Silver banana goes to…

In this issue of the peel:

• 💸 Uncle Sam is even worse at budgeting than you. 3 days into 2025, it looks like his resolution to get better with spending is already out the door.

•  ⛳ Holiday parties gave Topgolf plenty of new fans this year as Roaring Kitty selects his next target. Meanwhile, SoFi Technologies has a new hater, and Hindenburg Research selected its latest victim.

• 😢 When you’re kissing the President and Tweeting memes all day, it’s easy to forget you have to sell cars. Find out how bad it was for Tesla in Q4.

Market Snapshot

Banana Bits

• Yes, Warren Buffett did beat the market (again) in 2024.

• 5 Charts to get you ready for 2025 (these are actually sick, check them out).

• Greta Thunberg is having an awful start to 2025 as banks exit climate agreements in droves. 

• Meta replaces its policy chief in light of the new Administration.

• Chinese stocks led the world lower to start 2025 as manufacturing slows, create market woes.

The Daily Poll

Previous Poll:

What's your housing resolution for 2025?

Buy a house: 20.7% // Hold off and wait: 27.6% // Sell and upgrade: 7.7% // No housing plans: 44.0%

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Macro Monkey Says

Uncle Sam’s 2025 Checkbook

Working out, eating healthy, budgeting—these are all noble resolutions for the New Year. But it’s January 3rd, and I’m realizing now that I actually have to do these things.

As a proud, lifelong quitter, we’ll see how long these last. The good news is I know someone else who’s gonna quit pretty quickly, too.

Every year, Uncle Sam’s resolution is to try to f*ck up less than they did they ear before. An impossible task, which is why we know they’ll quit, but maybe—just maybe—for the first time ever, we might have some hope on the budgeting side.

Let’s get into it.

The State of 2025 U.S. Fiscal Policy

We talk about JPow and the Fed so often that I think my son’s first words will be, “Did they cut rates?” but rarely do we focus on fiscal policy.

That’s mostly because me talking about politics is like Boeing talking about plane safety, but it’s also because we don’t get political here at the Peel. All we do is present the facts—take them however you’d like.

With that said, the current state of fiscal policy in the U.S. is about as coherent as the thoughts in our President’s head.

How Did We Get Here?

Plans for the 2025 budget started, as they typically do, about 18 months in advance, back in spring of 2023. The President’s first budget proposal is typically due about a year later, with President Biden submitting his first FY 2025 Budget Proposal on March 11th.

This plan included $7.3tn in total spending with a projected deficit of $1.8tn. Even if the plan included $1bn going to each member of Congress’s personal wallet, they couldn’t possibly have agreed on this thing.

Fast forward a few months, and no agreement was made, so to avoid shutting down the Federal government, Congress passed a “Continuing Resolution” that maintained 2024 spending levels through December 20th.

Then, by December 20th, some progress had been made as members of Congress were even less likely to agree on a budget. 

Another Continuing Resolution was passed, maintaining the same spending levels through March 14th, and that’s where we stand today.

So…What’s the Plan?

By the way—the U.S. government’s fiscal year runs from September to September, so this “FY 2025” Budget, if one is ever made, will only cover a little longer than 5 months.

Government spending encompasses a large position of GDP, making up ~24% of total GDP in 2024. So, having a plan for a quarter of the economy seems like a good idea.

While no full plan has been developed, a piecemeal version is being crafted underneath.

It used to be that Congress would vote on 12 separate appropriations bills covering different areas of spending, allowing for a more controlled, surgical approach to federal outlays. But, as competence has left Washington faster than dollars, that’s not the playbook anymore.

Now, our Representatives attempt to pass one big omnibus spending bill. But, it’s still comprised of smaller-scale spending plans.

As of right now, 5 of the 12 total segments of appropriations have been approved by the House. 11 have been approved by the Senate, too, but the tough part is that January began a new Congress.

This new Congress doesn’t have to revote or anything, but 72 members of the current 119th Congress were not members of the 118th—the one that had completed the aforementioned approvals. While they don’t have to give their own approval, they may want to make changes.

As we speak, negotiations are ongoing with regard to defense and discretionary spending. It’s not fully back to the drawing board, but new requests from fresh members of Congress could throw a wrench in the plans.

With a new Executive Administration coming in just a few weeks too, the things this new President would be willing to approve—and don’t quote me on this, just a gut feeling—might vary slightly from that of the previous one.

The Takeaway?

A quarter of the way through the U.S. government’s fiscal 2025, we have no budget for fiscal 2025.

Continuing Resolutions are keeping Uncle Sam alive for now, but major negotiations need to take place over the next three months to avoid another rushed, barely read CR.

At least we can take some solace in the fact that our government is even worse at budgeting than we are.

Career Corner

Question

Focusing on my TMAY + 7 stories over the weekend—given I have two different working experiences (3 years of experience), should my stories solely focus on my current job? Is it fair to bring up stories from school at this point?

Answer

I would focus just on work unless it’s really a lights-out / best-ever type of story.

I would offer a different point of view. I find non-work related stories help to make a candidate more three-dimensional and separate you a bit from the pack.

Just think about the interviewer listening to an entire day of stories from all candidates about a time when they were doing a work project versus that one candidate who chats about how much effort he or she put in to qualify for a sports team or win a competition, etc. Just my two cents

For a third perspective, I would encourage talking about both for different answers. I think group projects in school seem a bit junior when you’re 3 years out, so for those types of questions, I would focus on work or post-grad extracurriculars, but I think it’s absolutely fair game to talk about athletics/extracurriculars from college and it’s good to show different dimensions of yourself.

Just make sure it’s not every question—they will want to see what you’ve learned in your jobs. Additionally, following the sentiment from the interviewer, when I was doing lateral hiring, I noticed that some interviewers seemed less interested in anything college, so I would make sure I spoke about mostly work in those.

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What's Ripe

Topgolf Callaway Brands (MODG) 14.50%

• Jefferies analysts had a blast at their holiday party, using it as an opportunity for channel checking that led to an upgrade of their inevitable venue, Topgolf.

• The investment bank upgraded shares in the restaurant/driving range/golf equipment firm, issuing a price target of $13/sh, which implies a 66% upside from Tuesday’s close and a 44% from yesterday’s.

• Topgolf is a victim of conglomeration, according to Jefferies, where the earnings multiple assigned to a whole business is held back by the lowest multiple segment.

Unity Software (U) 9.08%

• Can’t even get a full trading day into 2025 without this guy pumping a stock to create his own exit liquidity. Keith Gill, a.k.a “Roaring Kitty,” is back.

• The world’s most famous retail traders posted this on X, which somehow implies a reference to the word “Unity” through some cringe millennial gif of Dave Chappelle.

• Fellow retail traders took that and ran with it, bidding up Unity as we saw on Thursday. At least we know finance degrees are still worthless in 2025.

What's Rotten

SoFi Technologies (SOFI) 8.25%

• If SoFi’s New Year’s Resolution was to rack up as many haters as possible, they’re off to a great start. KBW analysts just joined the part.

• Analysts at Keefe, Bruyette, and Woods (KBW) rudely point out that this thing is wildly overvalued, citing SoFi’s forward P/E of 77x vs its peer group average of 26x.

• Amid all that, the firm still increased its price target from $7 to $8, which implies a 48% downside from Tuesday’s close and a 43% downside from yesterday’s.

Carvana (CVNA) 1.87%

• Speaking of racking up haters, Carvana just added the worst one of all. Stock serial killer Hindenburg Research wasted no time finding its first victim of 2025.

• Calling the firm a “father-son accounting grift for the ages,” Hindenburg alleges that the massive >4,800% runup shares have seen since nearly going bankrupt in late 2022 is based on misleading information.

• Hindenburg points to outlandish results in a struggling macro environment, lax (or nonexisting) underwriting standards, and enormous insider offloading during that period as its primary evidence. Read the full report here.

Thought Banana

Most Depressing Day of the Year

I’ve never been a car salesman, but I’d imagine that it’s tough to sell cars when you’re busy flirting with the President-elect and starting the next global controversy on X.

That seems pretty intuitive to me, but apparently, Tesla wanted to learn it the hard way.

Let’s dive in.

What Happened?

Yesterday, Tesla found out exactly why January 2nd is the most depressing day of the year… and it wasn’t just because of that Cybertruck that blew up.

The world’s most valuable automaker reported its quarterly and annual numbers for energy generation, vehicle production, and, most importantly, vehicle deliveries.

The Numbers

Effectively, the report functions as a proxy of sales. So, analysts were understandably upset when the company reported its first-ever annual drop in deliveries.

In 2024, Tesla delivered a total of 1,789,226 vehicles, a 1.16% decline from 2023’s 1.81mn. Although Q4’s deliveries did grow a very nice 6.9% from Q3, the 495,570 total missed estimates.

Street analysts were looking for 504k deliveries, internal data suggested they could be as high as 506k, and prominent Tesla analyst Troy Teslike was calling for 501k.

Unfortunately, much like my transcript, the actual results came in way too low. 

Production, rarely a concern these days, kept up well, declining from 1.85mn in 2023 to 1.77mn in 2024, reflecting solid inventory management.

Lastly, this was Tesla’s 2nd ever quarter in which they included energy deployments as part of the production and deliveries report. In Q4, the company generated 11 GWh (gigawatt hours) of energy, a 59.4% jump from Q3.

Energy remains the most underrated part of Tesla’s business, as all the eyeballs go to autonomous driving or whatever meme Elon just tweeted that’s about to wipe from Tesla’s market cap the GDP of a small country.

Through all of 2024, energy deployments clocked in at 31.4 GWh, a 113% growth from last year’s 14.7 GWh.

The Takeaway?

While disappointing, Tesla’s production, delivery, and deployment numbers reflect a company that managed to navigate a challenging macro environment better than most.

The firm’s results indicate market share gains in an industry that spent much of 2024 in an apparent slowdown. Plus, shares rose over 54% during Q4 anyway, so I’m sure shareholders aren’t too upset.

The Big Question: Will rate cuts help Tesla and the EV market return to growth in 2025? What challenges are on the horizon? 

Banana Brain Teaser

Previous

If the range of the six numbers 4, 3, 14, 7, 10, and x is 12, what is the difference between the greatest possible value of x and the least possible value of x?

Answer: 13

Today

What number is 108 more than two-thirds of itself?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

Happy Investing,
David, Vyom, Ankit & Patrick

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