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Tesla team ‘deserves credit’ for Q4 earnings achievements, Ross Gerber says

Gerber Kawasaki Wealth & Investment Management CEO Ross Gerber joins Yahoo Finance Live to discuss Elon Musk’s Tesla Q4 earnings call, investing in Tesla stock, and the outlook for Twitter and Tesla.

Video Transcript

RACHELLE AKUFFO: Tesla topped analyst estimates in its latest quarter, lifting Tesla shares higher this morning. You see they're up about 8.5%. And that's after the stock took a beating in 2022 with investors worried about Musk's Twitter distraction. However, for those questioning the brand image impact on Tesla hitting demand, here's what CEO Elon Musk had to say on the matter.

ELON MUSK: So I've got 127 million followers. It continues to grow very rapidly. That suggests that I'm reasonably popular. I'm the most interacted accounts-- social media accounts, I think maybe in the world, certainly on Twitter. And that's actually predated the Twitter acquisition. So I think Twitter's actually an incredibly powerful tool for driving demand for Tesla.

RACHELLE AKUFFO: Well, for a closer look on Tesla and the road ahead, we have Ross Gerber, Gerber Kawasaki Wealth Investment Management. Good to see you, Ross. So I want to ask you about what Musk said there, because popularity on Twitter doesn't necessarily equal demand. What do you think about that correlation that he's making here?

ROSS GERBER: Well, I think it's a little bit naive in the sense of a lot of people follow people just to watch the trainwreck kind of thing too. So I don't think all my followers are actually fans of mine, to be honest, in my Twitter account. So you know, you've got to be careful with that.

But I think his perception of Twitter's reach is a little off. You know, Twitter actually has very limited reach when you're talking about domestic viewers like on the general public. In fact, most of the people I know don't use Twitter all.

So I think that's one of the reasons I've been pushing for Tesla to really start doing some traditional advertising and marketing, because I do think he is incredibly popular and successful at using Twitter as a tool for marketing Tesla. But there's also been some negative with him using Twitter as a tool. And I think that, once again, most people don't use Twitter and Tesla's price cuts, if everybody knows about it, they're going to buy Teslas.

RACHELLE AKUFFO: And you have to wonder who he's listening to at the moment when it comes to investing here. I mean, the earnings are speaking for itself, though, with this incredible beat here. But then do you think that's enough to silence the bears at the moment? Enough to say, look, it hasn't been enough of a distraction to really damage Tesla's business?

ROSS GERBER: I think the thing here that really impressed me is I really do think Elon has been very preoccupied with Twitter. But the Tesla team deserves the credit, 100%, for this quarter and the achievements that they continue to make. The Tesla team, and you're starting to see a broadening out of the different characters who work at Tesla and starting to get to know these people who have really done a great job despite a lot of adversity. Last year and as we go into this next year, it's going to be Tesla's best year ever.

So I give credit to the Tesla team, from Martin-- Martin Bianchi, who is in charge of investor relations, poor guy, to all the different operators, Zach, and Drew, and the whole team there just really, really executing and working hard. So I give them a lot of credit.

RACHELLE AKUFFO: And, Ross, I want to toss to this sound byte we have here from when you were on Yahoo Finance in December, sort of really about navigating the space with Elon. Take a listen.

ROSS GERBER: I'm an investor in Tesla and I'm going to stay as an investor in Tesla. And I represent my investors who are invested in Tesla and the Tesla community. And we care about Elon. But when your friend goes astray, you can either be the type of friend who doesn't say anything or you say something and maybe that person doesn't like it so much, but hopefully he understands that I'm trying to do what's best for everybody.

RACHELLE AKUFFO: So then, Ross, with that in mind, then, how active do you want to be? Will it require you to get on the board to really see the sort of changes that you'd like to see at Tesla?

ROSS GERBER: Actually not. In fact, it's funny you ran that quote, because I think-- we did that Twitter spaces where Elon and I actually had a sort of, I guess, digital face-to-face conversation and I thought that was incredibly cool of him to just address me directly and my concerns. And I think he listens to people-- hopefully the people he understands really want to see him succeed, like me.

And you know, I think he's made adjustments. I think Tesla's made some of the adjustments that I want. I'm not unhappy-- I was really unhappy in December, I'm not as unhappy because I've seen some of the actions being taken by the company and by Elon to try to deal with this. But I still think there's more to do. But I think as time goes on, this will work itself out-- whether I'm on the board or not, to be honest.

RACHELLE AKUFFO: And I mean, it is going to be important, the sort of direction that we see, given some of these very ambitious production targets that Elon has for Tesla. How important is it going to be? Obviously, we've had a lot of missed production deadlines with things like the Cybertruck and other things. How important is it going to be credibility wise for investors to really see these deadlines come through?

ROSS GERBER: Yeah, and that's why I say this is probably the most critical year for Tesla since, like, the 2018-2019 period when they were ramping Model 3 production and it was like, if we don't get this going, we're BK, you know? And now, that's obviously not in the cards because Tesla is in such a good financial position, but this is a transition year of growth into the truck business, into the megapacks business, and as well scaling Model Y production and Cybertruck production.

So you know, I don't think it could be a more challenging year for the team at Tesla. But if they get to the other end of this year and achieve the business plan, boy, this is a huge year for Tesla. Investors have a unique opportunity, even though the stock's rallying today, we value the stock over $200 a share. I think earnings estimates are now too low for Tesla.

Everybody's downgraded their estimates. Expectations are very low for Tesla. And it's rare that we've seen that. So I think for investors who can deal with the volatility of Tesla and Elon, this is a great opportunity.

RACHELLE AKUFFO: And, of course, a lot of that's assuming that Elon sticks to his word, doesn't sell any more shares of Tesla-- because, obviously, still concerns about some of this Twitter debt coming due. But then in the call, we also saw that CFO Zachary Kirkhorn talking about the company, attacking every other area of cost and unwinding cost increases created for these multiple years of COVID-related instability. Where, then, do you think or would you like to see Tesla, perhaps, get more lean so that it can invest more in some of the growth that's needed to meet these production targets?

ROSS GERBER: Well, Tesla is pretty lean. Like, it's not a bloated company in any way. I think it's really more about their costs for transportation, their costs for inputs like aluminum, or lithium, and such. So we're seeing all those costs go down.

And they do have contracts that are longer term. So how that all works itself out, we'll have to see. But the relentless cost-cutters during the ramp-- and we saw this in 2019 under Jerome Guillen where as they ramp, they find efficiencies in their production lines that bring down costs. And, really, this is where we get to the opportunity of really making a really affordable Tesla one day-- maybe like a $25 or $30,000 Tesla one day-- is really about the scale.

And when Elon thinks about scale, he thinks massively. And that's what, I think, a lot of people underestimate about him is the massiveness of his vision. And so we expect costs come down, they seem to want to hold prices where they are, and margins will come back from Q1, which, obviously, will be impacted.

RACHELLE AKUFFO: Indeed. And keeping an eye on, perhaps, the Chinese competitor that he mentioned, whoever that may be who might take the throne-- if not a legacy--

ROSS GERBER: Well, it's BYD. Yeah.

RACHELLE AKUFFO: Sorry, BYD. No, you're fine. We'll be keeping an eye out then on BYD as well. Always good to have you-- Ross Gerber there of Gerber Kawasaki.