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New Constructs CEO: Tesla's Best Days Are Behind It

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Bloomberg Jul 24 02:55 · 6131 Views

Tesla missed profit estimates in the second quarter, extending a worse-than-normal start to the year. David Trainer, CEO at New Constructs, examines the results and says of Tesla, “the best days of this company are behind it, especially in the car business.”

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Transcript

  • 00:00 David Traynor joining us right now, the CEO overhead new constructs, which has a cell rating
  • 00:04 on the stock, a stock now
  • 00:06 sitting on what is now, I believe it's 4th consecutive quarter where they've missed estimates here, at least on the top line numbers here.
  • 00:12 And it's raising a lot of questions, David, about the growth story, what it is
  • 00:17 or more importantly, what it can be,
  • 00:19 but depending on what the lineup looks like.
  • 00:21 Any hope?
  • 00:23 I don't think so, Romain.
  • 00:24 I mean I think this growth story was really confirmed to be broken last quarter when we didn't just see a deceleration in growth, we saw a decline in deliveries
  • 00:33 and margins contracting.
  • 00:35 I think the best days of this company are behind it, especially in the car business
  • 00:40 as competition only gets stronger and they're, you know, competitors, market share gets gets
  • 00:46 bigger and better
  • 00:47 and Tesla's just not as popular as it once was.
  • 00:49 And, and I think the margins that we've seen in the past are
  • 00:54 not sustainable.
  • 00:54 And it's,
  • 00:56 I think it's notable that the company is still missing estimates when we know that all the bullish analysts out there are putting out a low number to make it easy for Tesla to beat.
  • 01:05 So it's,
  • 01:06 it's, it's really, it's, it's almost surprising they still beat the already reduced numbers.
  • 01:10 There are some broader trends right now when it comes to car buying and EV buying specifically, that's hurting Tesla.
  • 01:15 There are obviously some very Tesla specific things that are also hurting Tesla.
  • 01:19 I do want to focus on one thing, particularly when it comes to valuation, David, because you know, a lot of investors,
  • 01:23 they don't value this as a car company.
  • 01:25 They value it as a tech company.
  • 01:26 And Elon Musk has been very good about trying to shift that narrative around the broader tech capabilities.
  • 01:32 We are the original AI company or we are more of an energy company than just,
  • 01:37 you know, a car company.
  • 01:38 We're a battery company here.
  • 01:39 Any credence to that?
  • 01:40 I mean, they've shown in the past that they can make a pivot.
  • 01:43 Do you not see that up ahead?
  • 01:45 I don't know how.
  • 01:46 How big has the pivot been, Romain?
  • 01:47 I mean, you know, I think maybe the only other segment besides autos is energy.
  • 01:51 And it's still like, maybe it's below 10%.
  • 01:53 Never has been much more than that.
  • 01:55 I think Musk is a great marketer, an amazing marketer.
  • 01:59 And it feels like
  • 02:00 every time there's bad news, he pulls another rabbit out of the hat, whether it's a robot or or a spaceship or something else.
  • 02:07 I forgot about the humanoid
  • 02:08 robot.
  • 02:08 Yeah, that's
  • 02:09 it.
  • 02:10 How can you forget?
  • 02:11 I mean, it's such a good dancer, right?
  • 02:13 And so,
  • 02:15 yeah, I, I think these are diversion tactics.
  • 02:17 I think it's part of his marketing prowess.
  • 02:19 And I and I, I don't see
  • 02:21 that there's anything that Musk is going to do that's going to generate cash flow adequate to justify the valuation.