Monday's Headlines: Disappointing Deliveries Hurt Tesla

Monday's Headlines: Disappointing Deliveries Hurt Tesla

Here were the biggest movers in the MyWallSt shortlist on Friday:

Moving Up ⬆️

Baozun (BZUN) +7.2%

StoneCo (STNE) +5.1%

Sea Limited (SE) +4.5%

ShotSpotter (SSTI) +3.7%

Twitter (TWTR) +2.6%

Moving Down ⬇️

Nike (NKE) -12.8%

Under Armour (UAA) -9.8%

Lululemon (LULU) -6.9%

Huazhu Hotels Group (HTHT) -3.7%

Teladoc (TDOC) -3.4%

 

Disappointing Deliveries Hurt Tesla ⚡️

Shares in Tesla (TSLA) look set to open down at the start of this week, despite the company posting record vehicle delivery figures for the last quarter.

Last night, the iconic EV maker revealed that it managed to deliver 343,830 vehicles to customers in the third quarter, which was a sequential increase of roughly 35% and a year-over-year jump of more than 42%.

However, this rate of production still came in below analyst estimates, who had roundly expected in the region of 370,000 cars delivered by Tesla in the period. What’s more, the company’s third-quarter performance now leaves a lot to be done in the final quarter of the year if it hopes to achieve its long-term goal of increasing deliveries by an average of 50% every year — something to the tune of 495,000 deliveries in the next three months.

So what’s causing the holdup?

COVID shutdowns in China have had a big impact on the company’s production capacity, with months of production time being lost this year already. However, the bigger limitation, according to management, is logistics as Tesla factories struggle to grow capacity and match demand. This might seem like a pretty good problem to have, all things considered, but there is a risk that failure to satisfy growing demand for EVs will lead to dissatisfied customers, as well as conceding ground to an ever-growing field of competitors.

In a statement, the company said:

“As our production volumes continue to grow, it is becoming increasingly challenging to secure vehicle transportation capacity and at a reasonable cost during these peak logistics weeks.” Musk added to this by stating: "Smoothing out crazy end of quarter delivery wave to reduce expedite costs & relieve stress on Tesla team."

 

Carnival Cruise Shares Tank on Inflated Costs 🛳

Shares of Carnival Cruise Line plummeted 23% on Friday after the company announced skyrocketing costs. The British-American cruise operator posted quarterly results that missed estimates by a wide margin as it struggles with inflationary pressures and ongoing health and safety protocols.

Carnival posted revenue of $4.31 billion, missing estimates by $600 million. The company posted an adjusted net loss of $770 million due to $3.4 billion in operating expenses, which have more than doubled from the same period last year.

The drop on Friday brings the company’s share price to lows not seen for over twenty years — lower even than during the pandemic when its operations were completely shut down. Carnival, along with rivals Norwegian and Royal Caribbean, has been struggling to service the massive debts it took on to keep itself afloat during the lockdown, particularly as interest rates have risen.

Management said bookings have been improving in recent quarters, but still projected fourth-quarter occupancy to be below pre-pandemic levels. It was a baptism of fire for newly appointed CEO Josh Weinstein, who just took over the top job in September.

Weinstein said:

"Since announcing the relaxation of our protocols last month, we have seen a meaningful improvement in booking volumes and are now running considerably ahead of strong 2019 levels. We expect to further capitalize on this momentum with renewed efforts to generate demand. We are focused on delivering significant revenue growth over the long-term, while taking advantage of near-term tactics to quickly capture price and bookings in the interim."

 

Credit Suisse Hits Record Low 📉

Major Swiss bank Credit Suisse is on the ropes this morning, with shares falling as much as 12% earlier today as concerns around the company’s financial stability have sent investors running.

CEO Ulrich Koerner made a statement this weekend attempting to reassure its employees and the markets citing the company’s liquidity, however, his admittance that the bank was at a “critical moment” did little to appease those concerned. The firm will announce a new strategic plan on October 27.

Credit default swaps on the bank — which act as insurance against the default of a borrower, made famous in the Great Financial Crisis of 2008 — are on the rise, adding fuel to the fire of speculation around the bank’s collapse. Many commentators were quick to downplay this speculation as scaremongering, with the company’s key risk metric — CET1 — well within normal bounds. However, there is no doubt that management at Credit Suisse will have to produce an extensive restructuring plan to see it persevere through its current troubles.

With huge losses coming from its investment banking arm in 2022, many expect to see it undergo some severe downsizing which could see thousands of jobs on the chopping block. The restructure will also likely see the sale of assets and branches of the business, which would include its securitized products trading unit, and its Latin American wealth management operations excluding Brazil, according to Bloomberg.

Down 60% year-to-date, the demise of Credit Suisse has been a dramatic one, powered by catalysts such as the Archegos and Greensill Capital capitulations last year. New CEO Koerner was brought in in July to steady the ship, but there are plenty of holes to plug if he is to keep the Swiss bank afloat.

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