BUYING Tesla or SpaceX?? One is WAYYY Better
Summary
Luke begins by comparing Tesla and SpaceX, acknowledging his long-term stance as a buy-and-hold investor. He notes that he would not buy either stock in real life at their current valuations, anticipating better pricing and earnings opportunities in the future. However, if forced to choose between the two, assuming they remain separate entities, he would opt for Tesla.
He outlines his concerns about **Tesla (TSLA)**, stating that its business fundamentals have eroded over several years, and significant profitability from future ventures like FSD and RoboTaxi is still years away, despite past optimistic timelines. Optimus is even further out. However, he sees positives in the stabilization of the core car business and the strong performance of the energy division, which he believes is undervalued. Luke criticizes Tesla's current valuation, deeming it "overvalued by a mile," and emphasizes that "right now isn't the best time to be buying Tesla." He recalls past opportunities to buy Tesla at much lower valuations (low to mid 100s and mid 200s), which would have yielded substantial returns (up to 4x), contrasting this with buying at peaks which resulted in flat or negative returns. He expects better pricing in the future.
Regarding **SpaceX**, Luke expresses significant skepticism after reviewing its S1 document, which presented numerous "red flags." His primary concern is SpaceX's extreme valuation compared to its profitability. He notes that Tesla, despite being profitable, trades at 14 times revenue, while SpaceX trades at "120 plus times revenue" with "no profits and not even close to profitability" for the foreseeable future. To illustrate, he hypothetically grants SpaceX a billion dollars in profit (which he believes is unrealistic for the near future) and calculates its implied P/E ratio at over 25,500. He compares this to Tesla's peak P/E of 1,000 in 2021, a period he considered "crazy overvalued" and from which the stock saw "dead money" for years. Luke concludes that SpaceX's current valuation is "more than twice as expensive as Tesla was at those 2021 highs" and is "not sustainable," advising against buying at current prices as better opportunities will arise. While he praises the Starlink business, he considers other ventures associated with SpaceX, such as X and XAI, as "money pits" that are far from profitability.
Luke's reasoning for choosing Tesla in a forced scenario centers on its "far better" fundamentals and the expectation that its future revenue-generating projects (FSD, RoboTaxi) are "far closer" to printing meaningful money than most of SpaceX's endeavors, aside from Starlink. He reiterates that he maintains a long-term perspective and waits for undervalued entry points.
Mentioned Stocks
Reasoning: Luke expresses extreme negativity about SpaceX's valuation and profitability after reviewing its S1 document, finding numerous "red flags." He notes that SpaceX trades at "120 plus times revenue" with "no profits and not even close to profitability" for the foreseeable future. He hypothetically gives SpaceX a billion dollars in profit, calculating an implied P/E ratio of over 25,500. He compares this to Tesla's peak P/E of 1,000 in 2021, calling SpaceX "more than twice as expensive as Tesla was at those 2021 highs" and "not sustainable." He warns viewers, "Do not buy at that price," believing "better opportunities for that company... will come in the future." He considers other ventures associated with SpaceX (X, XAI) as "money pits" aside from Starlink.
Reasoning: Luke states that Tesla's business fundamentals have eroded for years, and future ventures like FSD and RoboTaxi are still years away from significant profitability, with Optimus even further off. He considers the stock "overvalued by a mile" despite some stabilization in the core car business and a strong energy segment. He advises that "right now isn't the best time to be buying Tesla," emphasizing that previous peak purchases led to flat or negative returns, unlike his past buys at lower, undervalued prices (low to mid 100s and mid 200s). In a hypothetical forced choice, he would pick Tesla over SpaceX because its fundamentals are "far better," and its future profitable ventures are closer to fruition.