WEBVTT - Dan Ives on Tesla/Apple (Radio)

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<v Speaker 1>We're joined by Dan Ives, managing director and senior equity

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<v Speaker 1>analyst of wed Bush Securities, Dancy to talk about Tyler,

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<v Speaker 1>among other things, missing a delivery forecasts and the third quarter.

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<v Speaker 1>Dan um ms shure three forty three thousand cars got

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<v Speaker 1>delivered in the quarter. But that's still a record. So

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<v Speaker 1>what's the more important number here? Is the cup half

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<v Speaker 1>full or is the cup half empty? Yeah? I think

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<v Speaker 1>it's gonna be half empty in terms of the reaction

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<v Speaker 1>because it's a miss. It's about five percent miss on

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<v Speaker 1>deliveries relative to what the street was expecting, and clearly

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<v Speaker 1>logistical issues put into it, especially I think in China,

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<v Speaker 1>but especially in this white knocko environment. I mean, I

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<v Speaker 1>think the stock will be under pressure as investors worry

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<v Speaker 1>that the demand story is starting to wean a bit. Okay,

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<v Speaker 1>so tell us about that demand story. You know Tayler

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<v Speaker 1>still makes an enormously popular range of vehicles. Well, why

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<v Speaker 1>do you see demand easing off? Well, on the enterin

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<v Speaker 1>we think demand continues to be robust, and I believe

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<v Speaker 1>this is more of a speed bump and logistical issue

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<v Speaker 1>in terms of delivering cars to customers at the end

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<v Speaker 1>of the quarters, rather than ultimately a demand really starting

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<v Speaker 1>to come off. But I do think what Tesla is

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<v Speaker 1>facing on a lot of automakers are facing, is that

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<v Speaker 1>the supply chain continues to be extremely complex. And Tessa

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<v Speaker 1>demand his outstrip supply, but ultimately, for the Wall Street,

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<v Speaker 1>it's about the numbers. And if you look at this quarter,

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<v Speaker 1>there's no way of sure coaded. It was softer, and

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<v Speaker 1>I think that's something in this market that that the

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<v Speaker 1>bulls didn't I qually didn't want to say, yeah, let's

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<v Speaker 1>look at that supply chain issue a bit more tastes

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<v Speaker 1>like calling it a transportation capacity issues. So getting physically

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<v Speaker 1>the cars to the customers, is that the whole problem

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<v Speaker 1>or is just part of it? How many undelivered cars

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<v Speaker 1>are sitting around on the testa lotton and how many

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<v Speaker 1>are waiting for Patsy We think of fifteen twenty thousand

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<v Speaker 1>roughly in terms of what i'll call either in transit

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<v Speaker 1>or ones that you know ultimately not been delivered to customers.

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<v Speaker 1>It's a problem because it's also the expense. If you

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<v Speaker 1>look in Europe as well as what we've seen in China,

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<v Speaker 1>the expenses to get customers actual cars in their hands

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<v Speaker 1>have been astronomical and I think Tesla has started to

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<v Speaker 1>balance that and basically be fined with ultimate deliveries that

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<v Speaker 1>could push quarter a quarter and that's what happened this quarter.

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<v Speaker 1>And you know, it's something where it puts more pressure

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<v Speaker 1>on the fourth quarter for Tesla because that's really gonna be,

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<v Speaker 1>you know, the big quarter for them in terms of

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<v Speaker 1>from a delivery perspective. So what's your outlook for the stock.

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<v Speaker 1>It's still quite expensive, but broadly flat on years. That's

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<v Speaker 1>a buy right now. Yeah, we view it as a buy.

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<v Speaker 1>I mean, we view this as just the narrow speed

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<v Speaker 1>bump on the broader long term thesis to to where

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<v Speaker 1>ultimately Tessa is gonna go. And to us, it's really

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<v Speaker 1>this is something that I think we'll get over exaggerated

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<v Speaker 1>in terms of the market, but in our opinion that

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<v Speaker 1>this is more of a buying opportunity rather than time

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<v Speaker 1>to throw in the towel. Yeah. Well, Tasla had one

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<v Speaker 1>of its most cluss closely watched events over the past

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<v Speaker 1>few days AI Day. What was some of your takeaways

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<v Speaker 1>from that? Yeah, so that was really more about robotics

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<v Speaker 1>and ultimately what I've used for the next generation of

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<v Speaker 1>Tessa products as well as FSD full self driving. I mean,

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<v Speaker 1>I think what Musk and Tests are trying to show

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<v Speaker 1>is that this is really the start of not just

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<v Speaker 1>the car company, a much more broader technology company. And

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<v Speaker 1>that was really the focus of AI day, really showing

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<v Speaker 1>this is more about the test of story when you

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<v Speaker 1>look past the next three to six months. That's what

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<v Speaker 1>was really the importance of it. Yeah, we got a

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<v Speaker 1>closer look at that Optimus robot. Of course this time

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<v Speaker 1>I wasn't a human in a suit. It was the

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<v Speaker 1>real thing, and it walked out, it waived. What were

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<v Speaker 1>your impressions of that? Because Elon Musk has previously said

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<v Speaker 1>this is going to be a bigger product than the cars. Yeah,

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<v Speaker 1>I think three to five years, it's a huge product.

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<v Speaker 1>And I think it really talks about just the AI

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<v Speaker 1>the technology that's ultimately happening in Tesla, and I think

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<v Speaker 1>that's important in terms of where this is all going

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<v Speaker 1>for Tesla, showing it's more than just a car company.

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<v Speaker 1>And I think if you're at four GM and others

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<v Speaker 1>you're watching that presentation, I think it's jaw dropping in

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<v Speaker 1>terms of the technology they're coming out with. And that's

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<v Speaker 1>why even when you think about deliveries. I think it's

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<v Speaker 1>just the ultimately just the start of what I view

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<v Speaker 1>is just a broader trend for testing. I want to

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<v Speaker 1>talk a little bit about Apple as well, and of

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<v Speaker 1>course you know we had a story out on Bloomberg

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<v Speaker 1>a few days ago also about the iPhone fourteen, Apple

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<v Speaker 1>choosing to maintain production rather than increase it as expected.

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<v Speaker 1>As this any calls for consent from your point of view. Look,

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<v Speaker 1>I think they're clearly seeing softness in the base model,

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<v Speaker 1>but I do believe they're seeing strength in the Pro

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<v Speaker 1>model that's been much stronger than expected. And I still

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<v Speaker 1>think this is one that demand going into holidays is

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<v Speaker 1>going to be strong. But it's a cautionary sign that

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<v Speaker 1>Apple is seeing, and we're seeing across the world that

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<v Speaker 1>demands in some areas, you're gonna start to see some softness,

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<v Speaker 1>and I think it Apple, You've seen that, but it's

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<v Speaker 1>also been neutralized by strength that you're seeing on the

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<v Speaker 1>higher end Pro model. Yeah, the that to what degree

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<v Speaker 1>does that surprise you or is a resilient consumer something

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<v Speaker 1>that we can take for grounded? Now? Well, Look, I

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<v Speaker 1>think Apple is unique because of the golden install basin,

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<v Speaker 1>because of the upgrade cycle, and I think that's something

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<v Speaker 1>where they continue to be what I'll use almost rocket

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<v Speaker 1>gibralder demand despite some of the black clouds are seeing

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<v Speaker 1>in the macro. Yeah, we're also running a story today

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<v Speaker 1>on Bloomberg about the difficulties and diversifying manufacturing away from China.

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<v Speaker 1>We're going to be talking about that a little bit

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<v Speaker 1>in the next hour as well. But in terms of

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<v Speaker 1>Apple's manufacturing base, do you see them increasingly moving away

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<v Speaker 1>from China, towards India, towards other jurisdictions. Well, I think

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<v Speaker 1>slowly they'll diversify, but that's easier said than done. And

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<v Speaker 1>I think China continues to be a mean stay for

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<v Speaker 1>Apple and and that's something that will take years to

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<v Speaker 1>ultimately diversify. But I think they're starting to do that

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<v Speaker 1>given some of the writing on the wall. And how

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<v Speaker 1>about the supply chain issues for Apple, do you see

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<v Speaker 1>these coming to an end? I think they're starting to moderate,

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<v Speaker 1>but into the mid two thousand twenty three it's still

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<v Speaker 1>going to be an issue, but we are starting to

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<v Speaker 1>see that modering. They be They're able to navigate supply

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<v Speaker 1>chain better than any other technology player in the world,

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<v Speaker 1>and it's showing. Yeah, we talked a second ago about Tesla,

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<v Speaker 1>how it's still expensive. Of course, Apple a famously expensive

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<v Speaker 1>stock as well, but also coming off the boiler a

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<v Speaker 1>little at last trade of one thirty twenty. Do you

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<v Speaker 1>buy at this level? We would be buyers of Apple here.

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<v Speaker 1>I think that's been oversold. I still think the demand

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<v Speaker 1>stories holding, and to me in technology, there's no better

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<v Speaker 1>mean that I want to be buying on this weakness

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<v Speaker 1>and Apple all right, then, I've always great to have

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<v Speaker 1>you on the show and to get your expertise and

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<v Speaker 1>your analysis. Dan Ives is managing director and senior equity

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<v Speaker 1>analyst at wet Bush Securities.