Well, Elon Musk Just had a surprise discussion with Morgan Stanley on everything from Twitter to Tesla to SpaceX and Starlink. Let's go through and cover some of the latest that Elon just told us. and what did he tell us about that next Generation vehicle and what else did he have to say about Twitter's profitability? Well first he started out his Um discussion with Morgan Stanley analyst talking about how the goal is to find the truth. That was one of the reasons Elon Musk wanted to buy Twitter is to make sure that the truth can be spread as much as possible.

Now that doesn't mean there's not going to be a lot of BS but you want the truth with the lowest level of error rate and that's why they're expanding that Community notes feature on Twitter Which one of the things that I noticed that I thought was really neat was there were a few ads that were running on Twitter and they would say things like uh, why borrow from a bank when you could borrow yours from yourself by using a home equity line of credit and I'm like home equity line of credit is from like a credit union usually or a bank and so I saw that ad and then after that which this is an Advertiser paying money to sustain Twitter's viability, right? the community notes actually put a comment underneath that ad saying ah, this is not exactly accurate. You're not borrowing from yourself, you're borrowing from a bank using the equity in your home and I'm like yeah, like that's awesome like we should have more like, more Community notes like that to prevent uh, the spread of just straight up false information, right? We're not trying to play the controlling the left or the right or the narrative. It's just like if stuff is totally wrong like it'd be nice to add some context or Clarity right whether it's sarcasm or it's meant to be deceiving or otherwise right. Community notes have been useful for that.

So I think that's pretty interesting. I Also think it's interesting that Elon Musk starts by talking about over at Twitter What's uh, neat is you actually tend to get news much faster than you might through mainstream media sources like the TV or new newspapers. for example, there were 50 000 tweets about chat GPT in the chat GPT announcement and how incredible it was before the mainstream media started picking up on it. also.

Elon Musk talks about how newspapers and mainstream media coverage are generally negative. You rarely find positive news now. In Fairness when you go on. Twitter Most of the viral stuff seems to also be very negative.

so I don't know if that's so much of a mainstream media problem, as it is just a human condition where we're more drawn into negative news than we are too positive news, even if like, sort of. the the intro is negative and then there's actually like, okay, this is what looks negative but then here's why it seems negative. Here's the context. here's the information.

Why? Maybe it's not necessarily as bad as it seems, right? It's almost like the way to educate these days is attacking head-on what is negative news and then sort of breaking it down into digestible information that we can actually glean education from. But it does seem like negativity does spread. But anyway, Elon Musk has this idea that there's much less negativity on Twitter whatever. Man, personally, I think everybody goes onto Twitter to sh9t post, but whatever.

that's my take. Elon does say that the average time people spend on Twitter is 30 minutes. That works out based on their monetizable user base. That works out to about 138 million hours per day now.

Elon Musk Repeatedly said that the people who are on Twitter and his opinion are, uh, maybe the smarter bunch of people who actually try to get educated or whatever. I'm okay I mean sure, you know I'm not I don't want to diss some people on Twitter I Personally think you get a lot more perspective on YouTube because you can actually go deeper into a conversation and the thread conversations on Twitter still suck you like for example, just the other day, Newt Gingrich is complaining about uh, uh, Governor DeSantis and his legislature potentially introducing a bill that would require the registration of any kind of blogger who's talking about Executives in the State uh or the governor right? And and then there's this whole fight going on about oh, this is censorship or no, this is good or that And like the whole bill was missing from the context, the bill is like you have to get paid but then we want Clarity on what is that getting paid mean right? And those are the conversations that are usually absent from those shorter. Snippets So what I personally like to do is if I see something trending on Twitter I try to get more information on it but but usually off Twitter It's kind of interesting. but anyway, uh, Elon Musk says that they currently make about five to six cents per hour of that time I did some really quick napkin math and that works out to about 6.9 million dollars a day.

207 million dollars per month. or if you multiply that by 12, just about 2.5 billion dollars of income at Twitter. Now what's interesting is Elon Musk did end up talking about some numbers. He mentioned that, uh, previously, maybe they had about 4.5 billion dollars of Revenue and 4.5 billion dollars of costs, but now they've added on about 1.5 billion dollars of debt and a massive decline in ads.

So you've had major issues for the sustainability of Twitter. This is why you said Twitter is trending towards bankruptcy, right? Because after all, if you take 4.5 and you take off somewhere around two and a half or like 40 to 50 percent, what do you end up with? Ah, about two and a half billion dollars? Which is roughly where that five or six cent per monetizable hour is right now now. Elon Musk Thinks that they can, actually, uh, potentially double this? triple this 5x this number. They think they could get to 15 to 25 cents of uh uh, per hour of monetization of somebody's Time by serving up relevant ads.

He thinks it's very frustrating right now that most people who use Twitter don't actually buy anything on Twitter because the ads just aren't relevant. Whereas in the future, he envisions the opportunity to use Twitter for oh uh. here. Do you want faster internet right now? Yes or no, That's cheaper than what you're currently only paying And you click? Yes! And you have internet That's sort of like his his thesis of how simple it should be to be able to check out and buy things on Twitter uh, in the future.

Right now, he says only about 20 of ads that are delivered on Twitter are really deemed to be relevant based on the algorithm. He also complains a lot about the code base. He talks about a fractal Rube Goldberg machine. So room Goldberg machine is basically like a Contraption You kind of want to think about a cartoon Contraption like imagine you're you.

You want to drink water and then you have a helmet on and then you have like three hoses that go into multiple different jugs and then another hose that comes up to you with a pump where you have to push the pump with your foot or something crazy just to be able to drink water right? So in other words, like the end result is the same. It's like you are thirsty, so pick up bottle drink water right? But no, you have this entire contraption that makes something very simple, overly complicated, right? So when you over complicate a simple task, it's very easy for it to break. And so a fractal version of this is. uh, so when you think of fractal, kind of think of a cloud like how a cloud repeats itself.

it just goes on and on and on. Or another way to think about it is like a kaleidoscope where you look in the kaleidoscope and it's like man, Everywhere you look it looks like you just have a repeating pattern of the same like Goldberg machine basically. Basically and so this idea is at Twitter that every time Elon Musk looks at something or the team looks at something from a code base, they're like, why is this so complicated Every time we change one tiny thing, we break 27 different things. This is ridiculous.

Elon Musk On Twitter Yesterday talked about how eventually they might have to just rewrite the entire code base because it's so stupid. basically the way it's been set up right now. Basically you give an example where hey, look we had a bug where people who were suspended from being able to join certain people's Twitter spaces could still end up joining those spaces. So we temporarily disabled people's ability to join those Twitter spaces.

But by disabling people from being able to join spaces which is where you have voice chat, Anybody who has used using an Android phone was no longer able to like tweets but you could on iOS So it's kind of like this is stupid. So anyway, he talks a little bit more about the burn rate over at Twitter. He thinks the burn right now is down to about 1.5 billion dollars. They've cut a lot of money on not only employee costs Cloud costs down 40 employees down to 2 000 from 8 000 three data centers down to two data centers.

they, uh, they think they're potentially at a place where they could be, uh, ebitda profitable now. But Elon Musk says well, we got to get the earnings up because our depreciation is really high. We would love to be able to write like pay taxes because that would mean we're actually making money, but we got to get the earnings up. Uh, and so Elon Musk Thinks that maybe total income minus expenditures could be roughly equal, maybe slightly positive in the second quarter of this year, and hopefully profitable thereafter.

At the end of last year, they sat at 253 monetizable daily active users and Elon Musk then makes this big sort of slam piece uh statement where he says what you read on Twitter is the real thing. What you read in the newspaper is not really doesn't like the mainstream media anyway. there are social networks with more users he says, but nobody's as smart as the users on Twitter. It's a nice compliment to the people on Twitter He talks about his app x.com how potentially in the future it could actually end up becoming one of the biggest financial institutions in the world by making it very easy to send money from one account to another, earn interest, go into debt, basically provide people with the ultimate convenience.

It sounds to me kind of like a a merge of maybe like Zell and PayPal and banking all in one and crypto and blockchain like all in one together. like the best of everything together makes sense. Uh, probably far down the road. He says it took about 20 years to build the Tesla management team, that it'll take a few years to build the Twitter management team, but it'll come.

He talks about then Tesla and sustainability. Big fan of solar and wind and batteries, not the biggest fan, so much of geothermal apparently or or the other potential methods for Um for energy. He believes that the next generation of producing Vehicles the Gen 3 platform. He actually gives us more detail here in the very little bit of time that he spent talking about Tesla's next-gen uh, a platform.

in my opinion. He gives us more detail here than he does or did in investor day. He just says look, the next Gen platform is going to be for producing a smaller car that it's going that is going to be almost entirely autonomous. Okay, great.

So now we know that Gen 3 is not to just make a cheaper model 3. it's actually a totally different car that is smaller and is expected to be almost entirely in autonomous mode. So maybe optional steering wheel. but anyway, that requires be, you know, basically mastering FSD So really interesting.

He then goes into this idea about how you know people are looking at Tesla totally the wrong way that the total addressable Market is not selling 20 million Vehicles It's really that what we should be doing is thinking about how Tesla is a software company and once we Master autonomy, you really have a massively larger uh software margins that basically we can get software margins in Hardware where like here's a car Uh, and maybe we do the car for a break even. But then we have like a hundred percent software margin on on being able to provide FSD or like 99, right? It's kind of like the hardware business just operates as a break even potentially a Tesla and they just make a crap load of money on the software. It's a brilliant idea in some regards. it's somewhat similar.

Well, I mean I'm not trying to compare myself to Elon Musk but we're we're trying. We're trying to accomplish exactly the same thing at my real estate startup, where basically we're able to use one stream of income to cover all of our operating expenses and then just milk that cash flow off something else. Now, more details on that later. but but that's a phenomenal uh vision and a phenomenal game plan.

Uh, it. So Elon goes on to say that look the Tam the total addressable Market is Huge. It's all humans, because really, you could 5 to 10x the value of a car in that cars that you're usually sitting around not being used for. But maybe 10 to 12 hours on average per week could in the future be used somewhere between 50 to maybe 100 hours.

His phrase was 50 to 60, so closer to five to six x. So that was neat and it makes a lot of sense. I mean I Kind of think about it from the point of view of if you sell a 25 000 vehicle, if you could reduce the cost of goods sold by 50 fantastic, you could still have a 25 to 30 margin. That's great.

But if you needed to go to zero margin and only make money off FSD you could literally get back to a 25 margin solely with FSD sales. And No. Hardware margin like the margin of safety at Tesla is so freaking phenomenal. It's one of the reasons it's my largest holding.

Uh, you know, in not only personally, but also In In, you know, Financial products out of management. but uh, all that aside. Uh, so then Elon Musk jumps into Starlink talks about how they have basically more than half of all of the satellites in orbit right now, you got to get to low earth, uh, low orbit levels with satellites to make sure you can provide low latency internet. and he gives some technical comparisons about light traveling in a vacuum uh, versus through fiber optic cable.

and he believes that light, uh, well, scientifically, light travels faster uh, in a vacuum than it does through fiber. and he believes he can accomplish a lot of those similar benefits by sending data through low Earth satellites. which I'm personally not a scientist I Don't know, maybe, but you could say that the the uh, you know what's between satellite one and satellite 2 is in a vacuum. but I'm not really sure how that data from the satellite to the user is considered to be in a vacuum since you're going through the Earth's atmosphere.

but maybe that's not the point. Maybe the point is just saying like, hey, like we use fiber optic cable to go from continent to continent, why use that cable when we could use something that's maybe 40 percent and faster? Like Satellites I Think that's probably more the direction he's using. Maybe somebody can fact check me in the comments of that. But anyway.

uh so then he talks a little bit about the Starship how they hope to launch it. uh, next, uh, month They think there's a 50 chance of reaching orbit and the only guarantee Elon Musk gives is that it will be extremely, extremely entertaining. So anyway, uh, personally I Thought this was more interesting than Investor day. Yes, thank you so much for asking that question Darby Mostly because like all of the, the details are fantastic of Investor Day like I did like the takeaways about the robots and basically the the parallel manufacturing.

I Thought some of those details were phenomenal. Some of the additional details on cost structure reduction I mean look absolutely phenomenal. but I think that was not an investor Day Presentation that was more of an engineering presentation. If if that was just labeled engineering presentation, you know what? fine perfect, fantastic.

An Investor Day style presentation would be more like look. Our goal is next vehicle 50 the cost. It's uh, it's gonna be a smaller vehicle, mostly autonomous, total addressable Market Infinitely greater than what people are expecting, right? Like the things he said today gave much more color to the Future cash flow potential of Tesla than uh than than the investor. They did the investor.

and that's because we already went into Investor Day expecting that the Next Gen platform was going to have a 50 cost reduction. It was just sort of like here's how, right as opposed to more of sort of a forecast. Uh, anywho, uh yeah, maybe it was an opportunity for Tesla to show off the team I Personally think they could have coordinated that a little bit better, right? So that's been sort of. My argument is that like maybe everybody could have done a dry run of the presentation because some people didn't sound like super prepared for it.

Kind of didn't seem like Elon Musk really was fully aware of what everybody was going to talk about. It's kind of like ah, here. I am okay, let's throw this together, which fine. It ended up working out just fine anyway.

and uh, look, obviously still still a big fan of Tesla but do I have my criticisms of course? uh. and if somebody is you know doesn't want to hear criticism then and balanced opinion then probably you don't want to listen to my channel anyway because that's always my goal is to try to sort of balance things out. But I mean when you compare Tesla to the competition, I mean who else is doing what Tesla's doing and I think that's the big question? It's certainly not Ford or GM They're not even close to profitable yet. it's certainly not.

uh uh, you know, Neo or Byd. I mean these these companies are focusing on either using Nvidia software uh, over at Neo or you're looking at Adaptive Cruise Control over at Byd. There is no priority on Autonomy right now, so people keep comparing Tesla to other companies. but really, what you should be doing is comparing autonomous driving vehicle platforms.

It may be comparing Tesla to Waymo, but now Waymo is cutting off P or is laying people off from its staff. That's kind of like why you know? So I I don't know and I know people say Oh, but Elon Musk has had layoffs too. Yeah, but not necessarily in the FSD team the auto labelers. After they wanted to unionize, they had a little bit of a off though.

I think 26 of them got fired. But anyway I find it very interesting. So uh, those are just some thoughts. Uh, some things to think about I like that Tesla Investor: they showed off all the team.

Yeah, of course I mean I think that's also a big deal, right? It's kind of like hey, here's the management team that is. uh, that's definitely a big deal because you you want some confidence that Tesla can also operate even without Elon Musk That does take sometimes years to a decade for a company to actually build Elon Musk one. As far as saying, it takes 20 years. but uh yeah, take it from there anyway.

Thanks so much for watching. We'll see you next one! Bye.