This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So let's get right to with somebody who is a Testla owner and investor well known to our audience. We're talking about Ross Garber. Russ Gerber is president and CEO like Gerber Kawasaki Wealth and Investment Management. He joins us on the phone from Santa Monica, California. Ross, pick out one number and in this earnings report and tell us why it's your favorite.
Earnings per share, earnings for share. They beat by a big number in a very very very tough environment while they're ramping two factories and boy, okay, that number two dollars and twenty seven cents ross for the second quarter. Estimates were for one dollar and eighty three cents, So blowing it out of the park when it came to that bottom line. Yeah, it's like so hard with supply chain and all the issues with China, and here they come out with a huge margin on their vehicles with
the ramp. I mean, it's just they executed amazingly well. So how are they doing it when so many others seem to be struggling. Well, there's a couple of things that Tesla has as a huge advantage over other automakers, And it first started when Ellon went out and cut supply deals with like Lithian companies and battery cell companies. He already had the vision of like, we want ten year contracts, we want guaranteed supply. Like he went all in and did like huge deals with these suppliers early on,
before electric vehicles were even an issue. So he's kind of gets the priority because he makes the most cars, and he committed the most early, and so he has the best position. Plus they're completely vertically integrated, so they really have an advantage over other players in the eavy space.
Why aren't we seeing shares jump more If the bottom line beat was so good, if automotive automotive gross margin came in so much higher than expected, shares in the after hours are only up two point I don't really look at after hours trading as any indication of too much, but we haven't had the conference call yet, and so that's usually where a lot of discussed that may change the trading and after hours, you know, I think the most important thing is the valuation of Tesla is very
high relative to the market, so they need to have good earnings to support their stock price and such. So either way, the stock is going to be up tomorrow, and I think that's great news. What's the important valuation metric to watch? I mean, I'm just going to basic PE is almost eighty eight right now, forward looking PE
of about sixty three. What is the important metric to look at when we're trying to value something like a Tesla, which most would argue is still a mega growth company, right, So we value all companies based off their P to growth ratio, So that's really what's important is how fast is the company growing relative to its p And that's really where you can get stock price appreciation because you see, this multiple will be forced in a way lower as he goes up if he doesn't go up, so he
usually goes up when he goes up. So the nice way to look at it is because Tesla is beating earnings and growing so fast their growth rate as well over of earnings, but their PE is less than a hundred, so relative to other stocks on the stock market, it is actually very cheap. So what's the question that you would have for executives on the call today for Elon Musk. If you were able to ask a question, what would
you ask him? Well, A, most importantly, I I really want to know what's happening in Berlin and Austin as far as the ramp where they are with with production and what's going on with the forty eight cell ramp, because that seems to be sort of a little, you know,
hiccup that they're dealing with right now. So I'm really concerned about technology also for full self driving, and you know, I've been using the software and it's getting better and better, But what's their time frame for a wide house which
I think? How much better is it getting? Because you know, there were some videos that made the rounds just a couple of weeks ago with some really concerning I think Galileo Russell posted it a few weeks ago, and he's a big testa bowl we've had on our program before, and it showed it the vehicle turning right down the wrong way down a one way street. I'm sure you saw that video. Ross, Um, how much better is it getting?
Because that's that's pretty bad. You know, I think that I've seen like so many humans just today do stupid things like that. You know, it's really like hard to be a perfect car while you're you do live in l A. So that you know, I'm a California so I can say that. And then I and I changed my car in l A. And it's super hard, you know, it's super hard to survive in l A. So I take the expectation that a computer will have a flawless driving ability when it's not even it's still a beta beta.
And then you get on the road and you watch humans like kill each other on the road daily. We're setting two standards, you see what I'm saying. And so like, full self driving is never going to be perfect. Well that's something who's gonna get run up? That's what I want to ask Ross. Is full self driving crucial to the Tesla story? Or can it just being a great
EV car maker? And that's enough. Well, it's crucial to the story if you think about it, that making an e V isn't a challenge for Tesla anymore so Tesla as a company, where would they evolve too if they were just an EV maker? Because eventually everybody's gonna be making evs and it will become a commodity. There's the human robot that I'm kind of upset, but that's that's all about AI though that's not really about like building
a robot isn't hard. It's about making a smart robot that can do good stuff, you know, and so like. So the future is the software, and I think you should look at it very much like Apple. You know, the Samsung phones are just as good as the Apple phones or better. Okay, the Google poones are just as good or better, but we all use iPhones because of the software and the way the software interacts with our
life keeps us involved with Apple forever. And that's what Tesla is building with software that the other companies don't have. So when you're talking it about an e V being a commodity and tenures, they will get it. But the software is where the value is. All right, we gotta run Ross always informative and fun to catch in with you. Ross Gerber over at Gerber Kawasaki Wealth joining us from Santa Monica. This is Bloomberg