Wednesday Headlines: Musk Sells $7 Billion of Tesla Stock
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Lemonade (LMND) +11.9%
Duolingo (DUOL) +2.8%
Brown-Forman (BF.B) +1.6%
Moving Down ⬇️
Trex (TREX) -15.0%
Upstart Holdings (UPST) -11.8%
Stitch Fix (SFIX) -9.5%
Trupanion (TRUP) -8.7%
Teladoc (TDOC) -8.7%
Here are the stories that you need to know ahead of market-open today, Wednesday the 10th of August.
Musk Sells $7 Billion of Tesla Stock 💰
Elon Musk has sold nearly $7 billion worth of Tesla (TSLA) stock over the past few days according to regulatory filings.
The Tesla CEO had previously sold around $8.5 billion worth of stock back in April as he was lining up financing for his acquisition of Twitter. That deal remains shrouded in uncertainty after Musk tried to back out, with Twitter currently suing Musk to enforce the agreement. Musk, who already owns 9% of Twitter, would have to raise another $33 billion in order to complete the deal. The case is headed to court in October.
Musk remains Tesla’s largest shareholder with a 15% stake in the electric car maker. He takes no salary from the company, receiving all his compensation in stock options.
Musk was asked on Twitter if he was done selling shares, to which he responded “Yes”. He added, “In the (hopefully unlikely) event that Twitter forces this deal to close and some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.”
Shares of Tesla are currently down around 25% from recent highs seen in April, when Musk first signaled his intention to pursue the Twitter deal. Last week, Tesla shareholders approved a 3-1 stock split that the company says is designed to make shares more accessible. That split is scheduled to take effect on August 25th.
The Trade Desk Soars Ahead of Market Open 🚀
Shares in The Trade Desk (TTD) are trading up over 16% today pre-market following a stellar performance by the company in its Q2 earnings reports yesterday evening. The ad-tech company displayed strong revenue growth and guidance for the third quarter that outpaced analyst estimates, sending its stock skywards this morning.
The Trade Desk reported revenue of $377 million for the quarter, an increase of 35% year-over-year. Adjusted earnings per share came in at $0.20 — up 11% on the year-ago quarter. Consensus estimates had expected revenue of just $365 million and EPS of $0.20 respectively.
Importantly, the firm also revealed exceptionally strong customer retention rates, having retained 95% of its customers for eight years straight. CEO Jeff Green elaborated on what this means for the company going forward:
“More of the world’s leading brands are signing major new or expanded long-term agreements with The Trade Desk, which speaks to the innovation and value that our platform provides compared to the limitations of walled gardens. This trend also gives us confidence that we will continue to gain market share in any market environment.”
Despite significant macroeconomic uncertainty, The Trade Desk has shown that it still has the capacity for growth. Even with advertising spending down globally, customers continue to make use of the firm’s platform, as proven by an extremely high retention rate. Although The Trade Desk is currently down close to 50% from all-time highs seen in late 2021, there are still plenty of positives for the company to take going forward into the latter half of the year and beyond.
For Roblox, Summer Break Can’t Come Quick Enough ☀️
Roblox had a disappointing second quarter and is paying for it in pre-market trading, down 12% so far. Revenue came in at $639.9 million vs. $644.4 million expected, while loss per share was 30 cents as opposed to 21 cents expected.
More importantly, Roblox’s bookings declined by 4% year-over-year. When it comes to the gaming platform, this is the more telling metric due to the funny way it reports its revenue. Roblox uses a complicated system of revenue recognition in which it differentiates between the purchase of a durable virtual item and consumable virtual items.
Durable virtual items, such as avatar outfits or houses, are recognized gradually over the course of the average lifetime of a user (about 23 months). Virtual items represent 88% of the sales on the platform so they’re pretty significant. This means that Roblox’s revenue figure is more a reflection of the last 23 months than the current quarter. If overall bookings are down, we can expect to see revenue gradually drop in the coming quarters.
Additionally, Roblox saw daily active users miss expectations and fall quarter-over-quarter. 52.2 million people visited the site every day, about a million shy of expectations and down 1.9 million from the first quarter this year.
However, management seemed eager to assure investors by providing positive news from its July performance. For the month, daily active users hit a record high of 58.5 million, up 26% year over year, while bookings increased by 8% to 10%. No doubt summer holidays are helping bring kids back to the platform, time will tell if this momentum lasts.