When the Price Gets Ahead of the Story

Gary Black, managing director of The Future Fund LLC, finds himself in an interesting position: He likes Tesla Inc. (TSLA) the company but can't stomach the stock price anymore. It's the investing equivalent of admiring someone from afar but declining to go on a date because they're just too high-maintenance.

In a series of posts on X, Black explained his thinking by reaching back to a comparison investors love: Amazon.com Inc. (AMZN). He held Amazon stock back when it wasn't profitable and traded at "an infinite P/E," because he could see where retail was heading. What made Amazon special wasn't just selling stuff online—it was the fulfillment and distribution infrastructure that allowed next-day delivery, something traditional retailers couldn't match.

The Tesla Trade That Was

Black saw a similar dynamic when he invested in Tesla back in 2019. "No other auto manufacturer could build high quality EVs at a huge cost advantage," he noted. That manufacturing edge made Tesla his fund's largest position for years. The company wasn't just making electric cars—it was making them better and cheaper than anyone else could figure out how to do.

But that advantage has narrowed considerably. Black points out that competition has penetrated the EV market, and Tesla's stock price has run "far ahead" of his estimates—something he's questioned publicly on multiple occasions. So The Future Fund exited the position entirely.

The Autonomy Question

Now Black sees a similar competitive dynamic emerging in autonomous driving. Multiple companies are already offering unsupervised autonomous ride-hailing, and he expects many more will follow as Nvidia Corp. (NVDA) "democratizes autonomy" with its Alpamayo technology. In other words, Tesla's lead in self-driving might not be the insurmountable moat some investors believe it to be.

"We still like TSLA the company but don't like $TSLA the stock," Black summarized. It's a distinction that matters: You can admire a business while thinking the market has gotten a bit too enthusiastic about the valuation.

Meanwhile, Back at Tesla

Black's comments come as Tesla posted some solid sales numbers. The Model Y was the best-selling EV in the U.S. last year, moving over 357,528 units of the crossover. The company also revealed a 7-seater layout version of the Model Y, which could help push sales even higher.

On the Full Self-Driving front, CEO Elon Musk announced a significant change to the pricing strategy. Tesla is eliminating the $8,000 one-time payment option for FSD, now offering the service exclusively through a $99/month subscription instead. It's a shift that converts a one-time revenue hit into a recurring revenue stream—investors typically love that kind of business model transformation.

Price Action: TSLA gained 0.46% to $440.59 during pre-market trading on Friday.