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Let's bring in Ross Gerber. He has thoughts on both of these companies. He's president and CEO of Gerber Kawasaki Wealth and Investment Management. They've got about four billion in assets under management, and he's with us from my bet lovely Santa Monica, California. How warm is it by you?
Seventy five?
And Sonny, I'm right next to the beach too, so I don't want to rub it.
That's enough, We're moving on.
We're done with you.
No, we're so glad to have you here.
Ask me.
I know, I know, I know, I'm a sucker for paying here. Hey, what story is more interesting to you? Ross? Is it Tesla and the possible combination of SpaceX x AI or is it Disney?
Well, the Disney story is a little bit sad for me because I'm just like, I've owned this compedy for my whole life.
And and Iger has done.
A great job sort of refixing the business and getting good movies back in the theaters and such, but they just can't seem to get the momentum going. And the valuation for Disney just makes no sense. It's so cheap relative to what they're willing to play for Warner Brothers assets, which are garbage compared to Disney. But they just seem like, maybe this company needs to be broken up. Wow, that's part of it, that's part of it.
What does that look like? What does that breakup look like?
Ross?
Well, see, Josh and Dana are both great executives, so like they have like the fact they have to pick one is the problem because Dana runs entertainment and Josh runs the theme parks and all this kind of stuff, and they're just completely different businesses with different skill sets. And maybe they should be co CEOs, even though I hate that formula for businesses. Disney's just the parts are
worth more than the whole. And we've waited five plus years since the pandemic for them to do something good and they haven't. So it's time for change at Disney, and I think it's breaking up the business and spinning off ESPN.
Would that be the only thing spun off? It would just ESPN would be.
No, it should be three companies the way I see.
It, what should they be?
Well, you have theme parks, resorts and experience. Oh that the cruise ships is one, and then you have you know, your streaming business as the other, and then you have ESPN Sports as the third right, so you have entertainment that's non sports, and then you have a pure sports play. Would that they just sold ten percent to the NFL?
Would that work with all the cross pollination that happens these days, Like you know, you go on a Disney cruise and the Disney IP is everywhere you go see a Disney film, and if it's a popular film, that ends up becoming something that is an attraction at one of the parking resorts. It's supposed to be this virtual cycle that for years worked out really well. Could they still do that as separate companies?
Yes, and I think it still works now that way, you know, but like explain how the sports business really matters when it comes to going, you know, on a cruise. It's nice to have ESPN on the TV there, but there's no relationship really. So I get when you're making a movie you wanted to go through the streamers, but I'm saying keep that all together. And then they licensed all their IP to the theme parks and resorts anyway, so it would just be an exclusive licensing agreement.
I think it's actually quite simple.
I think the real issue is extracting value from the very valuable assets and IP that Disney has while everybody's fighting over crappy IP and assets, like Disney has the best assets in Hollywood.
So you know, I don't know.
I just don't think they have a future of the market, saying like, wait, we don't see this future that you're making for us. Iigers ready to leave, you know. So I actually think this story is pretty interesting because you know, the entertainment business is never going to be the same after this murder goes through, and I don't know what it looks like on the other side.
One more company, Well, I expect to you in one question. No, forgive me, I broke in on you. But I do wonder you know Roscoe back a few years and I remember doing this deep dive on Disney and talking with Bob and all the executives and just this whole idea, like Tim said, this cross pollination and people.
Well before Bob left for the first time, yeah, this.
Is right exactly. And you know, people talked about the value of ESPN, like it that's the value of the company. But it sounds like there is value in a lot of parts today and hence why you would argue for breaking it up into three. Is that is that true?
Yeah?
I mean I love the parks and resorts and cruise business. I mean that business is killing it for them. It's tons of cash flow. Like people love the cruises. They just launched a few ships. They've got a great business there. I love the streaming business they finally, I mean, once they get this all under one roof, under Disney plus Hulu, Disney Plus is a is a great streamer and a
real competitor out there to the other streamers. And then you got ESPN, which is now like dominating sports again and really has a piece of every major you know league out there from a broadcasting perspective. But ESPN financials don't make any sense next to the cruise ship financials because ESPN loses money having these big events you know that we all want on ESPN, and they make money when there aren't big events. Actually it's kind of a
weird business. So they just don't compliment each other. And you saw it in the earning support, which was generally a very good report for Disney, and the stock gets hammered because when you look at all the moving parts.
It's never consistent.
And so I just think if they were able to prove that these assets I think are worth closer to one hundred and fifty dollars a share, and that's what it was trading at, then I'd say I wouldn't be saying this one hundred dollars a share. You got to break up this company and find value for shareholders after five years of waiting.
Okay, Disney down seven point four percent at one O four forty three right now, from in your view, the move to break up a company into separate parts, to combine a company in two different companies intech to one company. Let's talk a little bit about Elon Musk being in advanced talks to combine SpaceX with Xai. This according to people familiar with the matter. You had a really interesting
comment out on social media earlier today. You wrote, Yeah, x was out of money, merged with Xai, Xai out of money, merged with SpaceX, SpaceX out of money, merged with Tesla when they are all out of money? Dot dot dot. You obviously are not a fan of this idea.
No, you know, it's not that it's just first of all, you're saying there Elon Musten talks with himself, like who's he in talks with? I don't think Elon must talks to anybody. He's gonna do this. So he's gonna merge all three companies because he has to, and he needs to because Tesla has forty four billion on the books and they need the money. And every one of his projects is well out into the future. So I'm not going to tell you whether I think all these ideas are going to work or not work.
I don't bet against Elon.
I think that's up for the future to determine, you know, But all these businesses are incredibly capital intensive with very very questionable profit margins or even viability, Like data centers in space is not a viable business. Let's be real, It's very expensive to build a data center on Earth. Now imagine putting it up in space. Like this is just we're getting into this level of absurdity. So that's why I put it out there, like what happens next?
So I've got like eighteen projects that are incredibly capital intensive. Will people just keep giving Elon Musk money forever? But a lot of it's the same people who he's made money for just giving him back the money they've made for the next project. And so that's why I put the dot dot dot. It's like, well, what happens when this all comes together, because that's what's going to happen. It's all going to come together as one, and then
what happens to that business looking forward? They'll have to raise money. And so that's what this looks like in my mind as we go out over the next twelve months.
As an investor. You have invested in shares of Tesla, you buy and sell. You've done that, We've talked about that a million times. You've owned you own Tesla Cars. What is it for you that you need to own X too? I own Xay, that's right, Okay, So I'm just curious. So you obviously like what, you know a lot of what Elon's doing. You know, what is it that has to happen that makes you say I'm done?
No, I please don't say that I like what Elon's doing.
I actually abhor him.
Okay, He's doing horrendous things that I don't agree with at all, and I want to make that very very clear. On a personal level, I think his behavior is disgusting okay, And I think his viewpoints are disgusting and he's destroyed the brand. But he is one of the greatest engineers of our time, and he's a great inventor and he gets He's built a lot of amazing things. So I
don't discount that, and I'm invested in that. But that said, you know, at some point this all has to come together and actually work, and that's you know, you know, the big question. So I don't bet against Elon, and I am sort of betting for him, or I I I Actually what I say is I bet with crazy people sometimes and that's worked for me over my life. And you know, so I have a certain path with him, and I think he's crazy and maybe he pulls this stuff off, you know.
Yeah, So you're willing to make the bet on Elon still just got a bet, figu.
Well look at the other side of the coins. You have Tim Cook at Apple. You won't do anything. This guy is so risk adverse, he's scared to get in the water, you know what I mean. And so like Apple's just sitting on the cusp of the AI revolution, like with binoculars, going.
Who do I pay next? Because I haven't done.
Anything, So you know you have Elon on one end of the risk spectrum and you have Tim Ross.
We gotta go. Always love talking with you, Ross Gerber