TESLA: Misses Earnings

Tesla missed earnings and revenue estimates. This is the first time since 2019 that they have missed both. During the recent quarter, Tesla announced automotive earnings of $19.63 billion and an additional $1.56 billion from its energy generation and storage segment. From the automotive earnings, the share from regulatory credits increased to $554 million in the third quarter and from $282 million in the last quarter to $286 million YoY (year over year.)

The quarter's net earnings amounted to $1.85 billion, equating to 53 cents per share. There was a 22% decrease in total gross profit compared to the previous year. The total operating margin was 7.6%, marking a substantial drop from the 17.2% observed in the same quarter the year before. Tesla warned that the Cybertruck would not bring positive cash flow in the first 12-18 months. Elon Musk was very pessimistic when it came to the state of the macro-economy.

Earnings:

• Earnings per share 66 cents vs. 74 cents estimates

• Free Cash Flow $848 million vs. $2.59 billion estimates

• Revenue $23.4 billion vs. $24.06 billion estimates
  

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EARNINGS: Netflix Beats Profit Estimates

Netflix beats profits and matches revenue estimates. Netflix indicated that profit margins are projected to rise to a minimum of 22% next year, with the possibility of further growth in coming years. The Hollywood labor strike actually contributed to an increase in cash flow. The leadership team anticipates a free cash flow of $6.5 billion for the year, an increase from the earlier estimate of around $5 billion. This projection factors roughly $1 billion in reduced content expenditure due to the strikes.

However, the labor disruption hasn't significantly affected Netflix's launch timeline, as numerous shows have already been finalized. Addressing the issue of password sharing is among the key strategies at Netflix as it aims to bounce back from a slow couple of years. In addition, the company introduced an ad-supported streaming option in 12 regions. The company reported that, in the previous quarter, around 30% of new subscribers in those areas chose the version with advertisements.

Earnings:

• Earnings per share: $3.74, vs. expected $3.49

• Revenue: $8.54 billion, vs. expected $8.54 billion

💰 See who is reporting earnings for the rest of the week here.

OPENAI: Seeks $86 Billion Valuation

OpenAI is reportedly discussing the sale of shares owned by its current employees at a valuation of $86 billion, according to Bloomberg. The AI startup responsible for ChatGPT is negotiating this deal with prospective investors, referred to as a tender offer. The terms and distribution details are not yet finalized and might undergo changes.

If valued at $86 billion, it would surpass companies such as Stripe and China's online retailer Shein, positioning itself among the world's highest-valued private firms, trailing only behind SpaceX led by Elon Musk, and ByteDance, the parent company of TikTok. Microsoft owns 49% of OpenAI, an incredible strategic investment for them. It is important to note that OpenAI is raising this money to compete with Google, Amazon, and Apple as they pour money into their projects.

Headlines You Need To Know: 🎙

• U.S. weekly jobless claims less than expected

• Ford says strict fuel rules will cost it $1 billion in fines

• TSMC sees the most significant drop in profit in nearly five years

• ATT beats on earnings

• Biden to seek unprecedented aid for Israel

• Delta rolls back loyalty program changes

• The 60-40 portfolio just had its worst year ever

• Pfizer to price covid drug Paxlovid at $1,390

• OpenAi is in talks to sell shares at $86 billion valuation

• Fed Chair Jerome Powell to deliver Keynote address

One of the Best Stock Traders Ever

This guy is one of the greatest stock traders ever to exist, known as the Great Bear, but tragically killed himself after losing his entire fortune. Jesse Livermore was born in 1877 and started trading stocks when he was 14. Most of modern-day trading strategy is based on what Livermore used to do. Livermore’s big breakthrough came during the San Francisco Earthquake of 1906.

He shorted the market and earned over $250,000, which is worth $8 million today. But his true genius was shown during the Panic of 1907 when he made over a million dollars, or $32 million, in just one trade. Livermore became a living legend in the financial world but lost his wealth multiple times during the roaring 20s.

Livermore’s most legendary trade came in 1929 when he predicted the great crash. He made a fortune by shorting the market, reportedly earning $100 million or $1 billion today. Unfortunately, in 1940, Livermore blew up his entire trading account and lost his whole fortune. On this same day, Livermore tragically killed himself out of embarrassment. His legacy still lives on today.

Chart of the Day

📊 Inflation and Food Costs

Food inflation has continued to rise since 1960.

The author, publisher or insiders of the publisher may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.