Tesla Q3 Earnings Drop As Price Cuts Squeeze Margins But Fail To Boost Sales

2 hr 38 min ago

Tesla (TSLA) announced third-quarter results Wednesday that fell short of analysts' expectations amid an ongoing price war that has hurt margins.

The electric vehicle maker said revenue in the third quarter rose 9% to $23.35 billion, while adjusted earnings dropped 37% to 66 cents per share. Analysts surveyed by Visible Alpha had estimated that Tesla would report revenue of $24.3 billion and adjusted EPS of 73 cents.

Tesla said profitability was hit by a decline in the average selling price of its vehicles, negative foreign exchange effects, and increased operating expenses tied to its Cybertruck, artificial intelligence, and other research and development projects.

Operating income tumbled 52% from a year earlier to $1.76 billion in the third quarter, while operating expenses increased 43% over the same period. Tesla's operating margin slid to 7.6%, compared with 17.2% in the third quarter of 2022.

Tesla shares were up about 1% in after-hours trading Wednesday, after falling 4.8% to $242.68 in regular trading. The stock has gained about 10% over the past year but is well below its 2021 high of more than $400.

-Nathan Reiff

Netflix Q3 Earnings Beat on Password Tracking, Ad-Supported Tiers

2 hr 57 min ago

Netflix's (NFLX) revenue increased for the third quarter as the financial impacts of its password-sharing crackdown and ad-supported subscription tier, launched in the last year, began to accelerate.

Netflix Q3 earnings summary

• Net Income: $1.67 billion, or $3.73 per share vs. $1.4 billion, or $3.10 per share last year
• Revenue: $8.5 billion vs. $7.9 billion a year ago
• Total subscribers: 247.15 million vs. 223.09 million a year ago

Netflix subscriptions grew by 10.8% year-over-year to 247 million after adding 5.9 million global subscribers in the second quarter.

"Adoption of our ads plan continues to grow—with ads plan membership up almost 70% quarter-over-quarter—and 30% of sign-ups in our ads countries are, on average, to our ads plan, with more work to do to scale this business," the company said in a letter to shareholders.

Shares jumped more than 12% in after hours trading.

-Nathan Reiff

Dow Dives More than 300 Points on Surging Yields, War Worries

3 hr 13 min ago

The Dow Jones Industrial Average plummeted 332 points, or nearly 1%—its biggest decline in two weeks—as bond yields rose to their highest levels in more than a decade and investors monitored the conflict in the Middle East. 

Procter & Gamble (PG) shares jumped 2.6% after the consumer products giant said revenue increased 6% in the third quarter as higher prices and higher gross margins helped it to deliver better-than-expected earnings. 

McDonald's (MCD) moved higher by nearly 2%, a rare bright spot in the consumer discretionary sector, which lost more than 2% today. Consumer staples and energy were the only sectors to post gains today.

Chevron (CVX) shares climbed 0.8% on a nearly 2% rise in West Texas Intermediate crude oil prices, as investors worried about the impact the ongoing Israel-Hamas conflict could have on global supply. 

Boeing (BA) shares nudged up less than 0.1% after it reached a production deal with its supplier Spirit AeroSystems (SPR) to shore up its aircraft production system after a series of quality issues led Boeing to delay deliveries. Spirit shares soared 23%.

Walgreens Boots Alliance (WBA) shares fell 7% to lead the Dow 30 lower. Caterpillar (CAT) shares dropped almost 5%, part of an industrials sector tanked by shipping company J.B. Hunt Transportation Services’ (JBHT) disappointing earnings report.

Goldman Sachs (GS) shares declined by 2.4%, continuing its decline after yesterday’s earnings report showed third-quarter profits shrank by a third. 

Travelers Companies (TRV) shares dipped 0.7% after it reported a third-quarter earnings miss as the insurance provider’s catastrophe losses expanded.

-Terry Lane

Half of Global Fund Managers Expecting a Weaker World Economy

4 hr 18 min ago

Half of global fund managers expect a weaker global economy over the next 12 months, according to Bank of America's October 2023 Global Fund Manager Survey.

Forty-four percent of fund managers expect the global slowdown to be severe enough to cause a recession in the first half of 2024, compared with 36% who said the same in September. Just 5% expect a recession to start before the end of this year, while 25% ruled out a recession within the next 18 months.

Amid heightened recession fears, 30% of fund managers now expect a "hard landing" for the global economy, up from just 21% in September.

On a positive note, roughly 80% of fund managers expect inflation to subside over the next 12 months, while three-quarters expect a steeper yield curve.

-Mack Wilowski

ASML Orders Miss Forecasts, and the Firm Warns 2024 Sales Will Be Flat

4 hr 58 min ago

European tech giant ASML Holding NV (ASML) reported significantly fewer orders than expected and warned about a slowdown in sales in 2024 as customers spend less.

The Netherlands-based semiconductor equipment maker posted third-quarter fiscal 2023 bookings of 2.6 billion euros ($2.74 billion), well below estimates of 4.5 billion euros ($4.75 billion).

CEO Peter Wennink indicated that customers “continue to be uncertain about the shape of the demand recovery” in the chip industry. Because of that, ASML now predicts 2024 sales to be flat from 2023, while analysts were looking for an increase of 7%.

New York Registry Shares of ASML Holding NV were more than 4% lower Wednesday afternoon, but they remained in positive territory for 2023.

-Bill McColl

Midday Market Movers

5 hr 47 min ago

Nasdaq Inc. (NDAQ): Shares of the operator of America’s second-largest stock exchange gained 5% after its third-quarter earnings beat Wall Street estimates thanks to revenue gains by its index and anti-financial crime units. 

DexCom Inc. (DXCM): Shares of the glucose monitoring tech company rose more than 4% after the CEO of Abbott Laboratories (ABT) said markets are overestimating the blow that weight loss drugs like Ozempic will deal to medical device makers’ sales. Before Wednesday’s gains, DexCom stock had fallen 42% from mid-July highs. Abbott shares gained more than 3%.

Albemarle Corp. (ALB): Shares of the lithium miner fell 9% after Bank of America Securities downgraded the stock to underperform, citing the effect that lithium oversupply will have on prices.

Lucid Group (LCID): Shares of the luxury electric vehicle maker fell more than 9% a day after reporting it delivered 1,457 cars in the third quarter, far fewer than analysts were expecting. 

Cleveland-Cliffs Inc. (CLF): Shares of the steel maker were 8% lower after Bloomberg reported U.S. and European Union officials are negotiating an agreement that would either temporarily or permanently remove Trump-era tariffs on European steel.

The Gold Rally Continues

7 hr 24 min ago

Gold futures were up more than 1% by midday Wednesday, as a deadly blast at a hospital in Gaza stoked fears the fighting could escalate and spill over into a wider regional conflict.

Gold rose as high as $1,970 Wednesday morning as investors sought out safe havens, continuing a trend that began on Oct. 7, when Hamas militants attacked Israel.

Morgan Stanley's Profit Falls on Higher Costs and Slow Merger and IPO Activity

8 hr 9 min ago

Morgan Stanley (MS) shares tumbled over 7% Wednesday morning after reporting profit declined as sales at the investment bank’s wealth management and investment banking divisions fell short of estimates.

Morgan Stanley reported third-quarter fiscal 2023 earnings dropped 8.5% from a year ago to $2.41 billion, or $1.38 per share. Revenue was up 2.2% to $13.27 billion.

Revenue at the wealth management unit was $6.4 billion, missing forecasts by some $200 million because of higher compensation costs. Investment banking sector sales slumped 26.5% to $938 million, also well below expectations. The company pointed to weakness in mergers and initial public offerings (IPOs) for the decline.

Shares traded at their lowest level in more than a year by midday Wednesday.

-Bill McColl 

10-Year Yield Hits New 16-Year High

8 hr 54 min ago

Treasury yields surged Wednesday morning, with the 10-year yield topping 4.9% for the first time since August 2007.

The yield on 30-year Treasury bonds exceeded 5% for only the third time in the last 16 years.

Higher Prices Drive Procter & Gamble's Better-Than-Expected Earnings

10 hours ago

Procter & Gamble's (PG) first-quarter earnings for fiscal 2024 topped analyst expectations as higher prices boosted the company's sales of household necessities, even as some business segments saw consumers pull back.

The consumer goods manufacturer's net income rose to $4.52 billion, or $1.83 per share, up roughly 17% from the year-ago quarter. Sales climbed 6% year-over-year to $21.87 billion as the company increased prices on many of its beauty, household, and health care items.

Some of the anticipated pullback in consumer spending has already begun, though not enough to dent Procter & Gamble's financials. Sales volume in its Grooming and Baby, Feminine & Family Care segments fell 2% and 3% respectively, even though higher prices drove revenue higher.

Procter & Gamble shares were nearly 3% in early trading.

-Nathan Reiff

Stocks Making the Biggest Moves Premarket

10 hr 35 min ago

Gains:

• Spirit Aerosystems Holdings Inc. (SPR): Shares jumped about 12% after the airplane parts maker announced an agreement with Boeing indicating the two companies will continue to work together. Spirit stock has fallen more than 40% this year amid production delays caused by defective parts.
• Abbott Laboratories (ABT): The healthcare products maker’s shares rose more than 2% after it reported better-than-expected third-quarter earnings, crediting demand for medical devices like blood glucose monitors, sales of which analysts have been predicting will take a hit from the rise of weight-loss drugs like Ozempic. 
• Procter & Gamble Co. (PG): Shares rose about 2% after the consumer goods company beat earnings expectations with sales buoyed by higher prices. 

Losses:

• United Airlines Holdings Inc. (UAL): The airline’s shares fell more than 5% after it offered a fourth-quarter earnings forecast reflecting the halting of flights to Tel Aviv, saying a pause through the end of the year would reduce fourth-quarter earnings to about $1.50 per share, from $2.55 in the same quarter last year.
• ASML Holding NV (ASML): Shares of the semiconductor equipment maker slumped more than 3% after it said third-quarter bookings fell 42% from last year amid a slowdown in the chip business. 
• Morgan Stanley (MS): The investment bank’s shares fell more than 3% after it reported a 9% drop in earnings last quarter, with declines in investment banking and trading revenue offsetting much of an increase in its wealth-management business.

Futures Lower as Oil Prices Rise

11 hr 24 min ago

Futures contracts connected to the Dow Jones Industrial Average were 0.2% lower in premarket trading as oil prices rose on worries oil heavyweights like Iran could become involved in the conflict in Israel and Palestine.

S&P 500 futures contracts were down about 0.4% a little over an hour before the open.

Nasdaq 100 futures fell 0.5%.