Thursday's Headlines: Tesla Dumps 75% of its Bitcoin
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Shopify (SHOP) 12.0%
Coupa Software (COUP) 11.4%
Atlassian (TEAM) 11.2%
Bill.com (BILL) 9.8%
Moving Down ⬇️
American Tower (AMT) -2.9%
Lovesac (LOVE) -2.7%
Baozun (BZUN) -2.6%
Coca-Cola (KO) -1.7%
Diageo (DEO) -1.6%
Here are the stories that you need to know ahead of market-open today, Thursday the 21st of July.
Tesla Dumps 75% of its Bitcoin 🪙
Tesla (TSLA) shares are up in premarket trading this morning, despite the iconic EV maker reporting on what was a pretty tough quarter overall.
For the three months ending June 30th, Tesla reported an adjusted earnings per share (EPS) of $2.27 and revenue of $16.93 billion. These earnings were down compared to the same time last year, but still better than analysts had expected considering all of the production and supply chain issues that the company has been facing. Revenue, however, came in a shade lower than expected, but still represented year-on-year growth of 42%.
Tellingly, Tesla reported a severe drop in its free-cash-flow — the amount of money it has available after accounting for expenses that keep the business running. This dropped from $2.2 billion in the first quarter to just $621 million in the second quarter, highlighting the growing expenses being faced by manufacturing and hardware companies.
In fact, if it wasn’t for the fact that Tesla sold 75% of its Bitcoin holdings in the quarter — adding $936 million in cash to its balance sheet — the company would have had negative free-cash-flow.
CEO Elon Musk, who has been a noted Bitcoin bull in the past, was keen to point out that these sales were due to the uncertainty around COVID lockdowns in China, which meant that Tesla needed the security of more cash. “This should be not taken as some verdict on Bitcoin,” he added.
Shopify Partners with YouTube for Live Shopping 🛍
Shopify (SHOP) has partnered with YouTube to add live shopping tools to the video streaming site, allowing viewers to purchase goods without leaving the platform. The launch will be confined to the U.S., Brazil, and India for now, with more regions planned for later this year.
Viewers will be given a list of items featured in the video and will be able to purchase them there and then — for example, beauty products being used in a make-up tutorial or gadgets involved in popular unboxing videos. The move is a massive boon to the creator economy, facilitating the promotion of your own product line or an affiliated deal directly within the video while retaining viewership on YouTube.
The move likely comes in response to TikTok’s e-commerce ambitions. The addictive short-form video platform has plans to grow its e-commerce payment volume by ten-fold over the next two years, a strategy its parent company ByteDance has already seen bear fruit with its native Chinese app Douyin. We discussed this on Stock Club earlier this month.
Interestingly, TikTok used Shopify to let merchants embed their web shops into videos on the platform too. With it already a wildly successful tactic in China, this video integration could be the next step for e-commerce as we know it, and Shopify has certainly recognized this trend early.
United Airlines Slumps On Scaled Back Growth ✈️
Beleaguered airline company United Airlines disappointed investors with its latest earnings report last night. Despite returning to profitability, the company failed to meet Wall Street’s revenue expectations, sending its stock down over 7% in pre-market trading so far today.
The company reported adjusted earnings per share (EPS) of $1.43 — quite a bit below analyst expectations of $1.95. One saving grace was the $329 million of profit reported, made all the more impressive as this was the first profitable quarter since the pandemic began without the help of federal payroll aid.
Rising demand for travel benefitted the firm as U.S. airline carriers are currently in the midst of their strongest summer season in three years. However, soaring operational costs and labor shortages have left them unable to fully capitalize on the increased demand.
CEO Scott Kirby outlined that “industry-wide operational challenges that limit the system’s capacity, record fuel prices, and the increasing possibility of a global recession” were three challenges that must be addressed by the firm immediately.
United Airlines offers global air transportation services to both people and cargo. It has endured a rough couple of years as a result of the COVID-19 pandemic, which has seen it drop over 56% from all-time highs seen in late 2018. With that being said, it has also recovered from over decade-long lows seen in 2020 and is only down 8% year-to-date — something many tech companies could only dream of.
While it faces numerous challenges over the next number of months, demand for travel doesn’t seem to be waning and United seems well placed to benefit.