Below we take a look at Tesla Inc (TSLA) and 4 Other Consumer Discretionary Stocks That Have Wowed Billionaire Philippe Laffont. For our methodology and a more comprehensive list of the billionaire’s favorite stocks, please see Tesla Inc (TSLA) and 9 Other Consumer Discretionary Stocks That Have Wowed Billionaire Philippe Laffont.
5. Uber Technologies, Inc. (NYSE:UBER)
Value of Coatue Management‘s 13F Position: $323 million
Number of Hedge Fund Shareholders: 143
Hedge funds have become staunch supporters of Uber Technologies, Inc. (NYSE:UBER) since late-2019, with the stock consistently ranking among the 30 Most Popular Stocks Among Hedge Funds ever since. Philippe Laffont’s Coatue Management grew its UBER stake by 53% to 9.04 million shares during Q1, ranking it as the fund’s 14th-largest long position on March 31.
Uber Technologies, Inc. (NYSE:UBER) CEO Dara Khosrowshahi recently sent out an email to its employees detailing how the company was planning on scaling back on marketing and hiring, and describing the current economic landscape as one that was undergoing a “seismic shift”. Uber’s head honcho had previously declared that the company would be cash flow positive by the end of this year, so these moves appear to align with that strategy.
Rising fuel costs, which have jumped by nearly 50% in some areas over the past five months, have prompted Uber Technologies, Inc. (NYSE:UBER) to hike its fare prices in some regions, including the United Arab Emirates, where it’s hiked prices twice this year as gasoline prices surge. JPMorgan recently lowered its price target on Uber to $48 from $60, noting those rising fuel costs, in addition to slowing consumer spending and confidence.
4. Amazon.com, Inc. (NASDAQ:AMZN)
Value of Coatue Management‘s 13F Position: $494 million
Number of Hedge Fund Shareholders: 274
Coatue Management cut its position in Amazon.com, Inc. (NASDAQ:AMZN) by 44% during Q1, lowering its stake to 151,595 shares. Hedge fund ownership of the ecommerce giant took off at the start of the pandemic and hasn’t dropped below 250 since, with close to 30% of the group of select hedge funds that are tracked by Insider Monkey’s database being long AMZN.
Amazon.com, Inc. (NASDAQ:AMZN) is not only a compelling investment in terms of being the dominant ecommerce company in North America, but also as one of the leading AI companies, which is where Amazon’s future growth is likely to come. Amazon’s Web Services, which provides a variety of AI tools to customers, is already a massive cash cow for the company, generating $6.5 billion in operating income during Q1. And with the AI market expected to grow to $1.6 trillion within eight years, there’s likely plenty more of that in store for Amazon in the years to come.
The Polen Global Growth Fund is impressed with the way Amazon.com, Inc. (NASDAQ:AMZN) managed its way through the pandemic, having this to say about the company’s initiatives in its Q1 2022 investor letter:
“Amazon has done a terrific job managing through the pandemic, in our view. Many companies struggled to pivot their business model during COVID-19, which represented an existential threat.
Amazon had the opposite problem – a surge in demand. The company leaned into this by entering an extremely heavy investment cycle, doubling its fulfillment network and headcount over the past two years. To put this into context, Amazon added 273,000 employees in the last half of 2021 on top of over 400,000 employees the prior year. The company has also made significant Capital Expenditures, adding IT infrastructure for AWS and transportation capacity during this period. This all took place in the face of inflation related to wage increases and higher pricing from third-party carriers supporting the company’s fulfillment network. These heavy investments paid off—AWS grew 40% year over year, reached a $71B annual run rate, and total company revenue posted a two-year annual compounded growth rate of 25%. We believe this heavy investment cycle, like Amazon’s previous ones, will continue to support ongoing growth and will further separate Amazon from its competition while also providing the ability to increase margins through economies of scale. With respect to the margins specifically, AWS and Advertising – two fast-growing businesses – continue to contribute greater operating earnings to the overall business. We believe management has done an excellent job managing through this period and that the company is even stronger today than when COVID-19 first began to spread around the world.”
3. DoorDash, Inc. (NYSE:DASH)
Value of Coatue Management‘s 13F Position: $619 million
Number of Hedge Fund Shareholders: 52
Food delivery platform DoorDash, Inc. (NYSE:DASH) is yet another vehicle-related stock that Philippe Laffont loves, having raised his stake in the company by 81% during the first quarter to 5.28 million shares. While Laffont is slightly more bullish on DoorDash, hedge funds heavily favor the company’s food delivery rival Uber, which also operates a leading ride-sharing service. Nearly three-times as many funds are long UBER.
For its part, DoorDash, Inc. (NYSE:DASH) isn’t wilting in the face of a difficult economic backdrop. While the company does plan to slow hiring, with expectations that it will boost its headcount by between 10% and 15% this year, it’s continuing to march ahead with its global ambitions. DoorDash has rapidly expanded into 27 markets from just four, and recently spent $3.5 billion to acquire Finnish delivery service Wolt.
Despite the expansion, DoorDash, Inc. (NYSE:DASH)’s sales growth has quickly slackened, falling from more than 200% in Q1 of 2021 to just 35% growth a year later. The company is also facing other headwinds, including record high gas prices, and regulatory scrutiny concerning how much it pays its drivers. Seattle recently adopted legislation that requires companies like DoorDash and Uber to pay their drivers on a per-mile or per-minute rate, which can substantially raise their pay.
2. Rivian Automotive, Inc. (NASDAQ:RIVN)
Value of Coatue Management‘s 13F Position: $1.55 billion
Number of Hedge Fund Shareholders: 30
Philippe Laffont’s hedge fund has a gargantuan $1.55 billion investment in Rivian Automotive, Inc. (NASDAQ:RIVN) even after trimming the position by 13% during Q1. In contrast, numerous other hedge funds were selling off the electric vehicle maker during the quarter, as hedge fund ownership of RIVN fell by 36% one quarter after the company’s IPO. Among the sellers were Rob Citrone’s Discovery Capital and Steve Cohen’s Point72 Asset Management.
Rivian Automotive, Inc. (NASDAQ:RIVN) shares have been battered to the tune of 75% declines this year as investors worry that the timing isn’t right for the EV maker to be ramping up production. Like Lucid and XPeng, Rivian has already had to raise the price of its vehicles to offset rising materials costs. Unlike Lucid, Rivian has been able to maintain its 2022 production guidance of 25,000 vehicles thus far and has a strong backlog of orders, including an order for 100,000 delivery vans from Amazon.
The Baron Global Advantage Fund likes Rivian Automotive, Inc. (NASDAQ:RIVN) strong balance sheet as well as its prime opportunity going forward as the auto market further transitions towards EVs. The fund had this to say about the company in its Q1 2022 investor letter:
“Rivian Automotive, Inc. designs, manufactures, and sells consumer and commercial electric vehicles. Shares of Rivian continued its volatile trading following the stock’s IPO in late 2021, declining 52% in the first quarter as investors rotated out of fast-growing long-duration stocks and as industrywide supply-chain issues delayed Rivian’s production ramp. In addition, even while other automotive companies raised prices due to inflationary pressures, Rivian launched a price increase campaign that was not well communicated and, as a result, was met with dissatisfaction by existing reservation holders. While this was an unforced error, the company quickly corrected course, reversing its decision to raise prices for existing reservations, while maintaining the increase on new buyers (which has not caused a material impact to demand). We retain conviction in the shares given management’s vision, Rivian’s product positioning, the company’s relationship with Amazon.com, and the company’s strong balance sheet, which will help it overcome the current challenges while taking advantage of the long-term opportunity as the market transitions to electric vehicles.”
1. Tesla, Inc. (NASDAQ:TSLA)
Value of Coatue Management‘s 13F Position: $1.65 billion
Number of Hedge Fund Shareholders: 80
The number of hedge funds long Tesla, Inc. (NASDAQ:TSLA) surged by 44% in the fourth quarter to a new all-time high before dipping by 13% in Q1. Coatue Management raised its Tesla position by 4% to 1.53 million shares, overtaking Rivian in the process to become the fund’s top stock pick.
Supply chain challenges have also been battering Tesla, Inc. (NASDAQ:TSLA), with CEO Elon Musk recently describing his company’s Austin and Berlin factories as “gigantic money furnaces”. Tesla plans to cut salaried staff by 10% as it wades through what Musk expects to be a U.S recession that will last at least 18 months.
Tesla’s Q2 deliveries of 255,000 slightly missed expectations and were well below the 310,000 deliveries the company’s achieved in Q1. It also raises doubts about the company’s ability to hit its 1.5 million target for 2022, with Tesla being just 38% of the way to its goal at the midway point of the year. Bernstein analyst Toni Sacconaghi believes that while 1.5 million may be a stretch, 1.4 million is plausible. Sacconaghi has an ‘Underperform’ rating on TSLA shares along with a $450 price target that is $231 below their current level.
GMO LLC discussed the staggering demand for clean energy materials that EV makers like Tesla, Inc. (NASDAQ:TSLA) will have in the coming years in the fund’s Q1 2022 investor letter:
“To put the demand growth for clean energy materials into perspective, let’s look at Tesla (NASDAQ:TSLA). At its Battery Day last year, Tesla projected three terawatt hours of lithium-ion battery capacity needed in 2030 for the EVs and storage they expect to produce. To reach this target, Tesla alone would gobble up approximately 75% of the world’s current nickel production and four times the world’s current lithium production. These numbers are astounding enough, but when one considers that EVs currently represent just 15% of global nickel demand and about 45% of lithium demand and that Tesla will likely be producing only a small proportion of the world’s EVs in 2030, the implications are staggering. Clean energy materials companies will make a lot more money in the decades to come than they ever have both because they will be selling a lot more metric tons of material and because there are certain to be shortages where supply can’t keep up with the rapidly growing demand.”
For more on the latest trades made by some of the biggest hedge fund managers in the world, check out 10 Value Stocks to Buy According to Billionaire David Tepper and 10 Defensive Stocks in Billionaire Ray Dalio’s Latest Portfolio.
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