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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is Bloomberg Business Week inside from the reporters and

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Speaker 2: editors who bring you America's most trusted business magazine, plus

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Speaker 2: global business, finance and tech news as it happened This

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Speaker 2: Bloomberg Business Week with Caro Messer and Tim Stenebek on

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Speaker 2: Bloomberg Radio.

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Speaker 3: All right, Well, shares of Tesla are higher in the

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Speaker 3: after hours right now as investors continue to digest those

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Speaker 3: first quarter earnings numbers. Global vehicle inventory rose to twenty

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Speaker 3: eight days. It's a huge jump from the fifteen days

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Speaker 3: at the end of last quarter. Shares higher right now

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Speaker 3: by just about five percent. First quarter revenue coming in

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Speaker 3: at twenty one point three billion dollars that was below

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Speaker 3: estimates of twenty two point three billion dollars. That also

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Speaker 3: a missed when it comes to EPs adjusted EPs, I

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Speaker 3: should say that coming in at forty five cents versus

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Speaker 3: estimates of fifty two cents.

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Speaker 4: Shares a Tesla up about five and a half percent

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Speaker 4: in the aftermarket, but also Tesla to accelerate the launch

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Speaker 4: of more affordable models at getting a red sticky by

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Speaker 4: our team here at Bloomberg. All right, so let's get

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Speaker 4: to it with us Ross Gerber, president CEO at Gerber

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Speaker 4: Kawasaki Wealth and Investment Management, and also Bloomberg BusinessWeek columnist

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Speaker 4: Max Chafkin. Ross out there in Santa Monica, California. Max

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Speaker 4: here in our Bloomberg Interactive Broker studio getting ready for

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Speaker 4: another round of Tesla Bingo will getting do in just

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Speaker 4: a moment, Ross investors like it. What do you make

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Speaker 4: of this report looking backwards looking forwards?

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Speaker 5: Well, I think the good part of the report, because

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Speaker 5: this is really the only good part of the report,

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Speaker 5: is them saying that they're going to accelerate the production

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Speaker 5: of this next gen vehicle platform, and they were pretty

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Speaker 5: vague about what they're calling this or you know what

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Speaker 5: robo taxi is or is a model to coming, And

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Speaker 5: I think that'll be clarified on the conference call. So

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Speaker 5: you know, once again, we don't really watch after hours

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Speaker 5: trading because he really doesn't represent all the participants and so,

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Speaker 5: and we haven't seen the conference call yet, so we'll

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Speaker 5: see how this doc trades next several months. But there

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Speaker 5: really isn't any other good news in that report other

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Speaker 5: than them saying they're going to accelerate production, even though

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Speaker 5: they just fire all the people that are.

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Speaker 1: In charge of accelerating production.

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Speaker 3: Hey Russ, remind everybody take a step back here, because

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Speaker 3: Carol and I were looking at the terminal a little earlier.

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Speaker 3: You've you know, you are a longtime Tesla bull until

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Speaker 3: you weren't, and you were a longtime believer and have

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Speaker 3: been a long time believer in the company. You guys

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Speaker 3: still own a substantial number of shares over at kerber Kawasaki.

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Speaker 3: But what is your position right now in Tesla moving forward?

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Speaker 5: So my position is that Tesla is a wonderful company

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Speaker 5: that has enormous potential with the CEO who has become

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Speaker 5: so divisive that people won't buy the cars. And that's

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Speaker 5: why saying is just going to produce more cars doesn't

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Speaker 5: address the real issue is why they're not selling cars today,

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Speaker 5: and that's the issue that needs to be addressed that

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Speaker 5: isn't being addressed. So as a shareholder, we have to

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Speaker 5: assess what the future earnings potential of a company is

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Speaker 5: based off what their business model is. And when we

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Speaker 5: you know, we start investing in Tesla over ten years ago,

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Speaker 5: and we've had a great run up until the purchase

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Speaker 5: of Twitter, and so we've been lowering our position because

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Speaker 5: what we feel is that Elon's behavior has hurt the

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Speaker 5: brand in such a way that consumers actually don't want

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Speaker 5: to buy a Tesla. It's just the best car on

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Speaker 5: the road at the best price, so people buy the

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Speaker 5: car reluctantly at this point. So I think, you know,

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Speaker 5: we've got these problems to solve, and I'm not sure

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Speaker 5: if that will be addressed on the conference call today.

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Speaker 5: And that's you know, And I don't like being called

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Speaker 5: a Tesla bear, because I actually think they could turn

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Speaker 5: the company around pretty quickly if Elon changed his behavior

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Speaker 5: and stopped attacking everybody.

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Speaker 1: But I just don't think that's going to happen.

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Speaker 5: And so so I think the bigger issue that isn't

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Speaker 5: being addressed is doesn't matter how many cars Tesla makes

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Speaker 5: if nobody will buy them.

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Speaker 4: All Right, So Max chaff can come on in. You

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Speaker 4: guys do the Elon Inc. Podcast. You're constantly looking at

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Speaker 4: what he says, what he does. You're looking at his

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Speaker 4: kind of his assets, his portfolio, your initial thoughts on

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Speaker 4: kind of the headlines we got.

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Speaker 6: Yeah, just to kind of under Ross is saying something

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Speaker 6: like this, but like the note about the new products

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Speaker 6: is very vague. It doesn't say we're going to have

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Speaker 6: a model too, and it's going to come out on

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Speaker 6: this date, which is what investors, many investors have been

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Speaker 6: hoping for.

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Speaker 1: It says.

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Speaker 6: It sounds like it's saying, I'm reading it correctly, they're

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Speaker 6: going to try to essentially make the current models more affordable.

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Speaker 6: Now that obviously could allow them to sell more cars,

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Speaker 6: but it's a slightly different spin on things than what

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Speaker 6: many people have been inspecting. The other thing is, as

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Speaker 6: Ross is saying, you know, on a Tesla earning's day,

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Speaker 6: what Elon says, and more importantly, how he says it

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Speaker 6: is just as important as as what's in these numbers,

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Speaker 6: because he is going to hopefully anyway clarify some of

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Speaker 6: this but also hopefully get a sense of like where

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Speaker 6: things stand with robotaxi, where things stand with potential affordable cars,

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Speaker 6: and investors seemed to react to based on his optimism,

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Speaker 6: you know, a couple quarters ago, when he was in

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Speaker 6: this kind of dowur mood, we saw the stock go down.

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Speaker 6: So it's do we get an optimistic version of Elon

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Speaker 6: or the kind of very dour, pessimistic Elon.

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Speaker 4: Well, I wonder if you have a question for Ross Max.

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Speaker 6: Yeah, Ross, what is your reading on on this product?

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Speaker 1: On this paragraph about the product?

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Speaker 5: Well, I think you're dead right about the two things

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Speaker 5: you just said. Number One, they're of course vague because

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Speaker 5: of the legality of it. If they put this down

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Speaker 5: and they don't do it right. And since nobody seems

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Speaker 5: to know what Elon's going to do, and I'm sure

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Speaker 5: that everybody understands that nobody within Tesla knows what the

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Speaker 5: business plan is either, because they just don't at this point.

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Speaker 1: But I think secondly, a.

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Speaker 5: Lot of it will be how does Elon answer these

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Speaker 5: questions from investors during the conference call?

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Speaker 1: And what you said is right.

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Speaker 5: If we have sort of a very pauseitive Elon and

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Speaker 5: he's refocused and he's going to be working at Tesla more,

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Speaker 5: and you know, he can play the room right, maybe

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Speaker 5: we get a little rally on the stock, but it

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Speaker 5: doesn't change the fundamentals. If he doesn't play the room right,

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Speaker 5: this becomes a blood bath. So you know, I'm just

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Speaker 5: hoping that he understands the damage that he's done and

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Speaker 5: starts to mitigate this versus diving in and sort of

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Speaker 5: doubling down.

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Speaker 6: It will be interesting to see if Twitter comes up

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Speaker 6: or sorry X comes up, you know, because there is

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Speaker 6: this question in this sense that he's spent ge whiz

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Speaker 6: a lot of time talking about X, tweeting about X,

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Speaker 6: doing X related things. There's even a potential or they're

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Speaker 6: going to have a Grock integration inside of the Tesla's

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Speaker 6: And I think that to people who are really bought

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Speaker 6: into the ev story rather than the you know, Elon

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Speaker 6: Musk genius story, which those are two important constituencies here,

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Speaker 6: I think for Tesla Stock, you know, they would like

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Speaker 6: to see him spend less time on his social media network.

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Speaker 5: Yeah, well, it's not just less time, it's what he's saying,

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Speaker 5: you know. It's like it's not the time, it's that

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Speaker 5: what he's saying oftentimes is super divisive and basically racist.

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Speaker 5: So it's like, it's really hard to sell products to

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Speaker 5: people when the CEO says things that are really hurtful

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Speaker 5: to people, including me for that matter.

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Speaker 4: Now and we've talked with you about that, absolutely ross.

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Speaker 4: What could Elon say on the call, or Elon and

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Speaker 4: company say on the call that would make you more

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Speaker 4: excited about the company or once again say, you know,

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Speaker 4: kind of owe Elon really.

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Speaker 5: Well, if I had my dream come true, he'd say,

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Speaker 5: I'm coming back to work at Tesla, because he basically

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Speaker 5: doesn't work at Tesla, and he would say, I'm done

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Speaker 5: tweeting all this garbage and politics.

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Speaker 1: I'm going to really.

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Speaker 5: Focus on advancing sustainable transportation and energy and that we're

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Speaker 5: going to release this lower you know, priced car and the.

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Speaker 1: Strategy that we all bought into three.

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Speaker 5: Years ago, you know, and when the stock was at

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Speaker 5: all time highs and earnings were going up, you know,

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Speaker 5: fifty hundred percent a year.

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Speaker 1: You know, it was like it was like a different

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Speaker 1: world than today.

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Speaker 5: And it's amazing to me he doesn't understand this difference

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Speaker 5: that that really is his responsibility, and so as a shareholder,

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Speaker 5: I have to say it's an extremely distressing time because

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Speaker 5: the valuation of Tesla is premised off all these great

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Speaker 5: technological innovations, none of which have come to fruition yet.

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Speaker 1: So his focus is one hundred percent what needs to

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Speaker 1: be happening right now.

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Speaker 3: Hey, Ross, I do want to just end with one

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Speaker 3: last question about the cost of producing these vehicles. It

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Speaker 3: seems like Tesla is doing everything I can to bring

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Speaker 3: down the cost of producing these cars.

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Speaker 1: The cost of goods sold to.

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Speaker 3: Are they what numbers do you want to see there?

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Speaker 5: Well, they are, but their margins continue to go lower.

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Speaker 5: If you look at the report, which I've only had

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Speaker 5: a minute to look at, you know, their vehicle margins

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Speaker 5: continue to go lower. They're operating margins go lower, their

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Speaker 5: net margins go lower. So they're able to lower the

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Speaker 5: price of the car. But what they're not able to

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Speaker 5: do is keep that going as fast as they're they're

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Speaker 5: lowering the price of the vehicles, so it's still hurting

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Speaker 5: them even though they're lowering the cost of the car.

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Speaker 5: And it does bring in a bigger market, but you're

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Speaker 5: not creating any demand. And this is I have said

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Speaker 5: it a hundred times. Every company in America advertises or reason.

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Speaker 5: People need to know why your products are superior. And

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Speaker 5: all the Tesla people have bought in teslas, you know,

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Speaker 5: so all these YouTubers can tweet all they want, but

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Speaker 5: everybody wanted a Tesla bought a Tesla. So you've got

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Speaker 5: to get new customers. And the new customers are being

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Speaker 5: told that charging sucks and evs are bad and this

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Speaker 5: and that, and Donald Trump says they're bad, and this

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Speaker 5: is all they see all day, and then it's like,

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Speaker 5: why would they go buy a Tesla because there's not

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Speaker 5: one ad anywhere that tells you how great the cars

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Speaker 5: are because they are right.

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Speaker 4: Right, and you still own them right real quickly, yes

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Speaker 4: or no, yeah I do.

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Speaker 5: I just don't understand why they don't tell people how

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Speaker 5: great their vehicles are.

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Speaker 4: All right, Russ Gerbert, so appreciated. We know you've got to,

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Speaker 4: I think run over to our TV guys. President CEO

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Speaker 4: Gerber Kawasaki, so appreciate you joining us