Robo taxis are a $300 billion bubble

Matein Khalid

The weekend Crony Club dinners in the finest watering holes/pizzerias of Dubai are as long as they are liquid and our sole focus is to exchange money making investment ideas and wildest new jokes. So I found out that my buddies were more interested in my calls on the Mag-7 than in my philosophical reveries on MAGA. So paisanos, viola!

I had outlined my Tesla (TSLA) strategy in my pre-whisper number Lady Gaga skit. TSLA is truly caught in a bad romance as Elon’s $45 million gift to the Trump campaign is as old, tired and unhinged as the Orange Man himself. Kamala has replaced him as the rock star in Election 2024. TSLA lost a ghastly $35 a share after it disappointed the whisper number, a scenario I nailed in my Monday post and which can only be understood if you watch Lady Gaga’s Bad Romance (https://lnkd.in/dM_A94YJ).

I want to make $150 a share in the next year swing trading this deranged Bronco on the short side. Why?

Robo taxis are a $300 billion bubble that will pop with a vengeance. The US and Chinese economies will force brutal price cuts as the EV gladiators use their bloodied axes to murder each other as the tariff wars loom. EV sales worldwide will tank as the global recession/credit crunch accelerates. Even Tesla’s prize Model Y sales have slumped 2% since 2H 2023 and you ain’t seen nothin yet goomba!

The lithium-ion battery fire is a bad omen, as is the doomed bromance with Trump. A 70X val, falling margins and China risk is a lethal mix. So I ride this Wild Wadi roller coaster short to Xanadu as fair value is $80 to $100 a share tops.

I went Lord Gaga on Alphabet (GOOGL) when its AI launch in Paris flopped in early 2023 and the shares dropped $90, where GOOGL was a no brainer. Mr. Market is a schizo and occasionally pitches me the baseball equivalent of a sixer on a curve ball (I remain a cricket colonial since the New York Mets always broke my heart when I lived in the East Village), this was one since GOOGL went on to soar to 190. Good things happen when you bottom fish, though not bottom pinch, mega caps at the right val, which was 16X in early 2023.

The shares were slammed again last week from 190 to 167 but it is premature to buy the dip. I will only play GOOGL on the long side. Why?

Alphabet beat its whisper number on both EPS and rev. The OpenAI prototype launch made the House of Sundar even less pretty. Capex rose 91% and the Street now mistrusts the AI bubble. Spike Lee warned me all those years ago in New York, don’t believe the hype, she’s gotta have it and jungle fever. Sound advice for big game lonely heart hunting in West Village clubs.

The good news is 1.5 million developers are using Gemini and AI search is the hottest new media enchilada. Operating margins have risen to a yummy 29%. Google Cloud, YouTube and the Search monopoly are all on a roll. Time to design option strategies in CBOE to ensure I get delivered GOOGL at $140 or 19X, where I win and Mr. Market losses. Vediamo!

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Also published on Medium.