Author Archives: Scalper1

3 Keys To Tesla Earnings As $35K Model 3 A Go: Low Ride, Ramp, View

Trading at a two-year low since last week, reeling from analyst target cuts and facing its Q4 earnings report after the close Wednesday,  Tesla Motors ( TSLA ) stock rebounded more than 6% early Tuesday after guttering down 9% Monday and more than 7% Friday. The surge pared to a 0.18% gain for the trading day, and Tesla stock slipped about 2% after-hours. What’s ahead in Tesla’s fourth-quarter report? Here’s what to watch.  1. A Lowered Ride Several analysts have slashed price and other targets on Tesla ahead of the Q4 release, spurring some of the recent share declines. Tesla stock has fallen 38% this year, in a market now in correction on concerns about the world economy and falling oil prices. The S&P 500 has fallen 9%, Ford ( F ) 19%, General Motors ( GM ) 17%, Toyota ( TM ) 13% and the biggest stock of all, Apple ( AAPL ), 10%. Tesla holds a low IBD Composite Rating of 16 out of a possible 99, factoring in several metrics such as earnings growth and stock-price gains. With Tesla stock closing at 148.25 in the stock market today , the median long-term price target of analysts polled by Thomson Reuters stands at 282 and the average view slightly better than hold. But analyst opinions on Tesla vary drastically. Barclays cut its target to 165 from 180 Tuesday, with an underweight rating. Stifel analyst James Albertine, a long-term bull who rates Tesla stock a buy, said in a research report Sunday that “we see few catalysts to turn short-term bears bullish,” as Tesla concentrates on building its electric-car business (which requires “tremendous investment”) for the longer haul. Of 20 analysts polled, eight rate Tesla a hold, five underperform, four buy and three strong buy. That’s slightly lower than three months ago. How much do views on Tesla stock vary? StreetInsider reported on Tuesday that a Weiss, Harrington and Associates publication, Unit Economics, on Sunday re-initiated coverage of Tesla with just a 12 price target (and scathing commentary). That independent-research outfit, focused on energy, does not appear in the list of broker analysts tracked by Thomson Reuters. 2. Model X Ramp, Model 3 Plans One key to how investors view Tesla’s Q4 report and guidance is how production of the newly introduced Model X crossover SUV, with its falcon-wing doors, ramps up. Sales are still seen as very light vs. the Model S sedan. Both sell for north of $70,000. “Given management’s long-term focus, we suspect quality trumps speed with the new Model X,” Albertine wrote in his weekend research note. Tesla, with only two vehicles and a third on the way, “cannot afford major defects, recalls or further interruptions (bringing previously delivered vehicles in for service) in the same way that most OEMs (with far too many products, in our view) can announce recalls without suffering lost share.” Albertine expects that updated guidance may be lower than the 80,000-85,000 vehicles that Tesla has previously anticipated for 2016, “which could drive further sell-off in shares.” He also expects that management will deflect on cash-flow questions given the needs for ramping up the battery Gigafactory and the Model 3 sedan. “Will this matter once the Gigafactory is up and running and the Model 3 demonstrates it can be the (BMW) 3-Series killer bulls expect? Probably not,” he writes. “But it likely does not help valuation discussions near term.” @elonmusk $35k price, unveil in March, preorders start then. — Elon Musk (@elonmusk) September 2, 2015 After its luxury Model S and Model X, the design for Tesla’s smaller and more affordable — $35,000 — Model 3 is set for March, with pre-ordering beginning then, Tesla CEO Elon Musk said in September. A Bloomberg story Tuesday quoted Tesla spokeswoman Khobi Brooklyn as saying the company still plans a $35,000 price , before government green incentives. Those incentives could trim a buyer’s cost to about $25,000 in some places. Though details on how Tesla as a startup automaker will be able to achieve mass production with that price point — and eventually profit from it — remains to be seen, lowering the cost of batteries, via its Gigafactory, is one lever for that. 3. The View Thomson Reuters’ analyst poll calls for Tesla’s Q4 report to produce 10 cents earnings per share minus items, swinging from a 13-cent loss in the year-earlier quarter. Analysts see a $1.26 loss for 2015, then project EPS of $1.66 for 2016. Fourth-quarter 2015 sales are anticipated at $1.79 billion, up 64%, with 2015 coming in at $5.36 billion and 2016 at $8.58 billion. Over the last several days, average near-term projections have bounced back up — for instance, in Q4 EPS to a dime, after dipping as low as a view of 8 cents. But the longer-term analyst outlook has edged down. Tesla has interesting times ahead this year: That planned Model 3 unveil, for one thing. For another, scoping out some kind of partnership in China  so it can set up a car manufacturing plant there. Last Tuesday, Tesla’s China blog announced a Model X debut for the Chinese market, and invited orders. In late January, Tesla CEO Elon Musk exercised options to buy and hold about $100 million more Tesla stock than he already had, while paying a hefty tax bill (and in effect diluting the stock outstanding). Analysts question how soon the Model 3 can roll off the assembly line. And there’s potential competition ahead from other automakers — such as GM’s long-range Chevrolet Bolt — and maybe at some point an Apple car. “We can’t overstate the importance of the March 29 Model 3 unveiling,” Pacific Crest Securities analyst Brad Erickson wrote in a Feb. 1 research note. RELATED: Self-Driving Cars On Ramp As Feds Tax Oil In New Obama Budget . CEO Elon Musk Adds Huge Tesla Stock Stake Ahead Of Earnings . With Tesla Earnings Ahead, Truck Could Follow Model 3 .

Self-Driving Cars On Ramp As Feds Tax Oil In New Obama Budget

Autonomous cars, self-driving cars, robot cars — not only are they far along in development, now they can read dollar signs. A $98.1 billion federal transportation budget proposal came out Tuesday as the White House announced President Barrack Obama’s final $4.1 trillion budget proposal, which would slap a $10.25-a-barrel tax on oil. The transportation budget plan allocates $3.9 billion over 10 years for “large-scale deployment pilots” to develop a framework for how connected cars and autonomous vehicles will inter-operate across states. Regulators had penciled in the autonomy figure in an announcement at last month’s Detroit auto show, after President Obama alluded to plans for a “21st century transportation system” in his State of the Union speech. The president’s overall budget proposal is sure to fire up controversy and roadblocks when considered by the Republican-controlled Congress. “To speed our transition to an affordable, reliable, clean energy system, my budget funds Mission Innovation, our landmark commitment to double clean energy research and development funding,” Obama said in his budget message . “It also calls for a 21st Century Clean Transportation initiative ,” he said, “that would help to put hundreds of thousands of Americans to work modernizing our infrastructure to ease congestion and make it easier for businesses to bring goods to market through new technologies such as autonomous vehicles and high-speed rail, funded through a fee paid by oil companies.” The Department of Transportation plans to test autonomous cars in “corridors throughout the country” to accelerate development and adoption of “safe vehicle automation through real-world pilot projects.” “We are on the cusp of a new era in automotive technology with enormous potential to save lives, reduce greenhouse gas emissions and transform mobility for the American people,” DOT Secretary Anthony Foxx said in the auto show announcement, speaking alongside executives from General Motors ( GM ), Tesla Motors ( TSLA ), Alphabet ( GOOGL )-unit Google, Ford Motor ( F ) and others. “Today’s actions and those we will pursue in the coming months will provide the foundation and the path forward for manufacturers, state officials, and consumers to use new technologies and achieve their full safety potential.” Electric car maker Tesla and several mainstream automakers have been developing autonomous vehicles. So have Alphabet’s Google and, reportedly, Apple ( AAPL ). Monday, Tesla expounded in a blog post on the safety aspects of the new Summon feature , in its Autopilot software, that lets the Model S and Model X come pick up their owners in a driveway and park themselves in a garage at night. “Summon lays important groundwork for an increasingly autonomous world. One where the convenience and safety of transport vastly exceed what we are used to today,” Tesla said in summing up Summon. It added that semi-autonomous features like Summon can reduce the occurrence of accidents relative to conventional driving. From @POTUS , @WhiteHouse a #budget that moves #transportation forward https://t.co/MOlt0ZPK8D pic.twitter.com/kY09OE1nww — Anthony Foxx (@SecretaryFoxx) February 9, 2016 The overall budget proposal unveiled by Foxx on Tuesday, for fiscal year 2017, outlines the department’s 30-year vision for how automation and other changes can better cope with traffic as the U.S. population grows by an expected 70 million people. It covers everything from autonomous vehicles to unmanned aircraft systems, or drones. It prioritizes “clean, 21st Century surface transportation options”; public-private sector collaboration to accelerate low-carbon technologies and intelligent transportation systems; transportation safety enhancements; and what it calls 21st Century government and project delivery — meaning things like modernized permitting. It also allocates $15 million toward cybersecurity. In a December presentation, Foxx announced a “smart city” transportation contest with a $50 million prize, saying the DOT is “imagining connected and autonomous vehicles that can practically eliminate crashes and interact with wired infrastructure to eliminate traffic jams.” Loading the player… RELATED: Obama Will Speed Self-Driving Car As Google Partners Tesla Adds ‘Summon’ Self-Driving To Cars: A Big Deal?  

High-Flying Tech Unicorns Will Get Wings Clipped

The private-market value of high-flying “unicorns” is certain to fall as the recent rout in stock markets and the continued weakness for initial public offerings take their toll. Lowered valuations reverberate in several ways, often leading to a slowdown in funding needed to keep companies afloat and also causing highly valued employees to head for the exits, several analysts said. Unicorns are privately held companies with valuations of $1 billion or more. CB Insights counts 152 of them, with a combined valuation of about $532 billion in the latest tally. But just like the value of a home for sale is not certain until it’s actually sold, the same is true of private companies. “The reset of unicorn valuations is not showing up just yet, but the conversations are happening,” said Anand Sanwal, CEO of CB Insights, which tracks IPO investing and unicorns. “We hear that companies are being advised to raise money sooner than later, as the capital available now may not be there in six months,” he said. The largest unicorn is Uber, the San Francisco-based ride-hailing company with a market valuation reported to be near $65 billion after completing a $2 billion funding round in early December. Following Uber is Chinese smartphone company Xiaomi, valued at $46 billion. Then comes accommodation-services provider Airbnb at $25.5 billion. Other high-profile unicorns include Snapchat, Spotify and Pinterest. There are various ways a company’s valuation is rated. A common method is tracking the market value of similar companies listed on stock exchanges. When their value falls, investors devalue their private counterparts. Valuations are based on the company’s latest funding round, which can vary in length from about one year to 18 months. The impact of the latest stock market crunch and weak IPO market is not yet baked in, but it’s coming. Last Friday, for example, Big Data analytics software maker Tableau Software ( DATA ) crashed nearly 50% after reporting fourth-quarter earnings that contained a weak Q1 outlook. Tableau’s report sank the stock of other Big Data companies, such as Splunk ( SPLK ), Qlik Technologies ( QLIK ) and Hortonworks ( HDP ). “The big drops we’ve experienced in the public markets will reach into the private markets, which is typically followed by a contraction in funding,” said Kathleen Smith, a principal at Renaissance Capital, which manages two IPO-focused ETFs. “The pure size of the private company valuations we’ve seen is unprecedented and not sustainable.” Lowered valuations have reportedly emerged in some areas. Jawbone, a provider of fitness tracking devices, last month said it had raised $165 million in funding at a reported valuation of $1.5 billion, or about half what it was valued at in 2014. The lowered valuation comes as fitness tracker Fitbit ( FIT ), which came public in June at a price of 20, closed Tuesday at 14.30. Also last month, Foursquare said it raised $45 million in a new round of venture funding. A report by the New York Times said Foursquare’s valuation was roughly half of the approximately $650 million that it was valued at in its last round in 2013, as it tries to bolster its location-data-based advertising businesses. As to how or when unicorn investors will get a return on investment, the IPO market is no place to look for that now. The IPO market in 2015, coming off two robust years, fell to a six-year low in the number of companies going public. There were no new issues in January, with just two in February thus far. “Pure and simple the IPO market is miserable,” said Scott Sweet, senior managing partner at research firm IPO Boutique. “IPO underwriters are in the most precarious situation we’ve seen in years. It’s the IPO buyers that are pricing these deals, not them.” One example is payment processing company Square ( SQ ), which debuted Nov. 19 at 9 a share, well below its expected range of 11 to 13. Square stock closed Tuesday at 8.62. “We need to see not only the market improve for all stocks, but especially for the few IPOs able to make it out now. If they don’t, it will close the IPO pipeline like a padlock,” said Sweet. The valuations of recent tech IPOs have been sharply cut. Security firm Rapid7 ( RPD ), which priced at 16 in July and peaked above 27 on its first trading day, closed Tuesday at 9.46. Hortonworks, which had a December 2014 IPO price of 16, closed at 7.43. Sharp declines have hit dating firm Match.com ( MTCH ) and data storage firm Pure Storage ( PSTG ). Action camera maker  GoPro ( GPRO ), which came public in June 2014 at 24, closed at 11.39 Tuesday. “Spotify, Snapchat, Pinterest, name after name — they would not IPO in this market,” said Sweet.