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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

They’re at it again. “MicroStrategy Incorporated d/b/a Strategy” — the enterprise software company turned bitcoin maximalist — has announced a new financial instrument to raise money to buy more bitcoin. It’s called Series A Perpetual Strife Preferred Stock. 

“Strife”? “Perpetual Strife”? Matt Levine at Bloomberg had initially suspected a typo when he read it, but 23 references in the document suggest not. Maybe it’s an inside joke — the kind of thing that sounds clever at 5am at an after-party. Or perhaps it’s an unwittingly honest nod to the drama surrounding the company’s relentless bitcoin accumulation.

The bizarro name isn’t the only head-scratcher. Strife comes with quirks that set it apart from Strategy’s previous fundraising efforts.

For one, it’s not your typical (Micro)Strategy dilutive equity issuance; unlike the perpetual strike preferred securities (STRK), it is not convertible into common stock. Michael Saylor, executive chair, has pitched it as a way to tap into the vast pool of fixed-income investors who generally prefer stability and predictable returns. Yet Strife offers neither. It exposes investors to bitcoin’s downside (since Strategy’s creditworthiness hinges on its crypto holdings) without giving them any upside if the cryptocurrency soars. The dividend is fixed, so if bitcoin “moons”, Strife holders are left watching from the sidelines. It’s like being invited to an all-you-can-eat buffet but only allowed to smell the food.

The dividend structure is another oddity. Unlike Strategy’s STRK, where dividends could be paid in cash or stock at the company’s discretion, Strife dividends are strictly cash-only. The instrument offers a 10 per cent annual payout, but there’s a catch: if the company defers payment, the dividend rate increases by one per cent per year, capping at 18 per cent.

Buried in the fine print of the prospectus is a crucial detail: the board can suspend dividends altogether. It’s essentially a “trust me” deal. 

[O]ur board of directors or any duly authorized committee thereof may choose not to pay accumulated dividends on the perpetual strife preferred stock for any reason. Accordingly, we may pay less than the full amount of accumulated dividends on the perpetual strife preferred stock. In addition, if we fail to declare and pay accumulated dividends on the perpetual strife preferred stock in full, then the value of the perpetual strife preferred stock will likely decline.

Investors can’t say they weren’t warned.

And where is the cash for these dividends supposed to come from? According to recent filings, MicroStrategy has less than $50mn in cash, and its legacy software business is bleeding money. Servicing a 10 per cent yield on $500mn of preferred stock will require creative financing. The company apparently intends to fund the dividend not from operating cash flow like a normal company, but rather by selling more stock or other dilutive securities: 

We expect to fund any dividends paid in cash on the perpetual strife preferred stock primarily through additional capital raising activities, including, but not limited to, at-the-market offerings of our class A common stock and our perpetual strike preferred stock.

Issuing equity to keep the peace on Strife would be highly dilutive, and that is on top of the dilution from the dividends on STRK. As for convertible bonds, the market already feels saturated with Strategy’s equity-linked paper, and issuing more would simply add leverage to service a dividend lower in the capital stack. 

Still, Strategy has managed to assemble an impressive roster of underwriters, including Morgan Stanley, Barclays, Citigroup, and Moelis, with Fidelity as a selling agent to retail investors. This suggests either investor enthusiasm for Saylor’s bitcoin-centric vision — or, at the very least, an appreciation for the fees the company is willing to pay Wall Street.

Strife is a fascinating — if baffling — addition to Strategy’s playbook. It seems to defy financial logic, offering fixed-income investors an instrument with an unfavourably asymmetric return profile and piling on more dilution for common stockholders. But given the firm’s all-in bet on crypto, perhaps “Perpetual Strife” is the perfect name. When you’re staking everything on bitcoin, a little chaos is inevitable.

Further reading:
— If bitcoin is the future, what explains MicroStrategy’s need for speed? (FTAV)
— MicroStrategy’s secret sauce is volatility, not bitcoin (FTAV)
— Examining MicroStrategy’s record-shattering $21bn ATM (FTAV)
— Strategy: buy higher, pump harder (FTAV)

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The vibes have been bad for a while. Now there are some, uh . . . other indicators that are looking shaky too.

Markets’ recession signals either arrive too late (when everybody’s already lost their jobs) or too often (see the joke about stocks predicting 10 of the past three recessions). And right now, market signals are a bit of a Rorschach test. US stocks entered a correction in mid-March, but the yield curve isn’t inverted and high-yield credit spreads remain sanguine. The Federal Reserve is forecasting lower growth and higher inflation, but officials haven’t substantially altered their expected path for policy rates.

In other words: If the music really has stopped, investors and policymakers haven’t responded yet.

So instead we are collecting some of our favourite signals of early economic distress. Please do leave your own preferred rare indicators in the comments, whether they’re flashing a warning or not.

Burrito Now, Pay Later

Worried about the American consumer’s ability to order a taxi for their latte? Not to fear . . . they can now finance their DoorDash purchases with buy-now-pay-later platform Klarna.

The announcement seems to focus a bit more on groceries. This may show that Americans are feeling that 60-per-cent annual increase in the price of eggs, along with signalling that DoorDash is coming for Instacart (Maplebear Inc) ahead of its planned IPO:

Klarna, the AI-powered payments and commerce network, and DoorDash, the premier local commerce platform, have partnered to offer Klarna’s flexible range of payment options to DoorDash customers. In the coming months, DoorDash customers will be able to enjoy Klarna’s seamless range of payment options when purchasing groceries, retail, and even DashPass Annual Plan — on DoorDash.com or through the DoorDash app.

When customers reach check-out, they’ll see Klarna as an additional payment option, giving them more freedom to choose how they want to pay. Options will include:

— Pay in Full allows customers to pay for what they love right away using Klarna’s seamless payments experience.

— Pay in 4 allows customers to pay in four equal interest-free installments

— Pay Later allows customers to defer payments to a more convenient time, such as a date that aligns with their paycheck schedules

DoorDash customers in the United States can soon enjoy the added convenience of Klarna’s seamlessly integrated flexible payment options while shopping from an extensive selection of stores on the DoorDash Marketplace. This partnership empowers customers with maximum choice and control over how they pay — from groceries and the season’s big-ticket electronics to home improvement supplies, beauty, and even their DashPass Annual Plan membership.

Klarna gets extra market-bubble points for describing itself as “AI-powered”. We really hope someone turns BNPL burrito loans into a CDO at some point.

Art of Darkness

People have been taking out loans against their fine art instead of selling at losses amid a broader market decline, as MainFT reports, and now they’re getting margin called:

Top art lenders have asked borrowers for more pictures as security for their loans because the value of their collateral has tumbled in an art market slowdown.

Specialist lenders in the $40bn sector have issued margin calls as the value of paintings pledged against loans has fallen, asking borrowers to make up for the decline by handing over cash or swapping in more expensive artworks.

Art lenders, including Sotheby’s and Christie’s, take security over artworks owned by borrowers so they can take possession and sell the pieces in the event of a default . . . 

Sotheby’s, which has a loan book of $1.6bn and launched a bond backed by its art loans last year, had made margin calls because “there are very few categories where the value of art has gone up in the last 24 months”, said Sotheby’s Financial Services global head of lending, Scott Milleisen.

Borrowers aren’t always borrowing against pictures, to be fair. Sometimes they pawn jewellery.

Jobs make the world go ‘round

We learned a few years ago that bad vibes don’t really make a recession . . . Job losses do.

So what if vibes about job security are really bad? From Renaissance Macro this week:

The big news in the UMich data was not inflation expectations. Look at what people are saying about the jobs market! Expected change in unemployment worst since the 2008 recession. No one is asking for a raise in this environment.

Not loving that 2008 comparison, either!

Law school applications

This WSJ article about a sharp jump in law school applications and what it says about the current economic vibes was summed up very nicely by Alex Armlovich of Niskanen:

Did politics have an effect? Maybe. Did AI? Probably. Did the change in testing that the WSJ cited? Definitely.

Still, the steep jump in applications seems like a not-great signal for the jobs market. We should also note that actual law school enrolment figures probably aren’t as good of an indicator, because that also depends on whether the number of spots available is growing or shrinking. (You could simply have a smaller group of exceptionally competitive would-be lawyers enrol in a competitive year if classes stay small.)

Club Dropping

The “Strip Club Index” was always a dumb idea for an indicator. This is not because of what it measures (discretionary spending) but because it’s very difficult to measure. We won’t venture a guess about whether that money gets taxed, but it’s not being managed through payroll services like ADP. It also seems to have attracted a whole news cycle for the faux-cession in 2022.

But . . . it is notable, perhaps, to see this from the woman who led the Guardian story about it years ago:

Also RCI Hospitality — formerly known as Rick’s Cabaret — is down 21 per cent this year. ¯\_(ツ)_/¯

Sugar Daddy disappearance

Anecdotes aren’t data, sure, but after looking at that Guardian story, we might as well put this one out here too:

Match Group shares seem to be doing fine, though.

Please do leave your own favourite anecdata in the comments and we’ll include it if it’s good or funny enough.

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

After years in the toilet, European stocks are back. Trump is threatening to withdraw US security guarantees, Europe’s defence spending is ramping up, and the continent’s once-beleaguered industrial champions are newly energised.

Also, meme stocks have crossed the pond:

A handful of European stocks have become a battleground for retail traders taking on hedge fund short sellers, in a campaign with echoes of the “meme stock” craze that gripped Wall Street during the Covid pandemic.

Companies including Germany’s Hensoldt and Renk Group and French satellite firm Eutelsat have surged in recent weeks, far outstripping a broader rally led by the defence sector as investors anticipate a surge in military spending across Europe.

And with them, Eurostonks memes galore. The rationale for this memetic explosion is understandable: after years as the underperforming Old World cousins, European stock enthusiasts finally have something to shout about.

Which left us with a crucial question: are the memes any good?

To find out, we scoured the nether regions of Europe’s trading forums on the FT’s dime. There’s good, there’s bad, and there are Porsche sports car/tank hybrids.

High on the Dax surge, the Germans — not usually known for their sense of humour — have been especially busy:

Look, we never said they were funny. War’s a tricky subject for comedy (also, VW is not building tanks, at least as far as we know. Although there is this).

Speaking of tanks, there’s lots of love for domestic stocks, but slightly less love for a certain American carmaker…

…which, to be fair, markets seem to agree with:

Or, as dramatically illustrated by our German friends below:

Or via this SpongeBob interpolation, captioned “Daily Meme until Tesla is under €100”:

Who are the heroes of this new meme trend? Well, Jensen Huang is out, Armin Papperger is in.

Will we ever seen Armin decked out in this?

The resurgence in European defence stocks has also rallied Deutschland’s finest AI “artists” to the cause. They’ve been busying themselves (presumably relying heavily on US technology in the process 🌝) by imagining how the country’s ailing automakers could reinvent themselves as military vehicle manufacturers.

We’re not tank designers, but somehow we’re not sure about these:

We have to admit though, the Deutz tractor tanks looks pretty cool. Who wouldn’t want to cruise through the fields in one of those bad boys? Investors agree:

It’s not just the Germany’s industrial mainstays that have been memified. Drone manufacturers have got the treatment too:

The less said about that, the better.

France’s Eutelsat has been a favourite of the meme brigade, with short sellers caught at the sharp end of the satellite maker’s rebound:

The nearly 300 per cent surge in Eutelsat has cost short sellers approximately $187mn in mark-to-market losses in the three weeks to March 14th, while Hensoldt short sellers have suffered $110mn in losses as its shares climbed 40 per cent in the same period, according to figures from S3 Partners.

. . . 

BlackRock, the world’s biggest asset manager, also held significant shorts in Eutelsat, before trimming these below the disclosure threshold of 0.5 per cent in recent weeks. “BlackRock is now completely out,” one user gleefully informed the forum last week.

The pile-on reminds us of the Gamestop squeeze (immortalised in 2023’s truly awful Dumb Money movie) in its fervent anti-short rhetoric and calls to pump up the prices of certain stocks. Here’s MainFT again:

One user said: “On this wonderful day I’ve gone long Renk. I hope that the lights go on in the fat cats’ heads and that they see what is soon going to happen here.”

Marshall Wace, Qube, Darsana, Millennium and BlackRock declined to comment.

And:

“I don’t care about the profit, I just want to pool some of my money to help, and move away from US assets & asset managers,” wrote one poster on Reddit’s r/eupersonalfinance forum.

One might think this newfound European rizz would promote some intercontinental camaraderie.

But apparently some Germans aren’t happy:

Ah well, can’t please everyone. ¯\_(ツ)_/¯ A truly united Europe remains a distant dream, for now.

Further listening:
— Ode to Joy (YouTube)

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So, farewell then, picturesque term for life’s little ripostes to double-entry accounting and the ‘balance’ part of international balances of payments.

Your official replacement is functional, and often already in use as a synonym. If a bit less mysterious.

But at least this means that the IMF’s latest update to its balance of payments manual is here! From the fund’s list of big changes to the premier guide to global macroeconomic statistics since the last official update, in 2009:

The term “statistical discrepancy” replaces “net errors and omissions” (paragraph 2.25) . . . 

And if we go to Paragraph 2.25 onward:

2.25 Although the BOP accounts are, in principle, balanced, imbalances result in practice from imperfections in source data and compilation. This imbalance, a usual feature of BOP data, is labeled statistical discrepancy and should be identified separately in published data. It should not be included indistinguishably in other items . . . 

. . . The term statistical discrepancy should not be interpreted as meaning errors on the part of compilers; it is far more common that this discrepancy is caused by other factors, such as incomplete data sources and poor-quality reporting.

Oh, it’s not the same. We’ll take a while to get used to this.

The IMF manual also includes such updates as the treatment in balance of payments terms of crypto assets, central bank swaps and repo transactions in international reserves, and the rise of “factoryless” manufacturing.

The latter term refers to things like Apple or other multinationals contracting production in China. These definitions for balance of payments purposes might matter more than usual on the eve of a global trade war. Paging Brad Setser.

Meanwhile, we see the manual also takes on another disruptive force in global capital flows since 2009 — influencers posting brain rot:

11.110 The users of free online platforms (which are mostly organized as commercial enterprises) may create content such as videos, images, text, and audio, and make them available on the platforms. If the content creators receive remuneration (income) from the advertisers (via platform) that place advertisements next to the content (or on the spaces of their channels) on the platform, it should be recorded as supply of advertisement services. Although the “free” platform collects the fee from the advertiser and passes it on after deducting the charges for its services, the content creator is treated as providing advertisement services to the advertiser and consuming the services of the platform rather than as providing services to the platform (see paragraphs 16.62-64 for additional details on the content created by the platform users) . . . 

A footnote adds: “If content creators receive remuneration through subscriptions or by a means other than advertising, their services should be included under audiovisual and related services.”

Of course, even with a related UN update to national accounts data also now ready, balance of payments statistics don’t change overnight, and the IMF says that “countries are encouraged to implement both standards by 2029–2030.” So we might have a few net errors and omissions hanging around just yet.

When interest rates are high people are supposed to think twice about borrowing. When they’re low, they’re supposed to be whipping out the metaphorical (or literal) credit card. This is the central idea underpinning central banks‘ monetary policy fiddling.

Of course, central banks only set the short-term interest rate. Bond yields, while anchored by central bank rates, are established in the secondary market through a kind of a continual auction process. And in a world where government bond yields describe the likely course of future central bank action, a government should be indifferent to where it issues on this curve.

This, according to a couple of lengthy recent reports by rates strategists Moyeen Islam of Barclays and Mark Capleton of Bank of America — is not the world in which we live.

Before the global financial crisis, ten-year gilts often yielded more than thirty-year gilts (counter to the conventional logic that longer duration = more risk = more yield). Most bond-types understood this as a reflection of persistent demand from UK life insurers and pension funds pursuing Liability-Driven Investment strategies. As such it made sense for HM Treasury to shift their debt issuance longer, meeting this demand and reducing their own so-called “refinancing risk”. By doing this, the UK ended up with the highest average maturity government bond market in the world.

Fast forward to the post-Covid era, and longer-dated gilts trade with a yield not only higher than 10-year gilts, but also with a yield spread over 10s that is greater than those in the US or Germany. Charts via BofA:

(High-res)

Despite Capleton’s “scepticism about whether clever mathematical chromatography can really take a bond yield and deconstruct it into different unobservable (and perhaps hypothetical) component parts”, he reckons that this new yield gap represents a big ol’ chunky term premia — aka a sure sign that long-gilts are expensive for the government to issue. He backs up his view with a bunch of Gilts-SONIA forward spreads and cross-country forward spread charts that are too geeky even for FT Alphaville. 

Barclays’ Islam has no such qualms about straight-up stating that rising term premia “explains the bulk of the move higher in [thirty-year] yields”.

Why might this be? A lot rests on the 800lb gorilla of a question hanging over the market for long-dated gilts: whether long-standing demand for them from UK pension funds is pretty much over. While ‘peak LDI’ has been called before, the arguments are worth spelling out.

First up, the massive so-called “de-risking” shift from equities to bonds that has been the bane of pretty much every UK equity manager’s existence for the past two decades has happened. So it cannot happen again. The amount of potential de-risking still to come is, according to Capleton, de minimis.

Second, with defined benefit pension schemes almost all closed to new entrants, people are retiring and ultimately dying. This is now showing up in shrinking membership data. As Capleton writes:

The ONS’s ‘Funded occupational schemes in the UK’ release shows that total membership fell 16% between 3Q 2019 and 1Q 2024, and within the total the composition is aging, with the proportion of pensioners rising from 42% to 49% over that same short period.

Third, the present value of pension fund liabilities has been absolutely cratered by … the rise in bond yields. So if every defined benefit scheme invested the entirety of its assets in gilts this would only represent around a trillion pounds of demand, down from a demand ceiling of around two trillion pounds a few years ago.

The bottom line is that there’s no new pension fund demand for long-dated gilts coming just around the corner. And this fact is showing up in bond prices.

Barclays makes this point with maths. While gilt auctions have gone pretty well, the market’s capacity to digest risk is, Islam argues, a function of underlying liquidity. One way in which Barclays takes a measure of this is by drawing lines along different parts of the gilt yield curve and calculating the root mean squared errors that are generated from these lines of best fit. The underlying intuition is that in a massively liquid market all the kinks will get arbitraged away. 

But this is not happening. And the part of the curve where this measure of liquidity has been fast deteriorating is the long-end. Last year we pointed to the increasing kinkiness of the curve as maybe having something to do with a bid for tax-advantages attached to low-coupon gilts. But it looks like there’s something else going on too. Barclays:

(High-res)

As such, BofA’s Capleton reckons:

Gilt issuance needs to adapt, radically and rapidly. … This argues for a material reduction in long-dated Gilt issuance.

And this puts them basically on the same page as Barclays.

It’s not like governments haven’t made big changes to issuance before on the back of long-dated bonds becoming expensive to issue. Older readers will recall that on Halloween in 2001 the US Treasury caused a massive bond rally when it cancelled all long-bond issuance until further notice. Defending the decision, Peter Fisher, then-Undersecretary of the Treasury explained that:

This is about trying to manage taxpayers’ money prudently. … This is a relatively expensive borrowing tool that is simply not necessary for current financing requirements or those we expect.

Moreover — as Capleton reminds those of us under the state retirement age — the American move was an echo of Geoffrey Howe’s decision to cancel long-gilt issuance in his 1983 Budget. And while Barclays strikes a measured tone — encouraging the DMO to shorten the duration of its issuance to both improve market liquidity and reduce taxpayer costs — these more radical examples of wholesale long-bond issuance cancellation are the ones that BofA reckon the DMO should look closely at today.

Rather than issue expensive long-dated bonds whose prime beneficiaries are literally dying, BofA advocates shifting issuance towards UK Treasury bills. The UK’s T-bill market is pretty piddly by international standard, and Capleton makes the case that as quantitative tightening evolves there will be ample demand for bills from banks looking to find substitute assets that behave like Bank of England reserves.

(High-res)

Barclays and BofA both [ed: try saying that several times quickly] make a good case that the UK government, if it were a company, would be re-examining, and shortening, its debt issuance profile. 

Capleton also raises the idea that they should buy-back long-dated gilts that are trading at a deep discount, “taking profits” on bonds sold into the market with low coupons, and perhaps knocking off as much as 16 per cent of debt/GDP in the process.

But he jumps the shark when he writes:

With some of these issues, the obvious temptation would be to consult the market. Our main worry with this is the risk that action is delayed, potentially for a long time, if it’s a very formal consultation process … we’d suggest experimental operations rather than full-blown consultations.

Experiment rather than consult? Sorry, we’re British.

Overall, these are two fascinating and imaginative reports full of interesting debt management ideas. But whether the UK government responds to bond market pricing signals in the way normal economic agents are supposed to do is another question.

Disclaimer: The author has direct gilt holdings among his personal investments, one of which is long-dated. 😢

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Are you an FT Alphaville fan, or lucky enough to know one? Do you/they want to show your/their appreciation with your/their chest? Or tote bag? Or laptop sleeve?

Well, you’re/they’re in luck. Head to the FTAV swag store on Redbubble, where you’ll find FTAV designs across a great many things.

Here’s a small sample (all these designs are available on a variety of products in different colours):

Have you ever wanted:

— A Cathie Wood hates Alphaville tote bag?
— An Andrew Bailey coup mouse pad?
— A Credit Suisse CoCo pops hoodie?
— A Basel III: Endgame apron?
— A Team Transitory sticker?
— A small caged mammal T-shirt?

We’re assuming the answer is “well yes, now I do”. Head on over and feast your eyes. NB: Look at both the “Shop products” and “Explore designs” tabs to see the full smörgåsbord.

PLUS: Thanks to this agile, inventory-absent model, where FTAV does the designs and Redbubble does everything else, we are able to add more designs on request, or expand the current designs to more products if desired.

Perhaps there’s an old FTAV meme or crude Photoshop job you’d love to get for that special someone? Let us know via email at [email protected] (remember to put swag in the subject line).

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The judiciary is under attack; Fannie Mae just added a cybersecurity engineer at SpaceX and social media group X to its board of directors (though he left two days later); and Cantor Fitzgerald’s former chair and CEO Howard Lutnick has been pushing Elon Musk’s Starlink to federal officials, mainFT reports:

In a private meeting in the Herbert Hoover building near the White House this month, Howard Lutnick told civil servants at the Broadband Equity, Access, and Deployment (Bead) programme to increase the project’s use of satellite connectivity — over fibre-optic cable — and singled out Musk’s provider, Starlink. 

“He mentioned Musk by name, he asked if we had been talking with Elon,” Evan Feinman, who until Friday was the director of Bead, told the Financial Times in an interview. 

“The clear thrust of his directive was to increase the amount of satellite being used regardless of any other considerations.”  

Coincidentally, Cantor senior equity analyst Andres Sheppard on Wednesday upgraded Tesla to “overweight” from “neutral”, his change of view triggered, he says, by a trip to the car company’s Austin gigafactory and AI data centers earlier this week.

Cantor’s $425 12-month Tesla price target is unchanged, implying a roughly 88 per cent price rally from Tuesday’s closing price of $225.31. 

To be fair, stranger things have happened, and Sheppard isn’t an outlier: despite or because of Tesla’s recent sell-off, the Street has turned marginally more bullish on the stock since the turn of the year, with Bloomberg data showing 34 “buy” recommendations on Wednesday compared with 29 in early January.

And despite slashing his deliveries and revenue estimates for 2025 and 2026, Sheppard says Tesla’s recent wobble provides “an attractive entry point” for investors who are *ahem* “comfortable with volatility” . . . 

We become bullish on TSLA ahead of material catalysts Including: the introduction of Robotaxi segment (June 2025), rollout of FSD in China (started in 1Q25), rollout of FSD in Europe (we expect 1H25 pending regulatory approval), introduction of lower-priced vehicle in 1H25 (we expect initial price of ~$30,000 inclusive of tax credit), high volume production of Optimus Bot (2026), initial deliveries of Optimus to customers (we expect 4Q26E/1H26) and introduction of Semi Truck (we expect SOP in 2H25/2026).

For 2025, TSLA recently disclosed that it expects its automotive business to “return to growth”(produced and delivered <1.8M vehicles in FY24) and for its Energy Storage and Deployments segment to grow >50% (grew ~113% in 2024). However, we expect Tesla’s automotive business growth to be partially offset by tariffs, and the likely removal the EV tax credit, both of which we expect will have a material impact to the industry.

We also expect a mild 1Q, driven by lower demand in Europe and increased competition in China, plus some negative sentiment from Elon’s polarizing politics. Recall revenues from China, and other regions accounted for ~21% and ~30% of total revenues, respectively, in FY24. Overall we are bullish after our factory visit, and after the recent market selloff and share underperformance. We see future revenue upside from FSD, Robotaxi, Energy Storage & Deployment, and Optimus Bots, to be fundamental to TSLA’s thesis over the long term

Bullish on Self-Driving: While Waymo is currently the market leader in autonomous ride-sharing in the U.S. (offers >150,000 trips per week across several cities), we believe TSLA can quickly capture market share once it introduces its cybercab. Waymo’s vehicles have reported >25M cumulative autonomous miles driven on public roadways as of 12/2024. TSLA on the other hand, has reported >3B cumulative autonomous miles driven (on supervised Full Self Driving FSD), as of January 2025. TSLA’s FSD software is currently priced at $8,000, or via a monthly subscription fee of $99. During the Tour, we test-drove Tesla’s latest FSD (v.13.2.8), and are encouraged ahead of commercialization of its robotaxi segment. Additionally, recall that President Trump’s Administration previously discussed plans to potentially establish a federal framework for self-driving vehicles in the U.S. If implemented, then we see Tesla as a major beneficiary.

Sheppard is clearly in a tricky position here: Lutnick’s increasingly close ties to Musk and Trump mean Cantor’s Tesla coverage will from now on invite accusations of cosiness.

Lutnick divested his business interests in Cantor Fitzgerald upon becoming Trump’s secretary of commerce precisely to avoid any potential conflicts of interest. His sons Brandon and Kyle were promoted to chair and executive vice chair at the same time. 

—

Elsewhere in Tesla sellside, Wedbush permabull Dan Ives has been wobbling. Here are a few extracts from a note he sent out late on Wednesday:

Tesla is Musk and Musk is Tesla….they are synonymous and attached together and cannot be separated. For the last 15 years Musk has guided Tesla through many challenges to build Tesla into the global brand it has become today. We have been there for the ride with many ups and downs and defended the stock again and again over the years as we have firmly believed Tesla is the best disruptive technology player in the world.

Lets call it like it is: Tesla is going through a crisis and there is one person who can fix it….Musk. If you agree or disagree with DOGE it misses the point that by Musk spending 110% of his time with DOGE (and not as Tesla CEO) since President Trump got back into the White House this has essentially turned Tesla into a political symbol….and this is a bad thing.

Who’da thunk it?

This is a moment of truth for Musk and there are 2 things Elon needs to do to end this crisis and make sure it does not snowball into a much more black swan event for the Tesla brand over the coming years. As someone who is a core bull and believer in the Telsa [sic] long term growth story…..I loudly urge Musk and the Board to step up, stop being silent, and help resolve this crisis forming at Tesla.

Sounds dramatic! What exactly is the plan, Dan?

The 2 Things Musk Must Do in the Next Few Months To Stop This Crisis

1) Formally announce Musk is going to balance DOGE and being Tesla CEO. Musk needs to make a statement and his actions speak louder than words. We would expect this to happen either before or during the 1Q earnings conference call in early May. Investors need to see Musk take a step back and balance his DOGE and Tesla CEO roles…if he does this the heat from Musk around DOGE will start to dissipate among most of the critics and this will leave a scar for Tesla,….but not permanent brand damage.

2) Give the roadmap and timing for the new lower cost vehicles to be released into the market in 2025 along with the unsupervised FSD roll-out in Austin in June. With a Model Y refresh, inventory issues, and a host of demand issues with Musk brand damage a worry…there is one person Tesla investors need to hear from…Musk.

Ah, right. The fix is for Musk to keep on doing what he’s doing. But it’s all about balance. Because “his actions speak louder than words”, Musk needs to also tell Tesla investors things they might want to hear, maybe on an earnings call.

In the meantime, downgrade to . . . ?

We maintain our OUTPERFORM and $550 price target and remain firmly bullish on Tesla….but Musk needs to change course here…Tesla’s future depends on it.

Great stuff.

(Addendum snark by Bryce Elder)