Tesla Delivery Numbers Punch Hole In Growth Story

at Bloomberg dot com. A Tesla stock is down eight percent in early trading this morning after reporting a record decline in deliveries during the first quarter, stoking concerned that demand maybe slackeing for the Model three sedan it introduced less than two years ago. To help us in all things Tesla, we welcome Liam Denning, Liam's energy, mining and commodities columns for Bloomberg Opinion joins us on the phone.

Leat Liam, Thank you so much for joining us. How concerned should investors be should Tesla be about this latest delivery shortfall? A very concerned? Uh. I mean, essentially, what these numbers do is they blow a hole in the growth narrative around the stock. Um One number to keep in mind is that the stock was off the last time I looked. It was off about eight cent down

in the kind of two sixties level. Um. That is still if you can believe it, more than five thousand times gap earnings estimates, this is a stock that needs a growth narrative to to stay anywhere near where it's valuation is right now. And on what we saw in these first quarter sales numbers is you know, if you think about Tesla's lineup, you can divide it into two camps.

The Model three is the growth engine. That's where you know, it's a lower priced, lower price model that's meant to ramp up volume and bring Tesla towards being more of a mass market car maker. Um. The Models F and X, the older ones, are the higher price variants. They're kind of pools of gross profit margin. Both of them took a hit. So the Model three was down about quarter on quarter in terms of deliveries, and the Model lesson

X was down more than a half. How much can we just say, well, right now, there are a bunch of headwins. You've got the electric vehicle attack subsidy that the US had been allowing that they actually pulled back on. Then you have the fact that China is having some concerns with the US overtrade that that might impede uh Tesla's footprint there. I mean, how much how many excuses can you make for Tesla that actually ring true to you?

I mean, there are headwinds, and you know, no one should downplay the challenges of trying to trying to you know, grow grow the electric vehicle market. UM. I think Tesla's problem is a little more structural than that. The problem they have is that what they essentially did towards the end of was to pull forward UM demand for the Model three UM and especially the kind of higher priced verys.

And you know, one of the things that happened at the end of twenty eight teen was that Tesla reported UM two consecutive quarters profitable quarters, the first time it's ever done that. Not big profits, but profits nonetheless, and that was seen by many as as kind of the

company turning a corner. UM. What we're looking at now with the first quarter numbers is I would say, payback for that pulling forward of demand, and in some ways, while it's clear Q one numbers when they get reported in a few weeks time, I'm not going to be good. The bigger question is probably what happens in Q two, Q three because unless we see volume come back, then Tessa's profit and cashlow numbers especially are just not going

to look good. So, Liam, it's not just production and delivery and sales issues that Tesla is facing at the moment. There's also something with the SEC. And I know you're heading to court later today about the Elon Musk issue with the SEC. You can you give us the latest on what is going on there and what could the judge rule today? Sure? So this goes back to Elon Musk's um u tustle with the SEC over his funding secured tweet last August. Essentially, he came to a settlement

with the SEC. The SEC alleges that he violated that settlement and basically asked a judge to find Elon Musk in contempt um. Both sides filed their respective arguments and the judges asked for oral arguments today. That's where I'm heading later. It's unclear exactly what will happen this kind of ruling. My understanding, it's quite narrowly defined. So my guesses we're not going to see anything terribly dramatic today. Possibly we might see the judge impose another fine of

some sort. Essentially, what the judge is going to what the CEC wants the judge to do today, it's to take some sort of action that will four Cylon Musk to to uphold the terms of the settlement. Um. For the company, it's an unwelcome distraction. It's possibly damaging for the brand who knows UM. But for me it highlights just the sort of the chronic problems of governance UM

at Tesla. Just quickly here, I'm wondering why you think the shares aren't down more because you started out saying that there's still a five thousand at times profitability kind of baked into valuation, bagged into the stocks right now. So why haven't we seen a bigger fall? Well, I think you know, partly it's because Tesla has in the past shrugged off UM bad news. Remember, this is a stock where the value is largely predicated on people's long

term views. Their faith in the gene is Elon Musk, etcetera, etcetera. So one set of historical numbers taken on its own tends not to shake UH kind of core faith in the stock. However, as we look forward, I think what people may be waiting for at least some members of the shareholder base. Maybe waiting for is the actual accounts when they come out, you know, in a few weeks time. And I'm waiting to see what these bad sales numbers mean, really mean for profits, cash flow, that sort of thing.

Liam Denning, thank you so much for being with us. Liam Dunning is the energy, mining and commodities calumnists for Bloomberg Opinion, talking about Tesla and how the numbers just don't matter for some people. It's all about face. Well, I am sitting here watching Paul Sweeney reading Chicken Soup for his Soul, trying to find some sort of elixir

to the daily grind that I put him through. So I think we'll have to talk about that, and we'll have to talk about that with someone who knows better than I about Chicken Soup for the Soul, and that is Bill Rohanna, Chairman and chief executive officer of Chicken Soup for the Soul Entertainment. He joins us here in our Bloomberg Interactive Brokers Studios. Bill, we're here to talk about Chicken Soup for the Soul, but in particular the new venture with Sony Pictures, which is sort of an

interesting play on the new media business model. Please explain. So, first of all, good morning, and second second of all, our joint venture with Sony it's called Crackle plus uh is an online network that's a supported So you you may have heard this phrase a VOD which is different than SVOD, which is subscription video on demand, and a VOD is now sort of I love that Paul is nodding along and a VOD and spot mean nothing to me but go on, And actually that's that's part of

the issue and and also part of the opportunity. The fact is that the a VOD space, the ad supported video on demand spaces, expected to double in the next five years. We think that's a big opportunity. We know that people have taken and put a lot of resources into competing in subscription video. You have Netflix, and you have Disney and all those big players who are spending

a ton of money to compete there. We think they're ignoring add supported video on demand, and we don't expect people to ignore free video that they can get and not pay for and can satisfy their needs. So we're building a big business around that. So give us a sense of that advertising video on demand market today. You know, what's the size of it? Who are the players? Is

it growing? How big is it? Yeah? So today it's it's said to be about fourteen or fifteen billion dollars a year, which is not a very big market, and as I said, it's expected to more than double over the next five years. I mean, we are now one of the biggest players with Crackle plus, we may actually be the biggest player. It's a little hard to tell, you know, as as in many cases with new industries,

the numbers are sort of coming together. The statistics are being defined in terms of monthly active users, which seems to be a very critical statistic to people. We are at least as big as anybody else. The other big players are Pluto TV to be UM and of course Amazon is moving into this space like they apparently are moving into everything, so so so they're going to be a certainly a big player. Can you just tell us

Chicken Soup for the Soul entertainment? Which shows are on that? Okay, so Chicken Soup for the Soul Entertainment has a few parts. One part is the part we're talking about right now. Our online Network part. But we also have a Chicken Soup for the Soul Originals production series, which has eleven series that we've produced over the years. Chicken Soup for the Soul's Hidden Heroes has been on CBS and the c W and it was just nominated for an Emmy Award,

which we're very proud of for Outstanding Family Series. But we also have series such as Chicken Soup for the Soul's Animal Tails, which is on the c W. We've on things called Project Dad which was on TLC and Discovery Life. We've done a whole series of series. So, but how much of this would go on the Did

I do that right? Yeah? You got it right. Um. So, our strategy from the very beginning, Lisa, was to build the capability to make content profitably with the idea that we would retain rights to go on to our own networks. Because in the network business and the AVON and SVAD business, there are two costs that matter, marketing to new customers and the cost of content, and so our strategy from the beginning has been to try to get an advantage

in both those places. We've gotten the advantage in the marketing side by building followers and brands, and we now have about ten million followers on our social media that's up from one million when we started. And on the content side, we've built a capability to make our own series as well as to buy other people's television and film and we redistribute that. So we've done that in a couple of ways. All right. So when we talk

about these programming services, it's all about programming. And we see Netflix going to spend twelve or fifteen billion dollars in HBO with its three, four or five billion dollars, what is presumably Sony is bringing programming to the table. So what are you expecting from Sony in this joint venture. We're getting a lot of things from Sony because they, like us, see a big opportunity to build a major network that's ads supported. So we're getting access to their content.

As you said, we're also getting shared technology because they have a variety of networks that have the same kind of technology needs and that's lowering our technology costs. And we're getting this very large and robust network to start with. Is there any pushback from advertisers in how you calculate views and there the efficacy of the video ads, you know, not for us, but because we use third parties to confirm exactly what it is that advertisers are getting, so

they don't have to count on us counting. They It's unlike Facebook, who does their own counting. We actually use third parties to count for us, and they report to the advertising I mean, I guess how sustainable is the ad supported video model. I think it's enormous. I think it's going to be a very important part of the future. I don't expect people to go exclusively to subscriptions. It seems like it's too many. You know, there's a kind of a subscription fatigue already, and we're in the early

stages of the development. I really expect the world to be about fifty AD supported subscriber supported. If that turns out to be right, then the market is enormous. Supper at Support interesting Bill Rohans, chairman CEO of Chicken Soup for the Soul Entertainment, joining us in our Bloomberg Interactive

Broker studio. Bill, thanks so much for joining us. We are going to talk to a female juggernaut in the gaming industry, and we are so lucky to bring in Kate Gorman founder, chief executive and president for for Mason Games, based in San Francisco. Uh So, Kate, let's start with the fact that when I saw scratch off lottery tickets online, I thought, oh, that could really be sort of a

lead in for some kind of addiction. But this is sort of the opposite, right, absolutely, Thanks for having me, Lisa. So what we have done at Fort Mason Games is we've created a free app that's disrupting the lottery. And so Americans spend you know, seventy seven billion dollars in Cisco on the lottery and a lot of that is in scratch off tickets. And so what we did was we created a free app that's free to play, free to enter sweepstakes, and you can win money by scratching

off virtual lottery tickets or virtual scratch cards. And it's all AD supported. So we're really thinking about, let's not let people go and gamble. We'd rather have you play a fun game like experience on your phone while you're waiting for the bus or you know, intermittently throughout your daily life. So, Kate at Fort Mason Games and the company's focused on developing games that are catered towards women give us a sense of the gaming market today, what's

the mix between men and women gamers? Absolutely so for Mason Games, we make games for everyone, but particularly with women in minds and for me personally, that means that women are thought about in the design process and portrayed respectively throughout the gameplay. And so Google did a survey that says of women in the US are playing mobile games today and I expect that only to grow more as our mobile devices become more prevalent and powerful than ever.

And so we're really incorporating gaming and entertainment into our life throughout the day rather than just having shorter experiences once a day. And so with that comes more variety and diversity of players, especially women. What is female gaming versus male gaming? You know, there's not a stereotypical difference, but what I think that means is broadening our concept

of what is a game. And people are having different types of entertainment, and they're looking for entertainment and these little dopamine hits throughout their day instead of just sitting down with a gaming console. So as we're seeing mobile devices and streaming expand we're seeing different types of games and those are bringing different players, and so there's really no male female gaming. It's just our concept of gaming and entertainment is expanding. Okay, what are some of the

current trends in gaming right now? Absolutely? So, we're seeing a lot of really interesting trends in the gaming market. We saw Stadia by Google released, which is a fully streaming service that will use kind of these lower end devices to allow players to stream games over high quality Internet connections and using the cloud compute power to drive that. And then on the other side of it, we're seeing kind of these casual gameplay with Apple Arcade, and that's

a subscription model. It will allow you to play offline, and so that's really great for trying lots of different types of casual games that you may not be interested in paying for upfront um. But altogether it creates a really interesting ecosystem of a wide variety of different types

of games coming to the market. So, okay, I want to go full circle with you and go back to this digital scratch off lottery ticket model because it actually raises some interesting ideas about what advertising could look like.

The idea that people get that dopamine rush, as you were talking about with the scratch off online for free without having to gamble their own money, and then they get actual prizes, presumably by retailers or other outlets that want to advertise I want to show off what they have to offer. How big of a business is that right now and how much do you see it potentially growing? Well, we can't speak to the size of the market because we're really one of the first in it, and so

we're really growing it. It's us, but just since January we've seen our players scratch off over six point five million virtual scratchers and so there's a huge market for this. We're still growing really rapidly. But it's a really interesting and innovative way to disrupt a market, which is giveaway something for free and monetize it with ads. And we've seen this in many other markets historically, and so the lottery is one that, um it seems difficult to disrupt

because it's a physical piece of paper. But rethinking that model, UM, I think it's it's hard to say what the actual uh, you know, eclipse of the market would be. Right. So, just lastly, Kate, when you think about women as gamers, is there any genre that's been particularly successful for women. Absolutely.

I think the casual market and they think of the games like Candy Crush, or we make a social casino game called Confetti Casino, which is really geared towards women to have a party like environment, no gambling any place, lots, and so we see over seventy percent of our players

are female. And so I think that we see these more casual fun games with lighthearted themes that are more targeted to women, are respectful to women, are really resonating with women, but ultimately they're also playing all sorts of

other games too. Kate Gorman, thank you so much. Kate is founder, chief executive officer, and president of Fort Mason Games, based in San Francisco, talking about the gaming business, the mobile gaming business, trends in that business, UH, and how game programmers and game creators are targeting women, which has historically been arguably a little bit underserved in some of the content. I don't think they're innatially playing Call to Duty all the time, but clearly they are a major

as a representative of the female agenda. I will say, not really not playing called the right, but clearly a big segment. Well. The Wall Street Journal recently ran an article about how fewer men are buying suits as casual dress codes in the workplace become more widespread. To get a sense of how widespread, we welcome our next guest, James Fallon. James, editorial director for Women's Where Daily. He

joins us here in our Bloomberg Interactive Brokers studio. Both of the men that I'm sitting with right now have suits on carry on carry on and I have the tie so going full but no trousers. So, James, I mean, how big of an issue Is this a trend or is this a blip? Are men actually buying fewer suits? Oh? Man have been buying fewer suits for ever since casual Friday started, So it just depends upon what industry you're

in and what category you're looking at. So I mean the Goldman Sacks changing its policy towards suits and allowing the bankers when they're not meeting clients not not to have to wear a suit is really what spurred the latest reports. But Goldman was actually the last of the banks to allow that. And I mean I knew bankers in London in the nineties who were allowed to wear more casual clothes when they weren't meeting clients. But if

they're meeting clients, they have to put a suit on. Um. I don't think we're ever going to see the suit disappear in you know, law, law offices or those kinds of places, the more traditional um professions. But I mean it is becoming more casual. Men are wearing suits without ties as I am. Um, sometimes with sneakers and so forth. So definitely, but not full ath leisure. Yet that's just left for the women. Yes, for them. Well, again, it depends upon the profession. I mean it's probably in Silicon

Valley it's much more casual. UM. So, yes, I don't I don't think men, thank god, aren't going to work in leggings. Let us hope, although hey, if it flows your boat. I honestly, though, I am wondering how retailers are adapting to this shift towards something more casual. Basically, I mean you're you're obviously in a lot of different ways. I mean, start with the shoe department. You're seeing them carry a lot more sneakers and that kind of thing.

Then you're seeing them introduce a lot more casual wear and not shrink their suit departments. But perhaps de emphasized their suit departments. But even coming here, we passed Paul Stewart, we passed Brooks Brothers, we passed Joseph A. Banks. They all had suits in the window. Um. So it's still something that you are walking in Midtown where you basically many wall streets. So I mean it's it's a select group. I mean, it's a very small sample. I understand that.

But it's also the margins are higher on suits than on things. But also men buy casual clothes more than they buy suits. It's interesting, James. I mean, I'm just thinking about where a lot of college graduates are are are going once they graduate, and it seems like more and more are going towards technology. Um, you know, I'm just thinking about, like where my kids are thinking about it. It's this technolo alogy go West, and there is almost no suit culture out west. It is extraordinary, isn't It

is extraordinary? But I mean, take look at the irony of the Apple News announcement last last week or the week before. All the tech guys weren't in suits. Steven Spielberg, Steve Correll, all the male guys, Hollywood people, they were in suits. I mean they were wearing suits. Um My eldest son works in tech. He works from home most of the time. If he meets a client, he has to wear a suit. So again it depends. I thought he was going to say that he sits there in

a suit and tie and his desk feeling professional. I do have to wonder with with respect to style going forward, is there a sense of what is appropriate if it's not a suit, right, I mean it's sort of they're sort of a uniform that's you know, maybe a hoodie on Silicon Valley, But what's the uniform for business casual? Which is absolutely confessed they went through They went through that terror with on casual fridays where you know endless

golf shirts and um Khaki's Uh. I think it's it's because, um, it's because I mean I uh was okay, slightly different example, but looking globally. I was in Tokyo last month. We had a we had an event there. Um. I went to a luncheon with the head of Fast Retailing. It was off the record, so I was told that the dress code was casual. So I turned up in a jacket, a shirt, a pair of jeans, and a pair of sneakers. Every other journalist there was in a suit in a tie.

And I said to the public relations person, I said, didn't they get the casual memo? And he said, no, no, this is the way you're meant to dress in most circumstances like this, he said, it's it's a suit in a tie. Very confused. So so again globally it is the suit is still seen as the uniform. I think it's going to become a I'm not holding myself up a fashion plate, a jacket, a pair of casual trousers or jeans, tennis shoes, and then a nice shirt, but

I hope not the golf shirt khaki thing. So how are the how are the you know, the Brooks Brothers of the world, I think suits, Men's warehouse, Joseph A Bank, how are they their suits? Their suits? I mean, you know men's warehouses in the Taylor Brands, its parent company, has gone through a real transition, tough, very tough time financially. They're adapting, but um ironically at the very high designer end. As I said before, this whole street where vibe where

it was sweatpants and tennis shoes and hoodies, etcetera. The last round of men's shows. The pendulum is swinging back where the young kids are looking at suits again with tennis shoes in a more casual way. But to a fifteen year old who's grown up wearing nothing but hoodies and tennis shoes and jeans or sweatpants, a suit is now countercultural in a way, so the pendulum could swing back. We can't let you go without talking about fleece vests because we did have that story. I love to go

with the golf shirts and the caccupants. That's your look. Um. I will say that Patagonia, we reported that Patagonia is cracking down on the corporate logo vests that they are giving out. They are selling, not giving out. They won't sell them to anyone unless they follow a certain mandate for their company that they think is responsible socially and environmentally. And I'm just wondering from you know, perhaps a sartorial

responsibility standpoint. Vests pro con uh? Ever going away No, unfortunately, uh. And it depends upon the vest as a whether it's a pro or acon. Okay, fleece on the trading floor, no, definitely, Okay, would you allow fleece trousers on the trading floor. Let's put it that way. Are you are you a suspenders kind of guy? No, definitely not. Okay, that's that's Gordon

Gecko in Wall Street. And what about skinny jeans, skinny pants skinny pants in it depends upon the man who's wearing or a person who's wearing the skinny jeans, if they're squeezed into the skinny jeans. God no, please, they're coming back making what I thought that not only confused double breasted jackets. They have tried to bring it back. Mark Mark. Mark Crumpton from Bloomberg News and Blomberg Television is trying his best to bring back They the designers

keep trying to bring it back. It's not going to go. Basically, I could talk to you all day about this. This is absolutely fantastic and I don't think I'm going to have the image of men wearing Lulu Lemon leggings to work out of my head with the jacket casual Fridays. Thank you so much for being with us. James Vallen, Editorial director of Women's Wear Daily, joining us here in our Blueberg Interactive Broker's studio is wearing a suit, Paul Sweeney and Lung aside me also wearing suit and tie,

I am not wearing a suit and tie. Uh. And I've got to say business Casual Friday is definitely confusing for women. Thanks for listening to the Bloomberg pen L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Paul Sweeney. I'm on Twitter at pt Sweeney. I'm Lisa Abram Woyds. I'm on Twitter at Lisa Abram whits one. Before the podcast, you can always catch us worldwide. I'm Bloomberg Radio