00:00I want to go to this line from your notes because this really encapsulates the entire.
00:05Conversation on Tesla, as I see it, investor sentiment appears driven more by long term.
00:10Narrative than by near term fundamentals.
00:12You can certainly see that playing out in the stock price.
00:15In the valuations, but you take a look at the near term fundamentals, as we were just discussing
00:19with Ed.
00:20Earnings per share came in at 50 cents in the latest quarter.
00:23That is higher than analysts.
00:25Estimates, what do you make of some of these figures?
00:28Well, energy storage did really well.
00:30And this is a really good business for Tesla.
00:32And they're continuing to double down in energy storage because.
00:35The demand for energy is sort of like unlimited right now.
00:38So so it's.
00:40Really nice to see that part of the business doing well with the deterioration of their
00:44core EV business.
00:45So so that helped offset some of the decline and certainly being profitable.
00:50In charging and in energy storage helps offset the losses now.
00:55That the, you know, EV companies having, but, you know, it's still.
01:00Points to when in this future will Tesla actually generate new revenue.
01:05From any of the things that Elon's talking about.
01:08Well, on that note, I'm curious to hear what.
01:10You make of that $2 billion agreement to invest into XAI again.
01:15As we were discussing with Ed, the AI business theoretically will help power some.
01:20of those initiatives when you think about humanoid robots, when you think about full self-driving.
01:25For example, and I'm curious what you make of it.
01:28Well, it's also powering.
01:30Pornography and other that pretty nefarious things.
01:33So, you know, Tesla shareholders are.
01:35We're now involved with that.
01:36And so, you know, I think that XAI investment from Tesla.
01:40Tesla, you know, is sort of a weird thing considering they took Tesla's chips and.
01:45engineers to make XAI and now we're paying for it.
01:47You know, why isn't XAI a part of Tesla?
01:50It should have been from the beginning.
01:51I don't know.
01:52But those are questions shareholders can just.
01:55I think it makes sense for Tesla to invest in XAI.
01:58They have $44 billion in cash.
02:00Doing nothing.
02:01And so Elon needs the money to build XAI.
02:04And so he's going.
02:05He's going to use Tesla for that money and.
02:07And I don't think shareholders should be confused.
02:09Elon's going to do.
02:10What he wants with his money to support.
02:12Is money losing operations.
02:13Yeah.
02:14And it's.
02:15So shareholders money to not to be pedantic about it.
02:18But no, it's not.
02:19It's not.
02:20Their shareholders.
02:20They have no say in this company.
02:22It is not a traditional investment like other companies.
02:25It's Elon's company and Elon will do as he wishes with his money.
02:29And that's.
02:30If you invest with him, you are riding on the back of the bus and you better enjoy it.
02:34All right.
02:35Rob.
02:35So fair enough.
02:36So I have a question, though, about that money and whether that becomes a concern.
02:40Given the numbers that we saw with the 3% drop in revenue as Ed was talking about 30% drop.
02:45And free cash flow capital expenditures going up and he lays out.
02:50I don't know when this stuff is going to materialize, but the cyber cab, the Tesla semi and all these other things.
02:55That he says are on schedule for volume production in 2026.
02:59I mean, I.
03:00I almost hate to ask you this question, but are these realistic goals?
03:05Why do you.
03:06Don't worry.
03:07I laughed at myself.
03:08Because you know, it's absurd.
03:09Yeah.
03:10Yeah.
03:11I mean.
03:10Right.
03:11I think that's how you.
03:12You frame the question is when he says these things.
03:15They.
03:15They have no credibility.
03:16I've now just.
03:17I call them hallucinations.
03:18They're.
03:19They're.
03:20They're visions that he sees that he hopes to be true, but aren't.
03:24And so.
03:25I think investors have to be aware it's going to be many years before the cyber cab is a real.
03:30business and.
03:31And.
03:32And certainly robots.
03:33I don't even know how long.
03:34And.
03:35And.
03:35I think investors are fine with this sort of like long term vision of Tesla.
03:40Obviously.
03:40Obviously by the stock price.
03:41But.
03:42I think when you're talking about like.
03:44Business economic.
03:45fundamentals of the company, they've been deteriorating for the last three, four years.
03:49And you can see.
03:50It.
03:51In the annual numbers that they put in the shareholder deck with margins and.
03:54And profit.
03:55It's just going down consistently.
03:57So.
03:58You know.
03:59You can.
04:00Kind of.
04:00Put this in.
04:01Any way you want.
04:02Um.
04:03It's a hundred percent bet on.
04:04Elon.
04:05And.
04:05Yeah.
04:06And the stuff working out.
04:07And I just.
04:08I just don't know.
04:09Well.
04:10I mean.
04:10To that point.
04:11I mean.
04:12You know.
04:13Look.
04:14I mean.
04:15Anyone with the Bloomberg terminal.
04:16Really.
04:17Any sort of.
04:18Functionality.
04:19With regard.
04:15As far as to look at their earnings trajectory.
04:16You can go to see.
04:18Where this company is headed.
04:19But at the same.
04:20Time.
04:21We've been writing a lot on Bloomberg.
04:22About the valuation.
04:23The multiples.
04:24The fundamental.
04:25Multi.
04:25For this company.
04:26Which are.
04:27Just.
04:28Miles ahead of almost every other company out.
04:30There.
04:31And.
04:32I mean.
04:33You know this Ross.
04:34We went through this a few years ago.
04:35Where everybody's looking at the fund.
04:35Fundamentals.
04:36And they were awful.
04:37And.
04:38Yet.
04:39We still saw.
04:40That multiple.
04:40chiates continue to rise.
04:41And.
04:42People are putting much more of a premium.
04:43On the future.
04:44And to a certain extent.
04:45on the ties to other parts of the, I guess, the Elon Musk ecosystem.
04:50A hundred percent.
04:51And I think if you look at it from a shareholder perspective, this is a.
04:55Stock that has gone nowhere over the last four years.
04:57And so, you know, when you look at its five.
05:00Your return compared to the S&P, it's now less than half the return if you just invested
05:04in the market.
05:05So Tesla shareholders aren't doing so great.
05:07You know, it's not like if you invest in.
05:10Tesla five years ago, you're like rich now compared to investing in video for.
05:15And so, you know, when you actually compare.
05:20Tesla's performance to its peers, whether it be Google or Microsoft or Matt.
05:25Or whatever, it's not very good.
05:27And so investors are paying the price for this.
05:30Because there's a limit to what outrageous valuation people are willing to assign.
05:35So it used to be a hundred times earnings was Tesla sort of like multiple for a long time.
05:40Now we're trading at 250, 300 times earnings with earnings not going up, you know.
05:45It's like gravity will eventually come.
05:47And so one way or another, either they're.
05:50Going to deliver on the promises this year or gravity is going to come for Tesla.
05:55And that's why I say this year is a pivotal year for the company.
05:59And I hope they can.
06:00Deliver, but, you know, let's be real.
06:01They've got a lot of challenges in front of them.
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