Cathie Wood Makes the Case for Elon Musk's Tesla Pay Package

Bloomberg

Watch Cathie Wood Makes the Case for Elon Musk's Tesla Pay Package - Bloomberg on Dailymotion

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00:00Do you think, Cathy, the incentives are well aligned?

00:04Yes, we do. I do not believe any company anywhere near this size has ever delivered a compound

00:14annual rate of growth for EBITDA, which is a bottom line number of 41% over 10 years.

00:24No company has done that. So, yes, indeed, the incentives are aligned. If he and his team are

00:30able to deliver on that number, the stock is going to outperform enormously.

00:37Cathy, if by chance this proposal is rejected, would you consider shedding some of your Tesla

00:43position? So, I'm happy that the prediction markets are at 90 to 95% in terms of this is

00:53going through. So, we don't have to think about that. Clearly, if Elon left, we think about it in

01:00two ways. One, we think robo-taxis, he has them at the starting gate as of June, and now they're

01:08rolling out. And that AI project is well underway. If he had left five years ago, three years ago,

01:17it probably wouldn't be anywhere near where it is. What we now think, though, is in order to

01:24capitalize on humanoid robots, which that's a much more difficult project, that, yes, Elon's brilliance

01:33and the team he has attracted around him are going to be necessary to pull that off. Our price target,

01:41$2,600 in 2030, is 90% of that valuation is robo-taxi. We have very little for humanoid robots.

01:52If humanoid robots evolve as quickly as Elon thinks, now remember, that's Elon time, but

02:00he already has a running start because robo-taxis are robots. They're electric. They're powered by AI.

02:08Those are the three innovation platforms that will power humanoid robots as well. So he's ahead

02:14of the game on that one as well. But I do believe he's the right leader to bring that part of the

02:20story to life as well. Kathy, I've got to ask you this, though, to follow up on Lisa's question.

02:23If you wouldn't sell if he wasn't CEO, then why should we pay him that much to be the CEO?

02:29What I'm saying is we would feel comfortable with the robo-taxi part of the model, but we would not

02:40be able to build with confidence the humanoid robot part of the model. So over time, of course,

02:48as the story would depend more and more on that leg of the story, we would be taking our position down.

02:55You talked earlier, Kathy, the past couple of days about this reality check that's going on in the

03:01tech sector. And I understand that Tesla is sort of in its own place that you do hold them for the

03:07long term. How do you understand the reality check that's currently going on within a lot of the

03:12biggest tech stocks and the sense of skepticism about whether they can keep growing at that rate

03:17versus the long term bullish bet?

03:19You know, I'm really happy that there is so much skepticism out there. Anyone who went through the

03:27late 90s will remember there was no skepticism. And we had valuations based on the number of eyeballs

03:35on a website maybe 10 years from then. We're not seeing that right now. We are seeing, wait a minute,

03:44they're spending a lot of money on these data centers. This is a little bit of a different story than

03:52I was investing in, certainly in terms of, when I say I, the average investor was investing in

03:57with the MAG-6. Those were just cash cows and had huge cash positions. Something's changing here.

04:07It's making the typical investor a little more, I'll say, skeptical. This is not just the cash register

04:17ringing anymore. This is, wait, a big bet on the future. So I'm happy there's skepticism. I think it's a good

04:23thing.

04:24Are you buying right now? Are you seeing the skepticism as a chance to build some of your portfolio?

04:28Oh, sure. You know, and probably the most undervalued part of our portfolios is in life

04:38sciences, healthcare, because we think that is going to present the most profound application

04:44of AI out there. And yet it is highly underappreciated because, you know, healthcare

04:51analysts aren't comfortable with tech and tech analysts aren't comfortable with healthcare. And,

04:56you know, we've got a very siloed ecosystem in terms of the way research is done. At ARC,

05:01we're very focused on the technologies first and how they're going to scale across sectors. So our

05:07analysts are organized by technology. And we think there's a huge inefficiency there.

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