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Speaker 1: Welcome to the Bloomberg Penl podcast. I'm Paul swing you

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Speaker 1: along with my co host Lisa Brahmas. Each day we

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Speaker 1: bring you the most noteworthy and useful interviews for you

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Speaker 1: and your money, whether at the grocery store or the

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Speaker 1: trading floor. Find a Bloomberg Penil podcast on Apple podcast

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Speaker 1: or wherever you listen to podcasts, as well as at

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Speaker 1: Bloomberg dot com. So Shopify, I've got a stock for

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Speaker 1: you Shopify, Lisa. The stock is upcent over the last year.

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Speaker 1: These are the good folks that help merchants set up

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Speaker 1: and manage their online stores. Stock has done phenomenon well,

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Speaker 1: just had some great earnings out on the last couple

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Speaker 1: of days. Hardly Finkelstein, chief operating Officer Shopify, joins us

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Speaker 1: here on our Bloomberg Interactive Broker studio. Hardly, thanks so

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Speaker 1: much for being with it. Usually we chat with you

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Speaker 1: on the phone, so it's good to have you in

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Speaker 1: studio to be here. What is driving the growth of Shopify.

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Speaker 1: I mean when people think online, they just they just

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Speaker 1: and they think retail. They just think Amazon putting retail

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Speaker 1: out of business. But there are a lot of retailers

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Speaker 1: using your technology that are kind of getting it done right. Yeah,

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Speaker 1: there's a million merchants, a million stores now on Shopify

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Speaker 1: and they old sixty one billion dollars in two thousand nineteen.

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Speaker 1: That's up about forty nine percent from the previous year.

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Speaker 1: Our revenue for two was approximately one point five billion.

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Speaker 1: That's up. So certainly I think people are beginning understand

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Speaker 1: what Shopify is and what we are is where the

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Speaker 1: world's first retail operating system. And uh, we have stores

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Speaker 1: that are starting on shop If they getting really big,

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Speaker 1: that's the all Birds, that's the bombas Socks of the world,

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Speaker 1: that's the gym Sharks of the world. They're becoming category leaders.

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Speaker 1: But also we we also big brands I mentioned kitchen

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Speaker 1: Aid and PepsiCo and PNG that are also moving over.

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Speaker 1: So they use you, your guys platform as opposed to

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Speaker 1: building themselves. Is that kind of the way do you

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Speaker 1: think about Yes, some of them built these homegrown stores,

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Speaker 1: homegrown stores and decided they don't want to run massive

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Speaker 1: engineering teams. In other cases, they're migrating over from the

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Speaker 1: large enterprise offerings. So if you look at a chart

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Speaker 1: of your stock since the end of two thousand and eighteen,

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Speaker 1: it's just con stratospheric, right, I mean, it's just absolutely rocketed,

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Speaker 1: and I'm trying to understand how you maintain this sort

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Speaker 1: of momentum at a time when there is a lot

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Speaker 1: of competition and at a time when there still are

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Speaker 1: a lot of questions about the economy. Yeah, So a

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Speaker 1: couple of things. First of all, I think when we

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Speaker 1: first swent public, which is does in fifteen, Shopify was

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Speaker 1: really e commerce provider for merchants and entrepreneurs and small

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Speaker 1: businesses in English speaking world. Since then, we've expanded well

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Speaker 1: beyond e commerce. We now power physical retail across If

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Speaker 1: you walk in any Albert store, you'll see Shopify powering

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Speaker 1: the physical locations, and we do that across thousands of

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Speaker 1: brick and mortar stores. We have a capital business. We've

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Speaker 1: given them more than eight hundred million dollars in cash advances.

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Speaker 1: We have a payments business. We're launching a fulfillmance business now.

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Speaker 1: And we've also expanded beyond just our core geographies um.

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Speaker 1: In fact, we've grown our um the amount of merchants

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Speaker 1: on our platform outside English speaking countries from twenty four

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Speaker 1: percent last year to this past quarter, and so we're

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Speaker 1: seeing a larger TAM and we're doing more for our merchants,

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Speaker 1: which is why I sort of refer to us as

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Speaker 1: this retail operating system, not just an e commerce provider anymore,

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Speaker 1: so you know, as an e commerce provider or expanded larger.

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Speaker 1: You guys did not come out of Silicon Valley, did

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Speaker 1: you. You You guys are in Ottawa. We are absolutely abel

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Speaker 1: like the start up community, the startup vibe in Canada.

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Speaker 1: It is audaa Audawa the place to do it? Or

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Speaker 1: is it just entrepreneurs kind of all over? Yeah? Actually,

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Speaker 1: I think startups in entrepreneurship and technology has become geographically agnostic.

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Speaker 1: I actually think it's an advantage to be outside of

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Speaker 1: Silicon Valley. I have a lot of piers that run

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Speaker 1: companies like like Hours in the Valley and they tell

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Speaker 1: me that the average tenure of employees they're super short,

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Speaker 1: like eighteen months. We see incredible talent coming out of Canada,

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Speaker 1: we see incredible loyalty, and I think there's something to

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Speaker 1: be said about being the best place to work in

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Speaker 1: any single geography. And I think Shoplay is the best

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Speaker 1: place to work in Canada and one of them around

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Speaker 1: the world. What about competition, I imagine that Amazon would

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Speaker 1: love to get a piece of what you're doing. Yeah,

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Speaker 1: So we don't get be with Amazon, our million merchants do.

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Speaker 1: And I think what Amazon is doing is they're trying

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Speaker 1: to build an empire, and what we're doing is we're

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Speaker 1: arming the rebels, and the rebels are winning. So you

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Speaker 1: see companies like Nike moving off Amazon because they want

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Speaker 1: to have a direct relationship with or in consumers. All Birds,

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Speaker 1: for example, if you try to buy All Birds and Amazon,

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Speaker 1: you can only find fake all Birds and and and

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Speaker 1: Albert has been built on Shopify. So basically the idea

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Speaker 1: here is rather than go to Amazon, you're trying to

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Speaker 1: give them tools to be able to do it themselves

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Speaker 1: and create a platform. How do you offer them the

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Speaker 1: same kind of visibility that they may get in an Amazon. Yes.

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Speaker 1: So certainly if they're gonna put their products on a

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Speaker 1: marketplace like Amazon or eBay, they're going to obviously, uh,

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Speaker 1: they're gonna rent their customers to those to those brands.

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Speaker 1: We actually created a platform where our merchants are brands

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Speaker 1: can actually find their own customers and own them, whether

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Speaker 1: through social media or you can buy marketing directly from

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Speaker 1: Shopify on things like Google or Facebook or Snapchat or Instagram,

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Speaker 1: and so rather than simply giving them, customers are renting

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Speaker 1: them the way Amazon does, and eventually they can take

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Speaker 1: them back. We actually empower these merchants to create their

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Speaker 1: own customer basis and then connect directly with them. Where

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Speaker 1: are you guys investing in heavily in SFN shop Life

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Speaker 1: Fulfilm Network. We think that is if you sort of

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Speaker 1: look at what we've been doing the last couple of years,

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Speaker 1: we're taking off all the different challenges that a small

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Speaker 1: business or a big business may have. We think fulfillment

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Speaker 1: is one of those things people don't want to use,

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Speaker 1: uh the party logistics companies because either the requirements and

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Speaker 1: moms are way too high, or they put everything in

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Speaker 1: the same box with their marketplaces logo on it. What

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Speaker 1: we're doing is we're creating this network of third party

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Speaker 1: warehouses were aggregating them using technology and software. We bought

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Speaker 1: a company in Boston called six Rubber Systems last year

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Speaker 1: for about four and fifty million dollars. They're going to

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Speaker 1: provide incredible robotic technology to make all warehouses a lot

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Speaker 1: more effective, and then we're gonna democratize shop of the

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Speaker 1: Fulfilming Network. The way we've done with e commerce. Just

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Speaker 1: real quick here, I'm wondering what's the most effective platform

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Speaker 1: for advertising that you found. It really depends, I think

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Speaker 1: for a lot of these DTC brands, the ones that

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Speaker 1: are you know, new director consumer mattress companies or companies

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Speaker 1: like that. Honestly, social media seems to be the best one.

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Speaker 1: Now that being said, others are are in more of

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Speaker 1: these traditional industries. Their TV is actually working really well

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Speaker 1: for them. Interesting, Probably real quickly, Elon mess Musk is

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Speaker 1: taking advantage of this surging share price to sell some stock.

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Speaker 1: Are you guys interested in selling stock? Not at this pine? Okay,

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Speaker 1: Harlie fickle ste and thank you so much for being here.

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Speaker 1: Charlie Finkelstein, two operating officer of Shopify based in Ottawa,

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Speaker 1: joining us here in our interactive broker studio. Well, the

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Speaker 1: global travel industry is really at the forefront of feeling

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Speaker 1: the brunt of the coronavirus. You know, I'm thinking cruise ships, hotels, casinos,

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Speaker 1: really seeing business impacted significantly in the shares of those

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Speaker 1: companies reflecting it as well. Our next guest has a

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Speaker 1: equally cautious view of those sectors. Tuna A Moobi. He's

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Speaker 1: a director and industry research analysts at cf R A Research.

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Speaker 1: He joins us on the phone, Thanks so much for

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Speaker 1: joining us again. I know you've gone become more cautious,

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Speaker 1: downgraded a bunch of stocks. Tell us how you see

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Speaker 1: kind of some of these uh, casino companies, cruise lines

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Speaker 1: and the like. Good morning, uh Paul, my friend, and

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Speaker 1: thanks for having me. Um. So over the past um

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Speaker 1: two weeks or so, we have actually taken a more

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Speaker 1: dare assessment of a potential impact of the coronavirus on UM,

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Speaker 1: you know, the overall tourism and UM, you know, the

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Speaker 1: cruise ships, UM, the online travel companies, the casinos. The

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Speaker 1: one constant theme has emerged is that, UM, you know,

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Speaker 1: while it's very difficult to quantify the overall impact, and

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Speaker 1: of course no one really knows the duration of how

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Speaker 1: long it's gonna last, but we think that it's starting

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Speaker 1: to take a toll right now. And you just heard

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Speaker 1: about you know, the higher number of death tolls UM,

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Speaker 1: as well as more cases being diagnosed. So my sense is, UM,

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Speaker 1: you know, the market may still be underestimating the potential

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Speaker 1: impact of this, if you remember, UM, I think it

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Speaker 1: seems to be some comfort level that if you compared

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Speaker 1: to the um the Stars or the Bola, and while

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Speaker 1: those cases were ultimately you know, resolved, limiting its impact,

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Speaker 1: what warries us here is really the speed and severity

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Speaker 1: of of the of the new cases that are being

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Speaker 1: diagnosed on the death toll, which kind of leads us

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Speaker 1: to believe that this is gonna come. You need to

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Speaker 1: be an overhang as as the year goes on for

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Speaker 1: for quite some time. You know, it's so interesting to

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Speaker 1: hear you speak, because we speak with economists and investors

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Speaker 1: who say they're expecting some sort of V shaped recovery

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Speaker 1: in the economy of China and beyond. And I'm wondering

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Speaker 1: as you look at MGM basically withdrawing their entire outlook

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Speaker 1: for the year, citing the disruption from the coronavirus, the

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Speaker 1: fact that they get twenty seven percent of their business

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Speaker 1: from Macau UH and are losing and estimated more than

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Speaker 1: a million dollars a day based on the current shutdown

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Speaker 1: that we're seeing, how can we even be so sure

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Speaker 1: that a place like MGM could compensate for this later

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Speaker 1: on we can be at the short answer, We're actually

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Speaker 1: are taking a more negative view of MBM downgrading to

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Speaker 1: itsell ahead of their earnings. Um, you know report last night.

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Speaker 1: I think that just confirmed to us, um that you know,

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Speaker 1: no one really has a handle of this. So they

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Speaker 1: talked about the expanded burn rate about one point five

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Speaker 1: million dollars on a daily basis evil, while the casinos

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Speaker 1: have been shot down mostly for peril, and that was

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Speaker 1: also a thing that we heard from Wind Resources and

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Speaker 1: in Las Vegas. So I think you're really starting to see, uh,

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Speaker 1: you know, the casinos starting to feel the brunt of this.

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Speaker 1: And remember, um, you know, these are you know, in

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Speaker 1: an industry that was alreadily already I'm sorry, already massively

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Speaker 1: impacted by the Hong Kong protest. So these latest coronavirus

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Speaker 1: issue just seems to be adding a saut to to

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Speaker 1: injury and really no one how to handle on on

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Speaker 1: when this is gonna dissipay. Now, one more thing I'd

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Speaker 1: add is that even when the situation is resolved, typically

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Speaker 1: from a historical perspective, we usually see several months before

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Speaker 1: things can get any semblance of normalization, which is really

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Speaker 1: why we think this twenty um at least the first

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Speaker 1: half certainly is gonna need much more caution to know

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Speaker 1: this is definitely specific to the casino industry the travel industries.

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Speaker 1: Is there, though, a broader brush that we could paint

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Speaker 1: in terms of the potential longer term impact given your

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Speaker 1: experience examining the corporate balance sheets of these companies as

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Speaker 1: well as the likes of Amazon and Netflix. Well, you

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Speaker 1: know one thing that I'd say that China overall, um,

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Speaker 1: you know, most of these companies you talk about, Amazon

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Speaker 1: and Netflix have a relatively limited direct exposure in China

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Speaker 1: poly due to the regulatory um environment now. But I

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Speaker 1: think the UM what I see is some type of

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Speaker 1: uh uh you know, um kind of tangential fallout from

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Speaker 1: this geopolitical situation. UM. A lot of these companies, even

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Speaker 1: when they are not directly operating in China, have some

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Speaker 1: type of strategic partnership. That's true certainly for online travel companies,

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Speaker 1: and of course casinos have a huge stake in there.

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Speaker 1: So every industry is different. China itself has been a major,

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Speaker 1: uh you know, kind of driver of global tourism outbound travel,

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Speaker 1: and I think what's important to remember is that while um,

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Speaker 1: most of the issues right now appeared to be limited

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Speaker 1: to China, they could be. In fact, it broader geopolitical

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Speaker 1: impact across even the US and other uh you know

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Speaker 1: markets like Europe. Of course, that depends on how fast

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Speaker 1: those uh cases travel, but overall, while the overall impact

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Speaker 1: on GDP growth is the relatively meted at this point,

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Speaker 1: I think you could actually uh see that situation get

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Speaker 1: out of control pretty fast. So so it's just on

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Speaker 1: the cruise lines here. I know, when you talked to

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Speaker 1: a lot of people about, you know, why don't you

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Speaker 1: go on a cruise, one of the concerns is just

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Speaker 1: being you know, stuck with so many people in a

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Speaker 1: confined area, and it just seems like, you know, these

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Speaker 1: outbreaks of diseases are perhaps more common there. Do you

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Speaker 1: think there's longer term risk to kind of just the

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Speaker 1: whole market, you know, total market size for the cruising

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Speaker 1: industry from this, I think what's interesting that before this

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Speaker 1: coronavirus outbreak, um, you know, the cruise industry fundamentals were

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Speaker 1: pretty healthy. We're expecting the you know, kind of a

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Speaker 1: near record year based on advanced indicators of booking and pricing,

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Speaker 1: on board spending. Um, you know, all of those indicators

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Speaker 1: seem to be holding up well. Now, Uh it seems

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Speaker 1: like all bets are off when you kind of hear

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Speaker 1: stories about you know, the diamond prices being quarantined and

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Speaker 1: several other ships unable to find landing ports or destinations.

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Speaker 1: My sense is that there is a certain amount of

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Speaker 1: weariness out there, um among potential cruise passengers in terms

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Speaker 1: of booking pending the resolution of this issue. So, um,

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Speaker 1: I think you're starting to see the guidance from cruise companies. Uh.

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Speaker 1: You know, at risk is actually why we took a

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Speaker 1: more negative stance on Royal Caribbean as well as um

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Speaker 1: A Norwegian Cruise, both of which we downgraded well obviously

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Speaker 1: along on carnivals. So uh, this is something that's gonna

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Speaker 1: over over the industry until any more visibility in terms

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Speaker 1: of the potential resolution to not just real quick here

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Speaker 1: thirty seconds. Do you buy this argument that Netflix is

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Speaker 1: getting a whach boost from this because people are sitting

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Speaker 1: home and doing Netflix and chill rather than going out

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Speaker 1: potentially getting coronavirus a leita. That's something we've heard before,

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Speaker 1: but I'd say a little bit far fetched at this point.

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Speaker 1: It's really hard to kind of connect those dots. That

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Speaker 1: being said. I mean, I can understand why, you know,

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Speaker 1: maybe isolated cases that could be true, but hard to

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Speaker 1: generalize here do you know, Moby, thank you so much

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Speaker 1: to know MOBI director and industry analysts. It's c f

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Speaker 1: R A Research and joining us on the phone from

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Speaker 1: New Jersey, I love that I write a bunch of

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Speaker 1: stories about how Netflix. You know, we talk about the

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Speaker 1: negative impact of the coronavirus, but there are companies benefiting

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Speaker 1: because people are staying home and they've got to do something,

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Speaker 1: so they might as well watch movies. On Monday, the

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Speaker 1: Department of Justice and anced charges against four members of

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Speaker 1: China's People's Liberation Army hack of Equifax, and this was

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Speaker 1: something that exposed millions of Americans and their private data.

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Speaker 1: It raises questions. Putting aside this particular case, it raises

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Speaker 1: questions about just how well we are able to detect

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Speaker 1: the attacks that our data is exposed to every single day.

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Speaker 1: Joining us here in studio, Steve Wagner, Global Managing Director

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Speaker 1: of Decision Analytics four experience. Uh, Steve, so glad to

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Speaker 1: have you. I want to start with that, where are

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Speaker 1: we when it comes to detection when it comes to

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Speaker 1: these attacks? Sure? Well, the particular angle that we tend

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Speaker 1: to come at this from in my business is is

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Speaker 1: really fraud and identity um within commercial transactions? So a

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Speaker 1: lot of ways you can answer your question. We're focused

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Speaker 1: on that particular angle UM I think when we think

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Speaker 1: about it, and we just released a study that we've

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Speaker 1: done a six hundred six thousand, five hundred consumers and

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Speaker 1: six fifty bi no. This is in thirteen countries around

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Speaker 1: the world, and we've been looking at this question of

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Speaker 1: how businesses should sort of say, shape their understanding, how

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Speaker 1: do they react, what do they do? So the big

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Speaker 1: issue is businesses faced with those kind of security threats

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Speaker 1: instinctively sometimes will just clamp down, right, I you know,

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Speaker 1: the best thing for me to do is to not

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Speaker 1: be involved digitally with anybody. Of course, that doesn't really

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Speaker 1: allow you to do business very much. So the business persons, Yeah,

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Speaker 1: the business person really has to think through what's the

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Speaker 1: right way to do that, what's the right way to

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Speaker 1: make commerce work? So what our business people are generally

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Speaker 1: thinking about is how do I create an extraordinary digital

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Speaker 1: experience for my consumers? That's what they want to do, right.

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Speaker 1: What we found in this particular study was that of

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Speaker 1: businesses believe that they're actually doing a good job of

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Speaker 1: identifying who's coming to them, um Electronically, fifty of consumers

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Speaker 1: believe that the business is actually understand who they are,

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Speaker 1: which is obviously a significant mismatch. So do you think

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Speaker 1: the businesses that think the businesses think they're doing a

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Speaker 1: good good job identifying who their customers are? Is that

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Speaker 1: is that kind of false sense of security there? Do

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Speaker 1: you think that that is a really valid number? Well? What, well,

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Speaker 1: I think the numbers valid in the study, but what

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Speaker 1: they're what you have to get to in order to

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Speaker 1: understand that mismatch is the way businesses are looking at

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Speaker 1: it today versus the way consumers are looking at it.

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Speaker 1: So the way when you when you talk to a consumer,

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Speaker 1: what do they care about first and foremost in the

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Speaker 1: digital interactions, they care about security. So actually, when you

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Speaker 1: talk to a consumer your business, you're dealing with them

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Speaker 1: online in disha of security. Make them feel better, make

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Speaker 1: them happier to interact with you. A business. On the

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Speaker 1: other hand, when you rank their priorities, number one in

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Speaker 1: their priority list is uh creating an experience that is

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Speaker 1: targeted to that individual, right, So in other words, they'll

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Speaker 1: look at it, they'll say, yeah, I understand. I know

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Speaker 1: who Paul is. I've seen them before. Um, that's all

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Speaker 1: I need to know. Now. The real question is whether

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Speaker 1: or not the things I say to Paul and what

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Speaker 1: I do with Paul is really on target or not.

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Speaker 1: And the consumers just saying, hey, look, actually, when you

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Speaker 1: asked me for passwords and you asked me, you know,

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Speaker 1: put me into a credential environment. That's what I'm willing

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Speaker 1: to share. So, you know, but this goes really to

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Speaker 1: the heart of do you know who you're dealing with?

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Speaker 1: Do you know what the incoming attention you're getting really

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Speaker 1: is about. According to the same study you you talked about,

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Speaker 1: how fraud continues to increase, with fifty seven percent of

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Speaker 1: businesses citing an increase in the past twelve months. And

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Speaker 1: I just wonder how much this is an increase in

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Speaker 1: the ability to detect some of these and how much

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Speaker 1: is an increase in attacks or is it both? Yeah,

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Speaker 1: So I think there's an opportunity in the market right

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Speaker 1: now because I think what we've identified this mismatch between

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Speaker 1: how consumers feel and where businesses are. Businesses also believe

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Speaker 1: that if they really understand who the consumer is, fraud

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Speaker 1: will go down so sort of it's clear in the

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Speaker 1: study that businesses aren't quite getting it right yet. So

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Speaker 1: what businesses need to do is UM is take more

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Speaker 1: advantage of the data and the analytics that are available

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Speaker 1: within these online digital environments. So right now, I don't

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Speaker 1: think they do that enough. They tend to say, all right,

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Speaker 1: I've gotten passwords for this individual, I know their name,

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Speaker 1: I know if you I know them. But actually there's

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Speaker 1: a quite a bit more UM available, and in particular,

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Speaker 1: there's there are quite a few individual threat modality fraud

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Speaker 1: tools that you can use. And the question is are

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Speaker 1: these being knitted together into a comprehensive way or our

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Speaker 1: business is just employing Oh, I use I use device,

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Speaker 1: I d oh, I use biometric behavioral biometrics, I use this,

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Speaker 1: when in fact, what you really need to win today

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Speaker 1: is you need a comprehensive capability that incorporates sort of

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Speaker 1: all of the different tools that are available, layers that

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Speaker 1: with UM analytics so that you can really instruct strong defenses.

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Speaker 1: Steve Wagner, thanks so much for joining us. Really fascinating

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Speaker 1: that discussion is more and more of our time is

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Speaker 1: spent online. Uh, you have to balance the does the

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Speaker 1: business know me and are they protecting my data? And

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Speaker 1: all those times. Such an interesting concept that, you know,

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Speaker 1: there's one thing about having artificial intelligence detecting all of

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Speaker 1: the incoming threats. It's another thing just know who you're

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Speaker 1: dealing with at any given time and how do you

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Speaker 1: do that well, and that sort of dual approach to

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Speaker 1: trying to stave off some of the attacks that are

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Speaker 1: seeming that seemed to be increasing for every business that

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Speaker 1: does that does that operates in the online world, which

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Speaker 1: is everyone everyone. Steve Wagener, Global Managing Director, Experience Digions

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Speaker 1: Decision Analytics, based in Orange County, California, but joining us

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Speaker 1: here in our Bloomberg Interactor broker Studio Tesla really in

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Speaker 1: the front and focus today which shares up one point

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Speaker 1: six percent. This is amazing because ahead of the open

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Speaker 1: we saw shares down as much as seven point two

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Speaker 1: per cent. And this comes after a filing showing that

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Speaker 1: they planned a two billion dollar offering of common stock

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Speaker 1: taking advantage of the rally and the share price that

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Speaker 1: we've seen that's been absolutely astronomical. I'm trying to understand

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Speaker 1: a why people don't seem to care that they're going

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Speaker 1: to be diluted, very very marginally. But typically this is

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Speaker 1: something that that matters, uh, and be why then Tesla

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Speaker 1: didn't raise more? Kevin Tynan joining us here in our

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Speaker 1: interactive broker studios Kevin Tyne and Senior Auto's analyst for

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Speaker 1: Bloomberg Intelligence. Kevin, let's just first talk about the response.

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Speaker 1: Why are shares up today? Um? Well, because I think

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Speaker 1: the idea of adding uh capital of the balance she

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Speaker 1: wasn't an overhang, right. I think that the investors believe

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Speaker 1: that they are. He said this in the middle of

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Speaker 1: they're going to be profitable from here forward. They're going

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Speaker 1: to fund themselves from here forward. So I think that

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Speaker 1: that removed the bear case or that bear argument at

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Speaker 1: that time. Uh So, needing a little bit of capital here,

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Speaker 1: it's it's it's not that big a deal to sort

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Speaker 1: of reverse, especially when you think of the circumstances, right,

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Speaker 1: it was it's a no brainer considering the way the

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Speaker 1: stock is run and and the amount of it's it's

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Speaker 1: absolutely the right thing to do. And to your point,

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Speaker 1: I would say, why not do even more than that? Um?

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Speaker 1: But but a lot of the way this has managed,

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Speaker 1: this company has manages about that perception, right, Just the

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Speaker 1: idea of burning short sellers, right, is just something you

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Speaker 1: don't really see from most ceo s. Right, you run

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Speaker 1: the business the right way, uh profitably growth and that

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Speaker 1: takes care of itself. To actively sort of target that

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Speaker 1: group is just it's just unorthodox. And I think that's

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Speaker 1: a big part of it, is that perception that raising

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Speaker 1: capital shows a sign of weakness, that we can't fund ourselves,

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Speaker 1: when in fact it's just part of the process and

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Speaker 1: when it make sense to do so, you do it.

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Speaker 1: So the company also announced that they're going to spend

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Speaker 1: about three and a half billion dollars in capex this year.

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Speaker 1: Give us us Is that enough for some of the

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Speaker 1: plans they've announced. It is because of UM he loves leverage,

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Speaker 1: and really in this environment, who doesn't UM. So a

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Speaker 1: lot of that fixed investment will come from from borroing,

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Speaker 1: like so, even the Shanghai factory was money taken down

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Speaker 1: from the from the Chinese government, and same thing probably

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Speaker 1: with Berlin. So so that capex number that they put

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Speaker 1: out there probably does not include anything they would borrow

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Speaker 1: to UM to build those factories or to expand out

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Speaker 1: and get to some level of scale in China. Whether

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Speaker 1: that's distribution infrastructure or sales infrastructure. All that stuff will

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Speaker 1: come out of that cap X number, but the buildings

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Speaker 1: themselves will come from the borrowing. Ela Musk has said

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Speaker 1: that they were not going to be raising more capital

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Speaker 1: this year, so this isn't about face for him. Also,

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Speaker 1: Tesla has been cutting pockets expenditures over the past few

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Speaker 1: years in response to criticism about burning through cash, and

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Speaker 1: they reported an actually that profit, which is one of

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Speaker 1: the reasons why shares rallied so much. Given that, and

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Speaker 1: given that they seem to be doubling down on the

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Speaker 1: spending and not necessarily the cash generation, why are investors

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Speaker 1: so sanguine about this move? Well? I think also to

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Speaker 1: keep in mind the projects that he's that he's teased, right,

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Speaker 1: so there's roadster two point oh, there's semi truck, There's

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Speaker 1: there's cybertruck, there's Model why coming, There's all these grand plans.

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Speaker 1: There's Robotaxi fleet a million units in so so investors

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Speaker 1: the reaction will be like, he's funding the growth, right,

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Speaker 1: There's enough things to do, there's factories to build, there's

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Speaker 1: products to put out there that this is what you

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Speaker 1: have to do. You need capital do it and that's

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Speaker 1: what he's doing real quick. What's the demand for electric

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Speaker 1: vehicles to have a boy, you know, it was is

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Speaker 1: in the one percent range in nineteen, So one of

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Speaker 1: the bulls think it will be well if if you

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Speaker 1: ask the Uber bowls, it's gonna be that everybody who

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Speaker 1: owns a car will have to have an electric vehicle.

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Speaker 1: Plus it's not only a vehicle, right, it's your smartphone,

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Speaker 1: It's it's everything. So Tesla as a technology company can

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Speaker 1: be all things. Everybody who needs a car and a

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Speaker 1: phone is their addressable market. Kevin Tyne and Senior Auto's

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Speaker 1: analyst Bloomberg Intelligence joining us here on our Bloomberg Interactive

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Speaker 1: Broker Studio. Tesla stock up just you know, about one

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Speaker 1: and one and a half percent here, But that back

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Speaker 1: on the news of a two maybe two point three

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Speaker 1: billion dollar stock offering, UH and the associated the dilution

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Speaker 1: and supply into the marketplace. Just extraordinary that the stocks

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Speaker 1: trading up. But Kevin was mentioning there is a lot

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Speaker 1: of capital demand for this company and there's a cull

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Speaker 1: to of belief behind Elon Musk, and I think there

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Speaker 1: are other company companies that if they suddenly decided to

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Speaker 1: invest money in some questionable project, people wouldn't rally behind them.

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Speaker 1: Elon Musk is a different case. It's a different case.

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Speaker 1: It is a cold stock for many. Thanks for listening

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Speaker 1: to the Bloomberg P and L podcast. You can subscribe

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00:25:09,359 --> 00:25:12,119
Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast

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00:25:12,200 --> 00:25:15,679
Speaker 1: platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney.

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Speaker 1: I'm Lisa abram Woy. It's I'm on Twitter at Lisa

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Speaker 1: abram wits one before the podcast, you can always catch

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Speaker 1: us worldwide. I'm Bloomberg Radio.