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00:00What's your take. Catherine how does this play out in Delaware court. Yeah I think I'm going to agree with the respondents. I think ultimately this deal doesn't happen. I'm not. It's not clear to me why it made sense to begin with. And I understand Elon Musk is very smart. He took Tesla off a loss making deal and he's made it a success. He made pay pal a success. Maybe there's a theory he was going to turn around Twitter and you know pull something else out of his hat. But apparently he's lost interest. And I think it's time to move on that. What does this mean for Twitter and what would it mean for Tesla. You know for Twitter I think it's been quite disruptive. And I'm almost wondering if they're going to try to get more than the billion dollars. And I think if there was a people who believe in Elon Musk thought wow he's going to get involved in Twitter and he's going to turn it into a gold mine. So I think for Twitter it's it's not good either way. I think it's been disruptive. I think if there was hope you know put our shareholders we're going to get a lot of money now. They're not. It's just not good. And I think Twitter's business model is struggling. Anyway. For Tesla I think it might be good news because I think it was a distraction. It was a distraction for shareholders. They want Elon Musk focusing on Tesla. Solving the problems bringing the wonderful things he's done operationally supply chain efficiency all the great things that make Tesla what it is. So I think that's good news for Tesla. Tesla has a huge footprint in China and I'm curious how you think this big visit Nancy Pelosi going to Taiwan against the wishes of the Chinese government. If there's an impact for Tesla here. Clearly there will be an impact because I think China understands the importance of Tesla as an entity. And I think it's a Tesla is in many senses a crown jewel. So if China wanted to retaliate Tesla would be an easy target. And remember Tesla has big plans for China. Not only do they produce a lot there but it was going to be a big market for them. So I think certainly this would keep me up at night if I were on the board of Tesla. But it is what it is. And I think he's going to have to figure out how to move forward. You wonder if it's keeping up. Elon Musk dependent. Do you think Tesla's valuation space X is valuation is on Musk alone. His cult of personality. I think currently a lot because he really does have this fabulous track record and people look at what he does. He can take anything and turn it into gold and he's done it. And so he deserves it. He deserves a reputation. But I think a lot of those things can be learned. So I go back to Steve Jobs and Apple. I never thought Apple could make it without Steve Jobs. Guess what. I was wrong. Since 2011 when he died Apple has beaten the stock market by a thousand percent. So there is life after he won lost. There's life after all of us. But I don't want to minimize its importance to Space X and I think it's real. I think he really has brought process improvements efficiency. If you look at the way the cars are manufactured if you look at the way he's locked up the supply chain for years and years to come with lithium technology use clearly very smart. So he's important. So does that mean you think Tesla's valuation is fair. No I don't think Tesla's valuation is fair. I think that's sort of Kathleen Hays it is overpriced. Yes I understand. That's what race Tesla revenues go up 50 percent a year. If you compare it to Microsoft and Apple at Amazon those are going up more like in the mid teens a year maybe not even that much. So I understand Tesla revenues are going up but if you look at those other companies they're trading at 30 times free cash flow. Tesla is trading at three hundred times free cash flow. So this is priced for perfection. Nothing can go wrong. Everything has to go right. And I've never seen that happen before. So I think investors ultimately are going to be disappointed even if Tesla does everything. Every one of its goals it achieves. I don't think investors are going to be happy from here on.

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How the Musk-Twitter Drama Is Impacting Tesla

Grace Capital Founder and Chief Investment Officer Catherine Faddis joins Emily Chang to discuss her take on the Musk-Twitter drama and how it will play out in Chancery Court, and how the lawsuit might weigh on Tesla's stock. (Source: Bloomberg)

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