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Pet Care Demand Post-Pandemic · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
0:04
Speaker 1: my co host Matt Miller. Every business day, we bring
0:06
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
0:11
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
0:15
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. All right, Matt, you'll
0:21
Speaker 1: get this. People love dogs, especially the millennial generation. We're
0:25
Speaker 1: Owning a pet is more common than having a kid
0:28
Speaker 1: in any US cities. In fact, San Francisco is home
0:30
Speaker 1: to nearly one hundred and fifty thousand dogs, but just
0:33
Speaker 1: one hundred and fifteen thousand children. That's according to the
0:35
Speaker 1: American Community Survey. So, uh, you know, I'm not a
0:38
Speaker 1: pet person, but I know most people are, and it's
0:41
Speaker 1: a big business. Uh So we're happy to welcome Aaron Easterly.
0:45
Speaker 1: He's a CEO. But you don't have a dog, never
0:48
Speaker 1: had a dog, never had a pet. Your poor children,
0:50
Speaker 1: I know, I know that's trust movie and they've never
0:53
Speaker 1: been we've never taken him to Disney. So just failure
0:55
Speaker 1: on so many fronts, exactly, Aaron, thanks so much for
0:59
Speaker 1: joining us forgive me for not being a pet enthusiast,
1:02
Speaker 1: but talk to us about Rover, what your company is,
1:05
Speaker 1: what you do, and because I know you're going public soon,
1:08
Speaker 1: I believe Yeah, that's right. So Rover was founded on
1:13
Speaker 1: the premise that all people should deserve the unconditional love
1:17
Speaker 1: of a pet in their lives, whether it be dog
1:19
Speaker 1: or cat. And we want to make it really easy
1:21
Speaker 1: for people to go about their busy, modern hectic lives
1:24
Speaker 1: and half pets in their lives. So we started a
1:27
Speaker 1: peer to peer marketplace where people can find pet sitters
1:30
Speaker 1: and dog walkers, I mean, anything else they're looking for
1:34
Speaker 1: for the pet care. So how did how did your
1:37
Speaker 1: business get impacted by the pandemic? UM Well tailed two
1:46
Speaker 1: parts of the pandemic. The first part was was brutal.
1:50
Speaker 1: People stayed indoors, that they didn't go into work, and
1:53
Speaker 1: they traveled a lot less. And we're largely a travel
1:57
Speaker 1: related business of what to do with your pets when
1:59
Speaker 1: you leave town? Sometimes let's to do with your pets
2:01
Speaker 1: when you go into work. So our business was hit
2:03
Speaker 1: pretty hard. But during that same period of time, um
2:07
Speaker 1: the adoption rates of pets of the annual growth rate
2:11
Speaker 1: in that roughly quadruple um. So everyone during the pandemic
2:15
Speaker 1: went out and got a dog or a cat, and
2:18
Speaker 1: so it actually increased our addressable market and we gained
2:21
Speaker 1: material share. I think at the beginning of the pandemic
2:24
Speaker 1: we were about six and a half times the next
2:26
Speaker 1: biggest player if you look at the third party credit
2:28
Speaker 1: card data sales data um when we started our go
2:32
Speaker 1: public vias back process, or roughly ten times bigger. And
2:36
Speaker 1: if you look at the most recent data or something
2:38
Speaker 1: about sixteen or seventeen times bigger. UM. So weirdly, the
2:42
Speaker 1: pandemic heard us in the short term, but actually expanded
2:45
Speaker 1: our addressable market, caused us to gain market share, and
2:49
Speaker 1: we've boom coming out of it, saying records the last
2:51
Speaker 1: several months. So, uh, most people know my dog Steve
2:56
Speaker 1: is not just my pet. He's my very best friend
3:00
Speaker 1: and and uh he's you know, been all over with
3:04
Speaker 1: me from New York to Bronxville. We live in Berlin now.
3:07
Speaker 1: He flew We got him a business class seed. He
3:10
Speaker 1: flew with me on the plane, did we really Yeah yeah, Um,
3:14
Speaker 1: he had the kosher meal, and uh he didn't drink
3:17
Speaker 1: any beers because you know, you had to hold it
3:20
Speaker 1: for eight hours. But for for me, the hardest thing
3:23
Speaker 1: is getting these services, finding a dog walker when I
3:27
Speaker 1: was single, UM or finding someone to watch Steve when
3:32
Speaker 1: I was going places that didn't accept pets, and uh,
3:37
Speaker 1: I've always had to rely on a mishmash of different
3:40
Speaker 1: services UM and different platforms to find this. UM. I
3:45
Speaker 1: can understand your popularity, but I wonder if you know
3:49
Speaker 1: the popularity of pets at this point is at a
3:52
Speaker 1: peak because of the pandemic. Arin do you think that
3:55
Speaker 1: we're gonna see, now you know, the need to own
3:59
Speaker 1: a dog kind of decline? Well, I think that if
4:03
Speaker 1: you look at the pet ownership breaks in the U S,
4:06
Speaker 1: they's continued to go up even before the pandemic, and
4:09
Speaker 1: that's a multidecade trend, and the spend per pet continues
4:13
Speaker 1: to go up. UM. I don't think that coming out
4:17
Speaker 1: of the pandemic is going to reverse that. In a
4:20
Speaker 1: lot of ways, I think having a dog is similar
4:22
Speaker 1: to the emotional relationships sometimes people have with kids, which
4:26
Speaker 1: is like, once you're in your life, you can't imagine
4:28
Speaker 1: your life without them, And so I expect that will
4:31
Speaker 1: be pretty similar that most people once they have their
4:35
Speaker 1: furry ball of joy around them will be tough to
4:37
Speaker 1: imagine life without them. All right, again, I'm not a
4:40
Speaker 1: pet person. I'm an financial analyst. By the way, someone
4:43
Speaker 1: writes in and says, I didn't realize Paul hated American
4:45
Speaker 1: values dogs in Disney in Disney um, But I have
4:51
Speaker 1: a financial analystis stock analy So talk to me about
4:54
Speaker 1: your business model. How do you make money in the
4:57
Speaker 1: pet business? Sure? So we take a percentage of the
5:01
Speaker 1: transactions going through rover Um, typically a small percentage in
5:07
Speaker 1: the range of on average um and across all of
5:12
Speaker 1: our services is a small percentage. I want to be
5:16
Speaker 1: in your business. Can you imagine if your stockbrokers that
5:19
Speaker 1: I'll take of every trade? Well, small, I'll say, a
5:26
Speaker 1: minority of the dollars going through How about that? All right?
5:29
Speaker 1: So give us some some of the metrics. Is that
5:30
Speaker 1: a perchase? I mean, well, what are the metrics that
5:32
Speaker 1: really drive your business? Yeah? The biggest thing for our
5:36
Speaker 1: business is the rate of repeats. The business is typically
5:40
Speaker 1: between eight and repeat business in a given month. We
5:44
Speaker 1: don't have to do a lot to drive repeat business.
5:46
Speaker 1: We have incredible loyalty, so that generates really strong Uh,
5:51
Speaker 1: incremental cash flow dynamics, a new customer acquisition and the
5:56
Speaker 1: rate of repeat are the big drivers of our business
5:59
Speaker 1: UM and then average order value UM. So most people
6:02
Speaker 1: when you travel out of town maybe go for three
6:04
Speaker 1: or four night time average at the mix of some
6:06
Speaker 1: long trips and some small trips UM. And on average
6:10
Speaker 1: overnight cares you know, roughly thirty to thirty five dollars
6:14
Speaker 1: daytime care like in home daycare and dog walking is
6:18
Speaker 1: about twenty Is there any plans, I mean for expansion.
6:22
Speaker 1: I could think of some markets that need a platform
6:26
Speaker 1: like this. For example, UM, you know, if you want
6:29
Speaker 1: to adopt a dog, pet Finder kind of owns that
6:31
Speaker 1: market in America. But if you want to um find
6:35
Speaker 1: a breeder, it's really difficult to uh sort through all
6:40
Speaker 1: the web pages and understand who's reputable and who's not.
6:43
Speaker 1: I mean, it seems like there's a lot to be
6:45
Speaker 1: done in this space. And obviously pets is a um
6:51
Speaker 1: an industry in which people are just willing to dump cash.
6:54
Speaker 1: I mean, I will pay whatever it costs for Steve. Yeah. Uh,
7:00
Speaker 1: same with mine. That dog London UM lover to death
7:03
Speaker 1: and she owns me. Yeah. One of the neat things
7:06
Speaker 1: about our business is that there are actually relatively few
7:10
Speaker 1: scale tech companies in the pet space. The pet industry
7:14
Speaker 1: was associated with dot com access about twenty years ago,
7:17
Speaker 1: so suffered from uh, not as much investment as it
7:21
Speaker 1: could have had. And so when you think about in
7:24
Speaker 1: the US tech companies that have a direct digital relationship
7:29
Speaker 1: with pet owners in the seven figure range, there's basically
7:33
Speaker 1: two e Amazon and Rover, and we think that puts
7:36
Speaker 1: us in a really nice position to continue to expand
7:39
Speaker 1: our offerings. When we started, we had just two offerings.
7:42
Speaker 1: Both were overnight care boarding, which as you take your
7:45
Speaker 1: dog to someone else's home and house sitting someone comes
7:48
Speaker 1: to your home. And when we rolled out our daytime
7:50
Speaker 1: services dog walking, drop and visit in home daycare. Aaron Easterly,
7:57
Speaker 1: CEO of Rover, thanks very much. All right, let's turn
8:03
Speaker 1: to cyber security. Let's turn to ransomware. We've seen a
8:07
Speaker 1: lot of ransomware stories this year. Seems like they're running,
8:11
Speaker 1: you know, much more frequently than we've seen in the past. Yeah, exactly,
8:15
Speaker 1: even Microsoft, right, which is like if they can't defend
8:18
Speaker 1: against the cyber attack, and who can It's exactly. It's
8:21
Speaker 1: one thing for like the Paramount Film Studio to get hacked.
8:23
Speaker 1: It's another thing for Microsoft. Patrick, I'm co founder of Ventures,
8:28
Speaker 1: former head of trust and security at Dropbox and the
8:30
Speaker 1: senior VP, chief Trust Officer of Salesforce joins this Patrick,
8:34
Speaker 1: thanks so much for joining us. Is it my imagination
8:37
Speaker 1: or are we seeing more ransomware stories on corporate America
8:41
Speaker 1: and global uh, you know, corporations. It's not your mantros imagination.
8:48
Speaker 1: Were absolutely seeing more on this, and I would say
8:50
Speaker 1: a lot of it is tied to just the plicans
8:53
Speaker 1: of the business model. It used to be if you
8:55
Speaker 1: were cyber criminal in the past and you steal information,
8:59
Speaker 1: you have to find them a good place and sell
9:00
Speaker 1: instimate money. But nowadays are the ransomware. It's very simple.
9:04
Speaker 1: Now you point and click and crypt and you can
9:07
Speaker 1: go directly demonetizing by using cryptocurrency. We you know, we
9:11
Speaker 1: really didn't have ransomware before cryptocurrency became a thing. Although
9:17
Speaker 1: I mean, you can't really hide, um where the money
9:21
Speaker 1: is going with cryptocurrency. Everyone can see on the public ledger,
9:25
Speaker 1: so it seems pretty dumb in a way too. But
9:28
Speaker 1: it was supposed to be you can't trace it, but
9:30
Speaker 1: that was never the case. You literally can trace it
9:32
Speaker 1: better than anything else in the world. I mean, it's
9:34
Speaker 1: like the most traceable there. There is transparency on the transactions,
9:40
Speaker 1: and there are companies that look at tracing it, but
9:43
Speaker 1: the wallet owners are not known, and there are third
9:46
Speaker 1: party services called tumblers that move it through many wallets,
9:49
Speaker 1: rapidly splitting transactions to try to anonymize them. So true,
9:53
Speaker 1: it's like shredding a paper, but you can just if
9:55
Speaker 1: you want to spend the time and assume, assuming the
9:58
Speaker 1: CIA and the f I have you know, hired enough
10:02
Speaker 1: employees you or or or you if you want to
10:05
Speaker 1: write a program, you know, Um, it just takes another
10:09
Speaker 1: couple of seconds to do it. It's not I mean,
10:11
Speaker 1: it is the most easily traceable thing in the world.
10:15
Speaker 1: So clearly, cyber uh, cyber security isn't threatened by crypto, right,
10:22
Speaker 1: it's it's that these hackers have figured out a way
10:25
Speaker 1: to get in. Why can they even get into Microsoft?
10:28
Speaker 1: I mean you were running security at drop Box, You're
10:32
Speaker 1: in the in the tech world. Um at Salesforce. Is
10:36
Speaker 1: there anyone who's unhappable? Nobody is unhappable. Uh. Yeah, At
10:42
Speaker 1: the end of the day, it's a game of statistics.
10:44
Speaker 1: I hate to say the larger the company is, the
10:47
Speaker 1: more likely it is that you will find that one
10:50
Speaker 1: mistake that was made. If all you're looking for is
10:52
Speaker 1: one mistake, is the bad guy to find that entry point.
10:55
Speaker 1: Once you have an entry point, you start exploring extracting
10:58
Speaker 1: information what's called loving laterally, which is broadening your access
11:02
Speaker 1: across the network to get into more systems until you
11:06
Speaker 1: have enough critical access that you do what you need
11:08
Speaker 1: to do. So it's an iterative process. It takes some time,
11:12
Speaker 1: but frankly, I think you know, even decades ago, you
11:15
Speaker 1: know it's it became common knowledge, at least among the
11:18
Speaker 1: cyber compassentity that there is no such thing as being
11:21
Speaker 1: perfectly secure. It's all about risk management and prioritization. What
11:26
Speaker 1: do you think corporations should do if it's, you know,
11:30
Speaker 1: if you really can't prevent a hack? What should be
11:33
Speaker 1: the strategy for some of these corporations As I think
11:36
Speaker 1: about kind of trying to make more their systems more secure,
11:42
Speaker 1: it's I would categorize them into two things. Number one
11:46
Speaker 1: is early detection and the ability to do something about it.
11:50
Speaker 1: When you see an early indication of a breach coming
11:52
Speaker 1: in UM, somebody has gotten into a system, you need
11:55
Speaker 1: to have a timely response for that after you detected,
11:58
Speaker 1: and detection, by the way, is very difficult at scale.
12:01
Speaker 1: My advice is for the vast majority of companies that
12:04
Speaker 1: can't build twenty four seven in house monitoring UM systems
12:09
Speaker 1: and teams basically outsourced the detection part. You want somebody
12:12
Speaker 1: who's watching your network seven who can have early indicators
12:17
Speaker 1: that something is going wrong and block it at that
12:19
Speaker 1: point in time. The second thing is, you know, let's
12:22
Speaker 1: assume that doesn't happen. You need a plan for resilience. So,
12:25
Speaker 1: you know, let's assume they've gotten in, they moved laterally,
12:28
Speaker 1: they've encrypted a bunch of information or whatnot. You need
12:31
Speaker 1: to have the ability to continue your business, and that
12:34
Speaker 1: means being able to recover your information UM. A lot
12:38
Speaker 1: of the advice I give folks given folks even when
12:41
Speaker 1: there was a drop box, is just store things in
12:43
Speaker 1: like a cloud based service like a drop box or
12:46
Speaker 1: a Google Drive or Microsoft share Point, and you know,
12:50
Speaker 1: they can decrypt the or they can encrypt and steal
12:53
Speaker 1: the local copy, but they won't be able to get
12:55
Speaker 1: to the cloud back at the stair at least not
12:57
Speaker 1: very effectively, So that's one element, but of BEE much
13:00
Speaker 1: more sophisticated than that. It's really building scenarios and testing
13:03
Speaker 1: against them to make sure that you anticipate that something
13:06
Speaker 1: like this is going to happen to your business and
13:08
Speaker 1: that you can continue operations. What are you investing in?
13:12
Speaker 1: You you're starting a v VC fund, What are you
13:15
Speaker 1: looking for? We're looking very broadly. You know, my partners
13:20
Speaker 1: J and I started send Ventures and March efficially we
13:23
Speaker 1: raised the twinter million dollar funds, been actively investing, made
13:26
Speaker 1: for investments already. Um, honestly, you know, we we differentiate
13:31
Speaker 1: because we're former practitioners. We've been running cybersecurity serve functions
13:37
Speaker 1: inside of large enterprises for twenty some one years and
13:40
Speaker 1: that gives a slightly different perspective. So you know, what
13:42
Speaker 1: we invest in is quite frankly, you know, when we
13:44
Speaker 1: look at it from a CAZO security leaders perspective, we're
13:48
Speaker 1: looking stuff and say, yeah, this would have made our
13:51
Speaker 1: jobs much easier. This is this is a company I
13:53
Speaker 1: would have bought as a customer in the past, So
13:56
Speaker 1: we're looking through the perspective of buyers ones and obviously
14:02
Speaker 1: certain things like ransomware, super interested, but it's a much
14:05
Speaker 1: broader landscape that we look at really from the lens
14:07
Speaker 1: of people who have been practitioners in space for quite
14:10
Speaker 1: a long time. All Right, Patrick, thanks very much for
14:12
Speaker 1: joining us. Totally fascinating, obviously totally fascinating topic. Great to
14:16
Speaker 1: hear from Patrick him their co founder of sin Ventures.
14:22
Speaker 1: Now let's talk about investing in Uh well, I guess
14:26
Speaker 1: anti climate change. Investing to stop climate change, I guess
14:32
Speaker 1: is the way to put it. Gabriella Herculano, there's a
14:35
Speaker 1: CEO of i Clama, and she joins us um with
14:38
Speaker 1: her insights on this and got me. The interesting thing
14:41
Speaker 1: is it's not so easy to understand how to do
14:44
Speaker 1: this correctly, right, because if you want to raise the
14:47
Speaker 1: capital costs of those people or companies who emit too
14:52
Speaker 1: much carbon, you also end up raising their returns thereby
14:55
Speaker 1: giving yourself lower returns. Or I guess if you want
14:59
Speaker 1: to say, I want to take a bet that the
15:01
Speaker 1: government is going to change regulations so that these you know,
15:04
Speaker 1: carbon neutral investments are going to pay off later, that's
15:08
Speaker 1: also not really moving the needle yourself. So what do
15:11
Speaker 1: you do? Well? Um, Well, first of all, thank you
15:15
Speaker 1: so much. Format for having me. What we do is
15:18
Speaker 1: we look at the companies that can can really transition us,
15:23
Speaker 1: move us away from business as usual based on solutions
15:26
Speaker 1: that are um high on carbon footprint. The the motivation
15:32
Speaker 1: behind all that we do is the idea that the
15:35
Speaker 1: best way to reduce the carbon in the atmosphere is
15:37
Speaker 1: by not a meeting in the first place. So what
15:40
Speaker 1: are these solutions and how do we provide investors with
15:44
Speaker 1: a direct exposure to that. That's pretty much what we've done.
15:47
Speaker 1: It took us almost two years to put this product together. Um,
15:52
Speaker 1: we think that what we've done is provide exposure to
15:57
Speaker 1: a very comprehensive set of relevance visions. And we have
16:01
Speaker 1: a tangible metric that allows us to determine and ascertain
16:05
Speaker 1: and quantify that relevance, which is potential avoided emissions in
16:09
Speaker 1: diggatons of field two equivalent per year. So that's a mouthful,
16:14
Speaker 1: but it's that idea that there is a data between
16:17
Speaker 1: the emissions that come from you driving from point A
16:20
Speaker 1: to point B an internal combustion engine and taking an
16:24
Speaker 1: electric vehicle tesla right for for that same need, and
16:28
Speaker 1: that delta is the avoidance and that's where the world
16:31
Speaker 1: needs to go towards we need to go UM to
16:34
Speaker 1: satisfy our needs different UH needs for electricity and needs
16:40
Speaker 1: for transportation, for food, UM, all of those relevant ways
16:46
Speaker 1: in terms of mitigating climate change. So, Gabby, one of
16:51
Speaker 1: the issues that we've heard from E s G investors
16:54
Speaker 1: is that you know, the amount available data to make
16:57
Speaker 1: informed decisions just really isn't that good. I mean, you know,
17:01
Speaker 1: for typical financial analysis, you want the income statement, to
17:04
Speaker 1: balance sheet, the cash flow statement, but for E s
17:06
Speaker 1: G you need a whole bunch of other metrics and
17:09
Speaker 1: they're not really out there or they're not consistent. How
17:11
Speaker 1: do you guys deal with that? Well, we we took
17:15
Speaker 1: manage in our own hands. We we we gather the
17:18
Speaker 1: information ourselves. Where a London day is the ginstant tact
17:22
Speaker 1: and in Europe we have what is called EU taxonomy,
17:26
Speaker 1: the companies whom have to report what is deemed to
17:29
Speaker 1: be products and services that are positive in the impact
17:34
Speaker 1: in terms of environmental um changes and benefits. So that
17:38
Speaker 1: very long list of what these products and services are
17:42
Speaker 1: was a very important UM guideline for us. And what
17:46
Speaker 1: we did was we we we have we developed our
17:49
Speaker 1: own methodology because there was no, nothing remotely close to
17:54
Speaker 1: what we wanted to do in the marketplace. So we
17:56
Speaker 1: vertically integrate. We created our own equity benchmarks. So we
18:00
Speaker 1: triangulated these these UH finding the data on what is
18:05
Speaker 1: green revenue and what is also brown revenue, and surprisingly
18:08
Speaker 1: that data is also not there. Investors that want to
18:11
Speaker 1: negatively screen struggle to get that information. So we looked
18:15
Speaker 1: at the universe that is in line with these products
18:17
Speaker 1: and services that move us away from the business as
18:20
Speaker 1: usual right like we talked about. So we quantified the
18:23
Speaker 1: green revenue and the brown revenue, and then we we
18:27
Speaker 1: quantified and estimated the potential avoided emissions, which is another
18:32
Speaker 1: very relevant UM influence for us is the framework by
18:36
Speaker 1: mission innovation and what constitutes UH that delta, that potential
18:41
Speaker 1: avoiding inities. So we quantify. That's why it took us
18:44
Speaker 1: two years because we quantified. We went through all the filings,
18:48
Speaker 1: all the public information for each of the companies are
18:51
Speaker 1: it's about hundred and sixty nins in our universe, and
18:54
Speaker 1: we quantify that information for each one of them. What's
18:57
Speaker 1: the name of the e t F you're launching later
18:58
Speaker 1: this month? UM. We we launched last Wednesday, UM launched too. Yeah, yeah,
19:05
Speaker 1: so launching one on New York Stockaching is great. Launching
19:08
Speaker 1: too is fantastic. UM it's called i climb a Global
19:11
Speaker 1: Decarbonization Transition Leaders and the iclimbate Distributed Renewable Energy Transition Leaders,
19:17
Speaker 1: which tells what we think is the most exciting story
19:20
Speaker 1: within clean energy space, which is the decentralization of our
19:24
Speaker 1: power systems. So we launched both least Wednesday. All right,
19:28
Speaker 1: all right, we'll pay attention to those certainly going forward,
19:30
Speaker 1: and certainly is G investing is a growing, growing part
19:34
Speaker 1: of this marketplace, a lot of investor interest. Gabriella Herculano,
19:37
Speaker 1: CEO of I Climate, joining us again talking about E
19:40
Speaker 1: s G investing, and as I said, a lot of
19:42
Speaker 1: folks are really interested in this UM type of investing,
19:46
Speaker 1: and they're really pressing the companies that they own, whether
19:49
Speaker 1: it's in their mutual funds and their et s, about
19:52
Speaker 1: those companies UH efforts on E s G and again
19:56
Speaker 1: there's lots of metrics, lots of grades. Even on the
19:58
Speaker 1: Bloomberg terminal under the f A function where you have
20:02
Speaker 1: financial analysis, you have income statement balanchee, cash flow statements,
20:05
Speaker 1: all that kind of good stuff. Uh and bloombernk also
20:07
Speaker 1: in that function has E s G data, so we're
20:10
Speaker 1: a big part of that data process right there. You know,
20:17
Speaker 1: I'm looking at Tesla t s l a U S
20:21
Speaker 1: Equity and then I hit b Q to get that
20:23
Speaker 1: Bloomberg quote. It's my favorite quote on the terminal for
20:26
Speaker 1: security because it gives you just a snapshot of everything.
20:29
Speaker 1: And I'm looking at Tessa right here, and it's up
20:32
Speaker 1: on a trailing twelve month basis, but it's down more
20:34
Speaker 1: than six percent here on a year to day basis.
20:36
Speaker 1: So it feels to me like a stock that's looking
20:38
Speaker 1: for a catalyst for that next move. And they we
20:42
Speaker 1: have earnings for the company and for the close, and
20:44
Speaker 1: so let's get a preview and there's no one better
20:47
Speaker 1: than Dan Ives for that preview. Dan Ives as a
20:49
Speaker 1: managing director Equity Research at web Bush Securities. He is
20:52
Speaker 1: a proud alumnus of the Penn State University. Matt so
20:56
Speaker 1: goes goes against your buck eyes every year. Dan, thanks
20:59
Speaker 1: for joining us here. Again, I'm looking at the stock,
21:02
Speaker 1: you know, kind of not doing much this year. What
21:05
Speaker 1: do you think is the next catalyst for this name?
21:08
Speaker 1: And will that catalyst come after the close tonight. Yeah,
21:12
Speaker 1: I mean it's really been about the China story because
21:15
Speaker 1: China is such a windpin to the test of both pieces.
21:18
Speaker 1: That's about deliveries going into next year, and China was
21:22
Speaker 1: chopping at this quarter in terms of pr issue safety.
21:25
Speaker 1: That definitely had, but I'd say a negative impact on demand.
21:30
Speaker 1: Tonight's really about Musk hand holding investors through the rest
21:33
Speaker 1: of the year in terms of the trajectory, what China
21:36
Speaker 1: looks like and alternately, what deliveries could be. I view
21:40
Speaker 1: it as a positive catalysts. The stocks really under perform
21:43
Speaker 1: this year after what was the story to Yere last year.
21:46
Speaker 1: My view to three years out in the green tidalway,
21:49
Speaker 1: this continues to being one of the best ways to
21:50
Speaker 1: play it. You know, I look through um your recommendations, Dan,
21:55
Speaker 1: and you are just crushing it on every other stock
22:01
Speaker 1: that that you cover. You have a big universe and
22:03
Speaker 1: you're beating your peers almost across the board. The only
22:10
Speaker 1: I mean, you're still beating your peers on Tesla, but
22:13
Speaker 1: still it's down and you have a thousand dollar price target.
22:16
Speaker 1: What do they do wrong or were they not do that?
22:18
Speaker 1: You expected? What was the unexpected move from Tesla. Yeah,
22:22
Speaker 1: and I think when we make these calls and over
22:25
Speaker 1: the last you know called twenty plus years, I I
22:28
Speaker 1: don't like to look at stocks over a quarter or two, right,
22:30
Speaker 1: it's the longer term thesis. And I think when you
22:32
Speaker 1: look at tests for the first part of the thesis
22:35
Speaker 1: played out last year, but so far this year, China
22:39
Speaker 1: is underperformed. And that's why the stocks on the perform
22:41
Speaker 1: as long as you know, when when you have all
22:44
Speaker 1: these competitors coming in the e V landscape, from the
22:47
Speaker 1: traditional the GM, FORD, b W to the startups, that's
22:50
Speaker 1: put a perception almost an overhang issue comes down to China.
22:55
Speaker 1: And I think what's been a bit surprising is what
22:58
Speaker 1: we saw this quarter. I mean China was disappointing early on.
23:02
Speaker 1: I think they started to get their sea legs back,
23:05
Speaker 1: have momentum going the second half of the year, and
23:08
Speaker 1: this will go up and down. With China. We think up.
23:10
Speaker 1: We view it as more of a speed bump rad
23:14
Speaker 1: in the start of a more structural negative. That's why
23:17
Speaker 1: I think we start to hear tonight, Dan, you mentioned
23:20
Speaker 1: some of the new competitors coming into the marketplace, and
23:22
Speaker 1: again the big players, the big oms that we've been
23:24
Speaker 1: waiting for. How do you think about Tesla going up
23:28
Speaker 1: against the g m s and the vws of the
23:30
Speaker 1: world is a and the Mercedes even you know what,
23:32
Speaker 1: we saw some news recently as they really start to
23:35
Speaker 1: put some serious money behind their e M or e
23:38
Speaker 1: V efforts. Yea. And why aren't they worth that much?
23:41
Speaker 1: I mean, you know, why is GM worth only eight billion? Folkswagen,
23:45
Speaker 1: the biggest carmaker in the world, which has such illustrious
23:48
Speaker 1: brands as Porsche and Audi, They're only worth a hundred
23:51
Speaker 1: four billion dollars and Tesla's worth six fifty. It's a
23:56
Speaker 1: great question, and that's why. Look it's our view and
23:59
Speaker 1: take a step back. Can you get b W forward
24:02
Speaker 1: and especially GM? I believe a lot of these thoughts
24:05
Speaker 1: over the coming years get rerated, not just today, their
24:08
Speaker 1: auto companies from twather viewed by investors more and more
24:11
Speaker 1: start to get disruptive technology multiple because their success and EVS.
24:15
Speaker 1: Especially when I look at GM, I think that's a
24:18
Speaker 1: name that could be significantly higher as it gets rerded
24:20
Speaker 1: on the conversion to e V s and and ultimately
24:24
Speaker 1: today automobiles in the US or electric vehicle. So I
24:28
Speaker 1: don't view this as necessarily zero sum game. I think
24:31
Speaker 1: you're gonna see a lot of beneficiary tests, a disproportional beneficiary,
24:36
Speaker 1: but no doubt you are going to start to see
24:39
Speaker 1: some share games from the traditional players as part of
24:42
Speaker 1: this green tidal wave. Dan, let's focus a little bit
24:45
Speaker 1: on the income statement here, some boring old pen l stuff.
24:49
Speaker 1: Does Tesla make a profit on an individual unit basis
24:54
Speaker 1: just excluding any kind of credits or anything like that,
24:57
Speaker 1: And if not, when you expect that to happen, Yeah,
25:00
Speaker 1: not yet, and and that and that goes to the
25:03
Speaker 1: emotional bold bear thesis. Because of the ev tax credits
25:07
Speaker 1: and because of some of those other talents, that's how
25:10
Speaker 1: they show profitability. But as we go into the next
25:14
Speaker 1: few years, we believe they will be profitable as a
25:17
Speaker 1: car company, right, not just from an EVY tax credit perspective.
25:20
Speaker 1: And I think it's always been a forest through the
25:22
Speaker 1: tree type name where you have to sort of look out,
25:26
Speaker 1: especially because of China and where we are, especially on
25:30
Speaker 1: the software piece, that you're seeing more and more of
25:32
Speaker 1: the software upgrades, which flows to the bottom line. That's
25:35
Speaker 1: gonna be a major catalyst for Tesla to really see
25:39
Speaker 1: the green and I think a lot of it is
25:41
Speaker 1: the red and the rearview mirror, and that's been something
25:44
Speaker 1: that we've seen really play out over the last few years.
25:46
Speaker 1: If you go back to what's played out in the
25:48
Speaker 1: in the Tesla thesis, what's your biggest conviction of all
25:51
Speaker 1: the You've got a lot of outperforms here, and granted
25:54
Speaker 1: they've all done really well. Um, which one do you
25:59
Speaker 1: like the best? It's that company at a Cupertino Apple.
26:03
Speaker 1: I mean that's the one where when I just think
26:07
Speaker 1: about where we are in the upgrade cycle, what i'll
26:10
Speaker 1: call it supercycle thesis going into five G services, that
26:15
Speaker 1: continues to get rerated and I think the year from
26:18
Speaker 1: now we're going at three trillion dollar mark cap, and
26:20
Speaker 1: that continues to be the one along with of course
26:24
Speaker 1: Microsoft is a core cloud play. It's how you play
26:27
Speaker 1: this tech thesis and really fourth in Dusher Revolution play
26:31
Speaker 1: out all right, Well, never reminds me I need to
26:33
Speaker 1: go get a new iPhone. Actually, that's hey, Dan can
26:36
Speaker 1: He's got these recommendations. He knows how to frame them.
26:38
Speaker 1: I love the a on our page for him. It
26:40
Speaker 1: looks a plus for Dan Eyes from Wedbush Securities, this
26:46
Speaker 1: is Bloomberg. Thanks for listening to the Bloomberg Markets podcast.
26:51
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Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
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Speaker 1: on Twitter at Matt Miller nineteen seventy three. And I'm
27:01
Speaker 1: Fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast,
27:05
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