WEBVTT - More Tech Layoffs and Generative AI 0:00:13.560 --> 0:00:16.040 I'm Caroline High and Blue Mugs World headquarters in New York, 0:00:16.079 --> 0:00:19.720 and this is Blue Mug Technology. We talked layoffs, salesforce 0:00:19.760 --> 0:00:22.240 and video on the latest to announced cuts in an 0:00:22.239 --> 0:00:25.000 effort of curb spending. We break down the most vulnerable 0:00:25.040 --> 0:00:28.720 areas in tech this year. Meanwhile, Tesla rebounds after Kathy 0:00:28.760 --> 0:00:31.040 would vise the dip. We'll dig into the ball in 0:00:31.080 --> 0:00:34.560 the bear case for the ev maker and generative tech. 0:00:34.760 --> 0:00:36.839 It's already the next big thing in Silicon Valley. We 0:00:36.920 --> 0:00:40.960 discussed the risks and rewards for AI based platforms like 0:00:41.080 --> 0:00:45.360 chat GPT, but first, so far ahead of investment strategy, 0:00:45.400 --> 0:00:47.640 Lizzie Young is with us to talk all about well, 0:00:47.680 --> 0:00:49.879 really the moon music around investors at the moment. There 0:00:50.040 --> 0:00:53.120 is caution, there is worry, there is more macro headwinds 0:00:53.159 --> 0:00:57.040 to come. It feels like, yeah, there is, But none 0:00:57.080 --> 0:00:59.200 of this is really new. I think a lot of 0:00:59.240 --> 0:01:01.960 this has left or from December, and we had a 0:01:02.000 --> 0:01:04.520 really rough month in December, especially at a time when 0:01:04.560 --> 0:01:07.480 it was supposed to be this year end rally possibility. 0:01:07.560 --> 0:01:11.680 None of that actually came to fruition. So investors heard 0:01:11.720 --> 0:01:16.119 again from the FED today about their determination to keep 0:01:16.200 --> 0:01:20.280 rates higher. Again, not new news, So anybody that was 0:01:20.319 --> 0:01:23.800 caught flat footed on those minutes, I think maybe hasn't 0:01:23.880 --> 0:01:26.720 really been paying attention. So, yes, they're going to keep 0:01:26.840 --> 0:01:29.039 rates higher. But here's the good news. We may know 0:01:29.200 --> 0:01:31.680 by the end of the first quarter whether or not 0:01:31.720 --> 0:01:34.920 they're done hiking. Right now, the only thing that's baked 0:01:34.920 --> 0:01:37.440 in is twenty five basis points in February and another 0:01:37.440 --> 0:01:39.840 twenty five in March, and then that might be the 0:01:39.959 --> 0:01:42.360 end of raising rates, and then we just have to 0:01:42.360 --> 0:01:46.280 figure out how long they pause for to that end. 0:01:46.840 --> 0:01:50.240 Have we seen enough of that starting to be baked 0:01:50.240 --> 0:01:53.880 into the overall valuations, particularly in the world of technology, 0:01:53.880 --> 0:01:55.760 we have seen some of the big tech names, Apple 0:01:55.840 --> 0:01:58.360 for example, really rolling over. How have we baked in 0:01:58.440 --> 0:02:00.280 enough of the bad news when it comes to interest 0:02:00.360 --> 0:02:04.200 rate heights. I think we've baked in the idea of 0:02:04.280 --> 0:02:09.080 monetary tightening, so that happened largely in obviously the huge 0:02:09.160 --> 0:02:12.360 drawdowns that we saw, particularly in growthy areas of the market, 0:02:12.600 --> 0:02:16.560 So we've baked in basically the FEDS hawkishness. What is 0:02:16.600 --> 0:02:19.240 not yet baked in is whether or not we're going 0:02:19.280 --> 0:02:22.520 to confirm a recession. So if we do confirm a recession, 0:02:22.560 --> 0:02:25.200 and I think we would know that by labor markets 0:02:25.240 --> 0:02:28.560 actually starting to crack, then stocks likely need to go 0:02:28.600 --> 0:02:32.720 down further. Usually recessionary drawdowns are beyond and the furthest 0:02:32.760 --> 0:02:35.960 we've gotten so far. As The other thing that I 0:02:36.000 --> 0:02:39.000 don't think is quite baked in yet is when earnings 0:02:39.040 --> 0:02:42.480 revisions come down even further. Right now, they're still showing 0:02:42.919 --> 0:02:46.400 estimates for three as you're over your growth being pretty 0:02:46.440 --> 0:02:49.720 flat compared to two. I can't imagine that that's going 0:02:49.760 --> 0:02:52.120 to end up being the case In an environment where 0:02:52.440 --> 0:02:55.720 revenues are likely to come down, wage pressures are likely 0:02:55.760 --> 0:02:58.200 to stay sticky, and companies are going to see their 0:02:58.200 --> 0:03:00.520 bottom line and their margins get pressured. So I would 0:03:00.520 --> 0:03:03.400 expect earnings revisions to come in and show more of 0:03:03.440 --> 0:03:05.760 a contraction somewhere in the range of five to ten 0:03:05.840 --> 0:03:08.079 percent for the year. I don't think that's all priced 0:03:08.120 --> 0:03:10.359 in yet either. Well said and in fact sort of 0:03:10.400 --> 0:03:12.280 agreeing with you is Mike Wilson, of course, a bit 0:03:12.320 --> 0:03:14.720 of a perma bear. The right bear it was last 0:03:14.800 --> 0:03:16.440 year in terms of some of his calls is over 0:03:16.440 --> 0:03:18.680 a Morgan Stanley. He had this to say when we 0:03:18.720 --> 0:03:21.080 heard the news out of salesforce, the job cuts, and indeed, 0:03:21.160 --> 0:03:23.000 whether or not big tech is a good cost cutter, 0:03:23.080 --> 0:03:26.079 just take a listen list. I think the concerns about 0:03:26.120 --> 0:03:29.399 tech companies, John, is that they're not good cost cutters traditionally, 0:03:29.560 --> 0:03:31.960 right there, their growth companies, they tend to want to 0:03:32.000 --> 0:03:35.880 invest into these downturns. They they want to invest, you know, 0:03:36.000 --> 0:03:38.320 aggressively through all periods of time, and they're just not 0:03:38.360 --> 0:03:40.280 good at cost cutting, and so they're gonna be late 0:03:40.280 --> 0:03:42.360 on that. They're probably not going to do enough, and 0:03:42.400 --> 0:03:44.320 so it will take me longer than you think, and 0:03:44.400 --> 0:03:46.920 so the margin degradation can be more severe in those 0:03:46.960 --> 0:03:50.040 areas as you're racing for more cost cutting and and 0:03:50.120 --> 0:03:55.600 indeed perhaps not that effective cost cutting coming from big tech. Well, look, 0:03:55.640 --> 0:03:57.400 I have a lot of respect for Mike. I've been 0:03:57.400 --> 0:03:59.480 called a perma bear this year and for the last 0:03:59.480 --> 0:04:02.360 twelve months because I continue to be cautious. So I 0:04:02.400 --> 0:04:04.560 align with a lot of the things that he's saying. Now, 0:04:05.000 --> 0:04:07.800 tech companies cutting costs, He's probably right that they're not 0:04:07.880 --> 0:04:10.520 used to doing that. He is right that growth companies 0:04:10.520 --> 0:04:13.480 do tend to reinvest in the business. That's the idea 0:04:13.600 --> 0:04:15.840 of a growth company. That's why you also don't find 0:04:16.000 --> 0:04:18.400 a lot of growth companies that pay out dividends or 0:04:18.440 --> 0:04:21.720 engage in stock buybacks, because they're taking that capital that's 0:04:21.720 --> 0:04:25.560 available and reinvesting it into the growth of the business. 0:04:25.839 --> 0:04:29.360 Where I think any business is going to suffer ine 0:04:29.600 --> 0:04:31.800 is in what he said if they wait too long 0:04:31.880 --> 0:04:35.159 to cut costs, because if and when the labor market 0:04:35.200 --> 0:04:38.919 starts to show signs of weakness, the consumer likely pulls back. 0:04:39.320 --> 0:04:42.400 That can happen very quickly, and if companies are only 0:04:42.440 --> 0:04:45.480 modeling out one quarter one half of the year at 0:04:45.480 --> 0:04:48.840 a time, they might not cut costs quickly enough in 0:04:48.920 --> 0:04:52.880 order to pivot and catch sort of that revenue degradation 0:04:52.920 --> 0:04:55.800 that could happen as a result of lower consumer spending. 0:04:56.000 --> 0:04:59.960 What are some of the upside risks is the up 0:05:00.040 --> 0:05:02.360 side risks so that if we do have a recession, 0:05:02.640 --> 0:05:04.760 what we need to continue paying attention to is that 0:05:04.839 --> 0:05:09.000 it would reset the business cycle. I said that in Outlook, 0:05:09.000 --> 0:05:11.560 I'm going to keep saying that probably for the entire 0:05:11.600 --> 0:05:14.400 first half of the year, we do need to reset 0:05:14.400 --> 0:05:18.040 the business cycle. We are decidedly late cycle right now 0:05:18.240 --> 0:05:20.640 in order to get back to early cycle. A recession 0:05:20.680 --> 0:05:23.599 would reset it, and then we can start talking about 0:05:23.839 --> 0:05:26.640 where are the opportunities, What are the opportunities that we 0:05:26.640 --> 0:05:30.640 would see in a classic coming out of a recession scenario. 0:05:30.800 --> 0:05:33.720 And in that case, I would be looking at cyclicals, 0:05:33.720 --> 0:05:36.239 I'd be looking at small cap value. If the market 0:05:36.279 --> 0:05:39.720 gets down below thirty, I'd start looking at cyclical parts 0:05:39.720 --> 0:05:42.880 of tech like semiconductors. So we can start to think 0:05:42.920 --> 0:05:45.720 about that. The other thing that's positive is that bonds 0:05:45.800 --> 0:05:49.120 are again a decent option and they are trading at 0:05:49.160 --> 0:05:52.360 really good valuations. But the time is now before a 0:05:52.480 --> 0:05:56.480 recession is confirmed. You talking treasuries here, or what about 0:05:56.520 --> 0:05:59.599 Coote predict because actually some of bug intelligence are anticipating 0:05:59.640 --> 0:06:02.599 a whole load row perhaps corporate debt to be issued 0:06:02.640 --> 0:06:05.039 by some of the big tech companies. Yeah, that good. 0:06:05.080 --> 0:06:07.679 Good idea to distinguish that I am talking about treasury 0:06:07.760 --> 0:06:11.360 is the time is now in treasuries, particularly two year treasuries, 0:06:11.360 --> 0:06:15.800 before a recession is confirmed. Corporate debt. However, the way 0:06:15.800 --> 0:06:17.919 that we look at that is typically the spreads, and 0:06:17.960 --> 0:06:20.120 you can look at the spreads over the ten year 0:06:20.160 --> 0:06:25.000 treasury for example, corporate debt has not shown recessionary valuations 0:06:25.080 --> 0:06:27.200 at this point, So I would say corporate debt is 0:06:27.279 --> 0:06:30.360 kind of in that equity market camp where it's shown 0:06:30.560 --> 0:06:34.880 some valuation compression but not enough to say that, Okay, 0:06:34.880 --> 0:06:36.640 we're ready for the recession to be here, or that 0:06:36.680 --> 0:06:39.440 we're we have actually priced in a recession. So I 0:06:39.440 --> 0:06:42.200 would expect corporate debt and credit spreads, particularly in the 0:06:42.240 --> 0:06:45.480 high yield space, to blow out wider before they start 0:06:45.520 --> 0:06:48.720 to come back in again. And let's just for of you, 0:06:48.960 --> 0:06:50.840 whether they be a retail investor whether it be more 0:06:50.839 --> 0:06:55.039 of an institutional investor. Are you thinking in the next 0:06:55.080 --> 0:06:58.800 once we've got so much uncertainty, still upside risk, sanity downside, 0:06:58.800 --> 0:07:02.080 more cautious trading upon us. Is it best to be 0:07:02.160 --> 0:07:04.600 broad or is it better to be doing your fundamental 0:07:04.680 --> 0:07:07.240 analysis on individual companies. Is it well the earnings that 0:07:07.279 --> 0:07:08.680 you start to look at, or is it more the 0:07:08.760 --> 0:07:10.720 macro in the data that you're going to be focused on. 0:07:12.960 --> 0:07:15.360 Year was absolutely a year of the macro. Is a 0:07:15.440 --> 0:07:19.360 very macro driven environment, is likely to have some macro 0:07:19.520 --> 0:07:22.240 forces still hanging over our heads. Obviously in the middle 0:07:22.240 --> 0:07:24.760 of a rate hiking cycle. But the good news about 0:07:24.800 --> 0:07:26.760 that is that I think the rate hiking cycle is 0:07:26.800 --> 0:07:30.680 beginning to mature, so some of those macro forces won't 0:07:30.720 --> 0:07:34.240 be as interesting to the market anymore. Like we've already discussed, 0:07:34.280 --> 0:07:36.760 I think a lot of that monetary tightening has really 0:07:36.800 --> 0:07:39.080 been baked in, so it is important to look at 0:07:39.120 --> 0:07:42.320 the fundamentals. It's definitely important to look at the quality 0:07:42.760 --> 0:07:45.560 of a company and their ability to generate revenue, their 0:07:45.560 --> 0:07:49.080 ability to cut costs and manage not only what they're 0:07:49.080 --> 0:07:51.800 reinvesting in the business, but what they're able to return 0:07:51.880 --> 0:07:55.680 to shareholders. And that's why dividend strategies have been so popular, 0:07:55.720 --> 0:07:59.080 because it has been this returning some of that value 0:07:59.120 --> 0:08:03.480 to shareholders. Fundamentals are absolutely important. Valuations are probably the 0:08:03.680 --> 0:08:08.760 most important part of the fundamental story in smart words 0:08:09.000 --> 0:08:10.800 as we look ahead to what's going to be another 0:08:10.840 --> 0:08:13.400 turbuline here. I'm sure Lizzie Young, we always appreciate your 0:08:13.440 --> 0:08:24.880 time so far ahead of investor strategy stay well. The 0:08:24.920 --> 0:08:27.360 way to think of this is there was the Stewapoli 0:08:27.560 --> 0:08:31.600 between Google and Meta. They now control less than half 0:08:31.600 --> 0:08:34.520 of the advertising money, so that their overall control that's 0:08:34.520 --> 0:08:37.600 supplient as other areas have grown, and so what has 0:08:37.679 --> 0:08:42.720 happened is television with connected TV streaming is digital also, 0:08:42.800 --> 0:08:45.880 and it's now benefiting in the same way that digital 0:08:45.960 --> 0:08:49.440 advertising benefited Google and Meta, and so you see this 0:08:49.559 --> 0:08:52.920 growth occurring there more customers coming into the market, they're 0:08:52.960 --> 0:08:57.000 spending more. It's diversifying the customer base away from just 0:08:57.360 --> 0:09:00.599 a thousand or two thousand advertisers to many. War and 0:09:00.720 --> 0:09:04.480 so television is coming on strong as his third big 0:09:04.520 --> 0:09:09.400 scale channel that's now a true digital channel. Mountain CEO 0:09:09.440 --> 0:09:12.760 there Mark Douglas talking about the advertising industries shift away 0:09:12.800 --> 0:09:15.600 perhaps and Meta and Google to those new players in 0:09:15.640 --> 0:09:17.920 the media arena. And in fact, some of those media 0:09:18.000 --> 0:09:22.160 names that offer streaming profit offerings are really rallying and 0:09:22.200 --> 0:09:24.320 they've been running hard on the day, Paramount and more 0:09:24.360 --> 0:09:26.360 than eight percent, Warner Brothers up more than eight percent 0:09:26.440 --> 0:09:29.680 as well. Analysts even though still seem to see weak 0:09:29.720 --> 0:09:32.920 ad demand eluser streaming profitability. In fact, mcquarie was the 0:09:32.960 --> 0:09:35.800 latest to cite such concerns on the day. So what 0:09:36.040 --> 0:09:38.480 is the ball the bear case of media companies and 0:09:38.480 --> 0:09:41.160 which streaming offerings are likely to win out? Got the 0:09:41.200 --> 0:09:43.520 perfect take for you. An analyst of course, who had 0:09:43.559 --> 0:09:45.640 the charge on Netflix, upgrading it to a buy from 0:09:45.640 --> 0:09:47.719 Cell in the previous week, Ken ley On as a 0:09:47.760 --> 0:09:50.360 director of equity research over at cfr A and Ken 0:09:50.840 --> 0:09:54.000 just talk to us about the immediate short term rallies 0:09:54.000 --> 0:09:56.160 that we're seeing in some of these companies. I mentioned 0:09:56.200 --> 0:10:00.839 Warner Brothers paramounts. Does it take you by surprise? So 0:10:01.080 --> 0:10:04.760 it's really looking at the business and whether this is 0:10:04.760 --> 0:10:07.920 a market that's going to grow and there's going to 0:10:08.000 --> 0:10:12.640 be winners and losers. And we're coming off where the 0:10:12.800 --> 0:10:18.400 industry movies and entertainment stocks are down, so that serves 0:10:18.440 --> 0:10:21.760 as a bottom, if you will. Then it's a question 0:10:21.800 --> 0:10:24.960 for analysts to really figure out could there be a 0:10:24.960 --> 0:10:29.680 winner in a highly competitive, new disruptive area, which is 0:10:29.760 --> 0:10:34.160 video streaming and what that does to their business, including 0:10:34.160 --> 0:10:37.760 the legacy areas whether they be broadcast or pay TV 0:10:38.400 --> 0:10:42.600 or film. It's complex and we had to sell on 0:10:42.679 --> 0:10:48.880 Netflix most of two. We switched to a buy because 0:10:49.160 --> 0:10:52.600 doing some soul searching and maybe we were a little 0:10:52.640 --> 0:10:56.480 too severe on the valuation. Say Netflix shouldn't trade at 0:10:56.480 --> 0:11:00.600 a premium to a Water Brothers Discovery paramount or is they? 0:11:00.640 --> 0:11:05.320 But we think today they should because they are really 0:11:05.360 --> 0:11:08.800 focused on winning. Okay, talk to us about the focus 0:11:08.800 --> 0:11:11.760 on winning. Talk to us about whether enough pain, enough stress, 0:11:11.880 --> 0:11:15.320 enough cutting out of the extra fat and the margin 0:11:15.440 --> 0:11:18.120 is preserved over a Netflix, particularly as they've got this 0:11:18.160 --> 0:11:22.640 added edition of advertising revenue coming forward. The download looks 0:11:22.760 --> 0:11:26.640 very good for three and twenty four for this company 0:11:26.679 --> 0:11:30.120 because they're going to have new revenue streams importantly coming 0:11:30.160 --> 0:11:34.560 from advertising going from zero, but taking some fair share 0:11:34.960 --> 0:11:38.280 away from some of the companies you mentioned Google and Meta, 0:11:38.559 --> 0:11:42.559 but also the traditional broadcast area. There is a secular 0:11:42.600 --> 0:11:46.320 shift to streaming, and Netflix has a management that's been 0:11:46.360 --> 0:11:50.640 in place for ten years. They've organically grown a global 0:11:50.720 --> 0:11:55.760 based technology platform and library and shows that people want 0:11:55.800 --> 0:11:59.160 to watch. They also have a wide range of rain 0:11:59.240 --> 0:12:03.640 plants today with a new add pay plan of six 0:12:03.760 --> 0:12:07.199 ninety nine, but most of the affluent viewers are paying 0:12:09.080 --> 0:12:13.559 for higher features and high death Add to that, well, 0:12:13.600 --> 0:12:17.400 what are the competitors doing? Each of these has changing managements, 0:12:17.679 --> 0:12:22.120 They're dealing with complex mergers, they're not sure what they 0:12:22.120 --> 0:12:24.520 want to keep or what they want to sell, and 0:12:24.559 --> 0:12:27.800 they're also trying to figure out really in terms of 0:12:27.840 --> 0:12:30.120 how are they going to win the streaming as they 0:12:30.160 --> 0:12:34.320 hold on to either legacy businesses and broadcasts or other 0:12:34.360 --> 0:12:38.240 areas like parks. That's very difficult to do. So I 0:12:38.280 --> 0:12:42.520 think Netflix has the chance to outrun its competitors, and 0:12:42.559 --> 0:12:46.200 we're definitely going to see it in It's interesting that 0:12:46.200 --> 0:12:49.679 you said changing management. Of course, it's sort of revolving 0:12:49.720 --> 0:12:51.920 in some way, particularly when you think about the company 0:12:51.960 --> 0:12:54.920 that does indeed have parks one Disney. How wou do 0:12:55.000 --> 0:12:57.720 you think is Bill Bigo a net positive in general 0:12:57.720 --> 0:12:59.400 for that business at the moment, particularly when it comes 0:12:59.400 --> 0:13:03.959 to the focus on dreaming. So I haven't covered Disney 0:13:04.080 --> 0:13:07.040 or these companies for ten years, but you know, my 0:13:07.120 --> 0:13:10.640 observation is Bob Iger's coming back to do the job 0:13:10.679 --> 0:13:14.680 he was unfulfilled. He made an enormous acquisition back two 0:13:14.720 --> 0:13:19.000 thousand nineteen. Disney has high debt. They're trying to generate 0:13:19.400 --> 0:13:23.520 higher cash flow and earnings and return to shareholders. They 0:13:23.559 --> 0:13:26.360 don't pay a dividend, they don't buy backstock. But this 0:13:26.520 --> 0:13:30.960 is Disney h stocks cheap trading below ninety So we 0:13:31.080 --> 0:13:35.520 have a view that I could probably will do things 0:13:35.559 --> 0:13:39.120 that will be positive for shareholders. Well, we're not sure 0:13:39.160 --> 0:13:42.320 what it is. They have a put coal with Comcast 0:13:42.400 --> 0:13:45.839 for Hulu. That's a big number. They have to decide 0:13:46.080 --> 0:13:50.400 from activists like low what to do with ABC or 0:13:50.679 --> 0:13:54.000 espn uh. And it's complex and at the end of 0:13:54.040 --> 0:13:57.400 the day, the heart of this company is not video 0:13:57.520 --> 0:14:01.480 streaming Disney plus Uh. It's going to be challenging compared 0:14:02.040 --> 0:14:06.400 to Netflix, which is organically a hundred percent focus on 0:14:06.640 --> 0:14:11.559 video streaming and that's where viewers are going. Advertisers are 0:14:11.679 --> 0:14:15.800 following a little bit slower, but they're switching over to 0:14:15.920 --> 0:14:19.600 the streaming market and that's really going to benefit the 0:14:19.680 --> 0:14:23.480 stronger players. Well, there's another strong day for Netflix trading 0:14:23.600 --> 0:14:26.280 as well. On the day I'm almost five percent Kenny 0:14:26.280 --> 0:14:28.120 on It is great to catch up with you, stay well, 0:14:28.160 --> 0:14:30.800 Director Equity Research over at c f R A with 0:14:30.880 --> 0:14:34.400 that or double rays for Netflix last week to a buy. Meanwhile, 0:14:34.440 --> 0:14:36.640 another story we continue to watch and we stick on 0:14:36.800 --> 0:14:39.120 kind of the focus on advertising because Facebook's pair at 0:14:39.160 --> 0:14:42.840 Meta platforms then find four million dollars by the European 0:14:42.920 --> 0:14:45.600 Union's main privacy watchdog. The penalty has to do with 0:14:45.640 --> 0:14:48.600 the way users data is used for personalized ads on 0:14:48.640 --> 0:14:52.080 Facebook and Instagram. Meta has three months to ensure the 0:14:52.120 --> 0:14:57.200 processing of such information complies with eating rules coming up 0:14:57.440 --> 0:15:01.160 or shares a salesforce. They rose after a pretty painful announcement, 0:15:01.240 --> 0:15:03.920 and that's about cutting stuff by about ten percent. More 0:15:03.960 --> 0:15:06.920 of the company's restructuring plans. That's next, And as we 0:15:06.960 --> 0:15:08.720 had to break, let's take a little look at Apple 0:15:09.080 --> 0:15:12.160 shares losing shine after an argly month. The stock fell 0:15:12.240 --> 0:15:15.200 top percent in December, taking the company's market value below 0:15:15.240 --> 0:15:17.800 that are two trillion dollars. Now, investors are concerned that 0:15:17.840 --> 0:15:21.440 matters could get worse because of course delays in iPhone production. 0:15:21.760 --> 0:15:25.080 What's of course continue with China's COVID and weakening demand 0:15:25.200 --> 0:15:39.640 as the economy slows down from New York and look, 0:15:39.720 --> 0:15:42.760 they keep on coming layoffs and the tech industry, this 0:15:42.920 --> 0:15:45.440 time Salesforce announcing it will cut about ten percent of 0:15:45.440 --> 0:15:49.480 its workforce and indeed reduce real estate holdings. Joining us 0:15:49.480 --> 0:15:52.360 now as Bloomberg technophor to Brodie Ford who helped and 0:15:52.440 --> 0:15:55.080 analyze what was put out as a statement by the company, 0:15:55.240 --> 0:15:58.040 and do we have any hints of wear or or 0:15:58.440 --> 0:16:01.640 or you know, geographies of anything around these sorts of cups. 0:16:01.880 --> 0:16:04.040 It appears to be very broad based at this time. 0:16:04.080 --> 0:16:07.840 I've spoken that people from legal to philanthropy to sales 0:16:07.880 --> 0:16:10.320 recruiting I think when we see a big layoff like this, 0:16:10.400 --> 0:16:13.240 we assume all you cut all the recruiters, all the 0:16:13.280 --> 0:16:15.760 sales people, but there are some engineers in there too. 0:16:15.800 --> 0:16:19.680 It appears pretty broad. Um, everybody knows Salesforce is one 0:16:19.720 --> 0:16:23.160 of the biggest employers in San Francisco. If it is 0:16:23.200 --> 0:16:26.320 an equal layoff across their geographies, that would mean about 0:16:26.320 --> 0:16:29.080 a thousand people cut from San Francisco at a time 0:16:29.080 --> 0:16:33.160 when obviously their downtown is struggling. And to that end, 0:16:33.320 --> 0:16:35.400 do be therefore worry about San Francisco in the real 0:16:35.560 --> 0:16:37.480 estate therefore that they have there, if they're going to 0:16:37.560 --> 0:16:39.480 be sort of coming to an end of some of 0:16:39.520 --> 0:16:42.400 their leases. Well, what's funny about this is that they're 0:16:42.400 --> 0:16:44.520 talking about they're cutting leases, but at the same time 0:16:44.560 --> 0:16:47.840 they're saying, we're forcing some people back to the office. Right. 0:16:47.920 --> 0:16:51.120 Salesforce has said, you know, a year or two ago, 0:16:51.240 --> 0:16:53.960 Benny Office, I was saying, we're never going back, but 0:16:54.840 --> 0:16:57.360 there are some sales people being forced back to the office. 0:16:57.440 --> 0:17:00.560 Management is increasingly focused on product to the and these 0:17:00.600 --> 0:17:04.320 kinds of measures. So, you know, are they cutting some 0:17:04.400 --> 0:17:07.760 real estate? Yeah, but the tower is not going anywhere. 0:17:08.600 --> 0:17:10.399 Even if it was sinking at one point around that 0:17:12.880 --> 0:17:16.399 is this it intense of announcements, do you think? And 0:17:16.840 --> 0:17:19.520 more to the point, how does it dent the culture 0:17:19.600 --> 0:17:21.879 or actually take away some of that anxiety because there 0:17:22.000 --> 0:17:24.440 was commult were reporting with you almost on a daily 0:17:24.480 --> 0:17:27.960 basis last year about changes at the top of this business, 0:17:28.080 --> 0:17:30.560 and now it's going to be filtering down. I would 0:17:30.560 --> 0:17:33.240 say almost no one is surprised that there was a layoff. 0:17:33.280 --> 0:17:35.320 I mean, everybody I spoke to said that there was 0:17:35.359 --> 0:17:38.080 that kind of fear in the air. Um, the scale 0:17:38.160 --> 0:17:40.280 of it is higher than's unexpected. I think I was 0:17:40.320 --> 0:17:43.160 hearing the number around five thousand a little more often 0:17:43.160 --> 0:17:45.280 it was eight thousands. So it was large. And of 0:17:45.320 --> 0:17:47.720 course no one wants new rolling layoffs. I don't think 0:17:47.760 --> 0:17:51.359 management is planning to do another big layoff tomorrow. But hey, 0:17:51.400 --> 0:17:53.880 it's a worsening macro. They're doing this because they're seeing 0:17:53.920 --> 0:17:56.720 slow in growth and they need better profits. So I mean, 0:17:56.720 --> 0:17:58.560 I don't think we can confidently say that this is it. 0:17:59.000 --> 0:18:01.720 I mean, and our viewers would agree. We took to 0:18:01.760 --> 0:18:04.480 Twitter asking really whether the worst is behind us? Will 0:18:04.520 --> 0:18:08.080 take layoffs? And no, fifty three let's called. I think 0:18:08.160 --> 0:18:11.440 still there's more to come. You cover a broad range 0:18:11.440 --> 0:18:15.320 of companies, is it those most focused on selling into 0:18:15.359 --> 0:18:18.160 corporate businesses? We were just hearing about, of course Microsoft, 0:18:18.240 --> 0:18:21.040 the downgrade from ubs today, the warriors about Azure and 0:18:21.040 --> 0:18:22.760 they sort of the weak parts of the tech space 0:18:22.840 --> 0:18:24.840 right now. Well, what's funny is for a while it 0:18:24.920 --> 0:18:26.840 was if you were enterprise, you are good. It was 0:18:26.880 --> 0:18:29.760 the consumer facing market that's the one that was in danger. 0:18:30.240 --> 0:18:33.680 But as those consumer businesses have gotten more in trouble, 0:18:34.080 --> 0:18:37.560 but people whom sell those companies software are seeing it too, 0:18:37.640 --> 0:18:40.040 So it's kind of trickling up now to those places 0:18:40.040 --> 0:18:42.679 that were a little safer. Your Salesforce is your Microsoft. 0:18:43.480 --> 0:18:46.440 So as long as the picture is worsening in terms 0:18:46.440 --> 0:18:49.159 of consumer demand, I think it's still will hit the 0:18:49.280 --> 0:18:52.960 enterprise players. Brodie, thank you bringing us all in the 0:18:52.960 --> 0:18:55.680 analysis and this news, Brodie forward And of course Salesforce 0:18:55.720 --> 0:18:57.600 isn't the only company out with layoff news. Even on 0:18:57.640 --> 0:19:01.080 the day. On Wednesday, Video announced it will elevens global 0:19:01.119 --> 0:19:04.680 full time workforce, also to focus on the company's sustainable, 0:19:04.720 --> 0:19:07.919 profitable growth. Shares of the video software company rose about 0:19:08.040 --> 0:19:18.280 to see fight sent on the news. I use it 0:19:18.280 --> 0:19:22.359 every day. It makes driving safer less stressful. Uh and 0:19:22.359 --> 0:19:25.480 and I'm less tired after driving. It's a great product. 0:19:25.680 --> 0:19:28.200 And by the way, it improved yesterday while it was 0:19:28.240 --> 0:19:30.919 sitting in my driveway. The car I owned today is 0:19:31.000 --> 0:19:34.040 better than the car I owned yesterday. It's the pragmatic case. 0:19:34.240 --> 0:19:37.240 I mean, like, let's be honest, this is a world 0:19:37.320 --> 0:19:41.600 class um product that people love and that makes them 0:19:41.640 --> 0:19:46.160 safer and gets him to and from places faster and easier. Uh. 0:19:46.200 --> 0:19:49.280 And I don't expect it that that hasn't changed. Uh 0:19:49.280 --> 0:19:54.120 And so we expected to continue. Welcome back to Rebot Technology. 0:19:54.160 --> 0:19:55.760 I'm Counterline Herd in New York. And that, of course 0:19:55.840 --> 0:19:58.840 was our chief futurist Brett Winton, who Tuesday was talking 0:19:58.840 --> 0:20:01.360 about that the bull hey sequeled at the Pragmatic case. 0:20:01.480 --> 0:20:03.960 The bull case of Tesla, which has been under pressure 0:20:03.960 --> 0:20:07.120 after announcing a delivery miss. Another ball is Brett's foss 0:20:07.200 --> 0:20:09.879 Cathy Wood, who has bought the dip no doubt helping 0:20:09.920 --> 0:20:12.359 the bounce back. On Wednesday, I want to dig into 0:20:12.400 --> 0:20:15.320 Tesla a little bit more about well, really, where this 0:20:15.520 --> 0:20:17.880 price is going, where the fundamentals are going. The Morning 0:20:17.880 --> 0:20:21.119 Star equity strategist Seth Goldstein seth great to catch up 0:20:21.160 --> 0:20:23.359 with you, and look, you've got to buy on this stock. 0:20:23.440 --> 0:20:26.760 And like many others, you see the price basically doubling 0:20:26.800 --> 0:20:28.840 to about two or thirty one is where the general 0:20:29.119 --> 0:20:31.719 price target is for this year in the next twelve 0:20:31.720 --> 0:20:34.960 months for Tesla and you have about two twenty. Can 0:20:34.960 --> 0:20:37.160 you talk us through the reasoning why you think this 0:20:37.240 --> 0:20:41.199 is a by the dip moment. Yeah, so so tepla 0:20:41.320 --> 0:20:44.159 and shifting into a lower growth mode. The growth is 0:20:44.200 --> 0:20:46.040 still there in the fact of that a reason more 0:20:46.119 --> 0:20:48.560 price right now? You know a lot of the lot 0:20:48.600 --> 0:20:51.800 of the antillary businesses like fullth self driving and essentially 0:20:51.840 --> 0:20:54.840 growth of the insurance are being heavily dipcounted, as well 0:20:54.840 --> 0:20:58.159 as future card saving that management can still implement as 0:20:58.160 --> 0:21:02.560 they're ramped up at factory and had accused a battery 0:21:02.640 --> 0:21:06.000 day goals that will still drive marked than higher fie 0:21:06.119 --> 0:21:09.560 popper growth in accept the revenue growth even if revenue 0:21:09.560 --> 0:21:11.920 growth is more in the I teams over the next 0:21:11.960 --> 0:21:15.680 ten years instead of manage target. So we feel out 0:21:15.680 --> 0:21:18.600 of upside in the stock at current pre is it 0:21:18.720 --> 0:21:24.680 then a story of show me stock? What's interesting is yes, 0:21:24.840 --> 0:21:28.159 they did miss the targets their own internal targets to 0:21:28.240 --> 0:21:32.560 deliver more than growth in terms of deliveries last quarter, 0:21:32.680 --> 0:21:35.560 and they missed it. They got in is still strong? 0:21:35.880 --> 0:21:39.080 Do we need to have more clarity, more real sort 0:21:39.080 --> 0:21:43.679 of basic analysis and future guidance coming from Tesla so 0:21:43.720 --> 0:21:48.520 we can set our sites a little bit more realistically. Yeah, 0:21:48.560 --> 0:21:52.439 I think that certainly would help management. Just for saying 0:21:52.480 --> 0:21:54.760 that we effect the growth fifty percent a year and 0:21:54.840 --> 0:21:58.359 delivery over a multi year period does not really help 0:21:58.480 --> 0:22:01.640 with yearly year guidance, especially as Tesla is now big 0:22:01.760 --> 0:22:05.000 enough to start seeing a demand impact from an economic slowdown. 0:22:05.240 --> 0:22:07.119 You know, now that they've got there at one point 0:22:07.119 --> 0:22:10.480 three million vehicles annually, they're gonna start to see some 0:22:10.560 --> 0:22:13.200