Tech stocks surged before the bell Wednesday, outpacing the broader market as investors welcomed Tesla’s (TSLA) commitment to cheaper cars and awaited the next round of corporate earnings.
Tech-heavy Nasdaq 100 (^NDX) futures rose about 0.5%, following a strong closing gain. S&P 500 futures (^GSPC) rose 0.1%, continuing their rebound from their longest losing streak of 2024, while Dow Jones Industrial Average futures (^DJI) wobbled along the flat line.
Tesla shares jumped after the electric vehicle maker’s promise to accelerate the launch of more affordable models overshadowed its quarterly profit and revenue shortfall. This reassured investors worried about growth, amid a strategy shift towards robotaxis and the planned cancellation of a cheaper model.
The results of the first “Magnificent Seven” reports have intensified already high hopes for Big Tech profits, that mega-caps can reignite the stock rally they have fueled. Focus now shifts to Meta (META) report, due after market close, as shares of the Facebook owner rose after the Senate voted in favor of a potential ban on its rival TikTok. Microsoft (MSFT) and Alphabet (GOOG) will follow on Thursday.
Meanwhile, Boeing (BA) earnings are due Wednesday morning, after a quarter rocked by a high-profile plane failure that led to a regulatory cap on production. Also on the agenda are updates from AT&T (T), IBM (IBM) and Ford (F), among others.
Live5 updates
Just on the phone: Judy Marks, CEO of Otis
Many in the Yahoo Finance editorial team know my joy in reading about elevator and escalator maker Otis Worldwide (OTIS) – I’m fascinated by what the company makes, how it makes it, and what it says on the health of the global economy.
I just got off the phone with Judy Marks, CEO of Otis. His comments on China — following his March trip to that country (an important market for Otis) — left an impression on me:
“The message from the Chinese government is that we want economic development. We want foreign direct investment. We’re going to celebrate 40 years in China this year, and it’s an important market for us, but we’ve been watching the market develop .and some of the challenges in the real estate market and they really persist. I would tell you that the real estate market and the new equipment market, similar to the last 18 to 24 months, remains weak. credit weigh on the market.
Marks does not expect Otis’ China business to return to growth in 2024.
Hilton continues to buy up its company
Hilton (HLT) continues to be one of the most aggressive acquirers of its stock among the billion companies I follow closely.
In many ways, it almost feels like Hilton is going private again! The hotel and resort company went public again in 2013 after being purchased by Blackstone in 2007.)
This is from the company’s just-released earnings report:
“During the quarter ended March 31, 2024, Hilton repurchased 3.4 million shares of common stock at an average price per share of $196.17, for a total of $662 million, returning $701 million of capital to shareholders during the quarter, including dividends the number of shares outstanding as of April 19, 2024 was 250.0 million.
For perspective, Hilton ended 2022 with a share count of 277 million.
Toy Maker Revenue Is No Fun
No joke here, the profits of big toy makers Mattel (MAT) and Hasbro (HAS) aren’t much fun to watch.
Mattel didn’t exactly have a great earnings report last night – it now says it will return to revenue growth in 2025. Mattel is unique in that the Barbie movie really boosted its earnings in the year last, so things will be mathematically down. Sales fell 1% year-over-year in the first quarter.
Hasbro’s results this morning are also hard for investors to watch. The company reports a 21% drop in sales at its core consumer products business due to “broader industry trends, discontinued businesses and a reduction in closing sales following inventory cleanouts.” Last year “.
The two weak reports say a lot about where shoppers are right now…not when it comes to buying dolls, action figures, and board games.
A statistic to know about AT&T
I’m still looking through AT&T’s (T) long-term earnings report, but one number immediately caught my eye.
$4.7 billion.
That’s the amount of debt AT&T paid down during the quarter, as it continues to try to reduce its debt load after Time Warner. CEO John Stankey told me several times over the past year that paying down debt was one of his management team’s most important goals.
Fittingly, AT&T still ended the first quarter with approximately $132.8 billion in total debt! The company’s market capitalization is $118 billion.
A List of Questions for Tesla Investors to Think About
The day after.
Tesla (TSLA) CEO Elon Musk has been playing investors like a fiddle. He gave them what they asked for before profits – details on a cheaper Tesla – and they are eating it up. Shares are up 10% in premarket trading and the company’s ticker dominates the Yahoo Finance Trending Ticker page.
This is all well and good, but it all undermines (probably because of Musk’s design) the core Tesla story that has weighed on its stock price this year: The company is in trouble, and any bold promises of Musk driving up his shares during a terrible year for the company, that should be questioned on a grand scale.
Here are some questions Tesla bulls need to ask themselves.
Musk promises robotaxis and shows in the results presentation what their carpooling application could look like. But…
What do regulators have to say about this? How feasible is this launch in the next 12 months?
Musk knows Uber (UBER) exists, right? And that it is finally making a profit and investing aggressively in its business.
Musk seems to think that people will want to share their Teslas and make this platform a success. What happens if they don’t want to share their tricked-out Model 3?
Musk mentions Tesla will do it own part of the robotaxi fleet. What does this do to its cash flow and margin profile? Do investors and analysts want to see Tesla grappling with these additional costs as the pure-electric EV sector is under pressure and they attempt to make Optimus humanoid robots?
Musk promises he is fully committed to Tesla. But …
Some interesting earnings dialogue revolves around how long Musk plans to remain CEO of Tesla. He didn’t respond specifically with a schedule, said he worked Sundays and apparently 24 hours a day (like many other humans). He then questioned whether Tesla might retire its robots if he didn’t run the company. Is it time to consider a musk-free Tesla in the coming years? What does this look like for investors? Many of its top executives have left or are about to leave, including one of the guys on the earnings call last night! If Disney (DIS) CEO Bob Iger is considered a failure at succession planning, then Musk could be considered one of the worst succession planners in CEO history.
Musk insists Tesla is an AI company again. But …
Of course, Tesla has amazing technology. But doesn’t Tesla first make cars that then use its technology? Who would you rather own shares in? A pure play AI company like Microsoft (MSFT) or an automaker masquerading as an AI company?
Musk promotes a cheaper Tesla. But …
Tesla is no stranger to recalls and concerns about product quality. Take a look at last week’s Cybertruck recall! So how good will a $25,000 Tesla be? This seems like a terrible ownership experience, much like when my parents bought a cheap 1986 Ford Tempo and a 1987 Ford Escort when they came out.
Aimant les mots, Sara Smith a commencé à écrire dès son plus jeune âge. En tant qu'éditeur en chef de son journal scolaire, il met en valeur ses compétences en racontant des récits impactants. Smith a ensuite étudié le journalisme à l'université Columbia, où il est diplômé en tête de sa classe.
Après avoir étudié au New York Times, Sara décroche un poste de journaliste de nouvelles. Depuis dix ans, il a couvert des événements majeurs tels que les élections présidentielles et les catastrophes naturelles. Il a été acclamé pour sa capacité à créer des récits captivants qui capturent l'expérience humaine.
