Instant Reaction: Tesla Beats Estimates, Hints at EV Demand Rebound

0:00For years, the conversation around Bitcoin was the same. Is it real? And does it belong in a portfolio? While others debated, CoinShares got to work. In 2015, they launched the world's first Bitcoin EDP, regulated, listed, and built for institutional investors. Long before the U.S. market caught up, today they manage over$6 billion in assets and have remained profitable through every market cycle, including the 2022 downturn. What sets them apart? They're not a crypto exchange chasing trading fees, not a company betting its balance sheet on Bitcoin, not a mining operation. CoinShares is an asset manager with recurring fees, a fixed cost base, and a business model you can actually model.

0:39Now listed on NASDAQ under ticker CSHR. Learn more at coinsharesipo.com.

0:56Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds, and crypto. and they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R &D spend, small cap stocks with improving operating margins, or the S &P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on public, you just type in a prompt and their AI screens thousands of stocks and build a one-of-a-kind index.

1:36You can even backtest it against the S &P 500. Then you can invest in a few clicks. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market.

2:01Illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. Manage all your business finances, from banking to payments to credit cards, all in one place with Chase's digital tools. Plus, access online resources designed to help your business thrive. Learn more at chase.com slash business. Chase for Business. Make more of what's yours. The Chase mobile app is available for select mobile devices.

2:35Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. Bloomberg Audio Studios. Podcasts. Radio. News. This is a breaking news update from Bloomberg. instant reaction and analysis from our 3 ,000 journalists and analysts around the world. Yeah, let's go right to Tesla. It just crossed the Bloomberg terminal. First quarter adjusted EPS, folks, 41 cents a share, 7 cents better than what the street was expecting. That's adjusted EPS. First quarter gross margin coming in stronger than forecast, certainly a sign of profitability, 21.1 % versus an estimate of 17.7%.

3:25First quarter revenue coming in slightly higher than what the street was forecasting, Tim. $22.39 billion. The street estimate was for$22.19 billion. Okay, so some other headlines crossed in the Bloomberg Terminal. You mentioned free cash flow, but worth repeating because it is a redhead, Carol. First quarter free cash flow,$1.44 billion. The estimate was for a negative$1.86 billion. The Tesla communications around earnings are a slide deck so it's kind of tough to go through but tesla says that the cyber cab the tesla semi the mega cap production starting in 2026 so that's this year tesla also saying the first gen production lines for optimus that's the humanoid robot are being installed tesla also saying that cyber cab uh and the tesla semi are on schedule for 2026 the company says uh seeing its rebounds and demand for emea and north america and we should note that the company also says that tailwinds are persisting for the U.S.

4:21autos business, and it received approval for full self-driving in the Netherlands in April. All right. The stock, as you see, though, investors liking what it has to say about the first quarter in terms of a lot of those metrics actually looking better than forecast. And again, looking at some of the individual businesses, the company also saying it launched unsupervised robo-taxi rides in Dallas and Houston. As you mentioned, tailwinds persisting for the autos business, first-gen production lines for Optimus being installed. So much of the Tesla story is about what it's going to be done. It's classic vintage, if you will, at this point, Elon Musk.

5:01And we know we've talked a lot. We're anticipating the SpaceX IPO. Speculation, does everything get rolled into one company under the Tesla umbrella, whether it's the AI business? And how does everything work together? And that is certainly something we're watching and we'll be watching out for on the call. Yeah. On that, the question is about what the identity of this company is. Investors are not and have not for years valued it as a car company. Many people who are bullish on the company say it's about AI. It's about autonomy. It's about creating that fleet of robo taxis. You mentioned that it launched unsupervised robo taxi rides in Dallas and Houston.

5:36The company also saying that robo taxi miles about doubled sequentially. that's a measurement that Waymo uses as well to indicate the scale. Usage or testing or a little bit of both. Exactly. Well, this is usage, right? Yeah. But not everywhere. And the rollout is not as far and wide as it is for Waymo. Dana Hall on our live blog, senior reporter here at Bloomberg has been covering Tesla. She's saying, Tesla's saying high up in the deck that demand has returned. Here's the quote. We saw continued growth and demand for our vehicles and markets in APAC and South America. while also seeing a rebound of demand in both the emerging markets and also in Africa and in North America.

6:16Okay, look at that. Tesla shares higher right now, as we mentioned, just by about 3.4%. First quarter adjusted gross margin, excluding regulatory credits, was 19.2%. That's up from 12.5 % year over year. The headlines, though, that are important for our audience, Tesla first quarter adjusted earnings per share coming in above estimates at 41 cents. The estimate was for 34 cents. First quarter free cash flow, 1.44 billion. The estimate was for negative$1.86 billion. All right. With us is Steve Mann, Global Autos and Industrials Research Manager at Bloomberg Intelligence. He joins us from BI headquarters in Princeton, New Jersey.

6:53Steve, come on in. Lots of moving parts, certainly when it comes to Tesla. But it was originally all about the EV business. We can get into other stuff later. How do you think they did in the quarter? You know, like you said, earnings beat actually not a big surprise, given that production was pretty high in the quarter. And I think, you know, positive free cash flow is great versus the negative free cash flow consensus was expecting. That's probably a function of the higher profit for the gross profit for the quarter. I think investors will like this. If I look into their investor deck, shareholder deck, they are ramping up the cyber robotaxi business.

7:41They have unsupervised ramp up over in three different cities. And then San Francisco area, they actually have it running with a safety driver. So I think that's a good sign. I think that investors are pretty antsy about that, including myself. You know, like we're waiting and thinking like, you know, are they are they how are they doing on this? So, you know, I think I think they're ramping up according to plan. What's also interesting, and we actually wrote about this, is that the rest of the world markets for their auto sales is improving. Rest of the world basically excludes their three pillar markets, which is, you know, U.S., Europe and China.

8:28So, you know, we saw, you know, they're actually doubling the footprint in Japan, South Korea sales up. They're starting to get into the India market, huge market potential. So let's hear what they have to say about the robot. You know, I'm not as optimistic on the robot. Well, Ed Ludlow is here with us. He's going to help us make sense of all of these headlines. He is the co-host of Bloomberg Tech on Bloomberg TV. follows this company and all EV companies closely, but is it even an EV company anymore, Ed? This is the no surprises, no drama shareholder deck. So interesting. The return of the word demand about the core EV business is almost a surprise.

9:13We spent all week saying, we look past the EV business. This is about being an AI and robotics company. And we talk about how Tesla trades at 183 times forward earnings. The rest of the MAG7, those are the biggest technology companies by market cap, trade roughly 30 times forward earnings. In other words, this is what we're saying. Investors value this as an AI and robotics company. And yet the stock is up more than four and a half percent in after hours. And what they're talking about is the return of demand in markets like APAC and Latin or South America and demand in other core markets like EMEA for their electric vehicle is that surprising to you given that china has been able to create and build and develop evs that can be bought in some of these markets at a fraction of the price in teslas can be in the in the absence of any specific commentary about china i mean what uh tesla says i'm just going to read it is including the rollout of the model yl y long range or long length in markets outside of China and more affordable trims of both models.

10:19So that's the only real sort of specific way they've addressed China. They're not saying they saw weakness. They're just saying they saw strength outside of China. So I find that very interesting. Shame on us for not realizing this is still a real business, this EV business. But they've been trying to communicate to us that that's not the future. Or shame on them. Well, I mean, there's so many ways we could go about this. In the shareholder deck, they talk about, in passing reference, building the biggest ever chip fab. They don't use the word TerraFab, which I find interesting. The absolutely critical thing for the audience to remember is that any activity relating to Tesla building its own chip factory is not factored into its full financial year capital expenditures guide, which is$20 billion.

11:03They haven't changed that in this deck, unless I missed it, and I can check right now. But to build a chip fab that they're talking about would take in the trillions of dollars. And so one overhang that investors have been worried about, clearly they're not. The stock's up 4.5 % have been, how much money is Tesla going to spend to get all of this done? At some point, they're going to have to put the money where the mouth is to get these projects underway. Okay, go ahead. Yeah, let's bring back Steve Mann, Global Autos and Industrials Research Manager at Bloomberg Intelligence out there in our BI headquarters in Princeton, New Jersey.

11:33You've been listening to us talk with Ed and this kind of idea that, you know, EV is actually still a big deal at Tesla or and they're developing and growing in markets outside the United States. Yeah, I think I think you should think of cars from Tesla's perspective as a robot on wheels. right uh you know for them to proliferate ai um in cars and then later on with a humanoid robot you know they do need to sell more cars right they need to get these this fsd approved and it they had some good news recently at the end of last year south korea approved fsd and more importantly a few weeks ago netherland approved fsd and and that's critical because you know that that can actually help them proliferate beyond netherland into the rest of europe so it's a big deal for them um like you know ed was talking about the model uh why the length and longer model why you know it it's important to have that vehicle especially in asia because a lot of the household over there are multi-generational households so they do need a little bit more room, a little bit more seating room for the buyers over there.

12:50So that's why you're seeing that that car actually resonates, has been resonating with the Japanese and as well as South Korean consumers there. Ed, is this a real business for the company going forward? Are investors betting that the Optimus business will be - There's a distinction between going forward and near term, medium term, long term. Well, that's the Tesla story, right? The language is so specific. Preparations for our first large-scale Optimus factory will begin shortly. What does that mean, putting a shovel in the ground? Yeah, exactly. Well, we just don't know, and I'm sure that they'll get questions on it in the call.

13:26You know, Steve's absolutely right that they did discontinue production of the Model S and X, but they also, for a very long time, Musk himself said they only made that vehicle for sentimental reasons, right? It was so low volume. I find it really interesting that the second part of that paragraph, the first generation line for Optimus designed for 1 million robots a year will replace the Model S and Model X lines in Fremont, California. We are also preparing Gigafactory Texas for the second generation line, which is being designed for long term annual production of 10 million. And I think that's a really significant piece of news for the Bay Area and the state of California that actually just just in writing confirmation that Optimus as a program starts at that Fremont facility.

14:16You know, it's a big it's a big deal. I mean, given what Elon has said about California, the moving out of California. What was it? Was it Gavin Newsom? Yeah, Gavin Newsom said that Elon called him, and this was in Matt Winkler's opinion piece recently, that Elon called him and said, we can't find the talent that we're looking for outside of California. Yeah, and also, by the way, I'm not saying this is barnstorming breaking news. I'm just making an observation that they've set the plan out in writing for something that's hard for many people to believe. Steve makes a very critical point. Again, Tesla's talked about this.

14:46The first use case of Optimus is within Tesla's own facilities in the manufacturing context. And he's talked about selling it to the general population as a babysitter or as a care for the elderly or as part of the labor to address the deficit in labor in various sectors. But I'm just saying, like, they outlined a plan. And if you think about the history of this company, the big tent at Fremont that they put together, you know, the Frankenstein's monster of a factory that it once was, it's interesting how they do things. I also want to bring in Ross Gerber. He's president and CEO of Gerber Kawasaki Wealth and Investment Management.

15:21We're going to roundtable it and you guys talk to each other and we're going to talk to you. The firm has about$4 billion in assets under management. So talk to us a little bit about your first impressions when it comes to these results. This idea of seeing demand in certain parts of the world for the autos business. What's your take? Thrilled. Couldn't be happier to see demand for the autos business. That's the business I'm in is EV business. I care about climate. I want to see them sell as many EVs as possible in the world and they still make the best EV. And so I was like the fact we're talking about cars, I'm so happy because like that's how they actually make money and that actually matters.

16:00Nobody needs another cab service. OK, there's plenty of cab services. If you're in Santa Monica, you can take a robo taxi right now. We got Amazon up next. I haven't seen a Tesla yet. I'd love Tesla to come here where it's really hard to drive and test it out. But but that said, you know, I'm excited about I'm an EV guy. I'm a climate guy. It's Earth Day. I hope they sell as many EVs as possible. Guys, I'm just going to jump in here, Ross. Thank you for joining the show. It's not my show. I'm going to ask you to please hold and stand by. And you guys forgive me for that one. Something just dawned on me.

16:32What? So last quarter, they didn't either. But typically in the third page of the deck, they'll give you a financial summary where they put the headwinds and tailwinds to the top and bottom line. And I didn't even realize last quarter they didn't do it in Q4 and they've not done it this time. So, for example, we don't know what the impact of volume changes is or FX, as an example, or any other specifics, what the impact of operating expenses is on profitability. They haven't spelled it out. And I'm just making that observation. Well, all right. So let me agree with that observation. So what do you make of that, Ross?

17:12Well, you've got to wait for the SEC documents to drop, you know. OK. But I kind of was surprised by the number. So I was trying to parse through why it was better than expected, because with all the extra excess inventory that they added should have hit cash flow harder. So I'm just you know, I want to see their numbers didn't add up with my numbers, basically, because of the excess inventory, which they now have 27 days of inventory, which is actually a high for them. But yet that didn't hit cash flow at all. So or maybe it did because there was 1.4 billion, they say, of free cash flow, but the actual cash that hit the books was 700 million.

17:51But I just want to see how these numbers are parsed out.

17:59If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But even the best strategies can't prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments with expertise, personal attention, and independent agents who focus on relationships, not transactions. The Cincinnati Insurance Companies. Let them make your bad day better. Find an agent at CINFIN.com. Deadlines shift, plans change, and sometimes you just need promo products fast. Turn to 4imprint. 4imprint has hundreds of promotional items available with 24-hour turnaround.

18:46From custom apparel and drinkware to trade show gear, writing tools, and more. And their 360-degree guarantee promises your logo will be printed with care. Your order ships fast, and it'll show up right and on time. That's the certainty of 4imprint. Check out the full 24-hour selection at 4imprint.com. 4imprint. For certain. Find home wherever you roam at Sonesta ES and Simply Suites, where longer stays feel comfortable, flexible, and easy. Stretch out and enjoy spacious accommodations and home-like amenities designed to help you settle in and stay productive or relaxed for however long you need.

19:23And when you're a Sonesta Travel Pass member, staying at Sonesta ES and Simply Suites means earning points toward free nights, upgrades, and more with every eligible stay. Go to Sonesta.com to book your stay and unlock the best rates with Sonesta Travel Pass. Here today, roam tomorrow. Join now at Sonesta.com. Terms and conditions apply.