Morning Brew Daily - Tesla Earnings Dive, Facebook could owe you money?, & TSwift shut down FTX

Episode Date: April 20, 2023

Episode 43: Neal and Toby break down the latest earnings from Tesla and explain what they mean for the company moving forward. Also, Facebook might actually owe you money. Here's how to make your claim in the $725 million lawsuit. Plus, the CEO that told her employees to leave 'pity city' and why Taylor Swift shut down FTX. Learn more about our sponsor, Fidelity: https://fidelity.com/stocksbytheslice Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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at pwc.com slash US slash brew AI. That's pwc.com slash us slash brew AI. Good morning brew daily show. I am Neil Fryman. And I'm Toby Howell? Today on the show, how you can get free money

if you've been zucked. And I'm going to ask Toby some trivia questions about 420. So we'll see how well his short-term memory is holding up. Then we'll check in on a CEO who just got exposed for the most tone-deaf all-hands meeting

we've ever seen before telling you about another extremely common Taylor Swift dub. It's Thursday, 420, let's ride. Neil, it's 420, as we mentioned at the top of the show, and currently Starship

is on the launch pad as we speak. It's got a launch window of 9.30 a.m. You're crossing your fingers. Let's hope. I mean, last time, didn't it get called off within 10 minutes of it expecting to launch? So there's so many moving parts. And obviously, it could go wrong at any

moment, and they'll call it off. But come on. You know, it's Elon Musk. It's 420. Let's get the Starship off the ground. I know. Biggest rocket ever, most powerful rocket ever. It's going to go into space, come back into orbit for a little bit, and then come back and splash down near Hawaii, and it's taking off from Texas. So it's got a long journey in, I think, about 90 minutes ahead of it if it can get off. So let's hope. I will have the YouTube up and I will stop the show if this thing explodes or goes somewhere. That's our promise to you. Okay, Neil, so it's only fitting to start

our show on 420 with Elon. So it's like a roulette wheel at this point. We can either talk about Rockets, we can talk about Twitter, but today we're actually talking about Tesla. So yesterday, the EV maker reported earnings. And if I had to sum it up in one sentence, Tesla produced and sold a record amount of cars, but it did so at a lower price point than expected. That was a long sentence. So here's some specific numbers to kind of back that up. So Tesla delivered 423,000 vehicles in the first quarter. That's up 36% from the year before. They also produced almost 18,000 more vehicles than they delivered. And given that oversupply, it lowered prices by between 14 and 25%. So this is kind of the new reality for Tesla right now. Elon said on the earnings call, we've taken a view that pushing

for higher volumes in a larger fleet is the right choice here versus a lower volume in higher margins. So it's in its Walmart era? A little bit. He's kind of, he's slashing prices. The model Y is down 29% then in mid-January. So it's now for under $47,000. And the model three, which was Tesla's first, you know, inexpensive model is now below $40,000. They've done six price cuts. And I think it's good for us, right? Or good for the consumers, for sure. Yes. But so investors sent the stock down maybe 6% because of this squeeze and margins. And this is a really, I know it sounds a little business jargony, but margins are super interesting in the auto business. Tesla has massive margins compared to its competitors.

They went down to 11.4%, a roughly two-year low, and it was 19.2% last year. But that is way ahead of the competition. Yeah. So, I mean, just to put in perspective, Forbes operating margin is around 4%. And GMs is around 6.6%. So this is the amount of money they're making. on every right call they sell. And so you can see that even though Tesla's dropped from 19 to 11,

like they're still ahead of the competition. I actually did a little digging, though, and I looked at which automakers have the highest operating margins. Turns out it's Ferrari and Lamborghini. So Lamborghini, 25.9% operating margin. Are those cars any more expensive to make? A little bit. Maybe they have certain materials.

But Tesla is the first sort of like mass market automaker. to have a pretty meaty margins. And there's a couple of reasons. First of all, it doesn't market. It has no advertising. Crazy stat that Tesla spent less than $1 in advertising per vehicle sold in 2020. By comparison, Ford spent $468 and Chrysler spent $664. So they're obviously buying Super Bowl commercials and getting their name out there.

And Tesla doesn't seem to have to do that. And they directly sell instead of buy, they bypass dealerships as well, which helps them. Right. No, their margins are tasting. and then they also own their whole production supply chain, like the giga factories and whatnot. Another big news from the earnings call is that the cyber truck is potentially coming. I don't know if this is big news at this point. No one saw me roll my eyes.

But on the call, Elon Moss said starting in the third quarter, they were going to start delivering cyber trucks. This has truly been the biggest tease of all time, but third quarter seems close. I have no clue. I'm not thinking about it. I'm waiting until I see that on the road. road. I think I've been on the cyber truck waiting list just as for giggles. It is the ugliest thing I've ever seen. Yeah, it's funny. So my big takeaway, just to move on from Tesla, but overall is that it used to be

constrained by supply. Elon Musk would always say, we're in manufacturing hell. I'm sleeping at the factory because we can't produce enough vehicles to satisfy demand. And then now those tables have turned, and there is not enough demand to satisfy all of the vehicles it's producing. Yeah, they produced 18,000 more vehicles. So if we go back to early last year, they had a three day of supply. That's kind of how they measured it in the auto industry. Right now, they're sitting at a 15-day inventory, which means they could sell 15 days' worth of cars and still be fine. So you're totally right. We're in a supply glut versus in the past. It's always been the opposite. All right. So that's your Tesla story. Lower margins, more cars, less demand. And cyber truck may be coming. And cyber truck may be

coming. All right, moving on. Toby, can I interest you in some free money? I love free money. Tell me. All right. Well, if you use Facebook in the past 15 years, which, honestly, I am not sure I have, I will have to check. You could be entitled to grab a slice of the company's settlement for giving data mining firm Cambridge Analytica, which we all remember, and other third parties' access to its user's private information.

Last December, META agreed to pay $725 million to settle this class action lawsuit, which was the largest class action privacy settlement ever. and the application to grab your share Facebook users in America is now live. Neil, when I heard this news, it kind of reminded me of those commercials you see on TV for, like, mesothelioma. So I'm going to do it right now for you. Have you, or a loved one, use Facebook in the last 10 years? No. Do you have dreams of getting sucked by Mark Zuckerberg?

Then you may be eligible for your part of a $725 million settlement. Kudos. I'm going to sign up right now. I know. That got me. Thank you to our audio team. I feel like I was, for making that music for us.

I was watching at 1 a.m. just like in a days after 420. All right, so you actually just filled out this application. Take us through the process. Literally this morning, I was like, might as well do our due diligence here.

It was so incredibly easy. First of all, shout out to Apple's auto fill feature because you have to fill out all your personal information, your address, one button, filled it all out for me.

And this was, I thought, the coolest part. in order to actually receive the settlement, they gave you a bunch of payment options. Venmo was on there. So I literally just put in my phone number for Venmo. And I guess in the next year or whenever they pay it out, I'll get some sort of Venmo from Facebook or from Meta, which is honestly, that felt like very 20th century to me,

like 21st century, very modern way of actually like taking a part of the settlement. All right. So let's run some numbers to figure out how much we can expect and how much you can expect. Who's the guy on MSNBC, NBC with the khakis? I felt like him. Jim Kramer? No, the guy does the election stuff. Oh, I got you.

I forget his name. I'm just like blanking right now. It's 420. Anyway, so let's say you can claim 50% of the total pot of the $725 million because lawyers get 20% percent. Let's not gloss over that. Lawyers get 25% of this. Are you freaking kidding? Yeah, we're in the wrong line of business.

So we're left with $363 million conservatively. So how many people will claim? That's really important. Facebook had 266 million monthly users in Canada in the U.S. So you have to be in the U.S. to claim. So let's just put that at 220 million users conservatively again. An FDC study from 2019 found that a median of 9% of eligible consumers filed claims in lawsuits. So that's roughly 20 million people right there filing.

So if 20 million people claim, then you are about to get $18 to your VEN. Let's go. I was hoping that number is going to be. a lot bigger at the end. Please check my math, everyone. But yeah, $18 for your Venmo, but not anytime soon. This takes a long time to process, I would expect, in the next few years or so. Nine?

Okay, so it's 9% typically claim in these big lawsuits? Interesting. Okay, I'm part of the 9%, baby. Let's go. But there was, do you remember there was Equifax, which was the credit reporting agency that had a very similar settlement because it got hacked? It had to pay up to $700 million to people who used Equifax. people filed claims thinking they were going to get $125

and then ended up being about $25. So this is kind of in the same ballpark. All right, so don't have high expectations for this. I hope to see that Venmo, Mark, if you're listening. Do you come from? I know. Toss me a little extra, okay? A little something on the top.

Okay, Neil, we had a new villain pop-up on the internet this week. Andy Owen, the CEO of Furniture Conglomerate, Miller-Nole, went viral on Tuesday with a 90-second clip of her telling employees to stop worrying about whether or not they'd get bonuses. And here's the big quotable line to leave pity city. So we actually have a clip from her speech that will play for you now. Lead. Lead by example. Treat people well. Talk to them. Be kind and get after it. Don't ask about what are we going to do if you don't get a bonus. Get the damn $26 million. Spend your time and your effort thinking about the $26 million.

we need and not thinking about what you're going to do if we don't get a bonus. All right? Can I get some commitment for that? I would appreciate that. I had an old boss who said to me one time, you can visit pity city, but you can't live there. So people leave pity city. Let's get it done. Thank you. Yeah, I mean, she started off calm and then got and then the frustrations boiled over. and then this was just a train wreck. Like, there was too much momentum to stop it. I know. This was a really, really tough look for her because here's the kicker is that she's telling people

to stop worrying about if they got their bonuses. So, of course, people did their homework. She took in a nearly $4 million bonus herself last year. So it's truly, like, one of those tone-deaf moments of a CEO saying, like, don't worry, work harder while they are raking in some big bucks. Yeah, we've seen that a lot recently. And it always hits a nerve in these uncertain economic times.

People are getting laid off. They're not getting their paychecks as high as they once were. Inflation is kicking in. And for some reason, well, not for some reason, but there's Zoom now and people are recording. So maybe bosses have been doing this for the past, you know, forever. And now we see it. They're posting dumb things on LinkedIn that show they're not out of, they're not in touch with, you know, the real people's lives. Like this one guy, the CEO of hypersocial who posted on LinkedIn, he was laying on.

he was laying off people and he posted a picture of him crying as if we should feel bad for him. So there is this, obviously, this huge vibe that bosses, they're not like us. And all these more videos that come out only seem to confirm that. Although I will say I do feel bad because this was taken out of a 75-minute call. This was a 90-second clip. And apparently the way that the bonus structure works at this company is that you don't get the bonus unless you hit the the sales goal. So it was $26 million.

So by her saying, stop worrying about whether we'll get bonuses or not, which is basically like, of course we won't get bonuses unless we get this goal. So again, I know no one wants to have that take,

but I could see where she's coming from. Yeah, again, it's just, this is going into a future management case study of how not to motivate people. Right, right. Right? Like, you could do this one-on-one.

She said that her manager told her to not get out of pity city. And that is like a reasonable thing for your manager, mentor to say to you to be like, you know, come on, like snap out of it, man. But your coach would say something like that to you. And you might respond positively. But in that setting, it just was not the right thing to say clearly. She did apologize.

She did. She did apologize. Okay, Neil, before we jump into our next story, we're going to take a quick break. I wrote a little song to remind you, choice hotels, get you more of the experiences. U Valley. The Cambria hotels got it all a rooftop bar

have a ball Cocktails up here feel just right Is Cambria amazing all right Bring a date your team

or even your mom Book direct at choicehotails.com See you on the roof Okay, let's move on to Neil's numbers Are another alliterative

segment because we can't think of any other ideas. And I share three numbers with Toby and you all that are quite interesting that I read in the news. So let's start off. First number is 49. So a guy named Adam Faze, is that I pronounced? Faisy clan.

A guy named Adam Faze made a curious discovery on Spotify this week. He posted on social media that he found 49 versions of the same song. They had different artist names and different titles, but they were the same exact. 53 second song. And other people have since posted showing they found more instances of this same song but different name thing going on on Spotify and other music platforms. It's been known for a while that Spotify has a fake artist problem. It seems that some musicians are taking advantage of the growing trend of mood music. So where listeners are putting around background music, playlist for work,

sleep, exercise, whatever. And if you game the system to get on these mood music playlist, you can rack up streams and make money. Yeah, that seems like that. It doesn't even have to be that good. That's kind of the thing. It can just be noises, basically, because it's just in the background. Yeah, I've definitely been on those playlists where you just hear a random, like, 42-second clip of, like, it's not even good. It's like sound waves or something like that.

And then also, we've got to mention AI in this debate, too, because with the rise of AI music, I feel like we're going to only talk about this more with people just flooding the platform with really easy to make AI songs. Yeah. It kind of reminded me of our, it kind of reminded me of our conversation about virtual brands on Uber. Yeah.

Right? So Uber Eats had all of these brands, all of these restaurants with the exact same menu just to like drive traffic. Just rebrand it under different names. Just to get as much real estate as possible. So we're seeing these completely takeover platforms. All right. We got to do a stat for 420.

Americans spent more on legal marijuana products last year than chocolate and craft beer combined. This was very surprising to me. I was going to ask, my question was, are you surprised? It sounds like it is. I am surprised because I would have thought that, I mean, chocolate, if you think about just the holidays alone, which is like Valentine's Day, what else? I guess it's only Valentine's Day. Oh, no, Halloween, Halloween. Halloween.

Like, I would thought those two alone would absolutely dominate. I know, but people eat gummies every day. I know, I guess, I mean, walking down the street, we see a bodega selling weed. So I guess, I mean, this was exactly what people were saying. when they promised that like tax revenue would go up from legalized marijuana. So clearly we're seeing that it's selling pretty well. The reason I was surprised was that there's this only represents a fraction of the total cannabis market.

So it's only as of 2021 legal sales of which there were 30 billion only accounted for 25% of the total cannabis market. Wow. According to estimates. And New York, New York plus 21, 21 states total plus the district of Columbia have now legalized marijuana for recreational use. So you can kind of get it in big market. Almost half state, half of states in the United States. All right. The third stat, on April 5th, there were 13 AAA minor league games

and 11 of them drew more fans than the attendance for the professional team, the Oakland Athletics, who drew 3,400 people that day. I think their stadium fits 50,000. So it's kind of a ghost town. Four of the AAA games more than doubled the Oakland Athletics attendance. The reason I'm bringing this up is because the A's look like they're going to be leaving Oakland this morning. The team signed an agreement to buy land in a new stadium in where else, Las Vegas,

and hope to move there by 2027. This is so sad because I'm sure many people have been on Moneyball TikTok recently where we're just re-watching clips from Moneyball. And that is such a good movie. And it makes everyone deep down like a little bit of an Oakland A's fan. And so it is truly sad to see that I guess the Moneyball era hasn't panned out like Billy Bean unexpected and it's just not no one's watching no one well no one's watching but the fans are saying it's not our fault we're not going to watch this team which is objectively maybe worse than most minor

league teams yeah because they haven't spent any money together two pitchers max scherzer and justin birdlander make more than the entire a's roster money ball baby if it works it works if it doesn't it doesn't we should talk about Vegas growing as a sports destination they have three professional teams now the nights in the n hl the radio in the NFL and the Aces in the WMBA. They're about to get an MLB team, and you know an NBA team has to be coming. MLS?

Anybody? Yeah. When's it coming? Yeah. Vegas. So hot right now. Okay. Neil, Taylor Swift is back in the news once again for pulling off

yet another legendary move. So we all remember FTX, right? The crypto exchange that was tossing around customer funds like it was nothing. And founded by the apparent boy genius, Sam Bank, Infid. Well, back in its heyday, literally about a year, two years ago. FTX was shelling out the big bucks on celebrity endorsement deals. So we're talking about deals with Larry David, Shaq, Steph Curry, Tom Brady, really, really

A-list celebrities and athletes. So apparently Taylor Swift was also one of the people approached by FTX to endorse the company. They offered her a three-year, $100 million deal. A hundred million, Neil. Like, it's not nothing. I heard you. And you know what she said.

Can you tell me that these. These are not unregistered securities. And so this is a big question to ask, and we'll get into that. But Adam Moscovich, which is a lawyer who is involved in a lawsuit suing FDX right now, said that in their findings, Taylor Swift was literally the only person who asked that question before signing the deal. And then she obviously did not get an answer. She liked and turned it down and is now escaping this entire mess. They're being sued for $5 billion. This is not nothing.

And this lawyer, I don't know. Who's going on podcasts, like, as a lawyer? Honestly, like, when you got a sound bite as juicy as that, like, I don't blame him for that at all. He's getting me, what's his name vibe? The Stormy Daniels guy. No, I shouldn't say that because he's now in jail. Yeah. But, yeah, I don't know.

Tell us why unregistered securities are important. Right. So there's been this huge debate in the crypto industry about around security. So I'll just quickly define what a security is. And this is a very technical definition. But it's a fungible, negotiable financial instrument that holds. hold some type of monetary value. So in common language,

basically a security can be a stock or a bond that you own. And those things are under jurisdiction by the SEC. And so the SEC has been at war with crypto exchanges because they think that some of the tokens traded on these firms are securities because they're looking at them and saying like, look at the definition of security. These things have value, allegedly. You can trade them, which is, again, part of the definition.

So how is this not under our jurisdiction? But then crypto companies are like, no, no, no, no. These definitions were made in literally 1933, 1933, 1934. They weren't built for a world in which cryptocurrencies exist. Like, please update the legislation to better reflect, like, the current environment, the current fact that the blockchain is this ledger. So there is this huge tension between the two. And so Taylor Swift clued in on this discussion and asked the question.

Because individuals can be held liable for promoting unregistered securities, which is what Tom Brady and Steph Curry and Larry David all allegedly did. For sure. Yeah. And Shaq. The funniest part about all of this is that Shack, they couldn't serve Shaq the legal papers because he was apparently avoiding them for months. And they waited outside TNT Studios in Atlanta. And they finally, I think last week, they finally served him as papers. So funny that you can't track down Shaq.

Can't try it. He's small guy. I once saw Shaq's pickup truck in a Boston parking lot when he played. played for the Celtics. It is like a pickup truck slash trailer. Semitru. Like ShaqMobile. Hell yeah. Okay. Let's do some 420 trivia. We usually go to trivia. We didn't go last night. So we got to push it over to the podcast today. We all know April 20th for being a celebration of marijuana, but a lot of other notable events have happened on this day in history. So I'm going to give you some questions about 420 in history. All right. Number one, in 2010, an

explosion on an oil rig in the Gulf of Mexico resulted in the largest marine oil spill in history. What was that rig called? Horizon. That's one of the word. Horizon. Horizon something, Exxon, Exxon Horizon. No. Deepwater Horizon.

I was going to be like, where is it? Where's Horizon in? Deepwater Horizon. Wasn't there a movie about that? Yeah, there was with Mark Wahlberg. Classic. All right, I'll give you 50% on that. I'll take it.

Second question. This race car driver became the first woman to win an Indie car event with her victory. at the Indy Japan 300. I think that was in 2008. Danica, Patrick. That was on 420? Yeah. Oh.

The more you know. It was on 420. The more you know. It's a random day. Yeah. All right. So you have 1.5 out of two right now. Two iconic baseball stadiums opened on April 20th, 1912.

Fenway Park in Boston and Navan Field in this U.S. city. Oh, man. I don't recognize the name, but I'll tell you what it was later known as Tiger Stadium. Okay, so Chicago. No. Oh, Detroit. Detroit. Detroit, sorry.

I'm only taking your first. I know, no, no. I meant Detroit. I was thinking Detroit. That's good trivia, though. Yeah. Same day in 1912, pretty interesting. And the Tiger Stadium closed in 1999, so it had a pretty long run.

Obviously Fenway is still around. Your fourth question, 420 is called UN Chinese Language Day, because it's one of six official languages that is recognized by the UN. What are the other five? Oh, okay. English? Yeah. Spanish?

Yeah. Italian? Nope. Damn it. French? Yep. Okay. Japanese?

Nope. Dang it. Give me some... Middle East. Oh, Arabic? Yep. How many am I at? Do I have one more?

Yeah. There's one country that's on the National Security Council that people are like... Russian. Yeah. Russian. Yeah. Okay, so it was... Russian, English, Spanish, French, Arabic, along with Chinese.

Damn, Italians. Which I think Chinese is not a language. Mandarin. Mandarin. Yeah. Interesting. Last question. You're doing really well. I'm actually very impressed. During the height of the COVID pandemic in 2020, oil prices did what for the first time in history on 420? I mean, they either went down or up. So I'm going to say down. They went down for the first time in history. Well, I don't know. On 420? Yeah. What happened on 420, 2020? I mean, there's some, there's like an actual answer. They did this for the first time. Yes. And it's not moving up or down. It is a function. I don't know what else oil prices do. It is a function of moving down.

Okay, oh, drop below 100 for the first time. Drop below zero. Oh, below zero. They went negative for the first time. So people were paying people to take oil off their hands because there was no movement and energy use went to, you know, zero. So people were paying you. You were like, I have all this oil. You remember that.

That's so bad of me because I was covering these stories at the time. That's tough. Went down. Anyway, great job. I'll give you like a 60% on that. It was a hard curve. I hope everyone also enjoyed playing at home. Happy 420, everyone, and I hope this starship blast off.

We're about to race out of the studio to find out. T-minus five minutes, yeah. You can always reach us at Morning Brew Daily at Morningbrew.com with any thoughts or questions. Let's roll these credits. Shows producer and editor is Emily Milliron. Our technical director is Euchenna Wa Ogoo. Our supervising producer is Bryce Belloff. Nala Nudga and Raymond Liu are associate producers.

Hair and makeup bought a house in Pity City and has come back. Devin Emery is our chief comment. Our show is a production of Morning Brook. Great show today, Neil. Let's run it back tomorrow.