Why Tesla Stock and SpaceX JUMPED | LFG

lot of Elon Musk related news in the past few days. Not only a potential 25 or $26,000 Model 3, but not where you think the Cyber Cab event coming on Thursday. We've got to talk about that and some weird things going on around the event. uh as well as this talk about Elon Musk getting into manufacturing the blades and veins as a limiting factor for turbine energy for turbine engines for essentially the power plants for data centers. In other words, let's not rely on the grid. Let's build our own natural gas facilities operated with natural gas turbines almost like a jet engine for an aircraft. And uh let's just get into manufacturing some of the blades and veins because those are the limiting factor. We'll talk about how that could actually play out for Tesla and where the margins are for a company well SpaceX and we'll talk about where the margins are for a company like GE Venovo in comparison. So let's try to get through all of this Elon related news. Number one, the model uh 3 in China expected to sell now for $26,000. The Model 3 expected now to come out for $205 Hong Kong. Uh, which if you translate that, that works out to about $26,100. So, unfortunately, not in the United States. It is being called a quote unquote simplified Model 3 in Hong Kong and Macau. I mean, I guess technically you could say Elon's almost got the $25,000 car out. Uh but on August 31st, so that's today, Tesla announced, well, it was the news really came out late yesterday, but it was on the 31st of their time, announced the launch of a more affordable version of the Model 3 in Hong Kong and Macau, priced at lower uh than in mainland China. So I guess Hong Kong and Macau, not China, uh but not America. The strategic move aims to capture a larger market share in those regions. Keep in mind that's where the competition is. it is really really competitive to sell vehicles uh in the Asian market and you're seeing a lot of exports go from Tesla Shanghai to Europe uh mostly because that's where you now have BYD also competing with European manufacturers. Of course, tariffs are way too high on Chinese vehicles to see them make it to America for now. Although there are expectations that Chinese companies might start manufacturing more in Mexico and if we finally reduce some of the crossber issues between the United States and uh Mexico on a tariff basis with Donald Trump maybe we'll actually end up seeing Chinese cars in America. That said that has had people excited about maybe increasing sales in Asia for Tesla. Something that Tesla would really like to get back to is more growth for Tesla vehicle sales. I think that's the core of my valuation for the company with Optimus as optionality and FSD as optionality for the future. Core component of this company is still vehicle sales and getting people into that Tesla ecosystem. So once you buy the car, you're more likely to want to buy the solar panels and the batteries. We're installing some Tesla solar panels uh I think in two days actually as well as some Tesla mega not mega packs you know Tesla power walls mega packs are for cities and big infrastructure projects power well so we're excited about that maybe we'll make some content or a video on that but moving on from this uh Model 3 we've got to talk about the Tesla Cyber Cab so we've got the Cyber Cab event coming up on Thursday and the Cyber Cab event is reportedly uh going to cover this uh you know new and improved future of full self-driving in robo taxis and it comes conveniently right after we've seen uh Tesla lock in f a 5,000 capped permit for robo taxis in Clark County which is Vegas that was announced last week. The original interim approval only permitted 10 robo taxis in Vegas itself for Tesla, which is kind of lame, and capped at 45 m an hour and banned from doing airport trips. That 10 limit was removed though, and the airport ban does still remain in place, and 45 mph limit remains in place. So, these are really more local downtown kind of Vegas uh robo taxi rides. But in my opinion, that's actually a really big step forward for Tesla. And I think Tesla's Cyber Cab event might be purposefully coming on the back of that 5K permanent announcement for Vegas because Vegas is kind of a tough spot for ride hailing. It's a place where you have to be at certain locations. You can't be anywhere on the streets, otherwise traffic slows uh to a crawl. It already does often. Uh, and then taxi drivers actually get cited for stopping at the wrong places to pick up passengers. So, I'm really interested to see how robo taxi could end up evolving in an area like Vegas, which I think is going to be a lot more challenging than an area like Austin. Uh, and Tesla's now indicating that paid rides could occur within 30 days, which kind of perfectly aligns with this cyber cab event that's coming up. uh you know Tesla posted uh their cyber cab invitation for the September 3rd event which is exciting that it's coming uh and so a lot of people are wondering what are they going to announce at this event. Personally I think it also has to do with the fact that we are now coming out of production on these cyber cabs. So potentially moving away from using the Model Y as the robo taxi and focusing on the actual cyber cab itself without the steering wheel, without the pedals, we actually end up pushing cyber cabs onto the road. Uh not just in Vegas, but in Texas, in Florida and other areas where Tesla is operating and maybe we can actually see this start scaling because the scaling so far has been on the weak side. you know, we've been at between 40 to maybe a high of about 85 robo taxis on the road. Now, uh the official stats are somewhere around 40 to 42 registrations in Texas. Bloomberg's counted 59, including three Texas cities, and then a little bit in Florida. Tesla's hinting that it could actually be as high as 85 now. So, somewhere in that range, but it's obviously a far cry from thousands of Teslas on the road uh that are robo taxi. There's a lot of hope that hey this September 3rd event uh coming nearly two years after the Wii robot event is actually the catalyst where we start scaling. So it wouldn't surprise me that this event is look we just rolled the cyber cab off production lines. Uh we can now officially scale. We've done our testing for the last uh you know year as robo taxis have been out uh and and since we really said we were going to prioritize this two years ago. now is the time for scale. So, if I were working at Tesla, that's what I would be harping on because I think that would really give a boost to the stock even more so than what we're already seeing. And, you know, it could use a little bit of love. Uh, so a 4.6% bounce right here does come right on top of the 347 line, which is, you know, a very common line for Tesla to revert back to, and it's a very strong line. We've been on this line for a while here. So, this news hopefully gives it a more permanent, you know, support over this line. We'll see. Tesla is a at a onew week high now up now 4.6% and you know comes on the back of both this cyber cab event and the $26,000 Model 3 in Hong Kong and Macau and of course the news that more affects SpaceX regarding manufacturing turbines. But usually what we find is when SpaceX goes up, Tesla goes up and when Tesla goes up, SpaceX goes up. They correlate about 67% of the time. So 67% of the days these stocks move in the same direction. So it sort of implies it's a little bit more of an Elon trade and and how related these companies are when it comes to trading. But that's useful to know if if if you are trading. Then of course there's the Turbine News which we'll talk more about in just a moment. But just think about that for a moment. Uh first just finishing the thought on Vegas. Uh Whimo and Zuks operate in Vegas already. Tesla getting into this space could really and hopefully expand them not only in popularity because the this is a very popular vacation destination for people to travel to obviously Vegas. Uh and it would be a great testing ground for a very busy area with limited pickup and drop off areas that are highly restricted and highly regulated. And if Tesla can crush it in Vegas, my thesis is they could probably do it anywhere. Now, Tesla's CyberCap chief engineer argues, it's Eric Early, argues that hopefully they can get to 2500 units within a year. That's his goal, even though they're technically authorized up to 5,000, shooting a little bit more of a realistic target, if you will. So, all of that obviously pretty exciting news for Tesla. Uh, and then we move on to what's going on with this turbine news with Elon Musk. So Elon Musk is now apparently and reportedly per the information there were a couple pieces on this uh in the information over the weekend uh with uh some follow-up information coming through but Tesla's reportedly sorry Elon Musk via SpaceX talking about them at the same time is so hard I'm just going to mix up the words but uh the information reported in an exclusive that SpaceX is laying the groundwork for a turbine blade factory to solve the data center power crunch. Basically, Elon argues that, hey, if we get into the limiting factor of doing blades and veins, hopefully we can remove the limiting factor and actually get turbine gas power production up 18 months sooner given that the blades and veins are the slowest portion of the process. Keep in mind that there are a lot of sections when it comes to these turbine engines. You've got uh the hot section, which is the slowest and most expensive, and it includes things like the compressor, discs, casings, uh the fuel nozzles, the you know, aerosolizers. I probably screwed up that word, but basically the little um in injectors that spray the fuel into the actual combustion component of a turbine engine. Uh you've got uh the rotors, the generators, heat recovery, cooling. There's a lot. GE Vernovo says all of those components are a limiting factor, not just the blades and veins. So there's a little bit of a clash between the two. Though in fairness, SpaceX is green today on the news and therefore so is Tesla. They kind of operating together and both have news here. Whereas GE Vernovo is down about 2.4% on this news. and uh Home Aerospace, which also manufactures these components, down sharply, down almost 9% on the news that Elon wants to get into contributing to sort of the solving the limiting factor of blades and veins. Now, Elon's talked about this before in a couple of interviews, so it's worth playing a couple of these clips because they're super relevant. Let's start with the first one. >> Like, the turbines are sold out through 2030. >> Have you guys considered making your own? I think in in order for in order to uh bring enough power online, um I think uh SpaceX and and Tesla will probably have to make the turbine blades um the mains and blades uh internally >> for just the blades or the turbines? >> Uh uh the the the the limiting factor you can get everything except the the blades they call the blades and veins. um you can get that uh 12 to 18 months before the veins of blades eliminate. >> So in other words, all the other stuff that I was exemplifying, Elon thinks you can get that quickly enough. Again, GE Venovo disagrees with that. They say everything is facing a manufacturing capacity restraint. So it's not just having those components. It's actually being able to assemble it all together and that's a constraint. So Elon's argument is hey well you know I know these are causing a delay so if I get those will that maybe get me ahead on the line TBD >> actor veins of blades and there are only uh three casting uh companies in the >> Jeffrey says four but close enough >> world that make make these and they're massively backlogged like the two >> yes backlogs are indeed massive now there are obviously some risk factors here keep in mind Elon has experience with SpaceX and building raptor engines. But Raptor engines are different from turbine engines. So turbine engines, the the point of a gas turbine is to get you continuous power for a long period of time to where you're not relying on a local grid. You're basically setting up your own uh natural gas facility like a peaker plant almost. The problem is the following. Rocket engine versus gas turbine. So, a rocket engine, not a gas turbine. Rocket engines pump massive fuel for a few minutes. Turbines run continuously for hours. Gas turbines are aerodynamically super complex, super hard to make. And turbines uh or or I should say the turbo pump blades in a Raptor engine are very different than what you get inside of one of these. So SpaceX has experience making rocket engines where they run for a few minutes and then they stop. Uh you know the whole goal is basically thrust and you basically take it all apart and reassemble it after each launch. Whereas a gas turbine is supposed to land run basically continuously 8,000 hours a year. Uh and uh you know the the goal is you don't have to overhaul them for 25,000 years. these metals that you're trying to fabricate or that Elon wants to get into fabricating by building a plant in Texas. It's not the easiest thing to do. Well, so yes, Tesla has some experience and that credibility shouldn't be shorted. Uh but I don't know how much that's going to translate or how quickly they can even get a foundry up and running for casting these blades and veins. like the very time he's trying to save to get ahead of this supply shortage could be offset by the time it actually takes them to get to scale which isn't great. Now in fairness there is a real shortage going on and and that's why there's pricing power at a company like GE Venovo. So their uh margins on the power segment which is where the turbines sit at GE Venovo uh are up about 240 basis points to 2.4 for percentage points uh just over the last year. Their power segment is doing very well and they don't say it's because of data centers, but we expect it's due to data centers because they say from heavy duty gas turbines. They also mention that there has been a decrease at the offshore wind revenue component, which is probably because Trump calls them whale killers. Topic for a different video really, but anyway, their gross profit is up 27.8% 8% overall and their total revenues are up 22%. So they're growing their gross profit more. And because these turbines are higher margin for the individual company, expectations are that G Venovo is going to be able to boost their entire net margins and that could actually help their valuation out. If I jump on over, for example, to the uh reinvest stock tab, so this is sort of our terminal tab on uh let me get logged in again here. We seem to get logged out right in the middle of the video. It's like It's okay. Uh but um let's go over to the GE Vernova, which is going to be the GEV tab. And then once we're in over here, you could see a couple things. First, we've got a fair value upside target of around $1,231. This assumes that their margin continues to expand. Obviously, if this is just a cyclical business and their margin expansion is temporary or more competitors come in, then that's a downside. Remember Elon famously called lithium the limiting factor and then said hey they're going to get into the lithium refining as well at the l facility and then they did but then lithium prices tanked. So people are now wondering are blades and veins going to get really cheap now in a few years right so something to keep in mind but if we look at the insights over here we could see the gas capacity ramp accelerating from 3 gawatt at G Vernovo to 5 gawatt which you know that's that's a big increase that's more than a 50% increase that is a 67% increase in in output for these is is not only margin of creative but revenue of creative to gnovo So, a lot of people are excited about this and they see the the short-term sell-off. I don't have any exposure to to to this company. So, you know, that's not I'm trying to shield it, but um people are very excited about what this could do for their margins over the long term, plus what they're calling integrated solutions and solidstate transformers. That's actually where you have a 2028 call option on data centers in NPhase. Nphase is like a dirt cheap stock uh that's just been destroyed through high interest rates. The core of it is an interest rate sensitive play. But there is a call option built into it on solid state transformers. Worth uh studying that a little bit. But anyway, uh if you then jump on over to GE Vernovo's uh cash flow, their cash flow is actually fantastic. Their balance sheet's not that great, but if you look at their cash flow on $12 billion of free cash flow forecast, they've got like a 5% cash flow yield. Free cash flow yield. Pretty dang good. Not bad. So, uh, you know, there's money to be made in this turbine business. And anytime there's money to be made somewhere, you know, Elon tends to like to vertically integrate and he's not wrong often with his predictions. In fact, in May of 2025, he sort of predicted this, you know, energy wall that was coming. In fairness, he's like at the bleeding edge of investment into artificial intelligence. So, it'd kind of be weird if he didn't kind of see these walls coming. But, I mean, when we listen to this from a year almost a year and a half ago, it's pretty right on. Let's listen to it. Yeah, I think we're I mean a few years ago I made a very obvious prediction which is that the limitation on AI will be chips um and it's still chips kind of chips today. Uh then it will be electrical equipment uh for the >> I wish he would have told us it would have been chips then memory then electricity so we could have all yoloed memory a little bit earlier. you need to take power at that might be at 300,000 volts all the way down to 400 volts for the for the computer. Um, so it needs you need step down transformers and uh a lot of them and a lot of you know cabling and wiring and fuses and re uh you know it's a it's a lot a lot of transformers essentially and the the the electrical transformer industry is not used to big changes in demand. >> No, there's a shortage of transformers. literally shortage of transformers. And then >> this is where we get into something that's worth kind of following just because of the lulls of it. But shortage of electrical transformers, also a shortage of AI transformers, and look where Elon goes with it. >> Funny enough, the AI algorithm is called a transformer. Um, and then our Optimus robot is named after Optimus Prime. That's a transformer robot. >> So, we have Transformers for Transformers. >> Right. Right. But it's the one transformer is the one in shortage that the others need. >> And then as we solve the transformer shortage, there will be the fundamental electricity generation shortage. >> And are we there yet or are we going to be there soon? >> We're getting there soon. My guess is people start hitting challenges with power generation. Maybe by middle of next year, end of next year even with >> that's exactly where we are now. Both uh you know middle of next year to end of next year, that's where we sit right now timewise and also hitting the electrical wall. So Elon is right and you kind of got to give credit to where credit's due. So like if we put all of this together, there are a lot of really exciting things sort of in the world of Elon going on. You've got the prediction of an electrical shortage, which maybe the writing was on the wall for that to everybody, but the point is he's weaponizing the classic vertical integration that he does at Tesla and SpaceX and applying it to both the businesses as usual. And of course in the long term there's a really good shot that these companies end up merging. So there's a lot of enthusiasm for both of them. Now the turbine play I personally think it's a little bit of a shideshow. I think there's a lot more enthusiasm around you know potentially massive scale coming to the robo taxis. And I think that's really what Thursday is going to be all about is this is an announcement that robo taxis are now going to massive scale. They're going to be everywhere. It's not just going to be Texas or Florida anymore. Vegas, that's just the recent catalyst. Now that we're in production, we can really crank. And of course, you know, seeing the cheaper model, simplified Model 3 in China, hopefully that could be a boost to some of our delivery numbers as well. But overall, when you put all that together, that's a lot of Elon, Tesla, and SpaceX related news that sounds overall decently bullish. Obviously, there are risks at every level. You've got to get clean air permits for those turbines that could take 6 to9 months. You've got a whole other set of components for the turbines that Elon isn't actually going to manufacture in his foundry. So, you're still kind of balls tied, if you will, to some other manufacturing company. uh you might be able to go quickly with your clean air permits and taxes because those usually only take six to nine months whereas California or New York will probably be like 18 to 24 months. Uh and overall we're coming off a really low base and a lot of pessimism for robo taxis because it's been so slow to scale and you know the question around oh how do we scale if we have to map and validate every area and now we're geoence this isn't great could there be a breakthrough announcement these are all things that will be talked about now something else that's interesting about the Tesla post uh was The invitation itself suggested that only people invited can go to the event and that if you bring a plus one, which you're allowed to bring a plus one, you will not be allowed to use a content creator as your plus one. Now, this I just thought was a very interesting like Apple style manner of trying to control the narrative, but it hasn't been uncommon in the past that Tesla will handpick their favorite Uber bull Tesla content creators. They prefer getting news out with Uber Bulls over legacy media. We already know that. But then you take an Uber bull or even just a visitor or guest or an investor or whatever who then invites an influencer that's a little bit more critical of Elon or even just brings a little bit of a level of realism then all of a sudden you get Tesla it's like wait a minute we didn't want them here they were going to ask hard questions right uh and so they are now imposing the restriction that you are allowed to bring an additional guest but they cannot be a content creator. Now, they don't specify what they mean by that, like a certain number of subscribers, like you look like a content creator or you're not allowed to film or whatever. But it is an interesting way for uh Elon to maintain this uber control over their uh uh their their releases and their events. And it is right up the same alley as what uh Apple does. So, it's really not a surprise. You know, Apple does it. So, I'm not saying that Elon or Tesla are wrong for doing it. Hey, they're trying to put their best foot forward, so you can't really blame them for that. But, uh, I always find that very interesting. So, bottom line, excited about the Cyber Cab event, excited about these Teslas coming off of the production line. Uh, in fact, there was a photo on X about the Cyber Cab uh coming off the production line. We'll go ahead and pull that up. Uh, and there was also I want to say a note about uh I can't seem to find it right now. H, it doesn't matter. Anyway, Cyber Cap's coming off the production line. That's exciting. We've got uh probably no updates expected on Optimus. That's that's not a big deal. So, you're coming off a very low base for Robo Taxis. Turbines, not heavily excited for me, but just sort of another reiteration of vertical integration. Uh, and overall all of this is good news for both companies. Neither of it is particularly bad news. >> Why not advertise these things that you told us here? I feel like nobody else knows about this. >> We'll we'll try a little advertising and see how it goes. >> Congratulations, man. You have done so much. People love you. People look up to you. >> Kevin Pra there, financial analyst and YouTuber. Meet Kevin. Always great to get your take.