WEBVTT - Lamborghini CEO Seeing Overwhelming Demand for Vehicles 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carole Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.680 plus technology, politics, economics, all purtnising the power of Business 0:00:13.680 --> 0:00:17.160 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.239 Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.200 You can also listen to our radio show at two 0:00:25.200 --> 0:00:27.880 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.920 --> 0:00:32.080 YouTube search Bloomberg Global News. Here back with what's going 0:00:32.120 --> 0:00:34.040 on and just talk about some of the big macro 0:00:34.159 --> 0:00:36.480 stories that are going on in the world. But also 0:00:36.680 --> 0:00:40.680 in the luxury auto industry is Stefan Vinkelman. He is 0:00:40.720 --> 0:00:43.320 chairman and CEO of Lamborghini, and he's with us in 0:00:43.360 --> 0:00:45.760 our interactive broker studio right here in New York City. 0:00:45.920 --> 0:00:48.840 How are you. I'm very good, Thank you, I say 0:00:48.960 --> 0:00:51.560 lightly um. There is so much going on in the 0:00:51.600 --> 0:00:53.880 world that I am always curious Tim and I are 0:00:53.960 --> 0:00:57.320 when it comes to whether it's luxury automobiles or the 0:00:57.400 --> 0:01:00.880 luxury space in general, how it impacts your buyers, whether 0:01:00.960 --> 0:01:04.959 it's the war in Ukraine, whether it's supply chain constraints, 0:01:05.400 --> 0:01:09.600 volatility in the financial markets. Been a crazy first quarter. 0:01:10.840 --> 0:01:13.560 What what jumps out? I can tell you that since 0:01:13.640 --> 0:01:15.560 two and a half years we are in crisis more 0:01:15.760 --> 0:01:20.759 more or less the pandemic than the chip shortage. Now 0:01:20.840 --> 0:01:24.039 the war in Ukraine. What I can tell you, and 0:01:24.120 --> 0:01:29.120 which is for us very surprising, that already in the 0:01:29.160 --> 0:01:33.280 second part of the market, our type of market was 0:01:33.319 --> 0:01:38.320 coming back stronger than expected. And as we speak, we 0:01:38.400 --> 0:01:41.120 are selling every day more cars that we are able 0:01:41.160 --> 0:01:43.600 to produce. So we have an order bank which is 0:01:44.560 --> 0:01:47.800 longer than one year of waiting time. Is that typical? 0:01:48.440 --> 0:01:53.960 This is before let's say, beforeies or before the pandemic, 0:01:54.000 --> 0:01:58.200 it was between six seven, eight, maximum nine months, depending 0:01:58.240 --> 0:02:01.080 on the model and on the launches. And now this 0:02:01.240 --> 0:02:04.440 is very good and healthy for a company like ours. 0:02:05.280 --> 0:02:08.919 But that the market came back so strong and so sudden, 0:02:09.280 --> 0:02:13.560 this was unexpected. The short that the chip shortage for us, 0:02:14.040 --> 0:02:17.120 being part of the Volkswan group, was less an issue. 0:02:17.240 --> 0:02:21.240 We were lucky because we have small manufacturers or low volumes, 0:02:21.520 --> 0:02:25.680 high margins, so we got a priority line from from 0:02:25.720 --> 0:02:30.280 the Volkswan group and now the war in Ukraine. For sure, 0:02:30.360 --> 0:02:36.200 we we put our um operations on hold in Russia, 0:02:36.320 --> 0:02:40.360 so we stopped it. And we have an important supplier 0:02:40.639 --> 0:02:44.040 in the in the West Ukraine, so we had stopping 0:02:44.080 --> 0:02:46.640 goals and production for the Huracan, which is one of 0:02:46.639 --> 0:02:51.200 our models. But now we are let's say, on in 0:02:51.240 --> 0:02:56.640 our face where we have five six days of view 0:02:56.760 --> 0:02:59.359 of what is happening and we are not losing any 0:02:59.360 --> 0:03:02.480 production at I mean, so this is for us pretty 0:03:02.480 --> 0:03:07.800 pretty okay. Then it's clear stock market did anything slow 0:03:07.840 --> 0:03:10.359 down that first quarter because of the molty No, as 0:03:10.480 --> 0:03:13.600 we speak, I have to tell you, and I'm unable 0:03:13.639 --> 0:03:17.480 to make let's say, a forecast for the year two. 0:03:17.560 --> 0:03:21.880 But as we speak, there is no slowing down on 0:03:21.919 --> 0:03:25.280 the request for our cars and this is very positive. 0:03:25.600 --> 0:03:27.560 We have also to say that they are more people 0:03:28.520 --> 0:03:32.400 with the money at their disposal in comparison to a 0:03:32.440 --> 0:03:35.360 decade ago, so the the words is increasing and they're 0:03:35.360 --> 0:03:38.320 more benefiting forments. We have a very young customer base 0:03:39.200 --> 0:03:42.960 and they're very proud of owning a LAMBORGINI. We have 0:03:43.000 --> 0:03:48.160 to keep the promise of always delivering dream cards. This 0:03:48.240 --> 0:03:51.320 is par amount for this suc because of inflationary pressures 0:03:51.880 --> 0:03:56.000 supply chain. You mentioned the chip shortage, labor casts, all 0:03:56.000 --> 0:03:58.200 the inflationary pressures that we see happening around the world 0:03:58.280 --> 0:04:01.760 right now. How much have you had to race prices 0:04:01.800 --> 0:04:05.600 so far? We have not, let's say, transfer the cost 0:04:05.960 --> 0:04:09.440 of of the material cost roll materials to customers. We 0:04:09.480 --> 0:04:12.040 have a price increase between one and two per cent, 0:04:12.920 --> 0:04:16.880 which is not something which is unusual. Why haven't you 0:04:17.320 --> 0:04:19.640 why haven't you passed that along? If the consumers will 0:04:19.640 --> 0:04:24.360 need to wait for a year for a Lamborghini, they're 0:04:24.360 --> 0:04:29.000 probably willing to pay more more from the Let's say, 0:04:29.120 --> 0:04:32.880 if if this is going to continue, there is a 0:04:32.920 --> 0:04:37.040 further increase on the materials, certainly we are we will 0:04:37.120 --> 0:04:40.039 be forced to do so. At time being, we have 0:04:40.160 --> 0:04:43.200 it under control and I'm happy to say so. But 0:04:43.520 --> 0:04:45.600 for the future, as they said that, it's very difficult 0:04:45.600 --> 0:04:49.320 to to make a forecast uh the future. So the 0:04:49.440 --> 0:04:53.160 new models, they will have higher material cost due to 0:04:54.040 --> 0:04:58.360 hybridizations or batteries and combustion engines together, so there will 0:04:58.400 --> 0:05:01.359 be a slight price increase, but only due to that. 0:05:02.400 --> 0:05:05.400 How is the supply chain it? Although impacting your roll 0:05:05.440 --> 0:05:07.120 out this year, right, You've got a bunch of new 0:05:07.160 --> 0:05:11.200 models coming. Um, is any of that being impacted now 0:05:11.200 --> 0:05:14.880 a time being not. It's clear that it's early to 0:05:14.920 --> 0:05:18.560 speak about the new geopolitical situation because today we are 0:05:18.600 --> 0:05:20.320 not in the new normal, so we have to wait 0:05:20.400 --> 0:05:23.000 until the conflict is over and what is going to happen. 0:05:23.560 --> 0:05:26.000 For sure, we are acting global. So we are a 0:05:26.000 --> 0:05:31.240 company which is only good when we are able to 0:05:31.520 --> 0:05:34.440 sell worldwide. So we have high investments, little volumes, so 0:05:34.520 --> 0:05:37.880 we cannot flood one market and think that this is 0:05:37.920 --> 0:05:40.760 the the idea of the future, so we have to 0:05:41.279 --> 0:05:44.000 act global. On the other hand, acting global means also 0:05:44.040 --> 0:05:46.720 that our supply chain. We cannot just say that we 0:05:47.240 --> 0:05:50.320 stay in one country. So we will see how this 0:05:50.440 --> 0:05:54.240 is going to happen. Also, the pandemic with all the 0:05:54.320 --> 0:05:57.080 logistic chain was messed up and it took a lot 0:05:57.120 --> 0:05:59.680 of time to go back to normal, so we have 0:05:59.720 --> 0:06:03.039 to see how this is going to be once Uh, yeah, 0:06:03.080 --> 0:06:06.120 there is a new normal in place. You did suspend 0:06:06.200 --> 0:06:09.600 sales to Russia, correct, Um, how much of an impact 0:06:09.680 --> 0:06:13.880 is that for you guys? But luckily we can divert 0:06:14.160 --> 0:06:17.080 the production of the order bank or that the cars 0:06:17.120 --> 0:06:19.080 which we are going to produce or we wanted to 0:06:19.120 --> 0:06:22.640 produce for Russia into other markets. So we have no 0:06:22.800 --> 0:06:24.719 losses and the due to the fact that we have 0:06:24.800 --> 0:06:28.040 this long order bank, we don't have a negative impact. 0:06:28.080 --> 0:06:31.200 Will you stay out of Russia? We will see after 0:06:31.400 --> 0:06:33.520 after the war. As I said, it's very difficult now 0:06:33.560 --> 0:06:37.840 to make a forecast about what the geo political situation 0:06:37.920 --> 0:06:40.279 is going to be. The longer the wall last, and 0:06:40.320 --> 0:06:42.760 more difficult it would be to go back now, I'm 0:06:42.800 --> 0:06:45.599 sure about that. We know the incredibly some incredibly wealthy 0:06:45.600 --> 0:06:48.880 oligarchs in Russia have had sanctions and posted down them 0:06:48.920 --> 0:06:50.760 not by the interest the United States, but the UK 0:06:50.960 --> 0:06:53.360 and the European Union as well. If they were to 0:06:53.440 --> 0:06:56.080 approach you in another country to buy a vehicle, would 0:06:56.080 --> 0:06:58.320 you sell them a vehicle? But we have a list, 0:06:59.040 --> 0:07:05.560 a blacklist of people, and this is part of the 0:07:05.720 --> 0:07:09.920 business we had also before and there are all some 0:07:10.120 --> 0:07:11.960 of these guys on the list and we will not 0:07:12.040 --> 0:07:15.720 sell them cards. Have you been approached but not to 0:07:15.840 --> 0:07:18.480 my knowledge, but we have We have our dada's all 0:07:18.560 --> 0:07:21.400 partners worldwide, So at time being I don't see that 0:07:21.480 --> 0:07:25.480 there's anybody all right, the hard parts over. I got 0:07:25.520 --> 0:07:29.200 one more question. Uh, it's similar to what Carol was asking. 0:07:29.760 --> 0:07:33.080 You know, right now you suspended you've suspended vehicle sales 0:07:33.120 --> 0:07:37.000 in Russia. What would have to happen for you to 0:07:37.080 --> 0:07:41.720 start vehicle sales in Russia? Up again, Frank you speaking, 0:07:41.760 --> 0:07:44.080 I don't know, because once the war is going to 0:07:44.200 --> 0:07:47.720 be over, that there will be a new situation and 0:07:48.280 --> 0:07:51.920 we have to see how the European Union, because we 0:07:52.000 --> 0:07:54.320 are part of the union. European Union is going to 0:07:54.440 --> 0:07:57.160 react in terms of sanctions, and we will we are 0:07:57.280 --> 0:08:01.440 we will be aligned on what the government is going 0:08:01.480 --> 0:08:03.920 to tell us. But does it make you nervous? Because 0:08:03.960 --> 0:08:05.800 it does feel like it's a new Russia right now. 0:08:06.880 --> 0:08:11.640 But this was something which nobody was expecting and U, 0:08:12.160 --> 0:08:16.960 or at least very few people were expecting. And I 0:08:17.120 --> 0:08:21.400 think that this is something which in in the twenty 0:08:21.480 --> 0:08:25.200 first century or something which should not happen. Therefore, we 0:08:25.320 --> 0:08:29.280 will see. But okay, it's a pity. It's a pity 0:08:29.320 --> 0:08:32.760 also for the Russian customers in my opinion, Yeah, yeah, absolutely, 0:08:32.800 --> 0:08:36.400 in Russian citizens and certainly the Ukrainian citizens. Hey, okay, 0:08:36.559 --> 0:08:38.880 hard part over, So tell us why you're in New York. 0:08:38.960 --> 0:08:40.480 We do have the New York Orders show you guys 0:08:40.520 --> 0:08:43.839 have a global debut. Tell us what's coming up? Yes, 0:08:43.920 --> 0:08:48.520 on Friday there will be UM the view of the 0:08:48.600 --> 0:08:53.040 new version of a Hurakan. It's called Hurakan Technica. Um. 0:08:53.440 --> 0:08:55.679 It's a perfect bridge between let's say the weeks the 0:08:55.760 --> 0:08:58.040 two week stremes. We have not the Evil, which is 0:08:58.080 --> 0:09:00.480 a really drive cary and d ST which is the 0:09:00.520 --> 0:09:02.280 closest to a race car we have done on the 0:09:02.480 --> 0:09:08.600 Ura Can. So this is a perfect mix of driving pleasure, lifestyle. 0:09:08.880 --> 0:09:11.280 It's a world car, right, It's a broadcast which is 0:09:11.440 --> 0:09:14.600 very easy and very good also to drive on the racetract. 0:09:14.640 --> 0:09:16.480 So it's like which is a new front and new rear, 0:09:17.200 --> 0:09:21.480 real real seering, more down force, less drag, more holespower. 0:09:21.559 --> 0:09:24.400 So it's like, which is very easy and fun to drive. 0:09:24.920 --> 0:09:29.880 Who's this for? You mentioned were wheel steering. I've never 0:09:30.000 --> 0:09:32.599 driven a car with rear wheel steering. A lot of 0:09:33.000 --> 0:09:39.480 the super sports cars yes about acceleration longitudinal performance, but 0:09:39.600 --> 0:09:41.719 this is something which in my opinions, are given. It's 0:09:41.800 --> 0:09:44.640 much more about the lateral acceleration, how you get into 0:09:44.679 --> 0:09:47.679 the corner, out of the corner. The way to power ratio, 0:09:47.800 --> 0:09:50.920 the breaking, so the handling in one word, which is 0:09:51.000 --> 0:09:54.480 part of how we define performance. And therefore the real 0:09:54.520 --> 0:09:58.200 reseeing is enabling you and and different types of speed 0:09:59.040 --> 0:10:04.079 to be more performing. The reaction time is less. Well, Lamborghini, 0:10:04.240 --> 0:10:08.959 you know it goes hand in hand in terms of design, innovation, speed, performance. Um, 0:10:09.520 --> 0:10:12.360 how is it your customer in particular, what is it 0:10:12.480 --> 0:10:16.719 they increasingly want, especially as the auto industry, whether it's 0:10:16.760 --> 0:10:18.640 through e v S and so on and so forth, 0:10:18.760 --> 0:10:23.719 it is changing. So they want to buy into a 0:10:23.840 --> 0:10:26.920 brand which is including So there's something which they want 0:10:26.960 --> 0:10:29.360 to be part of their loyal right they're loyal to. 0:10:29.679 --> 0:10:33.840 One is the brands or events. In a very easy words, 0:10:34.520 --> 0:10:40.800 it's about sustainability more and more, it's about digitalization. These 0:10:40.840 --> 0:10:45.240 are the main things which people look into. And due 0:10:45.240 --> 0:10:48.080 to the fact that our customer base is becoming younger 0:10:48.200 --> 0:10:52.600 and younger, we are forecasting that by five we will 0:10:52.640 --> 0:10:59.200 we have seventy of our customers younger than forty in Russia. Sorry, 0:10:59.280 --> 0:11:02.280 in China for example, we already have an average h 0:11:03.200 --> 0:11:04.959 so we have very young customers. I just want to know, 0:11:05.040 --> 0:11:06.960 did Matt Miller give you a hard time about a campaign. 0:11:07.000 --> 0:11:09.040 Ev you got to hear the roar of the engine. 0:11:10.600 --> 0:11:14.320 Did he do it? No? Yeah, somehow, somehow he would ask, 0:11:14.640 --> 0:11:16.800 But I convinced him that this could be still a 0:11:16.880 --> 0:11:19.240 good time for us. You are such a good sport 0:11:19.360 --> 0:11:21.160 and we wish you well and good luck with the launch. 0:11:21.400 --> 0:11:24.280 Stefan Fie Colman he of course as chairman CEO of Lamborghini, 0:11:24.360 --> 0:11:26.360 and we are delighted have had him here in our 0:11:26.480 --> 0:11:30.200 studio on this Tuesday. You're listening to Bloomberg Business Week 0:11:30.440 --> 0:11:34.319 with Carol Messer and Bloomberg Quick Takes Tim Stinovic on 0:11:34.520 --> 0:11:38.000 Bloomberg Radio. Let's not go to Leona Baker. We've talked 0:11:38.000 --> 0:11:41.280 a lot in the past well week, Carol about what 0:11:41.440 --> 0:11:45.600 exactly Twitter is going to look like under Elon Musk. 0:11:45.640 --> 0:11:48.440 Who knows, but now it's not necessarily under Elon Musk. 0:11:48.520 --> 0:11:52.400 He is the largest individual shareholder with more than nine 0:11:52.440 --> 0:11:54.880 percent stake in the company. But what could he do 0:11:55.000 --> 0:11:58.480 to Twitter exactly? And so that's what our deals team 0:11:58.640 --> 0:12:01.000 looked at. Specifically, let's get that story from Blueberg News 0:12:01.040 --> 0:12:05.880 deal team reporter and leader, I should say leader, Leanna Baker. 0:12:05.960 --> 0:12:08.640 She joins us via zoom in New York City, Leanna, 0:12:08.720 --> 0:12:10.760 good to have you here with us. Uh day doesn't 0:12:10.760 --> 0:12:13.040 go by without some kind of reporting on what Ellen 0:12:13.160 --> 0:12:15.679 is up to, especially when it comes to Twitter. Uh 0:12:15.920 --> 0:12:17.679 So tell us what you guys set out to do 0:12:17.760 --> 0:12:19.679 and what you thought about it in terms of what 0:12:19.800 --> 0:12:23.719 a Twitter takeover how it might work. So usually my 0:12:23.920 --> 0:12:26.599 team is trying to find out about takeovers that we 0:12:26.720 --> 0:12:29.000 know are going to happen. This is sort of a 0:12:29.080 --> 0:12:33.439 theoretical exercise to understand if Elon Musk wanted to buy Twitter, 0:12:33.840 --> 0:12:36.440 how would you do it? So there's a few ways. Um. 0:12:37.000 --> 0:12:39.760 One way is that you can keep a quiet shares 0:12:39.880 --> 0:12:42.439 of the company, because you mentioned that he's already the 0:12:42.679 --> 0:12:45.679 largest individual shareholder, so why could be not, you know, 0:12:45.840 --> 0:12:48.839 by even bigger chunks of the company. One thing we 0:12:48.920 --> 0:12:51.880 looked at is that that's a possibility, but Twitter calways 0:12:51.920 --> 0:12:54.800 put in a poison pill to prevent Mosk or any 0:12:54.840 --> 0:12:59.040 shareholder from getting an even bigger steak. That's so old school, right, 0:12:59.200 --> 0:13:02.839 That is so old school, it feels it's true, but 0:13:03.000 --> 0:13:05.920 poison bills are still used a lot when there is 0:13:05.960 --> 0:13:09.760 a big shareholder trying to kind of get control of 0:13:09.840 --> 0:13:13.080 a company by acquiring shares in the open market. Twitter 0:13:13.200 --> 0:13:16.280 we've heard hasn't done one yet, but it's something they're 0:13:16.760 --> 0:13:19.040 you know, monitoring to see if they might need to 0:13:19.679 --> 0:13:23.600 to pull that maneuver. Another way that Musk could try 0:13:23.640 --> 0:13:26.280 to buy the company is doing a tender offer. This 0:13:26.400 --> 0:13:28.800 seems sort of unlikely, but what this would mean is 0:13:28.880 --> 0:13:32.600 that he would um put out a statement saying if 0:13:32.640 --> 0:13:34.520 any share olds the Twitter want to sell to me 0:13:34.600 --> 0:13:37.920 with this price, UM, you know, please go ahead. This 0:13:38.559 --> 0:13:41.280 uh would also be pretty hard from us because you 0:13:41.360 --> 0:13:44.040 have to get a certain amount of shareholders on board, 0:13:44.120 --> 0:13:48.199 usually more than Another thing he could do is what 0:13:48.360 --> 0:13:50.280 he tried to do a few years ago with the 0:13:50.360 --> 0:13:54.719 funding secured story tablot take privates that ever happened. He 0:13:54.840 --> 0:13:57.440 could go to the regular route of working with investment 0:13:57.480 --> 0:14:01.439 bankers and trying to get square to the Negli. That's 0:14:01.440 --> 0:14:03.080 something I want to talk to you about, Leona, because 0:14:03.440 --> 0:14:06.240 we had Mandy singing here a week ago Monday, and 0:14:06.760 --> 0:14:08.559 that was this was before we even found out that 0:14:08.600 --> 0:14:10.360 he would be offered a board seed and then were 0:14:10.360 --> 0:14:13.000 not rejecting that board seed. And he mentioned silver Lake 0:14:13.080 --> 0:14:16.760 is a potential partner UH that could team up potentially 0:14:16.840 --> 0:14:20.680 with Elon Musk to actually make a play for the company. 0:14:20.720 --> 0:14:24.440 How would that work? Like UM already put in a 0:14:24.480 --> 0:14:26.760 billion dollars in Twitter, and they have a board seat. 0:14:26.800 --> 0:14:29.400 Their post CEO, E Jun Survant puts on the board, 0:14:29.720 --> 0:14:32.680 so really also had a history with Musk. They were 0:14:32.720 --> 0:14:35.480 one of the names that Mosk had spoken to about 0:14:35.520 --> 0:14:39.800 the potential test like take private that never happened. That said, 0:14:40.200 --> 0:14:43.720 it would be pretty tough for them to maybe partner 0:14:43.840 --> 0:14:46.200 with Moss because the silver Lake is now associated with 0:14:46.280 --> 0:14:49.760 the board and Musk rejected the board seat. So we 0:14:49.840 --> 0:14:52.080 don't know if there's any tension there. I don't want 0:14:52.120 --> 0:14:56.120 be speculating, but certainly that is a private actuality partner 0:14:56.520 --> 0:14:59.440 that believes in in Twitter. So it's something to think 0:14:59.480 --> 0:15:02.520 about a side pool for. Like there's so many private 0:15:02.520 --> 0:15:05.480 equity firms out there that are always looking at opportunities. 0:15:05.600 --> 0:15:08.000 So we're trying to keep it up in mind, Hey 0:15:08.200 --> 0:15:10.280 just got thirty seconds, So there's like when all of 0:15:10.320 --> 0:15:11.720 a said and done, there's just a chance he just 0:15:11.920 --> 0:15:15.040 sells it all and walks away right just quickly. That 0:15:15.240 --> 0:15:19.240 seems like a really good option for him. UM personally, 0:15:19.760 --> 0:15:22.080 I just think bus might be too busy to be 0:15:22.320 --> 0:15:24.640 pulling off a huge emin a deal a farm twitter 0:15:24.680 --> 0:15:26.760 would still take a lot of time and focus. And 0:15:26.880 --> 0:15:29.880 he has so many other projects and public companies he's 0:15:29.920 --> 0:15:33.080 evolved in so uh. But if he were to sell 0:15:33.520 --> 0:15:35.880 his steak, he probably used to work with an investment bank. 0:15:35.960 --> 0:15:38.000 It's such a big steak you have to sell them 0:15:38.040 --> 0:15:39.960 the block trade. So we're looking at all these options, 0:15:40.120 --> 0:15:42.120 and he's still gonna work out that human robots so like, 0:15:42.240 --> 0:15:43.560 you know, that might just take up too much of 0:15:43.600 --> 0:15:47.000 his time. Hey what about self driving robot? Or there's 0:15:47.000 --> 0:15:48.960 the boring hole that we need in all our major 0:15:49.040 --> 0:15:52.240 cities and the neink Long can we go just naming 0:15:52.280 --> 0:15:54.080 other things that Elon Musk is working. Oh my god, 0:15:54.160 --> 0:15:56.200 Leanna Baker, thank you so much. Steals Team leader U 0:15:56.200 --> 0:15:59.240 Bloomberg News via zoom in New York City. You're listening 0:15:59.320 --> 0:16:03.160 to Bloomberg Business Week with Carol Messer and Bloomberg Quick 0:16:03.200 --> 0:16:08.480 Takes Tim Stinovic on Bloomberg Radio. This is Bloomberg Business 0:16:08.600 --> 0:16:12.360 Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic 0:16:12.840 --> 0:16:16.280 on Bloomberg Radio. All right, SPACs heard of them? Yeah, 0:16:16.280 --> 0:16:17.800 I have? You know, you don't hear hibout as much 0:16:17.800 --> 0:16:22.800 in two as you did in late uh. These special 0:16:22.960 --> 0:16:26.480 purpose acquisition companies continue to the very much be part 0:16:26.560 --> 0:16:28.800 of our market conversations, are also part of the conversation 0:16:28.840 --> 0:16:30.600 when it comes to concerns that are on the radar 0:16:30.800 --> 0:16:33.680 of regulators. This story Bloomberg Big Take, and it's also 0:16:33.680 --> 0:16:35.960 in the upcoming new issue of Bloomberg business Week. The 0:16:36.000 --> 0:16:38.920 story by Noah boo Hire and Matt Robinson. Noah's a 0:16:38.960 --> 0:16:41.280 finance reporter for Bloomberg News. He joins us on the 0:16:41.360 --> 0:16:44.400 phone from Seattle. Joel Webber is editor at Bloomberg Business Week. 0:16:44.600 --> 0:16:47.720 He's with this in the Bloomberg Interactive Broker's studio. Joel, 0:16:47.840 --> 0:16:50.160 what did your team, the team at Bloomberg Business Week 0:16:50.240 --> 0:16:53.000 find when they crunched the data when it came to 0:16:53.960 --> 0:17:00.040 perhaps interesting activity in SPACs before a SPAC goes and 0:17:00.120 --> 0:17:03.600 acquires a company, well in ongoing propaganda for a return 0:17:03.640 --> 0:17:10.920 to office stories. Um. No, it was in New York 0:17:11.320 --> 0:17:13.080 last weekend. We rubbed shoulders and he was like, Hey, 0:17:13.119 --> 0:17:14.560 I've been working on this back thing. You should you 0:17:14.560 --> 0:17:16.440 guys should take a look at it. And we looked 0:17:16.440 --> 0:17:18.160 at it and we're like, oh, this is really interesting. 0:17:18.640 --> 0:17:22.359 So the way that UM spack works is there's something 0:17:22.440 --> 0:17:27.000 called a stock warrant that gets basically issued in advance 0:17:27.280 --> 0:17:29.840 of a SPACK happening, and it gives holders the right 0:17:29.960 --> 0:17:34.480 to buy shares at a specific price. And when Noah 0:17:34.520 --> 0:17:38.399 started digging into that data, he found some interesting stuff. 0:17:38.520 --> 0:17:42.720 Right now, Yeah, UM, you know, as you mentioned there, 0:17:42.840 --> 0:17:44.679 there are these warrants out there that are that are 0:17:44.720 --> 0:17:48.719 traded UM ahead of time, and and they're they're interesting 0:17:48.800 --> 0:17:52.399 to look at because they're pretty volatile. They tend to 0:17:52.400 --> 0:17:54.880 spike on deal news. UM. And the reason we even 0:17:54.920 --> 0:17:57.400 started poking around this is that several months ago there 0:17:57.440 --> 0:18:00.159 were some some well timed trades in the warrant of 0:18:00.280 --> 0:18:03.960 the SPAC that that uh that is UM merging with 0:18:04.480 --> 0:18:09.320 Donald Trump's media platform. And we know that regulators were 0:18:09.320 --> 0:18:11.480 poking around that one. So we asked the question, like 0:18:11.720 --> 0:18:14.680 how common was this there there there you know, literally 0:18:14.760 --> 0:18:17.560 been hundreds of SPACs that have I POD in recent 0:18:17.680 --> 0:18:21.320 years and and and um you know, hundreds that have 0:18:21.640 --> 0:18:25.760 announced or completed mergers and and so we started looking 0:18:25.800 --> 0:18:29.639 back through the data and UM, we're looking particularly for 0:18:29.920 --> 0:18:35.280 instances when UM the volume of warrant trading spiked uh 0:18:35.400 --> 0:18:37.680 in in in the days and weeks ahead of a 0:18:37.760 --> 0:18:40.960 merger announcement. Now, UM, I should say that there are 0:18:40.960 --> 0:18:44.280 a lot of really benign reasons for that. UM. A 0:18:44.359 --> 0:18:48.159 lot of these merger talks leak early in the press, 0:18:48.280 --> 0:18:51.520 which is a which is a good reason for for 0:18:51.680 --> 0:18:56.240 why trading would pick up UM. But a lot of 0:18:56.800 --> 0:19:01.119 the spikes in trading that we uncovered, UH weren't so 0:19:01.240 --> 0:19:03.600 easily explained, And so the story was really about that. 0:19:04.440 --> 0:19:07.159 And as we started poking around, we realized that you know, 0:19:07.400 --> 0:19:10.040 we weren't the only ones who who who found this 0:19:10.160 --> 0:19:13.600 kind of activity interesting. UM. We understand that the sec 0:19:14.600 --> 0:19:18.480 UM and other regulators are are examining trades ahead of 0:19:18.560 --> 0:19:21.680 these the all announcements to figure out if if the 0:19:21.760 --> 0:19:24.440 trades were based at all on inside information. Well, and 0:19:24.520 --> 0:19:28.359 one of the it looks like inquiries by regulators includes dwack, 0:19:28.480 --> 0:19:30.359 which I just love to say, and that is a 0:19:31.240 --> 0:19:34.280 dwack one more time. It's like walking into a door 0:19:34.720 --> 0:19:38.680 or it happens to be a spack connected to former 0:19:38.720 --> 0:19:42.920 President Donald Trump. Tell us about that. Yeah, so what 0:19:43.080 --> 0:19:47.080 happened there is UM, the warrants for for that spack 0:19:47.160 --> 0:19:50.960 started started UM trading freely. I believe it was late 0:19:51.000 --> 0:19:54.720 September of last year, very shortly after they started trading. 0:19:54.760 --> 0:19:58.280 There was just a pronounced pop in in the volume 0:19:58.359 --> 0:20:01.960 of those warrants UM. And then about two three weeks later, 0:20:03.520 --> 0:20:06.840 the merger gets announced and the value of those warrants 0:20:06.920 --> 0:20:09.560 just stores I think they were, you know, before the deal, 0:20:09.680 --> 0:20:12.560 we're under fifty cents apiece. They eventually climbed to more 0:20:12.600 --> 0:20:16.320 than thirty seven dollars each. They've moderated some, but but 0:20:16.720 --> 0:20:23.560 the potential was there for someone to uh make a 0:20:23.880 --> 0:20:28.040 very quick and hafty UM profit. Now we don't no 0:20:28.160 --> 0:20:32.080 one has alleged wrongdoing in that case. We don't know 0:20:32.880 --> 0:20:36.880 UM what the outcome of the SEC and FINRA's information 0:20:36.960 --> 0:20:40.160 requests is going to be, but we know they are interested. 0:20:40.640 --> 0:20:43.440 What about when it comes to Vecto i Q Acquisition 0:20:43.560 --> 0:20:47.639 corporations purchase of the EV maker Nicola, because that shows 0:20:47.800 --> 0:20:51.920 how quickly, as you write, investors can profit. Yeah. Look, 0:20:52.040 --> 0:20:55.400 that's that's an example we call out in the story UM. 0:20:55.680 --> 0:20:58.000 And you know what we we found there is that 0:20:58.160 --> 0:21:00.960 there was there was a pickup and warrant trading about 0:21:01.040 --> 0:21:06.080 two weeks prior to that UM merger getting announced. And uh, 0:21:06.960 --> 0:21:10.800 you know, the warrants quickly went um from under a 0:21:10.880 --> 0:21:13.440 dollar to more than more than four dollars. They later 0:21:13.880 --> 0:21:16.480 you know, as as the deal got closer to completion, 0:21:16.600 --> 0:21:20.159 rose significantly higher. And so really the question here, what 0:21:20.400 --> 0:21:24.840 what what all of this raises is you know, how 0:21:25.040 --> 0:21:29.640 leaky were these deals? And we're people who were involved 0:21:29.680 --> 0:21:33.600 in them, um doing enough to safeguard the material non 0:21:33.680 --> 0:21:38.280 public information? UM. Insider trading cases are extremely hard for 0:21:38.720 --> 0:21:44.280 regulators to prove. Uh, but um, you know, the data 0:21:44.560 --> 0:21:48.480 is is suggestive of you know, a potential for people 0:21:48.720 --> 0:21:52.760 to be trading on inside information. And one of the 0:21:53.600 --> 0:21:56.280 bits of reporting that I thought was interesting is, uh, 0:21:56.800 --> 0:21:59.320 you too. You spoke to a professor at New York 0:21:59.480 --> 0:22:03.280 University School of Law who has written a ton about spacks, 0:22:03.400 --> 0:22:06.720 Michael oldreg Uh what did he have to say? Because 0:22:06.960 --> 0:22:09.960 there's the law firm component who's working on spots but 0:22:10.240 --> 0:22:14.199 SPACs but uh, and you know, obviously lawyers are going 0:22:14.240 --> 0:22:16.240 to be a key part of this, but not every 0:22:16.359 --> 0:22:21.080 law firm is top tier, right, yeah, I mean SPACs 0:22:21.119 --> 0:22:23.760 historically we're we're a bit of a backwater in the 0:22:23.840 --> 0:22:27.159 financial world. So UM, the companies that were big in 0:22:27.240 --> 0:22:30.680 this at the outset were not not your um, you know, 0:22:30.760 --> 0:22:34.120 most well known firms. Um. That professor you know said, 0:22:34.119 --> 0:22:37.359 a lot of these these law firms we're taking um 0:22:38.400 --> 0:22:42.439 uh this business on sort of a you know, uh, 0:22:42.800 --> 0:22:46.480 they were turning through a lot of these deals and um. 0:22:47.160 --> 0:22:50.000 The question is whether you know folks didn't dot the 0:22:50.040 --> 0:22:54.080 i's and crossed the teas and um. You know there's 0:22:54.200 --> 0:22:56.760 there's a lot bigger firms that are the deal with 0:22:56.920 --> 0:23:00.240 M and A more frequently, probably have more controls and 0:23:00.840 --> 0:23:03.879 um rules around how information gets shared. And and his 0:23:04.000 --> 0:23:06.240