🚘️ Tesla Tumbles, Dropping 12% after Q4 Earnings

Plus, Big Earnings Week Ahead for Big Tech and more...

TOP STORY
🚘️ Tesla Takes a 12% Tumble Amid Production and Profitability Concerns

Tesla's stock dropped a sharp 12% after its latest earnings report, with missed estimates and cautious production forecasts hurting the stock. This drop highlights growing concerns about Tesla's future growth and profitability.

Here are some lowlights from the latest report:

❌ Q4 Earnings Miss

Tesla's $25.17 billion Q4 revenue fell short of the $25.87 billion expected. Adjusted EPS was $0.71, slightly below the $0.73 forecast.

🚗 Production Outlook

Tesla warned of "notably lower" vehicle volume growth in 2024 compared to 2023, citing challenges in launching the next Gigafactory in Texas. The company is unlikely to meet the expected 2.19 million vehicles for 2024.

💰️ Margin Pressures

Q4 gross margin dropped to 17.6%, lower than the 18.1% estimate and a decrease from the previous quarter's 17.9%.

😰 Deeper Issues at Play?

Tesla's stock has now dropped over 26% this year, reflecting growing investor skepticism and concerns over competition from Chinese EV makers (see our write-up on BYD’s rise).

External events such as Hertz shedding EVs and price cuts in China have also hurt the stock.

📈 Tesla down, market up

Tesla's drop and disappointing earnings run counter to the overall market, with the S&P 500 growing 0.5% this week in its 5th consecutive record close.

🐂 Musk & Tesla Bulls Unphased

In light of the bad news, Musk says Tesla remains focused on its next-gen manufacturing platform and Tesla’s upcoming low-cost vehicle, expected in the second half of 2025.

❝

“We're very far along on our next-gen low-cost vehicle. We're really excited about this. This is a revolutionary manufacturing system, far more advanced than any other in the world.”

Elon Musk, CEO of Tesla

Many Tesla bulls also remain unphased, with the manager of the Baron Focused Growth Fund expecting Tesla’s stock to reach $1,200 by 2030, up 550% from current levels.

Baron highlights that Tesla is performing well considering the ‘EV Winter’ affecting the entire industry. However with Tesla as Baron’s top holding - making up 11.4% of the fund - these bullish comments may be mostly self-serving.

The Blossom community was overall positive on Tesla, with over 540 buys and only 132 sells this week, making Tesla the #3 most bought and #7 most sold stock this week.

FROM OUR FRIENDS @ HARVEST ETFS
💰 Two New ETFs That Offer Low-Risk Cash, Stability, and Monthly Income

Treasury Bills, or “T-Bills”, are a low-risk investment product issued by the Government of Canada. T-Bills provide a risk-free rate of return, so investors can get maximum protection on their principal.

Canadians seeking low-risk and security on their investment can get exposure to high-quality Government of Canada T-Bills with the Harvest Canadian T-Bill ETF (TBIL:TSX).

On the other hand, Canadians seeking security and high income can get exposure to high-quality US Treasury bonds with the Harvest Premium Yield 7-10 Year Treasury ETF (HPYM:TSX) (HPYM.U:TSX).

As Canadians look to navigate the changing monetary climate in early 2024, they now have access to Harvest ETF’s full fixed-income suite:

  • Low risk and low volatility

  • Flexibility of an ETF

  • Portfolio diversification

  • Competitive management fee: 0.10%

  • Exposure to high-quality medium-range US Treasury Bonds through US-listed ETFs

  • Covered call strategy increased yields and lower volatility on underlying holdings

  • Experienced active covered call specialists at Harvest ETFs

  • Currency hedged with attractive tax-efficient income

  • Competitive management fee: 0.45%

  • Exposure to high-quality US Treasury Bonds through US-listed ETFs

  • Covered call strategy increases yields and lowers volatility on underlying holdings

  • Experienced active covered call specialists at Harvest ETFs

  • Currency hedged with attractive tax-efficient income

  • Competitive management fee 0.45%

For the latest updates on the bond sector, sign up for Harvest ETFs’ monthly newsletter!

BIG TECH EARNINGS
🚨 Big Earnings Week Ahead! Microsoft, Alphabet, Apple, Amazon, Meta and more...

All eyes are on earnings in the week ahead with reports scheduled for five of the leading tech giants (Microsoft, Alphabet, Meta, Apple, and Amazon) alongside other popular holdings like Starbucks, Mastercard, and GM.

Semiconductor giant Intel kicked us off with a bit of a rocky tone on Friday, falling 11% on Friday despite beating earnings and breaking a 7-quarter streak of declining revenue.

What’s in store for the other tech-giants?

📆 Earnings Schedule

Tuesday, Jan 30:

  • 🤖 Microsoft ($MSFT), which recently hit a $3T market cap and surpassed Apple as the world’s most valuable company, is expected to report a record 16% increase in quarterly revenue. Microsoft has benefited significantly from AI hype, driven by its ~$13B investment in OpenAI.

  • 🔤 Alphabet ($GOOGL) is expected to see a 52% surge in its earnings per share driven by ad revenue growth and AI-boosted gains to its Google Cloud segment.

  • ☕️ Starbucks' ($SBUX) sales growth in North America is expected to get sliced in half year-over-year to less than 5.8% with union walkouts and boycotts hurting the chain.

  • 🔬 Advanced Micro Devices (AMD), another semiconductor giant, is expected to post 9.5% revenue growth, driven by AI exposure.

  • 🚗 General Motors ($GM) experienced stagnant delivery numbers this quarter with strikes hutting output. Profit may still beat expectations as investors have already been anticipating the lost output from the strike.

Wednesday, Jan 31:

  • 🛩️ Boeing ($BA) is set to report a $287 million operating profit, ending a five-quarter loss streak, but these profits have been heavily overshadowed by the shocking mid-air blowout that has shaken confidence and led to an FAA halt on production of the 737 Max. Boeing stock has plunged 21% this month amid the controversy.

  • 💳 Mastercard ($MA) is expected to increase earnings per share ~16% this quarter.

Thursday, Feb 1:

  • 🍎 Apple ($AAPL) is expected to slightly exceed earnings projections despite a slowdown in China sales, a smartwatch patent dispute, and legal battles regarding its App Store fees. Eyes will be on initial numbers for the Vision Pro headset which has shown promising early demand.

  • 📢 Meta's ($META) is set for some nice ad revenue growth, driven by spend from Chinese e-commerce platforms like Shein and Temu, but faces uncertainty in the year ahead with rising China-US tensions. AI investments to improve ad-targeting will be a focus.

  • 🚚 Amazon ($AMZN) is expected to hit an 11% revenue increase, bolstered by a robust holiday season and consistent growth in Amazon Web Services.

🌼 Blossom Community Sentiment

What does the Blossom community expect from the upcoming earnings? By looking at each stock’s community rankings we can get a sense.

If a stock is ranked higher under ‘most sold’ than under ‘most bought’ this reflects a generally bearish sentiment.

  • 📈 Microsoft - bullish (#20 most bought, #64 most sold)

  • 📈 Alphabet - bullish (#51 most bought, #70 most sold)

  • 📈 AMD - bullish (#28 most bought, #47 most sold)

  • 📉 Boeing - bearish (<#100 most bought, #78 most sold)

  • 📉 Apple - bearish (#18 most bought, #14 most sold)

  • 📈 Meta - bullish (#52 most bought, #82 most sold)

  • 📉 Amazon - bearish (#21 most bought, #18 most sold)

FROM THE BLOSSOM COMMUNITY
🎙️ Top Discussions This Week

MORE GREAT CONTENT
🥳 Follow Blossom On Socials!

If you like the Weekly Buzz 🐝 make sure to follow Blossom on our socials where Brandon and the Blossom ambassadors make tons of informative short-form videos about topics ranging from best dividend stocks, beginner tips, and other fun content about the stock market! 😊

P.S. We love it when you guys tag us on socials! Really appreciate all of you who have been sharing the love and telling your friends about Blossom 🙌 

TECH LAYOFFS
🔪 Tech Industry Braces for 2024 Layoffs

In 2023, many companies across tech, media, finance, and retail made significant job cuts, and it looks like the trend isn’t slowing down in 2024.

While bad news for workers, these job cuts have largely been welcomed by investors, with companies like Meta driving significant stock gains from increased efficiency.

Here are a few of the high-profile companies with job cuts either planned or already underway in 2024:

🧑‍💼 Salesforce is cutting 700 workers in 2024, equating to less than 1% of its workforce. Last year, Salesforce reduced their headcount by 10% leaving the company with 70,843 workers as of the end of October.

📺️ Paramount Global’s CEO Bob Bakish announced layoffs in an internal memo on Thursday. While numbers and a timeline haven’t been announced yet, Bakish commented on the need to "operate as a leaner company and spend less."

📽️ YouTube, which falls under the tech giant Alphabet, cut 100 YouTube employees from its creator management and operations divisions, its first corporate restructuring in 10 years. Additionally, Alphabet CEO Sundar Pichai indicated that additional layoffs across the company might be necessary in 2024 to achieve their objectives.

🏰 Pixar, which belongs to Disney’s animation unit, has reportedly laid off 20% of its employees as a response to lagging profitability in streaming and challenges faced by the company's box office performance.

📦️ Amazon announced layoffs of 500 employees belonging to their acquired streaming platform, Twitch. They are also set to reduce their workforce by "several hundred" at Prime Video and MGM Studios. Earlier this month, Amazon proceeded to trim 5% of the team involved in its Buy with Prime program.

💬 Discord has let go of 170 employees, constituting 17% of its total staff. A memo from CEO Jason Citron stated that the company over-hired in 2020.

🗞️ What else you might’ve missed