Tesla races towards Q4 earnings ???

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This week, Tesla slips after a bumpy few days, Uber eats up more market share, and Spirit Airlines becomes the latest airline stock to suffer.??

??? But first, the macro wrap-up:

The stock market started the week strong, as big banks announced some solid Q4 earnings, helping the S&P 500 rise above 4,800 for the first time in just over two years.?

But then came a mid-week wobble, as investors worried over how fast the Federal Reserve will cut interest rates, with the Dow hitting its lowest point in 2024 .

Tesla slips 3% after a problematic week ???

A bumpy week: As Tesla approaches its Q4 earnings for 2023 next Wednesday, it’s had to deal with a couple of unexpected issues this week.?

• Trouble in China: Fierce competition in China has led to Tesla dropping the price of its Model 3 and Y, a move that will likely eat into its net profit margins.??

• The Red Sea: Tesla’s also suspending production in Europe for two weeks due to supply disruptions from unrest in the Red Sea . Elon Musk said it’s likely they’ll lose out on 5,000 to 7,000 cars not being built .

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Uber up 8% as it merges Drizly app into Uber Eats ??

Last orders: Uber is shutting down its alcohol-delivery app Drizly that it acquired for $1.1bn 3 years ago. It’s a market leader in North America, boasting over 100m customers. So, what’s Uber up to?

• Improving profit margins: Unlike Uber, Drizly doesn’t have its own network of drivers. It simply connects customers with alcohol shops that use their own drivers. To improve profit margins, Uber will merge Drizly into Uber Eats, benefiting from its own drivers.

• The everything app: Uber has decided to focus on its ‘core Uber Eats strategy’ of helping consumers get almost anything on one single app. Alcohol is its latest play.

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Spirit Airlines plunges 60% as takeover bid falls through ??

Turbulent times: It’s been a turbulent week for airline stocks. Last week, Boeing had one of its door blow off mid-flight, and this week, a US judge blocked JetBlue from a $3.8bn takeover of Spirit Airlines .

• A win for customers: So, why was the deal blocked? District Judge William G. Young reportedly said it would have eliminated the airline industry’s most popular discounted flight options and driven up prices for customers.
• A quick descent: Shares plummeted because the $3.8bn merger would have made the JetBlue the country’s fifth-largest airline .

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What have we learnt this week? ??

• Red Sea attacks are a macro market mover: As well as Tesla, Volvo has also been affected by the supply disruptions amid the Red Sea attacks. Its shares have dipped 2%.?
• Uber’s vision: Uber has a vast network of delivery drivers. Its long-term vision is to have these drivers deliver not just food to consumers, but anything.?
• Airline stocks are having a tough time: From health and safety issues to government regulations, the past couple weeks have been difficult for the airline industry.

Stock announcements ??

• Netflix : Shares climbed 65% in 2023 , largely down to password crackdowns and raised pricing tiers. Investors will be keen to see how Netflix ended the year, during its Q4 earnings on Tuesday.?
• Tesla : After a tricky week, will Tesla have a better time during its Q4 earnings call next Wednesday? Results will tie up how the EV giant did in 2023.
• 3M : Despite announcing it expects to release steady earnings next Tuesday, 3M has raised its predicted earnings-per-share from $8.95 to $9.15 , due to its Q3 earnings.

Author: James Ashoo

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*Figures and ratings correct as of January 17th 2024.

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