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Speaker 3: All right, Well, shares of Tesla are higher in the
Speaker 3: after hours right now as investors continue to digest those
Speaker 3: first quarter earnings numbers. Global vehicle inventory rose to twenty
Speaker 3: eight days. It's a huge jump from the fifteen days
Speaker 3: at the end of last quarter. Shares higher right now
Speaker 3: by just about five percent. First quarter revenue coming in
Speaker 3: at twenty one point three billion dollars that was below
Speaker 3: estimates of twenty two point three billion dollars. That also
Speaker 3: a missed when it comes to EPs adjusted EPs, I
Speaker 3: should say that coming in at forty five cents versus
Speaker 3: estimates of fifty two cents.
Speaker 4: Shares a Tesla up about five and a half percent
Speaker 4: in the aftermarket, but also Tesla to accelerate the launch
Speaker 4: of more affordable models at getting a red sticky by
Speaker 4: our team here at Bloomberg. All right, so let's get
Speaker 4: to it with us Ross Gerber, president CEO at Gerber
Speaker 4: Kawasaki Wealth and Investment Management, and also Bloomberg BusinessWeek columnist
Speaker 4: Max Chafkin. Ross out there in Santa Monica, California. Max
Speaker 4: here in our Bloomberg Interactive Broker studio getting ready for
Speaker 4: another round of Tesla Bingo will getting do in just
Speaker 4: a moment, Ross investors like it. What do you make
Speaker 4: of this report looking backwards looking forwards?
Speaker 5: Well, I think the good part of the report, because
Speaker 5: this is really the only good part of the report,
Speaker 5: is them saying that they're going to accelerate the production
Speaker 5: of this next gen vehicle platform, and they were pretty
Speaker 5: vague about what they're calling this or you know what
Speaker 5: robo taxi is or is a model to coming, And
Speaker 5: I think that'll be clarified on the conference call. So
Speaker 5: you know, once again, we don't really watch after hours
Speaker 5: trading because he really doesn't represent all the participants and so,
Speaker 5: and we haven't seen the conference call yet, so we'll
Speaker 5: see how this doc trades next several months. But there
Speaker 5: really isn't any other good news in that report other
Speaker 5: than them saying they're going to accelerate production, even though
Speaker 5: they just fire all the people that are.
Speaker 1: In charge of accelerating production.
Speaker 3: Hey Russ, remind everybody take a step back here, because
Speaker 3: Carol and I were looking at the terminal a little earlier.
Speaker 3: You've you know, you are a longtime Tesla bull until
Speaker 3: you weren't, and you were a longtime believer and have
Speaker 3: been a long time believer in the company. You guys
Speaker 3: still own a substantial number of shares over at kerber Kawasaki.
Speaker 3: But what is your position right now in Tesla moving forward?
Speaker 5: So my position is that Tesla is a wonderful company
Speaker 5: that has enormous potential with the CEO who has become
Speaker 5: so divisive that people won't buy the cars. And that's
Speaker 5: why saying is just going to produce more cars doesn't
Speaker 5: address the real issue is why they're not selling cars today,
Speaker 5: and that's the issue that needs to be addressed that
Speaker 5: isn't being addressed. So as a shareholder, we have to
Speaker 5: assess what the future earnings potential of a company is
Speaker 5: based off what their business model is. And when we
Speaker 5: you know, we start investing in Tesla over ten years ago,
Speaker 5: and we've had a great run up until the purchase
Speaker 5: of Twitter, and so we've been lowering our position because
Speaker 5: what we feel is that Elon's behavior has hurt the
Speaker 5: brand in such a way that consumers actually don't want
Speaker 5: to buy a Tesla. It's just the best car on
Speaker 5: the road at the best price, so people buy the
Speaker 5: car reluctantly at this point. So I think, you know,
Speaker 5: we've got these problems to solve, and I'm not sure
Speaker 5: if that will be addressed on the conference call today.
Speaker 5: And that's you know, And I don't like being called
Speaker 5: a Tesla bear, because I actually think they could turn
Speaker 5: the company around pretty quickly if Elon changed his behavior
Speaker 5: and stopped attacking everybody.
Speaker 1: But I just don't think that's going to happen.
Speaker 5: And so so I think the bigger issue that isn't
Speaker 5: being addressed is doesn't matter how many cars Tesla makes
Speaker 5: if nobody will buy them.
Speaker 4: All Right, So Max chaff can come on in. You
Speaker 4: guys do the Elon Inc. Podcast. You're constantly looking at
Speaker 4: what he says, what he does. You're looking at his
Speaker 4: kind of his assets, his portfolio, your initial thoughts on
Speaker 4: kind of the headlines we got.
Speaker 6: Yeah, just to kind of under Ross is saying something
Speaker 6: like this, but like the note about the new products
Speaker 6: is very vague. It doesn't say we're going to have
Speaker 6: a model too, and it's going to come out on
Speaker 6: this date, which is what investors, many investors have been
Speaker 6: hoping for.
Speaker 1: It says.
Speaker 6: It sounds like it's saying, I'm reading it correctly, they're
Speaker 6: going to try to essentially make the current models more affordable.
Speaker 6: Now that obviously could allow them to sell more cars,
Speaker 6: but it's a slightly different spin on things than what
Speaker 6: many people have been inspecting. The other thing is, as
Speaker 6: Ross is saying, you know, on a Tesla earning's day,
Speaker 6: what Elon says, and more importantly, how he says it
Speaker 6: is just as important as as what's in these numbers,
Speaker 6: because he is going to hopefully anyway clarify some of
Speaker 6: this but also hopefully get a sense of like where
Speaker 6: things stand with robotaxi, where things stand with potential affordable cars,
Speaker 6: and investors seemed to react to based on his optimism,
Speaker 6: you know, a couple quarters ago, when he was in
Speaker 6: this kind of dowur mood, we saw the stock go down.
Speaker 6: So it's do we get an optimistic version of Elon
Speaker 6: or the kind of very dour, pessimistic Elon.
Speaker 4: Well, I wonder if you have a question for Ross Max.
Speaker 6: Yeah, Ross, what is your reading on on this product?
Speaker 1: On this paragraph about the product?
Speaker 5: Well, I think you're dead right about the two things
Speaker 5: you just said. Number One, they're of course vague because
Speaker 5: of the legality of it. If they put this down
Speaker 5: and they don't do it right. And since nobody seems
Speaker 5: to know what Elon's going to do, and I'm sure
Speaker 5: that everybody understands that nobody within Tesla knows what the
Speaker 5: business plan is either, because they just don't at this point.
Speaker 1: But I think secondly, a.
Speaker 5: Lot of it will be how does Elon answer these
Speaker 5: questions from investors during the conference call?
Speaker 1: And what you said is right.
Speaker 5: If we have sort of a very pauseitive Elon and
Speaker 5: he's refocused and he's going to be working at Tesla more,
Speaker 5: and you know, he can play the room right, maybe
Speaker 5: we get a little rally on the stock, but it
Speaker 5: doesn't change the fundamentals. If he doesn't play the room right,
Speaker 5: this becomes a blood bath. So you know, I'm just
Speaker 5: hoping that he understands the damage that he's done and
Speaker 5: starts to mitigate this versus diving in and sort of
Speaker 5: doubling down.
Speaker 6: It will be interesting to see if Twitter comes up
Speaker 6: or sorry X comes up, you know, because there is
Speaker 6: this question in this sense that he's spent ge whiz
Speaker 6: a lot of time talking about X, tweeting about X,
Speaker 6: doing X related things. There's even a potential or they're
Speaker 6: going to have a Grock integration inside of the Tesla's
Speaker 6: And I think that to people who are really bought
Speaker 6: into the ev story rather than the you know, Elon
Speaker 6: Musk genius story, which those are two important constituencies here,
Speaker 6: I think for Tesla Stock, you know, they would like
Speaker 6: to see him spend less time on his social media network.
Speaker 5: Yeah, well, it's not just less time, it's what he's saying,
Speaker 5: you know. It's like it's not the time, it's that
Speaker 5: what he's saying oftentimes is super divisive and basically racist.
Speaker 5: So it's like, it's really hard to sell products to
Speaker 5: people when the CEO says things that are really hurtful
Speaker 5: to people, including me for that matter.
Speaker 4: Now and we've talked with you about that, absolutely ross.
Speaker 4: What could Elon say on the call, or Elon and
Speaker 4: company say on the call that would make you more
Speaker 4: excited about the company or once again say, you know,
Speaker 4: kind of owe Elon really.
Speaker 5: Well, if I had my dream come true, he'd say,
Speaker 5: I'm coming back to work at Tesla, because he basically
Speaker 5: doesn't work at Tesla, and he would say, I'm done
Speaker 5: tweeting all this garbage and politics.
Speaker 1: I'm going to really.
Speaker 5: Focus on advancing sustainable transportation and energy and that we're
Speaker 5: going to release this lower you know, priced car and the.
Speaker 1: Strategy that we all bought into three.
Speaker 5: Years ago, you know, and when the stock was at
Speaker 5: all time highs and earnings were going up, you know,
Speaker 5: fifty hundred percent a year.
Speaker 1: You know, it was like it was like a different
Speaker 1: world than today.
Speaker 5: And it's amazing to me he doesn't understand this difference
Speaker 5: that that really is his responsibility, and so as a shareholder,
Speaker 5: I have to say it's an extremely distressing time because
Speaker 5: the valuation of Tesla is premised off all these great
Speaker 5: technological innovations, none of which have come to fruition yet.
Speaker 1: So his focus is one hundred percent what needs to
Speaker 1: be happening right now.
Speaker 3: Hey, Ross, I do want to just end with one
Speaker 3: last question about the cost of producing these vehicles. It
Speaker 3: seems like Tesla is doing everything I can to bring
Speaker 3: down the cost of producing these cars.
Speaker 1: The cost of goods sold to.
Speaker 3: Are they what numbers do you want to see there?
Speaker 5: Well, they are, but their margins continue to go lower.
Speaker 5: If you look at the report, which I've only had
Speaker 5: a minute to look at, you know, their vehicle margins
Speaker 5: continue to go lower. They're operating margins go lower, their
Speaker 5: net margins go lower. So they're able to lower the
Speaker 5: price of the car. But what they're not able to
Speaker 5: do is keep that going as fast as they're they're
Speaker 5: lowering the price of the vehicles, so it's still hurting
Speaker 5: them even though they're lowering the cost of the car.
Speaker 5: And it does bring in a bigger market, but you're
Speaker 5: not creating any demand. And this is I have said
Speaker 5: it a hundred times. Every company in America advertises or reason.
Speaker 5: People need to know why your products are superior. And
Speaker 5: all the Tesla people have bought in teslas, you know,
Speaker 5: so all these YouTubers can tweet all they want, but
Speaker 5: everybody wanted a Tesla bought a Tesla. So you've got
Speaker 5: to get new customers. And the new customers are being
Speaker 5: told that charging sucks and evs are bad and this
Speaker 5: and that, and Donald Trump says they're bad, and this
Speaker 5: is all they see all day, and then it's like,
Speaker 5: why would they go buy a Tesla because there's not
Speaker 5: one ad anywhere that tells you how great the cars
Speaker 5: are because they are right.
Speaker 4: Right, and you still own them right real quickly, yes
Speaker 4: or no, yeah I do.
Speaker 5: I just don't understand why they don't tell people how
Speaker 5: great their vehicles are.
Speaker 4: All right, Russ Gerbert, so appreciated. We know you've got to,
Speaker 4: I think run over to our TV guys. President CEO
Speaker 4: Gerber Kawasaki, so appreciate you joining us