MarketBites Daily Investment Commentary: Tesla Earnings: Rapid Growth & Bitcoin I iOS 14.5 Rollout

Stock Market Commentary for 4/27/2021:
  • +The busiest week of Q1 earnings continues with Microsoft, Starbucks, Visa, and many others reporting today. So far, 84% of S&P 500 companies beat Wall Street profit estimates.

  • Flare-ups in Covid-19 cases in India (350,000 new cases reported yesterday) and Japan, triggered concerns about the pace of the global economic recovery.

    Consumer Staples companies were the biggest losers of the day, as reports of surging commodity prices unnerved investors. Companies like Coca-Cola and Proctor & Gamble are highly impacted by raw material costs for their products.


  • Stock Talk:

 

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Top Investment Story #1: Tesla Earnings
What is Happening?

Tesla reported record net income of $438 million, while revenue surged 74%. The stock traded slightly lower (1.72%) in after-hours trading.

Why does this Matter?

Tesla shares are down about 18% from their 52-week high. Increasing EV competition from traditional automakers and a couple of public relations issues, as well as the global automotive semiconductor shortage, have all weighed on investor sentiment.

While the report didn’t address the above points, investors got many updates on sales figures and margins.

  • Earnings: 93 cents/share vs. 79 cents/share expected. This translates to $438 million in profits. Impressive? Not really, when we account for $518 million in EV credit sales and $101 million gain on Tesla’s Bitcoin investment.
  • Revenue: $10.39 billion vs. $10.29 billion expected.
  • Car Deliveries: 184,800, which is over 100% year-over-year growth. While deliveries skyrocketed, Tesla only grew its service centers and mobile service fleet by 28% and 22%, respectively. This could lead to potential bottlenecks in the near future.

What’s ahead?
Despite the global chip shortage plaguing automakers, Tesla reiterated its ambitious growth targets. Tesla plans to grow unit sales by 50% per year for the foreseeable future, and expects to do better than that in 2021. On the earnings call, Elon Musk stressed Tesla’s camera-based autonomous vehicle technology, which is in stark contrast to the radar-based technology most other carmakers use.

The Takeaway:

Tesla delivered remarkable growth this quarter, but the company’s continued reliance on EV credits (and now Bitcoin gains) to turn a profit should leave some investors disappointed.

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– By Raymond Kanyo

– Published in MarketBites Daily Newsletter


Meet the Authors
Top Investment Story #2: iOS 14.5
What is Happening?

The long-awaited iOS 14.5 update has been released by Apple. What does it mean for advertisers such as Facebook? What does it mean for you?

Why Does This Matter?

Apple has released its newest update, enacting the option for users to make it more difficult for applications to track them around the internet.

Most household-name tech companies have rallied around Apple’s call for user protection, including Google. The move comes as user-privacy rights have become more mainstream over the last 24 months. With the new update, Apple will allow iOS users to simply toggle off application tracking should they desire to do so.

A vocal opposer to this update has been Facebook. Facebook, like many social media sites, relies heavily on targeted ads in order to drive revenue. Facebook brass has suggested that limiting data collection will not only make targeted ads less effective, but will also make its user experience less enjoyable.

Bank of America analysts predict that the change will only cause a 3% headwind for Facebook revenues. The market appears to have bought into this number, as the stock ($FB) was unaffected by the news; closing Monday’s session with a modest .01% gain.

Other firms that analysts and pundits have identified as potential casualties of this update include, but are not limited to: Snapchat, Twitter, and Pinterest.

The Takeaway:

It is still unknown how impactful the new iOS update will be. The general trend towards user privacy across the internet appears to be a larger potential problem for firms such as Facebook at this time.

 

By Jack Dunne

– Published in MarketBites Daily Newsletter


Raymond grew up in Budapest, Hungary, where he played tennis for the Hungarian Junior Davis Cup team. At the age of 16, he received the Davis United World College Scholarship, which was established by legendary investor Shelby Cullom Davis, allowing him to attend the Taft Boarding School in Watertown, CT. After Taft, Raymond received a Presidential Scholarship to the Robins School of Business at the University of Richmond, where he studied Quantitative Economics and Finance. Raymond is a CFA Level III Candidate. Prior to joining Taylor Hoffman, Raymond worked at various financial institutions in the insurance, asset management, and financial consulting space. Outside of the office, Raymond enjoys playing tennis at ACAC and Westwood Country Club.

Raymond Kanyo
Product Manager & Investment Analyst

Jack graduated from the Robins School of Business at the University of Richmond with concentrations in Marketing and Finance in 2019. Prior to joining Taylor Hoffman, he worked in high-growth B2B SaaS marketing; assisting Fortune 100 firms to improve their web performance experience. A Long Island New York native, Jack’s hobbies include passionately supporting the Mets and Islanders, and he enjoys skiing whenever he can.

Jack Dunne
Investor Education Specialist
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