From Marhart where Innovation of Money and Power Collie in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed Loved.
Love Live from New York and San Francisco. This is Bloomberg Technology coming up. Netflix and a record the King of streaming, surpasses Wall Street's expectations on every major financial metric.
Plus after iPhone sales store in a major market oversees a sign of success.
And why Tesla is in the crosshairs of a federal agency's investigation.
Ed.
Yeah, let's get right to Netflix and this is the stock right you can see on the screen, the story on track for its biggest jump since January of this year, trading at a record high overall, and subscribers beat revenue beat And we always talk about earnings in the context of beating expectations numerically on metrics. But I think we both agree, right Caro, that the story was different to what we were expecting. A slow down in streaming. No, actually,
things seem to be okay for Netflix. I think there's a lot to get into about what's happening with the consumer's attitude towards streaming platforms and how we're watching content right now.
Yeah, the co CEO and sounding upbeat ted Surrandos really talking about how the company beat those expectations, but also what you can expect in twenty twenty five.
Take a listen.
Let's start with you know, looking into twenty twenty five, we're feeling really good about the business. We had a plan to reaccelerate growth, and we've delivered on that plan. You can see that in our twenty twenty four financials. We expect to deliver fifteen percent revenue growth and six percentage points about brading margin and brooman and engagement, which we view as our best proxy for member happiness, because when people watch more, they stick around longer, so that's retention.
Felix Jellette joins us and Felix.
It really was a case of even without the stellar slate they have coming up in fourth quarter, they managed to really build on that five million subscribers for the third Yeah.
I think it was better than everyone expected. I think it's particularly impressive because you have to remember this is the year following the dual strikes in Hollywood, so there's this huge production slow down. At the time, everyone was speculating like, well, there's not enough new things to watch? Why would people keep subscribing to the streaming services, including Netflix. There's going to be a lot of churn, a lot of cancelations. And yet in spite of that, a year later,
you know, Netflix adds another five million subscribers. This quarter is up to two hundred and eighty two plus million across the globe. So yeah, it's a very strong quorder for Netflix. And like Sorrendo said, they have an even better slate. I think you could argue coming up next quarter and next year.
So he talks about this interesting metric, which is I think he called it engagement, right Felix and misterdirector, let's bring Felix is shot back up because I don't think he's had much time to watch Netflix. He's been too busy reading the piles of books either side of his shoulder. But there was a time where Netflix said, stop judging us on subscriber growth, just look at our financial metrics.
Now they say, don't judge us on financial metrics. We really want to talk about this engagement number, what does it mean and where is it going?
I think we do look at the engagement number. Part of that is where is their future growth going to come from, and a lot of that is advertising, right, they said yesterday, you know, we're not where we're at where we want to be out in terms of advertising revenue, but we're investing in technology, and we're investing in better inventory, and what that means is investing in better live programming. And they just have a ton of stuff coming down
the pipeline, wrestling through our rest Live Wrestling. The week, they're going to have NFL games, They're doing more comedy live specials. Last week at our conference in LA, they announced they're going to do this live variety show. And I think that's going to be very appealing to advertisers once they get a certain crucial number of viewers there, and I think that's where the engagement comes from. And
I think that's what they're really excited about now. But I think you can't separate that from their ambitions and advertising.
Well, maybe he's kind of excited about the next edition of Wednesday because I can spot thing lurking behind your right shoulder at the moment. It's amazing, Felix Jdette, We thank you so much.
Ed.
Let's get some more data from branding Cats. He's the senior entertainment industry strategist at Parent Analytics, And there's actually a data point that you point to which I find fascinating, and that is Netflix's share in corporate demand. Explain that metric and why you think it makes Netflix a leader.
So corporate demands share really looks at all the original programming that a company creates, and it helps value their viability in the current media market and potentially the value of that content on the opening market should they ever want to license it. For the first time ever, Netflix has leapbrogged a legacy media company by beating NBC Universal. And we have to remember NBC Universal's programming dates back to the nineteen forties with NBC, whereas Netflix has only
been an original programmer for about twelve years. So the fact that their library has grown this significantly this quickly is a major testament to the amassed content that they have built.
They have had to spend a lot on that content, and the point is now whether they have to spend a lot on live content on sports to really drum up this advertising process that actually Amazon seems to have nailed in many ways.
Yeah, and with Amazon expanding its ads here next year to five additional markets. The pressure is on on Netflix to grow this advertising tier. It's been a slow but steady first two years. But what's really concerning is that Netflix is you Can average revenue per user has dropped for two straight quarters because of that ad tier growth. So it's a little bit of a give and take.
I would not be surprised if, with the addition of WWE and NFL games, we see a increase in the price for the ad supported tier in twenty twenty five five sometime.
What about price point of the service? More broadly, many anticipating that we could get some price hikes.
In fact, they've just enacted some today.
Absolutely, we're getting international price hikes. I would not be surprised if another you Can price hike is around the corner, particularly off the back of their extremely strong anticipated Q four content slate. And as they mentioned, the production logjam is starting to normalize following the strike, so we could probably expect a little bit more volume in terms of new originals in twenty twenty five, which also bolsters their
case in raising prices yet again. Consumers, maybe I'll watch that while on a little bit.
More Okay, if you're just joining us here, on Bloomberg Technology. Netflix shares are up more than ten percent, the biggest jump since January. But they're trading at their highest level ever on record, and I think a big part of that is is there is still subscriber growth, Brandon, and that was the story we were kind of considering with this slow down. You mentioned a moment ago the live events. I want to go deeper into that. How much of a feature this will be of the platform going forward.
Yeah, live events has not worked seamlessly for any streaming platform consistently. It's always been simulcast on these legacy media distribution networks and their streaming services. So Netflix is really trying to break new ground by making live entertainment on
a streaming only service work. And it is certainly a huge point of focus for them moving forward to supercharge their ads here, and I think them focusing the first ten years of their kind of original content development around building out the back end by licensing other content and building up a massive library is the right way to go about it. I think they're well positioned to dive deeper into sports because of it.
Now, nice we got some bridges in up on the screen.
That's a household favorite for us, what do you make in management? We're kind of in deeper into this period where you have the co CEO structure.
You think they're doing a good job.
I think they're doing a fantastic job. And I think Greg Peters is one of the only Hollywood media executives with actual coding and software experience. And I think as we dive into an even more digital future trying to capture gen V's atension and jen Alpha's attention, who are digital natives, it's going to be very, very very important to understand how the tech works and what the consumer experience on that tech is actually like. And Netflix is taking a step forward with that.
Yeah, I mean they've really beefed out the ability to carry live events. I mean we all think back to The Lover's Blind disaster when they tried to carry that live and the demand just to get down. But from that just reflects a little bit on ultimately where else.
Gen Z millennial are going.
Because yes, you cite the old school that they've overtaken in terms of just shared volume of content, but people are spending their time on TikTok on YouTube.
How are they matching up in terms of addiction there.
The concern with Netflix is that it's a pure play traditional entertainment service that is focused on film and TV, and yet video games, short form media via the creator economy, and other new media are driving growth in the entertainment ecosystem as film and TV endure a painful contraction. Yes, Netflix is building out a suite of video games, but we've had no material updates on its impact as they try to build an added value in house bundle that
goes beyond just traditional film and TV. So that's why I think perhaps Netflix is slightly overvalued at the moment, even as they clearly dominate in the traditional entertainment way.
I've got we've got to jump in on that that gaming side of the equation and the lackluster I mean, are they going to continue down the gaming path?
And wants to know.
The reports are that they are developing a triple A game, which is what I think gamers most associate with those big classic console games. Now, the success or failure of that will certainly say a lot about the health and longevity of their video game efforts. Now, do they need it to succeed, not in the interim but moving forward long term? Yes, I think they need to branch out beyond just film and television to create a stickier bundle that solves for multiple consumer pain points.
Brendan Katz, Senior Entertainment Industry Strategies at parad Analytic, it's great to have you back here on Bloomberg Technology.
Thank you so much.
Now coming up, Apple sees unexpected demand in China. We speak about that and the broader tech market with Angelo kal Kafa, so Edward Jones that conversations coming up. This is Bloomberg Technology.
The renaissance of growth has begun for Apple with iPhone sixteen. I think China, Look, that was the biggest issue.
That was a headwind.
Now it's a tell when they have mojo going into the next I think six to nine months. And that's why I look, Wehi the Bears Vivey on fire and a crowd theater for the last month, but I think they go back in the hibernation mode.
In our opinion, that was.
A very colorful Dan Ives of web Bush Securities on Apple's China turnaround as the data provider. Counterpoint Research says iPhone sixteen sales saw twenty percent in the country in its first three weeks for more, let's bring a bloomberg to Mark German. Now, when we've discussed some third party data, it's usually been negative and then Apple, with actual data in the earnest context, has proven it wrong.
This is counterpoint research.
Data that is a surprise, and it's a positive surprise. What does it tell us about iPhone sixteen in that market?
Dearly think it tells us anything new, right?
I think it tells us that the first three weeks of iPhone sales, as they usually are, were pretty hot.
Right.
The issue was never the opening month of the device.
The issue was over the long term, right, three six, nine months to twelve months, or the full cycle of that device. I think some analysts have been a little irrational or irresponsible in their commentary on the iPhone sixteen over the last several months.
Some analysts have gone as far as claiming.
That this is going to create a supercycle, something we haven't seen since the iPhone first launched on China mobile with bigger screens a decade ago.
Right.
They've been saying that Apple Intelligence is something that is going to drive a supercycle, despite the fact that Apple Intelligence is not available in China, right, So you can't necessarily have it both ways. You can't say that AI is going to create a supercycle in China.
Well, AI is not available in.
China, right, I'm not entirely surprise the iPhone sixteen is doing well in the region.
There's a lot of pent up demand.
There's a lot of people in China who didn't upgrade the prior to years, the iPhone fourteen Pro and the iPhone fifteen Pro. The iPhone sixteen has some nice improvements, right. I think the camera control interface is excellent, right. I think the speed improvements in the battery life improvements are really nice touches. I've enjoyed those personally, So I think it's a good upgrade for people who haven't bought a new iPhone in the past few years.
So I'm not entirely surprised.
And typically even when the data is negative, right, I typically come on here and say is we're not going to know the truth until Apple earnings. Right, That's the case even when it's positive, And so at the end of this month, we'll get a better idea of how accurate this information is.
Mark next time we are bringing you and Dan i'ves super Cycle Man on together for some fighting talk. We love it today, but more broadly when you think that there is lot bits to love within iPhone sixteen, The bit I'm just so questioning is the AI element. You've told this story again and again on well your own X platform in particular, who are they going to partner with in China?
How are they going to really read the benefits of the artificial intelligence?
Yeah, so there's two components really to the AI push in the iPhone, right there's the in house large language models and generative AI features.
Those are using an Apple model, those are running on Apple servers.
And then there's the third party component that's integrated into Syria and other parts of the operating system.
In the US, they're using so far Chat.
GPT starting in December, and they're also planning to integrate Google Gemini and to open it up to other lms in the future. So you have an array of choices in China. Most of those providers in the US are not available, so they're going to have to partner with local.
Entities by DO being one option.
Obviously you have Tencent, Obviously you have different bespoke llms in the region.
But the other component is.
How is Apple going to get approval from the Chinese government to use their server infrastructure to power their in house generative AI models, which are in fact the bigger deal right for Apple Intelligence, notification summaries, writing tools, image
generation gen moojis to create your own emojis. Right at least for iCloud, they have to use a partner right in China with government affiliation, and so they may end up having to do something similar if they want to get Apple Intelligence working in China, right, And China's one of two major markets, the other being the European Union where the AI features are not available on the iPhone and there's no clear release date for one that will happen,
and I don't anticipate that happening for at least a year.
Nice Bloomberg's Mark gun and keep your eyes peeled for his power on newsletter this weekend, and Caro, as we're showing clearly Apple and its gains are a factor in the market this Friday.
They are.
Let's talk about that about the broader market with the Angelo kokafas his senior investment stretches over at Edward Jones and just let's dwell on Apple for a moment and what it signals. But We've got UK retail data out today that said it was buoyed by things like the Apple phone, but also Google's pixel as well. How important is consumer to Apple right now and how resilient is it?
Yeah, I think today's strength in MEGACAUP tech, including Apple, is really a reminder not to dismiss technology, and technology actually remains bright spot. The consumer clearly has been the main driver for not only some of these technology names, but for really the broader economy and the bullmarket. Fieceis and we keep getting good news on that front. Economic surprises are turning positive. Just retail sales this week express
some strength and resiliency. So the economy is nowhere near recession, especially in the US, but the same applies to a broad now. China is a complicated story to say the least, but at the same time there's some signs of bottom in that also feeds into the Apple story. We've had plenses from policy makers to support growth. Many questions remain what's going to actually be delivered, But at least from a sentiment investors set perspective, it seems like the worst is behind US Angela.
When you talk about profitable tech, historically it's like in the context of having amazing balance sheet in trench market position. But here on Bloomberg Technology we talk about innovation. That's what Mark was reporting on. Which is the more important factor to the investor?
I think it's both.
You have that long term secular thesis and there's a long runway for growth, especially on artificial intelligence, but also you have the reality of market swings and rotations that happen because of the interstrate backdrop in the more near term, and both materie based on your time horizon.
Think about the current backdrop.
We have an economy that is still growing at a very solid pace. Verberate profits are on the rise, and at the same time, interst rates are.
Moving lower, and that backdrop provides a.
Little more tail winds for areas of the market that have been really left behind over the past eighteen months. The big cap technology companies, they're in a NetCast position. They have more cast than that, so they've been benefiting from the rise in interest.
Rates, right, and other areas have been here.
But on the flip side, as interest rates move lower, you are seeing really that broadening start to play out.
Angelo. It's been great having some time with you. Thank you. Very much.
Indeed, talking all through the valuation story Angelo kocafas his senior investment strategist at Edward Jones.
Let's turned to China.
Now, investors are learning that Chinese stock ETFs are now among.
The most risky. The performance over the long haul has made.
Some of the biggest wealth destroyers among us ets Isabell Lee reported on this and time time again, you've come on to tell us about how China is faring in the macro context, and we're looking at Kweb in particular. It's got all of our Chinese tech names listed here.
It's been painful, very painful.
So this is a story about how market timing is tough, but especially tougher for other sectors, especially China. So we looked at all ETFs with an AOM of above one billion, and we basically subtracted the assets and net inflows because if net inflows is less than the assets, it means investors lost money over their lifetime. And among that list, Chinese ETFs were at the top, and Kathywood's ARC funds
a couple of them. So back to Chinese etf you mentioned k Web over its inception since twenty thirteen, investors ploued in twelve billion, but its assets right now is just six point nine billion, so that's a valuation gap of five billion. And after k Web, it is a
Kathywood's flagship ARC fund that also lost investors' money. For context, you look at SPY, which is the biggest and most liquid ETF investors plout in one hundred and sixty billion, right now is around seven hundred billion, So you see that investors were rewarded theirs. It's really hard for the Chinese ETFs is bo you.
Said, timing the market is hard, but more recently China stimulus and then on the regulatory side, take video games for example, signal that policy might support some of those names. So now you're asking, okay, well, what's the trajectory.
From here exactly? So I want to bring it back to twenty twenty one. So k Web saw fantastic INFLOWCE then seven point four billion. That's when investors were kind of optimistic that China will see a rebound from the dull drums of the pandemic. But also that year, to your point, we saw a deepening housing crisis, We saw some industries being really cracked down on, and we saw that ETF tumble fifty two percent.
Fast forward to today, we.
Saw a massive stimulus blitz in three weeks. We saw a lot of indexes tracking Chinese stocks rice forty percent, and we saw investors also plowing billions into the Chinese ETFs, including k Web. But then now taking a step back, Chinese shares are kind of faltering. We're seeing that rally kind of fizzle. So it raises a question, well we see something like that again, and China is really just it's a very vulnerable vehicle.
It's very volatile.
So it's really one thing that investors to think about when they invest in kind of ETFs.
Bloomberg Sisvali, it's one of the best read stories today on the Bloomberg terminal and dot com and that's why we wanted you on the program.
Thank you very much.
Indeed, welcome back to Bloomberg Technology. I'm Caroline Hide, New York and.
I med love Loo in San Francisco.
Check on these markets.
Ed because we've had a volatile one, let's put it, because the NASDAC has been pushed around by those chip names that we're going to dig into in a moment. We're currently still holding on the ground four tens percent for the last five training days. Tell you what, I's had a nice little five day performance Crypto. Moving on and have a look at what's happened with MicroStrategy Benchmark also the analyst there raising the price target. But MicroStrategy
one of the biggest points contributors to the NASA one hundred. Today, Netflix, I mean the standout of the day, up ten percent, record high five million subscribers being added in the previous quarter and they're going to eclipse that in the fiscal fourth quarter. And largely I look at ASML, this is a recovery, maybe a buy the dip story. On this particular day, we're up just three percent on the US listed and European list, and I'm currently looking at the
mv ones up some three percent. It has been sold off fourteen percent over the course of the week. We know why the war is on orders, the warriors on everything else bar Ai chip equipment. Basically, when we got on.
The chip sector, let me take you on a journey over just five days, there's been seismic shifts in semiconductor sentiment. It all started with chip equipment maker ASML surprising with early release of results, cutting its outlook and injecting growth concerns. But by week's end, TSMC chip contract manufacturers the world settled nerves, boosting sales, growth predictions and spending plans, signaling the AI investment cycle might be okay. In Nvidia is
flirting with some new record highs. Bloomberg's in King, who lead semiconductor coverage, is here with us. And that's the point. The AI bit of the semiconductor industry is okay. Everything else I think we're still a little bit worried about.
Absolutely, right.
The biggest concern, because that's what all the money's been poured into, is is this AI demand that we've seen, are these huge orders for Nvidia supported? Is this something that can continue? And we got evidence that yes, that's the case, at least for now. What investors turn their attention to is that other areas automotive industrial PC maybe not so good.
Let's dwell on the automotive part though, in because you had a great story with Mackenzie Hawkins talking about how wool Speed is going to be getting money from the likes of Apollo, going to be expanding its manufacturing for EV chips.
So why that, Yeah, I mean, this is the little chip company that apparently now can. There were existential concerns about this company. Literally it was running out of money. It's had a lot of problems ringing online, some new manufacturing, and you know, there are a lot of notes out there, a lot of analysts saying maybe this company needs to
be bought, needs to go away, needs something. And now it got this, you know, massive injection into its balance sheet which should allow it to emerge from this dark place that it's been in. Huge share reaction to that that we've obviously seen this week, but still the stock market does not love this company.
The funny thing is is that earning season is kind of back again. And to go to your first point on the everything else part, Texas Instruments is kind of up first. It's the everything chips name. Just explain that and why you'll be paying close attention.
Yeah, we're going to have them reporting on Tuesday, And like you said, they are everything else. Automotive industrial are their two biggest markets. They make analog and embedded processes. These markets haven't been great. You know a lot of the typical sort of everybody in everybody out cycle of PC and smartphone, that kind of trend has kind of gone away, and we've seen all of these individual markets moving in different ways. Texas Instruments has been really struggling.
How they might change the narrative is if they give us any hour kind of comments about what's coming in the future that says maybe we're through the worst, that could be a positive. But if you actually look at the numbers, we're still struggling.
Dombasi and King rest up we go again next week. Thank you very much, Caro.
Look, we've got to talk now about how politics plays its role as well, the intersection of technology and politics. A major decision facing whoever, of course, wins the White House next month, how to regulate US chip industry, in particular to stay ahead of global competition and stick into that. Michelle Grida, she's the Sea of Cratch Institute for Tech
Diplomacy at Purging University. Michelle, the context with which we talk about in Nvidia and some of the other key players is the limitations are selling into China.
That was a key.
Story for ASML for example. Going forward, is that going to perpetuate itself?
Caroline, You're right, context is really important here, and when you think about it, it's just reflective of the new paradigm that we're in in which tech has to do very much with the future of American prosperity in American national security. So just as we have to scrutinize which countries we're sending F thirty fives to, we also have to scrutinize where we're sending our most advanced chips to, which also power our F thirty fives. And these aren't
hair dryers that we're talking about. And why we have to look at this is ultimately it comes down to trust. Do we trust the companies? Do we trust the countries that we're going to be sending our Nvidia chips and our most advanced critical technology to with the understanding that it's not going to end up in the hands of some of our adversaries like Russia, like China and the People's Liberation Army.
Do you have a clear sense of any benefit being derived from current and existing policy on semiconductors for the United States.
Look, we've taken measures over the course of a couple of administrations now to make sure that we're preventing our most critical technology from going to our adversaries and specifically China. But this is why tech diplomacy is also really important. When I was Assistants Secretary of State, I was traveling all across the world, and the number one thing that you hear from our allies and partners is that they
want US private sector investment. Well, it's really hard to do that when you have Chinese technology, untrusted technology embedded into your government infrastructure and across your country.
And so you want to make sure that you're.
Using trusted technology. If you look at the US and twelve of our closest democratic partners, we make up twelve almost two thirds of global GDP, China, Russia, Iron Venezuela's less than twenty percent of GDP. So you want to be a part of the big network. There's a lot
of financial opportunity, diplomatic opportunity in that. And so we started to, through American policy, implement the right policies around semiconductors to make sure that we are helping the partners in that trusted network and not in the untrusted.
Network, Michelle.
Earlier this week, Bloomberg's editor in chief John Mickelfwaite spoke to former President Trump and very directly tried to get a sense of what his policy will be with regards to China.
Let's listen to his comments.
Well, the reason they're doing it now is they're not going to do it afterwards.
Okay, you know, so they're doing it now.
They want to do a chain.
Now.
Look, I had a very.
I had a good relationship with President She. It's had a very good relationship with Putin, and a very good relationship with Kim Jong on, who has a nuclear force that you won't even believe.
President Trump discussed his good relationship with She, but I think many agree that we didn't get an understanding of whether he would continue with the existing stance of sort of export control on leading edge chip. What is your expectation if President Trump were to take office in November or in January of next year.
Well, remember export controls on critical technology from China began under President Trump, and specifically with Huawei. This was with regards to five G. Huawei ultimately lost thirty billion dollars in annual revenue because the United States under President Trump worked with sixty countries and two hundred telecommunications companies to only use trusted vendors in five G and that did not include Huawei. We've seen those export controls continue now
under the Biden administration. It's been on chips lately, but I think you can start to see this is American foreign policy now. Not only that the Congress is very bipartisan. Just a couple of days ago that China Select Committee called for putting more Chinese companies on the entity list. Is his Huawei's network of clandestine companies which American companies are sending semiconductor manufacturing equipment. So this is a very bipartisan thing and we should expect it to continue.
And yet Michelle companies still want to access the Chinese consumer. Apple still wants to build its phones there, still wants to access the consumer there. And Vidia still wants to sell it's less sophisticated chips over to China too.
What is a CEO to do?
What is Jensen Wang or Tim Cook to do in that situation?
Well, it's really interesting.
Actually it was a Bloomberg reporter just a couple of weeks ago had asked Jensen Huang his take on the China export controls, and he said he had to defer policy making to the United States. Unfortunately, in the world that we live in, when it comes to American national security. That's not anything that any CEO of a critical tech
company can differ. We all have to be in this together and in what's ultimately a technology race, American CEOs and tech CEOs in particular need to make sure that we are advancing our tech competitiveness at the same time we're not giving that technology to our adversaries who are dedicated to our demid So there's a very big leadership role for CEOs.
Michelle Guida, fantastic to have some time with you.
Thank you, CEO of the Crash Institute for Tech to Premacy at the Purdue University. Coming up, why Tesla driving a car program is the target for federal investigators. This is pretty bad technology. That's optimisticals.
Okay.
Last week's Tesla Robotaxi event was so underwhelming that Wall Streets questioning the stock's premium valuation. The so called robotaxi has been crucial to keeping Tesla's stock at lofty heights. It's trading at around seventy five times forward earnings on hopes that AI will recreate the auto industry through Musque's vision.
Here's a look at the stock since the event. The next catalyst to watch is of course third quarter results, for which I will be glued to my desk along with everyone else around the world.
Caroline, will you be, of.
Course what brutal chart.
Meanwhile, we've got to be glued to something else. In the National Highway Traffic Safety Administration, it's investigating Tesla's partial AutoMotion system. They market it as full self driving and following concerns it is defective after a series of crashes, one which resulted in a fatality. The most Crowdrudell relentless on this craig is with the weather.
Right, Yeah, this is at least sort of the grounds for the investigation that NITZA is sort of narrowly looking at the issue of, you know, when teslas are being operated on FSD and in in an environment where visibility
isn't great, so think of like foggy conditions. But I would point out that it's it's not necessarily the case that these investigations would sort of stay in that narrow scope where we've seen a precedent just with autopilot, this sort of standard driver assistant system that you get when you buy a Tesla that we saw NITSA open an investigation after multiple crashes involving police cars or fire trucks, and that investigation led to a much broader recall where
Tesla sort of, you know, came around to this idea that you know what nitsa You're right, we will sort of, you know, find that there's a defect with our that people aren't paying enough attention while they use it, and we'll do a remedy to try and address that.
Craig, as you know, because you're one of the editors on my reporting about Tesla, I'm an FSD user and actually I've posted on x quite a lot about using it in foggy conditions and some of the bizarre happenings when using the technology. One question that I have and many have, is about this probe and how it's different from prior probes and why actually this time around it may have teeth, so to speak, whereas you know, in the past, we haven't seen much happen after the probe.
Yeah, I think it's interesting. These defect investigations tend to take quite a bit of time. I mentioned that Autopilot wanted took you know, I think several years really for anything to really to come of that. And you know, so that is one thing to note that NITSA tends to move at a speed that is no sort of befiting of our you know, modern sort of daily drumbeat
of headlines age. I do think that what's interesting here is that, you know, just with that that autopilot investigation that precipitated or recall, Tesla was able to address that with and over the air software update, or at least they tried to do so. NITSA has gone back and said, you know what, we're not sure that that went far enough.
So I think when you ask about, you know, whether or not this could have teeth, I think the real question here if you're a Tesla investor, is you know, will Nitsa get to the point where they say, you know what, Tesla, we think that you don't have a sufficient hardware too for people to be able to use these systems safely. And do you need to do more for you know, monitoring drivers better and install equipment to
do that. Do you need to put in sensors to handle these these poor visibility conditions that would cost Tesla some real money.
And does that question the pace, which is slower than rivals of a cyber cab or fully independently driving car that we already see on the streets in Weimar.
Yeah, I think it's it's key here that you know, NITSA. I think NITSA is going to have to you know, have some say in Tesla. Following through on what Musk said last week about being able to offer a version of FSD that doesn't have to be supervised, at least in certain states, you know, Musk mentioned that in Texas
and California. You know, It's it just strikes me as hard to sort of take him at his word that that timeline can possibly be achieved when we're seeing evidence, you know, year after year of crashes involving people using these systems and the end you know, them not necessarily you know, being safe enough to regulators liking.
Musk ambitious on timelines. Craig tell we thank you.
Welcome back to Bloomberg Technology. Let's take a look at where Netflix is at right now. Earnings just beating investor expectations, the stocks up ten and a half percent, biggest jump since January of this year, and the stock is trading at all time highs. Let's go in house. Let's bring in Gita Ranganathan Bloomberg intelligence and Gita your research you published this morning, will get right to it. You look at the subscriber gains, that was a surprise, but you're
also judging Netflix on its margins. And it's really interesting to me because Netflix for ages was like, stop obsessing over subscribers, judge us on our financial metrics.
Well you are why.
Yeah, absolutely, ed.
So you know, it was really a broad based, very very good report, as you just pointed out. And yes, this has shifted now from being just principally a subscriber story to now more of an all rounded kind of
financial story as well. So good top line revenue growth, but more importantly that top line revenue growth kind of translating into very very solid bottom line growth, very solid you know, profitability, and we saw that yesterday and Netflix almost flirting with thirty percent operating margin.
In the third quarter. And then look at their guidances.
You know, when we came into twenty twenty four, they were you know, expecting or they were guiding margins at about twenty two percent. Yesterday they lifted it again from you know, twenty four, twenty five, twenty six and now twenty seven percent operating margins. And again the target that they set for twenty twenty five looks really really conservative to us. But this is basically this goes back to the age old question of us always asking, you know,
do streaming economics really do they make sense? Can this model be as good as the original traditional TV model? And Netflix has proven to us that it can be done.
What's interesting, though, is the previous chart we just showed is strong subscribers still a slow in growth trajectory, and I'm interested by perhaps Latin America seeing no growth and subscribers.
Why is that happening? Where is it happening.
Yes, so you know, it is a little bit of up and down. So they did talk about Latin America being a little bit of a timing issue. They're actually now continuing to see good growth starting, you know, in the calendar fourth quarter. But you know, there are mature markets and there are markets where there is going to be a lot of growth. So if you kind of just look at it as US versus rest of the world, eighty percent of subscriber growth comes from rest of the world.
So the US obviously is the most mature market, but there still are pockets across the world. Caroline, whether you're looking at Asia Pacific or India. India for instance, last quarter for them was one of their most highest growing markets in terms of a number of new subscribers as well as in.
Terms of revenue growth.
So they do have pockets all across the world, whether it's an Eastern Europe, whether it's an Asia Pacific where they are going to try and reintegrate subscriber growth, and those are going to be their biggest areas of opportunity going forward.
Giza, Bloomberg Intelligence House cool. Is Netflix still the number one streamer and will it always be the number one streamer?
I think so, ed.
I mean, they definitely have won the streaming wars right now as we as we kind of look at it way ahead of everybody else, way ahead of the competition, not just in terms of subscriber numbers, even if you look at them in terms of engagement.
Remember they are just a smidge behind.
YouTube, and YouTube has over two billion viewers across the world. It's a free service, right and you're looking at Netflix where you know you're it's a paying subscription service, a little bit of a different model, but they still have almost close to ten percent of viewing time in the US which is just a smidge again behind YouTube, so I think, you know, definitely the number one service globally and they will consolidate that lead over all of their rivals.
Great research, great recap, Ethan anging Atham, and we thank you from Bloomberg Intelligence and as IT for this edition and Blomberg Technology what we.
Yeah, it was an astonishing week and now earning season is back upon us so much to recap. You know where to find the podcast. It is online on Apple, Spotify, iHeart, and we publish it.
To all the Bloomberg platforms.
Thank you to the team in New York City, Thank you to the team in San Francisco. Happy weekends all of you around the world. This is Bloomberg Technology.