Did Tesla’s Earnings Impress?
On Wednesday, after the close of trading, Tesla Motors Inc. (TSLA, -5.60%) reported second quarter earnings and yes, the electric car maker did impress. The results beat expectations by Wall Street yet Tesla lowered its deliveries guidance for the year. Tesla reported a quarterly loss of 48 cents per share on $1.20 billion in adjusted revenue. According to a consensus estimate from Thomson Reuters, Tesla was expected to report a loss of 60 cents per share on $1.18 billion in revenue. In addition, the company lowered its full-year delivery guidance. In May this year, Tesla had stated that they expect about 55,000 sales for its Model X and its Model S combined yet yesterday, this number was reduced to "between 50,000 and 55,000." In the shareholder letter released on the day, Tesla explained that while the final stages of testing and equipment installation of their Model X is going well, there are a wide variety of dependencies which could impact their deliveries as well as their production in the fourth quarter. This could come about since the Model X and the Model S are produced on the same product line and with the current challenges facing Tesla on their Model X production, this could negatively impact the production of the Model S. In after-hours trading, Tesla shares declined by more than 7%. These losses were later pared. Since January this year, Tesla shares have gained 21 percent which is ten times more than the S&P 500 index (SPX) over the same period. Tesla is currently trading at $270.13 a share.
On Wednesday, U.S. stocks closed mostly higher. Despite this advance, the Dow Jones Industrial Average (DJIA) was negatively impacted by the weak performance by energy shares as well as by Disney. In early trading, the main benchmark indices declined after a weaker than expected reading on private payroll growth. This prompted concerns among investors regarding the timing of an interest rate hike by the Federal Reserve. In a separate report, the service sector reading surged to a 10-year high last month, which indicated a growing economy. During the trading session, the DJIA experienced volatility, moving between losses and gains. Early in the session, the blue chip index was down by nearly 58 points after being up almost 111 points. At the close of trading, the DJIA declined 10.22 points to 17,540.47. On the upside was the S&P 500 index (SPX) which advanced 0.3%, or 6.52 points, at 2,099.84. This index was up 19 points intraday. Also on the upside was the Nasdaq Composite index (COMP) which rose 0.7%, or 34.40 points, to close at 5,139.94. This tech heavy index was up nearly 70 points intraday.
On Wednesday, the U.S. dollar traded higher. This came after data showed that in July, the service sector activity in the U.S. grew at the fastest pace since August 2005. According to the ISM (Institute of Supply Management), its non-manufacturing PMI (purchasing manager's index) rose from 56.0 in June to 60.3 in July. This beat expectations for a reading of 56.2. In a separate report, ADP, the payroll processing firm, reported that in July, non-farm private employment rose by 185,000. This missed expectations for an increase of 215,000. In addition, the Bureau of Economic Analysis in the U.S. reported that the trade deficit widened from $40.94 billion in May to $43.84 billion in June. The EUR/USD traded at 1.0865, down 0.15%, while the GBP/USD traded at 1.5620, up 0.37%. Against the Swiss franc, the Canadian dollar and the Japanese yen, the U.S. dollar traded mixed with the USD/CHF up 0.27% at 0.9810, the USD/CAD down 0.29% at 1.3153 while the USD/JPY gained 0.40% to trade at 124.88. The U.S. dollar index was at 98.19, up 0.15%.
In Asian trading on Thursday, crude oil prices rebounded. This came as investors shifted their focus on to the continued oversupply in the global market. WTI crude oil for delivery in September traded at $45.19 a barrel, up 0.20%, on the NYMEX. On Monday this week, Texas Long Sweet futures declined about 4 percent to trade at approximately $45 a barrel. This marked the lowest level since the middle of March this year. Over the last month, U.S. crude futures have sharply fallen by more than 20 percent. Meanwhile, on Wednesday, Brent crude oil for delivery in September traded at $49.49 a barrel on the Intercontinental Exchange (ICE) in London. The spread between the U.S. and international crude benchmarks of crude stood at $4.46.