Morning Reads


Open Interest Changes



Is Elon Musk spending too much time shoring up the growth of X and not enough on Tesla (TSLA)? Investors might be thinking that in the aftermath of its latest earnings, with TSLA shares sliding 6% in AH trading on Wednesday to fall under $200. In fact, Tesla is the only Magnificent 7 member to not make significant strides back to the all-time highs seen in November 2021, when the electric carmaker hit nearly $410/share and had a market capitalization of $1.3T (it's now valued at $660B).

Snapshot: Check out the latest earnings, production figures, cash flow and margins here, but there are even bigger concerns about what those numbers might look like in the near future. Tesla warned that vehicle volume growth may be notably lower this year as the company is between two major growth waves - one that began with the global expansion of Model 3 and Y, and the next, which will happen in the second half of 2025 following the launch of the next-generation vehicle platform. Other worrying statements were also made by Elon Musk on the post-earnings conference call, especially after the rounds of price cuts aimed at boosting sales volumes.

Automotive gross margin ex-regulatory credits: We have lots of people who want to buy our car but simply cannot afford it. If the interest rates come down quickly, I think margins will be good. And if they don't come down quickly, they won't be that good.

Full Self-Driving agreements: I really think lots of car companies should be asking for FSD licenses. And we've had some tentative conversations, but I think they don't believe it's real quite yet.

Cybertruck: It's important to emphasize that this is very much a production-constrained situation, not a demand-constrained situation. And obviously, we could dramatically raise the price, but that doesn't feel right to us to sort of gouge people for early delivery.

Competition from China: Frankly, I think if there are no trade barriers established, they will pretty much demolish most other car companies in the world. So they're extremely good.

Push into robotics: I think we've got a good chance of shipping some number of Optimus units next year, but like I said, this is a brand new product. When there's a lot of uncertainty in your uncharted territory, it's obviously impossible to make a precise prediction.

25% voting control: I see a path to creating an artificial intelligence and robotics juggernaut of truly immense capability and power, but if I have so little influence over the company at that stage... I could sort of be voted out by some sort of random shareholder advisory firm. I want to have enough to be influential. Like, if we could do a dual-class stock, that would be ideal.

SA commentary: "Tesla is too expensive," writes Jonathan Weber, analyst at SA Investing Group Cash Flow Club. "Apart from that, we have a strong brand and a profitable EV business -- but growth is weak (or non-existent in real terms), profits are declining, and Tesla trades at roughly 150x free cash flow. Tesla has potential in autonomous vehicle tech, but I believe that this is a risky bet and would not buy Tesla stock based solely on this reason." (122 comments)

Another setback

In the latest blow to Boeing (BA), the FAA will not allow the aerospace giant to expand production of its 737 MAX aircraft. The agency's decision comes in the wake of a Jan. 5 incident in which the door plug of an Alaska Airlines (ALK) MAX 9 blew off the fuselage in midair, leading to all MAX 9s in the U.S. being grounded. "We will not agree to any request from Boeing for an expansion in production or approve additional production lines for the 737 MAX until we are satisfied that the quality control issues uncovered are resolved," said FAA Administrator Mike Whitaker. Meanwhile, Alaska Airlines said it anticipates it will resume MAX 9 flights on Jan. 26, while United (UAL) said its MAX 9s will take to the skies again on Jan. 28. (25 comments)

Up, up and away

Propelled by optimism over its artificial intelligence progress, Microsoft's (MSFT) market cap struck the $3T mark on Wednesday, six days before its next quarterly earnings report. Microsoft is now the second tech giant in the last year to surpass the $3T milestone, with Apple (AAPL) doing so last June to become the world's most valuable company. Many analysts are impressed by Microsoft, noting the upside to growth offered by its AI products, and expect "a solid beat and raise" when the tech firm reports results on Jan. 30. Investing Group Leader Daniel Jones also feels Microsoft is "one of the true growth prospects that can achieve enough growth on the bottom line to justify the lofty price that the market is demanding." (13 comments)

Defying recession

While U.S. economic growth is expected to have moderated towards the end of last year, strong consumer spending and hiring are likely to keep quelling any fears of a recession. Economists forecast that GDP grew 2.0% in Q4 sequentially, moderating from Q3's 4.9% pace. The latest report from the Department of Commerce will come today at 8:30 AM ET, but if GDP growth comes in stronger than expected, analysts believe it could further cool hopes for a March rate cut. Note that consumers remain resilient, with better-than-expected retail sales in December and consumer sentiment now at its highest level since mid-2021. (2 comments)

Today's Markets

In Asia, Japan flat. Hong Kong +2%. China +3%. India -0.5%.
In Europe, at midday, London -0.2%. Paris -0.5%. Frankfurt -0.4%.
Futures at 7:00, Dow -0.1%. S&P +0.1%. Nasdaq +0.1%. Crude +1.3% to $76.09. Gold +0.1% to $2,017.20. Bitcoin -0.2% to $40,149.
Ten-year Treasury Yield -2 bps to 4.16%.

Today's Economic Calendar

8:30 Durable Goods
8:30 GDP
8:30 International Trade in Goods (Advance)
8:30 Initial Jobless Claims
8:30 Chicago Fed National Activity Index
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
10:00 New Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $41B, 7-Year Note Auction
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening...

IBM (IBM) gains on earnings beat, strong cash flow outlook.

Biden delays decision on largest U.S. LNG export terminal.

AT&T (T) slides on weak profit forecast, increased spending.

HPE (HPE) reports cyber attack carried out by Midnight Blizzard.

Spirit tumbles; Citi says JetBlue (JBLU) deal seems unlikely.

Intel (INTC) opens chip manufacturing factory in New Mexico.

Paramount gains as David Ellison makes bid for parent firm.

Citi places PayPal (PYPL) on 30-day negative catalyst watch.

Kimberly-Clark (KMB) profit hit by hyperinflationary markets.

CSX (CSX) profit declines on lower coal prices, fuel surcharges.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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