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All right, we've been talking a lot about Tesla this morning. There delivery numbers came in weaker than expected. We had Dan Ives and Webbush Securities on earlier and he was just saying, hey, relative to maybe the whisper number, they came in a little bit better than expected. Here, let's get the broad overview of what's happening at our good friends at Tesla stops up about two point eight percent today, but it's down about twenty four percent you to date.
Return to Pierre Farragu, head of Global Technology Infrastructure at New Street Research.
Pierre, thanks so much for.
Joining us here. How do you think about these Tesla numbers? What does it mean for the near and intermediate term story at Tesla?
Yes, as you said, there is a bit of a positive surprise, like people tracking very precisely deliveries in various markets while expecting slightly lower numbers. The surprise comes from the US. The US did is a place where it's the most difficult to track the number of Tesla being delivered and the US bit expectations. So that's a model while coming in doing actually quite well. That's good, But then at the end of the day you have to remember the big picture. We are down thirteen persons here
on air. So we are facing a situation where Tesla is struggling to sell cars. A gross margin is in the latins. To me, Tesla facing good demons should be able to defend like mid mid twenties ghost margin. So we have like we are facing like a core business, not to business that is really at a very low point that is struggling. And so that's the difficulty. You have, like one structural difficulty that is relatively that we understand relatively well. It's that with their current product, Tesla has
kind of saturated its opportunity. Tesla needs lower highs points to keep growing and that's in the plan they're working on it. And then you have a number of other issues. You know, electric cars are less fashionable than they were a couple of years ago. The Tesla brand has suffered, particularly in Europe where numbers are down like almost forty percent on air and so it is definitely it's difficult to quantify, but it is a significant headwind as well.
And Overhall, you know, the economy is not the best you can imagine for Auto DIMA.
Yeah, I mean when we look at the mag seven stocks, we see Tesla as the primary laggard this year, down about twenty three percent. And of course we know that investors have really been vying for Mask's attention as has been really politically involved. So as we're seeing these numbers come through, what do things like moving forward? Are these numbers a massive impact or are the Tesla loyalists still out there? And is there some further positivity to come?
Yes, you the Testla stock has been on a roller coaster. It's like a very low performer this year, but it was like a clear outperformer last last year. And as you said, you know, it's following, it's following. You know, the political care if I may say, of the CEO in a musk and like this has created this situation.
Now if you look at the stock, you know, since you know, like April first, what you see that what tends to really move the stock is actually the new flow around how the company is now focused on deploying fleets of robot taxes. They've just started that in a couple of weeks ago, like late late last months, and I think that's going to be the primary driver of the stock going forward. Of course, there is a lot of uncertainty on you know, how fast TESTA is going
to be able to deploy ROBOTEXI. I'll even make your proffits like generate the profits out of the robotex Frietz. But the size of the price is so gigantic and so much more than yotel business that right, this is probably what drives us start going forward.
Pierre, thank you so much for joining us. Always appreciate getting your thoughts there. Pierre fargu He's set of Global Technology Infrastructure at New Street Research.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
All right, let's get back to Tesla. It's being we've been talking about today. They reported some delivery numbers give it a little bit light of forecast. Stocks up a little bit today and Dan ives and what Bush Security suggested that might be because the wish for numbers out there were a little bit lower, so the company exceeded them. So we're there. But there's surely been some negative sentiment
around Tesla stock. It's down twenty five percent year to date, some concerns about Elon Musk and his commitment to the company. But there's still a lot to like out there about Tesla if you look at the numbers. And that's what our next guest does, Matt Winkler. He's editor in chief emeritus of Bloomberg News. He founded Bloomberg News. To me, that's the point here, and he joins us here on our Bloomberg and Active Broker studio. Matt, thanks so much
for joining us. You've got to call him out today with your colleague Hinte saying, Hey, if you look at the numbers here at Tesla, it's an extraordinary story.
Still.
Yeah, and I, by the way, thank you for having me. And I would invoke our founder Mike Bloomberger himself, who when he was Mayor of New York would say often in God, we trust everyone else bring data, and so the data compiled by Bloomberg shows that this ed startup would call Tesla, founded by engineers Martin Eberhart and Mark Tarpening in two thousand and three, is still the world's low largest automaker, ninth largest public company, and worth more
than the gross domestic product of Saudi Arabia. And for all its might as a global sales leader, Toyota Motor Corp. Is about a quarter of Tesla's more than one trillion dollar valuation as of today, after the very numbers that you reported, and by the way, the stock is up the most since June. Okay, so initially the media take was negative, negative, negative, and people with the most at stake, which is where the data is, say not so fast.
And there's a reason for that. You know what we did my college pay and I is we asked that very question. Okay, with all this negative news that is prevailing, that is the prevailing narrative. Why is that, through thick and thin every single month this year, Tesla is still worth more than Toyota, and Bloomberg's own alternative artificial intelligence function DSX tells there are plenty of reasons. One is
that if you just took out the vehicle itself. There's still a trillion dollar market capitalization on the autonomous striving that is coming soon to everyone through Tesla. So there are all kinds of reasons why Tesla has the value that it has. But I would like to share with you something that I got from a Bloomberg user this morning at an email. He said, we don't need AI
to understand why Tesla critics are losing. Critics are either motivated by hate we've seen that politics, or a misunderstanding of time. Tesla represents the most extraordinary array of products, some of which are destined to become core components of the future economy and life of humanity. That's from our Bloomberg user, John Billings, who's in Washington, DC. So this is a big part of the story that everybody misses. And if you just look at quarterly sales reports, that's
not going to give you the picture. But I would say even in that context, the Model Why was the best selling vehicle in the world in twenty twenty three, twenty twenty four, and poised to be certainly the best ev selling vehicle in twenty twenty five and maybe again repeat and the reason why the deliveries were slow in the first in the second quarter was because they were retooling, renovating,
updating the model. Why sales are way up in Norway and Spain by the way, so so much for the demand problem.
How are you thinking about it in relation to peers? I mean, I know a lot of people have really been clamoring for Musk to turn his attention back to Tesla. And I mean when you think about some of these numbers that were parsing, as you mentioned, and your story that everything about Tesla these days has really been ranging
from bad to worse. So when you think about the future of the company in comparison to peers, you know, what are just some of the things that you expect in terms of performance moving forward?
Well, let's just look at the past ten years. By the way, twenty fifteen, most of the analysts that provide forecasts were negative about Tesla. Barrish, don't buy the stock. But what happened. Tesla's ninety seven point seven billion dollars of revenue last year is more than thirty times it's sales a decade ago. Now that outperforms even China's byd Okay, which has been the star of late in the media narrative.
But if you look at something like Tesla's earnings before interest, taxes, depreciation, hamorgtization, it's more than three hundred times the company's profit a
decade ago. Number two byd grew only fifteen times. You know, if you look at Tesla's current market capitalization, it's thirty one times it's value a decade ago, which is just another way of saying that among the top ten automakers that Tesla competes with, Tesla's revenue growth, it's profit, and its market value are superior, according to data compiled by Bloomberg.
Always brand value. Last question, One could argue the evaluation has always had a big, big Elon Musk premium based into it. His brand arguably has been diminished over the last six months with his political actions in doge A. Is that a concern or should it be a concern for investors? And you think is there a long term brand issue?
Do you think so?
I'm not qualified to answer that question, However, somebody who probably is is Nicholas Coelis, who's the co founder of Data Trek, and he's been covering the auto industry since the nineteen eighties, which is kind of when I sort of entered the picture and he says, there's something that is no Algo spreadsheet can understand, which is why hero led companies are often so valuable. Yep, yep.
Interesting. All right, Matt, great column as always. Matt Winkler, Editor in chief, Emeritis, founder of Bloomberg News. I think he drives around one of these Tesla things. I kind of went there last time. I got my young youngest a hybrid Honda, so I'm kind of getting there. But give me the hey close, give me the gass.
Mapple. Thank you so much.
We appreciate that.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business app, Listen on demand wherever you get your podcasts, or watch us live on YouTube.
I'd say one of the more competitive industries I see out there day in and day out. As a wireless business. You got the Big three, eighteen T Verizon, Team Mobile, and I mean it's all on price. I mean it's all kind of the same. I don't know that. Being said, I've been with Verizon since the beginning of wireless, so maybe likewise get no churing going there. John Butler, he covers all this stuff for Bloomberg Intelligence. John Butler, senior
telecom anaists for Bloomberg Intelligence. He's based down there in print in New Jersey. John, what's the state of the wireless industry today? Again, you've got those big three? How competitive?
Is it? Hyper competitive? Paul?
It really is interesting. Just as you said, there's a lot the Big three at and T verizing T Mobile.
They're always slugging it out with themselves. But now that you've got the cable operators coming in offering wireless at very enticing price points, and their brand strength is getting better, and so they're becoming more and more of an issue quarter and in quarter about well, we as analysts sort of measure as the health of a telecom and any given quarter as we look at the number of net news smartphone subscribers that carrier ads or phone net ads
as they're called. And what we've seen every quarter is the cable operators now are getting even up to half the net ads in a given quarter, So they're becoming a big factor. Having said all that, I'm impressed with how the carriers are keeping their service revenue growth pretty steady. You know, telecom is not a growth business. So if you're getting three to five percent growth in your service revenue,
it's a pretty good quarter. And I think we're in for more of that this quarter with the exception of Horizon. Then we can talk more about that if.
You want, John.
When I think about wireless carriers and I think about some of these phone providers, it feels as though everyone has their brand that they stick to. And as we were mentioning earlier, does it really feel like there's necessarily anything to entice people to hop around? But given all of this in regards to marketing or really just being able to drive demand, where are you seeing? Which company are you seeing as the biggest leader here?
Team Mobile is the runaway hit Nora. It's amazing. They really.
Team Mobile Tuesdays, they have giveaways once a week. They're brilliant marketers, just brilliant, And it's funny if you rewind the clock fifteen years they had a near death experience, Like I didn't think that carrier was going.
To make it. They brought in a very.
Dynamic CEO named John Ledger, who really turned around the brand. He made himself the face of the brand. They branded it as this sort of hip, counter culture, consumer friendly brand. People just love it. And in the meantime, they've done a great job updating the network and upgrading it so and after buying Sprint, of course, they now have the scale to really compete with AT and T and Verizon. They've gone from a distant third in the industry to
now the second largest wireless carrier. And they just they lead the industry and net ads quarter in in quarter out, which is a testament to the power of their marketing.
All Right, I'm a Verizon wireless customer, been one since the beginning of this whole wireless thing. Me too, by the way, exactly, So what's the story for those guys in terms of how they're dealing with the competition.
I think it's easy to sort of play armchair CEO here, but I think Verizon is making a bit of a mistake by not meeting rivals in promotions. They really take the high ground. They want to protect a premium brand image. For years and years they had the best network out there. I still think they have the edge there, but that gap is closing, particularly in the minds of a lot
of consumers that don't follow the industry. T Mobile keeps banging away that they have the best network in the US, and so that sort of premium brand image that Verizon had is beginning to erode.
And yet they're not meeting T Mobile or the cable.
Guys sort of you know, tip for tad on promotions and so on the margin. In recent quarters at least they've lost phone subscribers. Not a lot, but it's beginning to really chip away for them, and it's chipping away at their service revenue growth again because I just don't think they're promoting enough.
John.
So you've got the big three, what is the leadest with M and A in the space? Is there anything left to consolidate?
Not much, Nora.
You know there's been where the telcos are really looking for growth is on the broadband side, and you've seen a lot of consolidation there with the Verizon most recently buying Frontier, which is a big fiber provider. They really have strength in several states across the US. AT and T has done a really good job. They're buying Luman's fiber business. So you've got consolidation there on the wireless side.
You've seen t mobiles snapping up a lot of the independent and private prepaid brands like Mint Mobile is one of their most recent They're buying TDS, which is a small regional wireless carrier. So there really is nothing left here or except for big transformational acquisitions, and they really would be gigantic on that scale.
So I'm just not seeing it.
So John, just real quickly here, is this an r POO story? Is this just raising prices to consumers? Is that the growth story here for most of these big.
Guys, it's raising it's raising prices, Paul, Definitely, that's how you're getting that three to five percent service revenue growth. But I think another part of the story and one to watch is that Telco expansion into broadband. They're doing a great job there expanding into fiber and both that and fixed wireless access which is getting broadband over the air.
So I think we're going to see a lot of growth and increasing amount of growth to be precise, in coming quarters coming from that end of the business.
All right, John, thanks so much for joining us. Always appreciate getting update from you. John Butler. He's a senior telecom analyst for Bloomberg Intelligence. He's based down there in our Princeton office looking at this the telecom stocks here,
they've actually got some decent returns this year. I was looking at the AT and T, Verizon, T Mobile, AT and T year to dates up twenty five percent, Verizon's up nine percent, and T Mobiles up eight percent, and on a trailing twelve month basis EIGHTE and T's up fifty percent, Verizon six percent, and T Mobile thirty three percent.
So for stocks that kind of grow top line, as John was saying, kind of three eight to five percent, some pretty decent returns as they try to expand their business lines away from their core wireline and wireless and get increasingly into broadbands. So we'll keep an eye on some of those telecom names.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarcklay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Jeffrey Palmer joins as Senior vice president, head of Multi Asset Solutions. I'm not sure what that is, but I'm going to say it has to do with some alternative investment, maybe some real investments like real estate. Jeff, thanks so much for joining us here. Coeny Steers, I've known this asset manager on the street forever, but I've never done business with them because you don't really own media stocks, which was my game. You guys own real estate reads
stuff like that. Talk to us about your how you guys look at the marketplace where you see opportunity.
Yeah, so thanks for having me this morning. So we focus, as you mentioned, on real assets and alternative income strategies, and those real assets strategies in particular real estate, infrastructure, commodities, natural resource equities, in short, things that are exposed to the real economy that have real ties to the economy, inflation sensitive assets. So that's certainly been a really important
part of the world these days. And then that all kind of fits in also to that alternatives universe that we think offers diversification to your traditional stock and bond portfolio.
So I cover Reads for our equities teams. Super happy to have you here.
As I'm looking at.
Read's performance this year, I mean, we're seeing shares that didn't really do much. I'm looking at engageentsuff about four tenths of a percent so far this year. What are you seeing in terms of performance and opportunities within the read space, any particular sub sectors that you're keeping an eye on.
Yeah, so, I mean we should also kind of think about the year has already been full of a whole bunch of rotation. It was a pretty good first quarter for reads. They've cooled off a little bit in the second quarter, and that sort of is the mirror image from the broader SMP. Broadly speaking, we think that reads are pretty fairly valued, actually, you know, attractive relative to
broader equity markets. Within the reed space, you know, there's certain areas that we like, and then within the within the private real estate space, I would also add, you know, there's areas like open air shopping centers that have become you know, to us, we think our finding a bottom and in that private space is a little bit different than the listed space as well.
In private space, Let's just like I always made the mistake of commercial real estate just oh it's office so much more. I've now learned that through people kind of pointing it out to me. Where do in commercial real estate broadly defined, where do you guys see value in the private side.
Yeah, so Nora will tell you that office is only about three or four percent of the total listed index. Now that's down and our team has been underweight office for a long time, and so we've really benefited from that trade. So within that space I mentioned in the private space, that open air retail, it looks a little bit better. In listed markets, we favored things like multi family homes. Within healthcare maybe a little bit nicheer, but
you know, senior living areas. Certainly, Data centers have been a very important part. That's true not only in real estate, but also things tied to that in the infrastructure space as well.
So you mentioned open air shopping centers. Do you mind just explaining to our listeners what exactly that is, because I know a lot of people were talking for a long time about the death of the mall, so.
Meat to that, and this is not quite the mall, the renaissance of the mall, if you like. So think about in some cases outlet centers or in some cases open air outside where you have necessity based shopping center, so it might have a grocery anchor or a big box anchor, things that have durability to the Internet shopping cycle, but then it's sort of built around an anchor store. Those are areas where it looks like prices have bottomed.
There has not been new supply in the area for the reasons that you mentioned, because malls have been a really tough spot. So yields are pretty good, earnings growth looks pretty good in that area, and that's why we find some interest in that space.
Where is the capital markets as it relates to real estate thesas? So, if I want to go out and develop a multi family unit or some kind of piece of commercial real estate, am I going to get where? Am I going to get the money to do that? My local bank going to lend me that money for a real estate deal.
So obviously the last few years have been really challenging or real estate in general. Debt markets have really been tough. Actually, I think the good news here is that at the margin, the debt markets are starting to open up a little bit. It just means, you know, losses are making their way through. People are kind of realizing some of that, so we are seeing some pick up and lending. There's going to
be pockets where that's possible and where there's challenges. So you should think about this less as a national trend and much more as a local and even in some cases a hyper local sort of a trade to be able to do it. But the debt, you know, the debt financing is coming back, but it's been coming back.
Slowly, super quickly. I know you mentioned your underweight office and have been for a while. Any other areas that you guys are actively avoiding.
Well, in certain areas, it's you know, we've certainly seen an increase in supply sort of working its way through and that's been you know, in some cases, you know, apartments and some of those areas because you know that's where the rent growth has been strongest. It's where there's been most resils in the cycle. But as that supply comes through, it still takes some time to absorb. So that would probably be an area where we've been a little late.
Jeffrey, thank you so much for joining us. Jeffrey Palmas, senior vice president, head of multi asset Solutions at Coming In Steers and a proud graduate of Rutgers University. I'm a huge fan of Rutgers, the State University of New Jersey. I ton of kids out of Rutgers over the year and he traines here in a Bloomberg in Director Brokers Studio.
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