$Tesla Motors(TSLA)$ ‘s latest financial results missed Wall Street expectations for the first time in a year as production and deliveries hit bottlenecks.
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1. Not good results but highlights buyback and market cap
Net income exceeded expectations, but revenue, gross margin and deliveries fell short of expectations:
- Q3 revenue of $21.454 billion, up 56% year-over-year, a record high but below analysts' expectations of $22.1 billion
- Q3 gross margin of 27.9%, down from 30.5% a year ago and below the average estimate of 28.4%.
- Q3 net income of $3.292 billion, up 103% year-over-year, higher than expected
Tesla shares fell 6.28% after the bell.
However, Musk is very confident, saying that
we’ll have an epic end of year.
Tesla’s market value, now at $696 billion, could one day exceed the combined capitalization of Apple ($2.3 trillion) and Saudi Aramco($2.1 trillion), two of the world’s most valuable companies.
In addition to the epic year, Musk suggested that Tesla could make a "meaningful buyback" next year, possibly between $5 billion and $10 billion. This is unprecedented in Tesla's history.
Compared to $Netflix(NFLX)$ surprise earnings report, Tesla's weaker-than-expected earnings report naturally triggered a drop in the stock price.
2. Market rally stopped because of a decade-high Treasury yield
US treasury yields dampened optimism, sending the broader market lower.
The 10-year treasury yield soared to a fourteen-year high, with all (but 1m) US Treasuries yield up more than 4%. This is a rare occurrence in the past decade or so.
The spike in Treasury yield represents a change in the market's expectations for the Fed to raise interest rates.
Based on the projection of Treasury yields, the market expects the Fed's terminal interest rate to 4.95%, compared to the current level of 3%. It means there is room for nearly 200 basis points of rate hikes, much higher than the previous expectations.
The US dollar index also rose with Treasury yields and put pressure on stock market. In future, the choppy trend may continue because of the start of earnings season.
Consumer Discretionary, much affected by high inflation, may face a more dismal Q3.
Let's talk:
Which sector may fall short of expectations in Q3 like TSLA?
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Comments
now usa gov also have a new plan for semiconductor as they want more companies to go back to invest and build factories. there is tax rebate for the ev as their parts need to be made in USA. this cause more companies to go back to usa.