Don’t Call It A Comeback

Today’s most highly-watched earnings report came from Tesla. But despite all the fanfare, shares didn’t move as much as anticipated. 🤷

Let’s see what the electric vehicle maker told investors.

Adjusted earnings per share of $1.19 beat the $1.13 expected. And revenues of $24.32 billion topped the $24.16 billion estimate.

Automotive revenue of $21.3 billion grew 33% YoY, with $467 million coming from regulatory credits. Margins contracted as expected, with automotive gross margins hitting their lowest level in five quarters at 25.9%. 🔻

Service and other revenue rose to $1.6 billion, and energy generation and storage revenue rose to $1.31 billion. However, rising costs in its energy business left little profit remaining.

Tesla did not issue new guidance but reiterated that it’s planning to grow production as quickly as possible to reach the 50% compound annual growth rate target set in early 2021. Additionally, it reiterated that the Cybertruck pickup is on track to begin production in Texas this year. 📝

Despite the beat, concerns around the demand for the company’s products remain. Some analysts argue that the price cuts signify waning demand and that its 50% growth rate target is unrealistic. The company took steps to quell some of those fears, acknowledging that average sales prices have been trending lower for years. However, it also noted that affordability is a necessary requirement if the company is to sell millions of cars per year.

Additionally, bulls argue that Tesla’s ability to focus only on electric vehicles gives it a meaningful edge over competitors who have to juggle internal combustion engine vehicles and their electric vehicle efforts. That means Tesla can accept a lower automotive margin and still be profitable.

Despite all the noise, the company continues to charge ahead. It plans to invest $3.6 billion to expand its Nevada Gigafactory complex with two new factories. One will mass produce its Semi truck, and the other will make 4680 battery cells. The company’s overall production capacity continues to expand. It can now make 100,000 Model S and X vehicles annually. And about 1.8 million Model Y and Model 3s vehicles. 🚗

$TSLA shares are up about 4% after hours. As always, we’ll have to see if this initial jump holds or if investors reach a different conclusion after reading the report more closely. 🕵️

It’s another big day in tech earnings, so let’s just jump into it.

Dutch chip equipment maker ASML beat earnings and announced a lofty forecast for 2023 revenue. 😮

The company’s net sales rose more than 29% in the fourth quarter, with a 13% YoY rise for the full fiscal year. However, its net income for the year declined by roughly 4%.

Since it produces the machines required to make the world’s most advanced chips, ASML’s outlook is an important barometer for the industry. And today, it suggested that its net sales could grow 25% in 2023. 👍

While ASML’s executives recognize their business is not insulated from the macroeconomic environment, their customers believe the recent drop in demand will be “short-lived,” with many expecting a rebound in the second half of 2023. As a result, they’re not canceling orders, especially given the long average lead times for ASML’s tools.  

It also noted that it remains in the middle of the U.S. and China’s battle over extreme ultraviolet (EUV) lithography machines, which are required to make the world’s most advanced chips. However, it can still ship its older products to China and expects 2023 sales in the country to account for about the same 15% of its total sales in 2022. 🌏

Overall, investors seemed pleased with the results as $ASML shares rose nearly 2% towards their 1-year high.

ASML’s competitor, Lam Research, did not fare as well. 👎

Despite beating this quarter’s earnings and revenue estimates, The company announced a weaker-than-expected outlook and restructuring efforts. As part of its plan, it’s laying off 7% of its workforce (1,300 employees), with many cuts coming in the U.S. manufacturing sector.

Additionally, it now expects revenue of $3.5 to $4.1 billion in the fiscal third quarter, falling well short of the $4.94 billion analysts expected.

Shares of $LRCX are down roughly 3% on the news. 📉

Next up is Seagate Technology, a major American data storage player.

The company reported adjusted earnings per share of $0.16 vs. the $0.10 expected. Revenues of $1.89 billion also beat the $1.83 billion expected. And for the fiscal third quarter of 2023, it expects revenue in the range of $1.85 to $2.15 billion and earnings per share of $0.05 to $0.45. 📆

Cash flow from operations was $251 million, and it had free cash flow of $172 million in the quarter. This allowed it to declare a cash dividend of $0.70 per share.

Investors are apparently happy with what the company had in store for them. $STX shares are up 7% on the news. 📈

Lastly, IBM is joining the list of large companies cutting jobs. With that said, its earnings and revenue did manage to top expectations. 🤷

Its adjusted earnings per share of $3.60 were in line with consensus. And revenues of $16.69 billion beat the $16.4 billion expected.

Analysts had expected revenue to decline for the first time in two years, but instead, it was flat. Driving that was strength in its software and infrastructure segments, which saw 3% and 2% growth, respectively. That offset the weakness in consulting, which grew 0.5% but fell short of expectations. 

For 2023, it expects constant currency revenue growth to be in the mid-single digit range and a free cash flow of $10.5 billion. 🔮

Like other tech giants, IBM is also taking steps to reduce costs and boost earnings. That includes extending the useful life of its equipment, cutting 1,300 jobs (1.5% of its workforce), and more.

Shares of $IBM were down about 2% on the news. 🔻

While we all love talking about tech, there are other industries also reporting earnings today. Let’s recap the most notable ones.

First up is Boeing, which missed earnings and revenue expectations. 👎

The company’s adjusted loss per share was $1.75 vs. the $0.26 profit expected. And revenues of $19.98 billion fell short of the $20.38 billion estimated.

As we’ve heard from other industrial giants, the sharp recovery in air travel has boosted aircraft sales and deliveries. However, the company’s supply chain issues continue to hamper its results and impact its ability to ramp up production to meet demand. 🛫

It generated roughly $3.1 billion in cash flow last quarter and $2.3 billion for the year, its highest since 2018. It reiterated guidance for $3 to $5 billion in free cash flow this year. 

After an initial gap down, $BA shares rebounded throughout the day to close marginally positive. 

Next up is AT&T, whose shares jumped 6% after its earnings and full-year cash flow topped analyst estimates. 💵

The telecom giant’s adjusted earnings from continuing operations (excludes WarnerMedia spinoff) were $0.61 vs. the $0.57 expected. And revenues from continuing operations were $31.3 billion vs. the $31.4 billion expected.

Investors also focus on the company’s cash flows, which support its dividend. The company reported a full-year free cash flow of $14.1 billion, which beat estimates of $13.78 billion. Next year it expects $16 billion in free cash flow, lower than the $16.2 billion analysts forecasted.

In terms of subscriber numbers, postpaid phone subscribers topped estimates by 11,000. However, its fiber broadband subscribers continue to struggle, coming in at 280,000 vs. the 330,000 expected. 📱

Overall, growing cash flow and slowing capital expenditures in 2024 are seen as welcome signs for shareholders of the beaten-down telecom stock. It’s been a tough environment for competitors like Verizon as well, so we’ll have to see if today’s rally is short-lived or a longer-term turning point.

Copper mining company Freeport-McMoRan reported better-than-expected results. ⛏️

It reported adjusted earnings per share of $0.52 vs. the $0.45 expected. Revenues declined less than expected to $5.76 billion vs. the $5.4 billion consensus estimate.

Falling copper prices and rising operational costs were headwinds for the company. It booked an average copper price of $3.78 per pound in Q4, down about 14% YoY. Recently, copper prices have rebounded on China’s reopening hopes and improving odds that the U.S. and Europe could avoid a steeper recession in 2023. 🔻

Executives expect 2023 copper sales to be flat at 4.2 million pounds, with expected gold sales falling by 100,000 to 1.7 million ounces. Additionally, Unit cash costs are expected to rise to $1.60 per pound of copper in the coming year.

$FCX shares rose about 4.6% on the news, nearing a 9-month high. 📈

Casino operator Las Vegas Sands losses jumped and missed estimates. Revenues of $1.12 billion rose 10.9% YoY.

Despite the miss, shares of $LVS are up about 4% after hours. 🤷

Investors appear to be reading between the lines here. Bulls say that its Macau operations are still not back to normal and that China’s reopening will help fuel further growth. Essentially, if these results were okay without Macau performing well, then earnings/revenue should beat estimates in the future once it is. 

Whether or not that *gamble* will pay off for bulls remains to be seen. But for now, they’re placing their chips on green. 🎰