Markets Defused is an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.
- Tesla slumped on lower profit and market share
- Google financials mostly beat expectations
- Spotify is cashed up thanks to job cuts and subscriber growth
- Google missed out on Wiz deal
- Coca-Cola stock fizzed higher on stronger quarter
- General Motors stock stalled despite strong quarter
- UPS shares plummeted on weak quarter
Tesla stock slumped as profit fell 45% and it lost market share
Tesla Inc (NASDAQ:TSLA) reported a 45% drop in net income for the second quarter of 2024, as its electric vehicle sales volumes fell 7%.
Gross profit was steady at $4.5 billion, whilst net income had fallen to $1.47 billion from $2.7 billion this time last year. Whilst vehicle sales were down, second-quarter revenue of $25.5 billion was still 2% higher than last year.
“In Q2, we achieved record quarterly revenues despite a difficult operating environment,” the EV maker said.
Vehicle production numbers were, meanwhile, down 14% at 411,000 vehicles for the quarter. And, Tesla’s EV market share dropped below 50% for the first time ever.
At 52 cents, earnings per share was below the consensus Wall Street estimate of $0.62.
Tesla, in its accompanying ‘shareholder deck’, told investors that it has achieved “a sequential rebound in vehicle deliveries in Q2 as overall consumer sentiment improved”, and, it highlighted the introduction of new consumer financing options aimed at offsetting the impact of the sustained higher interest rates.
Strategically, the company is currently focussing its grow efforts toward artificial intelligence, self-driving ‘robotaxis’, and energy storage solutions.
In Tuesday's ‘afterhours’ dealing, Tesla stock was down $16.20 or 6.6% priced at $230.18.
Google’s Alphabet mostly beat expectations, but Youtube ad revenues missed
Google owner Alphabet Inc (NASDAQ:GOOG) reported second-quarter earnings mostly ahead of Wall Street expectations.
The company reported $84.74 billion of revenue for the quarter, up 14% compared to this time last year and better than the market’s consensus forecast of $84.19 billion.
Net income totalled $23.6 billion, which was handily above the consensus estimate of $18.4 billion. At $1.89 earnings per share was also ahead of Wall Street’s estimate of $1.84.
Chief executive Sundar Pichai underlined key Google messaging in the results statement, highlighting the tech giant’s AI roadmap.
“We are well under way with our Gemini era and there’s great momentum across the company,” Pichai said. “Our results in the first quarter reflect strong performance from Search, YouTube and Cloud.”
In Tuesday's ‘afterhours’ trade, meanwhile, Alphabet shares trade lower – losing $2.82 or 1.54%, priced at $180.78.
Spotify is cashed up thanks to job cuts and subscriber growth
Spotify Technology NYSE:SPOT) New York listed shares jumped around 12% after the music and podcast streamer reported record quarterly profits.
Its second-quarter results highlighted a material turnaround, driven by a substantial improvement in margin, thanks to cost-cutting measures and fresh growth in its premium subscription business.
Revenue was up 20% for the quarter, at €3.81 billion, to drive a profit of €274 million, or €1.33 per share, compared to a loss of €302 million in the same period last year.
Wall Street analysts had expected €1.23 per share, on €4.17 billion of revenue.
Operating costs were reduced by some 16% following cuts to marketing spend and the axing of around 1,500 jobs (around 17% of Spotify’s workforce were let go).
Premium, i.e. paid-for, accounts were up by 12% at 246 million users, whilst the platform’s total active users, including those on the ad-supported ‘free’ accounts, totalled 626 million worldwide. Spotify generated a total of €3.4 billion from subscriptions, up 21%, whilst ad revenue increased 13% to €456 million.
Looking ahead, Spotify said it expects to add 13 million new users in the third quarter, including 5 million premium subscribers.
This growth is expected to be supported by an expanded video catalog, plus the introduction of new subscription plans in Australia and Britain. Third-quarter revenue was forecast by Spotify to reach €4 billion, to result in income of €405 million.
In New York, Spotify shares were was up $34.95 or 11.84% changing hands at $330.23 each.
Google missed out on Wiz deal
Google’s takeover interest in Wiz has ended, with the companies no longer negotiation what was expected to be a $23 billion deal.
The cybersecurity firm will instead pursue an Initial Public Offering (IPO), according to reports.
Chief executive Assaf Rappaport had informed employees that the decision was influenced by regulatory concerns and investor issues.
It also comes after Microsoft and Crowdstrike put cyber-sec under a scrutinous spotlight after Friday’s global IT outage wreaked havoc on worldwide travel, banking and media operations.
A deal, had it proceeded, would’ve been Google's largest acquisition to date, but it was expected to face significant regulatory scrutiny due to Google's dominant market position.
Attentions will now be on what’s likely a higher profile IPO, with nosey parkers likely looking to see whether Google gets involved as a shareholder.
Ahead of tonight’s financials, Google-parent Alphabet Inc (NASDAQ:GOOG) saw its share price rise $1.17 or 0.6% to trade at $184.47.
Coca-Cola stock fizzed higher on stronger quarterly financials
The Coca-Cola Company (NYSE:KO) saw its stock move higher on Tuesday as the soft-drinks and snacks behemoth raised its full-year guidance, after reporting a strong second quarter.
Revenue was up 3% to $12.36 billion, driven by volume growth of some 2% - gains in Latin America and Asia offset a decline in North America.The firm noted a successful phase of price increases and highlighted sales growth of its concentrate products.
Chief executive James Quincey boasted that Coke had “delivered solid topline and operating income growth in an ever-changing landscape”. He added: “we continue to execute our highly effective all-weather strategy, and we are confident in our ability to deliver on our raised 2024 guidance and longer-term objectives.”
On a per share basis, earnings (adjusted EBITDA) was up 7% to 84 cents, beating the forecasts of Wall Street analysts which had consensus pitched at 81 cents. Albeit, net income fell to $2.41 billion from $2.55 billion a year ago. Adjusted earnings per share rose by 7% to 84 cents, surpassing analyst expectations of 81 cents.
It wouldn’t be a financial report in 2024 without an AI angle, and today the soft drinks and snacks company told its investors that it is leveraging technology to enhance sales - testing an AI service to send personalized messages to retailers, resulting in a 30% increase in purchases of recommended products.
General Motors stock stalled despite strong quarter
General Motors Company (NYSE:GM) stock was in reverse on Tuesday, despite quarterly financials that beat Wall Street’s expectations.
Revenue came in at $47.97 billion, up 7.2% compared to the same period last year, whilst earnings (adjusted EBITDA) per share was reported at $3.06, beating a market consensus forecast of $2.75.
GM highlighted strong sales of its gas-powered trucks and better sales prices, whilst upgrading its full year profit forecast for 2024 to between $13 billion and $15 billion, from $12.5 billion to $14.5 billion.
Despite delays, it also stuck with the prior estimate for EV production – at 200,000 to 250,000 EVs in North America by the end of 2024.
But, the opening of a new EV truck plant in Michigan has now been delayed to ‘mid-2026’.
It also flagged the need for higher marketing spend and an anticipated increase in input costs (due to higher underlying commodity costs).
In New York, GM shares fell $3.23 or 6.53% to change hands at $46.33.
UPS shares plummeted on weak quarter
United Parcel Service Inc (NYSE:UPS) saw its share price fall in Tuesday’s deals, losing around 13.5%, as its second-quarter financials disappointed investors. The results showed a decline in revenue and profits, and, a downgrade to full year guidance.
Revenue came in at $21.8 billion, down 1.1% compared to a year ago, whilst net income dropped by 32% to $1.41 billion. On a per share basis, earnings for the quarter was reported at $1.65 down from $2.54 a year ago. This was short of what Wall Street analysts had predicted, which was $1.99 of earnings on $22.18 billion of revenue.
It blamed weak freight volumes, softer pricing, but attempting to cast a silver lining highlighted that its e-commerce related volumes were picking up helped by two major new customers – and that their impact on volume had been “explosive”.
Shipping volumes in the Business-to-Consumer segment now accounted for some 58.5% of all UPS delivery volumes, it added.
“This quarter was a significant turning point for our company as we returned to volume growth in the U.S., the first time in nine quarters,” chief executive Carol Tomé said in a statement. "Going forward we expect to return to operating profit growth.”
Nevertheless, UPS downgraded its full-year 2024 revenue guidance to $93 billion, down some $250 million from the prior forecast. Also, operating profit is now expected to be around $8.7 billion, from $9.6 billion.
In New York, UPS shares trade down $19.40 or 13.36% changing hands at $125.78.