Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. So let's get
Speaker 1: right to with somebody who is a Testla owner and
Speaker 1: investor well known to our audience. We're talking about Ross Garber.
Speaker 1: Russ Gerber is president and CEO like Gerber Kawasaki Wealth
Speaker 1: and Investment Management. He joins us on the phone from
Speaker 1: Santa Monica, California. Ross, pick out one number and in
Speaker 1: this earnings report and tell us why it's your favorite.
Speaker 1: Earnings per share, earnings for share. They beat by a
Speaker 1: big number in a very very very tough environment while
Speaker 1: they're ramping two factories and boy, okay, that number two
Speaker 1: dollars and twenty seven cents ross for the second quarter.
Speaker 1: Estimates were for one dollar and eighty three cents, So
Speaker 1: blowing it out of the park when it came to
Speaker 1: that bottom line. Yeah, it's like so hard with supply
Speaker 1: chain and all the issues with China, and here they
Speaker 1: come out with a huge margin on their vehicles with
Speaker 1: the ramp. I mean, it's just they executed amazingly well.
Speaker 1: So how are they doing it when so many others
Speaker 1: seem to be struggling. Well, there's a couple of things
Speaker 1: that Tesla has as a huge advantage over other automakers,
Speaker 1: And it first started when Ellon went out and cut
Speaker 1: supply deals with like Lithian companies and battery cell companies.
Speaker 1: He already had the vision of like, we want ten
Speaker 1: year contracts, we want guaranteed supply. Like he went all
Speaker 1: in and did like huge deals with these suppliers early on,
Speaker 1: before electric vehicles were even an issue. So he's kind
Speaker 1: of gets the priority because he makes the most cars,
Speaker 1: and he committed the most early, and so he has
Speaker 1: the best position. Plus they're completely vertically integrated, so they
Speaker 1: really have an advantage over other players in the eavy space.
Speaker 1: Why aren't we seeing shares jump more If the bottom
Speaker 1: line beat was so good, if automotive automotive gross margin
Speaker 1: came in so much higher than expected, shares in the
Speaker 1: after hours are only up two point I don't really
Speaker 1: look at after hours trading as any indication of too much,
Speaker 1: but we haven't had the conference call yet, and so
Speaker 1: that's usually where a lot of discussed that may change
Speaker 1: the trading and after hours, you know, I think the
Speaker 1: most important thing is the valuation of Tesla is very
Speaker 1: high relative to the market, so they need to have
Speaker 1: good earnings to support their stock price and such. So
Speaker 1: either way, the stock is going to be up tomorrow,
Speaker 1: and I think that's great news. What's the important valuation
Speaker 1: metric to watch? I mean, I'm just going to basic
Speaker 1: PE is almost eighty eight right now, forward looking PE
Speaker 1: of about sixty three. What is the important metric to
Speaker 1: look at when we're trying to value something like a Tesla,
Speaker 1: which most would argue is still a mega growth company, right,
Speaker 1: So we value all companies based off their P to
Speaker 1: growth ratio, So that's really what's important is how fast
Speaker 1: is the company growing relative to its p And that's
Speaker 1: really where you can get stock price appreciation because you see,
Speaker 1: this multiple will be forced in a way lower as
Speaker 1: he goes up if he doesn't go up, so he
Speaker 1: usually goes up when he goes up. So the nice
Speaker 1: way to look at it is because Tesla is beating
Speaker 1: earnings and growing so fast their growth rate as well
Speaker 1: over of earnings, but their PE is less than a hundred,
Speaker 1: so relative to other stocks on the stock market, it
Speaker 1: is actually very cheap. So what's the question that you
Speaker 1: would have for executives on the call today for Elon Musk.
Speaker 1: If you were able to ask a question, what would
Speaker 1: you ask him? Well, A, most importantly, I I really
Speaker 1: want to know what's happening in Berlin and Austin as
Speaker 1: far as the ramp where they are with with production
Speaker 1: and what's going on with the forty eight cell ramp,
Speaker 1: because that seems to be sort of a little, you know,
Speaker 1: hiccup that they're dealing with right now. So I'm really
Speaker 1: concerned about technology also for full self driving, and you know,
Speaker 1: I've been using the software and it's getting better and better,
Speaker 1: But what's their time frame for a wide house which
Speaker 1: I think? How much better is it getting? Because you know,
Speaker 1: there were some videos that made the rounds just a
Speaker 1: couple of weeks ago with some really concerning I think
Speaker 1: Galileo Russell posted it a few weeks ago, and he's
Speaker 1: a big testa bowl we've had on our program before,
Speaker 1: and it showed it the vehicle turning right down the
Speaker 1: wrong way down a one way street. I'm sure you
Speaker 1: saw that video. Ross, Um, how much better is it getting?
Speaker 1: Because that's that's pretty bad. You know, I think that
Speaker 1: I've seen like so many humans just today do stupid
Speaker 1: things like that. You know, it's really like hard to
Speaker 1: be a perfect car while you're you do live in
Speaker 1: l A. So that you know, I'm a California so
Speaker 1: I can say that. And then I and I changed
Speaker 1: my car in l A. And it's super hard, you know,
Speaker 1: it's super hard to survive in l A. So I
Speaker 1: take the expectation that a computer will have a flawless
Speaker 1: driving ability when it's not even it's still a beta beta.
Speaker 1: And then you get on the road and you watch
Speaker 1: humans like kill each other on the road daily. We're
Speaker 1: setting two standards, you see what I'm saying. And so like,
Speaker 1: full self driving is never going to be perfect. Well
Speaker 1: that's something who's gonna get run up? That's what I
Speaker 1: want to ask Ross. Is full self driving crucial to
Speaker 1: the Tesla story? Or can it just being a great
Speaker 1: EV car maker? And that's enough. Well, it's crucial to
Speaker 1: the story if you think about it, that making an
Speaker 1: e V isn't a challenge for Tesla anymore so Tesla
Speaker 1: as a company, where would they evolve too if they
Speaker 1: were just an EV maker? Because eventually everybody's gonna be
Speaker 1: making evs and it will become a commodity. There's the
Speaker 1: human robot that I'm kind of upset, but that's that's
Speaker 1: all about AI though that's not really about like building
Speaker 1: a robot isn't hard. It's about making a smart robot
Speaker 1: that can do good stuff, you know, and so like.
Speaker 1: So the future is the software, and I think you
Speaker 1: should look at it very much like Apple. You know,
Speaker 1: the Samsung phones are just as good as the Apple
Speaker 1: phones or better. Okay, the Google poones are just as
Speaker 1: good or better, but we all use iPhones because of
Speaker 1: the software and the way the software interacts with our
Speaker 1: life keeps us involved with Apple forever. And that's what
Speaker 1: Tesla is building with software that the other companies don't have.
Speaker 1: So when you're talking it about an e V being
Speaker 1: a commodity and tenures, they will get it. But the
Speaker 1: software is where the value is. All right, we gotta
Speaker 1: run Ross always informative and fun to catch in with you.
Speaker 1: Ross Gerber over at Gerber Kawasaki Wealth joining us from
Speaker 1: Santa Monica. This is Bloomberg