednesday.

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