Linda Yaccarino's Twitter CEO appointment will 'free up' Elon Musk to work on Tesla: Analyst

Gerber Kawasaki Wealth & Investment Management CEO Ross Gerber details how Elon Musk's appointment of Linda Yaccarino as Twitter CEO is expected to weigh on Tesla stock, while commenting on Tesla recalls and EV pricing.

Video transcript

AKIKO FUJITA: Welcome back to Yahoo Finance Live. Shares of Tesla down about 2% right now with about 30 minutes left in the trading week after Elon Musk tapped Linda Yaccarino to run Twitter. For more, we're joined by Ross Gerber, Kawasaki Wealth and management-- Wealth and Investment Management CEO. You've got a long title, Ross. But we'd like to talk to you--

ROSS GERBER: I know. Sorry.

AKIKO FUJITA: You've got investments on both-- you've got investments on both sides of things. You've kind of become the public face of investor frustration for Tesla, but you're also invested in Twitter. What do you make of the announcement here?

ROSS GERBER: Oh, I couldn't have been more happy. I mean, this is what I've been pushing for for months-- find a great CEO for Twitter that will complement Elon's technology skills with somebody with a media background. I've always felt Twitter was a media and entertainment company before it was a technology challenge.

And that was something Elon and I differed on. And it looks like he finally came around and found just an A-plus CEO to run the media side of Twitter. So that's exciting as a Twitter shareholder. And it's even more exciting as a Tesla shareholder, because it'll free up Elon, I think, to spend a little bit more time on Tesla and focus, but also having him not have to deal with some of the more difficult and controversial issues that come in with the politics of running Twitter. So that creates another face to deal with some of the incredibly challenging issues of running a media company.

SEANA SMITH: Ross, is the Twitter overhang, though, really gone? Because at the end of the day, he's still executive chair, he's still CTO. And we know that he likes to have control over what he is invested in.

ROSS GERBER: Yeah. I think it's gone in the sense of we now have a clear vision of what management will look like at Twitter. And his role will decrease in the amount of time and energy it will take as time goes on, and the product stabilizes, and the technology and the team gets better. But I think it's really about being the face of Twitter that puts Tesla shareholders at risk because of all the political challenges of running such a difficult company.

And so by having somebody else being the CEO, it really deflects, I think, a lot of the negative-- hopefully deflects the negative criticism that Elon's got, which has definitely hurt the perception of Tesla in the consumer marketplace, especially in very, very important markets on the West Coast. So this is a win across the board because she's such a great person for this role.

AKIKO FUJITA: A number of other headlines driving Tesla shares today. One being the recall that's happening over in China. Put this in context for us-- how concerned--

ROSS GERBER: It's like this recall-- this recall thing is like talking about horseshoes and horses. It's like you don't recall cars anymore the same way we perceive a recall-- that we're going to have to drive our car back and get some physical part fixed. That's not what this is about.

These are software updates. And the terminology needs to change from calling these things recalls versus software updates that take 30 minutes for your car to update while sitting at home. So I think these things get blown out of proportion in the media.

And I really don't understand why when it's, like, literally, the owners of these vehicles don't have to do anything. So there's no cost to Tesla. So it's a lot of news headlines, lots of clicks. But in the end, Tesla just updates their cars and they work great.

SEANA SMITH: Ross, what do you think about the pricing strategy? Because that obviously has been a huge focal point here among shareholders, among investors over the last several weeks. And we've seen Musk reverse course a couple of times. How much of it do you think-- I guess how big of a boost do you think the price cuts have done with demand? And as a result, how worried are you about some of the pressure that we have been seeing on price margins?

ROSS GERBER: Right. So this has been the area that I've been really concerned about, because I view Tesla as a premium brand. And I think it should maintain its margin at minimum of 20% on vehicles. And we saw that decline in Q1 to sell these vehicles at lower prices.

And that's really what hurt the stock and concerned investors is, obviously, demand for Teslas are not meeting supply. And so they lowered the prices aggressively to create an equilibrium with supply and demand. But, unfortunately, that's not the best way to sell cars or premium products by having, like, a dynamic pricing model like hotels.

And so I think it's very confusing for consumers. And I think consumers who bought vehicles in Q4 felt burned because they paid, let's say, $65,000 for a car that they could now buy for $46,000. And that really doesn't leave customers happy who bought cars in the quarter before.

And so this strategy, to me, has been really haphazard and disjointed. And it's caused a lot of confusion. Now, they're raising prices because demand has picked up. You know, I think Tesla needs to decide, this is how much our cars cost minimum.

And if commodities cost decrease enough to lower prices and maintain margins, that's great. But Tesla needs to use tools to create new demand from the 90% of American consumers that drive gas cars and really don't fully understand the value proposition of an EV. And there's tremendous amounts of pent up demand if the public's educated. And that's where Tesla needs to go now that it's a mature company selling 2 million cars a year.

SEANA SMITH: We'll see if it does go there. Well, Ross Gerber, always great to have you. Gerber Kawasaki Wealth and Investment Management CEO, thanks so much.

ROSS GERBER: Thanks for having me.