Tesla has shed over 10% in early morning trading over fears that the coronavirus will delay vehicle deliveries in China.
Elon Musk made some bold promises in the company’s fourth-quarter earnings call – guiding for 500,000 vehicle deliveries in 2020.
If Tesla can’t meet Elon’s guidance, the stock could give back some of its gains. This comes after a whirlwind rally took shares to an all-time high of $968.
Tesla (NASDAQ:TSLA) bulls are on thin ice after the stock’s monster rally raises questions about sustainability and valuation. At these frothy levels, even the littlest bit of bad news can send shares tumbling lower.
Tesla’s market cap has already shed billions Wednesday – falling over 10% in early morning trading over fears that the coronavirus outbreak will delay the timeline for new vehicle deliveries in China. With expectations for the electric automaker so high, Elon Musk can’t afford any setbacks in 2020.
Tesla is Still Flying High of Fourth Quarter Earnings
Tesla bulls are still feeling the buzz from a whirlwind rally that started with the company’s fourth-quarter earnings result on Jan. 30. Tesla went into 2020 trading at around $430 per share before going on a parabolic rally that took prices to an all-time high of $968.
Source: YCharts
The company’s market cap reached a record-breaking $160 billion – a valuation so massive that famous short-seller Andrew Left of Citron Research claimed that even Elon would go short at these levels if he was a fund manager.
While Tesla’s controversial rally may seem like baseless speculation to some observers, it’s largely based on the company’s guidance for the full year 2020. If Musk can’t fulfill his promises, the stock could give back much of its gains.
Elon claims that vehicle deliveries in 2020 will comfortably exceed 500,000 units. This is a figure that is driven, in large part, by projections for China. The Asian nation represents a little over 10% of the automaker’s total revenue and much of its future growth prospects. Tesla recently rolled out the affordable Model 3 to Chinese customers and the company hopes to rapidly scale up production in the coming months.
But importing the cars from the U.S. probably won’t give Tesla enough leverage to achieve its ambitious projections.
We need to bring the Shanghai factory online. I think that’s the biggest variable for getting to 500,000-plus a year. Our car is just very expensive going into China. We’ve got import duties, we’ve got transport costs, we’ve got higher costs of labor here.
He elaborated:
We need the Shanghai factory to have the cars be affordable. It’s important to appreciate, the demand for Model 3 is insanely high. The inhibitor is affordability
Did the Market Factor in the Coronavirus Impacts?
The Wuhan coronavirus outbreak may throw a monkey wrench in Elon Musks’ plans for 500,000 deliveries in 2020. The Shanghai Gigafactory that builds the Chinese Model 3 is currently closed due to the ongoing crisis. As the outbreak continues to grow, the economic impacts may go from bad to worse.
According to the latest data, the Wuhan coronavirus, which is provisionally known as 2019-nCoV, has come to infect a total of 24,607 people with almost 500 fatalities. Many expect the epidemic may grow to become a global pandemic.
With such severe short-term headwinds in one of Tesla’s biggest growth markets, it may have been irresponsible of Musk to guide so optimistically in the fourth-quarter earnings call. Tesla’s management should have taken the opportunity to tamper expectations and prevent speculative zeal from creating an extreme and, perhaps, unsustainable rally in the stock.
Disclaimer: The above should not be considered trading advice from CCN.com.
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
