My Next $1,000,000 Bet on this Stock‼️

Key Concepts

Market Volatility: Fluctuations in stock prices, exemplified by the public account's 1% drop leading to a $52,000 loss.
Personal Finance Milestones: The speaker's personal connection to the $52,000 figure, representing his initial salary at Quicktrip.
Time Perception: The rapid passage of time, illustrated by children growing from infancy to high school age.
Financial Independence: The ability to take time off for personal activities, like lunch with children on a weekday, as a result of financial planning.
Big Tech Earnings Analysis: Detailed breakdown of Netflix and Tesla earnings reports, focusing on revenue growth, cost of revenue, sales and marketing expenses, operating income, net income, and EPS.
Valuation Metrics: Discussion of Price-to-Earnings (P/E) ratios and their implications for stock prices, particularly in relation to revenue growth.
Tesla's Business Model Challenges: Analysis of declining profitability, issues with high-end vehicle sales, and the shrinking mobile service fleet.
Robo-taxi Market: Assessment of the potential and timeline for robo-taxi services to become a significant revenue driver, with a focus on Waymo and Zoox.
Market Hedging Strategies: The use of leveraged ETFs (like TSLZ and PLTZ) to mitigate risk in a portfolio.
Investment Strategy: The speaker's approach to deploying capital, emphasizing buying during market downturns and maintaining consistent weekly investments.
Forward P/E Ratio: A valuation metric used to assess the market's overall valuation and identify potential buying opportunities.
Long-Term Investing Philosophy: The importance of consistent building and growth of a portfolio, regardless of short-term market fluctuations.

Market Performance and Personal Reflections

The video opens with a discussion of the public account's performance, noting a 1% decline which translated to a $52,000 loss. This figure resonates personally with the speaker, as it was his annual salary at Quicktrip in 2010 before a promotion to $52,000. This highlights how even small market movements can have significant financial implications. The speaker also reflects on the passage of time, using an image of children being held for a photo to illustrate how quickly they grow up, a sentiment that extends to the subscribers of his channel, who are generally in the 25-55 age range.

The concept of financial independence is underscored by the speaker's ability to take his children out for lunch on a Tuesday afternoon, a luxury he wouldn't have had if he were still working at Quicktrip and requiring vacation days and supervisor approval. This contrasts with the typical weekday experience where most people are working.

Analysis of Big Tech Earnings: Netflix and Tesla

Netflix: The speaker highlights Netflix's double-digit stock decline following its earnings report, labeling it a "bad omen" for big tech. Despite seemingly strong revenue growth of 17%, the earnings report is characterized as a "C++." The key issues identified are:

Cost of Revenues: Increased by 20%, outpacing revenue growth.
Sales and Marketing: Increased by 22%.
Operating Income: Grew by only 12%, significantly lagging revenue growth.
Net Income: Grew by a mere 8%, which is considered poor when revenue is up 17%. The speaker emphasizes that net income should ideally grow faster than revenue.

Tesla: Tesla's earnings report is also dissected, with a beat on revenues ($28 billion+) but a miss on EPS, indicating ongoing profitability issues.

Automotive Revenues: Only up 6%, which is considered poor, especially given the quarter's tax credit incentives that are now phased out.
Energy Generation and Storage Revenue: Showed 44% growth, but this is down from previous triple-digit growth rates.
Services and Other Revenue: Grew by a strong 25%, identified as a potentially exciting part of Tesla's business.
Total Revenues: Grew by 12%, which is deemed insufficient for a company trading at a high forward P/E ratio (over 200).
Total Gross Profit: Only grew by 1% year-over-year.
Gross Margin: Down 185 basis points.
Operating Expenses: Increased by 50%, which is unsustainable with only 12% revenue growth.
Income from Operations: Fell by 40% year-over-year.
Operating Margin: Fell by 51 basis points.
Adjusted EBITDA: Down 9%, with a margin decrease of 348 basis points.
Net Income (GAAP): Down 37%.
Net Income (Non-GAAP): Down 29%.
EPS (GAAP): Down 37%.
EPS (Non-GAAP): Down 31%.

The speaker attributes Tesla's profitability decline to several factors:

High-End Vehicle Production and Deliveries: Production of Cybertruck, Model S, and Model X is down 56% year-over-year, and deliveries are down 30%. This is problematic as the target market (high-income individuals) has generally fared well economically, while the middle and lower classes have been hit by inflation. Tesla's focus on the mass market is seen as a misstep.
Lack of Innovation in High-End Models: The speaker notes a lack of incentive to upgrade from his 2019/2020 Model X or 2021 Model S Plaid, indicating a failure to innovate in these key segments. This is attributed to Elon Musk's divided focus across multiple projects.
Shrinking Mobile Service Fleet: This is seen as a negative for customer experience, despite potential benefits to Tesla's profitability. The convenience of mobile service was a significant selling point.

The speaker argues that Tesla's stock performance is largely disconnected from its fundamentals, acting more like a "call or put option on the NASDAQ." He provides historical data:

2021: NASDAQ +24%, Tesla +60%+
2022: NASDAQ -33%, Tesla -70%
2023: NASDAQ +40%, Tesla +100%+
2024 (YTD): NASDAQ +32%, Tesla +65%

He predicts that robo-taxi revenue will not be significant until the 2030s, with Waymo being the current leader in the space. Companies like Amazon (Zoox) and Google (Waymo) have far greater financial resources to compete in this market.

Investment Strategy and Market Hedging

The speaker outlines his investment approach, focusing on three core areas:

Tesla Earnings Analysis: As detailed above.
What He Put Money Into Today and Why:
- Tesla Market Hedge (TSLZ): The speaker added to his position in TSLZ, a 2x leveraged ETF that profits from Tesla's decline. He views Tesla as a perfect hedge against the broader market because its stock performance closely mirrors the NASDAQ, but with amplified volatility. He estimates a 10% NASDAQ decline could lead to a 25% drop in Tesla, and with 2x leverage, a 50% appreciation in his TSLZ position. This strategy is favored over general market put options due to the potential for higher returns.
- Palantir Hedge (PLTZ): He also holds a 2x leveraged ETF against Palantir (PLTZ). This hedge is considered riskier due to Palantir's potential for significant upside (200+) if it reports mid-50s or higher revenue growth. The risk is that if Palantir misses these growth targets, the hedge could appreciate significantly. However, the speaker notes that Palantir's current valuation is extremely high, pricing in years of future growth, making it a poor long-term buy regardless of short-term catalysts.
Plan with Over a Million Dollars in Cash:
- The speaker has a substantial amount of cash ($1 million+) in various accounts.
- His strategy is to wait for market pullbacks. He anticipates a potential market downturn between now and year-end.
- If the market does not pull back, he expects to increase his cash holdings to $1.4-$1.5 million.
- When a pullback occurs (e.g., NASDAQ down 10-15%), he will deploy this capital into the market, buying more heavily as the market declines further.
- He contrasts this with periods where he invested heavily, such as during the tariff drama in March/April, the 2022 downturn, the "Rona crash," and the end of 2018 (when the S&P 500 dropped 20%). In 2018, he reduced his cash to $10,000, highlighting the risk of being too low on cash during a prolonged downturn.
- He analyzes the forward P/E ratio of the S&P 500, noting that current elevated levels (around 23) suggest it's not an ideal time for heavy market buying, except during severe recessions (like 2008 or early 2020) when earnings tanked.
- Despite not deploying large sums of cash currently, he consistently buys thousands of dollars of stocks every Friday across his various accounts. His focus is on finding great deals with low risk and high reward, regardless of the overall market P/E.
- He advises against timing the market by selling out of positions and waiting to re-enter, as this often leads to worse results.

Long-Term Perspective and Portfolio Building

The speaker emphasizes a long-term approach to building a portfolio, comparing it to building a house. Just as construction continues through adverse weather, portfolio building should persist through market downturns (rain, wind, storms). He views market corrections and crashes as "blips on the radar" when viewed over decades, citing historical events like the great financial crisis, the tech bubble, 2022, 2020, and 2018 as examples that ultimately became insignificant in the long run. He points to the NASDAQ's recovery and growth after the tech bubble burst as evidence of long-term market resilience.

Private Group and Giveaways

The speaker mentions his private stock group, noting an upcoming increase in the net worth requirement to $100,000 starting January 1, 2026, due to high demand. He shares an anecdote about a member who achieved millionaire status after joining the group, reinforcing the value of community and guidance. He also plans to give away personal items, like an old watch, to private group members, creating a forum for such giveaways.

Conclusion

The core message is to remain disciplined and consistent in investing, particularly by building a portfolio over time and strategically deploying capital during market downturns. While short-term market fluctuations can be dramatic, a long-term perspective reveals their relative insignificance. The speaker advocates for a proactive approach to identifying investment opportunities and hedging against market risks, emphasizing that consistent building, regardless of market conditions, is key to long-term financial success.