Motley Fool Hidden Gems Investing - Tesla Shareholders Are Nervous (They Should Be)

Episode Date: December 14, 2022

Tesla shares have been cut in half since April 14, the day Elon Musk announced his intention to buy Twitter. (0:21) Bill Mann discusses: - Delta Airlines projecting financial optimism in 2023 - Moderna shares up 20% this week after promising results from a skin cancer treatment trial in combination with Merck - Tesla shareholders being more nervous than before due to (among other things) Twitter taking more of CEO Elon Musk's time and attention (12:45) Ricky Mulvey talks with Jack Caporal from The Ascent about the most popular financial New Year's resolutions and tips for keeping them. For more data on The Ascent's survey on financial resolutioins, click here: https://www.fool.com/the-ascent/research/financial-new-years-resolutions/ Stocks mentioned: DAL, MRNA, MRK, TSLA Holiday Music: White Christmas by Sharon Jones & the Dap-Kings Host: Chris Hill Guests: Bill Mann, Jack Caporal Producer: Ricky Mulvey Engineers: Rick Engdahl, Tim Sparks Learn more about your ad choices. Visit megaphone.fm/adchoices

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Because we have your number. We've got encouraging news about a cancer treatment and an early look at financial New Year's resolutions. Motley Fool Money starts now. I'm Chris Hill. Joining me today, Motley Fool Senior Analyst, Bill Mann. Good to see you, my friend. Bill Mann. Hey, Chris. What's happening? Stuff is happening. Even though we are 10 days out from Christmas Eve, stuff is still happening. And we're going to start in the airline industry with Delta coming out and saying, 2023 is going to be really good for us.

We back. We are back. And anyone who has tried to buy airline tickets in 2022 is probably aware that prices have gone up. And look, if you're a Delta shareholder, you're probably pretty happy. If you're trying to buy airline tickets, maybe not so much. But one of the things we have talked about all year long is how there's not really any great incentive for company executives to come out and raise guidance in any significant way, which I think, to me anyway, makes it all the more remarkable that Delta basically came out and said, we think our earnings in 2023 are going to be about double what we've had. Which is pretty good. Yeah. Ed Bastian, the CEO, those were his comments,

also said that they expected revenues increasing 20%, which is how that works with any industry that has a high degree of operating leverage. Planes take off and most of the weight is the plane itself. Most of the fuel cost is getting the plane up and so everything else is somewhat incremental. So, a 20% gain in revenues, they believe, will equal nearly a doubling of revenues. So, really, really good news for Delta. Really good news for Delta. And I'm wondering, however, if this is going to be one of those points in time that we look back upon at some point in the future if Delta or another major airline gets into some kind of financial trouble and is looking for a bailout, because not that I'm wishing bankruptcy for any business,

but this is one of those things where it's like, if times are good for Delta, that's great. I'm pretty sure there are some people on Capitol Hill who are going to remember this in the future. You know, it's funny that you put it that way. And we aren't really talking about the wider airline industry. What Delta is saying is that everyone is coming back at once, vacationers are coming back, business travel is coming back. At the same exact time, United Airlines, also an airline, is having a pretty rough go of things. Fuel costs are much higher than they were a year ago. One of the things to keep in mind with Delta, and they got criticized for this a decade ago, they bought a refinery. Delta has an internal

hedge for fuel costs based upon a refinery that they get to use for their own purposes. So, yeah, I'm not sure what Congress would say. I mean, it is true, like if I bought another Delta ticket, probably their revenues would go up another 1%. That's how much they are. But Delta is uniquely, at this point, given the volatility in fuel prices, in a really good position. Let's move to the world of science. Shares of Moderna up around 20% so far this week. Moderna had a successful study of a skin cancer treatment that involved one of their vaccines

in combination with a cancer drug that Merck had produced. This is one of those things that's great across the board. It's obviously great for the shareholders involved. As someone who has dealt with skin cancer, this is good news. Yeah, for sure. Now, Moderna has come out and said that they have found with the study that they have just finished that there is a 44% reduction in risk of recurrence of cancer and death rather than just using the Merck drug Keytruda. Now, it's really important. To their credit, Moderna got out in front of this. There are certain components and caveats to the trials that they have done. So, they are not saying in any way, this is that. What they are saying is, basically, the promise of Moderna and mRNA

technology is really getting to the point of something that we've heard about for a long time, which is personalized treatment for cancer. And so, seeing that type of evidence is really, really promising to old guys like you and me, but also to medicine in general, because cancer is a very, very unique disease in that it is something that if you ask someone, an oncologist, they'll say, you know, every heart attack has similarities, but your cancer is your own. And so, this is a great promise and something that the entire industry has looked to for a long time. When it comes to investing in these types of businesses, what do you think is important for people to keep in mind? Because, you know, as you said, and thank you for the caveats around the trial.

I mean, one of the things I noticed was, I believe the number of people in this study was either 100 or 150, I mean, it was not a big number, it was promising results, but nothing that wouldn't warrant larger testing down the line. In terms of these types of businesses, what do you tell people? That's a really good question. The primary caveat around this is that the trial was somewhat small. With a Phase II trial, they don't actually have to hit statistical significance in order to be able to make certain assumptions of what they're seeing. What I would suggest is true about drug development in general is that it is massively, massively capital-intensive.

A lot of times, I think people think they've got to get in really, really early with super bleeding edge biotech companies. If you really wanted to play something like this, although Moderna has done very well, you might just want to play Merck, one of the monster companies, one of the largest companies in the world by market cap, but they're going to benefit as well. So I think that one of the primary things that people need to think about when it comes to biotech companies is that it is a really, really high failure, low hit investing path. There are people who can do it and who are very good at it. But I would be very cautious taking any extrapolations from headlines. Before I let you get back to your

day job, I do want to get your thoughts on Tesla, because I tweeted out earlier this week that since April 14th, which is when Elon Musk announced he was going to buy Twitter, of Tesla have been cut in half. And I know there are a lot of other factors involved in a share price dropping. It's not a direct cause and effect kind of situation. But I have to imagine that Tesla shareholders would prefer that Elon Musk spend more time on that company and less time on his newest company. Right. How much do you need to lose with this before your play thing? You're talking about a trillion-dollar company at its peak versus one that he probably overpaid for at $44 billion. So, yes, I think that Tesla shareholders are very accustomed to dealing with

the fact that they get only a percentage of the attention of Elon Musk, the CEO. He's got SpaceX, he's got the Boring Company. He had SolarCity at one time. So this is just how he operates. I will say, and you made this caveat as well, because I have seen a lot of people make the case saying that his involvement in Twitter has been a direct drag on Tesla shares. It's really important for people to remember that we don't actually know what makes share prices go up in town. And so making that one-to-one, I think, is a little bit of a mistake. I will say that it is pretty clear that the lack of attention that he seems to be paying to Tesla is making a lot more true believer investors much more nervous than they have

been in years. Bill Mann, always great talking to you. Thanks for being here. Thanks, Chris. If you're thinking about a financial resolution in the new year, you may want to head to the App Store. Jack Caperell from The Ascent joins Ricky Mulvey to talk about the most popular financial New Year's resolutions, and some tips from those who keep them. About two-thirds of Americans have got financial resolutions for 2023. There might be a spoiler coming. Joining us now is The Ascent's Jack Capril. Good to see you. Hey, Ricky. It's great to be back on the show.

So, tell me, what are the financial resolutions that the Americans are making? Us Americans. I'm an American too. Well, then you might have a financial resolution. The Ascent found that the most common financial resolution for the coming year is to pay off debt. Americans, they're also focused on saving for a big financial milestone, like buying a house or a car, expanding their family. They want to build their emergency savings, and they're also trying to increase their salary. Ricky mentioned a spoiler at the top, spoiler alert. That spoiler is that most of them are concerned about inflation getting in the way of their goals, although that may be changing, right?

Hopefully. How do those goals change by age? Sure. So by age, younger generations are more concerned about saving for a big milestone than older generation. That makes sense. When you're younger, you're starting to lay the financial groundwork for what's to come, a wedding, a down payment on a house, getting ready to support a kid. On the other hand, older generations were more likely to choose a resolution that involves paying off debt, building emergency savings, and also saving for retirement. I found that to be a little surprising. It seems more likely that young folks with less disposable income could be more likely to fall into credit card debt or have some personal debt. And it was

a little bit odd to me that older folks might still be focused on emergency savings and saving for retirement, because those are things that, of course, we want to start doing early on. And then finally, investing more. That's a resolution that tilts towards younger Americans. I think that's natural, given that older Americans might not feel so they have as much time to see investments deliver returns. Well, I mean, if you're older, you might have kids, you might have a house, you might have a car. So that emergency fund might be more of a priority. And 40% of people are still living paycheck to paycheck. So I wouldn't write that off. How are the younger folks trying to invest? Because research from your colleague, Dan Albright,

basically found that the Gen Zers still like their crypto and pot stocks. Sure. So The Motley Fool found that in addition to crypto and pot stocks, Gen Z and millennials, they also lean towards investing in companies in the financial sector, energy, real estate, and tech. Younger generations also want to build larger portfolios. So 10 or more stocks are what they believe to be a strong portfolio and prioritize investing for the long term. We'd love to see that. It suggests that younger generations are leaning into foolish investing principles, even if they don't know it. You mentioned crypto. I'm really curious to see how the results change in our next couple of crypto surveys, given everything that's happened in that space in recent months. Haven't heard. Can't wait to find out. Only 20% of Americans with financial resolutions say they're confident they're going to be able to keep their resolution. Is it just inflation they're worried about or what else? The data suggests that inflation is the biggest factor. So we asked folks who weren't optimistic about keeping their resolution why they felt that

way. And the largest concern was just that their resolution would become too expensive to keep. So obviously that's related to inflation. There was also some concern about the ability to build the habits necessary to keep their resolution. And I think that's something that could be made more difficult when keeping that resolution just becomes more expensive. Survey also asked about buy now, pay later. Just 5% of those with debt are concerned about buy now, pay later expenses. That seems a little small. Were you surprised by that answer? Ricky, I took it as a positive sign. I think buy now, pay later is a little bit fickle. Paying on time doesn't boost your credit score, but missing payments can harm it and add late fees or interest.

So it's a little bit like a credit card, maybe without upside. I think there's a numbers game happening here as well. We do an annual survey on buy now, pay later. One question we ask is what your monthly buy now, pay later payment average is out to be. For most folks, it's under $100, that's definitely lower than most other types of debt, credit card debt, personal loan debt, mortgage payment, et cetera. So you're going to be less likely to make a full-on New Year's resolution about $100 worth of debt. I think that's good news that folks aren't relying on buy now, pay later for big purchases. Yeah, still a little concerning that 40% of people in a Forbes survey said that they used buy now, pay later for purchases under $100.

dollars. Curious to see what the network effects of that will be going forward. Also asked successful resolutioners how they stuck to their financial goals. What were the budgeting apps, tips, tricks they got? We found that most folks do intend to use an app or some tool to help stick with their goals. The one that I personally like the most is Mint. It aggregates all of your accounts so you can see the value of all of your accounts, where your money is going, what you're spending on all in one place. So you don't have to kind of flip between five or six different apps. So I use that plus just good old fashioned spreadsheet to track my recurring expenses. And the other thing that I do that we also have recommendations for is to automate as many

transactions as possible. So if I have a savings goal, just take a chunk of money out of my paycheck automatically every month, put it in my savings. If I have investing goals, automate how much I want to invest every month, throw it into the market. Automation just makes reaching your goals and just managing your money so much simpler and less stressful because again, you're not dealing with every single transfer transaction. You talked a lot about the money goals, but you personally got any New Year's resolutions outside of the financial stuff, Jack? Rookie, we're both in Denver. You're recording this from the Denver office, it looks like. Allegedly. I can confirm we're both in Denver.

and that probably makes both of us skiers or snowboarders. I would imagine I've got the ski bug. Um, I've got some new year's resolutions related to skiing, tackling some more difficult terrain, number of days on the mountain, that type of thing. We'll see if I get there. How about you falling less in 2023 is always a good idea. This might sound a little lame, but I moved out here about a year ago and I haven't really like been involved with, with my community. And I'm going to try to do that a little bit more in 2023. In addition to treating social media, less like a game, being a little less reactive, I think, might be good for the blood pressure. Jack Capril from The Ascent, always good chatting with you. Thanks for coming on Motley Fool Money.

My pleasure. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow. Christmas, with every Christmas card I got, oh yeah May your days, may your days be merry and bright Oh yeah, oh oh, and may all, all your Christmas

It's every wine Oh, yeah Oh, I'm dreaming, I'm dreaming of a wine It's every wine