Tesla's second quarter earnings report showed the first fall in deliveries for the electric vehicle maker in two years. Dan Ives, managing director of equity research at Wedbush Securities, joined Cheddar News to break down the report and discuss CEO Elon Musk's still-pending deal to acquire Twitter. He noted that while deliveries were "better than feared," the last six months have been "a black eye" for the automaker.

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Tesla Gets a ‘Black Eye,’ As Deliveries Fall

Tesla's second quarter delivery and production results are in, in the E. V. Giant delivered just over 250,000 electric vehicles and a quarter marked by factory shutdowns in china. An ongoing supply chain challenges its first quarter down in a long time, but one bright spot june, which Tesla's best month on record for vehicle production to break this all down for us dan. Ives, managing director of equity research at Wedbush Securities and Dan. What is your key takeaway from the report from Tesla? My takeaway is that april and may you have the biggest Market in terms of China shut down. So I think that was about 70,000 units that ultimately were wiped off. To cue you look at that month of June trajectory, that's what the streets looking forward to. Because if you look at the second half, You know, barring a major shutdown in terms of China, they'll be up over 50%. I think that's where the stock starts to move on second half numbers in 2023. They've already ripped the band aid off into cubes. Now, how is Tesla able to mark its highest vehicle production month in history despite the shutdowns in china ongoing supply chain issues and chip shortages and more. Well, I think that's the big issue. I mean if you look at GM for instance, what we saw last week, I mean that that was really a debacle ford and other automakers are seeing major supply chain and shortages. I think part of it with Tesla's now you start to look at the global footprint. It's not just about china, it's not just about fremont Austin bruin which will ramp as well. They're flexing their evey muscles. I mean this was these were ugly numbers and I think that was not a surprise given what we saw in april may relative to the industry. It's a shining star. And I think that should really be the focus here As we look out into second half in 2023 in terms of the Evey race. So what do you think what's the outlook for the next quarter? Do you think they can keep up with production and keep up with deliveries? Look I think you'll see a bit of a shutdown july because of some enhancements in china. Austin and Berlin are still gonna be ramping. You know I think bogey's gonna sort of be 3 25 350 K. For 3 to 4 to some sort of run rate about 450 K. So I think that's really where the streets thinking right now and I think can they do it From a profitability perspective because of what you see in China that's the most profitable. Look that's the hearts and lungs of the Tesla story and I think the big focus is going to be are they seem demand softness. We still believe demand is outstripping supply by more than 15% now Tesla is no longer the world's biggest tv producer. Should investors care? Look I think quarter to quarter, it's gonna shift around. But I think that the broader race in terms of E. D. S, it continues to really be tested at the top of the top of the mountain. And I think ultimately that's a lead that they could potentially wadded because of production as we go into next year. Look, this is a rising tide, It's gonna lift a lot of books, you're gonna see success from Neo, from lucid GM ford and others V. W. And across the board because we think today, you know, you're just in the start of what's gonna be trillion spent in terms of E. V. Transition. So I just do not view it necessarily as a zero sum game, like some others in terms of how to play the V market now, chinese automaker, B. Y. D. Is the one that surpassed Tesla. What do we know about them and how much attention should investors be giving to it? You know, B. Y. D. I mean a formidable platform. They've built significant manufacturing power, you know, and that's something consumer demand has really been extremely firm. And then when you look, let's say Neo, I mean, B. Y. D. They really have not had the production issues that others in china have had, but in china right now it's an Andres in terms of going after that market because if you think about the markets, it's really china Fiba europe and in the us, but for Tesla holding their own in china. But the key is ultimately what we see with the zero Covid shutdowns. That was really the black cloud over the stock for the month of april maine, that's what we saw come out over the weekend with deliveries. Alright, let's switch gears, let's talk about twitter. So, Ellen went missing for about nine days and then came back and posted a picture with the Pope. Why do you think he went away? Look, I think I continue to believe this is a renegotiation situation for twitter. I think you see it in the stock, I think chances of 50 for 20 happen, there's a better chance of me playing for the Yankees than that price happening? I still think it's 42 to $45 because of the box, take account issue and ultimately, if the board does not come to the negotiation table, then this can ultimately end up in court if he tries to walk away. But I think most, because of the twitter situation and because of some of the headwinds, as I think for once he actually was quiet, which I view is actually a positive in terms of some of the circus stories that we've seen play out over the last few months. So where do you see the saga heading? Do you think he's actually gonna seal the deal soon or it's going to be dragged out. Well, I think ultimately it's going to be a renegotiation because, and I think the stocks telling me that too. That's what we think 42-45 is likely to sort of price point in terms of the Twitter deal and it comes down, the Twitter is going to continue to say deal is going to happen at the, at the price. But we believe not just from a finance perspective, but must recognize the risk. I think the fake account body issue, even though we could say start as a scapegoat, it's obviously morphed into a story of its own and I think it's a renegotiation and ultimately if they don't play ball, he tries to walk, pay the billion and this ends up in court and just a nasty court battle musk verse twitter, which is not good for any party involved. Now, my last question for you with Tesla delivery slipping, this twitter deal being dragged out, What kind of image is Ellen painting for investors and those who keep close eye on him. Mhm Well, I think in terms of deliveries, this quarter relative, I do think it was better than feared, but, but look, the last six months, it's been a black eye few months for musk in terms of the twitter situation, I think a lot of stuff on social media at the time that you're going through a hurricane like headwinds with Tesla obviously the cuts that we saw Tesla and I think this is, it's a fork in the road situation and that's why I think must taking a little time off twitter was not a bad thing, but now ultimately it's about execution. It's not just talking, talking, walking the walk and that's what the stock really is telling. I think everyone here, they need to execute second half of the year. Now when it comes to the major indexes, we saw them all open lower but the NASDAQ was able to flip the script on that. What do you feel is the reason behind that? I think you're seeing a bit of a rotation to oversold tax. I think baked into these numbers. You already seen probably pretty significant number cuts already anticipated for two Q and I think you're seeing a rotation. I think as we go into second half, especially areas like software cyber, even some of the social media and stalwart names, Apple Microsoft among others I think are oversold and I think that's what you're starting to see a dip of the toe in the water here in terms of rotation going into two kids. But no doubt the haters will continue to hate to yell fire in a crowded theater intact. It's gonna be a rollercoaster few weeks, especially fighting the Fed, we have jobless claims coming out on thursday, we have the job reports on friday investors are also considering whether or not biden is gonna tackle these tariffs on china from the trump era. So how do you see the week ending for stocks? Mhm. Look, I think it's what we've seen over the last week or two. I think valuations have already started to reflect 5- 10% number cuts across the board. And, and I think you will start to see, you'll see choppy. But I think the rotation toward attack, What we've seen that is really going to be the trend. I even think semis in some ways are oversold as we see it all playing out. So I think a little over rotation here, Taco is starting to get a little love in what's been just a Friday, the 13th year dan Ives, managing director of equity research at Wedbush Securities, dan Ives, thank you as always for coming on the show and sharing your expertise.