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Speaker 2: Tesla's board is offering Elon Musk a new compensation agreement
Speaker 2: potentially worth around a trillion dollars. Remember this is a
Speaker 2: company whose market cap right now is only one point
Speaker 2: one six trillion. I say only because you're comparing his
Speaker 2: potential pay with the market cap.
Speaker 3: That's kind of crazy.
Speaker 4: It is crazy. Is it's a number just kind of
Speaker 4: grabs you a little bit.
Speaker 3: It's eye popping.
Speaker 2: So let's bring in Steve Man, he's Bloomberg Intelligence Global
Speaker 2: Autos and Industrials Research manager, to discuss all of this.
Speaker 2: What is the justification that Tesla's board is offering that
Speaker 2: Elon Musk would be worth potentially a trillion dollars in pay?
Speaker 5: Yeah, trilling dollar is a lot, but I think what
Speaker 5: they're looking for by twenty thirty five is really juice
Speaker 5: up that market cap to eight point five trillion. And
Speaker 5: if you look at the operational operational targets that's tied
Speaker 5: to it. It definitely confirms that this company is moving
Speaker 5: towards AI robotics, you know, robo taxi.
Speaker 6: So what are some of the hurdles that are out there?
Speaker 6: Were mister Muslin maybe eventually get this.
Speaker 7: Hey, yeah, you know, it's it's not going to be
Speaker 7: easy for him, and it's probably designed to be that
Speaker 7: way so that, you know, you know, make make sure
Speaker 7: the shareholders will vote for the for the proposal.
Speaker 5: Don't make it too easy for him. So the easy,
Speaker 5: easy lift is really twenty million vehicle delivery. That's going
Speaker 5: to be a no brainer, easy to get to, given
Speaker 5: that it ships about one point million a year already.
Speaker 5: But the tough part, tough part is really a fifty
Speaker 5: percent take rate on FSD, the full self driving and
Speaker 5: a million shipments on robots, and so those are really
Speaker 5: really tough to get. The third thing is really the
Speaker 5: EBITA adjusted EBITA a four herd billion between you know,
Speaker 5: getting there between now and twenty thirty five.
Speaker 2: Okay, so he has a bit of time, and you know,
Speaker 2: he's someone who will start a narrative and stay on it.
Speaker 2: You mentioned FSD full self driving. Where are we in
Speaker 2: that effort for Tesla.
Speaker 5: Yeah, it's still it's still below ten percent. It's probably
Speaker 5: around five six, maybe seven percent at the most. Uh,
Speaker 5: there is still some technological you know, hurdles that they
Speaker 5: have to to to overcome, and a lot of it
Speaker 5: is really getting you know, consumers to be comfortable with it.
Speaker 5: So take rate of you know, ten million subscribers with
Speaker 5: twenty million vehicles shipped. It looks like a stretch, but
Speaker 5: it needs it because the margin for FSD is much
Speaker 5: higher than vehicle production, potential margins for robotaxis much.
Speaker 8: Greater than.
Speaker 5: Selling cars. So to get to the four hundred billion,
Speaker 5: he really needs to really focus on the AI capability
Speaker 5: of the company.
Speaker 6: Hey, Steve, since Elon Musk has left DOGE, do we
Speaker 6: have any idea how much time he is actually spending
Speaker 6: at A good question.
Speaker 5: Yeah, My impression is he's probably spending close to one
Speaker 5: hundred percent of his time, you know, not only based
Speaker 5: on this news where he's actually laying out a plan
Speaker 5: for Tesla, but look, he also had a very successful
Speaker 5: launch at SpaceX recently, so you know the impression is
Speaker 5: that he's full on in managing his companies.
Speaker 2: And I like that question. Paul because we know that
Speaker 2: Elon Musk has previously been an activist and urging the
Speaker 2: board to come up with a new pay package for him,
Speaker 2: you know, he kind of suggested that maybe he could
Speaker 2: move on and do AI somewhere else, and do robotics
Speaker 2: somewhere else.
Speaker 5: Yeah, I think from my perspective, I don't think he's
Speaker 5: going to go anywhere. This is still his baby.
Speaker 8: I think empty.
Speaker 5: I don't want to say empty threats. There's always a possibility,
Speaker 5: but I think the possibility is very low. But because
Speaker 5: this is his baby, and he's very very passionate about AI,
Speaker 5: about you know, energy sustainability, about sending people to Mars,
Speaker 5: and I think all of this is, you know, a
Speaker 5: part of that plan.
Speaker 6: So let's get back to some nuts and bolts here.
Speaker 6: They got to compete against China and they're not. That's
Speaker 6: tough number one. Number two, we had some really disappointing
Speaker 6: delivery number of sales numbers out of Europe here, So
Speaker 6: just the day to day near term seems pretty challenging.
Speaker 3: Yeah.
Speaker 5: And also, don't forget the seventy five hundred dollars EV
Speaker 5: tax credit in the US actually is going away at
Speaker 5: the end of September, it is going to be the
Speaker 5: next pretty challenging for the industry. Six to nine months
Speaker 5: between now and nine months from now, it is going
Speaker 5: to be very challenging. I think one bright spot, you know,
Speaker 5: if you heard b y D, one of the dominant
Speaker 5: Chinese automaker, is actually ratchet back their forecast on a
Speaker 5: sales forecast that actually tells us that, you know, maybe
Speaker 5: the pricing cut through pricing competition in China may be
Speaker 5: slowing down, and that would be positive for Tesla and
Speaker 5: the rest of the industry.
Speaker 2: Yes, if Tesla launches that low cost EV, which there's
Speaker 2: been a lot to talk.
Speaker 3: About, but we haven't actually seen any action on.
Speaker 2: Is there a status update on that or is this
Speaker 2: something just that that just keeps getting pushed out timed again.
Speaker 5: Yeah, I think it's going to come up pretty soon.
Speaker 5: In the last earnings call, they pretty much projected that
Speaker 5: the car is actually ready, but they have to hold
Speaker 5: off production because they want to produce as many Model
Speaker 5: wise and Model three before the end of the seventy
Speaker 5: seventy five hundred EV tax credit goes away, because they
Speaker 5: expect to sell a lot more in the next quarter
Speaker 5: or so. So I believe the car is ready, and
Speaker 5: it probably likely will have to. I would hope it
Speaker 5: will actually come to market in the new year, because
Speaker 5: there's gonna be you know, Rivian's also launching a cheaper
Speaker 5: model by then. GM with the Chevy Ball is supposed
Speaker 5: to come online in the next six months, so they
Speaker 5: do need to launch that sooner rather than later.
Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.
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Speaker 6: It's going to Lululemon here. This thing is not good.
Speaker 6: It's tough news coming out of there. Let's put it
Speaker 6: all into context. We could do that with Punam Boyle.
Speaker 6: She's a senior US retail analyst for Bloomberg Intelligence.
Speaker 4: Punum Lululemon. I love my Lulu Lemon, but what happened.
Speaker 9: What happened is that you like your performance, but do
Speaker 9: you like your casual where it's a casual wear part
Speaker 9: of the segment that's underperforming and causing for guidance to
Speaker 9: be cut on the sales side and then Tearff send
Speaker 9: a Minimus, causing the margin hit that we're seeing. So
Speaker 9: it's a sales and a margin story here. They're both underperforming.
Speaker 3: So what's the prescription for that?
Speaker 2: And is a company coming up with a strategy that
Speaker 2: is appeasing investors in any way?
Speaker 9: Yeah, So the biggest issue on the sales side is
Speaker 9: the fact that they're not performing well on the casual
Speaker 9: part of the business. They don't have enough newness. Currently,
Speaker 9: unis in their pipeline stands at twenty three percent and
Speaker 9: they want to move it to thirty five percent by
Speaker 9: next year. So we hope to see more newness, but
Speaker 9: it won't be until spring of twenty twenty six, which
Speaker 9: means the back half of the year is going to
Speaker 9: be very sluggish.
Speaker 2: That's a long time to wait for investors who have
Speaker 2: been sitting on the stock and have looked at a
Speaker 2: forty eight percent drop before today's trading. What's if investors,
Speaker 2: let me let me rephrase this. If consumers are swapping
Speaker 2: out of Lululemon going to Allo and worry, what are
Speaker 2: investors swapping out Lululemon for?
Speaker 9: Well, I mean, look, i'd say, the performance side of
Speaker 9: their business is doing well. So when you say swapping
Speaker 9: out from the aligned leggings perhaps to the allos, that
Speaker 9: might be just broadening the assortment. The real issue is
Speaker 9: on the wide leg pants, on the casual assortment that
Speaker 9: is not trending well. That is what needs to do better.
Speaker 9: Competition has always been there. It's growing, for sure, but
Speaker 9: it's always been there. Lul knows how to compete when
Speaker 9: they have the right product. The issue is they don't
Speaker 9: have enough new product. It's not coming fast enough and
Speaker 9: it won't come overnight. They hired a new AI head
Speaker 9: to drive innovation. That should help because AI is helping
Speaker 9: improve design timelines and so much more that we do
Speaker 9: think they can speed it up. But once again, nothing's happening.
Speaker 8: This year.
Speaker 9: They'll have a little bit more on new but it's
Speaker 9: not enough. Sales in the US are expected to decline
Speaker 9: and that's you know, we haven't seen a decline at Lemon.
Speaker 9: I can't remember when.
Speaker 6: So I mean Lulu Lemon's down. The stock is down
Speaker 6: fifty five percent this year, Puma's down fifty five percent,
Speaker 6: Adidas twenty five, under, Armour thirty seven. Are these performances
Speaker 6: in stock declines. Are they primarily driven by concerns about tariffs.
Speaker 9: Tariffs is definitely one concern, but I think that's not
Speaker 9: limited to just the athletic where it's for all apparel retailing.
Speaker 9: The other is just a shift in wardrobe.
Speaker 8: Right.
Speaker 9: If you think a few years back during COVID, where
Speaker 9: did the war ropes shift? A big part of your
Speaker 9: wardrobe was comfortable performance. Where right, we all had the leggings,
Speaker 9: we were wearing them at home while we were working,
Speaker 9: we were wearing them out. Today we're moving into a
Speaker 9: more structured wardrobe environment, which means that the closets are
Speaker 9: more balanced like they once used to be, and that's
Speaker 9: part of the reason why you're seeing underperformance also at
Speaker 9: the athletic ware companies.
Speaker 2: So in the meantime, as the Little Lemon tries to
Speaker 2: get its product, its newness, its assortment back on track,
Speaker 2: it's making up for the week sales in the US
Speaker 2: with a lot of international sales. China is a big
Speaker 2: strong point. Global growth is still there. How much more
Speaker 2: can it ramp up that side of the business.
Speaker 9: There's plenty of opportunity internationally. International is only twenty five
Speaker 9: percent of Little Lemon's total business. China's growing at over
Speaker 9: twenty percent, with the rest of international at around twenty percent,
Speaker 9: so a lot of runway there across both performance and
Speaker 9: casual wear. We think that's a bright spot that will
Speaker 9: remain a bright spot for the foreseeable future.
Speaker 6: Punam, It's early September here, but it's certainly never too
Speaker 6: early to talk about holiday shopping. What's the expectation in
Speaker 6: your industry about how holiday shopping will be this year.
Speaker 9: I think holiday will be okay as long as there
Speaker 9: are deals. The consumer is clearly focused on deals, and
Speaker 9: we think given the current TARFF situation, a lot of
Speaker 9: the inventory was up fronted, so retailers have most of
Speaker 9: holiday now in stock in their warehouses and also you know,
Speaker 9: starting to come into stories. We think the consumer will
Speaker 9: come for deals. They'll be choosy. They have been choosy
Speaker 9: all year, so you're looking at the Walmarts, the Amazons
Speaker 9: of the world that will probably continue to take wallet's share.
Speaker 3: Who's the strongest company in your space right now, poo.
Speaker 9: I think Amazon's still one of the strongest retailers out there.
Speaker 9: They can compete with their large pocketbooks, They have the
Speaker 9: consumer mind share, and they're essentially focused on delivering value
Speaker 9: to their customer along with speed and convenience.
Speaker 6: And Walmart's still doing well across the board.
Speaker 9: Yeah, yeah, Walmart's still doing well. You know, both of
Speaker 9: them are thriving side by side. Walmart's a larger grocery business.
Speaker 9: Over fifty percent of their sales do come from grocery,
Speaker 9: so they do benefit from that. But they are increasing
Speaker 9: their marketplace. It's over one hundred billion dollars now their
Speaker 9: e commerce business.
Speaker 8: Stay with us.
Speaker 4: More from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 2: Let's bring in Mandeep Singh of Bloomberg Intelligence. Of course,
Speaker 2: he is our go to person for all things in
Speaker 2: the tech space, man deep. The news here is that
Speaker 2: Broadcom is going to help open AI, design and produce
Speaker 2: an AI accelerator and AI chip starting in twenty twenty six.
Speaker 2: And this is all to i don't know, not take
Speaker 2: market share from in video, but at least compete a
Speaker 2: little bit better with than video, isn't it.
Speaker 8: Yes, And now that they have a ten billion dollar
Speaker 8: backlog from this new customer, open Ai. On the chip side,
Speaker 8: it's real money, so it's not just a proof of
Speaker 8: concept or anything like that. And that has always been
Speaker 8: the risk with Nvidia's growth is because of this concentration,
Speaker 8: whether it's from the hyperscale cloud players or the model
Speaker 8: providers like open Ai, if they were to do things
Speaker 8: on their own chip, that will have a big impact
Speaker 8: on Nvidia. And clearly open Ai fields that they can
Speaker 8: optimize the chip and the model to run better on
Speaker 8: their own chip, and that's probably why you're seeing such
Speaker 8: a strong reaction. But clearly this is a twenty twenty
Speaker 8: six event, so we will still have to wait in
Speaker 8: terms of how that chip is going to stack up
Speaker 8: and what the media will have in twenty twenty six.
Speaker 6: That's kind of where I wanted to go, Man, Deep,
Speaker 6: I guess if I were an Nvidia shareholder, I knew
Speaker 6: competition was coming and it just has to. But at
Speaker 6: the end of the day, I feel comfortable with the
Speaker 6: quality of my chips and my technology.
Speaker 4: Is that kind of the feeling here today?
Speaker 8: There is? And so look, I mean for a company
Speaker 8: like Google, which is also training their own model on
Speaker 8: their TPUs, they haven't been able to sell it to
Speaker 8: a non Google model provider, right, So it's really optimizing
Speaker 8: for your stack, which is what Apple has done over
Speaker 8: the years, but clearly that's worked very well for them.
Speaker 8: So Google really was the first one to train their
Speaker 8: model on their own chips, and I think that's what
Speaker 8: open ai is going after, is they feel they can
Speaker 8: do something similar to Google. In fact, the people that
Speaker 8: they've hired to design this chip are you know, people
Speaker 8: from Google, so they've postal lot of people from there.
Speaker 8: And look, I think given the you know scale average
Speaker 8: open ai and Google are operating, the chip costs are
Speaker 8: pretty substantial. So if they are able to optimize the chip,
Speaker 8: even for their own use, that's going to have a
Speaker 8: big impact on the gross margins. Which is why you
Speaker 8: see a big stock move, you know on Nvidia, because
Speaker 8: Nvidia relies on these large hyperscalers to continue to buy
Speaker 8: chips from them.
Speaker 2: Okay, so in Nvidia down and the shares have actually
Speaker 2: deepened their losses now lower by four point one percent.
Speaker 2: Advanced micro Devices is off even more, MANDIP losing seven percent.
Speaker 2: Where does this lead leave AMD.
Speaker 8: I mean, we know the revenue rundrate for Broadcom now,
Speaker 8: it's over twenty billion dollars. In fact, they guide it
Speaker 8: to acceleration. Anytime you see a company guide to accelerating
Speaker 8: revenue growth, I mean, that's great news in terms of
Speaker 8: multiple expansion. And so for a company like AMD whose
Speaker 8: hope was this market is large enough that they will
Speaker 8: also get that lift in terms of growth rates, clearly
Speaker 8: Broadcom is growing ahead of them and substantially. I mean
Speaker 8: they guide it to six billion dollars plus in next quarter. So,
Speaker 8: I mean Broadcom has shown ten consecutive quarters of quarter
Speaker 8: over quarter growth and it's going to continue because that's
Speaker 8: been their guidance for twenty twenty six. So from that perspective,
Speaker 8: and the gains seems somewhat muted when you contrast that
Speaker 8: with Broadcom's expected growth.
Speaker 3: Stay with us.
Speaker 4: More from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 6: Higher education certainly under pressure from this administration. We had
Speaker 6: another piece of news out just recently concerning our friends
Speaker 6: at Northwestern University.
Speaker 4: Get the last reporting there.
Speaker 6: Janet Lauren joins his Bloomberg Higher Education Finance reporter.
Speaker 4: Some turnover at Northwestern. What's going on there?
Speaker 9: Janet?
Speaker 10: Yes, So the president, Michael Schill, said he was resigning yesterday.
Speaker 10: He's been there for three years and it's been a
Speaker 10: bit tumultuous. In addition to protests and other things, he
Speaker 10: also had to deal with the settlement from the football
Speaker 10: coach who had sued the university over hazing. So he
Speaker 10: had made a deal with protesters during the height of
Speaker 10: all these protests in an effort to clear the encampment
Speaker 10: that was viewed as very unpopular.
Speaker 2: I hadn't realized that he was under fire or the
Speaker 2: school was under fire, because most of our focuses on
Speaker 2: Trump's targeting the IVY leagues, for instance Harvard notably. To
Speaker 2: what extent does this clear the air with whatever discussions
Speaker 2: Northwestern is having with the White House?
Speaker 10: It probably helps because you know they can say, well,
Speaker 10: our leader has left, we're going to put in a
Speaker 10: new person, new reform. But he was also brought before Congress.
Speaker 10: You remember the very high profile hearing with the presidents
Speaker 10: of Harvard, Penn, and MIT and Harvard and Penn's president
Speaker 10: stepped down. Was he there that one, No, he actually
Speaker 10: was called separately and he was grilled along with the
Speaker 10: presidents of Rutgers and UCLA. And he had talked about
Speaker 10: Northwestern has a campus in Cutter and there said we
Speaker 10: would we would be reviewing the contract. It's not clear
Speaker 10: if whatever happened there so that he was under a
Speaker 10: lot of pressure. But don't discount the pressure also about
Speaker 10: the football team because they had a settlement that came
Speaker 10: through late August. The football coach had sued the university
Speaker 10: for one hundred and thirty million dollars for wrongful termination
Speaker 10: and he denied knowledge of hazing, and he sued Northwestern
Speaker 10: is a member of the Big Ten. Don't forget, you know.
Speaker 3: In contacts.
Speaker 10: Yea, they may not be you know, UCLA and winning
Speaker 10: NCAA titles, but you know, same matter sports is, you know,
Speaker 10: is still kind of important there.
Speaker 6: So where are we in terms of these certain universities
Speaker 6: dealing with the Trump administration. Is it trying to just
Speaker 6: come up with a financial settlement and kind of move
Speaker 6: forward and just is that kind of where we are?
Speaker 4: Is that the model?
Speaker 10: It's all unclear. I mean, we know what happened with Harvard,
Speaker 10: as we talked about yesterday. They had an incremental win.
Speaker 10: The court ruled in their favor. But we're just waiting
Speaker 10: for the administration to appeal as they said they would.
Speaker 10: It'll probably go up to the Supreme Court. So, you know,
Speaker 10: even though Harvard won an incremental victory, I mean, the
Speaker 10: judge did not rule on the funding free so that continues.
Speaker 10: It still shows a lot of uncertainty. You know, Harvard
Speaker 10: is still not going to be getting any new grants,
Speaker 10: so and that still has a tremendous impact. You know,
Speaker 10: even though international students are okay there now, it still
Speaker 10: is a dampening on if I'm an international student, do
Speaker 10: I want to come to a school like, even though
Speaker 10: Harvard is my dream school, if things could be uncertain
Speaker 10: you know, it just it ramps up so much financial uncertainty.
Speaker 2: Yeah, it's just easier to go to the UK, or
Speaker 2: to Australia or somewhere else.
Speaker 3: Which school has settled on something with the White House.
Speaker 3: It's only Columbia, right.
Speaker 10: No Brown Brown fifty million dollars settlement and theirs was
Speaker 10: pretty smart because it gave fifty million dollars to develop
Speaker 10: workforce within the state of Rhode Island. So in some
Speaker 10: ways it really bolsters their relationship with their neighbors. Penn
Speaker 10: very early settled about transgender athletes.
Speaker 2: So you know, I think the way everyone else is outstanding,
Speaker 2: and that the goalposts cay move, keep moving on this
Speaker 2: correct and you know again.
Speaker 10: It's we don't know what's going on behind the scenes.
Speaker 10: We think Cornell is, we think Northwestern is, Harvard is.
Speaker 3: Harbord keeps thinking it's done, but it's not right.
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