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Musk’s Flamboyant Temperament Is Back But The Whole Auto Industry Stands Strong

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Tesla stock market news

Tesla Inc’s (NASDAQ:TSLA) California plant has reopened as Elon Musk defies orders that aim to contain the spread of COVID-19. Musk will be in the first line and asking to be the only arrested, if it comes to that as he tweeted on Monday. Back on Saturday, the company filed a federal lawsuit against the country as Musk already threatened to relocate the manufacturing facility out of California.

Musk has been vocal about COVID-19 as he even initially dismissed the concerns as dumb. And although Tesla was forced to stop production, Musk raised his voice again to free Tesla from the lockdown as he called the orders “fascist”. Alameda County health authorities stated they learned the plant has reopened and emphasized Tesla can only maintain minimal operations until an approved plan is in place. It is still unclear whether Tesla would suffer any consequences for reopening without a plan in place.

Detroit Automakers Stand Strong

The Big 3 Detroit Automakers are weathering the storm, at least without any talk of bankruptcies. Perhaps this is the case because they know better due to the previous downturn when they vowed to fortify balance sheets. Just to be on the safe side, Morgan Stanley conducted a “shutdown analysis” and its results inspire confidence that giant automakers such as General Motos (NYSE:GM) and Ford (NYSE:F) don’t need to fear the fate that many companies experienced due to the blows of the 2007/2008 financial crisis. Yet, not even then did the industry come to a standstill like it did during this pandemic. It seems that automakers learned their lesson the hard way as during the Great Recession, they were forced to shed billions in capital expenditures and structural costs. As CEOs made it their mission to be prepared for the next iceberg, they made sure to have tens of billions of dollars in available cash, less leverage and more flexible union contracts when it comes to vehicle production in order to save money when plants are idled.

By no means are things going well as Ford was the first to suspend its dividend and GM soon followed in April. But GM was ahead of the curve as it exited its unprofitable markets such as Europe and announced cuts in November last year as part of its $6 billion cost-saving plan through 2020. GM actually achieved a profit in the first quarter whereas Ford ended with a loss of $2 billion and Fiat Chrysler Automobiles (NYSE:FCAU) also losing $1.8 billion. But Ford’s debt-to-profit ratio still remains healthy under 2 with 1.4 in 2019 whereas it was 14.1 in the dreaded 2008. But Ford is estimated to burn $8.5 billion for the year whereas GM is is in for less than $3 billion. These three combined, they burned about $8.6 billion in cash during the first quarter: Fiat Chrysler leading the way with $5.5 billion, followed by Ford at $2.2 billion whereas GM burned through $903 million out of which $600 million was COVID-19 related. Although the second quarter is expected to be the worst quarter in terms of coronavirus impact for the entire auto industry, Detroit’s Big 3 seem equipped to handle it.

Outlook

Tesla’s shares have gained 239% in the past 12 months, compared with gains around 1.7% for the S&P 500 index and there is a reason for that. No matter what is your opinion of Musk, no one can dispute the fact he brought his vision forward and delivered on the promises. Now whether Tesla can deliver yet another surprise and achieve a fourth profitable quarter in a row is open for debate as not even Musk had a business plan called ‘pandemic’ before and literally no corporation could ever imagine that the economy could just ‘turn-off’.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

BenzingaEditorial

This Week’s Earnings Repertoire

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During the previous shortened week, COVID-19 outbreaks grew while vaccine developments provided a glimpse of hope of finally putting an end to COVID-19. This week, Zoom Video Communications, Inc. (NASDAQ: ZM), CrowdStrike Holdings, Inc. (NASDAQ: CRWD), DocuSign Inc (NASDAQ: DOCU), salesforce.com, inc. (NYSE: CRM), Five Below (NASDAQ:FIVE), and Kroger (NYSE:KR) are set to deliver their earnings reports.

Zoom

The question on everyone’s mind is can Zoom maintain its growth momentum? On Monday afternoon, Wall Street expects Zoom to report earnings of 76 cents per share on revenue of $693.95 million. Just one year ago, Zoom delivered earnings of 9 cents per share on revenue of $166.59 million. The economy might have plunged during the coronavirus pandemic, but Zoom stock skyrocketed as its cloud-based video collaboration platform became the textbook definition of the work and study-at-home lifestyle. However, its stock fell 15% with positive coronavirus vaccine developments so investors will be watching churn rates to see the percentage of users who are cancelling their subscriptions.

Crowd Funding

Software stocks altogether have gone on a massive rally March and cybersecurity stocks were among the biggest winners as companies needed additional security for their home-office setting. CrowdStrike surged as much as 202% year to date, with 93% and 13% gains over six months and last thirty days, respectively. But CrowdStrike also needs to show it can maintain its strong growth when corporations decide to return to an office setting.

Wall Street expects CrowdStrike to breakeven on revenue of $212.60 million. Exactly one year ago, it lost 7 cents per share while generating revenue of $125.12 million.

DocuSign

After close on Thursday, Wall Street expects the digital signature company to earn 13 cents per share on revenue of $361.15 million. One year ago, it earned 11 cents per share on revenue of $249.50 million. By providing individuals and businesses the ability to digitize an agreement process, it greatly benefited from remote work and social distancing. Its stock skyrocketed 80% during the past six months with almost 210% year to date, whereas the S&P rose only 12% during the same timeframe. But its valuation is being questioned with the upcoming vaccine. DocuSign needs to show it diversify its offerings, such as its contract lifecycle management platform.

Salesforce

Wall Street expects Salesforce to earn 75 cents per share on revenue of $5.25 billion. This figure equals earnings during the same quarter last year, whereas revenue amounted to $4.51 billion.

The company’s SaaS business model and its customer relationship management services have become a must have for developing companies. But after Dow Jones report that the cloud giant is in advanced talks to acquire Slack (NYSE: WORK) at an undisclosed amount, the stock retracted. With its negotiating and collaborating features Slack would immediately position Salesforce to challenge Microsoft’s (NASDAQ: MSFT) enterprise dominance it owes to Office365. But with Slack now valued at $22 billion,  it would Salesforce’s largest acquisition and based on how the market received the news, investors seem concerned.

Five Below

The youth-focused retailer has been one of the rare specialty retailers to outperform the COVID-19 storm that left many retailers fighting for mere existence. While temporary store closures did hurt its sales during fiscal first quarter, the retailer managed to bounce back to growth in its fiscal second quarter, with sales inching higher by 2%. But Five Below needs to show gains in both store expansion and sales growth to support management’s ambitious plans to expand its footprint.

Kroger

Although demand for consumer staples remains elevated, rivals like Walmart Inc (NYSE: WMT) and Costco Wholesale Corporation (NASDAQ: COT) reported slowing sales gains. Yet, Wall Street expects this leading grocery store chain to report head-turning growth metrics, while forecasting a revenue boost of 7% for the quarter.

The question of the week

Besides their earnings reports, the above companies have an important question to answer. Considering these companies greatly benefited from remote work, they need to prove they can keep their growth momentum even if positive vaccine developments encourage consumers to go back to offices and stores.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Alibaba’s Sophisticated Monopoly Strategy Expands to EVs

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By being a Chinese multinational company specialized in e-commerce, retail, Internet, and technology, Alibaba Group Holding Limited (NYSE: BABA), or just Alibaba.com, has a lot of reasons to be under the spotlight. But over the last month, it was mentioned due to three main reasons: the suspended blockbuster IPO of Ant Financial, the most recent earnings that failed to dazzle investors, and the anti-monopoly rules aimed at giving regulators more control over monopolies.

Even though Alibaba CEO Daniel Zhang labeled these plans as “timely and necessary”, both Alibaba’s and other Chinese tech giants’ shares plunged earlier this month as much as 20% in just two weeks. Alibaba’s fintech affiliate, Ant Group was close to making a record with a $37 billion IPO on November 5th, with an estimated valuation of almost $300 billion. However, this blockbuster IPO, publicized as the largest in history, was suspended due to above-mentioned regulations. Alibaba, as a major shareholder with a 33% ownership stake in Ant Group, felt the impact of these imposed brakes directly. But there is so much more to Alibaba’s ground-breaking success than attracting sellers by eliminating listing fees. This company excels at identifying and seizing unique business opportunities.

EV News

There is no tech giant that can allow itself not to think ahead, what will be the next big thing. Many tech giants both in the US and China already teamed up with traditional carmakers, trying to be a part of the transition to electric and autonomous vehicles. Back in 2015, Alibaba joined forces with Shanghai Automotive Industry Corporation, one of the “Big Four” state-owned Chinese automakers, to create an operating system for EVs. This cooperation advances when Alibaba recently invested in Zhiji Motor, a new electric vehicle arm launched by SAIC. Huawei also plans to get into the car industry by providing Information Communication Technology equipment for the automakers. This type of cooperation is already seen in Chinese EV startups like Xpeng Inc (NYSE: XPEV) and Nio (NYSE: NIO), who are aiming to challenge other than Tesla (NASDAQ: TSLA) itself. Alibaba already has worked with  BMW (OTC: BMWYY) and Volkswagen Group’s owned (OTC: VWAGY) Audi over the years so it is no stranger to the automotive business.

What do investors fear?

Investors were not impressed with Alibaba’s last quarter earnings. The company achieved adjusted income of $2.65 per share with a revenue of $22.8 billion. Wall street’s expected earnings were $2.12 per share with revenues of $23.2 billion. However, when looking at the revenues in the Chinese currency, the estimate was 154.9 billion yuan, while the company achieved 155.06 billion. Maybe the investors expected more, having in mind the positive trend which Amazon (NASDAQ: AMZN) and other e-commerce companies are having. The fact is there are six companies which take up almost 60 percent of the global online purchasing pie, with Alibaba owning two of them. Other than two more Chinese companies with a substantial share,  there is eBay (NASDAQ: EBAY) and JD.com (NASDAQ: JD) who have simpler business models which are less exposed to antitrust measures. Due to strong competition, as well as tighter regulations and the law of large numbers, Alibaba’s e-commerce revenues will probably decelerate in the following year. Considering that this is where Alibaba generates most of its revenue, with which I subsidizes the growth of other core segments that are still unprofitable (Alibaba Cloud, Digital Media and Entertainment, and Innovation Initiatives), it’s no wonder that investors were not delighted.

Conclusion

November was a rough month for Alibaba, but it is recovering. Not to mention that Chinese economy has emerged as the fastest recovering economy from the pandemic, while also being projected to be the single economy to report YoY growth this year. Alibaba remains as an international e-commerce empire that keeps evolving with green development initiatives. Although Ant Group IPO has slim chance to take place next year, the IPO’s collapse won’t impact Alibaba’s near-term growth. However, it won’t generate cash or boost its earnings as Alibaba had planned.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Weekly Retail Recap

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This week has brought a bunch of retail earnings reports, showing that specialty stores are on their way back to health.

Urban Outfitters shows strength ahead of holiday season

Urban Outfitters (NYSE: URBN) reported its quarterly profits rose 38 percent as strength of its brands combined with reduced operating expenses drove growth. Stock climbed as earnings reached a record despite the pandemic. The retailers managed to earn $77 million, or a record 78 cents a share, even though revenue fell 1.8% YoY to $970 million, exceeding Wall Street expectations for both EPS of 45 cents and revenue of $931.5 million.

Burlington Stores tops Q3 estimates but warns on weak start to Q4

While sales were challenged due to a weak August which saw deficient inventory levels and delayed back to school purchases, Burlington Stores (NYSE: BURL) saw comparable store sales trends improve significantly throughout the other two months of the quarter. The company did not provide any formal guidance, but revealed that the undergoing quarter has gotten off to a weak start.

Dick’s Sporting Goods came out with solid earnings and big news

Dick’s Sporting Goods (NYSE: DKS) reported solid earnings Tuesday, with sales at stores open for at least one year growing 23.2% over last quarter. But its major news was that the CEO Ed Stack is stepping down after 36 years in which he transformed his family’s small business into a national presence, took the company public and enacted a strong stance on the US gun debate. The current president Lauren Hobart will be promoted to this role on February 1, and by doing so, she will become company’s first female chief executive.

Nordstrom’s turnaround is real

The iconic fashion retailer reported better than expected third-quarter results. Nordstrom (NYSE: JWN) delivered the quarterly earnings of $0.22 per share, beating the Zacks Consensus Estimate of $0.01 per share but significantly below last year’s $0.81 per share. This has been a hard year for the retailer who saw its shares lose about 42.7% since the beginning of the year while the S&P 500 gained approximately 10.7%.  But after being crushed by the pandemic, Nordstrom now managed to crush Q3 earnings estimates, proving that it is already on the road back to health. COVID-19 gave a severe blow to the retailer due to its focus on selling dressy apparel for work and social events, resulting in sales sinking more than 40% YoY during the first six of the year. But this month, Nordstrom stock has doubled with growing hopes of upcoming COVID-19 vaccines. Also on a bright note, the company is poised to exceed its cost-cutting goals this year, including substantial and permanent reductions to its overhead costs.

American Eagle Outfitters – Sometimes a Beat Just Isn’t Enough

American Eagle Outfitters (NYSE: AEO) posted quarterly earnings of $0.35 per share exceeding Zacks consensus which looked for the company to post $0.33. However, revenue numbers didn’t fare quite so well as it amounted $1.03 billion for the quarter ended October 2020, missing the Zacks Consensus Estimate by 2.08%. This compares to year-ago revenues of $1.07 billion. The company did not provide any fourth quarter or full year guidance. For Q4, Street analysts forecasted sales declining only 1% this current quarter but profits are expected to drop another 14%, with an overall loss for the year.

Gap fell short

The Gap Inc (NYSE: GPS) shares tumbled as earnings fell short, but the retailer remains optimistic about the holidays.It expects fourth-quarter sales to be about equal to or slightly higher than a year ago as consumers can’t spend on entertainment and travel, the expectation is that this budget will be directed to discretionary goods during the gift giving season. But fiscal third-quarter earnings fell short of estimates as Old Navy and Athleta sales gains did not manage to offset the increased marketing costs aimed at defining core brands and growing market share.

Shares fell more than 10% in after-hours trading, having risen more than 51% since the start of this year, Gap has a market cap of $10 billion. Gap earned $95 million or earnings per share of 25 cents versus the expected $140 millionand 32 cents by Refinitiv data on a revenue of $3.99 billion versus the $3.82 billion expected.

Same-store sales were up as sales were boosted in large part by the company’s digital business, which surged 61% and accounted for 40% of total sales during the quarter. Gap said it added more than 3.4 million new customers online.

Retailers are hoping for a ‘holiday miracle’

It seems that recovery from the pandemic is underway despite a spike in COVID-19 infections across the globe. Arising number of cases could still hamper both sales and traffic in physical stores. Retailers such as Abercrombie & Fitch (NYSE: ANF) and Macy’s (NYSE: M) have cited this threat of temporary store closures. But retailers are hoping that the enthusiasm brought on by the holidays might be strong enough to conquer consumer fears of being infected by actually going shopping.  One thing is certain – in a changing apparel retail environment, the above clothing retailers now have the opportunity to fully demonstrate how vital online shopping really is.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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