A well-known Tesla bull and Future Fund's Managing Partner, Gary Black, on Wednesday reiterated his views that advertising can jumpstart Tesla Inc.'s
What Happened: A social-media user referred to a Tesla influencer's post about the Elon Musk-led company handing over Cybertrucks to celebrities on priority over customers who preordered before them. The influencer said these celebrities with huge social-media following offer free advertising to the vehicle when they pose pictures with it and also potentially drive traffic to Tesla's website. These people in turn will see the merits of the rest of Tesla's products, he said.
Tagging Black, the X user who shared the Tesla influencer's post, said, "I think it's okay to currently be in a time period where for the first time ever if your products are that damn revolutionary. You can get away with spending $0 on ads."
Replying to him, the fund manager said Tesla could do both. "Why not do both? Get celebs and athletes to show off the Cybertruck for free, plus advertise your other products to expand your TAM to non-EV users?" he said.
"$100M in ad spend in lieu of $1B in price cuts seems like a great deal for $TSLA."
Why It's Important: Tesla's volume growth has slowed ever since higher interest rates began to bite consumers. The strategy the company devised to reinvigorate volume backfired. The series of price cuts Tesla announced since the start of 2023 did not produce the desired effect of lifting volume and instead eroded margins.
Hurt by this double whammy, the stock has been under pressure since the start of 2023. It has fallen over 31% year-to-date. More importantly, analysts do not expect a reprieve until the company launches a sub-$30,000 vehicle.
Black-run Future Fund's flagship exchange-traded fund - the Future Fund ETF
In premarket trading, Tesla rose 0.83% at $172.75, according to Benzinga Pro data.
