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The initial version of this story had incorrect price changes for 2023. It is now updated with information as of the market close on Jan. 31.
Investors staged a January rally, with solid gains for the S&P 500 and an even better showing for technology stocks that led the dismal downward action in 2022.
This…
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This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.
https://www.barrons.com/articles/stock-market-movers-tesla-alibaba-gm-lucid-51674835133
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Tesla Inc. late Wednesday reported mixed quarterly results, with revenue slightly below Wall Street expectations, but injected some optimism in its production outlook for 2023 and promised to rein in costs faster.
Demand is not a problem, Chief Executive Elon Musk said in a call with analysts after results. “I want to put that concern to rest,” he said, adding that January orders are stronger than ever, and demand far outstrips Tesla’s rate of production.
“We…
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Tesla Inc. Chief Executive Elon Musk on Tuesday told a San Francisco jury that “funding secured” and other tweets he fired off as he considered taking the EV maker private were a way to “do the right thing.”
Musk was in his third day of testimony in a federal trial over alleged investor losses caused by the tweets.
The billionaire said he…
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Short selling can be controversial, especially among management teams of companies whose stocks traders are betting that their prices will fall. And a new spike in alleged “naked short selling” among microcap stocks is making several management teams angry enough to threaten legal action:
Taking a long position means buying a stock and holding it, hoping the price will go up.
Shorting, or short selling, is when an investor borrows shares and immediately sells them, hoping he or she can buy them again later at a lower price, return them to the lender and pocket the difference.
Covering is when an investor with a short position buys the stock again to close a short position and return the shares to the lender.
If you take a long position, you might lose all your money. A stock can go to zero if a company goes bankrupt. But a short position is riskier. If the share price rises steadily after an investor has placed a short trade, the investor is sitting on an unrealized capital loss. This is why short selling traditionally has been dominated by professional investors who base this type of trade on heavy research and conviction.
Read: Short sellers are not evil, but they are misunderstood
Brokers require short sellers to qualify for margin accounts. A broker faces credit exposure to an investor if a stock that has been shorted begins to rise instead of going down. Depending on how high the price rises, the broker will demand more collateral from the investor. The investor may eventually have to cover and close the short with a loss, if the stock rises too much.
And that type of activity can lead to a short squeeze if many short sellers are surprised at the same time. A short squeeze can send a share price through the roof temporarily.
Short squeezes helped feed the meme-stock craze of 2021 that sent shares of GameStop Corp.
GME,
and AMC Entertainment Holdings Inc.
AMC,
soaring early in 2021. Some traders communicating through the Reddit WallStreetBets channel and in other social media worked together to try to force short squeezes in stocks of troubled companies that had been heavily shorted. The action sent shares of GameStop soaring from $4.82 at the end of 2020 to a closing high of $86.88 on Jan. 27, 2021, only for the stock to fall to $10.15 on Feb. 19, 2021, as the seesaw action continued for this and other meme stocks.
Let’s say you were convinced that a company was headed toward financial difficulties or even bankruptcy, but its shares were still trading at a value you considered to be significant. If the shares were highly liquid, you would be able to borrow them through your broker for little or almost no cost, to set up your short trade.
But if many other investors were shorting the stock, there would be fewer shares available for borrowing. Then your broker would charge a higher fee based on supply and demand.
For example, according to data provided by FactSet on Jan. 23, 22.7% of GameStop’s shares available for trading were sold short — a figure that could be up to two weeks out-of-date, according to the financial data provider.
According to Brad Lamensdorf, who co-manages the AdvisorShares Ranger Equity Bear ETF
HDGE,
the cost of borrowing shares of GameStop on Jan. 23 was an annualized 15.5%. That cost increases a short seller’s risk.
What if you wanted to short a stock that had even heavier short interest than GameStop? Lamensdorf said on Jan. 23 that there were no shares available to borrow for Carvana Co.
CVNA,
Bed Bath & Beyond Inc.
BBBY,
Beyond Meat Inc.
BYND,
or Coinbase Global Inc.
COIN,
If you wanted to short AMC shares, you would pay an annual fee of 85.17% to borrow the shares.
Starting last week, and flowing into this week, management teams at several companies with microcap stocks (with market capitalizations below $100 million) said they were investigating naked short selling — short selling without actually borrowing the shares.
This brings us to three more terms:
A short-locate is a service a short seller requests from a broker. The broker finds shares for the short seller to borrow.
A natural locate is needed to make a “proper” short-sale, according to Moshe Hurwitz, who recently launched Blue Zen Capital Management in Atlanta to specialize in short selling. The broker gives you a price to borrow shares and places the actual shares in your account. You can then short them if you want to.
A nonnatural locate is “when the broker gives you shares they do not have,” according to Hurwitz.
When asked if a nonnatural locate would constitute fraud, Hurwitz said “yes.”
How is naked short selling possible? According to Hurwitz, “it is incumbent on the brokers” to stop placing borrowed shares in customer accounts when supplies of shares are depleted. But he added that some brokers, even in the U.S., lend out the same shares multiple times, because it is lucrative.
“The reason they do it is when it comes time to settle, to deliver, they are banking on the fact that most of those people are day traders, so there would be enough shares to deliver.”
Hurwitz cautioned that the current round of complaints about naked short selling wasn’t unusual and even though short selling activity can push a stock’s price down momentarily, “short sellers are buyers in waiting.” They will eventually buy when they cover their short positions.
“But to really push a stock price down, you need long investors to sell,” he said.
Lamensdorf said the illegal naked shorting that Verb Technology Co.
VERB,
Genius Group Ltd.
GNS,
and other microcap companies have been recently complaining about might include activity that isn’t illegal.
An investor looking to short a stock for which shares weren’t available to borrow, or for which the cost to borrow shares was too high, might enter into “swap transactions or sophisticated over-the-counter derivative transactions,” to bet against the stock,” he said.
This type of trader would be “pretty sophisticated,” Lamensdorf said. He added that brokers typically have account minimums ranging from $25 million to $50 million for investors making this type of trade. This would mean the trader was likely to be “a decent-sized family office or a fund, with decent liquidity,” he said.
Don’t miss: This dividend-stock ETF has a 12% yield and is beating the S&P 500 by a substantial amount
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Elon Musk testified Monday he believed he had funding secured to take Tesla Inc. private, both from a Saudi Arabia investment fund and from his stake in SpaceX.
The Tesla chief executive resumed testimony in a federal trial in San Francisco over investor losses allegedly caused by tweets he fired off in 2018, including his “funding secured” tweet.
Representatives of Saudi Arabia’s investment fund “were unequivocal about moving forward,” Musk said. He also mentioned his large stake in privately held aerospace company SpaceX, and that “alone meant funding was secured.”
Tesla
TSLA,
stock added to gains as Musk’s testimony got underway, and at last check was up nearly 8% and far outperforming the broader equity indexes.
The stock traded as high as $143.50, its highest intraday since Dec. 20, and was on pace to close at its best since that date.
The CEO told the court that the $420-a-share price on the deal “was a coincidence” as it was roughly a 20% premium over Tesla’s stock price at the time, and “not a joke.”
In certain circles, the number 420 refers to marijuana use.
Lead defense lawyer Nicholas Porritt also asked several questions that led Musk to say he hadn’t talked to major Tesla shareholders such as Baillie Gifford and T. Rowe Price about possibly taking Tesla private. Musk also said he couldn’t recall specifics around speaking with the board about the plan.
Firing off the now famous “funding secured” was a way to stay ahead of a soon-to-be-run Financial Times story about the Saudi fund taking a large stake at Tesla and as a way to keep all Tesla investors informed, Musk said. Moreover, he tweeted that he was “considering” the move, “not saying that it would be done,” Musk told the court.
Musk gave brief testimony Friday before the court adjourned for the day, taking pains to make clear that his tweets are not always taken to the letter. The trial started last week and it is expected to go into February.
“Just because I tweet something, it does not mean people believe it, or act accordingly,” Musk said on Friday to a defense attorney.
The trial revolves around Musk’s tweets from August 2018, including one where he told his millions of Twitter followers he was “considering taking Tesla private at $420” and then added “funding secured.” The plan later fizzled out.
Investor Glen Littleton, the lead plaintiff in the case, alleges he lost money due to the false tweets and is seeking damages.
U.S. District Judge Edward Chen already has ruled that Musk’s tweets about taking Tesla private were not true and that Musk acted with recklessness.
It is still up to jurors to decide, however, if the tweets were material to investors and if the falsehoods caused investor losses.
The CEO and Tesla each were fined $20 million in September 2018 to settle civil charges around the “funding secured” tweets and Musk was stripped of his chairman role at Tesla.
Musk and Tesla agreed to settle the charges against them without admitting to nor denying the SEC’s allegations.
Musk’s bid to end the SEC settlement deal over the Tesla tweets was denied last year.
Tesla shares have lost 55% in the past 12 months, compared with losses of around 9% for the S&P 500 index.
SPX,
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After one of the worst years in Wall Street’s history, investors have some serious questions for companies. As holiday returns roll in — and with them, forecasts for the months or year ahead — many have the chance to answer those questions, or avoid them.
In the busiest week of the holiday-earnings season so far, three big names will take the stage on back-to-back-to-back afternoons. Here is what to expect:
Microsoft
MSFT,
shed $737 billion in market value last year, the third-most of any S&P 500 company, then announced plans to lay off some 10,000 workers this month. Previously a Wall Street darling thanks to the phenomenal growth of its Azure cloud-computing offering, Microsoft now faces a cutback in enterprise spending on cloud and other products, as companies seek to cut their bills after spending wantonly during the early years of the COVID-19 pandemic.
First Take: Big Tech layoffs are not as big as they appear at first glance
When the company announced layoffs, Chief Executive Satya Nadella admitted customers were cutting, saying “as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.” Analysts believe Azure may be holding up better than rivals, however, and will expect to hear about it when Microsoft results hit Tuesday afternoon.
“Our Azure checks were mixed, but generally better than public cloud sentiment that has turned highly negative over the past few months,” Mizuho analysts wrote. “More specifically, we have heard of increasing levels of optimization, but it is being partially offset by many organizations prioritizing digital transformation.”
From October: The cloud boom has hit its stormiest moment yet, and it is costing investors billions
As cloud growth slows down, expect Microsoft to point to the next big buzzword in tech: Artificial intelligence, specifically ChatGPT, the chatbot product developed by OpenAI, which Microsoft has invested heavily in and expects to incorporate into its products. D.A. Davidson analyst Gil Luria this month wrote that Microsoft’s investments in OpenAI would help it build out more AI technology, including in its search engine Bing.
Tesla
TSLA,
stock suffered a much larger percentage decline than Microsoft in 2022,as the electric-vehicle maker’s shares closed out their worst year on record with their worst quarter and month ever. After the year ended, Tesla began slashing prices in China and the U.S. in hopes of qualifying for more consumer tax incentives and reinvigorating demand, which could lead to questions about previously fat margins.
In-depth: Tesla investors await clues on demand, board actions and weigh downside risks in 2023
For Tesla, which reports fourth-quarter results Wednesday, the results will offer more context on production of the Cybertruck — currently set to start in the middle of the year — demand in China, competition and the impact of price cuts. Auto-information website Edmunds on Thursday said that Tesla’s decision to slash prices by as much as 20% in the U.S. and Europe led to a jump in interest in the vehicles.
While those cuts seem likely to hurt profit, Deutsche Bank analyst Emmanuel Rosner called it “a bold offensive move, which secures Tesla’s volume growth, puts its traditional and EV competitors in great difficulty, and showcases Tesla’s considerable pricing power and cost superiority.” And a survey from Wedbush analysts found that “76% of EV Chinese consumers are considering buying a Tesla in 2023.” But Toni Sacconaghi, an analyst at Bernstein, said Tesla needed more low-cost electric-vehicle offerings, which might not ship until 2025.
Tesla earnings preview: Price cuts in focus as stock hovers around 2-year low
With Tesla’s stock in the gutter, some analysts have raised the possibility of a share buyback to spur investor interest, and Chief Executive Elon Musk said such a plan was being discussed in the previous earnings call. Musk is not in great favor with many investors right now, however, following some heavy selling of Tesla shares in the wake of his purchase last year of Twitter, which some on Wall Street have said has distracted him from the needs of the auto maker. Musk’s tweets have landed him in trouble elsewhere: Opening arguments began last week for a trial centered on allegations that Musk put investors at risk when he tweeted in 2018 that he was “considering” taking Tesla private and had secured the money to do so.
‘He broke the stock’: Why a prominent Tesla investor wants Elon Musk to put him on the board
Intel’s
INTC,
questions were not fresh in 2022, as the chip maker for years has seen rivals like Advanced Micro Devices Inc.
AMD,
and Nvidia Corp.
NVDA,
challenge it in ways that would have been unthinkable in previous generations. Shares still dove more than 43% last year, as declining sales led to plans for $3 billion in cost cuts.
There’s little hope for a big rebound when Intel reports Thursday afternoon. Personal-computer sales have experienced their biggest year-over-year declines ever recorded, and Intel’s long-delayed new data-center offering that is meant to answer AMD’s challenge only began selling this year.
Opinion: The PC boom and bust is already ‘one for the record books,’ and it isn’t over
Intel CEO Pat Gelsinger, though, has a chance to lay out his vision for a long-term Intel rebound, as he attempts to make Intel a chip-manufacturing powerhouse again after years of struggles. He was forced to trim his annual outlook multiple times last year, so it will be important for him to provide attainable numbers this time, but without reducing hopes in the path forward.
Expectations remain low for fourth-quarter earnings season overall, with consumers squeezed by higher prices and interest rates, and hopes fading for any relief from the holiday shopping season. But even with a low bar, the fourth-quarter results from companies so far have been worse than the historical norm, with FactSet senior earnings analyst John Butters writing Friday that “the fourth-quarter earnings season for the S&P 500 is not off to a strong start.”
So far, 11% of S&P 500 companies have reported fourth-quarter results, with roughly one-third reporting earnings better than estimates, Butters reported. That’s lower than the 10-year average of 73%.
Still, Wall Street generally expects strong profit margins for companies in the S&P 500, as earlier price increases — which help businesses offset their own costs and test the limits of consumer demand — mix with more recent cost cuts.
For the week ahead, 93 companies in the S&P 500 index
SPX,
and 12 of the 30 Dow Jones Industrial Average
DJIA,
components, are set to report quarterly results.
Mark your calendars! Here is MarketWatch’s full earnings calendar for the week
Among the highlights: General Electric Co.
GE,
reports Tuesday for the first time since splitting off its GE HealthCare Technologies
GEHC,
business. 3M Co.
MMM,
— which makes Post-it Notes, duct tape, air filters, adhesives and coatings — also reports Tuesday, after the company in October said the costs of raw materials, a big driver of inflation, were showing signs of easing.
And as demand for goods eases amid worries about a downturn, a number of railroad operators that ship those goods report during the week. Union Pacific Corp.
UNP,
whose lines ship across the Western half of the U.S., reports on Tuesday, while CSX Corp.
CSX,
which covers much of the East, reports Wednesday. Norfolk Southern Corp.
NSC,
also reports Wednesday.
Telecom giants Verizon Communications Inc.
VZ,
AT&T Inc.
T,
and Comcast Corp.
CMCSA,
report Tuesday, Wednesday and Thursday, respectively. Results there will offer a clearer sense of the state of demand for Apple Inc.’s
AAPL,
iPhones, as premium models suffer from production snags, and for broadband, which saw heightened demand when more people were staying home due to the pandemic.
Southwest, post-meltdown: Southwest Airlines Co.
LUV,
which reports on Thursday, will offer executives with plenty to answer for, after bad weather and an overloaded, aging scheduling system caused thousands of flight cancellations over the holidays.
For more: Southwest Airlines turns to repairing its reputation after holiday meltdown
The implosion has raised questions about the air carrier’s investments in its own technology — after restarting dividend payments shortly before the disruptions — and airlines’ ability to handle the post-lockdown travel rebound. The breakdown has underscored the airline industry’s bigger issues with understaffing, after 2020’s wave of departures, as carriers try to reload flight schedules to meet pent-up travel demand.
Scott Kirby, chief executive at United Airlines Holdings Inc.
UAL,
said during his company’s earnings call last week that he felt the industry’s goals to expand their flight coverage this year and beyond were “simply unachievable.” And he said that airlines that tried to follow prepandemic patterns were destined to face trouble. He said manufacturers were suffering from delays in building jets, engines and other parts, and that airlines had outgrown their technology infrastructure.
For more: United Airlines swings to profit despite ‘worst’ winter storm’
“All of us, airlines and the FAA, lost experienced employees and most didn’t invest in the future,” he said. “That means the system simply can’t handle the volume today, much less the anticipated growth.”
American Airlines Group Inc.
AAL,
Alaska Air Group Inc.
ALK,
and JetBlue Airways Corp.
JBLU,
are also expected to report results Thursday morning, along with Southwest.
Visa, Mastercard and consumer spending: The return of travel and entertainment, along with rising prices, have helped prop up consumer spending. But as Visa Inc.
V,
Mastercard Inc.
MA,
American Express Co.
AXP,
and Capital One Financial Corp.
COF,
prepare to report, their finance-industry counterparts are getting nervous — and taking more steps to pad themselves against the fallout from consumers struggling to pay their bills.
Credit-card issuer Capital One reports results on Tuesday, while card payments-network providers Visa and Mastercard report on Thursday, with Amex on Friday morning. They’ll report after shares of Discover Financial Services
DFS,
got hit last week after the company, which also offers credit cards and loans, set aside more money to cover souring credit, and reported a bump in its net charge-off rate — a measure of debt a company thinks is unlikely to be recovered.
Larger banks, like JPMorgan Chase & Co.
JPM,
have also set aside more money to guard against credit losses.
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After one of the worst years in Wall Street’s history, investors have some serious questions for companies. As holiday returns roll in — and with them, forecasts for the months or year ahead — many have the chance to answer those questions, or avoid them.
In the busiest week of the holiday-earnings season so far, three big names will take the stage on back-to-back-to-back afternoons. Here is what to expect:
Microsoft
MSFT,
shed $737 billion in market value last year, the third-most of any S&P 500 company, then announced plans to lay off some 10,000 workers this month. Previously a Wall Street darling thanks to the phenomenal growth of its Azure cloud-computing offering, Microsoft now faces a cutback in enterprise spending on cloud and other products, as companies seek to cut their bills after spending wantonly during the early years of the COVID-19 pandemic.
First Take: Big Tech layoffs are not as big as they appear at first glance
When the company announced layoffs, Chief Executive Satya Nadella admitted customers were cutting, saying “as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.” Analysts believe Azure may be holding up better than rivals, however, and will expect to hear about it when Microsoft results hit Tuesday afternoon.
“Our Azure checks were mixed, but generally better than public cloud sentiment that has turned highly negative over the past few months,” Mizuho analysts wrote. “More specifically, we have heard of increasing levels of optimization, but it is being partially offset by many organizations prioritizing digital transformation.”
From October: The cloud boom has hit its stormiest moment yet, and it is costing investors billions
As cloud growth slows down, expect Microsoft to point to the next big buzzword in tech: Artificial intelligence, specifically ChatGPT, the chatbot product developed by OpenAI, which Microsoft has invested heavily in and expects to incorporate into its products. D.A. Davidson analyst Gil Luria this month wrote that Microsoft’s investments in OpenAI would help it build out more AI technology, including in its search engine Bing.
Tesla
TSLA,
stock suffered a much larger percentage decline than Microsoft in 2022,as the electric-vehicle maker’s shares closed out their worst year on record with their worst quarter and month ever. After the year ended, Tesla began slashing prices in China and the U.S. in hopes of qualifying for more consumer tax incentives and reinvigorating demand, which could lead to questions about previously fat margins.
In-depth: Tesla investors await clues on demand, board actions and weigh downside risks in 2023
For Tesla, which reports fourth-quarter results Wednesday, the results will offer more context on production of the Cybertruck — currently set to start in the middle of the year — demand in China, competition and the impact of price cuts. Auto-information website Edmunds on Thursday said that Tesla’s decision to slash prices by as much as 20% in the U.S. and Europe led to a jump in interest in the vehicles.
While those cuts seem likely to hurt profit, Deutsche Bank analyst Emmanuel Rosner called it “a bold offensive move, which secures Tesla’s volume growth, puts its traditional and EV competitors in great difficulty, and showcases Tesla’s considerable pricing power and cost superiority.” And a survey from Wedbush analysts found that “76% of EV Chinese consumers are considering buying a Tesla in 2023.” But Toni Sacconaghi, an analyst at Bernstein, said Tesla needed more low-cost electric-vehicle offerings, which might not ship until 2025.
Tesla earnings preview: Price cuts in focus as stock hovers around 2-year low
With Tesla’s stock in the gutter, some analysts have raised the possibility of a share buyback to spur investor interest, and Chief Executive Elon Musk said such a plan was being discussed in the previous earnings call. Musk is not in great favor with many investors right now, however, following some heavy selling of Tesla shares in the wake of his purchase last year of Twitter, which some on Wall Street have said has distracted him from the needs of the auto maker. Musk’s tweets have landed him in trouble elsewhere: Opening arguments began last week for a trial centered on allegations that Musk put investors at risk when he tweeted in 2018 that he was “considering” taking Tesla private and had secured the money to do so.
‘He broke the stock’: Why a prominent Tesla investor wants Elon Musk to put him on the board
Intel’s
INTC,
questions were not fresh in 2022, as the chip maker for years has seen rivals like Advanced Micro Devices Inc.
AMD,
and Nvidia Corp.
NVDA,
challenge it in ways that would have been unthinkable in previous generations. Shares still dove more than 43% last year, as declining sales led to plans for $3 billion in cost cuts.
There’s little hope for a big rebound when Intel reports Thursday afternoon. Personal-computer sales have experienced their biggest year-over-year declines ever recorded, and Intel’s long-delayed new data-center offering that is meant to answer AMD’s challenge only began selling this year.
Opinion: The PC boom and bust is already ‘one for the record books,’ and it isn’t over
Intel CEO Pat Gelsinger, though, has a chance to lay out his vision for a long-term Intel rebound, as he attempts to make Intel a chip-manufacturing powerhouse again after years of struggles. He was forced to trim his annual outlook multiple times last year, so it will be important for him to provide attainable numbers this time, but without reducing hopes in the path forward.
Expectations remain low for fourth-quarter earnings season overall, with consumers squeezed by higher prices and interest rates, and hopes fading for any relief from the holiday shopping season. But even with a low bar, the fourth-quarter results from companies so far have been worse than the historical norm, with FactSet senior earnings analyst John Butters writing Friday that “the fourth-quarter earnings season for the S&P 500 is not off to a strong start.”
So far, 11% of S&P 500 companies have reported fourth-quarter results, with roughly one-third reporting earnings better than estimates, Butters reported. That’s lower than the 10-year average of 73%.
Still, Wall Street generally expects strong profit margins for companies in the S&P 500, as earlier price increases — which help businesses offset their own costs and test the limits of consumer demand — mix with more recent cost cuts.
For the week ahead, 93 companies in the S&P 500 index
SPX,
and 12 of the 30 Dow Jones Industrial Average
DJIA,
components, are set to report quarterly results.
Mark your calendars! Here is MarketWatch’s full earnings calendar for the week
Among the highlights: General Electric Co.
GE,
reports Tuesday for the first time since splitting off its GE HealthCare Technologies
GEHC,
business. 3M Co.
MMM,
— which makes Post-it Notes, duct tape, air filters, adhesives and coatings — also reports Tuesday, after the company in October said the costs of raw materials, a big driver of inflation, were showing signs of easing.
And as demand for goods eases amid worries about a downturn, a number of railroad operators that ship those goods report during the week. Union Pacific Corp.
UNP,
whose lines ship across the Western half of the U.S., reports on Tuesday, while CSX Corp.
CSX,
which covers much of the East, reports Wednesday. Norfolk Southern Corp.
NSC,
also reports Wednesday.
Telecom giants Verizon Communications Inc.
VZ,
AT&T Inc.
T,
and Comcast Corp.
CMCSA,
report Tuesday, Wednesday and Thursday, respectively. Results there will offer a clearer sense of the state of demand for Apple Inc.’s
AAPL,
iPhones, as premium models suffer from production snags, and for broadband, which saw heightened demand when more people were staying home due to the pandemic.
Southwest, post-meltdown: Southwest Airlines Co.
LUV,
which reports on Thursday, will offer executives with plenty to answer for, after bad weather and an overloaded, aging scheduling system caused thousands of flight cancellations over the holidays.
For more: Southwest Airlines turns to repairing its reputation after holiday meltdown
The implosion has raised questions about the air carrier’s investments in its own technology — after restarting dividend payments shortly before the disruptions — and airlines’ ability to handle the post-lockdown travel rebound. The breakdown has underscored the airline industry’s bigger issues with understaffing, after 2020’s wave of departures, as carriers try to reload flight schedules to meet pent-up travel demand.
Scott Kirby, chief executive at United Airlines Holdings Inc.
UAL,
said during his company’s earnings call last week that he felt the industry’s goals to expand their flight coverage this year and beyond were “simply unachievable.” And he said that airlines that tried to follow prepandemic patterns were destined to face trouble. He said manufacturers were suffering from delays in building jets, engines and other parts, and that airlines had outgrown their technology infrastructure.
For more: United Airlines swings to profit despite ‘worst’ winter storm’
“All of us, airlines and the FAA, lost experienced employees and most didn’t invest in the future,” he said. “That means the system simply can’t handle the volume today, much less the anticipated growth.”
American Airlines Group Inc.
AAL,
Alaska Air Group Inc.
ALK,
and JetBlue Airways Corp.
JBLU,
are also expected to report results Thursday morning, along with Southwest.
Visa, Mastercard and consumer spending: The return of travel and entertainment, along with rising prices, have helped prop up consumer spending. But as Visa Inc.
V,
Mastercard Inc.
MA,
American Express Co.
AXP,
and Capital One Financial Corp.
COF,
prepare to report, their finance-industry counterparts are getting nervous — and taking more steps to pad themselves against the fallout from consumers struggling to pay their bills.
Credit-card issuer Capital One reports results on Tuesday, while card payments-network providers Visa and Mastercard report on Thursday, with Amex on Friday morning. They’ll report after shares of Discover Financial Services
DFS,
got hit last week after the company, which also offers credit cards and loans, set aside more money to cover souring credit, and reported a bump in its net charge-off rate — a measure of debt a company thinks is unlikely to be recovered.
Larger banks, like JPMorgan Chase & Co.
JPM,
have also set aside more money to guard against credit losses.
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Electric vehicle buyers in the U.S. can now get a purchase tax credit from the government, and it has pushed the price of several high-volume EVs below the average price paid for a new car in America.
There are currently seven high-volume EVs that cost less than the average new car, including two
Tesla
(ticker: TSLA) models. Buyers should look at those if they are thinking about going electric.
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Tesla Inc. Chief Executive Elon Musk took the witness stand briefly late Friday in a federal trial in San Francisco over alleged investor losses caused by his “funding secured” tweet and other tweets back in 2018.
In his roughly half-hour being questioned by a defense lawyer, Musk lauded Twitter Inc. as the most “democratic” way to communicate with Tesla investors and took a swipe at short sellers.
His testimony is expected to resume on Monday at 11:30 a.m. Eastern. Meanwhile, Tesla shares
TSLA,
were flat in the extended session Friday after ending the regular trading day up 4.9%.
A defense attorney began with plumbing Musk’s Twitter habits, and that Musk sometimes bristled at the implications his tweets may carry more meaning than what he assigns them.
“Just because I tweet something, it does not mean people believe it, or act accordingly,” Musk said, giving as example another one of its infamous tweet, in which he said Tesla stock was too high — and the stock then went higher.
The case revolves around key tweets from August 2018, including one where Musk told his millions of Twitter followers he was “considering taking Tesla private at $420” and then added “funding secured.”
Investor Glen Littleton, the lead plaintiff in the case, alleges he lost money due to the false tweets and is seeking damages.
U.S. District Judge Edward Chen already has ruled that Musk’s tweets about taking Tesla private were not true and that Musk acted with recklessness.
It is still up to jurors to decide, however, if the tweets were material to investors and if the falsehoods caused investor losses.
During his testimony, Musk said short sellers are essentially pulling for Tesla’s demise.
“Short sellers are basically a bunch of sharks on Wall Street,” Musk said. “(They) wanted Tesla to die, very badly” because they stood to make money for an eventual bankruptcy.
Musk testified right after a lengthy testimony from a plaintiff expert.
The CEO and Tesla each were fined $20 million in September 2018 to settle civil charges around the “funding secured” tweets and Musk was stripped of his chairman role at Tesla.
Musk and Tesla agreed to settle the charges against them without admitting to nor denying the SEC’s allegations.
Musk’s bid to end the SEC settlement deal over Tesla tweets was denied last year.
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CNN
—
A 2016 video that Tesla
(TSLA) (TSLA) used to promote its self-driving technology was staged to show capabilities like stopping at a red light and accelerating at a green light that the system did not have, according to testimony by a senior engineer.
The video, which remains archived on Tesla’s website, was released in October 2016 and promoted on Twitter by Chief Executive Elon Musk as evidence that “Tesla drives itself.”
But the Model X was not driving itself with technology Tesla had deployed, Ashok Elluswamy, director of Autopilot software at Tesla, said in the transcript of a July deposition taken as evidence in a lawsuit against Tesla for a 2018 fatal crash involving a former Apple
(AAPL) (AAPL) engineer.
The previously unreported testimony by Elluswamy represents the first time a Tesla employee has confirmed and detailed how the video was produced.
The video carries a tagline saying: “The person in the driver’s seat is only there for legal reasons. He is not doing anything. The car is driving itself.”
Elluswamy said Tesla’s Autopilot team set out to engineer and record a “demonstration of the system’s capabilities” at the request of Musk.
Elluswamy, Musk and Tesla did not respond to a request for comment. However, the company has warned drivers that they must keep their hands on the wheel and maintain control of their vehicles while using Autopilot.
The Tesla technology is designed to assist with steering, braking, speed and lane changes but its features “do not make the vehicle autonomous,” the company says on its website.
To create the video, the Tesla used 3D mapping on a predetermined route from a house in Menlo Park, California, to Tesla’s then-headquarters in Palo Alto, he said.
Drivers intervened to take control in test runs, he said. When trying to show the Model X could park itself with no driver, a test car crashed into a fence in Tesla’s parking lot, he said.
“The intent of the video was not to accurately portray what was available for customers in 2016. It was to portray what was possible to build into the system,” Elluswamy said, according to a transcript of his testimony seen by Reuters.
When Tesla released the video, Musk tweeted, “Tesla drives itself (no human input at all) thru urban streets to highway to streets, then finds a parking spot.”
Tesla faces lawsuits and regulatory scrutiny over its driver assistance systems.
The U.S. Department of Justice began a criminal investigation into Tesla’s claims that its electric vehicles can drive themselves in 2021, after a number of crashes, some of them fatal, involving Autopilot, Reuters has reported.
The New York Times reported in 2021 that Tesla engineers had created the 2016 video to promote Autopilot without disclosing that the route had been mapped in advance or that a car had crashed in trying to complete the shoot, citing anonymous sources.
When asked if the 2016 video showed the performance of the Tesla Autopilot system available in a production car at the time, Elluswamy said, “It does not.”
Elluswamy was deposed in a lawsuit against Tesla over a 2018 crash in Mountain View, California, that killed Apple engineer Walter Huang.
Andrew McDevitt, the lawyer who represents Huang’s wife and who questioned Elluswamy’s in July, told Reuters it was “obviously misleading to feature that video without any disclaimer or asterisk.”
The National Transportation Safety Board concluded in 2020 that Huang’s fatal crash was likely caused by his distraction and the limitations of Autopilot. It said Tesla’s “ineffective monitoring of driver engagement” had contributed to the crash.
Elluswamy said drivers could “fool the system,” making a Tesla system believe that they were paying attention based on feedback from the steering wheel when they were not. But he said he saw no safety issue with Autopilot if drivers were paying attention.
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CNN
—
Not that long ago, cars from the 1990s were just used cars. And, really, most of them still are, if they’re still running at all. But as millenials get older, gain some disposable income, and pine for the cars of their own youth, many of these cars have crossed the threshold to becoming sought after collectibles with rising values in the car collecting world.
Cars from brands like Ferrari, Bugatti and McLaren are, of course, highly valued, but some models from manufacturers like Toyota, Mitsubishi and Volkswagen have also seen their values soar.
“Values, for the last three years, for cars and vehicles from the 1990s have increased the most out of any decade,” said Brian Rabold, vice president of automotive intelligence at Hagerty, a company that closely tracks the collector car market. In addition to insuring collectible cars, Hagerty also owns the auction company Broad Arrow.
Values for 1990s-era collectible cars have risen by an average of 78% over the past three years, “which is huge,” Rabold said.
Several factors are ramping up the interest level, Rabold and others said. First, there is the simple passage of time. Twenty-five years, give or take, marks the time when some special cars become collectible. For one thing, depreciation has run its course.
Usually, even if their condition remains largely the same, cars become less and less valuable with each passing year, but only up to a point.
Then some cars, ones that are special and desirable for whatever reason, begin to increase in value. That’s because, as the cars have been getting older, so have the people who were teenagers or maybe in their early twenties when these models first came out. They may have wanted them back then, but couldn’t afford them. Now they’ve grown up and have the disposable income to buy that Mitsubishi 3000GT, say, just for fun.
Collectors are often attracted cars outside their own age range, too, said Randy Nonnenberg, co-founder and president of the online collector car auction site Bring a Trailer.
“We have young people that like 70 year old cars, and we have an 80 year old guy who just bought a new [Porsche 911] GT3,” he said. “So, I mean, it’s all over the map.”
Also, the end of the 20th century and the beginning of the 21st marked a turning point in automobiles themselves.
“A lot of people think of the golden age of the automobile was the ’50s and ‘60s,” said Eric Charnholm, who owns a 1992 Nissan Sentra SE-R, a car he spent 15 years looking for. “There’s an argument to be made that the ‘90s is actually the golden age.”
In that era, automakers figured out how to make small cars that met fuel economy requirements, but that could also be fun to drive.
“You had this mix of high horsepower, light weight with minimal safety systems that made them for a very fun combination,” he said.
Cars of the 1990s still had a somewhat raw, mechanical feel that is often lost in modern cars replete with computer assisted and drive-by-wire technology, where cables, computers and actuators, rather than just gears and hydraulics, make the connection between the driver and the road, said Nonnenberg.
“Modern cars are very comfortable and wonderful,” he said, “but it’s more of a sort of ride-along experience.”
Still, cars from the 1990s are far from ancient, unlike models from the early 20th century which have, on average, fallen in value in recent years, according to Hagerty. Cars from the ’90s have at least some modern comfort and safety features, and even relatively inexpensive cars can have respectable power and performance.
“They have air conditioning, they have power windows, they have airbags, a lot of them,” Nonnenberg said, “but they have a little more character.”
None of this means that all cars from the 1990s are going up in value. We’re talking about “collectible” cars. These are usually, but not always, sports cars or performance models. With some exceptions, like ’90s Buick Roadmasters wagons, practical family cars are not generally considered collectible. (Prices for Roadmaster wagons have increased 48% since 2019, according to Hagerty.) Just as in the new car market, pickups and SUVs are now finding fans, too, but not everyone gets the appeal.
“Mid-nineties pickup trucks are the ones that make me scratch my head,” said Frank Mecum, consignment director for Mecum Auctions. “We’re selling some of these low-mileage pickup trucks for fifty, sixty, seventy grand and they’re just normal pickup trucks.”
Between 2015 and 2018, buyers paid an average of $13,375 for 1990s Ford Broncos on Bring a Trailer. Now those Broncos are going for almost double that amount. Prices for Volkswagen Vanagons, a more modern version of the VW Bus, have similarly increased, according to the auction site. Toyota Land Cruisers have are also sought after.
“We’re big fans of the Land Cruisers in general, but that specific generation, the early ’90s to ‘97, is kind of a favorite,” said Mike Marzano, who owns Mouse Motors, a company that deals in collectible vehicles. “I guess it’s practical in the sense that it’s, you know, a family hauler, but they’re not very fuel efficient. They’re actually awful.”
The 1990s were also an era when there were a lot of appealing Japanese sports cars, thanks to that country’s economic boom in the 1980s. Robert Yeager, author of the book “The NextGen Guide to Car Collecting,” owns a 1996 Lexus SC 300. He loves the car for its design and it’s exciting to drive, he said.
“I think the ’90s are really a sweet spot for people who are looking for cars that are fun.” he added.
Even inexpensive Japanese cars of that era boasted quality that wasn’t matched by American automakers at the time, he said.
Values for the early ’90s Mitsubishi Eclipse have risen 40% since 2020 while prices for the closely related Eagle Talon, a product of Mitsubishi and Chrysler, have risen almost 45%, according to Hagerty.
Values for Nissan 300ZX models and ’90s Mazda Miatas are also rising, according to Bring a Trailer. But they remain fairly affordable with early ‘90s Miatas going for about $14,000 and Nissan ZXs for about $26,000 on the site.
Radwood, a series of car meet-ups for 1980s and ’90s cars, started in California and has now spread into a series of events around the country. Radwood has become a full time job for co-founder Art Cervantes who owns 1998 BMW M3 and a 1987 BMW 325is. The Radwood event series, which has its own line of branded merchandise, is now owned and operated by Hagerty.
Cervantes also recently purchased a 1996 Nissan Skyline GT-R, a model better known as, simply, the GT-R in the United States. His purchase of the GT-R touches on another reason cars can become collectible after 25 years. The GT-R wasn’t available in the US in 1996, but regulations allow for cars that couldn’t be owned here when new to be freely imported and driven after after 25 years.
“I bought this car in March of 2022,” he said, “and it’s appreciated approximately $20,000 since I bought it based on how the market is going.”
For many of their owners these cars aren’t just for show of for weekend jaunts. While still being desirable and collectible, they can function as vehicles for daily use.
These cars aren’t so old and delicate that using them as a primary form of transportation is out of the question, said Bring a Trailer’s Nonnenberg.
“There’s some people that even want that for their everyday sort of car, right?” he said. “They’re not as interested in driving the Tesla, they’d rather drive car from the 90s or the 2000s.”
Correction: An earlier version of this story incorrectly identified the owner of Mouse Motors. His name is Mike Marzano.
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This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.
https://www.barrons.com/articles/stock-market-movers-alibaba-xpeng-goldman-morgan-stanley-51673625139
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Chinese electric car maker Xpeng Inc. has cut prices for most of its vehicles by around 10%, joining other auto makers in lowering prices as competition heats up in the country’s fast-expanding electric-vehicle market.
The company said in a statement on Tuesday that it will slash prices for multiple versions of its P7, P5 and G3i models by 20,000 yuan (US$2,970) to CNY36,000 yuan, representing about a 10% drop from current prices. In particular, the starting price for Xpeng’s
XPEV,
best-selling P7 sedan will be reduced by 12.5%.
The price cuts will take effect from Tuesday afternoon, the company said. Xpeng has kept prices unchanged for its new G9 model.
For car owners who purchased Xpeng automobiles before the price cut, Xpeng said it will extend maintenance services for free as compensation.
Xpeng’s move came after Tesla Inc.
TSLA,
lowered its China selling prices earlier this month. EV makers have been increasingly seeking to fend off rising competition from emerging rivals and traditional car makers’ stepped-up push into the EV industry, where previously soaring sales growth is expected to cool down amid higher market saturation.
Write to Yifan Wang at yifan.wang@wsj.com
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Tesla Inc.’s price cuts in the U.S. and Europe heightened worries on Wall Street about the electric-car maker’s margins and worsening demand at a moment when both aspects of the business seem at risk.
Tesla overnight slashed prices of several of its models, including its cheaper Model Y compact SUV and Model 3 sedan, in the U.S. and in several European countries by about 6% to 20%.
Tesla stock
TSLA,
fell more than 3% by midday trading, eroding weekly gains to about 5%. Tesla shares rallied close to double-digits earlier in the week on some optimism about its coming earnings and news that it was expanding its factory in Texas.
The stock has traded around two-year lows and lost nearly 50% in the past three months as concerns swirl about the extent of the involvement of Chief Executive Elon Musk with Twitter Inc., which Musk bought in October, and weakened demand amid a global slowdown.
The price cuts, which also mean some Tesla EVs qualify for tax credits, may represent a gamble that until very recently Tesla thought itself insulated from.
“Ultimately, management is following through with its strategy to sacrifice industry-leading gross margins to prop up volume demand as the health of the global consumer remains uncertain,” TPH analyst Matthew Portillo said.
“Today’s move on pricing likely sets the table for management to be able to set more realistic guidance expectations on Jan. 25,” when Tesla is expected to report quarterly earnings, Portillo said.
The action resulted in at least one downgrade for the stock. Guggenheim analyst Ronald Jewsikow lowered his rating on Tesla stock to sell from neutral with a price target of $89, implying downside of about 24% from current levels.
“We see a negative catalyst path for the stock to underperform in the near and intermediate term,” Jewsikow wrote in a note.
Jewsikow went on to forecast a “sizable gross margin miss” in the fourth quarter, mostly thanks to the price reductions and incentives. Fiscal 2023 estimates “need a reset,” the analyst said.
Tesla is slated to report fourth-quarter earnings after market close on Jan. 25. FactSet consensus calls for adjusted earnings of $1.16 a share on revenue of $25 billion. The numbers are likely to be tweaked as it gets closer to the reporting day.
Analyst Dan Ives with Wedbush said he was optimistic the price action could prompt more people to get their Tesla.
Tesla now enjoys the global scale it did not have a few years ago, with more factories, and has margin flexibility to make such moves, Ives said. And there’s the added benefit that some of its vehicles are now eligible for the tax credits.
“We believe all together these price cuts could spur demand/deliveries by 12%-15% globally in 2023 and shows Tesla and Musk are going on the ‘offensive’ to spur demand in a softening backdrop,” Ives said.
“Margins will get hit on this, but we like this strategic poker move by Musk and Tesla,” the analyst said, keeping the equivalent of a buy rating on the stock and a $175 price target, which compares with an average $244 price target as gathered by FactSet from 45 analysts.
Citi analyst Itay Michaeli took more of a middle road. The price cuts confirm Wall Street worries on demand outside of China and Tesla’s strategy of prioritizing volume over price, he said.
The EV maker’s decision, though, are also part of a broader EV-industry view “that any demand pressures in 2023 would likely be met with price actions as opposed to production cuts,” Michaeli said.
Ultimately, gaining EV market share “will prove more important than maximizing EV margins in 2023,” Michaeli said.
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Pour one out for the beleaguered economists, who for once got an important indicator, the consumer price index, right on the nose, after CPI fell 0.1% in December, while core prices rose 0.3%.
“The 2021 surge in durable goods demand normalized, and the resulting collapse in durable goods price inflation was stunningly fast,” says Paul Donovan, chief economist of UBS Global Wealth Management.
“The commodity wave of inflation is fading, and that leaves the profit margin expansion in focus,” he adds. What a good time for earnings season to be upon us, and what do you know, it is, kicking off with the banking sector on Friday before broadening out next week.
Strategists at Goldman Sachs have a new note out, saying that the market is pricing in a soft landing even though the trend of earnings revisions points to a hard landing.
They’re not that optimistic — even in the soft-landing scenario, the team led by David Kostin say the S&P 500
SPX,
will end the year right around current levels, at 4,000. But they identify 46 stocks that could benefit — profitable, cyclical companies that are trading at price-to-earnings valuations below their 10-year median, among other factors.
One name jumps out: Tesla
TSLA,
which trades at 22 times forward earnings versus the 10-year median of 117 times. But the other 45 names are less flashy, ranging from Capital One
COF,
and Carlyle Group
CG,
to a host of industrials including 3M
MMM,
Parker-Hannifan
PH,
and Otis Worldwide
OTIS,
As a whole, these typically $10 billion companies are trading at 12 times earnings, versus 17 times usually.
In the hard landing scenario, S&P 500 profit margins would shrink by 125 basis points, to 10.9% — about in line with the median peak-to-trough decline during the eight recessions since 1970, which has been 132 basis points. Consensus expectations are for a 26 basis-point margin decline.
The Goldman team also have a 36 stock screen for a hard landing — profitable companies in defensive industries with a positive dividend yield. They’re typically food, beverage and tobacco companies as well as software and services companies — including Costco Wholesale
COST,
Kroger
KR,
Altria
MO,
Tyson Foods
TSN,
Microsoft
MSFT,
MasterCard
MA,
and Visa
V,
As a whole, these $37 billion companies are trading at 22 times earnings vs. a historical 24 times.
After a 2.3% advance for the S&P 500
SPX,
over the last three sessions, U.S. stock futures
ES00,
NQ00,
declined on Friday.
The yield on the Japanese 10-year bond
TMBMKJP-10Y,
exceeded 0.5%, the Bank of Japan’s yield cap, ahead of next week’s rate decision , prompting a second day of aggressive bond purchases from the central bank.
For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
Fourth-quarter earnings were rolling out from Bank of America
BAC,
JPMorgan Chase
JPM,
Citigroup
C,
and Wells Fargo
WFC,
and outside of banks, Delta Air Lines
DAL,
BlackRock
BLK,
and UnitedHealth
UNH,
JPMorgan shares slumped after forecast-beating earnings, though investment bank revenue came in light of estimates. Delta shares also declined after topping earnings estimates.
Tesla
TSLA,
cut prices of Model 3 and Model Y vehicles in the U.S. and elsewhere by up to 20%. The electric vehicle maker stock dropped 6%.
Virgin Galactic
SPCE,
surged after saying it’s on track to launch space-tourism flights in the second quarter.
Apple
AAPL,
says CEO Tim Cook requested, and received, a pay cut after investor criticism.
The University of Michigan’s consumer-sentiment index is due at 10 a.m. Eastern, and Minneapolis Fed President Neel Kashkari and Philadelphia Fed President Patrick Harker are due to speak.
Tyler Winklevoss said charges by the Securities and Exchange Commission brought about Gemini Trust for allegedly offering unregistered securities were “super lame” as it seeks to unfreeze $900 million in investor assets.
There’s a bull market in swearing on corporate earnings calls.
The West is now preparing to send tanks to Ukraine in what could be another escalation of its conflict with Russia, which on Friday claimed victory in the eastern town of Soledar.
A look back at photos of Lisa Marie Presley, who died at age 54.
Here were the most active stock-market tickers as of 6 a.m. Eastern.
| Ticker | Security name |
|
BBBY, |
Bed Bath & Beyond |
|
TSLA, |
Tesla |
|
GME, |
GameStop |
|
AMC, |
AMC Entertainment |
|
MULN, |
Mullen Automotive |
|
NIO, |
Nio |
|
APE, |
AMC Entertainment preferreds |
|
AAPL, |
Apple |
|
SPCE, |
Virgin Galactic |
|
AMZN, |
Amazon.com |
Like a scene out of “Stranger Things” — there’s uproar after new restrictions on the Hasbro
HAS,
game Dungeons & Dragons.
Starting next month, Starbucks
SBUX,
rewards will be less generous for most items, though iced coffee will be easier to get.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.
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The outlook for the car market in 2023 is uncertain, but that isn’t stopping investors from piling into
Ford Motor
shares.
Ford
(ticker: F) stock is up 23 cents, or 1.9%, at $13.48 in midday trading Thursday. The
S&P 500
and
Dow Jones Industrial Average
are up about 0.9% and 0.7%, respectively.
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CNN
—
A long list of companies once again showed off an assortment of cutting edge technology and oddball gadgets at the Consumer Electronics Show in Las Vegas last week.
There were new twists on foldable devices, cars that changed colors and smart ovens that live streamed dinners. There was a self-driving stroller, a pillow that pulsates to reduce anxiety and a locker from LG that claims to deodorize smelly sneakers in less than 40 minutes. At the event, some people gathered in groups, sitting in silence, to test out the latest virtual reality products.
While some of these devices may never find their way into households, the products on display offer a glimpse at some of the biggest tech trends companies are anticipating this year and in the years ahead.
Here’s a look at some of the buzziest products announced last week:
BMW unveiled a wild color-changing concept car with 260 e-panels that can change up to 32 colors. During a demo, different parts of the car, including the wheel covers, flashed in varying hues and swirls of colors. The technology, which relies on panels that receive electrical impulses, isn’t ready for production. (Breaks between panels and what looked like wiring could be seen on the outside of the car.) But just imagine being able to drive a sporty red car on the weekends and then a conservative gray model when you go to work.
If you think snapping photos of your meal for Instagram is overdone, now you can livestream your dinner as it cooks in real time and post it to your social feeds. Samsung’s new AI Wall oven features an internal camera that can capture footage of your baking food or allow you to keep tabs on it without ever leaving the couch. The oven, which uses an algorithm to recognize dishes and suggest cooking times and temperatures, also pushes notifications to your phone to prevent you from burning meals. The oven will launch in North America later this year; a price has not yet been announced.
Canadian-based baby gear startup Gluxkind was showed off its Ella AI Powered Smart Stroller. It offers much of the same tech seen in autonomous cars and delivery robots, including a dual-motor system for uphill walks and automatic downhill brake assist. It’s meant to serve as an “extra pairs of eyes and an extra set of hands,” according to the company’s website – not a replacement for a caregiver. The Ella stroller is able to drive itself for hands-free strolling – but only when a child is not inside.
No gadget at CES this year was as striking as the Mutalk mouthpiece from startup Shiftall. The device, which looks like a muzzle, features a soundproof Bluetooth microphone that makes it difficult for others in the room to hear your voice when you’re on calls. The company thinks the $200 gadget will come in handy for everything from voice chats and playing online games to shouting in VR when you don’t want to disturb anyone else nearby. Instead of hearing you, they will simply see your new mouthpiece; you can decide which is worse.
If you ever wanted to hit 15 miles per hour on roller skates, this electric pair from French startup AtmosGear promises to help get you there. With a battery pack that holds an hour charge and the ability to travel over 12 miles, the skates can clip onto any existing roller skates, turning them into motor-propelled footwear. The skates are currently available for pre-order for $525.
You’ve probably heard of smartphones that come with headphones, but what about headphones that come with a screen? The JBL Tour Pro 2 earbuds adds a touchscreen to the case to bring smartwatch-like capabilities by allowing users to control its settings, answer calls, set alarms, manage music and check battery life. No launch date has been announced, but the new buds will cost $250 when they eventually go on sale.
Some companies offered a new twist on the foldable phone concept. For example, Samsung Display’s Flex Hybrid prototype features a foldable and slidable display (the right side slides to offer more screen space). Meanwhile, the Asus $3500 Zenbook 17 Fold OLED – the world’s first foldable 17-inch laptop – picked up significant buzz on the show floor, acting almost like a large tablet that can be folded in half when on the go.
Dubbed “the world’s first awareable,” the $500 Nowatch is a watch… with no clock. The Amsterdam-based startup of the same name launched the device to help users monitor stress, body temperature, heart rate, movement and sleep. But unlike other smartwatches, there’s no watchface – instead, a gemstone sits where the touchscreen display typically goes. “We’ve replaced the traditional watch face with ancient stones, celebrating the belief that time is NOW,” the company said on its website.
Honda and Sony have joined forces to create tech-filled electric cars that, they say, will be both fun to drive and filled with the latest entertainment innovation. According to the CEO of Sony Honda Mobility, its cars will recognize your moods and be highly communicative and sensitive to your needs. The car will have screens on the outside so it can “express itself” and share information and will be able to “detect and understand people and society by utilizing sensing and [artificial intelligence] technologies,” according to the company. That’s why the company named its first joint car brand Afeela, in that it just has to “feel” right. But it’s unclear if we’re afeeling that name.
While it typically requires a blood panel and a visit to the doctor’s office to learn more about vitamin deficiencies, Withins says its new $500 U-Scan device can tell you similar information right from the comfort of your own toilet. The device attaches to existing toilets and collects data from your urine stream to detect vitamin deficiencies, check hydration and monitor metabolism, according to the company. An additional device called the U-Scan Cycle Sync tracks periods and ovulation cycles.
Schlage’s new smart lock is one of the first to work with Apple’s Home Key functionality, which allows users to upload their keys to their Apple Wallet and unlock their deadbolted front door directly from their phone or Apple Watch. The lock also works with Amazon Alexa and Google Assistant for voice controlled, hands-free locking. Available in two finishes, the deadbolt can manage access codes, view lock history and handle multiple locks at once. The lock, which will cost $300, will be available for purchase late this spring, according to a company press release.
– CNN’s Peter Valdes-Depena contributed to this report
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It may not have been a surprise to see the consumer discretionary sector of the S&P 500 get hammered last year amid talk of a looming recession while the Federal Reserve jacked up interest rates to push back against inflation.
But the stock market always looks ahead. Following a decline of 19.4% for the S&P 500
SPX,
in 2022 and a 37.6% drop for the benchmark index’s consumer discretionary sector, this may be the time to begin looking for bargains.
And now, analysts at Jefferies have lifted the sector to a “bullish” rating.
In a note to clients on Jan. 10, Jefferies’ global equity strategist, Sean Darby, wrote: “A Goldilocks scenario might be unfolding for the U.S. consumer — falling inflation but steady employment conditions.”
He sees consumer confidence improving, in part because “households are still sitting on [about] $1.4 trillion of Covid savings.”
Darby pointed to a list of 18 consumer discretionary stocks favored by Jefferies analysts that was published on Jan. 6. Those are listed below, along with three stocks in the sector the analysts rate “underperform.”
The ratings of the Jefferies analysts for individual stocks is based on their 12-month outlooks for the companies, in keeping with Wall Street tradition.
So we have added another list further down, showing which companies in the S&P 500 consumer discretionary sector are expected by analysts polled by FactSet to increase sales the most through 2024.
Here are the 18 consumer discretionary stocks recommended by Jefferies analysts with “buy” ratings on Jan. 6, sorted by how much upside the firm sees for the shares from closing prices on Jan. 9:
| Company | Ticker | Jan. 9 price | Jefferies price target | Implied 12-month upside potential | Three-year estimated sales CAGR through 2022 | Two-year estimated sales CAGR through 2024 |
| Topgolf Callaway Brands Corp. |
MODG, |
$20.76 | $56 | 170% | 32.8% | 10.0% |
| Bloomin’ Brands Inc. |
BLMN, |
$22.08 | $35 | 59% | 2.4% | 3.7% |
| Coty Inc. Class A |
COTY, |
$9.38 | $14 | 49% | -7.1% | 3.7% |
| MGM Resorts International |
MGM, |
$37.64 | $56 | 49% | -0.1% | 6.6% |
| Chewy Inc. Class A |
CHWY, |
$40.13 | $57 | 42% | 28.0% | 10.6% |
| Planet Fitness Inc. Class A |
PLNT, |
$82.36 | $115 | 40% | 10.4% | 13.9% |
| Molson Coors Beverage Co. Class B |
TAP, |
$50.21 | $69 | 37% | 0.5% | 1.4% |
| Fox Factory Holding Corp. |
FOXF, |
$99.90 | $135 | 35% | 28.1% | 6.6% |
| Hasbro Inc. |
HAS, |
$63.70 | $85 | 33% | 9.1% | 3.6% |
| Hostess Brands Inc. Class A |
TWNK, |
$23.10 | $30 | 30% | 14.2% | 5.0% |
| Lowe’s Cos. Inc. |
LOW, |
$199.44 | $250 | 25% | 10.6% | -1.9% |
| Walmart Inc. |
WMT, |
$144.95 | $175 | 21% | 4.9% | 3.3% |
| Dollar General Corp. |
DG, |
$241.05 | $285 | 18% | 10.9% | 6.7% |
| Church & Dwight Co. Inc. |
CHD, |
$82.25 | $97 | 18% | 7.0% | 4.6% |
| McDonald’s Corp. |
MCD, |
$267.25 | $315 | 18% | 2.4% | 4.0% |
| Estee Lauder Cos. Inc. Class A |
EL, |
$261.63 | $304 | 16% | 2.8% | 5.8% |
| Mondelez International Inc. Class A |
MDLZ, |
$67.24 | $75 | 12% | 6.3% | 4.1% |
| Tapestry Inc. |
TPR, |
$41.25 | $45 | 9% | 3.3% | 3.2% |
| Sources: Jefferies, FactSet | ||||||
Click on the tickers for more information about the companies.
Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
The two right-most columns on the table show estimated compound annual growth rates (CAGR) for the companies over the past three calendar years and expected sales CAGR for two years through calendar 2024, based on the companies’ financial reports and consensus estimates among analysts polled by FactSet.
(We used calendar-year numbers, some of which are estimated by FactSet for prior years, because some companies have fiscal years or even months that don’t match the calendar.)
The stock pick with the highest 12-month upside potential, based on Jefferies’ price target, is Topgolf Callaway Brands Corp.
MODG,
This company has the highest estimated three-year sales CAGR on the list, and has the third-highest projected sales CAGR through 2024, after Planet Fitness Inc.
PLNT,
and Chewy Inc.
CHWY,
On Jan. 6, the Jefferies analysts also listed three stocks in the sector they rated “underperform.” Here they are, sorted by how much the analysts expect the stocks to decline over the next 12 months:
| Company | Ticker | Jan. 9 price | Jefferies price target | Implied 12-month upside potential | Three-year estimated sales CAGR through 2022 | Two-year estimated sales CAGR through 2024 |
| Lululemon Athletica Inc. |
LULU, |
$298.66 | $200 | -33% | 26.3% | 14.6% |
| Williams-Sonoma Inc. |
WSM, |
$122.17 | $98 | -20% | 14.1% | -0.3% |
| Harley-Davidson Inc. |
HOG, |
$43.25 | $39 | -10% | -2.8% | 4.4% |
| Sources: Jefferies, FactSet | ||||||
A look head at which companies are expected to increase sales the most over the next two years might serve as a good starting point for your own research.
Bear in mind that some of the companies in travel-related industries suffered declining sales for three years through 2022 because of the coronavirus pandemic. Some of those are on this new list of 20 stocks in the S&P 500 consumer discretionary sector expected to show the highest two-year sales CAGR through calendar 2024:
| Company | Ticker | Two-year estimated sales CAGR through 2024 | Three-year estimated sales CAGR through 2022 | Share “buy” ratings | Jan. 9 price | Consensus price target | Implied 12-month upside potential |
| Las Vegas Sands Corp. |
LVS, |
59.2% | -32.6% | 79% | $52.78 | $53.53 | 1% |
| Norwegian Cruise Line Holdings Ltd. |
NCLH, |
39.6% | -9.3% | 44% | $13.78 | $16.96 | 23% |
| Carnival Corp. |
CCL, |
35.2% | -14.7% | 30% | $9.47 | $10.11 | 7% |
| Tesla Inc. |
TSLA, |
34.3% | 49.7% | 64% | $119.77 | $232.43 | 94% |
| Wynn Resorts Ltd. |
WYNN, |
29.3% | -17.5% | 53% | $94.33 | $96.07 | 2% |
| Royal Caribbean Group |
RCL, |
28.4% | -6.8% | 53% | $57.29 | $66.43 | 16% |
| Chipotle Mexican Grill Inc. |
CMG, |
13.4% | 15.9% | 71% | $1,446.74 | $1,778.81 | 23% |
| Amazon.com Inc. |
AMZN, |
12.2% | 22.1% | 92% | $87.36 | $133.76 | 53% |
| Booking Holdings Inc. |
BKNG, |
11.9% | 3.9% | 63% | $2,208.41 | $2,307.67 | 4% |
| Aptiv PLC |
APTV, |
11.9% | 6.4% | 70% | $97.98 | $117.23 | 20% |
| Starbucks Corp. |
SBUX, |
11.2% | 7.2% | 42% | $104.74 | $103.44 | -1% |
| Etsy Inc. |
ETSY, |
11.1% | 45.3% | 50% | $120.99 | $124.04 | 3% |
| Hilton Worldwide Holdings Inc. |
HLT, |
10.1% | -2.9% | 38% | $129.08 | $146.17 | 13% |
| Expedia Group Inc. |
EXPE, |
9.0% | -0.9% | 50% | $93.77 | $125.65 | 34% |
| NIKE Inc. Class B |
NKE, |
8.1% | 5.8% | 62% | $124.85 | $126.15 | 1% |
| Marriott International Inc. Class A |
MAR, |
7.5% | -1.2% | 30% | $152.53 | $172.81 | 13% |
| BorgWarner Inc. |
BWA, |
7.1% | 15.3% | 53% | $42.24 | $46.93 | 11% |
| Tractor Supply Co. |
TSCO, |
6.8% | 19.0% | 61% | $217.48 | $232.34 | 7% |
| Yum! Brands Inc. |
YUM, |
6.7% | 6.4% | 47% | $129.76 | $137.79 | 6% |
| Dollar General Corp. |
DG, |
6.7% | 10.9% | 67% | $241.05 | $267.54 | 11% |
| Source: FactSet | |||||||
Among the companies on this list that didn’t suffer sales declines from 2019 levels, Tesla Inc.
TSLA,
is expected to achieve the highest two-year sales CAGR through 2022.
Dollar General Corp.
DG,
is the only company to appear on this list based on consensus sales growth estimates and the Jefferies recommended list.
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As CES 2023 draws to a close, much of the attention in the chip world was lauded on companies like Advanced Micro Devices Inc. and Nvidia Corp. but a lower profile chip maker appears better positioned coming out of the convention.
Morgan Stanley analyst Joseph Moore said there’s still a lot of caution about overall chip demand especially with softness in China, but autos appear to be one of the strong themes of CES 2023, he said.
“The areas that have been weak remain somewhat weaker – notably memory, semi cap, and generally PC and cloud builds – while the markets that have been strong (such as automotive and industrial) remain strong but with lead times clearly starting to normalize, which likely points to longer term revenue pressures particularly in a weaker economy,” Moore said.
“Still, the longer term themes remain positive, especially for autos (which is increasingly the focus of CES),around themes such as EVs, ADAS and autonomous.”
Such was the case when Nvidia Corp.
NVDA,
said on Tuesday it was partnering with Hon Hai Technology Group
2317,
, or Foxconn, best known for being the manufacturer of Apple Inc.’s
AAPL,
iPhone, to make electric vehicles that use Nvidia’s Drive Orin chips and sensors, and bringing its GeForce Now streaming video game service to autos made by Hyundai Motor Group
005380,
BYD
1211,
and Swedish EV maker Polestar.
“We generally think that Nvidia numbers are likely OK from here, though there was some caution on sell through in China for gaming, and a clear awareness that while the company’s position within cloud is very good, that pressure in cloud budgets leads to somewhat lower visibility,” Moore said. “But we would say that generally we think that they are past the worst of the pressures in their business, in contrast to most of the semiconductor group where there are still likely numbers cuts ahead.”
Meanwhile, Advanced Micro Devices Inc.
AMD,
used the CES keynote to introduce the Instinct MI300 chip as “world’s first data-center integrated CPU + GPU.” The combined central processing unit and graphics processing unit meant for AI inference, the months-long process where data centers spend millions of dollars a year on electricity to train and develop artificial intelligence. AMD Chief Executive and Chair Lisa Su said the MI300 can reduce the time it takes for an inference modeling process from months to weeks.
But one chip maker that doesn’t get a lot of attention appeared to emerge from CES best positioned for the year: ON Semiconductor Corp.
ON,
which focuses on electric vehicles and advanced driver assistance systems as primary growth drivers, leveraging its legacy position in auto chips.
“Most notably, the company’s push into [Silicon Carbide] remains on track, and expect to still exit the year at a run-rate where the majority of crystal driving the business is internally sourced,” Moore said. “The company remains confident that demand in the EV space will far outpace supply for a long time and have thus shifted their focus over to execution on the production side.”
Citi Research analyst Christopher Danley lauded ON as being the most bullish chip maker of CES 2023.
“ON remains on track to triple Silicon Carbide revenue YoY from roughly $300 million in 2022 to $1.0 billion in 2023,” Danley said. “The company stated it is sold out through 2023.”
But ON aside, Danley said everyone at CES is “nervous” about “cracks” in data-center demand, “and they should be.”
“There was a tone of nervousness on the data center outlook with many execs and investors cautious and talking about ‘uncertainty’ in data center outlooks from both hyperscalers and enterprise customers,” Danley said. “We continue to believe data center correction will happen given a multitude of datapoints and leading indicators.”
Back in early December, Danley said his checks “indicate order rates from the data center end market are fading with downside from the enterprise end market (roughly 40% of the data center end market) and Facebook,” which is owned by parent company Meta Platforms Inc.
META,
“We continue to expect a correction in the data center end market in 1H23,” Danley said.
That said, Danley said his top pick was and continue to believe a correction there is inevitable. We remain cautious on semis until all end markets and companies correct and our top pick remains chip maker Analog Devices Inc.
ADI,
Back to autos: Ambarella Inc.
AMBA,
on Thursday, Ambarella said it was partnering with Continental AG
CON,
to develop hardware and software for assisted driving using AI with the ultimate goal of an autonomous driving system. The companies hope to have systems in production in 2026.
Moore said Ambarella’s tech “continues to impress,” and said the Continental partnership will provide software revenue that’s shared but with the larger portion going to Continental.
At CES 2023, “the companies are showing a full L2+ ADAS implementation for a 10-camera system running on a single chip, which per AMBA was only using 8% of the compute value of the chip.”
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