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Tesla Stunningly Misses Its Q1 Estimates With Anemic Performance



On April 24, Tesla Motors (NASDAQ: TSLA) reported big quarterly losses resulting from decreased demand for its electric cars. The loss took its toll on the bottom line and it was far greater than what Wall Street analysts had predicted. The quarter’s revenue of $4.54 billion fell well short of expectations. Tesla had $2.2 billion of cash at the end of the first quarter, a 40 percent decline from the figure at the end of last year.

The company did pay off a bond in March this year but Tesla’s operations consumed $640 million of cash in the first quarter. It sold 31 percent fewer vehicles in the first quarter than in the fourth quarter of 2018. The company also said logistical challenges had hindered deliveries of the Model 3 sedan to Europe and China. A reduction in a federal tax credit benefit for Tesla’s buyers may have weighed on Model 3 sales in the United States.

The big question for Tesla is whether the drop in car sales in the first quarter was a temporary phenomenon or is something more serious happening with the demand for its cars. Why is Tesla cutting prices if the demand for its products is supposedly strong? Well, according to Tesla’s chief executive, Elon Musk, the goal is to make its cars “as affordable as possible.”  The reality is that the auto market is maturing and slowing down.

Another weak spot for the company was its solar business, where sales dropped by more than 35 percent in the quarter. Revenue was weak but the heaviest blow to the bottom line was made by the insane costs that were clearly a result of a poorly made strategy.

Sales of Model 3 sedans could recover as the company delivers cars overseas. But demand for the higher-priced Model S and Model X vehicles plunged 56 percent in the first quarter from the fourth, even though the company cut the price of the cars at the end of February.

Tesla expects to lose money again in the second quarter, though less than in the first quarter, but turn a profit in the third quarter. The lower price may stir up the demand, but charging less could make it harder for Tesla to make a profit on the vehicle.

Tesla’s cash position is crucial to the company’s future and many analysts fear that Tesla will have difficulties in getting more capital so it is likely to issue new shares. Mr. Musk, who had previously said the company did not need more capital, indicated that he had changed his mind because Tesla was now in a position to use capital more efficiently.

But it seems Musk has an idea of getting some of Tesla’ desperately needed funds by getting into the insurance business. Musk has big plans for Tesla’s Autopilot software as it recently announced two new features, revealing that it intends to use the benefits of the software to decrease insurance costs for consumers. Tesla has among the highest insurance rates in the market because its vehicles are thought of as next to impossible to fix. Musk is convinced that this will be ‘much more compelling than anything else out there.’ Tesla-branded insurance would include, among other features, a customer-permitted direct data feed that would eliminate frictional costs and inefficiencies embodied in the traditional insurance process. The filing also said that “vehicles equipped with an autonomous feature option will be eligible for credits based on the level of autonomy of the vehicle.” Getting the data about how people drive is definitely a good insight for setting a rate, that is of no question, but is Tesla equipped for this new venture with the needed “know-how” and adequate financial support?

Warren Buffett has even commented on this announcement, admitting the value of the data, but Buffett doubts that auto companies can take advantage of this information, let alone make money from it.

Tesla vehicles are engineered to be the safest cars in the world and the team behind them is doing its best to make accidents much less likely to occur. Data from its Vehicle Safety Report shows progress but is it enough to make Tesla start earning money, let alone create a financial cushion if it actually has to start paying insurance claims at some point. After all, Tesla just closed a $2.7 billion offering of stock and convertible notes to raise much-needed cash. The bottom line is that despite these good ideas, Tesla’s core business is struggling so perhaps it would be better for the company to focus on that first before adding yet another page to its portfolio of activities.

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Toyota’s News: Redesigned Corolla, New Investments and Partnerships



Toyota Stock Market News

Toyota Motor Corporation (NYSE: TM) is managing something other automakers only dream of. The company is honouring its values while achieving sustainable growth for over a decade. The dependable Japanese giant continues to deliver on its promises as it prepares for an electric future.

A new sturdy yet sporty Corolla

On September 17th, the company announced a completely redesigned Corolla that now goes beyond just being a practical buying decision. The newly evolved Corolla has a sporty design, offering pleasurable driving and advanced safety equipment. Being built on Toyota New Global Architecture (TNGA), Corolla is ready to evolve to meet customers’ needs, according to Yasushi Ueda, chief engineer in charge of development.

Since its debut in 1966, this car is nothing less than adored by consumers all over the world and now, it will have its first hybrid version available to U.S. customers.

Hybrid strategy is actually paying off

Just like Honda Motor Co. (NYSE:HMC) with its 2020 CR-V Hybrid, Toyota is using its hybrid technology to position itself for future growth and transition to an all-electric future, despite the fact these energy saving vehicles do not qualify for government subsidies. But, this strategy is paying off as hybrid demand skyrocketed and the company proudly revealed in February that Lexus reached its 10 millionth vehicle sales milestone since its launch, with its 2018 sales performance achieving several ‘best-ever records’. And it is thanks to these figures that the Chinese government is also starting to see the potential of such vehicles so things can only get even better for Toyota. As the saying goes, persistence is the key to success and these two companies have been quite brave in sticking to HEVs.

New Investment – $391 Million Goes to Texas’ San Antonio Plant

This will be Toyota’s first expansion in nine years at the plant that produces its Tundra and Tacoma pickup trucks. It is the part of the company’s strategy to invest $13 billion in its U.S. operations over the period of five years, ending in 2021.

Future Investment – $243.29 million to Produce New Vehicle in Sao Paulo

Toyota is also about to get an even stronger presence in Brazil as it will hire 300 new employees at the Sorocaba Plant to start the production of a new vehicle.


And let’s not forget the ground-breaking partnership of Japan’s leading automakers that was revealed in August as Toyota and Suzuki Motor Co. (OTC: SZKMF) announced they will collaborate on developing autonomous car technology. This deal is cementing the bond that the two automakers kicked-off in 2016. They might seem like an odd couple as Suzuki is a everything but a big player, yet its strong presence in India is only one of the things that will greatly benefit Toyota. Although Suzuki admitted defeat on the world’s biggest playgrounds, China and the U.S., it cracked the code for emerging markets. And this is exactly where future global sales growth is expected to come from.

Inventing a car that will run forever?

According to Bloomberg, Toyota aims to go far further than electric by teaming up with Sharp Corporation (OTC:SHCAY) and Japanese governmental organization NEDO that encourages the development of innovative technologies. Considering that Toyota is a company that has even used the economic crisis and recession to only come out stronger, it’s not unlikely that it is set to out do the impossible by mixing the most efficient batteries with solar panels. The company’s strong financial performance and track record show that if anyone can do it, it’s Toyota Motor Co.


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Nike Exceeds Wall Street Expectations With Q1 Earnings for FY2020



Direct-to-consumer sales and digital momentum strategies did the trick for Nike

When Nike (NYSE:NKE) released its better-than-expected first quarter of the fiscal 2020 results late Tuesday. Naturally shares jumped more than 5% to reach $91.80. The reported revenue increased 7.2% year comparing to last year, achieving $10.7 billion, greater than the expected $10.44 billion. Net income soared more than 28%, making adjusted earnings per share $0.86, also smashing expectations of $0.70 per share.

Nike managed to achieve a turnaround

The biggest contributor to total sales was Nike’s North American segment that increased 4% comparing to last year. But China sales also continue to grow and by double digit percentages: 22% to be exact, topping $1.68 billion. Overall, these are fantastic news for investors. Especially since the company’s rare earnings miss for the final quarter of the previous fiscal year. The company attributed this to increased marketing costs and a higher tax rate. But highly anticipated new product launches and solid results for continuing lines, along with efforts to draw new customers to the Nike SNKRS app, did their magic.

Digital momentum is key

Digital movement is transforming and amplifying everything Nike does and in Q1, Nike Digital grew 42% on a currency neutral basis. This growth is driven by enhanced digital services and the international expansion of its app ecosystem. Moreover, The Nike app and SNKRS app are now both live in over 20 countries, with more expansion coming throughout the year.

There are literally no weak spots for investors

Arguably, there are no weak spots for prudent investors to dig in as far as this quarter’s report is concerned. The company is literally firing on all cylinders. The company’s management attributes these results to “the depth and balance of the company’s complete offense, building on the strengths of its foundational business drivers and capitalizing on the untapped dimensions of its portfolio”. Management has also dismissed any concerns that US-China trade conflicts could harm its operations, disclosing no impact has been seen up to date.

Nike showed it can even handle the increased tariffs

Earlier this year Nike joined over 200 other footwear companies urging President Trump not to increase tariffs on footwear imported from China, calling the move “catastrophic for our consumers, our companies, and the American economy as a whole.” But while those tariffs are certainly catastrophic for small players, Nike seems more than capable of mitigating the consequences of this added expense.

Poor macroeconomic conditions are only masking Nike’s true power

The company made it clear that its figures would have been even stronger had it not been for macroeconomic challenges which are manifesting through tariffs and foreign-exchange rates. They implied that the weakening economic climate is essentially masking Nike’s true strength. And in addition to children, women are also a big opportunity for the company that Nike will continue exploiting. This is why Nike expects better-than-planned growth in its higher-margin NIKE Direct channels and international segments and consequently, its full-year gross margin. One thing is for sure: Nike has turned itself into so much more than a ‘sneaker-company’.

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Apple Will Be Making Its MacBook Pros in the US



With a newly granted “federal product exclusion,” enabling it to import some Mac Pro parts without paying tariffs, Apple (NASDAQ: AAPL) will be able to save enough money to make US assembly worthwhile. The company announced on Monday that it will manufacture the new version of its Mac Pro desktop computer in Austin, Texas. It’s also a big political win for Apple, since President Trump has for years called on the company to make more products in the US. Tim Cook clearly made a compelling case during his meetings with President Trump. Apple described the decision to keep Mac Pro production in Austin as part of its “commitment to US economic growth.”

Macroeconomic climate is not favourable

The September figures around the world are simply awful. The uncertainty brought on by intensifying trade wars, the outlook for the car industry and Brexit are paralyzing investors, with September seeing some of the worst performance since the financial crisis in 2009, leading many to worry about whether yet another crisis is upon us. On a brighter note, Apple’s stock went up 0.2% after Bloomberg reported that ten of its 15 requests for an exemption from tariffs on imports from China had been approved.

New investments

Apple previously disclosed plans to spend $350 billion in the U.S. by 2023, a figure that includes new and existing investments. Its Apple TV+ is set to launch on November 1, with stars like Oprah Winfrey bringing her famed book club streaming show to the company’s subscription service. Among documentaries that will be released, there will even be a multi-series about mental health, featuring no other than Prince Harry himself. Apple’s subscription service will cost only $4.99 a month and will be available in 100 countries and regions at launch. Also, customers who buy a new Apple device will also get a free year of Apple TV+.


Netflix (NASDAQ: NFLX) is still the leader when it comes to U.S. streaming, along with Amazon Prime (NASDAQ:AMZN), AT&T’s HBO (NYSE: T) and upcoming Disney+ (NYSE:DIS), it is certain that competition will be intense. Netflix’s stock has been dropping since July, which was the first time the number of subscribers fell. Moreover, Netflix’s stock price has now officially wiped out any gains it’s made over the year so far and both Disney and Apple have a shot at beating Netflix at its own game.

Apple is still facing impending import duties and innovation difficulties

Let’s not forget that the company still faces import duties scheduled for Dec. 15 that could affect nearly all of its major products including iPhones, iPads, MacBooks and Apple Watches. And more importantly, it is thought by many as facing an innovation problem so it heavily relies on customer loyalty that will continue driving its sales. We’ll just have to wait for November 1st launch of Apple TV+ to see the impact of Apple’s new streaming subscription service.

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