Coffee With Greta: TSLA Props Up Tech Stocks
DJIA Futures: +34 (+0.1%)
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NASDAQ Futures: +81 (+0.7%)
Good morning friends!
Futures are higher as traders digest more Q2 earnings.
Let’s get right to it!
Tesla Reports Mixed Q2 Results
Tesla (TSLA) shares are up 3% ahead of the open after reporting mixed Q2 results.
The electric automaker reported adjusted earnings of $2.27 per share on $16.93 billion in revenue.
That topped analysts’ expectations for adjusted EPS of $1.81 but missed estimates for $17.1 billion in revenue.
Revenue rose 42% annually but automotive gross margins shrank to 27.9% from 32.9% in Q1 and 28.4% a year ago.
That drop was caused by inflation and more competition for parts.
Tesla maintained its guidance for “50% average annual growth in vehicle deliveries,” over a “multi-year horizon”.
United Airlines Tumbles After Q2 Profit Miss
United Airlines (UAL) shares are dropping 6.8% in premarket trade after missing Q2 profit expectations.
The airline reported adjusted earnings of $1.43 per share on $12.11 billion in revenue.
It was the company’s first profitable quarter since before the pandemic but fell short of expectations.
Analysts were expecting adjusted EPS of $1.85 on $12.12 billion in revenue.
The CEO said, “It’s nice to return to profitability — but we must confront three risks that could grow over the next 6-18 months. Industry-wide operational challenges that limit the system’s capacity, record fuel prices, and the increasing possibility of a global recession are each real challenges that we are already addressing.”
United estimated its Q3 capacity will be 85% of Q3 2019 levels and Q4 capacity would rise to 90% of 2019 levels.
The airline lowered its growth expectations for 2023, now expecting to fly no more than 8% over 2019 levels vs its earlier forecast for 20% growth.
American Airlines Slips On Weaker Outlook
American Airlines (AAL) shares are slipping 3.7% ahead of the open despite reporting a profit in Q2.
The airline reported adjusted earnings of $0.76 per share on $13.42 billion in revenue.
That was in line with analysts’ adjusted EPS expectations and beat revenue estimates for $13.4 billion.
Revenue rose 12% compared to pre-pandemic even as American flew 8.5% less of its Q2 2019 schedule.
The company’s unit costs surged 45% in the quarter compared to 2019 as fuel prices and other expenses soared.
American forecast Q3 revenue will be 10% to 12% higher than 2019 levels but flight capacity will be 8% to 10% lower.
Amazon Announces Healthcare Acquisition
Amazon (AMZN) shares are up 1.2% in premarket trade after announcing it will buy primary healthcare provider One Medical.
One Medical operates under 1Life Healthcare Inc (ONEM) and trading in the stock has been halted.
Amazon will buy the company in cash for $18 per share, totaling $3.9 billion.
The stock closed at $10.18 on Wednesday.
The senior vice president of Amazon Health Services said, “We think health care is high on the list of experiences that need reinvention.”
Weekly Jobless Claims Continue to Rise
Weekly jobless claims rose unexpectedly, signaling layoffs are rising across the country.
The Labor Department reported 251,000 Americans filed initial unemployment claims last week.
That was up 7,000 from the previous week and higher than expectations for claims to fall to 240,000.
Continuing claims rose by 50,000 to 1.38 million in the week ending July 9.
ECB Raises Rates for First Time in 11 Years
The European Central Bank approved its first rate hike in 11-years today.
The ECB pushed its benchmark rates up by 50 basis points, bringing the deposit rate to 0%.
Rates had been in negative territory since 2014.
The ECB said, “The Governing Council judged that it is appropriate to take a larger first step on its policy rate normalization path than signaled at its previous meeting.”
The decision comes after Eurozone inflation hit a record-high at 8.6% in June.
Oil Prices Slump On Demand Worries
Oil prices are falling today as demand worries squeeze the market.
West Texas Intermediate crude futures are down 3.5% to $96.50 bbl while Brent crude futures are down 3.1% to $103.50 bbl
The drop comes amid continued global recession fears after the ECB rate hike and as U.S. gas inventories rose sharply last week.
The Energy Information Administration reported U.S. crude inventories fell by 400,000 barrels but gasoline stockpiles rose by 3.5 million barrels.
The increase in gas inventories far exceeded expectations and comes as demand is slumping.
Gas Prices Continue To Tumble
U.S. gas prices fell for the 36th day in a row today as those high inventory levels outpace demand.
AAA shows the national average for regular gas fell nearly 3 cents overnight to $4.440/gal.
The national average for diesel also fell 2 cents overnight to $5.476/gal.
In Case You Missed It
- The National Association of Realtors reported existing home sales tumbled 5.4% in June to a seasonally adjusted annual rate of 5.12 million units. That was lower than expectations and the slowest pace of sales since June 2020. The median price of an existing home sold last month rose to a new record-high of $416,000.
