TOP STORY
🚀 Tesla Rallies 23% After Its Second Best Day in History

👑 After a disappointing Robotaxi Event and being dethroned by Broadcom in the Magnificent 7, Tesla has officially regained its spot with the big dogs after an incredible rally drove the stock up 23% this week.

🚀 Tesla had its best day in over a decade and its second-best day in the stock’s history after beating earnings expectations by a wide margin.

This is in contrast to an otherwise red week for the markets:

• 🇺🇸 The S&P 500 is down -0.85%

• 🇨🇦 The TSX is down -1.51%

• 🤖 The Nasdaq-100 is up 0.35%

👀 So, let’s break down Tesla’s earnings and see what the future holds for the Blossom community’s favorite EV company…

📊 Earnings Breakdown

• ❌ Revenue: $25.18B, up 8% from last year but missing expectations slightly by ~1%

•  ✅ Profit: $2.17B, up 17% from last year and beating expectations by 20.4%

• 🚗 Auto Revenue: $20B, up 2% from last year

• 🔋 Energy Storage: $2.4B, up 52% from last year

• 📝 Services Revenue: $2.8B, up 29% from last year

💰 The headline driving the stock jump was the incredible 20.4% profit beat, which was boosted in large part by $739M in automotive regulatory credit in the quarter.

📈 Elon was also optimistic about 2025, predicting 20-30% vehicle growth, much higher than the 15% expected by analysts.

🤖 An Update on Autonomy

🤔 The recent Robotaxi event left many investors with more questions than answers, and while Tesla is yet to unveil a comprehensive plan, Elon did give clarity on a few points in the recent earnings call:

• Tesla plans to start production of the robotaxi by 2026

• Tesla has developed a ride-hailing app that employees in California can use this year (with a safety driver for now)

• Tesla aims to start offering driverless ride-hailing in California and Texas as early as 2025

• Tesla unveiled a new video about Actually Amart Summon (ASS), part of its ‘Full Self Driving Supervised System’ (FSD), which accounted for $326M in revenue this quarter.

As discussed last week, Tesla still has a ton of catching up to do with competitors like Google-backed Waymo, which is already fully operational with self-driving cars in Phoenix, Arizona, Los Angeles, and San Francisco (and recently raised a new ~$6B funding round), but at least this week gave investors a bit more clarity on Tesla’s roadmap.

🤷‍♂️ Analysts Remain Mixed

While the stock jump reinvigorated many shareholders and analysts, others are still skeptical and pessimistic. Overall, analysts remain very mixed on Tesla.

🎯 According to FactSet, the average rating is a ‘Hold,’ with an average price target of $224. While this is ~20% lower than Tesla’s current price, it is 4% higher than before earnings were reported, with many analysts raising their targets and releasing positive statements:

But others took the jump as an opportunity to bash the stock:

🗳️ Analysts like JPMorgan Chase also noted that the earnings this quarter were heavily reliant on the $739M revenue boost from regulatory credits, which are a “potentially unsustainable driver,” especially in light of all the political uncertainty and Elon Musk’s heavy political involvement.

💡 My Summary

Overall, for anyone trying to decide whether to buy Tesla, I always like to come back to Elon’s famous quote:

🚘 While this week’s earnings were great, Tesla is still significantly overvalued as a car company (trading at over 10x the price to operating income as Toyota), meaning the stock is still a highly speculative bet on whether Elon can deliver on the Robotaxi and the Optimus robot - which will likely take years to pay off!

🌼 The Blossom community was bearish (or at least collecting profits) on Tesla, with it ranking as the #1 Most Sold and the #15th Most Bought stock this week.

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BREAKING NEWS
🍔 McDonald’s Stock Crashes 8% After E Coli Outbreak

📉 While Tesla was flying high, McDonalds was having a brutal week, after an E Coli outbreak linked to its Quarter Pounders sent the stock plummeting 8%.

☠️ On Friday, the Center for Disease Control and Prevention (CDC) confirmed 75 cases across 13 states that have tragically killed at least one person.

🌯 Lessons from Chipotle

💸 Some investors have seen this as a buying opportunity, pointing to a similar situation with Chipotle a decade ago.

😰 In 2015, Chipotle had a string of E coli and salmonella outbreaks that dominated the news cycle for months, destroyed consumer confidence, and caused the stock to crash 55% over the next 3 years until 2018.

🚀 But after years of rebuilding its reputation, Chipotle turned things around and has since risen over 900% from 2018 lows.

🍔 Is McDonald’s a Different Story?

While there are some parallels to Chipotle in 2015, many say the McDonald’s story is completely different.

🧅 While Chipotle was never able to identify what was actually making people sick, and took too long to acknowledge the problem and take responsibility (instead blaming the media for sensational headlines), McDonalds has already identified the root cause - onions from Taylor Farms.

🌮 As a result, other fast food restaurants, including Taco Bell, Pizza Hut, KFC, and Burger King, also pulled onions from their menus, softening the reputational blow for McDonalds.

📊 Upcoming Earnings

The other big thing to consider before buying (or selling) the news, is McDonald’s upcoming earnings - which are set to be released on Tuesday.

McDonalds missed its earnings forecasts in Q2 and Q1 by 3% and 1% amid flat growth and rising interest costs and is expected to have declining margins due to inflationary pressures.

Despite this, the stock was up 7% this year before the recent drop and recently increased its quarterly dividend by 6%.

Overall, the Blossom community seems bullish, with McDonald’s ranking as the #59 Most Bought and the #89 Most Sold with mostly positive sentiment:

I personally haven’t had a chance to form a strong perspective one way or another, but am excited to read your thoughts on Blossom!

Join the discussion on Luis’s post here 😎

UPCOMING EVENT
🤖 AI & The Markets: Bubble or Boom?

🔥 Our first livestream was a hit, so we’re planning to make it a more regular thing for the Blossom community!

🗓️ For our next session on November 12, we’ll be getting to the bottom of the question:

🤔 Are we in an AI bubble? Or is it just the beginning of the AI boom?

👀 Depending where you look in the news you might see wildly different perspectives…

🚀 On one hand, the Bank of America is raising their price target for Nvidia and calling it a 'generational opportunity'.

🦸‍♂️ On the other hand, some experts are saying the market is suffering from 'invincibility syndrome' and that we're in a repeat of the dot-com bubble.

🎙️ In this session, we'll try to get to the bottom of this question, with lively discussion, debate, and insights, from two leading commentators: YouTuber Daniel Pronk, and host of the Canadian Investor Podcast Braden Dennis.

IN THE NEWS
🚨 Other Key Headlines This Week

• 🚖 Waymo raised $5.6B from Alphabet and other investors to expand its robotaxi service to Austin and Atlanta - its second external funding round since its $3.2B Series B in 2020

• 🇨🇦 The Bank of Canada lowered interest rates by 0.5% to 3.75%, its first 50-basis-point cut since the pandemic, as inflation concerns subside.

• 💻 IBM shares fell 6% after Q3 revenue missed expectations by a slim margin, but have since recovered, ending the week up 0.2%

• ☕️ Starbucks dropped 3% after earnings but has since recovered, announcing a 7% increase to its dividend payout. Starbuck's Q4 report showed some concerning metrics, with US same-store sales falling 6%.

FROM THE BLOSSOM COMMUNITY
⭐️ Featured Discussions this Week

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