Generate's Investment Specialist Greg Smith was on ZB with Mike Hosking this morning, talking about the US$1 trillion pay package approved by Tesla shareholders for Elon Musk, and the value it could drive on the other side if he hits his KPIs. Across the Atlantic, he discusses the headwinds hitting British Airways, while back home he looks at why Briscoes isn’t that upbeat on Kiwi consumers just yet.
Listen here or read the transcript below:
From Generate Greg Smith, welcome to Monday.
Morning, Mike.
Good day at the office for Elon, 1 trillions ago.
Yeah, we don't often talk about executive pay here. This one's an absolute doozy. So yeah, trillion-dollar pay package. Just to be clear, that's 1000 billion dollars. So lots of debate and scrutiny, but 75% of the votes cast backed what is the largest corporate pay package in history. So he's got lots of targets, hasn’t he? So this includes over the next decade delivering 20 million vehicles, that's 10 times what they do currently.
1,000,000 robot taxis that's from zero currently, 1,000,000 robots that's from zero currently and a 10 million full self-driving subscriptions that's versus a few 100,000 now. On the subject to profit 400 billion in core profit target versus 7 billion last year. And the stock also of course needs to rise from the current value of 1.4 trillion to 2 two trillion initially before eventually reaching 8.5 trillion.
If he hits all of his goals Musk gets another 12% stock, it takes his stake to 25%. Mike, of course, he's pretty happy about the vote. He liked the cheers at the AGM and he said other shareholder meetings are like snooze fests but ours are bangers. It's obviously a bit of disquiet on the amount of this package, but you know, he had threatened to quit and if he actually delivers on it, you’d have to think shareholders would be the big winners.
Just also by the way, he reckons humanity will be huge winners from his optimist robots. He claims they will increase the world economy by a factor of 10. Jobs will no longer exist. Everyone will get a universal income and in the process will eliminate world poverty. So yeah, pretty big call, Mike.
Yeah, if only he could get his roadster out by the end of the year. That might help his reputation, right? Travel. IAG. What are we reading into this?
Yes, this is the company that owns British Airways. So their shares fell 10% in London on Friday. So they're coming off a pretty good year last year. But yeah, profits weakening, revenues were flat for the third quarter, 9.3 billion.
And basically the North American route, which I suppose has being the jewel in the crown from over the years is certainly easing. So the revenue per available seat kilometre was down over 7%. Asia was pretty strong. The company’s gone pretty well. The shares were down 10% but are up 20% still year to date. They've done a billion dollars share buyback. But yeah, just a bit of alarm over what's happening on that North American route. So strict immigration controls under Trump, they're not helping.
And also corporate activity between the US and Europe is softening generally. And also, you talk about the UK before, the propensity of British workers to still work from home. So they're doing so at least two days a week. That's also holding back business travel. So just to give you an idea if you look at business bookings this year for BA, it's actually running at 63% of pre COVID. So work from home, still very strong. I suppose you could also say the worst drop in efficiency of British businesses since the 70s outside of the global financial crisis isn't helping. IAG they still reckon they can deliver on the four-year growth outlook.
They reckon they're going to deliver particularly in the premium passenger segment. So they see that it's still strong, although I thought it was interesting why they've got no plans to get back in on the Concorde. Some US carriers are, though. And that's after the Trump administration lifted its ban on overland supersonic flight.
Right, so back home, what do Rod and Briscoes have to say?
Yeah, basically saying it's still tough. Obviously, Briscoes has been one of the most resilient amongst cost-of-living pressures. The had an update on Friday, the 13 weeks to October 26. Group sales actually down 1.8 percent, $171 million. They actually managed a small gain in homeware that was at 1.8%, still quite modest. Sporting goods down more than 7%, although they did have a redevelopment of one of the key flagship stores.
But sales for the nine months of the year down least 1%. But yeah, basically the retail environment is still difficult and I thought it was interesting, he said there's a lack of consistent momentum. We've had those rate cuts, but it hasn't really transferred into a meaningful recovery as yet.
So I suppose plenty of retailers will be hoping it does in time for the key shopping period. Shares down 1.8%, still up 7% year to date.
All the money's going on the power bills, Greg. That's where it's going. What are the numbers?
Absolutely, I can tell you that for certain. Dow that was .2 percent, 46987. S&P up .1%, 6728. Nasdaq, so tech stocks continue to soften a little bit. Down .2%, 23004. Footsie 100 down .6%. Nikkei down 1.2%. ASX 200 across the Tasman down .7 percent 8770. NZX 50, we're an outlier. We're up .2%,13599.
Gold up 24 dollars, 4001 US an ounce. Oil up 32 cents 59.75. And the currencies, we were down against most of the majors, 56.2 against the US, 86.7 against the Australian dollar, 42.7 against sterling, 86.3 against yen. This week we'll see whether we get that CPI data with the shutdown going on, Mike, but we've got plenty of earnings.
We've got Rocket Lab, Cisco, Walt Disney and Sony. Locally we've got some card spending, manufacturing, PMI and you've got some earnings numbers here as well. So ANZ, Main Freight and Infratil.
You go well Greg Smith, Generate Wealth and KiwiSaver specialists.