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SUMMARY
Jeremy Lefebvre discusses the outlook for major stocks during earnings season, comparing the performance and prospects of Netflix and Tesla, and shares his analysis of American Express, Google, ServiceNow, and a potential new investment in Occidental Petroleum. He also evaluates the challenges facing SpaceX and emphasizes the importance of long-term investing over short-term speculation.
MAIN POINTS
- The video outlines four main topics: a comparison of Netflix and Tesla, upcoming earnings for three key stocks, a new potential stock purchase, and an analysis of SpaceX's stock trajectory.
- Netflix is presented as a strong buy due to consistent execution and improving financials, while Tesla is characterized as a hope-driven investment with repeated disappointments.
- Jeremy expresses high confidence in American Express and Google delivering strong earnings results, but is more cautious about ServiceNow due to uncertainties in guidance.
- Occidental Petroleum is introduced as a new investment consideration, with detailed discussion of its business model, financial health, and exposure to oil price cycles.
- The analysis highlights underinvestment in oil infrastructure, geopolitical risks, and the potential for higher oil prices, which could benefit Occidental Petroleum.
- Occidental Petroleum's involvement in carbon capture is identified as a significant future growth opportunity, with AI analysis supporting its leadership in the sector.
- SpaceX is examined, with concerns about its high valuation, lack of near-term profitability, and upcoming share lockup expirations that may drive the stock lower.
- Jeremy predicts SpaceX will likely bottom between Q4 2026 and mid-2027, with a possible price floor near $75, but does not recommend betting on further declines.
- He concludes by advising viewers to focus on long-term investing and portfolio building rather than short-term speculation or gambling on IPOs like SpaceX.
DETAILED ANALYSIS
Earnings season is underway, and Jeremy Lefebvre begins by highlighting the volatility and potential for significant portfolio gains during this period. He notes the remarkable recent performance of ELF, which has surged 62% in seven weeks, and contrasts this with the disappointing returns of Netflix and Tesla since November 2021. Despite their previous reputations as market leaders, both stocks have delivered negative returns over the past few years, underscoring how quickly market sentiment can shift.
A core theme is the importance of evaluating stocks based on current fundamentals rather than past performance or optimistic narratives. Netflix is praised for its consistent revenue growth, stable or improving margins, rising free cash flow per share, and a declining price-to-earnings ratio, all of which suggest the stock is undervalued. In contrast, Tesla is criticized for stagnating revenue, declining margins, reduced free cash flow, and a rising price-to-earnings ratio, making it an expensive and risky investment.
Lefebvre points out that Tesla's business has repeatedly fallen short of ambitious promises, such as achieving mass-market vehicle dominance, leading in solar energy, or revolutionizing freight with the Tesla Semi. Despite high expectations, Tesla's U.S. vehicle market share remains at just 3%, and its ventures into solar and semis have not materialized as significant revenue drivers. In contrast, Netflix has steadily increased its subscriber base from 192 million to 325 million over several years, demonstrating reliable execution.
The discussion then shifts to three stocks reporting earnings this week: American Express, Google, and ServiceNow. Lefebvre expresses strong confidence in American Express, predicting a 'triple beat'—surpassing expectations on revenue, earnings per share, and guidance. He attributes this to American Express's stable, membership-based business model and its affluent, high-credit-score customer base, which ensures recurring revenue and consistent spending.
The company's status as Warren Buffett's second-largest holding through Berkshire Hathaway further reinforces its reliability.
For Google, Lefebvre also anticipates a triple beat but warns that capital expenditures (capex) could be a concern. Rising memory prices may force Google to increase its capex, and if this increase is substantial, it could negatively impact the stock despite strong earnings. ServiceNow is expected to deliver a double beat, but Lefebvre is less certain about its guidance, citing recent comments from Palantir CEO Alex Karp that suggest shifting corporate attention toward competitors like Anthropic and Claude.
He notes that if ServiceNow's guidance disappoints, the subsequent analyst call could be particularly challenging, potentially exacerbating any negative market reaction. Nevertheless, Lefebvre emphasizes that short-term earnings results do not determine the long-term value of these investments.
The video introduces Occidental Petroleum (OXY) as a new stock under consideration, marking a departure from Lefebvre's usual focus on technology and growth companies. He explains that Occidental is an energy company specializing in oil and natural gas production, with additional initiatives in carbon capture. The company's financial health is closely tied to commodity prices, and its recent multi-year down cycle has created a potential value opportunity.
Lefebvre argues that cyclical stocks like Occidental should be purchased after extended downturns, not during boom periods. With revenues, earnings per share, and free cash flow expected to rebound, and a break-even oil price around $40 per barrel, Occidental appears well-positioned if oil prices remain above this threshold. The company has also been reducing its debt, nearing a $10 billion target, which could soon allow for increased dividends and share buybacks.
Lefebvre discusses the broader context affecting oil prices, including historically low U.S. strategic petroleum reserves and a decade of underinvestment in oil infrastructure due to shifting political priorities and regulatory uncertainty. Oil and gas companies have little incentive to expand capacity aggressively, preferring higher prices and stable output. Geopolitical instability and worsening international relations further support the possibility of rising oil prices.
He draws a parallel to the memory chip industry, where limited capacity helps maintain favorable pricing.
A key growth area for Occidental is carbon capture, where the company has made significant investments, including the acquisition of Carbon Engineering and the development of large-scale direct air capture facilities. Artificial intelligence analysis identifies Occidental as the leading beneficiary if carbon capture becomes a major industry over the next decade. Lefebvre estimates a low probability of loss if the stock is purchased around $55 and held for five years, with a strong chance of doubling the investment through share appreciation and dividends.
The potential for outsized returns exists if oil prices surge to historical highs and carbon capture gains traction, but the primary expectation is steady value and income growth.
Turning to SpaceX, Lefebvre highlights the company's persistent stock decline despite a generally strong market environment. He clarifies that SpaceX's value is currently driven by its Starlink, X (formerly Twitter), and XAI businesses, while its ambitious space exploration projects remain speculative and unlikely to contribute meaningfully for many years. SpaceX's price-to-sales ratio far exceeds even high-growth tech companies, making it unattractive from a valuation perspective.
Upcoming share lockup expirations, particularly between August and November 2026, are expected to unleash significant insider selling, further pressuring the stock. Lefebvre predicts that SpaceX will likely bottom between Q4 2026 and mid-2027, with a possible price floor near $75, and a worst-case scenario around $45. However, he does not recommend betting on further declines, citing the unpredictability of market reactions and the availability of better long-term opportunities elsewhere.
In closing, Lefebvre cautions against short-term speculation, especially in newly public stocks like SpaceX, and urges viewers to focus on disciplined, long-term investing. He shares examples of individuals who have built substantial portfolios through consistent research and investment, contrasting this with the fleeting gains of speculative trading. The overarching message is to prioritize building a solid investment strategy for sustainable wealth creation.
LINKS
- Application page for Jeremy Lefebvre's Private Stock & Wealth Group.
- Patreon page for supporting the channel and viewing weekly stock buys.
- Free workshops on investing topics provided by Jeremy Lefebvre.
- Jeremy Lefebvre's official Instagram account.
- Jeremy Lefebvre's official X (formerly Twitter) account.
- Jeremy Lefebvre's official Facebook profile.
- Jeremy Lefebvre's personal website.
- Instagram account for 1000XStocks.
- X (formerly Twitter) account for 1000XStocks.