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How billionaire Mario Gabelli is betting on electric vehicles without buying Tesla

Pras Subramanian

You don’t have to invest in Tesla (TSLA) stock to get exposure to the booming market for electric vehicles (EV).

Billionaire Mario Gabelli, who’s no slouch when it comes to the automotive sector as he first started as a sell-side analyst covering the auto and farm equipment industry over 40 years ago, brings a unique take to the Tesla discussion.

Gabelli is not necessarily bullish on Tesla, but he is bullish on their ‘run rate.’

“The world that we live in has seven and a half billion people, but there's 1.4 billion cars on the road,” he noted during a discussion on Yahoo Finance’s The Final Round. “The EVs and the hybrids are going to be x, y, z percentage of that.”

What really gets Gabelli excited is not owning the automakers or Tesla in particular, but the parts makers.

“Replacement parts are also important. Who is going to sell parts for the electric charging stations,” he said. With regards to parts makers he prefers, Gabelli is high on Dana Corporation (DAN) and Genuine Parts (GPC), companies that he believes are well run, and that his funds own.

Tesla’s bearish quarter

Late Wednesday, Tesla (TSLA) reported financial results for the first quarter of 2019, and they were bad.

The electric carmaker posted an adjusted loss per share of $2.90 for the quarter, more than double the $1.30 loss per share analysts were expecting.

A Tesla Model S is plugged in at a vehicle Supercharging station in Seabrook, N.H., Friday, Aug. 24, 2018. (AP Photo/Charles Krupa)
A Tesla Model S is plugged in at a vehicle Supercharging station in Seabrook, N.H., Friday, Aug. 24, 2018. (AP Photo/Charles Krupa)

The top line wasn’t much better. Revenue for the quarter came in at $4.54 billion missing expectations for $4.84 billion.

In addition, cash on hand for the electric carmaker dropped $1.5 billion to $2.2 billion; recall the company had a $920 million bond payment back in March. Even more troubling, from an operating cash flow perspective, Tesla was in the red by nearly $920 million, or put another way, the company was burning $10 million every day in Q1.

Lots of concern here from Tesla’s Q1 numbers, but the company did stand by its previously issued guidance of 360,000 to 400,000 total vehicle deliveries in 2019, with the second quarter expected to see 90,000 to 100,000 deliveries. On the conference call, CEO Elon Musk said the company would likely post a loss in the second quarter, but return to profitability in Q3.

So there were some positives there for Tesla, but not much as the bulls would like.

For more on Gabelli and his thoughts on Tesla and big tech, check out the video above.


Pras Subramanian is a senior producer and reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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