The Long Term Investor

I have seen more NEGATIVITY in ALL the media today than I have seen in a long time. It is the DEFAULT media position.

In my mind a good thing. It will prolong the BULL MARKET and will keep it under the radar. At some point the dam will break and the money will pour into the markets.

HERE is REALITY:

https://finance.yahoo.com/news/stock-market-news-today-live-updates-april-19-2023-115833034.html

"With earnings season heating up this week, “82% of companies are beating and by a margin of 7.6%. The earnings recession wallop the bears are expecting has not materialized," the team at Fundstrat Global Advisors wrote in a note to clients. "1Q23 earnings season will ultimately enable the S&P 500 to push to new highs for the year,""

 

Meantime.....here are the markets today.

Stocks slip as earnings flurry continues

https://finance.yahoo.com/news/stock-market-news-today-live-updates-april-19-2023-115833034.html

(BOLD is my opinion OR what I consider important content)

"U.S. stocks moved lower Wednesday at the open as investors digested another flurry of corporate earnings, including Morgan Stanley (MS).

The S&P 500 (^GSPC) slid by 0.47%, while the Dow Jones Industrial Average (^DJI) edged down by 0.31%. The technology-heavy Nasdaq Composite (^IXIC) slipped by 0.73%.

Bonds yields were higher after Britain’s inflation rate slowed last month but remained above 10%. The yield on the 10-year note climbed to 3.6%, while rate-sensitive 2-year note yields rose to 4.24% Wednesday morning.

Stocks had closed flat on Tuesday amid an earnings parade that included results from Bank of America (BAC) and Goldman Sachs (GS).

On Wednesday, Morgan Stanley came into the mix, reporting that its first-quarter profit fell amid continued pressure on its investment banking unit. Shares were down more than 2% at the open.

One of the sore losers after the closing bell on Tuesday was Netflix (NFLX). The stock sank more than 10% after the streaming giant posted mixed results as it pulled back on its crackdown for password sharing. It pared losses, however, and was down 3% Wednesday morning.

The story was different for Western Alliance (WAL). The regional lender said that its deposits climbed by $2 billion at the end of the first quarter. The stock rallied 19%.

More earnings are on tap this week. On Wednesday, Zions (ZION), Tesla (TSLA), and International Business Machines Corporation (IBM) are due after the market closes.

Meanwhile, US Bancorp (USB) posted higher revenue for the first quarter on the back of rising interest rates and its acquisition of MUFG Union Bank. The stock edged up near 1% following the results.

With earnings season heating up this week, “82% of companies are beating and by a margin of 7.6%. The earnings recession wallop the bears are expecting has not materialized," the team at Fundstrat Global Advisors wrote in a note to clients. "1Q23 earnings season will ultimately enable the S&P 500 to push to new highs for the year,"

Meanwhile, little volatility as of late has enabled a continued easing in financial conditions, which in turn has “helped cement investors’ conviction that the Fed [is] set to deliver another hike in just two weeks’ from now, which was supported by the latest round of FOMC speakers,” Jim Reid and colleagues at Deutsche Bank wrote in a note to clients.

St. Louis Fed President James Bullard said on Tuesday in an interview that “Wall Street’s very engaged in the idea there’s going to be a recession in six months or something, but that isn’t really the way you would read an expansion like this.” Bullard also didn’t rule out more interest rate hikes.

Separately, Atlanta Fed President Raphael Bostic said he favors another rate hike and then holding them above 5% for "quite some time." While officials offer more signals of another rate hike, the Fed will be releasing its Beige Book, which will provide detailed information from the 12 Fed districts about economic conditions.

Chicago Federal Reserve President Austan Goolsbee is expected to speak on Wednesday ahead of Fed’s blackout period, which starts on Saturday.

Here are some other trending tickers on Yahoo Finance:

• United Airlines Holdings, Inc. (UAL): The airline giant reported a loss in the first quarter despite travel rebounding. United anticipates earnings of $3.50 to $4 a share in the second quarter, executives said on the earnings call.
  
  
• Intuitive Surgical, Inc. (ISRG): The company reported earnings on Tuesday that showed a massive resurgence in robotic surgery procedures during the March quarter.
  
  
• Abbott Laboratories (ABT): Abbott posted a quarterly profit above expectations despite a dramatic slowdown in sales of Covid tests.
  

Elsewhere, bitcoin (BTC) slid below $30,000 on Wednesday, which also led to a sell-off in the broader crypto market, with ether (ETH) dipping below $2,000."

MY COMMENT

Today will be a back ally knife fight between the negativity and reality. It is far from the close but I am thinking that today is not a good day to bet on reality.

Now if you are a long term investor......always bet on REALITY.

Of course this assumes that an investor knows what reality is. I know everyone on here does......but in the general population.....I have my doubts.

 

Bummer for the workers......but If Elon Musk can cut 80% of the BLOATED Twitter work force......this is probably a good thing.

Meta has started its latest round of layoffs, focusing on technical employees

https://www.cnbc.com/2023/04/19/met...-layoffs-focusing-on-technical-employees.html

A FEW BLURBS from the article:

"Revenue has declined for three straight quarters, and analysts are projecting another quarterly sales drop when Meta reports its first-quarter earnings next week. The company’s previous guidance called for sales of between $26 billion and $28.5 billion, which means the streak of revenue declines could end if Meta reaches the top end of the range.

While its core business is mired in an online ad slump, Meta is spending billions of dollars a quarter developing technology for the metaverse, representing a huge and risky bet on a nascent market that’s yet to crack the mainstream. Last quarter, Meta’s Reality Labs unit, tasked with building the metaverse, recorded a $4.28 billion operating loss, bringing the unit’s total losses for 2022 to $13.72 billion."

AND

"Over two rounds of layoffs, in November and March, Meta said it will be cutting about 21,000 jobs."

AND

"....the company on Wednesday started laying off employees in technical roles.Employees with technical backgrounds like user experience, software engineering, graphics programming and other roles..."

AND

"Wednesday’s layoffs also hit product-facing teams and that Meta plans to cut business-facing roles, such as finance, legal and HR, beginning in May..."

 

Today is TESLA day......after the close......they will report earnings.

One of my earliest companies to report....before the flood next week. I am interested in how they did.....mostly to see how the media handles it. It is not a real critical issue for me for me since this is my SMALLEST holding being about 1.3% of my total portfolio.

 

Looks like a COME-BACK in the markets while I have been typing and reading.

CARRY ON. ENDURE the negative media attack with COURAGE and DECISIVENESS.

 

YEP....fees and expenses are HUGE for both long term and short term investors.

For short term investors the impact of fees and short term capital gains taxes are a killer. You are talking about 20-30% right off the top......and....from what I see online the majority of short term non-professional traders seem to IGNORE this impact. They talk about their trading gains....but ....never mention the fees and taxes.

For long term investors it is the COMPOUNDING impact of fees that turns a tiny fee into a BIG IMPACT over the long term.

It definately pays to micro-mange fees for all types of investors.

 

I just looked at my account for the first time today. FORTUNATELY......I am seeing a continuation of the past three days in my account as well as what I have been seeing for the past 8 market days. I am defying the averages once again today.....I am in the GREEN. I actually have SIX stocks up at the moment.....AAPL, AMZN, MSFT COST, NVDA, HON, and GOOGL.

For a day when most of the commentary and sentiment is strongly negative.......I am dong just fine.

At the moment........I am strongly over a 17%.......actually +17.51%...... year to date result for my ENTIRE portfolio.

NOW....will this just keep going up over the rest of the eight months left in the year......NO. There is no doubt that a time will come this year when I am backing off from these gains....perhaps even significantly. That is just a NORMAL market happening. BUT......I at least have built up a nice cushion for the inevitable drop that will happen at some time this year. It would not be a normal year if we did not have at least one or two corrections over the course of the year. As a long term investor you have to be able to ENDURE the short term volatility and market corrections.......in order to capture the annual gains that the markets will give you.

Over the years we KNOW that the SP500 will be positive for any one year about 70% of the time. If you are not seeing this in your long term results.......you need to do some research and analysis of your returns compared to the SP500 Index........ "IF"......your investing goal is to achieve the broad market returns.

 

NEWS-FLASH.........the NASDAQ has just turned POSITIVE for the day.....by 0.01%.......NOW.....0.02%.

HAPPY DAYS ARE HERE AGAIN.

Although by the time I quit typing and check it again.....it might be gone.

 

SP500 is now making a push to go positive for the day......only down (-0.07%) at this moment. Nice to see the markets try to shake off all the negativity.

 

For anyone that is struggling with all the negativity.....here is what you need to focus on:

"With earnings season heating up this week, “82% of companies are beating and by a margin of 7.6%. The earnings recession wallop the bears are expecting has not materialized," the team at Fundstrat Global Advisors wrote in a note to clients. "1Q23 earnings season will ultimately enable the S&P 500 to push to new highs for the year,"

https://finance.yahoo.com/news/stock-market-news-today-live-updates-april-19-2023-115833034.html

This is the TRUTH and the REALITY that investors should be focusing on for the longer term. In addition to the coming end of the FED rate hikes.

This represents the FUNDAMENTALS....in the markets. REAL business results from REAL businesses. After all anyone owning a stock owns a piece of an actual business. It is not some gambling chip....it is a real company where the investors SHARE in the business results for better or worse.

 

I am posting this article because it is a HUGELY IMPORTANT lesson for investors....especially younger investors. We need to STRONGLY support and protect our free market capitalistic system of business. (If you want to use this to argue politics.....that is your choice....but it is here as CRITICAL BUSINESS INFORMATION)

Don’t Call Scandinavian Countries ‘Socialist’
The claim that socialism is alive and doing well in Scandinavian countries is shameless propaganda, hopelessly wrong and out of date.

https://fee.org/articles/don-t-call-scandinavian-countries-socialist/

(BOLD is my opinion OR what I consider important content)

"One of the great delusions of our day is that Scandinavian countries are “socialist” and so America should be socialist too. Senators Bernie Sanders and Elizabeth Warren and others of the ultra-Left repeatedly claim that Norway, Sweden and Denmark (sometimes they include Finland and Iceland too) are prosperous because they are socialist.

Lars Rasmussen knows better. As Danish Prime Minister, he declared in 2015, “I know that some people in the U.S. associate the Nordic model with some sort of socialism. Therefore, I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.”

A market economy is a capitalist one in which property is largely private and prices are free to reflect supply and demand. It is synonymous with “free enterprise.” In a socialist economy, by contrast, government owns or controls the means of production and heavily regulates and redistributes everything else. We sometimes call that a “planned” or “command” economy because the plans of market participants are bulldozed by the commands of those in political power.

The Heritage Foundation’s annual Index of Economic Freedom is one of two excellent sources for comparing how “capitalist” or how “socialist” a country is. The US, which showed up among the top ten (freest or most capitalist) for years, now ranks #25 in the latest (2023) Index. Denmark and Sweden are more capitalist than America, at #9 and #10, respectively. Norway comes in at #11. Nearby Finland, technically not a Scandinavian nation, checks in at #12. The world’s socialist countries—Cuba (#175), Venezuela (#174) and North Korea (#176)—are at the other end of the scale; and not by coincidence, they are also among the very poorest.

The other go-to source is the Fraser Institute’s Economic Freedom of the World Index. The methodologies and categories of the two indices differ somewhat, producing in turn some differences in country rankings, but the findings are broadly similar: In Fraser’s most recent Index, Denmark is #10, Finland is #21, Norway and Sweden are tied at #37. Iceland, like the other four a “Nordic” nation, ranks #19. At #6, the US does better in the Fraser Index than it does in the Heritage Index.

Type “Scandinavia socialism” or “Nordic socialism” into the search engine at FEE.org, and you’ll find numerous articles that address the misinformation on this topic—articles not authored by charlatans, demagogues and class warriors who deploy obsolete data, but thoughtful and well-researched pieces by actual economists and native Scandinavians who know what they’re talking about.

The allegedly socialist countries that seem to work do so not because of the socialism they have but because of the capitalism they possess in abundance—strong evidence that the freer economies are, the better off the people are. Go full socialism and you get a miserable basket case such as Venezuela. The fact is that while Nordic nations dabbled in welfare-state style socialism a half-century ago, they learned some lessons from the resulting stagnation. They reversed course. They are now among the freest, most capitalist countries on the planet according to both the Fraser and Heritage Indexes.

I’ve said it before and I’ll say it again: Socialism devastates an economy until some form of capitalism is allowed to rescue it. That’s the story of such places as post-war Japan, Hong Kong, and Germany. I can think of no instance in all of history in which capitalism produced economic disaster that socialism subsequently remedied. It just never happens, and that should be totally predictable. Socialism offers no theory of wealth creation; it’s nothing more than crackpot schemes for the concentration of power and income redistribution, robbing Peter to pay Paul for Paul’s vote.

“Free markets and small government made Sweden rich,” explains Swedish economist and Cato Institute fellow Johan Norberg. “The experiment with socialism crashed us.”

In another revealing article Norberg quotes a top Swedish official:

Voicing a conclusion of people across the political spectrum, the Social Democratic Minister of Finance Kjell‐Olof Feldt stated “That whole thing with democratic socialism was absolutely impossible. It just didn’t work.”

Nima Sanandaji, author of Scandinavian Unexceptionalism, tells us that “Nordic societies did not become successful after introducing large welfare states.” He writes,

They were economically and socially uniquely successful already in the mid-20th century when they combined low taxes and small welfare states with free-market systems. Over time, the generous welfare states of Nordic nations have created massive welfare dependency, gradually eroding the strong norms of responsibility that undermine the region's success. This, combined with the growth-reducing effects of a large state, explains why Nordic countries have gradually, over the past decades, moved towards less-generous welfare, market reforms, and tax cuts.

The Economist magazine described the Scandinavian countries in 2013 as “stout free traders who resist the temptation to intervene even to protect iconic companies.” They are among the easiest countries to do business in. Through tax cuts, deregulation, and privatization, they’ve dismantled much of the socialism that nearly ruined their economies.

The claim that socialism is alive and doing well in Scandinavian countries is shameless propaganda, hopelessly wrong and out of date. Those who make such ridiculous claims betray their real agenda of government control by never telling you these facts: 1) Sweden has a 100 percent nationwide school voucher program for schooling instead of the costly, underperforming socialized education system we have here; 2) None of the Scandinavian countries has a nationally-imposed minimum wage law; 3) Scandinavian countries all have lower corporate income tax rates than the US; and 4) In these nations, “property rights, business freedom, monetary freedom, and trade freedom are strong,” as Sanandaji points out. The same folks hawking “Scandinavian socialism” never tell you to check out those Fraser and Heritage indexes either.

For more on this topic, see Socialism: Force or Fantasy, especially the recommended readings at the bottom. Don’t miss this additional and very important point: So-called “democratic socialism” is at war with itself; the longer and deeper that any nation pursues it, the more the socialist aspect squeezes out the democratic part. Whenever they come to power, democratic socialists steal not only your “stuff” but anything they can get their hands on—elections, the media, the schools, your children, even your vocabulary.

The Nordic countries of Denmark, Norway, Sweden, Finland and Iceland have generous welfare states—which they have purposely been reducing—but it’s not socialism that pays the bills. As always, capitalism pays the bills that socialism piles up—that is, until, as Margaret Thatcher put it, the socialists “run out of other people’s money.”

MY COMMENT

I see a lot of FANTASY business content that seems to be favoring some form of Socialism or some aspects of Socialism in our business system. For investors....this is a RETURN KILLER. it is also a business killer. The last thing we need......AS INVESTORS.....is more and more government sticking their ignorant noses into the business world.

You want to kill our stock markets.....simply adopt more and more Socialism.

 

I had a nice moderate GAIN today. The markets backed off some into the close but I STILL got in a good day and made money. It was thanks to FIVE out of TEN of my stocks. My winners were.....AAPL, AMZN, MSFT, NVDA, and HON. They carried the day for me today. I also got in a nice beat on the SP500 today by 0.30%.

BUMMER....for the SP500 which ended the day slightly in the RED.

 

Here is how we ended the day.

Stocks muted as investors weigh earnings, Beige Book

https://finance.yahoo.com/news/stock-market-news-today-live-updates-april-19-2023-115833034.html

(BOLD is my opinion OR what I consider important content)

"U.S. stocks were flat Wednesday as investors digested another flurry of corporate earnings, including Morgan Stanley (MS).

The S&P 500 (^GSPC) was little changed at the close, while the Dow Jones Industrial Average (^DJI) slid by 0.23%. The technology-heavy Nasdaq Composite (^IXIC) ended the trading session above the flatline.

Bonds yields were higher after Britain’s inflation rate slowed last month but remained above 10%. The yield on the 10-year note climbed to 3.59%, while rate-sensitive 2-year note yields rose to 4.25% Wednesday.

Oil prices fell, gold dipped to around $2,000 an ounce as the dollar strengthened.

Wall Street continued to be fixated on any indicators about the Fed's next policy move. According to the Fed's Beige Book survey released Wednesday afternoon, inflation and hiring slowed across the 12 Fed districts, and lending volumes and loan demand among businesses and consumers declined.

Stocks had closed flat on Tuesday amid an earnings parade that included results from Bank of America (BAC) and Goldman Sachs (GS).

On Wednesday, Morgan Stanley came into the mix, reporting that its first-quarter profit fell amid continued pressure on its investment banking unit. Shares were up near 0.5%.

One of the sore losers after the closing bell on Tuesday was Netflix (NFLX). The stock sank more than 10% after the streaming giant posted mixed results as it pulled back on its crackdown for password sharing. It pared losses, however, and was down 3% Wednesday.

The story was different for Western Alliance (WAL). The regional lender said that its deposits climbed by $2 billion at the end of the first quarter. The stock rallied over 23% Wednesday, leading the gains among the regional bank stocks that were hit by last month's turmoil.

First Republic Bank (FRC) surged over 12%, Zions (ZION) up more than 7% ahead of its earnings. The KBW Nasdaq Regional Banking Index (^KRX) gained 3%, outperforming the KBW Nasdaq Bank Index (^BKX) on Wednesday.

More earnings are on tap this week. On Wednesday, Zions (ZION), Tesla (TSLA), and International Business Machines Corporation (IBM) are due after the market closes.

Meanwhile, US Bancorp (USB) posted higher revenue for the first quarter on the back of rising interest rates and its acquisition of MUFG Union Bank. The stock edged up over 2% following the results.

With earnings season heating up this week, “82% of companies are beating and by a margin of 7.6%. The earnings recession wallop the bears are expecting has not materialized," the team at Fundstrat Global Advisors wrote in a note to clients. "1Q23 earnings season will ultimately enable the S&P 500 to push to new highs for the year,"

.....etc, etc, etc."

MY COMMENT

Another day where the markets simply REFUSED to go down.

 

HERE are the TESLA earnings:

Tesla net income and earnings drop more than 20% from last year

https://www.cnbc.com/2023/04/19/tesla-tsla-earnings-q1-2023.html

(BOLD is my opinion OR what I consider important content)

"Shares in electric vehicle makers Tesla dropped 4% after the company reported first-quarter earnings after the bell. Here are the results.

• Earnings per share: 85 cents adj. vs 85 cents expected, according to the average analyst estimate compiled by Refinitiv
• Revenue: $23.33 billion vs $23.21 billion expected, according to Refinitiv estimates

Net income came in at $2.51 billion, down 24% from last year, while GAAP earnings came in at $0.73, down 23% from the year-ago quarter"

MY COMMENT

A mixed report. EPS was right on line with the estimate. Revenue was over the estimate......but.....Net Income came in at a reduced level from a year ago. This is early and skimpy data.....so there is nothing about the reason for the drop in Net Income.

 

HERE is a different take.....because it is using different estimates for Revenue and perhaps other items.....that emphasize the negative.

Tesla earnings: Q1 revenue, profit miss estimates; gross margin dips to 19.3% on price cuts

https://finance.yahoo.com/news/tesla-earnings-193915429.html

(BOLD is my opinion OR what I consider important content)

"Tesla stock is slipping after the bell as the electric-vehicle maker reported slight revenue and profit misses and gross margin that dipped below 20% to 19.3% as the cost or recent price cuts hit profitability.

For the quarter, Tesla reported Q1 revenue of $23.33 billion, slightly below Street estimates of $23.35 billion, with Q1 adjusted EPS coming in at $0.85, below Street estimates of $0.86. That revenue figure for Q1 represents a slight dip from the $24.32 billion Tesla reported in Q4, but still 24% higher than a year ago.

On the profitability end, Tesla reported adjusted net income of $2.9 billion, less than the $3.03 billion estimated by the Street, and a billion less than last quarter and $700 million less than a year ago. With revenue staying flat-ish and profit dipping, the effects of margin compression could be at play here.

"Although we implemented price reductions on many vehicle models across regions in the first quarter, our operating margins reduced at a manageable rate. We expect ongoing cost reduction of our vehicles, including improved production efficiency at our newest factories and lower logistics costs, and remain focused on operating leverage as we scale." the company said in a statement.

Looking ahead, Tesla still sees 2023 global production of 1.8 million vehicles, with its long-term delivery growth rate staying at 50%. Tesla also said Cybertruck production is on track to begin later this year at Giga Austin, with the company producing "Alpha," or early test versions, of the vehicle.

Tesla instituted a number of price cuts in the U.S., Asia, and some European markets in Q1 of this year, including last night. Gross margins dipping to 19.3% may reflect the costs of those price cuts.

Last night Tesla (TSLA) slashed prices of its Model 3 and Model Y EVs yet again, in fact bringing one of them below $40,000.

Yesterday's price cut, the sixth one this year by Tesla in the U.S., saw each version of the Model Y SUV slashed by $3,000 each, with the Model 3 RWD (rear-wheel drive) dropping by $2,000 to $39,990. The base Model Y, known as the AWD or all-wheel drive version, now starts at $46,990.

Tesla has now cut prices of its base Model 3 by 11% this year alone, and its base Model Y prices have fallen by 20%, according to calculations done by Reuters. These latest price cuts come as the federal government limited the number of vehicles eligible for the electric vehicle tax credit, with Tesla's base Model 3 RWD seeing its tax credit fall by half to $3,500.

Wall Street banks such as Evercore ISI have attempted to quantify the price cuts. “If we assume ~$2k US [price] cut ave translates to ~$1k global and then half of that is offset by cost improvements… then $500 cut to gross profit equates to ~100bps of gross margin pressure and implies 19% Q2/Q3 Auto gross margins (rough math,” the analysts said earlier this month.

Similarly, Ryan Brinkman of JPMorgan has been wary of the price cut effect on Tesla’s profitability, as well as other EV-makers.

“We have been cautious about the profit impact of Tesla’s price cuts, writing that the lower prices are negative overall for Tesla, less negative for traditional automakers such as GM and Ford (given they are now likely to lose even more money in the interim on EVs, although they have other profit centers to offset such losses), and most negative of all for pure-play battery electric automakers competing with Tesla (such as Rivian), as they, too, are likely to lose more money on EVs although do not have profits elsewhere to offset these losses,” Brinkman wrote earlier in April.

And similar to last quarter, analysts are keying in on the word “demand” as it pertains to production and backlog. In Q1 Tesla delivered around 423K vehicles and produced 440K globally; analysts at Evercore, for instance, would like to hear any indication of how Q2 deliveries are tracking and if the order backlog is growing. Guggenheim analyst Ronald Jewsikow wrote in a note to clients that week that Tesla's most recent U.S. price cuts indicated "slowing demand" for the EV maker.

Looking further ahead to the post-earnings conference call, investors and analysts will be waiting to hear any progress on Cybertruck production which is slated to begin later this year, any new information on the gen 3 platform discussed at Tesla’s investor day, and more on the timeline ahead for construction of Tesla’s latest gigafactory in Mexico."

MY COMMENT

Not a bad article....but I dont like the tone. Of course they used.....different.....expectation figures in this article to claim that there was a miss on REVENUE and EPS.

I really put most of the issue with Net Income on the fact that this is a very young company that is building numerous multi BILLION dollar factories and pushing to get up to scale. They are not afraid to spend money.

I note this comment regarding price cuts:

"We have been cautious about the profit impact of Tesla’s price cuts, writing that the lower prices are negative overall for Tesla, less negative for traditional automakers such as GM and Ford (given they are now likely to lose even more money in the interim on EVs, although they have other profit centers to offset such losses), and most negative of all for pure-play battery electric automakers competing with Tesla (such as Rivian), as they, too, are likely to lose more money on EVs although do not have profits elsewhere to offset these losses"

NO mention of the pricing power that TESLA commands and the fact that they are now using this power to capture market share from all the smaller players in the EV area.

All in all depending on what earnings estimate you use........a "push".......on most of the data......and a miss on Net Income. I would consider this earnings report......"good enough"......as an owner of the stock. NOTHING to get all worried about at all.

 

A perfect example TomB16. Your posts and commentary are welcome here any time. You are one of the original LONG TERM INVESTORS on this board.

I love that the story that I posted above that states......"the electric-vehicle maker reported slight revenue and profit misses and gross margin that dipped below 20% to 19.3% as the cost or recent price cuts hit profitability"......makes it sound like it is some crisis that the Gross Margin dropped below 20%.

WELL BS...........for comparison here is the Gross Margin data for a few other auto companies:

GM - Gross Margin of 13.93% (Dec 2022)
Ford - Gross Margin of 9.3% (average from Dec 2018 -2022)

Perhaps a better comparison:

BMW - Gross Margin of 17.27% (Dec 2022)
Mercedes - Gross Margin of 18.5% (average from Dec 2018-2022)

So....TSLA is doing well for an auto company......with a Gross Margin of 19.3%. I also expect that the Gross Margin will increase as they hit scale and as they ramp up production at the various plants that are under construction come on line and Gross Profit increases. China issues are also lingering in the data today.

So......I have no issue with the TSLA data.

 

HERE is what MUSK had to say on the issue:

Musk says Tesla will put sales growth ahead of profit

https://www.reuters.com/business/au...-quarterly-margin-below-estimates-2023-04-19/

(BOLD is my opinion OR what I consider important content)

"April 19 (Reuters) - Tesla Inc (TSLA.O) boss Elon Musk on Wednesday doubled down on the price war he started at the end of last year, saying the electric vehicle (EV) maker would prioritize sales growth ahead of profit in a weak economy.

The company posted its lowest quarterly gross margin in two years, missing market estimates, as it slashed prices aggressively in markets including the United States and China to spur demand and fend off rising competition.

Shares in the Austin, Texas-based automaker were down 6% in after-hours trading.

"It's better to shift a large number of cars at lower margin and harvest that margin in the future as we perfect autonomy," Musk told analysts on a conference call. He said although the economy remained uncertain, the EV maker's orders exceeded production.

Musk, who had said earlier that he would have liked to achieve 2 million vehicle deliveries this year, declined to reaffirm that on Wednesday but stood by the company's official target of 1.8 million deliveries.

"Tesla's worrying China sales figures indicate demand for its vehicles is slowing more than expected in the face of rising competition from local EV companies," said Jesse Cohen, senior analyst at Investing.com.

Tesla said in a statement it still believed its operating margin would remain the highest among big carmakers.

The company reported total gross margin of 19.3%, short of market expectations of 22.4%, according to 14 analysts polled by Refinitiv.

Tesla also did not report its automotive gross margin, a figure closely watched by investors, with Musk saying the weak economy making it hard to provide margin outlook.

The company posted an automotive gross margin of 19% excluding regulatory credits in the first quarter, down from 24% the previous quarter, according to Reuters' calculation.


Reuters Graphics
On Wednesday, Tesla said its average selling price declined in the first quarter from a year earlier, but it did not elaborate.

Analysts say the EV maker may need to cut prices further, pressured by a price war especially in China even as its new factories in Berlin and Texas churn out cars.

Tesla in the first quarter reported record inventory of $14.38 billion, up from $6.69 billion a year earlier.

It burned $154 million in cash during the quarter, and would have consumed more but for a $1.6 billion gain attributed to "proceeds from maturities of investments."

NEW MODELS

Musk in 2020 announced plans to produce a new battery cell to halve the cost of the most expensive part of an EV, but the company has been struggling to ramp up production for those cells.

Tesla aims to cut assembly costs by half, but did not say when it will debut long-awaited affordable electric vehicles. Tesla fans have for some time hankered for Tesla to refresh its aging model line-up.

In January, Musk said Tesla expected to start production of Cybertruck this summer, but that volume production would not occur until next year.

Musk said on Wednesday's call that he expected a delivery event for Cybertruck in the third quarter.

Tesla's net profit fell by nearly a quarter to $2.51 billion from a year earlier, hurt by higher raw-materials, logistics and warranty costs as well as the production ramp-up of its 4680 battery cells.

Income adjusted for one-time items and revenue was in line with estimates from Refinitiv."

MY COMMENT

This is a company that is not afraid to invest and build for the future. It is a very young company......and doing just fine. I like the "X" Empire that Musk is building.