WEBVTT - Tesla's China Approval and Paramount's CEO Ousting 0:00:01.480 --> 0:00:02.200 From Bahard. 0:00:02.320 --> 0:00:06.760 We're Innovation, Money and Power Collie in Silicon Valley, NBN. 0:00:07.080 --> 0:00:11.160 This is Bloomberg Technology with Caroline Hyde and Ed Love Love. 0:00:24.360 --> 0:00:27.440 I'm Caroline Heindet Bloomberg's World headquarters in New York and. 0:00:27.520 --> 0:00:29.880 I made Love Low in San Francisco. This is Bloomberg 0:00:29.920 --> 0:00:31.040 Technology coming up. 0:00:31.120 --> 0:00:34.800 Tesla gets some tentative approval for its driving system in China. 0:00:35.159 --> 0:00:40.320 Details ahead plus paramount expected to oustit CEO ahead of 0:00:40.360 --> 0:00:41.519 earning tonight, we'll bring you. 0:00:41.479 --> 0:00:44.640 The latest and so far shares they drop after Q 0:00:44.760 --> 0:00:47.519 two guidance disappoints. We're going to discuss all of it 0:00:47.560 --> 0:00:50.559 with the CEO, Anthony Noto. Well, first, let's checking on 0:00:50.600 --> 0:00:53.960 these markets, because we're cautiously up on the nawstack at 0:00:53.960 --> 0:00:55.960 the moment, up three tenths of a percent. We've got 0:00:55.960 --> 0:00:57.760 a big week. You've got the FED, you've got the 0:00:57.800 --> 0:00:59.200 all important claims, we've. 0:00:59.120 --> 0:00:59.840 Got jobs data. 0:01:00.120 --> 0:01:02.280 Friday, we're seeing the NASDAK still managing to be up 0:01:02.280 --> 0:01:04.200 about forty eight points. Now we're seeing a ten year 0:01:04.240 --> 0:01:06.760 yield actually diving back some four or five basis points. 0:01:06.840 --> 0:01:08.920 Let's call it ahead of the all important Federal Reserve. 0:01:09.200 --> 0:01:12.000 And indeed just where we see this economy, this interest 0:01:12.080 --> 0:01:15.880 rate environment going notably a lot capturing the attention on 0:01:15.880 --> 0:01:18.280 the macro perspective. What's happening in Japan at the moment. Look, 0:01:18.400 --> 0:01:20.920 we've got a holiday period that means some of the 0:01:20.959 --> 0:01:22.959 trading is going to be more muted in Japan, but 0:01:23.040 --> 0:01:25.200 the yen some big volatility over the course of the 0:01:25.240 --> 0:01:28.400 weekend Monday trading, We're down a percentage point on the 0:01:28.440 --> 0:01:30.160 dollar of US as the end the yen goes higher. 0:01:30.720 --> 0:01:34.880 Was it Japanese boj intervention? So far they remain mum 0:01:34.959 --> 0:01:36.800 on the subject. We look forward to what's happening in 0:01:36.840 --> 0:01:40.120 terms of another dollar related asset, this one Bitcoin down 0:01:40.200 --> 0:01:42.600 versus the US dollar by about one and a quarter percent. 0:01:42.720 --> 0:01:44.200 Now we're still seeing perhaps a little bit of a 0:01:44.280 --> 0:01:47.640 risk off feel to bitcoin more generally and atf flows 0:01:47.720 --> 0:01:49.760 for sixty eight hundred and fifty nine, and what are 0:01:49.760 --> 0:01:51.080 you looking at on the micro the ed. 0:01:51.920 --> 0:01:55.920 Well Tesla and Tesla is a big, almost surprise story 0:01:56.200 --> 0:01:59.520 this Monday, the stock up twelve point four percent. It's 0:01:59.560 --> 0:02:02.000 just a few tens percent away from its biggest jump 0:02:02.200 --> 0:02:04.840 since January of twenty twenty two. Very similar gains to 0:02:04.880 --> 0:02:08.760 what we saw April twenty fourth, the day after earnings, 0:02:09.000 --> 0:02:13.480 the story prelim or tentative approval for full self driving 0:02:13.840 --> 0:02:17.560 in China. That's according to a Bloomberg source. Two subsets 0:02:17.600 --> 0:02:21.680 of that a partnership with Baidu on the InCAR mapping 0:02:21.880 --> 0:02:26.080 specifically for the China market, and then also an agreement 0:02:26.200 --> 0:02:29.440 over data and privacy or terms on data and privacy 0:02:29.600 --> 0:02:33.280 that will allow it to move forward with FSD. Big 0:02:33.320 --> 0:02:36.120 reaction in the market. Elon Musk himself went to China 0:02:36.160 --> 0:02:39.079 over the weekend met with Premier Lee Chung, which was 0:02:39.120 --> 0:02:42.440 itself a surprise seven days after he bailed on India. 0:02:42.720 --> 0:02:44.480 And there's a lot to unpick in this one, but 0:02:44.560 --> 0:02:47.080 it's a big move higher on the Tesla stock carract. 0:02:47.160 --> 0:02:49.000 Yeah, we got to digame with none other than Craig 0:02:49.000 --> 0:02:52.760 Shrudelle Bloomberg of course all over this story throughout the 0:02:52.840 --> 0:02:55.799 day and indeed well previous night. It was a surprise, 0:02:56.200 --> 0:02:58.280 and it looks as though the meeting bore fruit. 0:02:58.520 --> 0:02:59.919 What exactly does this mean for. 0:02:59.880 --> 0:03:04.240 The overall robotaxi autonomous vehicle kind of future that elm. 0:03:04.040 --> 0:03:08.720 Pains, Yeah, we have to really separate out robotaxi and 0:03:08.760 --> 0:03:14.079 what Tesla calls full self driving because that nomenclature has 0:03:14.280 --> 0:03:18.160 been a misnomer. It is a driver assistance system. When 0:03:18.200 --> 0:03:21.200 you activate it, you're in control of the vehicle, You're 0:03:21.639 --> 0:03:23.720 responsible for supervising it. 0:03:23.800 --> 0:03:25.480 And if you do get into. 0:03:25.320 --> 0:03:30.399 A crash, Tesla has has shown a tendency to turn 0:03:30.440 --> 0:03:33.080 around and blame you the driver. And so there's a 0:03:33.080 --> 0:03:37.520 big difference between this system Tesla calls FSD and this 0:03:37.640 --> 0:03:41.240 robotaxi that Musk has managed to get Wall Street excited about, 0:03:41.800 --> 0:03:44.120 despite the fact that he's been talking about it as 0:03:44.120 --> 0:03:46.760 a concept now, you know, since twenty sixteen at least. 0:03:47.400 --> 0:03:50.880 But this is a big development in the sense that FSD, 0:03:51.080 --> 0:03:54.960 for all its shortcomings and the progress that still needs 0:03:54.960 --> 0:03:58.440 to be made for it to be you know, you know, 0:03:58.600 --> 0:04:02.840 more widely used and accept it is bringing in incremental revenue, 0:04:03.040 --> 0:04:06.280 but only in certain markets in the US. This is 0:04:06.480 --> 0:04:10.240 something that Tesla charges eight thousand dollars for or ninety 0:04:10.320 --> 0:04:13.160 nine dollars a month subscription. If it can you know, 0:04:13.320 --> 0:04:16.760 make arrangements to get incremental revenue out of its customers 0:04:16.800 --> 0:04:20.960 in China, it could boost its business there at a 0:04:21.000 --> 0:04:22.320 time it could sorely use. 0:04:22.240 --> 0:04:25.480 A lift Craig is best. I can tell you've been 0:04:25.880 --> 0:04:28.120 logged on your Blue Mog terminal for like twenty seven 0:04:28.160 --> 0:04:32.560 hours straight, coordinating our teams in China, the US, in Europe. 0:04:32.839 --> 0:04:35.200 Just to explain the chronology of what happened, there were 0:04:35.279 --> 0:04:39.480 multiple stages to arrive at what is a tentative approval 0:04:39.520 --> 0:04:40.080 for FSD. 0:04:41.520 --> 0:04:44.200 Yeah, I mean we heard rumblings that Musk was maybe 0:04:44.279 --> 0:04:47.360 going to make this trip and you know, lo and behold, 0:04:48.000 --> 0:04:50.760 you know, Sunday, my time here in London. You know, 0:04:50.800 --> 0:04:53.720 we wake up to this idea that, yes, Musk has landed. 0:04:54.520 --> 0:04:57.320 This was a surprise in the sense that Tesla you know, 0:04:57.400 --> 0:05:00.400 doesn't even have a presence at this week's Beijing on show. 0:05:00.440 --> 0:05:02.720 It's a show that got underway last week, but it 0:05:02.800 --> 0:05:06.120 certainly was you know, a timely visit in the sense 0:05:06.160 --> 0:05:08.800 that there are a lot of you know, government officials 0:05:08.839 --> 0:05:12.000 in town for the show. You know, the auto industry 0:05:12.080 --> 0:05:14.920 has absolutely been a bright spot for the Chinese economy, 0:05:15.320 --> 0:05:19.160 and you know, China's relationship with Tesla has has been 0:05:19.240 --> 0:05:23.080 really positive. This is you know, a success story, even 0:05:23.120 --> 0:05:25.960 with the challenges that this company has had lately with 0:05:26.120 --> 0:05:28.160 sort of continuing its momentum in. 0:05:28.120 --> 0:05:32.680 China marketshare being eroded to none of them byd the 0:05:32.720 --> 0:05:36.440 local competitor. Remind us of the deals that have had 0:05:36.480 --> 0:05:39.599 to be done with Chinese players though ultimately to be 0:05:39.680 --> 0:05:41.640 able to get the granting. 0:05:43.360 --> 0:05:46.160 Yeah, the key one that that ED flagged is with Baidu. 0:05:46.320 --> 0:05:48.839 And I think this is really interesting because you know, 0:05:48.880 --> 0:05:51.440 Elon Musk has been on the record for many years 0:05:51.480 --> 0:05:54.600 now saying that Tesla doesn't need maps, that maps are 0:05:54.680 --> 0:05:58.440 crutch and you know, so this this is you know, 0:05:58.720 --> 0:06:00.799 a U turn if you will, if you and forgive 0:06:00.800 --> 0:06:04.000 a car pun uh. You know from this stance that 0:06:04.040 --> 0:06:07.560 this is not necessary in China. However, in order for 0:06:07.640 --> 0:06:10.080 you to offer these sorts of systems, you need to 0:06:10.120 --> 0:06:14.960 have a partnership with a mapping and navigation company. And 0:06:15.040 --> 0:06:18.000 it just so happens that the companies that are able 0:06:18.040 --> 0:06:20.839 to offer those service services are all Chinese. 0:06:20.920 --> 0:06:24.080 It's very reminiscent of how China sort of. 0:06:24.000 --> 0:06:28.560 Controlled the battery uh, you know, electric vehicle battery market 0:06:28.880 --> 0:06:31.520 in you know, the more infant years of of the 0:06:31.800 --> 0:06:35.160 EV industry for China, and it really was successful and 0:06:35.480 --> 0:06:38.720 helping sort of build up, you know, world dominating companies 0:06:38.760 --> 0:06:41.080 like c at l UH. They're looking to try and 0:06:41.160 --> 0:06:44.520 replicate that sort of uh, you know pattern with you know, 0:06:44.800 --> 0:06:48.000 companies that play a critical role in these driver assistance 0:06:48.040 --> 0:06:51.039 systems that may one day be able to support, you know, 0:06:51.440 --> 0:06:53.880 fully taking the human driver out of the equation. 0:06:54.640 --> 0:06:57.599 And what's so interesting is by do is itself quite 0:06:57.640 --> 0:07:01.440 competent in the domain of at least developing autonomous technology. Look, 0:07:01.440 --> 0:07:03.839 the stock's up twelve percent or more, on track for 0:07:03.839 --> 0:07:05.760 his biggest jump since Janney twenty twenty two. 0:07:06.520 --> 0:07:07.520 Perceived good news. 0:07:07.520 --> 0:07:09.800 There is some more nuanced view in the markets about 0:07:09.800 --> 0:07:13.559 what Musk's actually doing here, Craig, listen to this elon. 0:07:13.680 --> 0:07:15.880 Musk's on an opportunity to go in there and say, look, 0:07:15.920 --> 0:07:19.000 I want to do this because you've seen the clashes 0:07:19.040 --> 0:07:20.760 that have been going on between the US and China. 0:07:20.920 --> 0:07:23.640 He's trying to put a foot on both sides and say, look, 0:07:23.640 --> 0:07:26.760 I've got this technology. And he had the premium brand 0:07:26.800 --> 0:07:28.480 in China, and then all of a sudden, the evs 0:07:28.480 --> 0:07:31.200 in China started to get less expensive and Tesla started 0:07:31.240 --> 0:07:31.760 to lose Sharon. 0:07:31.800 --> 0:07:32.800 He had to drop prices. 0:07:32.920 --> 0:07:34.600 So to me, this is a way to say I'm 0:07:34.600 --> 0:07:38.239 going to change up this math for myself, but also 0:07:38.680 --> 0:07:40.840 if I can be successful in this, then maybe I 0:07:40.880 --> 0:07:42.280 get to be the outlier. 0:07:43.960 --> 0:07:46.880 That was Sarah Hunt, whose chief market strategies at Alpine 0:07:46.920 --> 0:07:50.160 Saxon Woods earlier on Bloomberg Surveillance. We've got a very 0:07:50.160 --> 0:07:53.000 strong piece on the terminal out now talking about how 0:07:53.040 --> 0:07:55.560 we'll hold on. A week ago, Musk was supposed to 0:07:55.600 --> 0:07:59.520 go to India and he bailed and he's gone straight 0:07:59.560 --> 0:08:02.920 to China. That it shows us the power dynamics and 0:08:03.000 --> 0:08:06.960 must skill in all of this, right, Craig in navigating geopolitics. 0:08:08.040 --> 0:08:11.480 Yeah, I mean there's been mutual backscratching here between Elon 0:08:11.600 --> 0:08:14.720 Musk and the CCP for for years now. Let's not 0:08:14.760 --> 0:08:17.600 forget that Tesla was the first you know, international car 0:08:17.600 --> 0:08:20.800 company or foreign car company to you know, be allowed 0:08:20.800 --> 0:08:24.560 to operate in China without having to agree to a 0:08:24.640 --> 0:08:27.720 joint venture with a local manufacturer. There was a huge 0:08:28.240 --> 0:08:31.040 you know wind for Musk and something that he fought 0:08:31.040 --> 0:08:34.800 for for years. And you know, the the construction of 0:08:35.000 --> 0:08:38.079 the plant for Tesla and Shanghai was you know, record time. 0:08:38.240 --> 0:08:41.560 It was extremely time lee in the sense that you know, 0:08:42.360 --> 0:08:46.120 Musk was really ramping up the model three trying to 0:08:46.120 --> 0:08:48.520 bring the model why out and they were able to 0:08:48.600 --> 0:08:51.640 keep that plant running even during you know, the pandemic, 0:08:52.000 --> 0:08:54.439 when you know other plants in China had a really 0:08:54.520 --> 0:08:58.360 difficult time, you know, opening back up from the initial shutdowns. 0:08:58.400 --> 0:09:02.080 And so you know, China has very much supported Tesla 0:09:02.200 --> 0:09:05.960 when Tesla needed it most. And you know, we're seeing 0:09:06.120 --> 0:09:09.120 US companies pull back a little bit from China, maybe 0:09:09.120 --> 0:09:11.600 at least de risk a little. You know, Apple's a 0:09:11.600 --> 0:09:14.440 good example of doing so. You know, by the way, 0:09:14.559 --> 0:09:18.040 in India, I think people were looking at at a 0:09:18.040 --> 0:09:22.199 potential investment by Tesla in India as a similar move. 0:09:22.760 --> 0:09:25.680 And it's clear that Musk doesn't see you know, urgency 0:09:25.800 --> 0:09:26.200 to do that. 0:09:27.320 --> 0:09:30.000 Bloomber's cry too l thank you so much, terrific reporting. 0:09:30.000 --> 0:09:32.920 There's another story very close to this one, Sticking with 0:09:33.040 --> 0:09:38.560 autonomous driving, US auto safety regulators are investigating Ford's Blue 0:09:38.559 --> 0:09:42.280 Cruise driver resistance feature after a pair of fatal crashes 0:09:42.600 --> 0:09:46.280 involving the technology. The US National Highway Traffic Safety Administration's 0:09:46.559 --> 0:09:50.640 Office of Defect Investigation opened the preliminary evaluation after it 0:09:50.679 --> 0:09:54.640 received notice of two battery electric Mustang Maki SUVs that 0:09:54.760 --> 0:09:58.360 collided with stationary vehicles. Will continue to track that one 0:09:58.520 --> 0:10:00.920 stock down one point six percent car notable. 0:10:00.960 --> 0:10:03.000 Meanwhile, coming up ed, Look, I've got to turn our 0:10:03.040 --> 0:10:06.280 attention to another key stock on the move and paramount 0:10:06.440 --> 0:10:09.040 is we understand the company weighing outstaying. 0:10:08.679 --> 0:10:09.520 Its own CEO. 0:10:09.800 --> 0:10:13.520 At least the board is ahead of earning tonight, but 0:10:13.640 --> 0:10:16.960 also a notable potential purchase of this business. 0:10:17.360 --> 0:10:19.400 We'll bring you more this boombow technology. 0:10:34.320 --> 0:10:36.040 It's time for talking tech and first up. 0:10:36.080 --> 0:10:40.079 The Supreme Court has rejected an appeal by Alon Musk 0:10:40.240 --> 0:10:44.319 over his so called Twitter sitter, who oversees social media 0:10:44.400 --> 0:10:48.640 posts about Tesla. The Justices, without comment, refused to hear 0:10:48.720 --> 0:10:51.719 contentions from the Tesla CEO on the accord that he 0:10:51.760 --> 0:10:55.600 assigned in twenty eighteen that he says now violates his 0:10:55.760 --> 0:10:59.400 constitutional free speech rights. We'll track that one plus. Apple's 0:10:59.440 --> 0:11:02.800 iPad has been hit by the EU's digital dominance crackdown. 0:11:03.040 --> 0:11:05.319 The product's been added to a list of big tech 0:11:05.360 --> 0:11:08.280 products and services hit by the new rules. The move 0:11:08.320 --> 0:11:11.520 means Apple has six months to make sure its tablet 0:11:11.559 --> 0:11:15.920 ecosystem complies with a raft of preemptive measures under the 0:11:15.920 --> 0:11:19.839 EU's flagship Digital Markets Acts. And the Redstone family and 0:11:19.920 --> 0:11:23.720 independent film producer David Ellison have both offered concessions to 0:11:23.760 --> 0:11:26.959 make a possible change in control at Paramount Global more 0:11:27.000 --> 0:11:30.320 appealing to the company's other investors. The Skydance bid was 0:11:30.320 --> 0:11:33.560 described by multiple parties as a best and final offer 0:11:33.600 --> 0:11:37.000 on Sunday. Paramount's board is still undecided about entering a 0:11:37.040 --> 0:11:40.000 deal with Ellison, given the opposition from other investors. 0:11:40.080 --> 0:11:41.800 Cara, Well, the board has got a lot to be 0:11:41.840 --> 0:11:43.719 considering right now, we understand ed, and we want to 0:11:43.720 --> 0:11:45.320 dig into all of it with the most Chris Peal 0:11:45.400 --> 0:11:47.560 Mary who has been busy throughout the weekend, reporting in 0:11:47.600 --> 0:11:50.199 this out, editing it out. And the board, we understand, 0:11:50.320 --> 0:11:53.920 is also wondering whether it OSTs Bob Backish, the actual 0:11:53.960 --> 0:11:57.360 current CEO of Paramount. Ahead of Well, we know earnings 0:11:57.400 --> 0:12:00.840 are already coming out after the bell today amid this 0:12:00.920 --> 0:12:02.040 sales process. 0:12:02.760 --> 0:12:05.959 Yeah, the situation was described to me yesterday is being 0:12:06.080 --> 0:12:11.240 very fluid, which I think is an understatement. We're recently 0:12:11.280 --> 0:12:16.160 certain the company will announced earnings this afternoon, but beyond that, yes, 0:12:16.520 --> 0:12:20.240 they're expected to say goodbye to their CEO, Bob Beckish, 0:12:20.320 --> 0:12:23.360 replacing him on an interim basis with a management committee. 0:12:23.760 --> 0:12:26.560 They're still negotiating to deal with Skydance. It would be 0:12:26.600 --> 0:12:28.640 a change of control of a company and that was 0:12:28.640 --> 0:12:33.200 the best and final offer yesterday, with David Ellison, the 0:12:33.240 --> 0:12:37.839 owner of Guidance, helping his sort of contribution in terms 0:12:37.840 --> 0:12:40.439 of buying Paramount stock at a premium to what it's 0:12:40.800 --> 0:12:45.480 trading out today, sort of apes of shareholders. Redstones also 0:12:45.800 --> 0:12:50.760 are apparently making concessions that would allow the non voting 0:12:50.760 --> 0:12:53.800 shareholders to weigh in on a deal, which is something 0:12:53.840 --> 0:12:56.000 that you know they don't have to do, but is 0:12:56.040 --> 0:12:59.120 sort of best practice in securities law these days. 0:13:00.120 --> 0:13:01.040 A whole lot going on. 0:13:03.200 --> 0:13:05.440 You've outlined the sort of mechanics of the deal. I 0:13:05.440 --> 0:13:08.360 think just like reminder audience the rationale on the why 0:13:08.800 --> 0:13:11.480 why are we still spooking about Paramount and somebody buying 0:13:11.520 --> 0:13:12.439 it or changing it? 0:13:12.640 --> 0:13:13.280 What's going on? 0:13:14.360 --> 0:13:18.800 Well, the traditional TV business is in trouble. People are 0:13:19.200 --> 0:13:22.920 leaving for streaming services. Advertising has been in decline, although 0:13:23.360 --> 0:13:26.040 they'll see a pickup at Paramount this quarter because of 0:13:26.040 --> 0:13:30.480 the super Bowl, and the streaming business, which is the future, 0:13:30.760 --> 0:13:34.160 is still losing money. The Paramount still although the losses 0:13:34.200 --> 0:13:37.839 are coming down a bit are still going to be 0:13:37.880 --> 0:13:39.760 in the one hundreds of millions of dollars. 0:13:39.440 --> 0:13:42.160 And it's a question whether they'll ever stop. 0:13:42.720 --> 0:13:45.880 And so when your two main businesses like that, the 0:13:45.880 --> 0:13:48.920 movie business has been unprofitable last year, it's a challenge 0:13:48.920 --> 0:13:51.719 to get people back to theaters. So pretty much every 0:13:51.800 --> 0:13:55.160 leg of their business is in some sort of peril 0:13:55.600 --> 0:13:57.720 and that's why this sock is down and why they're 0:13:57.720 --> 0:14:00.560 considering options. 0:14:02.080 --> 0:14:05.080 All right, Bluebots, Chris Pam Mary terrific, really appreciate having 0:14:05.120 --> 0:14:17.600 you out down from La. 0:14:14.040 --> 0:14:17.600 So fine out with earnings that well look strong today, 0:14:17.720 --> 0:14:20.080 but the forecast is what people are worrying about. The 0:14:20.120 --> 0:14:23.240 shares falling after the fintech company provided second quarter nuance 0:14:23.280 --> 0:14:26.120 here with adjusted net revenue and adjusted ebit DA that 0:14:26.440 --> 0:14:29.720 perhaps fell short of some consensussessments out there. Want to 0:14:29.760 --> 0:14:32.520 dig into that nuance with SOFI CEO Anthony Noto. 0:14:32.640 --> 0:14:34.040 Thank you for joining us, Anthony, And. 0:14:34.200 --> 0:14:36.160 Look, we've got to focus on the fact that your 0:14:36.160 --> 0:14:37.640 full year guidance was raised. 0:14:37.880 --> 0:14:39.240 You're feeling positive. 0:14:38.840 --> 0:14:40.560 About the way in which are steering the company. You 0:14:40.560 --> 0:14:43.560 say you're in an inflection point, But why the second 0:14:43.680 --> 0:14:46.000 quarter being below expectations? 0:14:46.040 --> 0:14:47.840 What can you add to what you're seeing here right here, 0:14:47.920 --> 0:14:48.360 right now. 0:14:49.400 --> 0:14:52.640 We had a great first quarter, as we reported twenty 0:14:52.640 --> 0:14:54.920 six percent year of year at growth, and it's in 0:14:54.960 --> 0:14:57.240 line with the transformation that we talked about, which is 0:14:57.240 --> 0:15:00.520 our combined tech platform business and our financial service business 0:15:00.880 --> 0:15:03.880 would grow fifty percent or more. It grew fifty four 0:15:03.920 --> 0:15:07.000 percent year of year, and that combined with flat revenue 0:15:07.000 --> 0:15:08.640 for lending, and that was part of the plan, and 0:15:08.720 --> 0:15:13.680 we had our second consecutive quarter of gap positive EPs. 0:15:13.920 --> 0:15:16.720 In addition to growing our book value on a tangible 0:15:16.760 --> 0:15:20.760 basis per share by about sixteen percent sequentially, we also 0:15:20.840 --> 0:15:24.000 guided the full year, as you mentioned above, not just 0:15:24.120 --> 0:15:27.600 our beat, but also above our prior guidance, so that's 0:15:27.640 --> 0:15:28.960 a positive overall outlook. 0:15:29.200 --> 0:15:31.760 We had not given Q two guidance before. 0:15:31.840 --> 0:15:34.200 We typically give the full year and then the current 0:15:34.240 --> 0:15:36.320 quarter that we're in, so at the end of twenty 0:15:36.360 --> 0:15:39.200 four we gave guidance for the full year and Q one, 0:15:39.320 --> 0:15:43.200 not Q two. The analysts are using their own estimates 0:15:43.200 --> 0:15:45.880 for that, and because we're taking a conservative view on lending, 0:15:46.240 --> 0:15:49.080 lending will be down sequentially in Q two, while our 0:15:49.120 --> 0:15:52.680 tech platform revenue and our financial services revenue will continue 0:15:52.680 --> 0:15:55.560 to have strong year year growth, but also strong sequential 0:15:55.600 --> 0:15:58.920 growth and continue profitability as well. So we feel really 0:15:58.960 --> 0:16:01.480 great about the business transformation we've made over the last 0:16:01.520 --> 0:16:04.320 six years. The fact that we can grow revenue twenty 0:16:04.360 --> 0:16:07.360 six percent on flat lending revenue is a real testament 0:16:07.560 --> 0:16:08.960 to the diversity of our business. 0:16:10.280 --> 0:16:12.440 Hey, Darison, you can't feel great about the share reaction. 0:16:13.840 --> 0:16:16.400 You know, any given day, it's hard to predict what's 0:16:16.440 --> 0:16:18.880 going to happen with the shriff. But what I can 0:16:18.920 --> 0:16:21.720 say is the business is doing incredibly well. The strategy 0:16:21.840 --> 0:16:25.400 is working. We're really happy about the trend we do. 0:16:25.880 --> 0:16:27.920 We are taking a conservative you on lending, but that's 0:16:28.320 --> 0:16:31.440 given how uncertain the environment is. If the environment becomes 0:16:31.440 --> 0:16:34.120 more stable, we'll be more aggressive on lending, but right 0:16:34.160 --> 0:16:36.440 now there's no need to and the environment remains as 0:16:36.560 --> 0:16:38.560 uncertain as it has for the last six months. 0:16:38.560 --> 0:16:42.400 On rates, mister Noto, good morning, it's ed in San Francisco. 0:16:42.680 --> 0:16:44.520 A lot of the questions I got from our audience 0:16:44.520 --> 0:16:48.160 for you were about the capital you raise and your 0:16:48.200 --> 0:16:51.840 strategy going forward. There was convertible in one queue, a 0:16:51.880 --> 0:16:55.040 lot of interest in that. I actually am not clear why, 0:16:55.400 --> 0:16:57.840 but the people want to know, So that's the question. 0:16:58.600 --> 0:17:01.520 Yeah, I think people misunder stand the share count. First, 0:17:01.560 --> 0:17:04.520 we did two things in Q one. First, we issued 0:17:04.520 --> 0:17:07.840 a convertible note at one point two five percent interest 0:17:08.080 --> 0:17:12.320 that allowed us to redeem a preferred security that we're 0:17:12.359 --> 0:17:14.720 paying twelve and a half percent interest on. So that 0:17:14.800 --> 0:17:16.800 is going to provide an interest savings for us, and 0:17:16.800 --> 0:17:20.520 we've already noticed all of the holders of that preferred 0:17:20.920 --> 0:17:24.199 instrument and so that's being redeemed sooner than expected. We 0:17:24.400 --> 0:17:27.480 also bought back an existing convert that was trading well 0:17:27.520 --> 0:17:29.919 below its face value, and that was a creative to 0:17:29.960 --> 0:17:33.359 book value and it was basically neutral on tangible book 0:17:33.440 --> 0:17:36.720 value per share. So there's some perception that it was diluted. 0:17:36.840 --> 0:17:39.399 It's not dilutied on a tangible book value per share. 0:17:40.119 --> 0:17:42.720 And I think there's just a misunderstanding on what the 0:17:42.800 --> 0:17:45.399 total ending share count will be in the future. 0:17:46.880 --> 0:17:49.560 My colleague, a Bloomberg intelligence Herman Chan has a very 0:17:49.600 --> 0:17:52.560 clear thesis for you guys. You have a brilliant app, 0:17:52.840 --> 0:17:57.560 strong user interface, one stop shop, and you're targeting young professionals. 0:17:57.560 --> 0:17:58.679 That's what they think. 0:17:59.080 --> 0:18:01.800 But the story really is this higher interest rates for 0:18:01.880 --> 0:18:06.399 longer environment narrative. How does that thesis work in that 0:18:06.480 --> 0:18:07.280 rate environment? 0:18:07.320 --> 0:18:10.119 Anthony, Yeah, well, first of all, your colleagues said it 0:18:10.240 --> 0:18:12.320 very well, and so we should consider having them being 0:18:12.359 --> 0:18:15.240 one of our spokespeople. But I'd say is higher for 0:18:15.359 --> 0:18:18.920 longer is going to create challenges for financial institutions. 0:18:19.200 --> 0:18:20.719 We are very well capitalized. 0:18:20.760 --> 0:18:24.160 We have a seventeen point one percent risk based capital ratio, 0:18:24.720 --> 0:18:27.560 so we have ample cushion or capital ratio relative to 0:18:27.600 --> 0:18:30.840 where we have to operate from a regulatory standpoint, and 0:18:30.880 --> 0:18:33.360 we have plenty of liquidity. That said, as we saw 0:18:33.480 --> 0:18:37.160 today another regional bank was very challenged. We're also benefiting 0:18:37.240 --> 0:18:39.960 from really strong deposit growth. We had our record growth 0:18:39.960 --> 0:18:43.720 and deposits three billion dollars of new deposits, and ninety 0:18:43.760 --> 0:18:46.640 percent of our deposits are from direct deposit customers, which 0:18:46.680 --> 0:18:49.720 means we're their primary account and it's very very sticky. 0:18:50.440 --> 0:18:54.000 But higher for longer we'll put stress on other people's 0:18:54.000 --> 0:18:57.400 balance sheets if they're not hedging appropriately the way we do. 0:18:57.480 --> 0:19:00.040 We hedge our loans once we grant them, we're we 0:19:00.040 --> 0:19:03.280 don't have that interest rate exposure. We can also match 0:19:03.359 --> 0:19:06.040 what we're giving in as an apy to our SOFI 0:19:06.119 --> 0:19:08.840 money members against the loans that we're offering in the 0:19:08.920 --> 0:19:11.320 rates that they have to maintain a very high NIM 0:19:11.400 --> 0:19:13.959 and we've been able to do that consistently. In addition 0:19:14.000 --> 0:19:16.239 to that, with also the tech platform business, which is 0:19:16.240 --> 0:19:19.160 not tied to interest rates. And then in the financial 0:19:19.160 --> 0:19:23.000 services business, we have the invest platform that's growing very nicely, 0:19:23.280 --> 0:19:26.040 good AUM growth, good member growth, and another source of 0:19:26.160 --> 0:19:27.200 verisfied revenue for. 0:19:27.240 --> 0:19:28.960 US where technology show. 0:19:29.040 --> 0:19:32.000 We want to go into the specifics of your technology, Anthony, 0:19:32.200 --> 0:19:34.520 but I want to bring our audience that matcro flavor 0:19:34.560 --> 0:19:38.639 that you so brilliantly give, because why are you more 0:19:38.720 --> 0:19:41.360 cautious on the US economy? Why are you seeing five 0:19:41.400 --> 0:19:44.920 percent excess of unemployment? Why are you seeing these interest 0:19:45.000 --> 0:19:47.840 rate cuts that you've now basically halved in your expectations 0:19:47.840 --> 0:19:49.240 for twenty twenty four. 0:19:49.520 --> 0:19:52.240 Yeah, our balance sheet has grown quite meaningfully. It's about 0:19:52.240 --> 0:19:54.280 a thirty billion dollar bounce sheet now. So as we 0:19:54.359 --> 0:19:57.440 came into twenty twenty four, we had a choice. Could 0:19:57.440 --> 0:20:00.200 we come up with our own expectations for twenty twenty 0:20:00.680 --> 0:20:04.200 could we use consensus expectation. Let's just take up planning 0:20:04.280 --> 0:20:07.639 stance that's really conservative, and the planning stance that we 0:20:07.680 --> 0:20:10.080 took then was that there would only be four rate cuts. 0:20:10.359 --> 0:20:13.000 The market was factoring in six rate cuts at the time. 0:20:13.359 --> 0:20:15.720 We also took up planning stance on unemployment that would 0:20:15.760 --> 0:20:18.320 be more than five percent, the market was well below that, 0:20:18.680 --> 0:20:21.360 and we also took a stance on GDP contraction. 0:20:20.960 --> 0:20:21.800 That was modest. 0:20:22.160 --> 0:20:25.040 Well, here we sit today three months later, and the 0:20:25.080 --> 0:20:27.560 market's only factoring in one to two rate cuts. So 0:20:27.600 --> 0:20:30.600 I'm really thankful we took a conservative stance going into 0:20:30.600 --> 0:20:32.480 the air, and I'm really thankful we still have a 0:20:32.480 --> 0:20:35.800 conservative stance. I couldn't feel better about the underlying trends 0:20:35.800 --> 0:20:38.560 of our strategy and execution of our business. But I 0:20:38.600 --> 0:20:41.879 don't think we're an environment where anyone has a really strong, 0:20:42.000 --> 0:20:44.800 high conviction level on where rates will be. There's still 0:20:44.840 --> 0:20:47.359 a debate whether it be any rate cuts whatsoever. So 0:20:47.400 --> 0:20:50.520 we just can't put the business at risk hoping that 0:20:50.560 --> 0:20:51.440 we can figure it out. 0:20:51.600 --> 0:20:54.240 So we're going to a conservative point of view. 0:20:54.880 --> 0:20:58.000 With short time, Anthony, you're moving away from this kind 0:20:58.040 --> 0:21:01.200