Google & Tesla Finally Report Earnings This Week

Welcome back, everyone. We've officially made it through week one of earnings season. So congratulations on that. But before you celebrate too early, things are just getting started. Week two, what we're getting into this week is even bigger than week one. Let's go ahead and just take a look at the earnings calendar here, and I'll highlight a few companies that we'll be going over in today's episode. To start things off, tomorrow before market open, we have Equifax right there. Equifax is reporting earnings, and this is meaningful to me because Equifax is my latest addition to the portfolio. Equifax is a high-quality compounding machine. It's a company that's outperformed the S&P 500 over the past five years, and I believe that the circumstances are set up so that this company can outperform to a greater extent moving forward. So I'll be giving some thoughts on that one and why I own it. Another real high-quality company reporting earnings, which is MSCI, the global indice business. We'll be looking at this one in the setup going into this week. Now, moving on to Wednesday, we get into the biggest day of the week. We have Tesla and Google, both reporting earnings after market close, again, on Wednesday. So this is gonna be a big day. Lots of investors are looking forward to these two holdings, and we're gonna go through each one. I, of course, am invested in Google. I love the company right now. I think it's a great stock to own. But then we have Tesla, which there's a lot of different opinions on. And Google and Tesla, in some portion, are competing with each other with Waymo and the Robotaxis. So I'll have some comments on that as well. Then, of course, we have Chipotle, reporting earnings after market close on Wednesday. This is a company that I made some money on in a short amount of time. So we'll be checking on Chipotle, seeing what's going on with that one as well, and the whole food industry. So we have a lot to get to in this episode. Let's go ahead and jump in. Now, to start things off, we're gonna look at the calendar and go into Tuesday before market open. The one that we'll start off with is Equifax. This is a holding of mine, so let's go ahead and just take a look at the position here. When I bring up the financial category, we have Equifax is a smaller holding because it's a newer one. It hasn't had time to grow and compound. So even though it hasn't made as much gains as like S&P Global or MasterCard, that is because of how new it is to the portfolio. The return so far since owning it has actually been quite good, but that's because I bought it during the tariff scare. So this one's up already around $3,800, just owning it a number of months, and we're off to a great start. Now, why did I add this company to my portfolio? Well, I've outlined a couple of times that Equifax is a really high-quality company. When I'm looking for new investments, it's not enough that I have upside. It's not enough that I can just make money in a company. I wanna make sure I have an incredibly low chance of downside, that it's very unlikely I'll lose money on this company over the next five years. So like Warren Buffett says, if you protect the downside, if you buy very high-quality stocks at reasonable valuations and you buy them in a basket of stocks, it's very low chance you're gonna lose money. And I believe that's the case with Equifax. It has time periods of accelerating revenue and decelerating, but overall, it is a long-term compounding machine. Looking at the company by segment, we get a much better picture here. Equifax is broken up into three primary segments. You have workforce solutions. That includes a product called the work number. You have USIS, that's the credit report part. And then you have international, which is the whole international business with these two different segments grouped into it. So we have that broken up into those three different categories. Out of the three, all of these are great. Both credit reporting and workforce solutions are really good, but the workforce solutions is more important to the long-term story. This is what sets Equifax apart from just being a credit bureau to being a real data-centered tech company. Now they have infused a lot of the data they get from their credit history. They layered upon a lot of workforce solution data, particularly your income verification and work history, and they sell that as a subscription-based or contract-based product. It is deeply embedded in governments, in real estate companies. It's embedded in local governments, in schools. It's embedded in our whole financial system, the lending programs. Everything where someone wants to know if you can pay back a loan, this product is a part of it. And it's the biggest in the world by far. So they have the first mover's advantage. You can see the rapid growth that happened in 2020. That's because many government agencies wanted to use this product to try to reduce the amount of fraud that had to do with stimulus checks and giving out different benefits. Real estate owners like this to verify income of someone that's renting out a location. You have business owners that like this product because they like to verify your work history, make sure you are who you said you are, and you worked at the companies you said you worked at. So there's lots of different use cases for this, and they're constantly expanding the amount of use cases over time. Equifax is not a static business. It's not one just sitting there on an old business, not adapting or changing what they do. When I go back to the earnings calendar and I bring up the what to watch for here, this outlines the biggest evolutions and the biggest things to watch for with this company. For example, investors should closely monitor the U.S. mortgage market dynamics within the current quarter, as mortgage revenue accounted for approximately 20 to 21% of total revenue last quarter. So as you can see, the mortgage revenue is important to Equifax, but it's 20 to 21% of last quarter. That's not something where, you know, most people look at Equifax and they'd think that mortgage revenue, their credit rating business, that that'd be like 70 or 80% of it, right? That that'd be the majority of it. It's not, it's a smaller portion of this company. Now, having said that, if mortgage demand increases or does better than expected, it will be one more thing that's to the advantage of Equifax. And we have this battle going on between President Trump and J-PAL on trying to lower interest rates. If interest rates are lowered sometime this year, it will help out Equifax in a number of ways. First of all, hiring would probably pick up for businesses and mortgage demand would pick up. So there's two different segments that would benefit from lowered interest rates. You have workforce solution growth. The workforce solutions continues to be a critical growth driver with revenue up 3% overall and EBITDA margins expanding to 50%. Additionally, there's strong momentum in expanding twin records and growing state penetration, particularly with increased focus on program integrity and improper payments and social services. It underpins ongoing growth opportunities in both the federal and state governments. Right now, our country's dealing with a huge debt problem. Everybody knows about this, that the US has an enormous amount of debt. The biggest factor in that debt is social services, different types of welfare programs. And Equifax's role in this is verifying that people really are who they say they are to try to reduce the amount of fraud in social services. So governments are very interested in aligning with Equifax, making sure that when they're handing out social security, making sure that when they're handing out welfare, when they're handing out SNAP benefits, that it's actually going to people that both need it and they are who they say they are. Now, Equifax, like many of these data businesses, because they have so much credit history and they know so much about somebody's history, they're also really good at combining all that data and using it as value-added services. In USIS, they offer things like credit card fraud detection, knowing who your customer is, all that type of stuff. They say the USIS segment demonstrated strong 7% revenue growth, driven primarily by non-mortgage verticals performing within their long-term growth range. Post-cloud transformation, USIS has shifted to fully, it's shifted fully to growth, innovation, and customer focus, resulting in improved market presence and share gains. One of the big thesis points on Equifax is that the cloud transformation took up so much time. They did it for a number of years, since around 2017, when they had that big breach, all the information was leaked. They completely re-architected the entire technology of the company. So now they're more streamlined, they're on Google Cloud, they can focus on just putting out nice products, making them more efficient, and it's made their whole product development cycle a lot shorter. So we're seeing new products that they're developing with all the data that they have. Investors should watch for continued momentum from new product rollouts, such as the mortgage twin indicator solution, launched recently, with plans to introduce similar twin-powered solutions in auto and personal loans during the year. So again, not a static company. They're now more streamlined, creating far more products. They have this enormous pile of data, and now I view them as being able to actually use a lot of that data, being able to utilize it. We have capital allocation. Equifax's new capital allocation framework reflects confidence in its business model with plans to generate approximately $900 million in free cashflow in 2025. So when we look at the company, let's go take a look at the free cashflow. We have it on trailing 12 months, so we can bring that up here. I'll filter by the past five years. So if we look at it so far, let me bring this up. We have it right here at 800 million. By the end of 2025, they should have 900 million, which would be its all-time high. So they are moving up in free cashflow year over year. Free cashflow per share should also move up even faster because they're doing a bit of share buybacks. So we have growing amounts of free cashflow, and we have a more streamlined business, more technology-focused, tons of data, a product that's incredibly difficult, if not impossible, to rebuild at this point. And then we have this company working on returning the extra capital they're generating back to shareholders. The company announced a 28% increase in quarterly dividends to 50%. So just a casual 28% dividend increase. Now, I've done dividend investing for a long period of time. I know everything there is to know about dividend investing. You could quiz me on it. I know everything there is to know about it. And it's never a bad sign when a company is increasing a dividend by 28%, especially a really high-quality company that's not increasing the dividend by taking out debt. They're just increasing it because they have more cashflow, they're more streamlined, their margins are going up. That is a really good sign for a business. On top of that, they authorized a $3 billion buyback program. So we're looking at a buyback program that's just under 10% of the current market cap. This shows how aggressive they could be. Now, there's no guarantee that they'll use all of this, but I think they will. I think they're gonna buy back $3 billion over the next four years, which, again, is around 10% of the market cap. These capital return initiatives are balanced against continued investments and high returns on CapEx and bolt-on acquisitions aligned with strategic priorities. So again, they're doing dividends, they're buying back shares, they're acquiring small continued bolt-on acquisitions, they're pushing out new products, they've streamlined their operations, they've reduced the amount of risk and having another hack. All of this is looking really good. I just love the story of this business. Now, to cap this off, Equifax is also a company that people are concerned about in terms of a recession. What if we have a recession and the housing market goes down? Wouldn't that hurt Equifax? Equifax articulated a typical recession scenario analysis indicating resilience with expectations of 5% to 10% revenue growth even amid recessionary economic conditions. Now, let me just repeat that. I'll go ahead and highlight it here. They've indicated resilience with expectations of 5% to 10% revenue growth even amid recessionary economic conditions. So management has said, bring on a recession, we're still gonna grow. Like you can't stop this growth. And the reason why it actually makes sense, this isn't just baseless analysis, this is really well-founded. This is driven by a larger proportion of recession-resilient and counter-cyclical revenue streams now representing approximately 67% of total revenue. Subscription-based revenue growth increases utilization of alternative data and government program expansions are expected to particularly offset the impact of declining mortgage volumes in softer hiring markets. So in recessions, they wouldn't make as much money with the work number in terms of employers hiring people and looking at their work history. They wouldn't make as much money in terms of real estate owners using it to look at the income verification of different tenant applications, but they'd make far more money with governments handing out welfare. Remember, when recessions happen, millions of people go on unemployment. When those millions of people go on unemployment, how does the government verify that those millions of people are on unemployment? Through the work number. So that's why they say Equifax is counter-cyclical. It makes money in both good times and bad times. Moreover, when we look at the valuation of the company, it's not all that demanding. On a Ford basis, you're looking at a 31 PE ratio, a 28, and it looks a little expensive on the numbers here, but they're expected to grow really fast. This company should be growing really fast over the next couple of years. Everything is lined up to see really good growth. In terms of their earnings tomorrow morning, I gotta be honest, this is one of the companies that I'm not concerned about at all. It's so fundamentally strong. It's such an incredible position that I just don't concern myself with it. If it goes down 5% after earnings, who cares? If it goes up 5%, who cares? The long-term of this company, I believe, is incredibly bright. The valuation is reasonable at the very least, and I think it's just a good buy today. Now moving on, we get into MSCI. MSCI makes money through licensing its indices, its analytics, and its data to institutions, to investors, and ETFs. So they have this big network effect of being this massive indice licensing business, but they also have a nice side business being an analytics company, a data company. Very similar to S&P Global, but for the rest of the globe instead of just primarily the US. When we look at some differences in the businesses, the reason that I don't own MSCI is because when I was looking at S&P Global, they already have a very similar business in both analytics and indice licensing. So S&P Global owns the Dow Jones. They license out all of this indice information to ETFs that track the S&P 500. It has massive, massive network effects. It's similar to like the English language. When a language becomes a very dominant business language, everyone starts to just learn that language to be included in the business language. And as more people learn it, more people in the future learn it, and it's just really hard to uproot. It's a very good moat. English has a very good moat for the same reason that S&P Global has a really good moat in credit ratings and in their indices. Everybody uses them because everybody uses them, and that's self-reinforcing. Well, in many ways, MSCI works the exact same way. It is a company that has this huge network effect. It has it for the world indices, and because they have the first mover's advantage, they have the headstart, they have an incredible network effect that so far doesn't look like it's going away. When I say that MSCI is one of the highest quality companies in the world, I really mean it. It is really one of the highest quality companies in the world by almost any metric you look at. When we look at the earnings predictability, you can just see it right here. Since 2020, they haven't missed on a single earnings. They're not going to this next earnings either. I just don't think they're going to. The revenue they have less control over, so they do miss from time to time, but that hasn't stopped the company so far. Missing on revenue is not that important as long as the overall revenue continues to grow. So don't get deterred if you see a headline. They beat on their earnings and missed on revenue. The news headlines will call that mixed. In reality, that's fine. That's not something to be concerned about. MSCI has metrics of fast-growing revenue, growing around 11 to 13% per year. It's a business where its retention rate, we have a KPI here showing it, it's in line with Costco. In fact, their analytics retention rate here is actually better than Costco's membership retention rate. It's 95%. Costco's is 93. So you have very high retention. Almost nobody moves from this business. That's one of the highest I've ever seen of any business type ever. When we look at the EBITDA, it just grows and grows over time. We look at the free cash flow of the company. This is one of the most remarkable free cash flows. We look at the past decade. This is what it looks like. Growing over five years at 16%. We look all time. Again, this is what it looks like. Ever since around 2016, just continued growth. When we look at it on a per share basis, it actually grows a bit faster because of share buybacks. So they grew their free cash flow per share on a CAGR of 22% for the past decade. While they're doing all of this and they're growing their free cash flow per share that fast, they're also growing a dividend on the side 13% year over year. Incredible dividend growth as well. I think MSCI set up well for this earnings. It's been trading flattish for a while now. So the share price hasn't behaved this year. In fact, it's down a little bit year to date. So it's underperformed for a time. Moving out one year, it's up 15%. So it hasn't been too bad. But I think it's time for MSCI to have some positive growth momentum. I expect this earnings to be good. Now, moving on, we get to Wednesday after market close. Tesla and Google. Do they really get more popular than that on at least retail investors and social media just general interest from investors? I don't really think so. These are two of the biggest ones. And ironically, they also compete a little bit. For Google, it's like a sliver of the company competing with a lot of Tesla story. But Tesla is a bit all in on the Robotaxi network. So they do compete as well. And I'll have some comments on that. We also have Chipotle reporting earnings as well. Now, we'll start things off with Google. Now, I own Google shares in both of my portfolios. I have it in the story fund and the passive income portfolio. When I look at this combined, we have the combined portfolios here. We have it organized by the weighting and we have Netflix, S&P Global, Amazon, Microsoft, MasterCard, and then Google. So it's the sixth largest holding, a 7% weighting with 16,800 in the green. And I believe there's a lot more upside in Google today. I've outlined this company a number of times because I believe the risk reward is really well adjusted for this company with minimal downside long-term, but ample upside. One investor that shares my view on this is Mark Mahaney. Mark Mahaney is one of the few analysts that I really believe is worth listening to. Here's his thoughts on Google today. Dislocated high quality. It's a, I don't know, it's a concept I've been working on and with for a couple of years. I put it in my book a few years ago, nothing but net, but look, I look for high quality companies. I think there may be a dozen of these in large cap internet, you know, nine, 10, 11, 12, but the last couple of them are a little bit debatable. There's a good number of these like an Amazon, a Netflix, an Uber, a Meta that I think are just high quality assets and for a variety of reasons, they're TAMs, they're Total Adjustable Markets, Management Team, Product Innovation, Competitive Position, et cetera. And then you wait for them to get dislocated. You wait for them to trade off aggressively for whatever reason. Market roll. He has his price targets right there. He has Google at $205 price target, Amazon at 280 and Uber at 115. Now Google, I believe is at like 180, 185, around there, Amazon around 225 and then Uber I believe is around like 90, might've changed around a little bit, but that's about where they are right now. So they're all well below these price targets. He has these as number one, number two and number three top picks. Those are the opportunities you want to step in on. In my mind, the best DHQ opportunity right now is Google, then followed by Amazon and then followed by Uber. Uber was wonderfully DHQ or dislocated beginning of the year at 60 bucks. That's not the case now. But anyway, I look for these dislocated opportunities and I want to buy high, low. I want to buy high quality companies when they're selling at low prices. Now he's asked about competitive forces to Google because Google's not just a very clean story. It's not one where they have no competitors. Google's facing a lot of things that people believe are disruptive risk. One of them is the new browsers, the open AI and things like Perplexity are launching. Of course that's competitive with Chrome. Well, I think that's one of the reasons why Google is dislocated. Why it trades at a discount to the market despite owning the world's leading search engine and having these wonderful other assets in YouTube and Google Cloud and then Waymo. It trades at a discount because of this perceived existential threat. I may be wrong. Google may well be existentialized over the next couple of years. I don't think so though. And we do quarterly survey work. We haven't seen any change in Google's share of commercial search queries. In fact, if anything, Carl, it's slightly gone up. So if Google can reaccelerate its pay-click growth a bit, if they can sustain this double-digit paid search revenue growth, I think over time that'll kind of wear down the existential Gen AI search risk. And what Google needs to do is keep improving those products. I think AI, Gemini are materially better products. It's not like Google hasn't invested in AI. I saw Sundar's first, Pichai Sundar's first IO addressed, I think it was a decade ago. And he was talking about AI back then. So the company, as long as they get the products out well and they get them out right, I think they'll address the threat and you'll see a re-rating in the stock and you can make a lot of money. I think the risk reward is highly attractive. That's why it's our number one pick. Google currently trades at a 19 Ford PE ratio. If we take a look at where Meta is right now, it's at a 27. So just by Google trading up to where Meta is, you make a lot of gains in the process that assumes no earnings per share growth at all. And of course, Google will probably continue to grow earnings per share for the next couple of years. So there's multiple ways that you can make money with this stock. Now, his thesis, I think is correct. And it's very much similar to mine, but not the exact same. He believes that over time, Google's just gonna keep doing what Google does, making more money, generating more ad revenue through their searches. He believes that the search volume and query volume is going to continue to grow. They have great assets there already. And that the continual quarter after quarter growth will simply wear down the pessimists and the bears. It'll just kind of beat it down over time. And that has happened before. It's the same thing that happened with Netflix. The continued quarter after quarter growth in subscriber numbers and cash flows. After a certain point, bears on Netflix just throw in the towel. They can't take it anymore. They just ignore the company. They forget about it. They stop talking about it. And the sentiment completely changes. And that's similar to what he's stating should happen with Google. Now, there's always a chance things could go wrong and Google could be dramatically disrupted. That's a non-zero chance, but it's very low. My thesis on Google is a little bit different. The way that I look at it is again, I don't wanna lose money over the longterm on any stock. And so when I look at Google, I look at the ways that I could lose money. If search was disrupted, that could be a way that you could lose money on Google. If the business of search really went down over time. But my thesis also includes looking at YouTube, the Google subscriptions, Google cloud and other bets with Waymo. When I cross out search completely and look at just the other segments of this business, I believe that in five years, they'll make up for more than the entire market cap of Google today. So another way of saying that is Google search could go to zero, completely zero out, no revenue, no operating profits, no free cashflow. And I believe in five years, just the remaining assets would be worth around $2 trillion, which is currently the market cap of Google. And I don't even believe that that's a stretch. You have YouTube as one of these assets, which right now Netflix is worth $550 billion. And management of Netflix believes they can be worth around a trillion by 2031. So if YouTube is bigger than Netflix, it should be worth 1 trillion plus by 2031. Now you look at Google cloud, Google cloud is bigger than YouTube and growing faster. Google cloud did $46 billion in revenue over the trailing 12 months. YouTube did 36. So Google cloud is substantially bigger. YouTube only grew around 12% over the trailing 12 months. Google cloud grew 30%. So if YouTube is worth around a trillion dollars in five years, what is Google cloud worth? It's bigger and more profitable at the same time. It's worth at least a trillion dollars. Just those two companies alone should be the market cap of Google in five years. Not counting Waymo, which is hidden in the other bet segment, which seemingly gets no credit at all. The company is very small, so you can't apply some huge multiple to it right now, but the potential remains very large. And Tesla's entire valuation, a huge part of it, is attributed to RoboTaxi. Waymo already has one that so far is more successful than Tesla's. So the focus right now on Google is all on search and AI. Search and AI is all you hear about. But the other assets they have are more than good enough to justify the valuation over the long term. Search can be looked at as more of a benefit, but even looking at it as just a benefit, search is also still growing. It's growing faster than most companies at above 10% growth year over year. So the assets of Google, I believe, are just a collection of incredible businesses. The narrative continues to linger, but you can see that with the trading price, it's lingering to a lesser and lesser extent. Now, if I remind you, the last earnings report that Google posted was incredibly strong. It was incredibly strong and the stock still went down. So with Google, I'm a little bit cautious going into this week. There is the chance that they can post really strong earnings, but the stock still moves flat. There's so much interest in trading. Everybody hangs on to the last word the CEO says, and I could see that happening with this company. But fundamentally speaking, I believe it's at a low valuation and it's incredibly strong. So I'm not worried about this one over the next three months or the next year. Now let's go ahead and talk about some comparisons between Google and Tesla, because Tesla's the next one we're gonna be looking at here. I have one chart here that shows the RoboTaxi weekly rides, and this has Waymo, Tesla, and Zucs. So far, we only have the numbers of Waymo because they're the only ones reporting it. So I would add in Teslas or Zucs, but Tesla's not giving us any weekly ride numbers. I think it's just a bit too early to expect that. And Zucs hasn't even started yet. So it's basically just a placeholder. When we look at Waymo, they also don't update us on a quarterly basis. So we get these updates haphazardly, and then we put them in whatever quarter they belong with the latest data. The latest data we have so far is that Waymo's completing 250,000 plus rides per week. They just passed a total of 100 million paid rides. So Waymo's off to the races. They're expanding. They're doing real rides. Now Tesla is starting to do the same thing, but there's a few caveats here. There's a lot of Tesla influencers, people on X and social media. These are followers and investors in Tesla, which is completely fine, but they're sharing comparisons like this of the Tesla, the area that Tesla can go in, their geo-fenced area, and Waymo's. For example, in Austin, where the only place Tesla currently is, Tesla started off in a very small area, just a couple miles. That's where they had their initial start with just a number of vehicles. And then Elon did what Elon did. And he expanded the area in a very specific phallic shaped shape. So we have his area here. That's Elon's humor. And it is funny, but looking at this, the commentary from it was initially that Tesla has a bigger area than Waymo. It's already surpassing Waymo. And now Waymo expanded just today to an even bigger area than Tesla. So it looks like they're going toe to toe. It looks like they're competing back and forth. Looks like this is competition taking off. And that may be the case. Maybe Waymo's looking at this and trying to keep the lead in front of Tesla, but there's one big distinction between the two. The Waymos in these areas are not being operated with a driver's assistant. There's no one sitting in the passenger seat with a button to brake the vehicle. With Tesla, every single vehicle so far has 24-7 someone sitting in the seat that's an employee of Tesla. So no one has ever taken a RoboTaxi Tesla ride in just the car itself. Every single ride has been with someone else, an employee in the vehicle, specifically there to monitor the vehicle and to interject and react in specific edge cases. And with RoboTaxis in particular, the edge cases are everything. That's the most difficult part. Figuring out how to make a car drive in completely normal conditions is one thing. The tough thing is accounting for all the dangerous edge cases. Tesla has someone in the passenger seat specifically because of those edge cases. And there's already a number of instances where there's driver's assistances in the passenger seats that have intervened and prevented possible accidents. One of them that was just reported was a Tesla fan that mentioned that when they took a ride in the RoboTaxi, it was a longer drive. It was from one end of the area to another and it came up to a train track. The Tesla was going to drive straight into the train track with a moving train and the driver's assistant person hit the brakes. So they don't know for sure if it would have been an accident or it would have recognized it at the last minute, but he said it seemed like it was going straight into it. So even though these are similar, Tesla's expanding a driver assistant version of RoboTaxi, I don't consider it quite the same. And some Tesla investors just say, Joseph, why do you hate Tesla? This isn't hating Tesla. Pointing out specific real differences between two technologies is not hating on one technology. It's simply acknowledging the truth that one of these is in a different level than the other. One of them has an employee in the car. The other doesn't. Is that not a real difference? Is that not something worthy of being pointed out? Having an employee in the car is a pretty notable difference. Pointing that out is not hating on Tesla. It's not an attack on Tesla. It's pointing out a very real crucial difference in technology. Waymo doesn't have employees in their vehicles. When they're doing rides, you enter into the car and you're the only one there. And the monitors for Waymos are monitoring multiple vehicles so it's not even a one-to-one ratio of monitoring the vehicle. Waymo currently is more advanced in their autonomy. Again, that's not hate. That's just pointing out a fact. And on this subject, I want to address one more point. This whole idea of hating a stock or loving a stock, this idea that a stock is like a thing that you can be a fan of or an enemy of is not something that I agree with at all. That's not how I look at stocks. And I know that many people do look at stocks that way. I don't think that's good investing. I don't think that's a healthy way to invest. If you're attached to a stock in an emotional way, if you feel like it's part of your identity, if you feel like it's part of your culture or a group identity, it's going to make you loyal to a stock. Like it's a group, a team, or a sports team that you have to root for. It almost becomes political where you have to align with the stock and be an apologist for it, a zealot for it. You have to defend anytime someone criticizes it. You have to go out of your way to paint the bright picture for it. Not because it's the best stock in the market, but it's because it's the one that you're attached to. That is bad investing. And I don't do that with any stock I own. There's really no stock in my portfolio that I wouldn't be willing to sell tomorrow if I thought it wasn't the best investment. And yes, even Costco. I would sell that one if I thought it was no longer a great investment. I've done the same with Apple. I sold that company. I'm a huge Apple fan boy. I have all of their products. I love the company. I love the designs. I just bought a MacBook Pro for an employee just a day ago. I really like Apple and I sold the stock in a heartbeat as soon as I realized it was no longer the best return potential for me. I did the same with Chipotle. Still love the company, sold the stock. And I'd do the same with any company I own. I'd sell Netflix if I no longer thought it was the best stock. So I don't look at these as teams or things to have my alliance to. These are stocks. They don't know that you own them. They don't share the love back for you. They're financial instruments to make money. That's all they are. They're companies which are wealth generating machines. Now it's awesome to own things that can make you really wealthy. So I look at it through that perspective, but they're not things that deserve my undying loyalty. I'm not loyal to any stock. I'll sell it as soon as it doesn't serve me. With Tesla, this is a company that I've been overwhelmingly critical of for the past number of years. And during that time period, this has been an overwhelmingly terrible investment for investors. The company is a mess. The financials are a mess. The revenue is flat. Investors criticize Apple when they have flat revenue. They say it's a sign of no longer innovating, but Tesla has been flat since around 2023. So we have flat revenue quarter after quarter after quarter. We have a company that has cash flows that are volatile and they've gone down since 2021. They've never recovered to their peak. We have a company where the ratios have gone down dramatically since 2022. They have more competition than ever in China. The company's also losing major tax incentive credits. So we have gross margins declining, operating margins declining, profit margins declining. At the same time, their vehicles delivered have hit a plateau. In fact, they've declined since around Q4 of 2023. Now, there are some good things going on with Tesla. Their full self-driving has made remarkable improvement over the past couple of years. And that's notable, but it doesn't change the fact that this is a company trading at a 140 PE ratio, a 0.6% free cash flow yield. There is just a lot baked into this company. There's investors hoping for this massively profitable future that Elon has painted. And over the past five years, trying to bet based on this enormous future has led to subpar returns. The company still trades at the same price it did back in 2020. When Tesla was the best valuation, when it was the best deal, was in 2020, before it had this remarkable run-up in price. And that's when I purchased the company, July 29th, 2020. Now this is a small buy, only $300, but keep in mind, this was five years ago. I wasn't working with as much money. And I did nine different buy orders. I built up a position in it. Now it says it's $1,500 per share here, but it's gone through two different share splits since this purchase order. If you adjust the price, this was around $100 per share. And I bought a couple thousand dollars or just over a thousand dollars. So it wasn't a big position, but I saw the position quickly double in price over just a number of months. There was an incredible amount of momentum in the stock at that time period. After it quickly over doubled in price, I sold the company, March 1st, 2021. I saw that it quickly launched up to an incredibly high valuation and I decided it was time to sell. I took the gains and put it into other stocks I thought were better opportunities. Tesla stock is a thing to make money. That's what it is. And I'm only gonna invest in it when I believe it can best serve me. Now, looking at the biggest things to watch for, we have top of mind for Tesla investors, the RoboTaxi event, the event and the ongoing developments of it. Now, it initially launched in a very conservative manner. We have the small geo-fencing and we have, I think more importantly, the safety passenger, whatever you wanna call it, the supervised, unsupervised version of it. And I believe that that's the next step for Tesla. It outlines here that management sees confidence that full self-driving unsupervised will be available for personal use in several US cities by year end. So they believe that they're gonna expand this thing rapidly and they're gonna be doing it without the driver's assistant or safety passenger in the future. That would be a massive development. I'd be a lot more bullish on Tesla if they had no safety driver, no one in the passenger seat, no Tesla employee, and they had lots of rides going with many vehicles without any type of accident or any type of crash. I'd be a lot more on board with what they're doing. They're not there yet, but so far the management team expresses a lot of confidence in getting there. Investors should watch for both the technical progress in decreasing necessary human supervision and the regulatory and environment acceptance for unsupervised full self-driving. The other parts of this, I don't believe are quite as important. The supply chain and scaling of Optimus Robot, that's a ways out. Even though Tesla's positioning itself to capture that market, I believe that's a bit down the road. I'm not too concerned about the tariffs with Tesla. I believe the bigger issue right now is the loss of the tax credit. And then we have the production and reception of the updated and affordable model variants. My opinion, I thought the new version of Tesla's looked really good. But overall, when I look at Tesla, I see it as a huge opportunity. If they have that S curve, if they have full autonomy, if they can get the drivers out of the seat, they can prove that they're safe and they can expand rapidly, there is a good story here. Maybe they can justify the large valuation. Now, a lot of this is already priced into the stock. A lot of investors love the story of it, but they're not looking at the valuation as closely. So I am concerned about the valuation. And of course, anytime we look at Tesla reporting earnings, we know how this goes. At first, we'll see the numbers. They'll be whatever they are. And whatever Tesla posts, if it's good, Tesla investors will celebrate it. If it's bad, they'll say that that's old news. Nobody cares about it. It's all about the earnings call in the future. It's all about the guidance. It's all about RoboTaxi. That's the game plan every single quarter. Bad quarter means forget about the quarter and it's all about the future. Good quarter means to celebrate it and look at all the numbers. And everything comes down to the earnings call and how much Elon Musk says about the stock and the bright future. So we're gonna see what this company does, but it's the same roller coaster every single week. And I look forward to it this week. For me, I'm not buying Tesla stock today, but I will buy it if I believe it would serve me in the future. Now, finally, we get to the last company that we'll go over this time, which is Chipotle. Going into this earnings, even if they post really good earnings, it's still trading up in that higher echelon of premium valuation. So a lot of the good news that's gonna happen with Chipotle is already priced in, leaving them susceptible to any negative sentiment. If there's anything that's slow, if same store sales is slow, if the average ticket price is slow, if them opening up new locations is slow, the stock is gonna continue to tread water. I would be a little nervous owning this one going into this earnings. Now that's gonna be it for this episode. I hope you enjoyed. See you in the next one.