Earnings Season Has Been Wild…

It's been a wild ride watching these Q1 earnings reports roll in. 

I’ll be breaking down the earnings that moved the markets today…

TSLA (Tesla), META (Meta) & BA (Boeing)

Let's dive in and see what's really going on with them:

Tesla

Elon and his team are making some serious moves…

Despite missing analyst expectations, the stock is up 10% today.

Why?... Because the analysts were WRONG!

A slew of analysts, notably Reuters, had reported Tesla scrapped plans for lower-cost models in the face of fierce competition. 

But guess what? 

Not only did this turn out to be false, but Tesla reported that they were actually RAMPING PRODUCTION FOR LOW-COST MODELS. 

As noted in their shareholder deck (page 10), they are planning on accelerating the launch of new models AHEAD of their previously stated timeline 👇

In terms of margins, the street has been seriously concerned that recent price cuts will hinder Tesla’s ability to innovate and grow in the face of fierce competition.

 In the statement above, Tesla notes that using existing manufacturing lines drives efficiency. 

On that note, analysts were expecting 😂 Tesla to ramp their in-house computing (dojo) to 300,000 h100s by the end of the year. (insert wrong answer buzzer) 🤓 Wrong again! 

Sticking with the efficiency theme, Tesla said they only expect 85,000 by the end of the year, once again reinforcing their mindfulness of cost efficiency.

Meta

Talk about opposites here… While Tesla is seemingly entering their “year of efficiency,” Meta is seemingly exiting theirs. 

Coming in with a slight beat on both the top and bottom lines.

(EPS $4.71 vs Est. $4.36 • Sales $36.5B vs Est. $36.2B)

Meta is finding itself deep in investments, scaling new products, particularly around AI, and declining revenue and earnings. 

In addition, there are concerns that a TikTok ban may set a precedent for the government to take similar actions against Meta. 

All in all, Meta seems to be finding itself right back in a multi-year CapEx cycle that has now increased to $35 billion to $40 billion to support AI while facing legal and regulatory headwinds.

Boeing

Things are looking a bit turbulent for the aerospace giant.

Despite reporting an adj. EPS beat for Q1 ($1.13), $0.50 better than the analyst estimate of ($1.63) and revenue of $16.57B, consensus of $16.5B.

Boeing just can’t seem to get off the ground… Just moments later, the stock began to trade in the NY session

Moody downgraded Boeing’s credit rating to nearly “junk” citing "inadequate performance" in its commercial airplanes segment. The company states that Cash burn is high, and it's facing increasing scrutiny from regulators. 

So there you have it. 😎

My opinion…

What we should make of the situation is that the market is still conscious of spending and weary that companies may scale too far too fast.

Meta has lost its “Year of Efficiency” moniker, and Tesla has gained it. 

AI estimates and expectations may be coming in a little hot across the board and need to come back down to earth before taking off again. 

Regardless, the market is beginning to present real opportunities for investors, but it’s not there yet. 

We said we smelled fear, but signs are telling us it’s not over yet. 

We’re close, but not yet…

There is no Fed to save the market this week (they’re in a blackout period ahead of the FOMC), but just remember, it won’t take much for this to end.

Keep that shopping list in hand. The sales are coming soon!!! 💯

Five big names, five different stories. 

Whether you're a long-term investor or a short-term trader, there's something here for everyone. 

Just remember, do your own research, and never invest more than you can afford to lose.

Rooting for you, 

Paper Gains.