Facebook, Apple and Tesla Earnings in Focus

after the numbers came out. Apples to come, Tesla is out and that stocks down, as Charlie mentioned, about three percent lower in the after hours. Let's start that with what we heard from Facebook. Joining us is John Arlokman anchor being in Bloomberg's The Open correspondent for CTV National News, on the phone from Toronto. He's also got a great tweet out today about Sandra Bullock and the Internet you have. If you haven't seen it, you should go and see it. Um, John,

good to have you here. Yeah, thanks. I mean, one of these days I hope I can talk to Sandra Bullock about for early days on the internet, don't we all? An interesting time back was it was it was good to remember that there was a time when there wasn't the internet or it was really kind of pretty basic and primitive. Not basic, not primitive is Facebook. It's come a long way. Uh, investors initially sold off John the stock in the after hours. It's now little change what

jumps out for you. Well, this is that period, of course, Carrol, between when the executives field questions from analysts and when the market is reacting, when we try to determine where the stock could be going, and some of the early takeaways and Sarah Fryer from the Bloomberg team already writing a story about this. We're trying to figure out what because the numbers for the fourth quarter for Facebook we're

strong as always. I mean, it's become an ad behemoth, even with all the uncertainty that we read about and saw tied to the uncertainty for Facebook's business and uh, you know the uncertainty in Washington. The reality is during the pandemic, people were on their phones, they were on Facebook. And I would would argue it's hard without getting really deep into the numbers, but I would argue, more and more of this story is becoming an Instagram story, Carol.

I mean the team of Bloomberg already estimated the intelligence team that Instagram makes up at least the enterprise value of Facebook. And I don't know about you, but in my household, people were scrolling Instagram. People were shopping through Instagram. And so they have my daughter's shop. That's how my daughter's shop. She's seventeen, that's how she's shops going through Instagram,

that's right. So the so the primary driver of that business for Instagram are the ads, and they do just about everything they can to get people talking about product and facilitating commerce because if that is successful, then those brands will want to advertise more on Instagram. And you know, it's interesting even the CFO Facebook and some prepared commentary is highlighting what happened last year which might not happen this year. What I mean by that is we all

bought a lot of stuff we were at home. You know. Maybe it did some stuff with the pool, maybe you uh, you know a lot of new death because you're working from home, maybe about a new TV set. Whatever. Instagram is all about stuff you can buy, uh, And so that was also helping their advertising business last year. If we cross our fingers and hope that the vaccine roll up can be successful, could be more about services. Maybe we'll go out to restaurants more. Maybe we'll finally take

that trip. And so they're already warning that that shift in spending could ultimately hurt them, but we'll have to see with times. So I think they had a big quarter, a monster even in the face of what are seen as some regulatory head ones for Facebook. And now we try to figure out who are the post pandemic winners.

If you will, Well and John, I guess a question for me is, yeah, even if I mean, this is a company where a fourth quarter sales jump and as you said, online shopping was feeling a lot of that. But you know, if we have a company where a Facebook, where sales jump fifteen or twenty, those are still strong numbers, you know what I mean, even if there's an adjustment, but maybe investors just have to kind of potentially potentially

adjust those expectations. Well, I've always tried to be measured in these earnings reactions, dating back to when I was based in San Francisco for Blueberg, and we recovering these earnings out there because the numbers are truly astonishing. And to your point, last year their odd revenue jumped another twenty plus percent. Now is that a couple percent off what we saw on the previous year. Sure, but again

we're talking about people. We're talking about one of the most traumatic years of our lives, and this company is talking about well into double digit advertising revenue growth. And that's gotta that's got to come from somewhere. That's not

like the pie is getting bigger right now. So I think Facebook continues to be in a pole position thanks to that savvy billion dollar purchase in so Puny looking back for Instagram ahead of their I p O. But I think we also know beyond just what the financial outlook the company shares with us is, they're going to

have to navigate these waters in Washington. Um. I think even with the core Facebook product, we've all learned our lesson of these last few months of you know, the the negative side of what can happen on social media and being accountable and responsible for that not only takes a change in how you get the business, but also it costs money, and they're spending a lot of money to try and fix those problems too, and that investor's watch as well. And it's not just this you know,

US regulatory environment. They also mentioned some concerns about data transfers to and from Europe that could be heard with new regulations. So you know, increasingly this these types of companies are facing potentially greater regulation, whether it's here in the US or over in your uh, looks like a pretty good quarter, John Man as always right, underestimate speaking

this this this big numbers game, a big teg. The symbolism of reaching a hundred billion dollars or I guess in this case more than a hundred and eleven billion, as you pointed out, Um, how unprecedented this really is in corporate America. I mean, there's just a handful of companies and in the next few days, and sure we'll be talking about the mighty Amazon, But think about the business of Amazon, at least for the most part in

their growth. Yeah, that that the cloud business, which is astonishing, but really it was about moving goods. Walmart, we know, has already reached this threshold of being able to generate more than a hundred billion and a quarter, and it's impressive. But again the nature of Walmart's business is different. Move everything we can, and our margins are razor thin. Apple, there are limitations on how far they're blull and go

in selling product because they like those big margins. So I think going back to what we talked about earlier with people staying home during the pandemic and school going through Instagram, they were, indeed but getting new iPhones, and you know, if the kids were at home, they were buying some of the other gear. And then there's that services business, Carol, which is that's the leg of growth they're they're leaning on right now, John, Where else though?

I always think about my European grandparents who came over, you know, um where else would you get a product that's roughly especially if you you know, depending on which model, But you can spend a thousand dollars on something that you are going to consider disposable because at something like in a couple of years, you're going to replace it or maybe sooner. I mean, we've got two new iPhones

in our house. Uh you know, I just look at I understand what you're saying, Like the limitations in terms of you know, they want to stick with those high margins, but it works for them. Like everybody said, you got to go mass market, you gotta go down market. Well maybe you don't. Well they and we should be clear again, there were pandemic winners, and Apple clearly was one of them because is there was just that simple need for us to make sure we had good take at home.

And and when you're a consumer and you're making a decision, um, you might have to cough up a little bit more for an Apple product, but you're you're pretty confident in what you're getting with that product. Now the question becomes, if you were busy buying Apple stuff last year, are you going to need to go out and get something in two thousand and twenty one. I think that's again

why before the pandemic hit. And we've talked for years, Carol about how, yeah, they still have the big product days, but they're not as exciting as they once were when the iPhone was brand new or you know today, uh in two thousand and ten was when Steve Jobs first unveil the iPad. Right, it doesn't feel like there's a new, flashy product that gets as excited. Although I have to tell you I love my AirPods, and you know, there wasn't as much fanfare around the launch of those a

few years ago. So I think you'll continue to see Carroll this company really focus on their services business revenue there was substantial at more than fifteen billion dollars. And that's things like yeah, it's it's it's what you're putting in the cloud. But it's you know, getting you to choose Apple Music over Spotify. It's getting you to use the Apple TV service, you know, right in the mix

there with Disney Plus and Netflix. Uh. And then you know if they if they can sell you on some of the other stuff, you know, wearables is is still a growing category for them. People are still picking up the Apple Watch, and I think after the initial excitement of the quarter, will probably go back to that storyline of what else does Apple That's That's what I'm thinking about. How many times over the years we've we've said like, you know, come on, Apple, you've got to diversify, You've

got to diversify. And yet here we are, like, hey, listen, these are these are pretty impressive numbers. You know, I feel like we talk about Apple, it's always in a whole other category. Just got about twenty seconds left here, John, any final thoughts. The one thing I'll just note is in China, sales were up substantially. They were north of twenty one billion that was up from about fourteen billion a year ago. And we know that the China recovery

stories something people are already talking about. Yeah, exactly in our own Mark German, who we follow so closely. Also when it comes to Apple, talking about the wearables, home and accessories boost due to major updates in that line in including you talked about two new Apple Watch models, the air Pods, the air AirPods Max headphones. John was talking about the headphones there and also the home Pod Mini. So he said Apple went out all on accessories this

past quarter. John, great to have you back with us breaking everything and anything you need to know. When it comes to Facebook and Apple, John is anchor up Being and Bloomberg's the open correspondent for CTV National News. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic from Bloomberg Radio. So Tesla is also

at It's been a big day. Uh. In the after hours for earnings Tesla shares, I should point out they are lower in the after hours right now, They're just down about four point eight percent. So listen, it was an outperformer last year. Up it was already an outperformer this year up heading into these earnings, growth stock, auto stock, tech stock, battery stock, It's many things. So let's get

into it with Bloomberg News reporter Ed Ludlow. He's with us from our Bloomberg nine sixties studio in San Francisco, along with Ross Gerber, president CEO of Gerber Kawasaki Wealth and Investment Management. He's on the phone from Santa Monica. He owns Tesla Shares, owns Tesla Cars. Um, guys, let's get into it, and I'm going to start with you what jumps out because I just want to say I just saw a headline that Tesla expects to achieve fifty

average annual growth and vehicle deliveries. That was in their letter. Yeah, that was in the letter. The thing that wasn't was basically a stated delivery goal for right consensus going into this was around eight hundred thousand units. And perhaps, you know, the market a little bit disappointed that Tesla didn't just stay outright what they think they will deliver this year. You, I guess you could ask Ross about that. Well, let's say,

crass Rus, what do you think about that? Oh? I think he wants learned his lessons about you know, telling people what his goals are and then everybody jumps on him if he's short. So he's doing what an Apple and all the other companies are doing and leaving a little more wiggle room for error. And maybe the more I think the market is reacting a little bit more towards missing on the on the EPs side than per

se what we expect out of deliveries. Alright, ed, go ahead and pick up what else stands out for you, yeah, you know, and beyond that, I mean credit where credit is due. Tesla says that they're on tracking in Berlin with the Giga factory and also in Austin to start deliveries from those locations this year, which is pretty astonishing, right based on you know, how quickly they built the

Shanghai plant. They've now brought Shanghai up to installed annual capacity of four and fifty thou vehicles, which is impressive, and they're basically touting in the earnings release that they expect Germany at least and perhaps Austin to go the same way. There is some pressure on operating margins that Tesla says is largely from aggressive price cuts in China.

The average selling ice for test of vehicles came down, which is interesting, right because Ellen, Musk and Cove talked for a while about wanting to make their vehicles more affordable, but that is completely at odds with where the rest of the industry is going. We're seeing high average setting prices, particularly in combustion engine cars. And the final thing is that executive compensation was very high, which eight into margins

as well. Yeah, hey, listen, well, okay, So I wonder Ross Garber, uh, if there's a bit of a pullback, are you going to be buying into this? Well, no, because we think where we'd like to buy Tesla is much lower than it's going to go tomorrow. How well, you know, we see Tesla as a buying around five dollars a share, you know, and that that's figuring looking at a hundred times this year's estimate for us in

five dollars. So so you know, like, to me, paying five is is what I would pay, you know, But I also paid seven dollars for all my shares, so you know I'm in No, I don't need to sell, I don't need to do anything. So I'm a holder of Tesla's as it bounced around here, and if I get a real correction in Tesla, I'm certainly going to add to it. All right, And what what do you like about this quarter? What don't you like about this quarter? Ross? Well,

I like the top line. The top line numbers are great. But I think you guys kind of hit on on the topic. Margins were definitely hit, whether it's from price reductions or increasing expenses. Uh, they were definitely hit from what they should have been on an operating level, and that's I think is why you're seeing the Staco down. But I also look at those things is not material in the story of Tesla, which is really about a

company that's growing incredibly fast. I'm completely innovating in several industries and has just the most incredible long term future of any company I own. So so I I don't want to look at this as anything meaningful. Yeah, well, Russ, let's jump into the story that you're describing. If you look at the kind of action that we saw of the last twelve months in the share price, every time a street end lists raised their price target, a lot

of that was based on future revenues. Higher margin software revenue. ROBOTAXI are you disappointed we didn't hear more about that from Tesla in terms of progress and autopilot. What are you listening for on the cool on those kind of value add and other business areas outside of the business of just building e vs. Yeah, you know, it's it's funny, that's a it's a great way to look at it.

So from a fundamental perspective, a lot of those things like ROBOTAXI, I don't even factor into my analysis because I look at that as those will happen when they happen. Okay, what matters to me is how many cars they're gonna sell and batteries and solar they're going to sell in the next two years, and what is the ramp of these products moving forward. So, for example, you brought up the rapid growing of the factories and how quickly they're

getting this production up. The monthing I'm focused Laser focused on is on cybertruck and semi you know, production and delivery, because that's going to be the next big leg up for Tesla is taking over the trucking business in America, and so like that's what I care about because I think it's gonna be hard to build the cyber truck, and we've seen it with every time they build a

new vehicle, it's kind of a nightmare. So what I'm really focused on is are they going to execute, you know, successfully with cyber and semi in the next twelve months or is this thing going to get delayed and we're gonna run into problems and run into issues that could hurt the stock. So so that's what we're really focused on.

Is the next market for Tesla is trucks. We want them to dominate this market, and that's the most important step besides getting full self driving done, which they're working with simultaneously. But with the new battery cell structures and what they're building on the long term looks amazing. But as far as what's going to drive the stock, it's getting the truck business going roster. We need to look at this as more of a battery company in addition

to being an auto or tech company. Absolutely. In fact, that's where I think they now have the biggest mode because every other company trying to build VS is trying to get batteries from the same three players. And we've now made significant investment in other terry companies and other battery technologies because basically, there isn't enough of this stuff. There isn't enough cells, There isn't enough way to fill

the demand that all the automakers want. So when Fisker says they're going to build a car GM, where are they going to get all the batteries? That's gonna be the good question. So with Tesla doing this all in house, but inventing a new cell that six or seven times better, this is going to differentiate them from the competitors for the next decade. Ross in one word, does does Tesla Needle must need to start acknowledging competition more from the

likes of Riva and Lucid, etcetera. They're not competition, No, they're not competition. Who's what's the competition. They don't even have a truck, you know, So like when they get a truck and they can actually make the truck and I can get in this truck and drive it. And so the competition I see is in China. And that's why they lowered prices in China. There are some good cars in China being made, whether it be by Neo

or b I D or whatever. And then we're also seeing, uh, this new car from Lucid kind of getting towards production and which is a really nice car. To hence the refresh of the models, so you know that refresh was a big thing. So I'm really stoked about it. You guys are the best. Ed Ludlow Auto reporter of Berg News, Russ Gerber, Overber Kawasaki Wealth and investment management guys. Thank you so much. Great breakout of Tesla