Apr 2024 - A swift recap on Unity & Tesla
It has been an eventful month and to be quite frank I am a little behind on everything. This post will be another short post and I will forego giving Microsoft (MSFT) the praise they deserve, for a perfectly excellent, boring earnings report. Instead I will focus on what happened at Tesla (TSLA) as well as some grand news out of Unity (U).
Moves
No active moves were made this month.
Performance
My portfolio value decreased by 3.01% in the month of April, perfectly in line with the Dow Jones World Index down the same amount.
Dividend overview
| Name (Ticker) | Received | Amount (USD) |
| Broadcom (AVGO) | Apr 2nd | $31.57 |
| Taiwan Semiconductor (TSM) | Apr 12th | $54.77 |
| Total | Apr 2024 | $86.34 |
I received a total of $86.34 in dividends before taxes for April 2024, a decrease of 32.15% compared to the same month last year at $127.25.
Commentary & Review
Unity finally found a new CEO
Now, technically this is cheating as this event occurred on the 1st of May. However, since this is a huge deal in my investment universe, I thought I would be remiss to not cover it given my delay in posting.
Following 8 months of uncertainty since John Riccitiello got the boot the Unity board of directors finally managed to find a new man for the job: Matthew Bromberg, former COO of Zynga and former Group General Manager of Bioware. He is/was also on the board of several well-known companies, such as Fitbit, Bumble as well being Senior Director at Blackstone (BX).
It is clear that the Unity board has a type; At first glance, his background actually reminiscent of John Riccitiello’s. However, judging from the first couple of interviews I have seen with him online, I do not think we should judge too soon. His approach seems refreshing and much more nuanced, although deeply grounded in an operations mindset. Fortunately, he is also more than a decade younger than John, which I see as a plus.
But I cannot quite say figure out what to expect from him. I was a BIG fan of Interim CEO Jim Whitehurst’s product focused strategy and had honestly hoped he would stay on as CEO. But Bromberg seems solid too, in a different way and while most about him is still unknown, I think we can give him the benefit of the doubt. In either case, this is a fresh start, which might help morale, as Whitehurst did executive a whole lot of very harsh (necessary) reductions in workforce and product portfolio. Thankfully Whitehurst will transition to Executive Chair of the board, which I think can do a lot of good.
On May 9th Bromberg will debut on the earnings call, and I am very excited to see how he performs. On a side note Marc Whitten who I also considered a viable pick for the CEO position at Unity was recently promoted to Chief Product and Technology Officer of Create.
Bromberg will set the direction of this company for the next many years to come, so this is indeed a huge moment for the stock. Let us see what new long-term leadership can do for this company, sitting on one what I believe to be a tool massively important for the future.
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Tesla for a long-awaited comeback.
While Tesla’s numbers actually just slightly missed, sentiment was so negative and expectations so low that the release of the report immediately resulted in a big surge for the stock. There is no getting around it, however - this was a tough quarter for the automotive business. Tough overall for the entire industry, but amplified at Tesla by several unfortunate events, including a terrorist attack on the Berlin Gigafactory, local conflict bottlenecking the Red Sea, and the simultaneous ramp of two vehicles in the US (Cybertruck and refreshed Model 3).
But in many other ways, this was a great report. The energy business has grown massively and is now nearing 10% of total revenue - even as Solar continues to disappoint. From how I categorize this stock and from what I have said in the past, it should be clear to everyone who follows along that this something I am hugely excited about. Energy storage is so important for the future of renewable energy sources and Tesla has a massive advantage here. Now, I wish Solar would make a comeback, but I do not expect it to, until the day Optimus can automate installations…
Speaking of, Optimus appears a viable product much sooner than I had expected. Even accounting for “Elon-time” (super optimistic timelines) I come away impressed by comments and demos on its current capabilities. Musk expects to deploy these robots in factories very soon and start selling them within a few years. Even if this takes 5 years longer, it is still far ahead of any timeline I had considered.
But comments about Full Self Driving is probably what got investors most excited. It was not anything new, really, but it is reassuring to me, seeing concepts for a Tesla Ride hailing service presented in this report.
These concepts showcase an extension of the current Tesla app, functioning much like Uber, with a 3D map and the ability to adjust climate controls prior to pickup.
Once again, Musk mentioned that a third party license deal for FSD was in the works - and this time in less uncertain terms. Many speculate it to be Ford (F), however recent talk is pointing towards BYD (2594) as an obvious partner, given their dominance in China, lack of any kind of self-driving technology and an existing (battery related) partnership between the two companies. Only a few days later, Tesla was granted approval for FSD in China through a collaboration with Baidu, which will provide local maps data. This sent the stock on another rocket launch, regaining 38% in less than a week.
Finally, things were settled surrounding the recent Reuters rumor that Tesla’s had plans to scrap its low cost model entirely. It seems the truth is that the Next Generation Platform will reserved for the Robotaxi for now, while other low-cost measures developed will be coming to current production lines. In what form remains uncertain for now, but we should be seeing things happen as soon as next year. This approach is less ambitious, but also far less risky, pushing the timeline much ahead!
I apologize for once again submitting a short update for my Investment Journal. If you crave more from me, I did do another live Q&A with Mads Christiansen about two weeks ago. Watch the recording here (complete with timestamps for each topic) for thoughts on recent volatility and semiconductor picks.
Watch List
Changes to the Watch List this month: I have removed Embracer (EMBRAC B) as the company has now effectively failed in its long-term objective, creating lasting synergies through consolidation of smaller game studios. The company has announced it will split up into three separate public companies, offloading a ton of debt on board game group Asmodee, while Middle-earth Enterprises and Coffee Stain got the better end of the deal.
My Watch List sorts stock by sector and notes are included for each one, describing my interest and reservations. The status indicates the likelihood of a position being added to my portfolio. ‘Watching’ means I just keep an eye on them, whereas ‘Top Pick’ means they are very likely to find their way into my portfolio at one point - ‘Under consideration' means somewhere in between, with notes offering some elaborating thoughts. Please note my Watch List is based on my own research and goals and is in no way a recommendation of what to buy.
| Sector | Name (Ticker) | Status | Notes |
|---|---|---|---|
| Healthcare | Gubra (GUBRA) | Under consideration | Hidden gem, versatile, familiar, though unprofitable |
| Merck & Co (MRK) | Watching | Casual interest, limited familiarity | |
| Medtronic (MDT) | Watching | Casual interest, limited familiarity, attractive dividend | |
| Industrials/Manufacturing | DSV (DSV) | Watching | Interesting strategic M&A expansion, great execution, automation opportunity |
| Elkem (ELK) | Top Pick | Cyclical industry, but well positioned to break out | |
| Otis (OTIS) | Top Pick | Potential dividend growth play, familiar | |
| Norsk Hydro (NHY) | Watching | Casual interest, limited familiarity, attractive dividend | |
| Lockheed Martin (LMT) | Watching | Ethical concerns, too expensive | |
| Corning (CLW) | Watching | Weakening moat, rising competition, familiar | |
| Consumer | McDonalds (MCD) | Watching | Strong brand, limited optionality |
| LVMH Moët Hennessy Louis Vuitton (MOH) | Under consideration | Strong leadership, performance, too expensive | |
| Coca-Cola (KO) | Under consideration | Strong brand, stable giant, too concentrated, familiar | |
| PepsiCo (PEP) | Under consideration | Strong brand, well diversified, familiar | |
| Tapestry (TPR) | Under Consideration | Interesting recent acquisition, high debt, cheap | |
| Grab (GRAB) | Watching | Great business synergies, interesting market, unprofitable | |
| DoorDash (DASH) | Watching | Automation opportunity, strong marketshare, unprofitable | |
| Energy/Utilities | Ørsted (ORSTED) | Top Pick | Strong positioning, leadership, familiar |
| NextEra energy (NEE) | Watching | Strong position, too concentrated, too expensive | |
| Enphase Energy (ENPH) | Watching | Rising star, limited familiarity | |
| Sea (SE) | Watching | Core business weakening, innovator, just turned profitable | |
| Palantir (PLTR) | Watching | Amazing tech, highly dilutive, unprofitable, opaque | |
| Meta (META) | Watching | Strong leadership and userbase, undergoing big change | |
| Mercado Libre (MELI) | Watching | Great execution, growing market, too expensive | |
| Shopify (SHOP) | Watching | Innovator, well positioned, unprofitable | |
| Xiaomi (1810) | Watching | Fast innovator, China risk, previously owned | |
| Nvidia (NVDA) | Watching | Strong brand and leadership, too expensive, previously owned | |
| Finance | Coinbase (COIN) | Under consideration | Strong brand and leadership, unprofitable, previously owned |
| BlackRock (BLK) | Under consideration | Strong execution, exposed to the economy, attractive dividend | |
| SoFi Technologies (SOFI) | Watching | Strong leadership, innovator, unprofitable | |
| NuBank (NU) | Watching | Great execution, interesting market opportunity | |
| JP Morgan Chase (JP) | Watching | Stable giant, overlapping industry with holding | |
| Manulife Financial (MFC) | Watching | Stable giant, attractive dividend, limited familiarity |
Disclaimer: I am not a financial advisor, the opinions expressed in this article are entirely my own – always invest at your own risk.
