Stock recap
Stock recap
Stock recap
WEEKLY STOCKS RECAP
This week in EVs
China’s EVs arrive in the fourth quarter.
This week, Chinese electric vehicle manufacturers announced their fourth-quarter delivery data.
Xpeng Inc (NYSE:XPEV) delivered 20,115 vehicles in December, unchanged from the previous month but representing a 78% increase over the same period last year. XPeng delivered 60.2k vehicles in the fourth quarter of 2023, matching the lower end of their predicted range of 59.5k to 63.5k. Their yearly performance for 2023 showed a healthy 17% year on year growth, totaling 141.6k deliveries.
Simultaneously, Nio (NYSE:NIO) reached a milestone of 18,012 vehicle deliveries during the same period, representing a 13% increase over the previous month and a 14% increase over last year. This included 12,048 SUVs (ES6, EC6, ES7, and EC7 models) with a 14% MoM increase and 5,964 sedans (ET5, ET5T, and ET7 models) with a 10% MoM increase.
NIO exceeded its volume target for the fourth quarter of 2023, delivering 50k vehicles vs the expected range of 47k to 49k units. Overall, NIO saw 31% YoY growth in 2023 deliveries, totaling 160k vehicles.
Li Auto Inc (NASDAQ:LI) reported 50,353 car deliveries, a 23% increase over the previous month and a significant 137% rise over the same period last year. Li Auto exceeded its planned delivery range for the fourth quarter of 2023, delivering 131.8k vehicles versus the predicted range of 125k to 128k. Overall 2023 deliveries increased by 182% year on year, totaling 376,030 automobiles.
Leapmotor (HK:9863) reached a new milestone last month, delivering 18,600 vehicles, an increase of 119% year on year and 11% month on month. Sales for 2023 were 144,000 units, a 30% rise year on year.
Tesla Inc (NASDAQ:TSLA) reportedly sold 94,139 China-made electric vehicles in December, according to figures supplied by the China Passenger Car Association (CPCA), a huge 68.7% increase over the same period previous year. Model 3 and Model Y deliveries from China increased 14.2% over November.
Tesla’s sales of Chinese-made vehicles, including exports, totaled 947,742 for the year, accounting for 52.4% of total global deliveries. Tesla delivered 484,507 cars worldwide in the fourth quarter, above market estimates. However, it was exceeded by BYD (SZ:002594), allowing it to relinquish its status as the leading manufacturer of electric vehicles as the Chinese rival recorded a record quarter with sales of 944,779 new energy vehicles.
TSLA stock closed Friday down 6.4% for the week.
GM is footing the bill.
Despite the recent loss of a US government tax credit, General Motors Company (NYSE:GM) stated on Wednesday that it will offer $7,500 in incentives on its electric vehicles. This action follows the Treasury Department’s December instructions aimed at altering the EV supply chain in the United States by implementing additional battery sourcing standards to reduce reliance on China. These standards went into effect on Monday.
GM informed its dealers that the equal EV tax credit amount would be compensated “for any vehicles that became ineligible due to the new guidelines.” GM announced last month that, with the exception of the Chevrolet Bolt, all of its EVs will be temporarily ineligible for the tax credit. They particularly stated that the Cadillac Lyriq and Chevy Blazer EVs were ruled ineligible due to concerns with two minor components.
GM anticipates that the Lyriq and Blazer EVs will recover eligibility in early 2024, pending changes in sourcing. Furthermore, they stressed that vehicles made “after the sourcing change,” such as the Chevrolet Equinox EV, Chevrolet Silverado EV, GMC Sierra EV, and Cadillac OPTIQ, will be eligible for the entire incentive.
Similarly, Ford Motor Company (NYSE:F) said last month that the $3,750 tax credit will no longer be available for its E-Transit and Mach-E models. The F-150 EV Lightning pickup truck and the Lincoln Corsair Grand Touring SUV, on the other hand, kept their tax benefits.
On Wednesday, Ford announced intentions to raise the price of its entry-level F-150 EVs by $5,000 to $10,000 while lowering the price of select premium vehicles by up to $7,000.
GM shares finished the week down 1.18% after falling more than 2.4% on Tuesday.
Fisker’s business with dealerships
Fisker Inc (NYSE:FSR), an emerging American electric automaker, announced this week plans to build an innovative Dealer Partnership model in North America. The business intends to develop a separate hybrid model combining direct sales and dealer arrangements, signaling a shift in Fisker’s market strategy.
In a news release, CEO Henrik Fisker stated that Fisker plans to establish “as many as 50 dealer partners in the US and Canada, alongside a similar number of dealer locations in Europe” by 2024.
This Dealer Partnership approach tries to offer Fisker consumers fixed price (where regulations permit) while also offering dealer partners greater market regions, allowing them to set pricing without regard for local competition. The business has been in talks with numerous possible dealers to launch this model since late November 2023.
Fisker sees this plan as a stimulus for expanding its sales, delivery, and test drive network. The business hopes to have automobiles delivered to its initial dealers by the end of Q1 2024 and to conclude all initial dealer partnerships before offering higher-volume vehicle variants.
FSR stock closed down 25.2% for the week on Friday.
AI moves
Goldman expects AI beneficiaries to excel even more.
Goldman Sachs analysts have released their forecast for IT hardware and networking equipment vendors through 2024. They basically claim that AI beneficiaries will continue to outperform in 2024.
Arista Networks (NYSE:ANET) is a top pick in this category, as it is likely to gain from rapid capital growth at its core hyperscale customers (Microsoft and Meta) as well as milestones that enable Ethernet as an AI networking fabric.
Furthermore, Dell Technologies Inc (NYSE:DELL) has been identified as a company that would witness increased demand for AI servers as “infrastructure investments expand beyond hyperscalers (first movers) to AI cloud service providers and, eventually, enterprise.”
Nvidia has received mixed reviews.
Analysts at Bank of America retained NVIDIA Corporation (NASDAQ:NVDA) as a Top Pick in the chip sector, noting that the company’s “genAI dominance can potentially help generate $100bn of incremental free cash flow over the next two years (CY24/CY25E).”
“In our view NVDA’s solid FCF generation creates optionality in addressing these concerns, and in helping to expand its trading multiple back to its historical median 35x-40x,” the research firm stated.
DA Davidson analysts, on the other hand, commenced research coverage on NVDA shares with a Neutral rating and a $410 per share price target.
“While we continue to believe that generative AI is the most important transformative technology since the Internet, we do not expect the same level of investment we saw in 2023 continuing beyond 2024,” the analysts wrote in a research note.
Morgan Stanley discusses artificial intelligence regulation.
Morgan Stanley analysts shared significant lessons from their interaction with Stanford University specialists on AI policy.
“We continue to believe that the development and implementation of AI regulation in the US will not be imminent and discuss multiple hurdles to clear,” analysts wrote in a note.
Overall, analysts claim that AI legislation in the United States is still in its early stages, and that it will “take years to implement anything enforceable in the United States.”
“The experts cited resource constraints at the Federal agency level and asymmetrical information between government and industry as two key factors that could hinder successful AI regulation.”
AI recipients will be reduced in 2023.
MongoDB (NASDAQ:MDB) and Palantir Technologies Inc (NYSE:PLTR), two major AI beneficiaries from 2023, had their ratings reduced this week. UBS downgraded the former after a 108% rally in 2023.
“We still like the durable ~30% long-term growth story, but absent a material database revs pull-through from AI workloads in 2024, we conclude that a continued re-rating of the stock is unlikely,” UBS analysts wrote in a note to clients.
In other news, Jefferies analysts downgraded Palantir to Neutral because it is “overhyped on AI.”
“We are concerned that the stock has rallied to unsustainable valuation levels primarily on the back of AI euphoria (and retail trading momentum) with no monetization strategy,” the analyst wrote in a research note.
“We are still fundamental fans and believe that the company has potential to gain share in an underpenetrated and large TAM but believe that there is more risk than reward at current levels, even when factoring in upward estimate revisions.”
UiPath receives a new bull.
With an Outperform rating, William Blair analysts launched research coverage on pure AI name UiPath (NYSE: NYSE:PATH).
“We believe UiPath is a market leader in workflow automation and process optimization.” Analysts said that the company’s technology “helps automate manual workflows through user interface (UI) and application programming interface (API)-based automations.”
“UiPath addresses complex and enterprise-grade processes, which has led to the company’s platform becoming mission critical for its customers (as evidenced by its strong gross retention rate of 97%).”
Analysts expect PATH to offer “durable growth and expanding margins over the next few years.”
Earnings season begins next week with major banking, consumer, and industrial companies reporting quarterly results.
Tilray (NASDAQ:TLRY), JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), BlackRock (NYSE:BLK), Citigroup (NYSE:C), Delta Air Lines (NYSE:DAL), and UnitedHealth are notable companies.
Earnings week Ahead
Major quarterly updates for January 8–12 are listed below:
On Monday, January 8,
Commercial Metals (NYSE:CMC)
Commercial Metals (CMC) will report Q1 earnings before the bell on Monday. After a mixed Q4, the company predicts a robust Q1 by historical standards but a sequential fall. Seasonally decreased shipments, North American steel product margin compression, and European market challenges are to blame.
CMC has restructured its reporting structure into three segments: North America Steel Group, Europe Steel Group, and Emerging Businesses Group.
Oren Growth Investment of Seeking Alpha believes Commercial Metal Company (CMC) is cheap due to its exposure to projects less affected by interest rate movements. CMC is a stock to watch due to its low net leverage and revenue outperformance. Oren Growth Investment warns investors about acquisition failures, environmental regulations, and competition.
EPS consensus: $1.45
Revenue consensus: $1.93B
In 7 of the past 8 quarters, the company outperformed revenue and EPS projections.
Helen of Troy, Accolade, Jefferies, and others reported.
Tuesday, January 9
Tilray Brands
Tilray Brands (TLRY) will report Q2 earnings after Tuesday’s close. In the previous six months, the Canadian cannabis company’s stock have risen 40%. However, it decreased 22% last year.
Analysts are divided on TLRY. Seeking Alpha authors advise selling, while Wall Street analysts advise buying. Quant system at Seeking Alpha ranks TLRY as Hold.
Seeking Alpha columnist Blake Downer writes, “Tilray Brands is trading slightly under their intrinsic value,” adding to the company’s mixed reviews.
EPS consensus: -$0.05
Revenue consensus: $195.07M
Earnings Insight: Tilray has outperformed sales and EPS estimates in 3 and 5 of the past 8 quarters.
Aehr Test Systems (AEHR), MSC Industrial (MSM), CalAmp (CAMP), TD SYNNEX (SNX), SMART Global (SGH), WD-40 Company (WDFC), Acuity Brands (AYI), Neogen (NEOG), E2open (ETWO), and others reported
On Wednesday, January 10
KB Home (NYSE:KBH)
KB Home (KBH) will report Q4 earnings after Wednesday’s close. The homebuilder, which has grown over 80% in the past year, is expected to fall EPS and revenue Y/Y.
Hold ratings from Sell-side and Seeking Alpha’s Quant grading systems indicate a cautious view.
Seeking Alpha blogger GS Analytics says KB Home faces high interest rates. However, rising net orders and a steady backlog predict FY24 revenue growth. While margins are likely to improve next year, GS Analytics said the value already reflects this outlook, calling it neutral.
Consensus EPS: $1.68
Revenue consensus: $1.62B
KB Home has outperformed EPS projections in 6 of the past 8 quarters and sales in 50%.
Saratoga Investment (SAR), AZZ (AZZ), PriceSmart (PSMT), and others reported.
On Thursday, January 11,
Infosys (NYSE:INFY)
Infosys (INFY) will report Q3 earnings before the bell on Thursday. Seeking Alpha’s Quant rating system rates the stock Hold, but Wall Street analysts rank it Buy.
“The company’s flagship generative AI offering, Topaz, has the potential to drive significant growth and value appreciation,” says Quinn Coughlin of SA.
Analysts expect $0.18 EPS.
Revenue consensus: $4.66B
Insight: Infosys has failed EPS and sales projections in 5 and 2 of the past 8 quarters.
Concrete Pumping (BBCP) and more reports.
Friday, January 12
The banking sector will be active on Friday as several large businesses report quarterly results. Stay tuned for Citigroup (C), Bank of America (BAC), Wells Fargo (NYSE:WFC), JP Morgan (JPM), BK, and Blackrock (BLK) updates.
Before the market starts on Friday, UnitedHealth Group (UNH) and Delta Airlines (DAL) will publish quarterly earnings in addition to bank reports.
WEEKLYÂ EARNINGS CALENDAR
Monday, JAN 08
Accolade (ACCD), Helen of Troy (HELE), Jefferies (JEF)
Tuesday, JAN 09
Acuity Brands (AYI) Albertsons (ACI) AZZ (AZZ) Neogen (NEOG) PriceSmart (PSMT SMART) Global SGH TD Synnex (SNX) Tilray (TLRY) WD-40 (WDFC)
Wednesday, JAN 10
KB Home (KBH)
Friday, JAN 12
Wells Fargo (WFC) Bank of America (BAC) BlackRock (BLK) BNY Mellon (BK) Citigroup (C) Delta Air Lines (DAL) JPMorgan Chase (JPM) UnitedHealth (UNH)
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