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Tesla misses on earnings, expects 50% average annual growth in deliveries going forward

Tesla missed on earnings but reported positive cash flow and said it expects to increase vehicle deliveries by 50% each year going forward.

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Tesla reported quarterly results after the bell, missing analysts’ estimates on earnings but notching another profitable quarter for the electric vehicle and solar business.

Shares were down about 5% after hours following an earnings call to discuss the quarter and year ahead.

Here are the results, versus what analysts were expecting according to estimates compiled by Refinitiv:

  • Earnings: 80 cents adj. vs $1.03 per share expected
  • Revenue: $10.74 billion vs $10.4 billion expected

The company also gave some guidance on sales going forward, writing “Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries.” Tesla expects faster delivery growth than that for 2021, with two new factories expected to come online this year and updated versions of its Model S and X vehicles now in early stages of production.

CEO Elon Musk said on the call Wednesday that deliveries of the updated version of Model S would begin in February.

Tesla also plans to make its premium driver assistance software, marketed as the Full Self Driving option, available on a subscription basis. That means drivers won’t have to pay the high up-front price of $10,000 to use FSD if they want it.

Musk also said that drivers who previously purchased FSD for their Tesla vehicle could not transfer the software to another Tesla, should they buy another. The price of the software is included in the value of a trade-in by Tesla he said, but not transferable.

Gross margins reached 19.2% for Tesla in the fourth quarter of 2020, the lowest since the last quarter of 2019. Capital expenditures hit $1.15 billion for the period ending Dec. 31.

The company also reported positive free cash flow for 2020 of $2.79 billion, more than double its 2019 figure of $1.08 billion.

Tesla previously said it had delivered 499,550 vehicles in 2020, falling barely shy of its guidance for half a million vehicle deliveries in 2020. (Deliveries are the closest approximation of sales numbers disclosed by Tesla.) It produced 509,737 vehicles during the year.

Both deliveries and production numbers set a new record for the maturing electric car company, seen as a triumph in a year when auto sales and factory operations were dampened by a global pandemic.

Automotive revenue grew to $9.31 billion in Q4, while revenue from energy generation and storage reached $752 million, and services and other revenue grew to $678 million. “Other” revenue includes sales of Tesla merchandise including the company’s own tequila, apparel and more essential vehicle accessories like car charging adapters.

Tesla spent $522 million on research and development and nearly a billion on SG&A, sales, general and administrative costs in the last quarter of 2020.

Looking ahead, Tesla said it would begin producing its newest model — the crossover SUV known as the Model Y — at new plants in Austin, Texas, and Brandenburg, Germany, in 2021. Tesla intends to incorporate its own new “tabless” battery cells, which it unveiled at an annual shareholder meeting and battery presentation in September last year in those vehicles.

Photos from Tesla’s Q4 2020 earnings report, released Jan. 27, 2021, show progress on the company’s new factory near Austin, Texas.

Tesla

Tesla’s factory near Berlin under construction in this photo from the company’s Q4 2020 earnings report, released Jan 27, 2021.

Tesla

Wednesday’s report is Tesla’s first since its addition to the S&P 500.

Vehicle sales in China largely enabled Tesla to hit record deliveries in 2020. So did the introduction of a new crossover SUV, the Model Y, which Tesla began to produce in serious volumes in the first quarter last year out of its Fremont, California car plant.

In the fourth quarter, after multiple price cuts and a shift from selling more expensive Model S and X vehicles to cheaper Model 3 and Y vehicles, including in China, Tesla’s average sales price dipped by about 11%.

Since Tesla’s third quarter earnings call in October, the price of the company’s stock has more than doubled, giving it a market capitalization of more than $800 billion and making it the fifth-most valuable company in the U.S.

Even so, Musk said “the stock market undervalues how good FSD is going to be.” He said Tesla’s robotaxi technology, still in development, helps justify the company’s massive valuation.

The company also gave some guidance on sales going forward, writing “Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries.” Tesla expects faster delivery growth than that for 2021, with two new factories expected to come online this year and updated versions of its Model S and X vehicles now in early stages of production.

Source: https://www.cnbc.com/2021/01/27/tesla-tsla-earnings-q4-2020.html

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More earnings, April’s big jobs report and inflation worries could swing markets in the week ahead

April’s jobs report and a barrage of earnings news make for another busy week for markets, as the calendar rolls into May.

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Traders on the floor of the New York Stock Exchange.

Source: NYSE

April’s jobs report and a barrage of earnings news make for another busy week for markets, as the calendar rolls into May.

Stocks notched solid gains in April, as REITs, consumer discretionary names and communications services companies outpaced the broader market, all more than 7% higher. However, April finished on a sour note, with stocks selling off on Friday.

“Since November, there’s been a 30% rally,” said Jimmy Chang, chief investment officer at Rockefeller Global Family Office. He noted that historically the November to April period is the strongest for stocks. “There’s the adage ‘sell in May, go away.’ It may be somewhat appropriate this year since we’ve done so well in the last six months.”

Big jobs report

April’s employment report is schedulted to be released Friday, and the market is expecting a big number.

Economists say payrolls in April could easily reach 1 million, after 916,000 jobs were added in March. Estimates range from about 700,000 to a forecast of 2.1 million from Jefferies economists.

According to Dow Jones, there is a consensus forecast of 978,000 among the economists it surveyed and the unemployment rate is expected to fall to 5.8% from 6%.

Federal Reserve speakers will also be important after Fed Chairman Jerome Powell said in the past week that the central bank is still looking for “substantial further progress” in its goals for the economy.

The chairman emphasized that the Fed is not close to tapering back its bond-buying program, a surprise to some investors. Some bond market pros had expected the Fed to start discussing cutting back purchases at its June meeting and begin to reduce its $120 billion monthly bond buying by the end of the year or early next year.

“Next week is all about the jobs number, because as part of the Fed’s path to ‘substantial progress’ on their two roles, we’ll see how much further along that path they are next Friday” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. The Fed’s mandate is to pursue full employment and a steady pace of Inflation, which it has targeted at 2%.

The Fed has expected a temporary period of high inflation which it anticipates to see subside later in the year though Boockvar and others say inflation could be hotter than the central bank expects. The core personal consumption expenditures price index jumped 0.36% in March, with the year-ago rate rising from 1.4% to 1.8%. It is expected to go even higher in April. Headline inflation in the consumer price index is expected to begin running at 3% or better when it is reported May 12.

Just days after Powell’s comments on tapering, Dallas Fed President Rob Kaplan on Friday said the Fed should begin the discussion on paring back bond purchases because imbalances in financial markets and the economy are improving faster than expected.

The market’s focus on the Fed’s bond program makes the jobs report even more important. If the central bank starts to taper back those asset purchases, it would then signal it would be on the path toward raising interest rates. Most economists do not expect the Fed to raise interest rates before 2023.

“If this jobs number comes in super hot, it’s going to make people up their estimate on when the Fed might taper,” said Michael Schumacher, director of rates at Wells Fargo.

Powell is among Fed speakers in the coming week, but he is not expected to provide any new views when he participates in a National Community Reinvestment Coalition conference Monday afternoon. Kaplan speaks Tuesday and Thursday, and New York Fed President John Williams and Cleveland Fed President Loretta Mester are also among central bank officials speaking in the coming week.

Earnings soar

So far, a record 87% of S&P 500 companies have beat earnings estimates, and earnings look to be growing by more than 46%, according to Refinitiv.

Credit Suisse’s chief U.S. equity strategist, Jonathan Golub, upped his forecast Friday for the S&P 500 based on strong earnings. “We are raising our 2021 S&P 500 price target to 4600 from 4300, representing 9.2% upside from current levels, and 22.5% for the year,” he wrote.

Earnings are expected from a diverse group of companies, from General Motors to ViacomCBS. Pharma will be in the spotlight as Covid vaccine makers Pfizer and Moderna both report. Draftkings and Beyond Meat are also on the schedule.

A host of travel-related companies issue results, including Booking Holdings, Hilton Worldwide, Marriott Vacations and Caesars Entertainment. Consumer brands, like Anheuser Busch Inbev and Estee Lauder also report, as do insurers including AIG, Allstate, and MetLife. (A calendar with some key earnings dates appears below.)

Chang said the market has discounted a lot of the positive news already.

“In spite of the really strong reports from the bellwether companies, you’re seeing some of the names starting to peter out a little bit,” said Chang. “I think it’s a sign that so much good news is discounted. I suspect the market is due for a breather. I think in the next couple of months, we’re likely to see sideways movement. There’s likely to be a pullback which will be healthy.”

The S&P 500 was up 5.2% in April, finishing Friday at 4,181. It is now up 11.2% for the year so far. The Dow rose 2.7% in April, to 33,874, and the Nasdaq gained 5.4% in April, ending Friday at 13,962.

Chang said he expects some of the “boring” blue chips that haven’t participated as much in the rally to do better. Some of those names can be found in pharma, he said.

Heading into the coming week, investors will be watching for words of wisdom from Warren Buffett at Berkshire Hathaway’s annual meeting Saturday.

Week ahead calendar

Monday

Monthly vehicle sales

Earnings: Avis Budget, Loews, Alexion Pharmaceuticals, Rambus, Leggett and Platt, Vornado, American Water, Iamgold, Mosaic, Apollo Global Management, ZoomInfo, Estee Lauder, ON Semiconductor

9:45 a.m. Manufacturing PMI

10:00 a.m. ISM manufacturing

10:00 a.m. Construction spending

2:00 p.m. Senior loan officer survey

2:10 p.m. New York Fed President John Williams

2:20 p.m. Fed Chairman Jerome Powell at National Community Reinvestment Coalition conference

Tuesday

Earnings: Pfizer, CVS Health, ConocoPhillips, Martin Marietta Materials, Activision Blizzard, DuPont, KKR, T-Mobile, Akamai, Pioneer Natural Resources, Lattice Semiconductor, Denny’s, Hyatt Hotels, Host Hotels, PerkinElmer, Prudential Financial, Viavi, Caesars Entertainment, Thomson Reuters, Cummins, Vulcan Materials

8:30 a.m. International trade

10:00 a.m. Factory orders

1:00 p.m. Dallas Fed President Robert Kaplan

1:00 p.m. Minneapolis Fed President Neel Kashkari

Wednesday

Earnings: General Motors, Hilton Worldwide, Booking Holdings, Fox Corp., Uber Technologies, Etsy, PayPal, Allstate, Accolade, Cognizant Technology, MetLife, Marriott Vacations, CF Industries, Marathon Oil, CyberArk Software, Emerson Electric, Amerisourcebergen, BorgWarner, Zynga, Tanger Factory Outlet, Twilio

8:15 a.m. ADP employment

9:30 a.m. Chicago Fed President Charles Evans

9:45 a.m. Services PMI

10:00 a.m. ISM services

11:00 a.m. Boston Fed President Eric Rosengren

12:00 p.m. Cleveland Fed President Loretta Mester

3:00 p.m. Chicago Fed’s Evans

Thursday

Earnings: Regeneron, ViacomCBS, Kellogg, Moderna, Murphy Oil, Beyond Meat, Shake Shack, Square, Roku, Axon, Cushman and Wakefield, Tapestry, Neilsen, AIG, Anheuser-Busch, EOG Resources, Consolidated Edison, DropBox, Expedia, Roku, Peloton Interactive, Datadog, Cardinal Health, Ambac Financial

8:30 a.m. Initial jobless claims

8:30 a.m. Productivity and costs

9:00 a.m. New York Fed’s John Williams

10:00 a.m. Dallas Fed’s Kaplan

1:00 p.m. Cleveland Fed President Loretta Mester

1:00 p.m. Atlanta Fed President Raphael Bostic

Friday

Earnings: Cigna, Siemens, Gannett, AMC Networks, Draftkings, Liberty Broadband, Elanco Animal Health

8:30 a.m. Employment

10:00 a.m. Wholesale trade

3:00 p.m. Consumer credit

Stocks notched solid gains in April, as REITs, consumer discretionary names and communications services companies outpaced the broader market, all more than 7% higher. However, April finished on a sour note, with stocks selling off on Friday.

Source: https://www.cnbc.com/2021/04/30/more-earnings-aprils-big-jobs-report-and-inflation-worries-could-swing-markets-in-the-week-ahead.html

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Apple is in the middle of a supercycle for everything it sells, and the Mac and iPad are on a tear

Apple showed massive growth in Mac and iPad sales in its latest quarterly earnings report on Wednesday.

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Tim Cook, CEO of Apple laughs while Lana Del Rey (with iPad) takes a photo during a launch event at the Brooklyn Academy of Music on October 30, 2018 in New York City.

Stephanie Keith | Getty Images

Apple reported another blowout quarter Wednesday, showing 54% revenue growth and authorizing a mind-melting $90 billion share buyback.

But while we usually spend each quarter talking about the performance of Apple’s iPhone and Services segments, it’s impossible to ignore the insane growth the company reported for Mac computers and iPads.

Apple isn’t just in the middle of a new iPhone supercycle of sales. It’s in the middle of a supercycle for everything.

Just take a look at the Mac and iPad segments’ performance during Apple’s fiscal second quarter:

  • Mac revenue: $9.10 billion, up 70.1% year over year
  • iPad revenue: $7.80 billion, up 78.9% year over year

Those are just wild numbers for two product categories that had been languishing for the last few years. Before 2020, the story behind the Mac was that Apple had put its PC development on the back burner in favor of focusing on its profit engine: the iPhone.

But that started to change last year with the perfect storm for Apple’s Mac and iPad sales growth: the launch of Apple’s own computer chip, the M1, and the spike in demand for devices to help people work from home.

While the pandemic part of the equation is obvious, Apple also said the M1 played a role in the sales boom. On the company’s earnings call Wednesday, CEO Tim Cook credited the M1 chip for fueling the growth, especially after Apple proved the chip can perform just as well as or better than the Intel chips it used to use for computers.

Apple also just added the M1 to its new iPad Pro model, which goes on sale Friday and ships in May. That gives the iPad the same power as the Mac. Apple executives told TechCrunch this week that they hope adding all that power to the iPad will spur a new wave of software development to make the device much more useful for productivity tasks. If that works, the iPad Pro will be a viable alternative for people who want to use a tablet instead of a traditional laptop.

And there are more reasons to be optimistic about the Mac later this year, when Apple will reportedly redesign its Mac laptops and potentially use the next version of its M-series chip in them.

There’s just one caveat to all this optimism around the Mac and iPad: the chip shortage.

Cook and his team admitted on the earnings call Wednesday that there could be supply constraints for some components needed for Apple’s gadgets. But they sounded optimistic they’ll be able to work through the issues.

And don’t forget: Cook made his name in the business world as a supply chain and logistics genius.

Just take a look at the Mac and iPad segments’ performance during Apple’s fiscal second quarter:

Source: https://www.cnbc.com/2021/04/29/apple-aapl-earnings-show-massive-jump-in-ipad-mac-sales.html

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Intel revenue and profit drop slightly from last year

Intel CEO Pat Gelsinger announced earlier this month that the company plans to invest $20 billion in new microchip manufacturing plants.

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Pat Gelsinger, CEO of Intel, speaks in Santa Monica, Calif., on March 9, 2017, in a photo taken when he was CEO of VMware.

Patrick T. Fallon | Bloomberg | Getty Images

Intel sales were essentially flat and profit dropped in the first quarter of 2021 in CEO Pat Gelsinger’s first earnings report at the helm.

Intel’s earnings per share were significantly higher than analyst estimates and the company’s own forecast, but Intel stock was down more than 3% in extended trading. Sales were also above analyst estimates.

Here’s how Intel did versus Refinitiv consensus estimates:

  • Earnings per share (EPS): $1.39 vs $1.15 (adjusted) expected, down 1% year over year
  • Revenue: $18.57 billion vs $17.90 billion (adjusted) expected, flat year over year

For Intel’s second fiscal quarter, it expects $17.8 billion in revenue, slightly higher than analyst expectations of $17.55 billion. The company missed analyst estimates for its second-quarter EPS as analysts expected $1.09 and Intel is guiding for $1.05 as it spends to build additional manufacturing capability.

Gelsinger, who took over in February, announced earlier this month that Intel would invest $20 billion in new microchip manufacturing plants and announced a plan to become a contract chip manufacturer, or a foundry, which would make other company’s chips, in addition to its own chips.

“This is a pivotal year for Intel,” Gelsinger said in a statement.

But that plan will take years to come to completion. In the quarter ended in March, Intel quarterly sales and quarterly earnings were essentially flat compared with the same period last year, even as demand for microchips skyrocketed around the world.

PC sales had their best quarter in years in the first quarter, according to several estimates. They boosted the chipmaker: Intel said that sales of chips for notebook laptops were a record for the company having risen 54% year over year and that total PC volumes were up 38% in the quarter.

In the year-ago quarter, Intel reported $9.78 billion in sales in its client computing group, which includes PC chips versus $10.61 billion in the most recent quarter. The group comprises more than 59% of Intel’s revenue.

However, many of those laptops and desktops are low-cost Chromebooks which use less expensive chips. Apple, an Intel customer, also is increasingly using its own chips, instead of Intel’s, for its Mac line of PCs. Intel CFO George Davis told analysts that Intel’s performance in PCs was despite sales to Apple “ramping down.”

Intel also sells high-performance chips for data centers, and sales were elevated last year as companies bulked up their cloud operations as employees worked from home. A year ago, Intel reported $6.99 billion in revenue in its data center group versus $5.56 billion this quarter.

Mobileye, Intel’s autonomous vehicle subsidiary, reported $377 million in revenue, which was up 48% year-over-year.

Intel has seen setbacks in making its most advanced chips, which use a manufacturing process called 7-nanometers. It also faces increased competition from companies like Nvidia, which announced its own data center chip this year, and AMD, which has boasted that it has passed Intel in some key computing performance metrics.

Gelsinger’s plan to become a foundry and increase manufacturing in the U.S. is not going to be cheap. Intel said it planned to spend between $19 billion and $20 billion on capital expenditures in 2021.

Last month, Intel said it was expecting earnings of $4 per share and revenue of $72 billion for the full year of 2021. Intel raised that guidance on Thursday to earnings of $4.60 per share as well as sales guidance to $72.5 billion.

Source: https://www.cnbc.com/2021/04/22/intel-intc-earnings-q1-2021.html

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