Stock recap
WEEKLY STOCKS RECAP
IN EV SPACE
Tesla facing NHTSA inquiry and legal challenges
The National Highway Traffic Safety Administration (NHTSA) in July sent Tesla (NASDAQ:TSLA) a notice seeking additional information on modifications made to the EV giant’s driver monitoring system, which is an integral part of the company’s autopilot software, as revealed by documents released on Tuesday.
NHTSA is specifically concerned about a software update that expands how long drivers can operate it without forcing them to apply force to the steering wheel. US regulators are worried that this loosening of rules could lead to drivers becoming inattentive and increase the risk of inadequate supervision of the autopilot system.
Adding to Tesla’s issues, the company is likely to face legal hearings this month and in October on allegations that its Full Self-Driving (FSD) autopilot technology has been responsible for tragic accidents.
The initial trial, in California’s state court, is a civil action complaint alleging that Tesla’s Autopilot technology caused a Model 3 owned by Micah Lee to unexpectedly veer off a highway east of Los Angeles while traveling at 65 miles per hour. The purported fault resulted in a collision with a palm tree, causing the vehicle to catch fire, and the scenario transpired in a matter of seconds.
The second trial is slated for early October in a Florida state court and focuses around a 2019 accident north of Miami in which Stephen Banner’s Model 3 collided with the trailer of an 18-wheeler big-rig truck that had joined the road. The impact resulted in the vehicle’s roof being torn off, leading to Banner’s death. The lawsuit argues that Tesla’s autopilot failed to apply the brakes, steer, or take any precautions to avoid the crash.
Tesla has denied blame for both accidents, attributing them to driver error and stating that their Autopilot system is safe when overseen by human drivers.
As all this plays out, Tesla continues to battle its price war, stating Friday that there will be significant price reduction in China for its Model S and Model X EVs.
Also on Friday, the business showcased its revamped Model 3 with improved range capabilities. The new Model 3 is Tesla’s first substantial upgrade to its affordable-car lineup since the successful global release of the Model Y in 2020.
Tesla hasn’t yet set a launch date for the updated Model 3 in the US market. Right now, they’re providing more than $5,000 in discounts on some of the automobiles they already have in stock in the US.
US allocates $12 billion for EV progress
During a briefing with journalists on Thursday, US Energy Secretary Jennifer Granholm announced that the US will allocate $12 billion in funds, accessible through grants and loans, to support automakers and their suppliers in retrofitting their facilities for the production of electric and other advanced vehicles.
This announcement comes at a time of contentious discussions between the United Auto Workers union and the three major auto firms concerning compensation and benefits for workers involved in the production of EV batteries. However, Granholm underlined that it remains questionable whether this cash will have any impact on these ongoing negotiations.
In addition to EVs, the funding may potentially embrace companies involved in the manufacturing of efficient hybrid vehicles, plug-in electric hybrids, plug-in electric drive vehicles, and even hydrogen fuel cell vehicles, as detailed by the Energy Department.
Tesla facing NHTSA inquiry and legal challenges
The National Highway Traffic Safety Administration (NHTSA) in July sent Tesla (NASDAQ:TSLA) a notice seeking additional information on modifications made to the EV giant’s driver monitoring system, which is an integral part of the company’s autopilot software, as revealed by documents released on Tuesday.
NHTSA is specifically concerned about a software update that expands how long drivers can operate it without forcing them to apply force to the steering wheel. US regulators are worried that this loosening of rules could lead to drivers becoming inattentive and increase the risk of inadequate supervision of the autopilot system.
Adding to Tesla’s issues, the company is likely to face legal hearings this month and in October on allegations that its Full Self-Driving (FSD) autopilot technology has been responsible for tragic accidents.
The initial trial, in California’s state court, is a civil action complaint alleging that Tesla’s Autopilot technology caused a Model 3 owned by Micah Lee to unexpectedly veer off a highway east of Los Angeles while traveling at 65 miles per hour. The purported fault resulted in a collision with a palm tree, causing the vehicle to catch fire, and the scenario transpired in a matter of seconds.
The second trial is slated for early October in a Florida state court and focuses around a 2019 accident north of Miami in which Stephen Banner’s Model 3 collided with the trailer of an 18-wheeler big-rig truck that had joined the road. The impact resulted in the vehicle’s roof being torn off, leading to Banner’s death. The lawsuit argues that Tesla’s autopilot failed to apply the brakes, steer, or take any precautions to avoid the crash.
Tesla has denied blame for both accidents, attributing them to driver error and stating that their Autopilot system is safe when overseen by human drivers.
As all this plays out, Tesla continues to battle its price war, stating Friday that there will be significant price reduction in China for its Model S and Model X EVs.
Also on Friday, the business showcased its revamped Model 3 with improved range capabilities. The new Model 3 is Tesla’s first substantial upgrade to its affordable-car lineup since the successful global release of the Model Y in 2020.
Tesla hasn’t yet set a launch date for the updated Model 3 in the US market. Right now, they’re providing more than $5,000 in discounts on some of the automobiles they already have in stock in the US.
US allocates $12 billion for EV progress
During a briefing with journalists on Thursday, US Energy Secretary Jennifer Granholm announced that the US will allocate $12 billion in funds, accessible through grants and loans, to support automakers and their suppliers in retrofitting their facilities for the production of electric and other advanced vehicles.
This announcement comes at a time of contentious discussions between the United Auto Workers union and the three major auto firms concerning compensation and benefits for workers involved in the production of EV batteries. However, Granholm underlined that it remains questionable whether this cash will have any impact on these ongoing negotiations.
In addition to EVs, the funding may potentially embrace companies involved in the manufacturing of efficient hybrid vehicles, plug-in electric hybrids, plug-in electric drive vehicles, and even hydrogen fuel cell vehicles, as detailed by the Energy Department.
China’s EV producers excel in August
Rival EV manufactures in China revealed outstanding delivery numbers for August, confirming the EV market’s steady expansion there.
Li Auto (NASDAQ:LI) established an all-time high in sales, with 34,914 vehicles delivered in August, marking a 2.3% increase over the previous record of 34,134 vehicles, set in the month prior. This astonishing result reflects a staggering 664% surge when compared with the same month last year.
Nio (NYSE:NIO) reported deliveries of 19,329 vehicles for August, albeit this marked a minor reduction of 5.5% compared with the previous month’s record of 20,462. Nonetheless, it reflected an outstanding 81% growth when compared with August of the prior year. Nio’s delivery prediction for the third quarter, ranging from 55,000 to 57,000 electric vehicles, implies that the company is already exceeding the top end of its delivery projections.
XPeng (NYSE:XPEV) accomplished a significant milestone in August by delivering 13,690 vehicles, the greatest number since June 2022. This showed a noteworthy 43% increase compared with the same period a year earlier. Additionally, sales enjoyed robust growth of 24.4% compared with the 11,008 EVs delivered in July, representing the seventh consecutive month of sequential improvements.
According to the China Passenger Car Association, as of August 27, retail sales of passenger new energy vehicles (NEVs) in China reached 538,000 units, indicating a 2% increase compared with the previous month, underscoring the ongoing expansion and competitiveness of the electric vehicle market in China.
Outlook for the week on energy and precious metals
New York-traded West Texas Intermediate, or WTI, crude made a final trade of $86.05 per barrel on Friday after officially finishing the session at $85.55 per barrel – up $1.92, or 2.3%. For the week, the U.S. crude benchmark finished up 7.2%. That came after a combined 4% dip over two prior weeks as the economy in top importer China stalled. Prior to that, WTI gained 20% over seven weeks.
London-traded Brent made a final deal of $88.99 per barrel on Friday after officially finishing the session at $88.55 – up $1.72, or 2%. For the week, Brent climbed 4.8%. That was after a combined 2.3% dip over two weeks. Prior to that, the global crude benchmark surged for seven weeks in a row, gaining a total of 18%.
Oil: WTI Technical Outlook
The U.S. crude benchmark is leaning towards an overbought scenario and in need of a correction to restart a robust climb, said Sunil Kumar
On the flip hand, a strong consolidation above the monthly middle Bollinger Band $86.80 could pave the way for the next bullish wave towards the Nov 2022 high of $93.70, Dixit said.
But a more plausible possibility is a transitory pullback towards the horizontal support zone of $84.90 – $84.40, he suggested.
This might potentially stretch towards $82.40 and the Daily Middle Bollinger Band of $81.40 which would perform well for WTI, Dixit added.
Gold: Market Settlements and Activity
Gold prices neared a one-month high Friday before consolidating to end the week up little over 1% after a mixed U.S. jobs report for August, where payrolls came in stronger than predicted but unemployment also climbed, touching 18-month highs.
The U.S. economy added 187,000 non-farm payrolls last month against an anticipated 170,000 while the jobless rate jumped to 3.8% from a previous 3.5%, the Labor Department reported. The mixed reading carried the notion that the Federal Reserve might not instantly resort to more rate hikes to drive inflation to its long-standing target of 2% per annum from the near 3% it hovers at now.
In Friday’s trading, gold futures’ most-active December contract on New York’s Comex executed a final trade of $1,966.20 on Friday, after officially finishing the session at $1,967.10, up $1.20, or 0.06%. The session peak for December gold was $1,981.70 an ounce, its best since Aug. 7. For the week, it increased 1.4% while decreasing 2% for all of August.
Gold: Spot Price Outlook
Spot gold experienced a second week of improvements but still fell short of a finish that would have positioned it for a stronger run higher, said SKCharting’s Dixit.
“Unconvinced traders failed to establish a day/week closing above the 200-day SMA, or Simple Moving Average, of $1,954 and the descending Weekly Middle Bollinger Band of $1,951,” he said. “Thus, the spot price settled at $1,939.”
Going into the week ahead, the 50-day EMA, or Exponential Moving Average, of $1,931 presents active support, Dixit. “A consistent break below $1931 will ease the path for a drop to the 200-day SMA, or Simple Moving Average, of $1,914.”
On the bright side, stability above $1,942-$1,945 will encourage a retest of the $1,951-$1,954 level.
“Strong acceptance above this zone will eventually extend the bullish momentum targeting $1,965,” added Dixit. “Failure to establish above $1,954 will eventually resume the downward correction.”
Natural gas: Market Settlements and Activity
The front-month October gas contract on the New York Mercantile Exchange’s Henry Hub had a final trade of $2.762 per mmBtu, or million metric British thermal units on Friday after officially finishing the session at $2.765, nearly flat on the day.
For the week though, October gas surged 22.5 cents, or 8.85%. The U.S. gas standard also achieved a three-week high of $2.865 in Thursday’s session.
Natural gas: Technical Outlook
Dixit of SKCharting highlighted that in yet another bullish weekly bounce, natural gas had the sliding 200-day SMA perfectly lined with the swing high of $3.00 psychological handle.
“If this zone is successfully cleared with price action stability above the line, expect to witness gains reaching overhead resistance at the monthly Middle Bollinger Band of $3.25,” stated Dixit. “Our major upside target is the 50-week EMA of $3.46.”
A break below the 5-day EMA of $2.70 will be the first sign of exhaustion for the current upside in gas, followed by a dip below the 50-day EMA $2.60 and the weekly Middle Bollinger Band of $2.50.
6 big earnings hits
Thursday postclose roundup: Dell’s huge results, disappointment at Broadcom, Lululemon beats
Dell Technologies (NYSE:DELL) soared 8.5% in recent premarket trading after the company said adjusted EPS totaled $1.74, smashing the $1.14 estimate, on revenue of $22.93 billion that topped the $20.86B target, as a jump in in service and software maintenance agreements boosted growth.
Recurring revenue climbed 8% to $5.6B year-over-year in Q2, led by “increases in service and software maintenance agreement,” the business said.
Chipmaker Broadcom (NASDAQ:AVGO) posted profits per share of $10.54 on revenue of $8.88B for its fiscal Q3, comfortably topping the consensus expectation for EPS of $10.43 on revenue of $8.85B, and said it expects AI-related expenditure on infrastructure software and semiconductors to enhance demand.
The business expects to post Q4 revenue of $9.27B, up 4% from the prior year but slightly below the $9.28B expectation. Shares were dropping 4.6% to $880 in early Friday trading.
Lululemon Athletica (NASDAQ:LULU) shares were up 1.5% to $387 in Friday’s premarket after the firm posted Q2 EPS of $2.68 that above the $2.54 expectation, as well as better-than-expected revenues of $2.2B.
The athletic gear retailer also said on Thursday that full-year profit could range from $12.10 to $12.17 a share, while revenue is estimated at $9.51B to $9.57B.
Salesforce boosts its outlook
Earlier in the week, Salesforce (NYSE:CRM) shares surged 3% Thursday after the software firm upped annual forecast and surpassed estimates for Q2, boasting better demand for the second half of the year.
Adjusted EPS was $2.21, substantially beating the $1.90 average Street projection, on revenue of $8.6B vs. the $8.53B expectation.
The company boosted its full-year expectations to earnings of $8.04 to $8.06 per share – significantly higher than analyst estimates for $7.45 and up from the preceding $7.41 to $7.43 range – given an anticipated firming of demand and stronger margins through year-end. Revenue forecasts were marginally increased to $34.7B to $34.8B
Operating margin and operating cash flow growth was raised to 13.3% and a range of 22% to 23%, respectively. That compared with an earlier expectation for margins of 11.4% and operating cash flow growth of 16% to 17%.
Third-quarter adjusted EPS was forecast in a range of $2.05 to $2.06 on revenue of between $8.70B and $8.72B, exceeding Wall Street estimates of $1.82 and $8.67B, respectively.
Wolfe Research is staying with a Peer Perform rating “until we get conviction around double-digit top-line growth,” but the firm is also raising its margin assumptions for the company “given the ‘mission accomplished early’ feel around margins, and the commentary around 30% being a floor not a ceiling.”
Goldman Sachs said these numbers will assuage “some investor concern around Salesforce’s ability to balance top-line and OM expansion,” noting that this “can lead the stock to re-rate higher,” much as several other tech giants have managed to achieve.
Shares closed Thursday at $221.46.
Victoria’s Secret misses
Victoria’s Secret (NYSE:VSCO) missed on Q2 projections, sparking a Thursday premarket fall, although the company ultimately pulled through in the main session.
EPS of $0.24 came in poorer than the consensus forecast of $0.27. Revenue was $1.43B, below the consensus forecast of $1.44B.
For Q3, the company predicts a loss of between $0.70 and $1 much worse than the consensus expectation for a $0.14 shortfall. And for the whole year, the company expects net sales to shrink in the low-single-digit range compared with last year, contrary to the average expectation of around a 2% reduction.
Wells Fargo dropped shares to Equal Weight from Overweight on these findings, lowering its price objective by $2 to $16 per share.
“Uncertainty on their ability to execute a turnaround is mounting and valuation should continue to erode,” stated the analysts.
BofA decreased the price target by $5 to $25, but remains Buy-rated, saying it is “encouraged by multiple opportunities to drive sales in 2H.”
Still, shares firmly recovered following a poor open, gaining 6.9% to $19.18.
HP loses ground on soft guidance
HP’s (NYSE:HPQ) shares tumbled 6.6% after the firm posted fiscal Q3 sales late Tuesday that fell short of Wall Street projections, as well as weaker-than-expected annual earnings guidance, amid a slackening backdrop for PC demand.
Adjusted EPS of $0.86 was flush with Wall Street projections, while its top line of $13.2B missed the $13.38B estimate.
In its personal systems unit, which comprises personal computers and accounts for the majority of growth, revenue declined 11% to $8.9B in Q3 year over year.
The company’s Q4 outlook was $0.85 to $0.97, compared with Wall Street estimates for EPS of $0.95, and full-year EPS was predicted at $3.23 to $3.35, below than the $3.37 average analyst target.
Several analysts decreased their price targets on the stock following the print. Bernstein said the report was disappointing, writing, “We worry about the structural health of the printing business and its ability to grow over time,” even though PC revenues are “likely to improve going forward.”
The business stated that the shares are “more expensive than HPE, which is less structurally challenged.”
Weekly Earnings Calendar
Monday, September 4
- Trip.com (TCOM)
Tuesday, September 5
Wednesday, September 6
- UiPath Inc. (PATH), Core & Main Inc. (CNM), Gamestop Corp. (GME), Sprinklr Inc. (CXM) and American Eagle Outfitters (AEO)
Thursday, September 7
- The Toro Company (TTC), DocuSign Inc. (DOCU), Guidewire Software Inc. (GWRE), Smartsheet Inc. (SMAR), Braze Inc. (BRZE), and John Wiley & Sons Inc. (WLY)
Friday, September 8
- Kroger Company (KR)
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