Tesla Cuts Prices in China
Here were the biggest movers in the MyWallSt shortlist on Friday:
Moving Up ⬆️
Boston Beer Co. (SAM) +19.7%
Netflix (NFLX) +8.0%
Twilio (TWLO) +6.5%
Wynn Resorts (WYNN) +4.8%
Align Technology (ALGN) +4.7%
Moving Down ⬇️
Silicon Valley Bank (SIVB) -23.9%
2U (TWOU) -7.8%
Duolingo (DUOL) -7.3%
Pinterest (PINS) -6.4%
BlackLine (BL) -6.1%
Silicon Valley Bank Plunges on Drop in Guidance 🏦
Shares of Silicon Valley Bank (SIVB) fell a whopping 24% on Friday after the company reported a mixed bag for its third quarter of 2022.
Earnings per share of $7.21 beat analysts’ expectations, while revenue of $1.56 billion fell short. In fact, revenue came in at its lowest level in the past two years due to a precipitous drop in non-interest income. Coming in at $359 million for the quarter, this was down almost 50% year-over-year thanks to reduced mergers and acquisitions activity, as well as declines in equities.
The company’s guidance did little to salve matters, with management dropping expected growth from net interest income from the mid-40s to the low-40s. The bank also refused to provide a preliminary outlook for 2023 due to a “lack of visibility”.
CEO Greg Becker noted the tough market conditions while reiterating an optimistic long-term outlook:
“While the challenging environment is pressuring balance sheet and NII growth, and we expect these conditions to persist for the foreseeable future until public markets stabilize, we believe it is a matter of when, not if, the markets return. In the meantime, we are well-equipped to manage through these conditions. Once liquidity begins to return, we will be well positioned to take advantage of it.”
Shares of Silicon Valley Bank are down 67% year-to-date as valuations have plummeted and activity in the start-up space has dried up.
Shares of Boston Beer Pop 🍾
Shares of The Boston Beer Company (SAM) were up close to 20% on Friday after investors cheered a better-than-expected earnings call from the brewer.
For its third fiscal quarter of the year, the makers of Samuel Adams beer reported net revenue of $596.5 million, which was an increase of 6.2% compared to the same time last year. This easily beat consensus analyst estimates of $567.8 million.
Earnings, on the other hand, came in at $2.21 per share, which included a non-cash impairment charge of $1.61 per share. This also beat analyst estimates.
In the third-quarter last year, The Boston Beer Company suffered a loss thanks to a decline in popularity for its hard-seltzer drinks. This year, while its Truly hard seltzer brand continued to see weaker demand, appetite for its more traditional beers and newer products like Twisted Tea and Hard Mountain Dew boosted the company.
Management also attributed "strong pricing performance" as a factor in the return to profitability and, going forward, tightened the range of its guidance for the remainder of the year — expecting prices to rise 4% - 5% and shipments to decline only 4% to 7%.
Chairman and co-founder of the company, Jim Koch, said:
"I continue to be optimistic about the long-term growth outlook for Boston Beer's diversified beverage portfolio … as we continue to navigate through this dynamic operating environment, we remain committed to investing in innovation and brand support across our Beyond Beer portfolio.”
Tesla Cuts Prices in China ⚡️
Shares of Tesla (TSLA) are down in premarket trading this morning after it emerged yesterday that the company is cutting the price of some of its cars in China.
The cuts, which were posted in listings on Tesla's Chinese website on Monday morning, are the first to be enacted by Tesla in China in 2022. The price changes appear to only apply to its Model 3 and Model Y vehicles and represent discounts of as much as 9%.
These cuts have spooked investors considering that China is the largest EV market in the world and a vitally important region for Tesla, who even built one of its gigafactories in Shanghai to help cater for demand there. In fact, the company had actually increased prices in the region earlier this year in response to rising material costs.
Now, however, questions will be asked over waning demand for Tesla vehicles in a country where competition is so high. CEO Elon Musk has even said recently that he sees signs of a recession in China, though more focused on its over-bloated property market.
In other Musk-news, the soon-to-be owner of Twitter (TWTR) has reportedly said that he plans to gut the company of as much as 75% of its workforce if and when he takes over. Though the rumours are yet to be confirmed and Twitter shares are up this morning, such drastic cuts to a workforce that is already not too enamored with its leader-in-waiting could potentially cause more harm than good.