Gary Black Tracker
Daily quotes, trades and insights from Gary Black.
Daily quotes, trades and insights from Gary Black.
Gary Black Tracker
Cover story in Barron’s today about SpaceX IPO summarizing the history of megacap IPOs. I tend to agree that while $SpaceX(SPCX.US) is likely to be overpriced at $2T valuation vs 2025 EBITDA of $6.6B (SPCX EV/EBITDA 300x, $Tesla(TSLA.US) 150x) and 2025 Revs of $18.7B (SPCX EV/Rev 107x, $Tesla(TSLA.US) 16.5x), the relatively low % float to be issued in the SPCX IPO (4%), the fact that NDX and S&P 500 will fast track how quickly SPCX can join its indices, and the distribution power of GS and MS as the two lead bankers should be enough to engineer a first day IPO pop for investors who are allocated shares.
SpaceX IPO Is a Game You Should Play at Your Own Risk (WSJ subscription required)I don’t know of a single company with a $2T market cap that doesn’t make money. That should give potential $SpaceX(SPCX.US) investors pause. $Tesla(TSLA.US)
Not that interested in $SpaceX(SPCX.US). I don’t know of any $2T market cap companies that trade at 300x EBiTDA. Given all the hype, likely to be way overpriced. Will be more interested after it falls by 50%.
Brent crude -4.4% to $106/bbl as Trump cites “final stages” of U.S.-Iran peace talks, pushing 10yrTY down -8.7bp to 4.58%. This is causing long-duration (high P/E) stocks like $Tesla(TSLA.US) to rise today, reversing the trends of the past few days.
In shorting stocks, it’s far better to short a company with deteriorating fundamentals than a rich valuation. Deteriorating fundamentals mean a bad business model where volumes are declining, or there’s no innovation, or management can’t execute, or there’s a loss in pricing power because of excess competition and a lack of differentiated products.
In my experience there are too many PMs and analysts in the industry with mainly financial backgrounds who pay little or no attention to fundamentals and rely instead on valuations and short term estimate trends to develop short ideas rather than try to determine whether a company with a hot new product can turn around stagnating comps when rising comps are what drives the stock. Over and over again, getting a company’s fundamentals right beats valuation insight.We would not short $Tesla(TSLA.US) even though its base business (EVs) seems to be deteriorating (2026 will be third consecutive down year for deliveries) while the overall EV industry is growing at 20-25% per year in units. TSLA mgmt’s strategy to use zero interest rate and promotional incentives instead of communicating its competitive advantages directly to consumers is clearly not working but with generalized unsupervised autonomy technology about to transform the industry, TSLA is likely to offset declines in its base EV business with new autonomous revenue streams. While TSLA’s 2026 P/E of 210x seems way extended vs +35% long-term earnings growth, we would not short TSLA stock on what are largely valuation grounds.$Cava(CAVA.US) +6% AH after posting 1Q SSS well in excess of Street ests (+9.7% vs +6.0%E) on the strength of its new pomegranate Salmon dish and raising its FY’26 outlook, defying restaurant downturn fears. All 1Q metrics beat ests. CAVA +13% short interest will add to strength on the beat.
1Q actual:- SSS +9.7% vs. +6.0% est- Revs $438.3M vs. $418.2M est- Adj Ebitda $61.7M vs. $57.3M est - CAVA restaurant-level profit margin 25.1% vs. 25.0% est- Net new Cava restaurant openings 20 vs 17 est- Adj EPS $.20 vs $.17 estFY’26 guidance:- Sees SSS +4.5% to +6.5% vs +4.95% est, saw +3% to +5%- Sees Adj Ebitda $181M - $191M vs $186.9M est, previous $176M-$184M est - Sees net new Cava restaurant openings 75 to 77, vs 76 est- Sees CAVA restaurant-level profit margin 23.7% to 24.3%, vs 24.0% estCommentary:- CEO Brett Schulman: These results, which include the lap of strong prior year comparisons, speak to the structural strength of our business, the resonance of our compelling value proposition, and our position as the dominant leader in Mediterranean – all of which fuel our confidence to sustain this momentum going forward .”Conf call 5pm.President Trump faces a conundrum: How to reopen the Straight of Hormuz, lower global energy prices and wind down an increasingly unpopular conflict that has caused the biggest oil supply disruptionin history ahead of midterm elections in November.
Brent crude has jumped 50% since the start of the war, with traders fearing a fresh escalation in hostilities between the US and Iran after Trump’s visit to China failed to yield any concrete progress on a plan to restart the Strait of Hormuz.10year TYs have risen from below 4.0% at the end of February to 4.59% today, which reduces the valuation support for all equities, but particularly long duration equities such as $Tesla(TSLA.US). President Trump has no one to blame for this situation but himself. If oil and int rates stay high through November, the Republicans can blame Trump for losing the House or the Senate or both in the mid-term elections.Money markets now assuming a Fed funds rate HIKE of +25bp by March 2027, which seems absurd given that the U.S.-Iran war will likely be long over by then and if history repeats, brent crude falls back to the $70/bbl range as it did in 2022 within 9-12 months after Russia invaded Ukraine. Too many investors are blindly extrapolating out the current environment rather than thinking logically through what happens next with midterm elections in November.
Stocks fell sharply (SPX -1.1%, NDX -1.6%) pre-market as surging global inflation triggered a bond selloff, halting the AI-driven rally. Brent crude jumped +3.3% to $109/bbl, pushing 10-year U.S. treasury yields above the forward S&P earnings yield for the first time since early 2024 and before that the 2000
The forward S&P 500 earnings yield is typically higher than the 10year U.S. treasury yield in most periods, reflecting a positive equity risk premium. As of this morning, this is no longer the case, with the 10-year U.S. treasury yield of 4.54% now higher than the forward S&P earnings yield of 4.50% (inverse of S&P500 2026 P/E of 22.2x) for the first time since early 2024, and prior to that the 2000 dot com bubble. This is likely triggering today’s equity weakness as 10-year treasury yields surge.
$Hims & Hers Health(HIMS.US) -10% AH after posting 1Q results below consensus and lower than expected 2Q and FY’26 EBITDA guidance. With GLP-1 competition intensifying, I expect HIMS selling pressures to continue although favorable FY’26 rev guidance and 30% short interest limits upside from shorting.
1Q results:- Rev $608.1M vs $617.5M est- EBITDA $44.3M vs $46.1M est- GM 65.0% vs 71.7% Est- EPS -$.40 vs +$.02 est (negative for the first time since 2023 3Q).2Q guidance:- Rev $680-$700M vs $644.5M est- EBITDA $35-$55M vs $70.1M estFY’26 guidance:- Rev $2.8B-$3.0B vs $2.75B est- EBITDA $275-$350M vs $319M est and $300-$375M prior guideImportantly, investors accept management’s optimism that HIMS rev growth will re-accelerate from +4% YoY in 1Q to 18-20% over the next few quarters. I’m skeptical.See today’s pre-mkt summary for Subscribers, where I have correctly predicted that equity markets would surge to new records on the back of strong AI earnings despite continued fighting in the Middle East. I expect S&P 500 earnings to rise +19% YoY to $330, representing a 2026 P/E of 22.4x, which implies a 2026 earnings yield of 4.5%, a slight premium to 10-year treasury yields, in line with historic spreads vs treasuries over the past 60 years.
AI Wins Have Alphabet Poised to Become World’s Biggest Company
▪Alphabet Inc. has become a dominant player in the AI technology market, with a significant presence in nearly every aspect of the technology.▪The company's market capitalization has been gaining on Nvidia Corp.'s, with Alphabet's stock price soaring 43% since October 31, while Nvidia's is up just 6.3%.▪Investors say Alphabet's diversified businesses, including Google Search, Google Cloud, YouTube, and Waymo, put it in a prime position to be the biggest winner in the AI trade, and potentially overtake Nvidia as the largest company in the world.By Ryan Vlastelica05/10/2026 08:00:07 (Bloomberg) -- Over the past year, Alphabet Inc.( $Alphabet(GOOGL.US)) has gone from an artificial intelligence afterthought to the one firm in the market with dominant positions in nearly every aspect of the technology. Now it’s on the brink of overtaking AI chip giant Nvidia Corp. as the largest company in the world.“Alphabet holds a significant spot in almost every corner of the AI ecosystem, and the combination of everything it offers puts it in a prime position to be the biggest winner of AI,” said Luke O’Neill, chief investment officer at CooksonPeirce Wealth Management, which owns stakes in Alphabet and Nvidia.Google’s parent closed Friday with a market capitalization of $4.8 trillion. Nvidia was below that level on Tuesday, but a three-day rally into the end of the week pushed it to $5.2 trillion. The gap between the two has narrowed considerably over the past six months, as Alphabet shares have been on a tear, including a 34% gain in April, its best month since 2004. On Oct. 31, Nvidia’s market capitalization was $4.9 trillion and Alphabet’s was less than $3.4 trillion. Since then, Alphabet’s stock price has soared 43% while Nvidia’s is up just 6.3%, trailing the S&P 500 Index and the tech-heavy Nasdaq 100 Index. Investors say it’s logical that Alphabet would ultimately seize the title of world’s largest company because its tentacles reach into so many important parts of the technology industry and the AI trade. Nvidia may be the leader in building AI chips, but Alphabet has a rival product that’s gaining favor. It also owns a bunch of massive businesses like Google Search, Google Cloud, YouTube and Waymo. In addition, Alphabet’s Gemini AI model is considered one of the best in the industry, and the company is a significant investor in Anthropic, which has another leading model in Claude.“Nvidia is a great company, but it has the potential to be far more cyclical should AI spending slow down,” O’Neill said. “Alphabet is so diversified that if one business falters, the others can pick up the slack. You can’t get a wider competitive moat than Alphabet has, and it seems like THE company of the internet era. So it would make sense if it were the biggest.”Read More: Nvidia Stock Falls Behind as Big Tech Rivals Enter Its TerritoryAlphabet was the biggest stock in the market in early 2016 when it briefly surpassed Apple. As of Friday, Apple’s market cap is $4.3 trillion, followed by Microsoft Corp. at $3.1 trillion andI asked Grok who were the ten most influential $Tesla(TSLA.US) analysts and content providers on X over the past year. The answer didn’t change much whether I asked for the ten “most influential” vs “most credible” vs “best”. Here was Grok’s response.
From my pre-mkt summary for Subscribers this morning: $Tesla(TSLA.US) +1.1% again this morning to $416 after rising +5.7% the past two days after showing significant year-over-year gains in April in China and several European countries, as global oil prices have surged.
Despite likely continued near-term momentum fueled by rising oil prices I remain cautious on $Tesla(TSLA.US) given the company’s disappointing FY’26 outlook following robust 1Q earnings. 2026-30 earnings ests continue to decline and investors are coming to the realization that other manufacturers will also solve for unsupervised autonomy over the next 12 months. $Alphabet - C(GOOG.US) $Baidu(BIDU.US) $WeRide(WRD.US) $Pony AI(PONY.US) and $Amazon(AMZN.US) are now completing 1.0M paid unsupervised autonomous rides per week without safety monitors. I have no position in TSLA due to its extended valuation (2026 P/E 220x vs +36% long-term EPS growth, 6.0x PEG).$Celsius(CELH.US) +6% today on stronger than expected 1Q earnings, driven by distribution gains from recent acquisitions Alani Nu (targeted toward women) and Rockstar (targeted toward men). 2027 rev and eps ests appear to be turning positive, and the stock has never sold at such a cheap forward P/E (20x) or EV/Ebitda (14x) relative to long-term forward growth (rev +8%, EBITDA +10%, EPS +15%).
$Doordash(DASH.US) +11% AH as 2Q gross order value guidance exceeded expectations and 1Q results came in line. This is similar to $Uber Tech(UBER.US) who also guided higher for 2Q gross bookings after posting in-line results for 1Q.
2Q Guidance:- Marketplace gross order value $32.4B - $33.4B vs $32.25 billion est.- Adj Ebitda $770M-$870M vs $830M est.1Q Results:- Marketplace gross order value $31.6B +37% y/y, vs $31.21B est- Rev $4.04B, +33% y/y, vs $4.15B est- EPS 42c vs. 37c est- Adj Ebitda $754M vs $741.4M est- Adj gross margin 51.9% vs. 51.1% est- Orders 933M vs 942.25M est- Free cash flow $420M vs $631.2M estCOMMENTARY AND CONTEXT- We continue to expect Deliveroo to contribute approximately $200 million to our Adjusted EBITDA in 2026"- 2Q EBiTDA guidance included gross cost of the Dasher gas relief program of $50M, funded at least partially by adjusting investments in other areaDASH continues to look compelling at a FY’26 P/E of 33x and FY’26 EV/EBITDA of 19x, vs 5-year forward rev growth of +20% CAGR and 5-year forward EBITDA growth of +25% CAGR.Conf call 430pm ET$FRESHPET(FRPT.US) -6% today after delivering FY’26 guidance largely in line with consensus after adjusting for the 1Q rev beat. Specifically, FRPT sees deceleration in FY 2026 rev growth of +8%-11% vs +7-10% prior guidance and vs +9% consensus, and no change in its FY’26 EBITDA forecast of $205M-$215M vs $211M est, despite +13% rev growth in 1Q (vs +11% exp), and a modest beat in 1Q EBITDA ($37.9M vs $36.9M consensus). 2Q consumption trends continue to decelerate from 1Q (see below), and with a likely tough 3Q compare (2025 3Q rev +14%) due to last year’s 3Q Sam’s Club buy-in, may explain mgmt’s relatively weak FY’26 rev guide (+8-11%) vs +13% in 1Q.
At a 2026 P/E of 42x and 2026 EV/EBITDA of 14x vs 5-year proj. rev growth of +9% and 5-year proj. EBITDA growth of +18%, FRPT is neither super-expensive nor super-cheap. With 13.1% short interest, the stock is becoming a crowded short.$Uber Tech(UBER.US) +9% pre-mkt after guiding to stronger than expected 2Q gross bookings and beating on 1Q gross bookings while narrowly missing on 1Q revs. The strong 2Q outlook signaled that robust demand from US travelers is likely to offset the impact from geopolitical tensions in the Middle East.
Uber’s core US rideshare business will “accelerate further” this year, CEO Dara Khosrowshahi said in prepared remarks. Heightened insurance costs, which had contributed to higher fares and weighed on the US business, have been moderating, leading to meaningfully improved trip growth in the hardest-hit markets, such as SFO and LA.Conference call 8am ET likely to focus on efforts to build out autonomous ride hailing capabilities with a growing stable of partners. 2Q FORECAST- Gross bookings $56.25B - $57.75B vs $56.23 B est.- Adj EPS 78c to 82c vs 80c est.- Adj Ebitda $2.7B - $2.8B vs $2.64B est1Q RESULTS- Gross bookings $53.72B, +25% y/y, vs $52.92B est - Mobility bookings $26.39B, +25% y/y, vs $25.82B est - Delivery bookings $25.99B, +28% y/y, vs $25.76B est - Revenue $13.20B, +14% y/y, vs $13.3B est- Adj Ebitda $2.48B vs $2.44B estimate - Ad EPS 72c vs 70c est- Trips 3.64B 20% y/y, vs 3.64B est - Monthly active platform consumers 199M +17% y/y, vs 198.45M estCommentary- CEO: “We expect the U.S. Mobility business to accelerate further in 2026”- “We continue to execute on our barbell strategy across the price spectrum. At the low end, we’re focused on affordability and access. In the core, we’re keeping prices stable through strong supply and product improvements”- “Reaching 50 million Uber One members is an exciting milestone as we execute against our platform strategy, with members now driving half of our Gross Bookings across Mobility and Delivery”Prepared remarks:Stocks rose Wednesday pre-market as oil and bond yields fell on reports that a US-Iran one-page MOU is nearing agreement to end the conflict and frame nuclear talks. Brent crude dropped 5.3% to $104. AMD surged 18% on strong AI-driven revenue outlook, lifting peers; GOOG rose on Anthropic’s $200B Google Cloud commitment. I expect equities to extend record highs once the Middle East conflict ends, with 2026 S&P 500 EPS now at $330 (+19% YoY). I remain cautious on TSLA due to declining estimates, increased autonomous competition, and an extended valuation relative to forward growth estimates.
Stocks edged higher pre-mkt after President Trump announced Project Freedom to guide neutral ships safely out of the Persian Gulf amid a fragile Iran ceasefire. Brent crude rose +1.4% to $110. Strong tech earnings, rising 2026 S&P EPS estimates ($325, +17% YoY), and a coming resolution to the Iran conflict support further record highs. $eBay(EBAY.US) surged 10% on $GameStop(GME.US) ‘s 56B buyout proposal. We remain cautious on $Tesla(TSLA.US) due to falling earnings estimates, increased competition in unsupervised autonomy and a stretched valuation relative to future expected growth.
My experience as a former CEO is that CapEx budgets start the year high with management’s best intentions to spend them, but then rarely get fully spent. As a former sell side analyst, I’ve observed that most companies don’t spend their full CapEx budgets. Among the big 4 hyper scalers ( $Alphabet - C(GOOG.US) $Microsoft(MSFT.US) $Meta Platforms(META.US) $Amazon(AMZN.US)) all except AMZN spent less in 1Q CapEx than WS expectations, and 1Q actuals were far lower than 1/4 of their current FY2026 CapEx budgets.
While I appreciate we’re in the early stages of an AI arms race, I also understand CEO and CFO human nature is to budget conservatively (and then beat), and convince their boards they are doing all they can do invest competitively in the AI arms race. As we get into 2H, I fully expect boards to revisit the ROIs on actual AI investments, and scale back if returns are below the companies’ cost of capital.Stocks held steady pre-market at record highs, with Brent crude up +1% to $111 on the ongoing U.S.-Iran conflict and closed Strait of Hormuz. Trump vowed to sustain the naval blockade to pressure Iran back to the bargaining table. $Apple(AAPL.US) surged +3.2% after forecasting 14-17% Q3 revenue growth, beating expectations. We see S&P 500 extending gains post-conflict, with 2026 EPS at $325 (+17% YoY) implying a 22x P/E. We remain cautious on $Tesla(TSLA.US) due to declining earnings estimates, rising autonomy competition, and a stretched valuation.