Stocks recap
Stocks recap
WEEKLY STOCKS RECAP
IN TECH
Tesla
Tesla (NASDAQ:TSLA) shares fell this week as investors worried about the EV maker’s recent price cuts to boost volumes and face rising competition. The decision raised three-month revenues to $24.93 billion.
However, without regulatory allowances, its automotive gross profit margin fell to 18.2% from 18.8% in the first quarter and 26.2% last year. Tesla’s shares fell as CEO Elon Musk hinted at more price cuts this year, though the loss was smaller than predicted.
Tesla earned $0.91 EPS on $24.93 billion revenue. Investing.com analysts predicted $0.79 EPS on $24.29B revenue.
With deliveries up 86% to 466,140, the firm had a record quarter.
Netflix
Netflix (NASDAQ:NFLX) saw a “low” number of cancellations and added 5.9 million customers in Q2, well above Wall Street projections, thanks to its crackdown on password sharing and its lower ad-supported tier.
However, softer-than-expected revenue of $8.2B overshadowed EPS of $3.29 (vs. $2.84). Netflix’s third-quarter top-line projection of $8.5B missed expectations.
Co-CEO Greg Peters warned investors that these initiatives will take “several quarters” to yield results.
Netflix fell 4% to $427.50 this week.
After “a mother of a quarter,” Evercore ISI raised the price target to $550 and withdrew its Tactical Underperform rating. The business “would encourage investors to buy NFLX shares on this (small) pullback” due to expectations correction, not fundamental correction.
NFLX shares were upgraded by $35 to $525 per share by BofA. Analysts called the findings “healthy,” adding:
NFLX’s content richness and breadth should help them weather production cuts.
Taiwan Semiconductor
Taiwan Semiconductor Manufacturing (NYSE:TSM), or TSMC, reported a higher-than-expected second-quarter profit Thursday on resilient chip demand, but warned that a surge in artificial intelligence may not be enough to overcome a broader industry slowdown.
After the outcome, American depositary revenues fell 7.1% to $97.25.
The world’s largest contract chipmaker, which supplies Apple Inc (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), reported net Q2 earnings per share plummeted 23% to 7.01 Taiwan dollars (US$1 = T$31.07), or US$1.14 per ADR. Analysts polled by Investing.com expected $1.07.
Profit fell year-over-year due to a good performance last year and a downturn in semiconductor demand through 2023 due to rising interest rates and worsening global economic conditions.
The chipmaker’s gross profit margin is predicted to fall to 51.5% to 53.5% from 54.1% in the third quarter, while operating profit margin is expected to fall to 38% to 40% from 42%.
After a strong 2022, a larger economic slowdown was reducing chip demand, the business said. TSMC was less enthusiastic about AI-driven chip demand than its peers.
CFRA’s rating dropped from Strong Buy to Buy after the outcome.
Microsoft
When generally accessible, Microsoft 365 E3, E5, Business Standard, and Business Premium will cost $30 per month for 365 Copilot subscribers.
Microsoft shares hit a session high Tuesday after the disclosure of higher-than-expected pricing for a commonly used program.
Analysts were also optimistic.
“A major next step for MSFT’s AI monetization,” Barclays said, “We think the price uplift (53% over E5) is at the upper end of investors’ expectations and should drive shares.” Wells Fargo (NYSE:WFC) claimed the price “represents a significant step-up to existing license costs.”
Based on 422 million Office 365 subscriptions and 1% penetration, BofA calculated a $1.52B opportunity. It considers “M365 Copilot’s ability to parse through relevant business data” a “critical differentiator to existing AI products.”
Mizuho wrote:
MSFT’s medium-term and long-term growth potential, including Generative AI monetization, are higher than many think. MSFT leads the June-quarter reporters. Our Buy rating and PT remain at $420 (from $390).
After Tuesday’s spike, shares fell to $343.77 for the week.
IN EV SPACE
Tesla’s thrilling Q2 call
Tesla (NASDAQ:TSLA) reported solid Q2 earnings this week, beating the Street’s $0.79 projection with profits up 20% to $0.91 per share. Quarterly revenue rose 47% to $24.93 billion, exceeding the consensus forecast of $24.29B.
Despite rising loan rates and macro uncertainty, Tesla CEO Elon Musk reported record quarterly vehicle production, deliveries, and revenue.
The billionaire CEO said autonomy will drive volume “through the ceiling” and that the company’s robotaxi goods will be in high demand during the call.
He stressed the relevance of AI and the Dojo supercomputer in teaching Tesla’s Full Self-Driving (FSD) program to be 10 to 100 times better than human driving. Musk expects asset value will improve significantly when regulators approve (FSD) and Tesla’s fleet value rises.
Ford’s China battery deal investigated by House.
Ford (NYSE:F) and its CATL venture were investigated by the US House of Representatives.
In February, the Detroit automaker unveiled a $3.5B battery manufacturing proposal in Michigan using CATL’s technology. The Republican chairs of the House Ways and Means Committee and the Select Committee wrote to Ford seeking clarification on the deal, expressing concerns about Ford’s potential reliance on Chinese inputs for electric vehicle battery manufacturing and exposing “itself and U.S. taxpayers to the whims of the Chinese Communist Party and its politics.”
Ford said the cooperation diversifies its supply chain and produces cheaper, more durable batteries than U.S. alternatives. They claimed the arrangement would boost battery technology and American jobs while promoting environment and human rights. However, new information has spurred the House investigation, throwing doubt on Ford’s claims and increasing worries about the alliance.
Delaware law permits Nikola
In another electric vehicle legal/political issue, Delaware Governor John Carney has approved a new law that will make it simpler for Nikola (NASDAQ:NKLA) to double its shares.
Nikola twice failed to acquire enough shareholder proxies to ratify the share increase from 800 million to 1.6B, forcing two annual meeting adjournments. Nikola’s share increase will be easier to approve under the new regulation, which simply requires a majority of votes.
Delaware-based manufacturer says it has enough votes for the new law increase. Next count is Aug. 3.
Founder and former Executive Chairman Trevor Milton, who holds 8% of Nikola shares, broke an almost three-year social media silence to encourage shareholders to vote against the move. Milton faces sentence on three federal fraud convictions and is in arbitration with the company over a $125M SEC punishment the company agreed to pay.
NKLA shares rose 15.82% after a 10.8% Tuesday gain.
Outlook for the week on energy and precious metals
WTI Forecast
Sunil Kumar Dixit, chief trading strategist at SKCharting.com, said crude bulls finally broke above the 2000-Day SMA, or Simple Moving Average, of $76.70 as WTI continues to rise.
“If bulls hesitate to clear through 50-week EMA $78.40, the 100 day-SMA of $73.50 and the 50-day EMA $72.90 will act as dynamic support zone,” Dixit said, referring to the Exponential Moving Average.
“Once this 1st line of resistance is decisively cleared, bulls will face the 100-week SMA of $85.20, followed by the Monthly Middle Bollinger Band $86.20.”
Gold: Forecast
Dixit of SKCharting said that a $30 correction pushed gold down to $1,957 from a $1,987 high, ending the week with modest gains.
The 50-day EMA of $1,949 is the next support, followed by a big confluence of the 4-hour chart produced by the 100 SMA and 200 SMA at $1,941.
Dixit said bulls must protect momentum at the test of value zone or a future downturn will make deeper dents into $1,925 and $1,900.
If gold finds buyers above the $1,968-$1,978 horizontal resistance zone, a retest and break over the swing high of $1,987 will lead to the following leg upward of $1,996 and $2,009 before $2,035.
Gas Price Forecast
Dixit of SKCharting stated the 4-Hour time frame shows short-term price activity caught between the 100 SMA of $2.66 as interim resistance and the 200 SMA of $2.56 as immediate support.
Dixit said the mid-term outlook favours a bullish rebound supported by stability above the 50-day EMA dynamically positioned at $2.53, waiting to break above the Daily Middle Bollinger Band of $2.66, and retesting the swing high of $2.84, followed by the psychological handle of $3.00.
MAJOR DEALS
Stratasys rejects Nano Systems, accepts 3D Systems merger talks.
After six weeks of unsolicited proposals and rejections, Stratasys (NASDAQ:SSYS) said early last week that 3D Systems’ (NYSE:DDD) latest revised buyout offer “would reasonably be expected to result in a ‘Superior Proposal'” as defined in its May all-stock $1.8 billion merger agreement with Desktop Metal (NYSE:DM).
In this second 3D Systems offer, Stratasys stockholders would receive $7.50 in cash and 1.5444 shares of the combined business, representing 44% ownership.VMware stock rises as U.K. CMA approves Broadcom acquisition.
VMware stock surges after U.K.’s CMA clears Broadcom’s acquisition
VMware (NYSE:VMW) shares rose more than 5% on Wednesday after the U.K.’s Competition and Markets Authority (CMA) granted preliminary approval for Broadcom’s (NASDAQ:AVGO) acquisition of VMware.
The CMA has temporarily found that the transaction may not significantly affect competition in the U.K. server hardware component market. This is not the final decision, and a final report is expected on September 12.
The European Commission conditionally approved the transaction this month.
Dell buys Moogsoft
Dell Technologies (NYSE:DELL) agreed to buy DevOps and ITOps AI-driven intelligent monitoring solutions company Moogsoft.
Dell’s “multi cloud by design” strategy and AIOps skills will improve. The deal should finalise in Q3.
KKR buys Chase for $1.3B
Chase (NYSE:CCF), a leading global provider of protective materials for high-reliability applications, has confirmed that it will be bought by KKR’s affiliate. Chase shares rose over 3% on Thursday.
KKR will buy all Chase common stock at $127.50 per share in cash, valuing Chase at $1.3B including debt.
Insider trade & Hedge fund action
Catalent stock jumps after WSJ reports Elliott’s large holding.
The Wall Street Journal reported that activist investor Elliott Investment Management bought a large investment in Catalent (NYSE:CTLT) on Thursday, sending the stock up about 3%.
Elliott is also discussing proxy contests with potential directors, the paper states. Director nominations end July 29.
Elliott’s push for change comes after Catalent’s CFO left in April and the company had operational challenges that hurt its stock price many months ago.
Catalent stock rises after WSJ reveals activist investor Elliott holds a significant stake
Constellation Brands shares gain on announced agreement with Elliott
After announcing Information Sharing and Cooperation Agreements with Elliott Investment Management L.P., one of Constellation’s largest investors, Constellation Brands (NYSE:STZ) shares rose more than 5% on Wednesday. Elliott consented to a standstill, voting, secrecy, and more.
The business also elected Mondelēz International (NASDAQ:MDLZ) CFO Luca Zaramella and AutoZone (NYSE:AZO) CFO William T. Giles to its Board of Directors.
Cathie Wood’s ARK sells Twitter.
The Wall Street Journal claimed that Cathie Wood’s ARK Investment Management sold 47% of Elon Musk’s Twitter.
Wood, who supported Musk’s Twitter privatisation last year, said the write-down did not represent their long-term favourable stance on the venture.
Musk posted about Twitter’s debt, negative cash flow, and 50% advertising income drop.
Wood thinks Meta’s Twitter-rival Threads will spur healthy competition and turn Twitter into a “everything app.”
Asana CEO buys more shares
Asana (NYSE:ASAN) CEO Dustin Moskovitz bought another 80,000 common shares worth $1.9 million.
Moskovitz now owns 40,312,803 common shares directly and 4,147,046 indirectly through a trust.
In March 2023, he announced his aim to buy 30M shares by 2023.
Weekly Earnings Calendar
MONDAY JULY 24
Cadence Design Systems Inc. (CDNS), NXP Semiconductors (NXPI), Ryanair Holdings (RYAAY), Brown & Brown Inc. (BRO), Domino’s Pizza (DPZ), and Crown Holdings Inc. (CCK)
TUESDAY JULY 25
Microsoft (MSFT), Alphabet Inc. (GOOGL; GOOG), Visa (V), Texas Instruments (TXN), Raytheon Technologies (RTX), Verizon Communications (VZ), General Electric (GE), UBS (UBS), 3M Company (MMM), and Ford Motor Company (F)
WEDNESDAY JULY 26
Meta Platforms (META), The Coca-Cola Company (KO), Thermo Fisher Scientific (TMO), Union Pacific Railroad (UNP), Boeing (BA), Automatic Data Processing Inc. (ADP), AT&T (T), Chipotle Mexican Grill (CMG), Stellantis (STLA), and O’Reilly Automotive (ORLY)
THURSDAY JULY 27
Mastercard (MA), AbbVie (ABBV), McDonald’s (MCD), Shell (SHEL), Linde (LIN), Comcast (CMCSA), T-Mobile (TMUS), Intel (INTC), Honeywell International (HON), and S&P Global Inc. (SPGI)
Friday, July 28
ExxonMobil (XOM), Procter & Gamble (PG), Chevron (CVX), AstraZeneca (AZN), Sanofi (SNY), Aon (AON), Colgate-Palmolive (CL), Charter Communications (CHTR), Centene Corp. (CNC), and T-Rowe Price Group (TROW)
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