WEBVTT - Netflix and Tesla Earnings Under the Investor Microscope 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:18.960 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.120 --> 0:00:22.280 Here to ask my brother the worst thing that's happened 0:00:22.280 --> 0:00:25.759 to him over the last year. He would, no doubt say, 0:00:27.360 --> 0:00:29.840 the trouble that I'm logging into Matt. 0:00:30.160 --> 0:00:32.280 Matt, if you're listening. 0:00:32.200 --> 0:00:34.559 Logging into the family Netflix account. 0:00:34.760 --> 0:00:37.760 What do you mean? Denny's mentioned it's up about seventeen 0:00:37.800 --> 0:00:40.680 percent this year. It's pretty much staying just off its 0:00:40.760 --> 0:00:43.360 highs of the day. The high was up eighteen percent, 0:00:43.360 --> 0:00:45.840 so it's holding out of the games. Despite the FED 0:00:45.920 --> 0:00:49.440 talk the focus on rates. Netflix now up almost thirty 0:00:49.479 --> 0:00:50.480 seven percent year to date. 0:00:50.560 --> 0:00:52.520 Wow, so this after the company said it's raising prices 0:00:52.560 --> 0:00:54.640 for some customers here in the US, the UK, France. 0:00:54.680 --> 0:00:57.880 It's posted its best quarter for subscriber growth in years. 0:00:57.920 --> 0:01:00.760 It's a sign that management's confidence in the future, even 0:01:00.800 --> 0:01:04.920 as rival streaming services lose money. Speaking of rivals, Yeah, Meanwhile, 0:01:04.920 --> 0:01:07.960 profit at Walt Disney's Sports TV networks fell twenty percent 0:01:08.000 --> 0:01:09.959 through the first nine months of fiscal twenty twenty three, 0:01:09.959 --> 0:01:12.520 as the company provided the first peak at that business 0:01:12.520 --> 0:01:15.600 on a standalone basis. We got with us a great 0:01:15.680 --> 0:01:18.240 voice on all things media and streaming. Keita Rogna gothen 0:01:18.600 --> 0:01:20.760 Tech in, a media analyst a Bloomberg Intelligence. She joins 0:01:20.840 --> 0:01:23.520 us on Zoom from BI headquarters in Princeton. Gita, I 0:01:23.560 --> 0:01:25.440 want to get to Disney in a few minutes. First, 0:01:25.520 --> 0:01:30.000 let's just start with Netflix. Wow, a great quarter from 0:01:30.000 --> 0:01:33.080 the company. It turns out that cracking down on password 0:01:33.120 --> 0:01:37.880 sharing actually does lead to people who signing up for Netflix. 0:01:39.520 --> 0:01:42.000 Yeah, it absolutely does. And this, you know, it just 0:01:42.040 --> 0:01:44.600 tells us about the power of the platform, right Tim, 0:01:44.640 --> 0:01:48.200 because Netflix, I think today is really more like a 0:01:48.360 --> 0:01:51.920 utility almost, and so people really do want to have 0:01:52.000 --> 0:01:54.240 this service. It's a must have when it comes to 0:01:54.280 --> 0:01:57.360 streaming content. And that's kind of reinforced by the fact that, 0:01:57.440 --> 0:02:00.200 you know, you just look at their subscriber gains in 0:02:00.200 --> 0:02:02.800 in the third quarter. And what's even more surprising is 0:02:03.520 --> 0:02:05.640 the guidance that they gave for the fourth quarter. Apart 0:02:05.640 --> 0:02:08.240 from the fact that they do expect the subscriber momentum 0:02:08.280 --> 0:02:10.600 to kind of continue into twenty twenty four, So they 0:02:10.639 --> 0:02:12.520 do recognize the power of the platform, and I think 0:02:12.520 --> 0:02:14.880 the real guts move was the fact that they really 0:02:14.919 --> 0:02:17.600 announced that those price changes, right, so they know that 0:02:17.680 --> 0:02:19.880 they have a lot of pricing power. They know that 0:02:19.919 --> 0:02:22.440 people really love their content and are going to sign 0:02:22.480 --> 0:02:23.080 up no matter what. 0:02:23.680 --> 0:02:26.960 In terms of where they announce those price increases is 0:02:26.960 --> 0:02:28.600 that where they're growing the most. 0:02:29.639 --> 0:02:31.960 That's where there are Pooh is the highest, so their 0:02:32.000 --> 0:02:35.560 average revenue per user number is the highest, So those 0:02:35.560 --> 0:02:38.920 are the markets that contribute the most in terms of revenue. 0:02:39.840 --> 0:02:42.360 So yes, they wanted to make sure that they're able 0:02:42.440 --> 0:02:46.520 to kind of offer a nice variety of different price points. 0:02:46.760 --> 0:02:49.280 But they also know that, you know, taking up the 0:02:49.280 --> 0:02:53.600 premium price, so they increase the premium price plan by 0:02:53.639 --> 0:02:55.919 about fifteen percent in the US, or instead of costing 0:02:55.960 --> 0:02:58.240 twenty dollars now it will cost about twenty three dollars, 0:02:58.520 --> 0:03:01.360 so kind of really forcing you to pay up, but 0:03:01.440 --> 0:03:05.040 again offering enough flexibility because they left the ad based 0:03:05.080 --> 0:03:07.880 plan at that low price point of seven dollars. So 0:03:08.200 --> 0:03:11.720 what they're effectively trying to do is push more and 0:03:11.800 --> 0:03:14.600 more people to take advertising. Because though they mentioned that 0:03:14.760 --> 0:03:18.399 advertising is kind of building it is gaining traction, they 0:03:18.440 --> 0:03:21.600 still do need a critical mass of subscribers on that 0:03:21.680 --> 0:03:25.000 ad based plan to really attract the big, big AD 0:03:25.040 --> 0:03:26.760 dollars and build up a huge business. 0:03:27.560 --> 0:03:29.040 One thing I want to ask, do you feel like, 0:03:29.320 --> 0:03:32.839 following this report, Kita, that it's Netflix when it comes 0:03:32.880 --> 0:03:35.760 to streaming and everybody else like Netflix just seems to 0:03:35.760 --> 0:03:37.400 have figured it out, especially when you look at their 0:03:37.760 --> 0:03:38.800 you know, free cash. 0:03:38.520 --> 0:03:42.200 Flow, they certainly have figured it out. I mean, you know, 0:03:42.880 --> 0:03:45.160 one year ago we were in the midst of this 0:03:45.200 --> 0:03:48.120 great Netflix correction and we were all scratching our heads about, 0:03:48.440 --> 0:03:51.000 you know, what is the endgame for streaming, And they've 0:03:51.080 --> 0:03:53.480 kind of really definitely cracked the code when it comes 0:03:53.520 --> 0:03:57.600 to building subscriber scale, when it comes to profitability, because 0:03:57.600 --> 0:04:00.120 you just look at some of the profit metrics that 0:04:00.160 --> 0:04:01.880 they threw out there. You know, there was a little 0:04:01.880 --> 0:04:05.080 bit of concern Carol about their margin trajectory, but they 0:04:05.160 --> 0:04:07.080 kind of put that to rest because they said that 0:04:07.400 --> 0:04:09.840 you know, they will get to two to three percent 0:04:10.000 --> 0:04:12.480 increase in twenty twenty four, so about twenty three percent 0:04:12.520 --> 0:04:15.320 operating margins. And I think the real positive commentary was 0:04:15.360 --> 0:04:18.160 they said there's really no ceiling here, so you know, 0:04:18.240 --> 0:04:20.159 they know that they have a lot of operating leverage 0:04:20.200 --> 0:04:23.320 in the model. And it's been a complete shift in 0:04:23.360 --> 0:04:25.839 the tone in the sentiment from last year and definitely 0:04:25.839 --> 0:04:29.440 from last quarter. There's a lot more confidence in the story. 0:04:29.480 --> 0:04:32.000 I think it's emerging as a real clean story now 0:04:33.040 --> 0:04:35.159 and a lot of levers that they have to pull 0:04:35.440 --> 0:04:37.160 going out into the next few quarters. 0:04:37.440 --> 0:04:40.000 I got to push back on Carol's comment about year 0:04:40.040 --> 0:04:42.520 to date a little bit. Carol, forgive me, Netflix might 0:04:42.560 --> 0:04:44.159 be doing very well year to date, but if we 0:04:44.240 --> 0:04:46.320 take a look at what it's done over the last 0:04:46.360 --> 0:04:49.240 few years, we are still down geta more than forty 0:04:49.279 --> 0:04:52.279 percent from those all time highs that were reached a 0:04:52.279 --> 0:04:55.599 while back in November of twenty twenty one. Where is 0:04:55.680 --> 0:04:59.720 Netflix right now after that terrible few months that it's 0:04:59.720 --> 0:05:00.920 stuff for a couple of years ago. 0:05:02.200 --> 0:05:04.920 Yes, I think you know, that was obviously the perfect storm, 0:05:04.960 --> 0:05:06.960 and I think in our minds we had kind of 0:05:06.960 --> 0:05:09.440 always thought of the total addressable market for Netflix as 0:05:09.520 --> 0:05:12.279 kind of being this one billion dollar, sorry, one billion 0:05:12.680 --> 0:05:14.919 user market. Of course, when they kind of hit the 0:05:14.920 --> 0:05:18.120 wall and they started even losing subscribers, there was this 0:05:18.279 --> 0:05:22.279 def definitely, this reset a recalibration of kind of assessing 0:05:22.320 --> 0:05:24.200 the whole streaming space, and now I think we've kind 0:05:24.240 --> 0:05:27.000 of finally come to the conclusion that it's probably closer 0:05:27.000 --> 0:05:29.120 to about five hundred million. That's kind of what Netflix 0:05:29.200 --> 0:05:32.119 keeps saying over and over again. They're at that halfway point. 0:05:32.160 --> 0:05:34.320 So you know, out of that five hundred million market, 0:05:34.520 --> 0:05:36.719 they're already at two to fifty million. Question is are 0:05:36.760 --> 0:05:38.160 they going to be able to get to the next 0:05:38.200 --> 0:05:40.440 two fifty million. I think so, I mean maybe not, 0:05:41.160 --> 0:05:43.359 you know, total penetration, but I think they'll get to 0:05:43.360 --> 0:05:46.279 almost sixty seventy percent there at almost sixty seventy percent 0:05:46.320 --> 0:05:48.280 here in the US, so there's no reason they should 0:05:48.360 --> 0:05:50.159 be able to get to that in other developed markets 0:05:50.160 --> 0:05:53.240 as well and kind of really build that base in developing, 0:05:53.360 --> 0:05:55.000 you know, emerging and developing markets. 0:05:55.120 --> 0:05:56.880 You know, I was thinking about the conversation at screen 0:05:56.920 --> 0:06:00.360 time with Ted Sarandos that Lucashaw had, and I do 0:06:00.400 --> 0:06:02.599 feel like this is a company, you know, geta that 0:06:02.680 --> 0:06:04.960 does figure out how to pivot. If you think about 0:06:05.240 --> 0:06:09.000 the origins of this company, right, like, it's just pretty amazing. 0:06:10.480 --> 0:06:13.479 Absolutely. I mean, you know, they introduced DVD. They knew 0:06:13.520 --> 0:06:16.240 when to get into streaming, they knew when to make 0:06:16.279 --> 0:06:20.120 that pivot from licensed programming to original programming, and they 0:06:20.200 --> 0:06:22.640 knew also when to make the pivot just from English 0:06:22.640 --> 0:06:27.200 originals to you know, originals and all kinds of local languages. 0:06:27.240 --> 0:06:29.840 And that's actually performing really really well for them. So 0:06:30.120 --> 0:06:32.200 they've kind of they've they've really known how to kind 0:06:32.240 --> 0:06:34.560 of adapt and kind of be the leader. 0:06:35.520 --> 0:06:38.400 Gita. I mentioned Disney because we got we got to 0:06:38.400 --> 0:06:39.839 talk a little bit about the peak that we got 0:06:39.839 --> 0:06:42.960 at Disney's Sports TV network profit. It fell twenty percent 0:06:42.960 --> 0:06:45.200 through the first nine months of fiscal twenty twenty three. 0:06:45.400 --> 0:06:48.719 You wrote that the results could help Disney attract outside investors, 0:06:49.000 --> 0:06:50.479 and you also said the business could be worth as 0:06:50.560 --> 0:06:53.279 much as twenty two billion dollars based on those newly 0:06:53.440 --> 0:06:56.920 released figures. Give us your interpretation of what we saw 0:06:57.080 --> 0:06:58.480 released in that filing yesterday. 0:06:59.440 --> 0:07:01.000 Yeah, so those are a little bit of both good 0:07:01.000 --> 0:07:03.160 and bad news, I would say, Tim. So, the good 0:07:03.160 --> 0:07:06.279 news is that the top line is relatively stable, so 0:07:06.320 --> 0:07:09.680 they do generate a pretty hefty sixteen billion dollars per year, 0:07:09.720 --> 0:07:12.240 both from affiliate fees as well as advertising. This is 0:07:12.320 --> 0:07:16.480 just the ESPN division, both domestic and international TV channels, 0:07:16.520 --> 0:07:19.600 as well as their ESPN Plus streaming unit, which is 0:07:19.640 --> 0:07:21.520 pretty good and you know the fact that it has 0:07:21.560 --> 0:07:24.120 been pretty stable, hasn't really moved around too much. That's 0:07:24.160 --> 0:07:27.720 good news. The bad news is their margins are fairly low. 0:07:27.760 --> 0:07:31.000 So we're talking about mid teens operating margins. And the 0:07:31.040 --> 0:07:33.760 reason why this is pretty low and I say it's 0:07:33.800 --> 0:07:35.880 low because you look at a cable network, and average 0:07:35.920 --> 0:07:38.840 cable network the typical margins are around thirty to thirty 0:07:38.840 --> 0:07:40.360 five percent. So this is a little bit of a 0:07:40.360 --> 0:07:43.760 different animal because you know, you have sports rights fees, 0:07:43.800 --> 0:07:46.640 and sports rights fees are not only huge, they also 0:07:46.720 --> 0:07:50.520 keep increasing pretty rapidly year after year, and so that's 0:07:50.560 --> 0:07:52.760 one thing that kind of ESPN has to grapple with 0:07:52.800 --> 0:07:56.680 that reality. So margins are pretty low. EBIT or EBITDA 0:07:56.760 --> 0:07:59.000 is in decline, so they do have to do something, 0:07:59.080 --> 0:08:01.400 they have to do it fast. You know, obviously this 0:08:01.520 --> 0:08:04.240 is a very very valuable asset. Everybody knows that they 0:08:04.240 --> 0:08:08.560 have tremendous reach, they have tremendous brand name, so I 0:08:08.600 --> 0:08:10.720 think you know they're they're of course looking for a 0:08:10.760 --> 0:08:13.400 distribution partner I think that's kind of why they want 0:08:13.440 --> 0:08:16.760 to provide this transparency in terms of, you know, their financials. 0:08:17.120 --> 0:08:18.800 So we'll have to see how it plays out. 0:08:18.920 --> 0:08:21.280 So geta distribution partner or do they just want an 0:08:21.320 --> 0:08:23.320 outright sale of it or do they want to still 0:08:23.360 --> 0:08:25.720 kind of have some control or connection with it and 0:08:25.720 --> 0:08:26.960 just kint about thirty seconds. 0:08:27.840 --> 0:08:30.120 Yeah, I think they still definitely want to retain the asset. 0:08:30.120 --> 0:08:33.719 I mean, this is this is a huge asset for them, 0:08:34.160 --> 0:08:35.840 you know, so I think they definitely want to have 0:08:35.880 --> 0:08:40.439 some kind of control, but they also need a distribution partner. 0:08:40.440 --> 0:08:42.560 So they've been looking at different you know, players, whether 0:08:42.559 --> 0:08:44.719 it's a Horizon, whether it's an Apple. So we'll have 0:08:44.760 --> 0:08:46.559 to see how that kind of plays out. 0:08:46.360 --> 0:08:48.840 All right, So appreciate it. You are our hidden gem. 0:08:49.120 --> 0:08:53.000 Guita Ranganathan. She's technology media analyst at Bloomberg Intelligence, joining 0:08:53.040 --> 0:08:55.319 us from BI headquarters in Princeton, New Jersey. But man, 0:08:55.360 --> 0:08:57.000 I love talking on media with her. She's just so 0:08:57.200 --> 0:08:58.280 on it and just knows it all. 0:08:58.320 --> 0:09:01.720 It's pretty amazing to see Netflix up seventeen percent today, Carol. 0:09:01.840 --> 0:09:04.120 Yeah, in a day where we have seen certainly the 0:09:04.120 --> 0:09:07.160 equity side of things whipsod in the markets. And Netflix 0:09:07.200 --> 0:09:08.839 is pretty much held on too. And this is when 0:09:08.840 --> 0:09:11.040 you you know, will have strategists or folks and say, 0:09:11.040 --> 0:09:12.960 you know, you get a look company by company in 0:09:13.000 --> 0:09:13.640 this market place. 0:09:13.640 --> 0:09:15.800 Sure to the day of the Nasdack's down nine tens one percent. 0:09:16.559 --> 0:09:20.040 If you're listening to the Bloomberg Business Week podcast, catch 0:09:20.120 --> 0:09:23.480 us live weekday afternoons from three to six Eastern Listen 0:09:23.559 --> 0:09:26.960 on Bloomberg dot com, the iHeartRadio app and the Bloomberg 0:09:27.040 --> 0:09:29.840 Business app, or watch us live on YouTube. 0:09:30.360 --> 0:09:33.640 Want to talk, certainly, that's having an impact in the market. 0:09:33.679 --> 0:09:35.680 Tesla shares there about one point seven percent of the 0:09:35.720 --> 0:09:37.520 S and P five hundred, nearly three percent of the 0:09:37.600 --> 0:09:40.320 Nasdaq one hundred, and they are definitely under pressure today. 0:09:40.360 --> 0:09:43.920 Yeah, down ten point three percent as we speak this 0:09:44.040 --> 0:09:46.760 after third quarter results fall below concessus analyst that's Smiths 0:09:46.840 --> 0:09:49.600 across the board. Carrol, we're talking profit, we're talking sales, 0:09:49.800 --> 0:09:52.080 We're talking margins Eland Musk calls to struck a cautious 0:09:52.120 --> 0:09:53.000 tone on the call yesterday. 0:09:53.120 --> 0:09:55.480 You have seen pretty bummed out right. He dialed back 0:09:55.559 --> 0:09:58.720 expectations for Tesla as years of rapid expansion collide with 0:09:58.800 --> 0:10:02.200 rising interest rates in a more host conscious consume our interest. 0:10:02.240 --> 0:10:04.559 Everybody was consumed with how many times he said interest. 0:10:04.880 --> 0:10:07.640 Dana Hall is senior technology reporter for Bloomberg News. She's 0:10:07.679 --> 0:10:09.960 back with us on the phone in San Francisco. Danna, 0:10:10.080 --> 0:10:14.120 thanks for being with us. Gosh, it feels like it 0:10:14.160 --> 0:10:17.240 was a pretty He was really pretty bummed out here 0:10:17.320 --> 0:10:20.320 following this release. But let's go give us first of 0:10:20.320 --> 0:10:22.880 all the highlights the low lights and then talk to 0:10:22.920 --> 0:10:25.439 us about his tone on the call. 0:10:25.800 --> 0:10:27.360 Yeah, so it was I mean, so we sort of 0:10:27.440 --> 0:10:28.839 knew that it was going to be a bad quarter 0:10:28.920 --> 0:10:32.120 because Tesla missed their delivery targets in terms of how 0:10:32.120 --> 0:10:35.000 many cars they delivered to customers in three Q, so 0:10:35.040 --> 0:10:36.760 we knew it was going to be deb bad. But 0:10:37.160 --> 0:10:41.040 even then, they like missed on EPs, they missed on margins. 0:10:41.200 --> 0:10:43.640 And then what was funny was that it was like 0:10:43.640 --> 0:10:45.600 this weird thing so that it was a bad quarter, 0:10:46.240 --> 0:10:47.800 but they announced that they were going to hand over 0:10:47.800 --> 0:10:50.760 the first cyber truck on November thirtieth. So initially after 0:10:50.800 --> 0:10:53.480 the release hit, the stock was actually positive. When we 0:10:53.480 --> 0:10:56.320 were like, okay, everyone must be excited about the cyber truck. 0:10:56.760 --> 0:11:00.480 Then the call begins and Elon was like the most dour, 0:11:01.360 --> 0:11:05.439 down beaten, down trodden CEO like I've heard in a while, 0:11:05.559 --> 0:11:07.880 and like he has different moods, right, Like usually he's 0:11:07.960 --> 0:11:10.120 very ebulate. This is like dower Elon. I mean he 0:11:10.160 --> 0:11:13.719 said things like I'm scarred by two thousand and nine 0:11:13.720 --> 0:11:16.440 when General Motors and Chrysler wet bankrupt. That has seared 0:11:16.480 --> 0:11:19.320 into my mind with a branding iron. Then he talked 0:11:19.360 --> 0:11:21.880 about the challenges of the cyber truck and he said, 0:11:21.920 --> 0:11:24.840 we dug our own graves with the cyber truck. Nobody 0:11:24.880 --> 0:11:28.840 in general digs their own grave better than themselves. And 0:11:28.840 --> 0:11:30.400 then he spent a lot of time just talking about 0:11:30.400 --> 0:11:32.319 interest rates and how we have to make our cars 0:11:32.360 --> 0:11:35.160 more affordable and that when interest rates are high, that 0:11:35.360 --> 0:11:38.280 just raises the price of the car for the average consumer. So, 0:11:39.000 --> 0:11:41.760 I mean, he's complained about interest rates for quite a while, 0:11:41.800 --> 0:11:45.880 but he was just like he just sounds deflated, and 0:11:46.120 --> 0:11:48.520 it really brings into question whether Tesla's going to hit 0:11:48.520 --> 0:11:51.319 their target for the year if more price cuts are 0:11:51.360 --> 0:11:54.400 to come, you know. So it's just it was it 0:11:54.440 --> 0:11:56.880 was wild and like you're seeing the stock is down 0:11:56.920 --> 0:11:58.760 ten percent today. That's a big move for Tuessla. 0:11:58.840 --> 0:12:00.480 Does it need a warm puppy or new plan. 0:12:02.880 --> 0:12:05.439 I think that, like we were talking, I was talking 0:12:05.480 --> 0:12:07.600 about this earlier today with some colleagues, you know. I 0:12:07.600 --> 0:12:10.520 think the one thing that people forget is that the 0:12:10.640 --> 0:12:14.640 era of free money is over and Tesla's growth story 0:12:14.840 --> 0:12:18.200 was really fueled by these rock bottom interest rates that 0:12:18.360 --> 0:12:20.520 lasted for like over a decade. And this is the 0:12:20.559 --> 0:12:23.760 first time that Tesla has really been in a high 0:12:23.800 --> 0:12:27.719 interest rate environment. And the automotive industry is very cyclical. 0:12:28.679 --> 0:12:31.120 People are very price conference when you have mortgage debt, 0:12:31.120 --> 0:12:33.079 when you have credit card debt, when like the cost 0:12:33.120 --> 0:12:35.600 of food is through the roof, when like your your 0:12:35.720 --> 0:12:38.760 personal paycheck is you know, not going as far as 0:12:38.760 --> 0:12:40.960 it used to. Like a car is a really big 0:12:41.000 --> 0:12:43.600 purchase for people, and if you can't afford that monthly payment, 0:12:44.240 --> 0:12:48.000 you're going to wait. And and unfortunately, like Musk has 0:12:48.080 --> 0:12:50.120 kind of trained us all to know that, like he 0:12:50.240 --> 0:12:52.679 will continue to cut races. So I think a lot 0:12:52.720 --> 0:12:55.199 of customers are sitting on the sidelines wondering if he's 0:12:55.200 --> 0:12:58.679 going to cut prices yet again. So there's just a 0:12:58.880 --> 0:13:01.960 in in, you know, So he's going a little bit 0:13:01.960 --> 0:13:03.520 of a pickle. I think that you're going to see 0:13:03.559 --> 0:13:05.920 a lot of analysts change their price targets. You're going 0:13:05.960 --> 0:13:07.920 to see a lot of forecasts for twenty twenty four 0:13:07.920 --> 0:13:12.839 come down. And then we also, okay, so now last point. 0:13:13.320 --> 0:13:15.000 So they're going to hand over the cyber truck on 0:13:15.040 --> 0:13:17.360 November thirtieth, we still don't know how much it's gonna cost, 0:13:17.480 --> 0:13:20.280 Like they still have not given any specs, so that's 0:13:20.320 --> 0:13:21.360 like a big missing number. 0:13:21.559 --> 0:13:24.600 Did this make you feel Dana like it was twenty 0:13:24.640 --> 0:13:27.400 eighteen for Tesla all over again? When you know, describing 0:13:27.440 --> 0:13:29.760 production Hell sleeping on the floor of the factory? Is it? 0:13:29.880 --> 0:13:30.880 Is it that Elon Musk? 0:13:31.880 --> 0:13:34.240 It's a little bit. It's like we're in interest rate. 0:13:34.240 --> 0:13:40.360 I guess we're in interest rate Hell. And yeah, I 0:13:40.440 --> 0:13:43.240 mean I think anytime a company brings forth a new 0:13:43.320 --> 0:13:47.800 vehicle program, there it's tricky. It was just interesting because 0:13:48.240 --> 0:13:50.400 he did kind of allude to the fact that like 0:13:51.720 --> 0:13:53.720 getting the cyber truck out in high volume is going 0:13:53.760 --> 0:13:56.120 to be is going to be hard, and like, you know, 0:13:56.320 --> 0:13:58.760 you would think that Tesla would have learned these lessons 0:13:58.760 --> 0:14:01.160 over time, but yeah, this is like a whole new 0:14:01.240 --> 0:14:03.640 vehicle he said, He's like, oh, the cyber truck has 0:14:03.679 --> 0:14:07.280 a lot of bells and whistles, and it's like, well, geez, 0:14:07.320 --> 0:14:09.480 like do they need all the bells and whistles? Like 0:14:09.480 --> 0:14:11.560 what I would love to know, Like what exactly is 0:14:11.600 --> 0:14:13.720 so hard about this truck? Like he kept saying on 0:14:13.760 --> 0:14:15.640 the call Us last night that they dug their own 0:14:15.720 --> 0:14:17.480 grave with it, but like why. 0:14:18.240 --> 0:14:20.400 Kevin Tynan on our Area yesterday Dana made the point 0:14:20.400 --> 0:14:22.360 that it's it's you know, every other card that they've 0:14:22.360 --> 0:14:25.400 built has sort of been based on the same what's 0:14:25.440 --> 0:14:27.320 the It's not the same is it the same chassis, 0:14:27.320 --> 0:14:29.400 it's the same platform as how he described it, And 0:14:29.560 --> 0:14:33.240 this is like so risky starting something completely from scratch, 0:14:33.280 --> 0:14:35.400 building it out of what is it? Stainless steel? I 0:14:35.400 --> 0:14:39.560 mean stainless steeliaah yah, it's a big risk for the company. 0:14:40.440 --> 0:14:42.880 I did see one, so like they do exist, Like 0:14:42.920 --> 0:14:45.440 I actually saw one, like driving in my Oakland neighborhood 0:14:45.440 --> 0:14:47.240 while I was like walking to Trader Joe's and it 0:14:47.280 --> 0:14:48.280 went by, like you're. 0:14:48.160 --> 0:14:51.080 Being followed by Tesla Janna. 0:14:51.520 --> 0:14:53.280 I couldn't get a close look, but I was like, oh, 0:14:53.320 --> 0:14:56.160 there's a cyber truck. Look at that and so like 0:14:56.200 --> 0:14:59.040 they do exist, but yeah, like it is risky, and 0:15:00.160 --> 0:15:02.480 I think a lot of the things that Tesla has done, 0:15:02.680 --> 0:15:05.640 like they announced this new plant in Mexico, and he 0:15:05.720 --> 0:15:08.480 also kind of slow walks the plant like they're they're gonna, 0:15:08.840 --> 0:15:10.680 I mean, they're still gonna do it, but they're not 0:15:10.720 --> 0:15:13.160 gonna they might not like construct it as fast as 0:15:13.200 --> 0:15:14.120 the originally planned. 0:15:14.120 --> 0:15:15.640 Like they just you know, they're. 0:15:15.480 --> 0:15:19.040 Just he's he's worried, like he's you know, to his credit, 0:15:19.640 --> 0:15:22.640 he's like the longest serving automotive CEO right now. Right 0:15:22.720 --> 0:15:26.000 he has been the CEO of Tesla since two thousand 0:15:26.040 --> 0:15:29.280 and eight, so he has been through these economic cycles 0:15:29.360 --> 0:15:31.480 and I think he's pretty astute to them. I Mean, 0:15:31.480 --> 0:15:34.320 he was also warning like commercial real estate is gonna 0:15:35.040 --> 0:15:37.840 you know, there's more shoes to drop with commercial real estate, 0:15:37.880 --> 0:15:40.400 and he was talking about credit like he's he he 0:15:40.520 --> 0:15:42.120 was like it was interesting to hear him kind of 0:15:42.120 --> 0:15:46.560 expound on economics. But like the yeah, the more he talks, 0:15:46.560 --> 0:15:48.640 the more the stock tanks. And then you're really seeing 0:15:48.680 --> 0:15:49.560 that sell off today. 0:15:49.680 --> 0:15:52.000 As someone who covers this company and the twists and 0:15:52.040 --> 0:15:54.680 turns of all things that are Tesla and Elon Musk. 0:15:54.720 --> 0:15:57.080 I do wonder he's gone through different periods. Is this 0:15:57.200 --> 0:16:00.640 just another different period or something different? You think in 0:16:00.680 --> 0:16:02.960 the life cycle of this company. 0:16:03.840 --> 0:16:08.400 It's a little bit different in that, you know, he 0:16:08.520 --> 0:16:11.120 has not had to manage a kind of high interest 0:16:11.160 --> 0:16:14.320 rate environment for quite as long as they are managing 0:16:14.320 --> 0:16:18.000 in that. Now, consumers do have other options when it 0:16:18.000 --> 0:16:19.760 comes to evs. I mean, for a long time, we 0:16:19.840 --> 0:16:22.280 kept hearing that the competition is coming. You know, the 0:16:22.320 --> 0:16:25.320 competition is not that robust. I mean, the competitors are 0:16:25.400 --> 0:16:28.760 still selling in pretty small volumes, but there are choices. 0:16:28.840 --> 0:16:30.760 And then, frankly, I think the big elephant in the 0:16:30.840 --> 0:16:34.080 room is that Elon Musk bought Twitter. That is an 0:16:34.120 --> 0:16:37.640 albatross around him. Eat, He's got this huge debt payment 0:16:37.720 --> 0:16:41.880 and his buying of Twitter and his sort of public 0:16:41.960 --> 0:16:45.760 persona as this media mogul has turned off some of 0:16:45.760 --> 0:16:48.520 his most like loyal consumers. Like, we live in a 0:16:48.520 --> 0:16:51.400 polarized country and people like used to think that Elon 0:16:51.600 --> 0:16:54.880 was like this like clean tech democrat, and now they 0:16:54.920 --> 0:16:57.800 think that he's this like right wing guy. And you know, 0:16:57.880 --> 0:17:01.440 I have no hard data on how that yeah, digging 0:17:01.440 --> 0:17:03.840 into demand, but like, yeah, but there are definitely people 0:17:03.840 --> 0:17:05.639 that are like for political reasons. I'm never going to 0:17:05.680 --> 0:17:07.080 buy a car from this guy because I hate what 0:17:07.119 --> 0:17:07.840 he's on Twitter. 0:17:08.440 --> 0:17:10.879 He's you know, he's controversial. You either like him or 0:17:10.920 --> 0:17:11.160 you don't. 0:17:11.200 --> 0:17:15.800 Should have known what that's you know that that would spread. 0:17:15.840 --> 0:17:16.440 He should have known. 0:17:16.640 --> 0:17:19.920 Dnah Hall, so appreciate it, Senior technology reporter for Bloomberg News. 0:17:19.960 --> 0:17:22.800 You know his slump elon his fortune also slump. 0:17:22.840 --> 0:17:28.840 Today you're listening to the Bloomberg Business Week podcast. Catch 0:17:28.920 --> 0:17:32.080 us live weekday afternoons from three to six Easter on 0:17:32.200 --> 0:17:35.960 Bloomberg Radio, the Bloomberg Business app, and YouTube. You can 0:17:35.960 --> 0:17:39.199 also listen live on Amazon Alexa from our flagship New 0:17:39.280 --> 0:17:51.840 York station, Just say Alexa play Bloomberg eleven thirty. 0:17:52.520 --> 0:17:54.200 I wonder if could play Abba in the halls of 0:17:54.240 --> 0:17:56.760 the Federal Reserve. What do you think? 0:17:56.800 --> 0:17:58.480 Good choice? Paul Brannan for this. 0:17:58.680 --> 0:18:02.520 Song money, Money, Hey, what's the most important price in 0:18:02.560 --> 0:18:03.440 the global economy? 0:18:03.480 --> 0:18:03.760 Well? 0:18:03.920 --> 0:18:05.760 Is it the price of a barrel of crud? A microchip, 0:18:05.840 --> 0:18:06.480 or maybe a big mass? 0:18:06.560 --> 0:18:07.160 I think a big mac? 0:18:07.240 --> 0:18:07.400 Am? 0:18:07.400 --> 0:18:09.600 I right, is a big mac? Is it a big mac? 0:18:09.760 --> 0:18:12.280 I don't know? No, Considering that song. 0:18:12.840 --> 0:18:14.439 I think more important than the price of any of 0:18:14.440 --> 0:18:17.320 those things, Carol, is actually the price of money. For 0:18:17.359 --> 0:18:19.960 more than three decades, it was falling in now it's 0:18:20.000 --> 0:18:22.000 going up. Just look at what the tenure Treasury you'll 0:18:22.119 --> 0:18:24.359 did today came within a Harris breadth of five percent 0:18:24.720 --> 0:18:27.200 at the highest in two thousand and seven. That has 0:18:27.240 --> 0:18:30.320 pulled up the cost of mortgages, corporate loans and more. 0:18:30.560 --> 0:18:32.679 Yeah, it's a different cost of money, that's for sure. 0:18:33.800 --> 0:18:36.800 And so we get into this because he writes about 0:18:36.800 --> 0:18:39.280 this Tom Orlick and Company in the new issue of 0:18:39.280 --> 0:18:42.320 Bloomberg BusinessWeek, which is on newsstands already online at Bloomberg 0:18:42.320 --> 0:18:44.760