Tesla Banks a Profit. Finally; Twitter’s Getting Rid of Employees Despite a Beat; Latest IPO Fails to Wow Wall Street

Booyah!

id-100328985

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Tesla’s CEO Elon Musk is super-pleased with himself after his electric car company posted a quarterly profit for the second time since the company went public. The first time that happened was waaaaay back in 2013. And Musk is banking on the fact that he can pull it off again next quarter. The news was particularly welcome to Musk since he is eager to merge Tesla with his other company, SolarCity. Except investors aren’t as enthusiastic about the prospect or presumably the $2.6 billion cost of the merger. But come November 17 Musk is going to find out if shareholders will have a change of heart and are willing to embrace the move when a vote takes place. In any case, Tesla’s profit came in at a very lofty $21.9 million with a record $2.3 billion in revenue. That would be a 145% increase over last year’s same quarter revenue. Yes you read that right.  The company also scored 14 cents per share when analysts only expected 4 cents. Add that to the fact that last year the stock lost 58 cents per share and we’ve quite a nice comeback story. So what made this quarter different from all other quarters? Ramped up production of Tesla’s Models S sedans and Model X Crossovers. With Musk urging employees to move the vehicles with all their heart and soul, a 92% increase was seen on deliveries of 25,185 cars. But it wasn’t just the current crop of cars that contributed to Tesla’s winning quarter. Apparently, 373, 000 people already pre-ordered the $35,000 Model 3, which won’t even hit the streets until 2017.

Boohoo…

id-10079499

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Twitter announced its third quarter results and yet again, failed to impress anybody. One of the more significant highlights, or rather lowlights, is the company’s decision to lose about 9% of its workforce, or roughly three hundred employees, out of over 3,800 worldwide. That number could go higher but the ultimate goal is to help the company reorganize sales, partnerships and marketing efforts. And who doesn’t like to reorganize, right? The social media company did manage to pull down revenues of $616 million, beating estimates of $605.5 million. Some might consider that an impressive achievement. Except it’s not, since it marked Twitter’s ninth straight quarter of declining growth. And while the company also earned 13 cents per share, once again beating estimates of just 9 cents, growth of monthly active users stayed relatively flat, despite all kinds of exciting new changes.  In the meantime, both Disney and Salesforce.com have passed on potentially acquiring Twitter, as CEO Jack Dorsey said that he’s done talking about reports of possible acquisitions.

That’s NYSE…

id-10062095

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Chinese company ZTO Express made its big Wall Street debut today but failed to dazzle the Street. Unlike the Chinese IPO darling of 2014, Alibaba, ZTO dished out over 72 million shares for $19.50 a pop, only to open today for the first time on the New York Stock Exchange at $18.40. The stock later slid even lower to $17.70. But considering that the company’s original range fell between $16.50  – $18.50, its slide isn’t exactly tragic. Just disappointing. In any case, ZTO still managed to raise $1.4 billion and the company plans to use $720 million of that to purchase more trucks, land, facilities and equipment. In other words, big expansion plans are in the works. As a package delivery company, it handled close to 21 billion parcels just in 2015. It should come as no surprise, however, that ZTO’s main business deals with delivering shipments for Alibaba. In fact, Alibaba accounted for 75% of ZTO’s business in the first half of the year.  You might be wondering why Chinese companies like to list on stock exchanges in the United States. Well, for one, there are currently about 800 companies lined up in China who have filed applications to list on indexes on the country’s indexes.  It’s a considerably slower process and some feel it’s less reliable. Besides, given the volatility of the Chinese economy, raising money in U.S. dollars as opposed to a weaker Chinese currency only sweetens the pot for plenty of companies.

Ya-Oops! Internet Biz Breach; Tesla Calling Out Wolverine State; Budget Beauty Goes IPO Glam

Out of breach…

id-100304695

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

As if things couldn’t get any dicier at Yahoo, the company is now facing the wrong end of a security breach with roughly 500 million Yahoo accounts caught in the fray of the company’s core internet business. And all this as Yahoo hopes to close a $4.8 billion deal with Verizon so the telecom giant can acquire those compromised core internet assets. It seems talk of a breach surfaced way back in August when a story broke out about a hacker, who goes by the name “Peace,” sold a ton of personal info that included birthdates, usernames, scrambled passwords etc. for the price of three bitcoins. In case you were wondering, because I know you were, that’s around $1,800. The question of the day is should Yahoo have come clean about the breach sooner and been a bit more proactive? After all, there are laws regarding breaches in 48 states that stipulate that companies must alert affected customers within a certain amount of time. But Yahoo might be in the clear since no social security numbers or other financial information was supposedly involved.  For those who have Yahoo accounts and want to take additional precautions, besides changing passwords, they can visit http://www.identitytheft.gov.

Denied…

id-100215014

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Tesla’s not very happy with Michigan right now as evidenced by the lawsuit it filed against the state and its Governor Rick Snyder. Tesla is screaming foul, calling a 2014 Michigan law unconstitutional, because it seems to have been designed to protect auto titan and Michigan darling, General Motors. Apparently, the Great Lake state doesn’t take kindly to automakers selling their cars directly to (gasp!) consumers and refuses to issue a dealership license to the maker of the pish-posh battery-operated cars. Car salesmen find Tesla’s business model positively odious because it has the car company selling its motorized wares directly to the folks who will ultimately be driving them, thereby cutting out the middleman i.e. car salesmen. Tesla, which is also suing Michigan Attorney General Bill Schuette and Secretary of State Ruth Johnson – her department officially rejected Tesla’s license application – is hoping a judge strikes down the the law because it impedes commerce between states. Tesla is currently barred from selling and repairing its cars in Michigan, as well as not being licensed to sell them in Connecticut, Texas and Utah.

IPO glam…

id-100253880

Image courtesy of keakguru/FreeDigitalPhotos.net

There’s a new darling on Wall Street and this time it’s one that has very little to do with tech. Enter e.l.f. beauty  – which stands for eyes, lips, face (duh!) – a cosmetics company with 9 stores in the New York area, two stores in the L.A. area and is also sold in 19,000 retail locations including Walmart and Target, of course. E.l.f., which trades on the NYSE exchange under the ticker symbol ELF, is positively fabulous if only because of its super-special price point: it’s considerably lower than other brands with most of its products selling for $6 or less. Backed by private equity firm TPG, the IPO was set to debut between $14-$16 a share, but was then later priced at $17 per share with 8.3 million shares up for grabs.  None of that seemed to matter when it opened this morning at $24 a share and then soared 59% to $27.09. That gave the company a value of over $1 billion which is not bad for a company that sells a bargain product in a very crowded $57 billion global cosmetics industry.

NYSE Gets Be-Glitched; Jobless Benefits Rise, But Nothing to Worry About. Yet; IMF Blames US Over World’s Slow Growth

Not such a NYSE day…

Image courtesy of  cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

Move over Greece and figure it out already. The outage glitch at the New York Stock Exchange (NYSE) is now taking center stage. The trouble is believed to have started Tuesday night when an upgrade was in progress. Problem is, by 7:00 am the next morning the issues seem to have not been resolved and traders were having difficulty connecting. At 11:00 am a warning was issued that the tech problems were being investigated. But, by 11:32 am, NYSE figured it would be a good time to halt trading. Good thing trading was able to shift seamlessly to other exchanges, as the US enjoys a system where there’s a lot of overlap in its financial markets. (Take that IMF: see below). As for NYSE, trading transferred to a back-up unit in New Jersey. So don’t bother making fun of anybody from there for a really long time. However, it still didn’t go unnoticed that it was the biggest outage in two years, that happened to coincide with technical glitches by United Airlines and the Wall Street Journal. Some suspect that it was no coincidence that all three of those systems experienced glitches. Even FBI Director James Comey said, “We’re not big believers in coincidence either. We want to dig into that part.” Although, at this point in time there’s no way to know what caused the glitches and if they’re at all related.

Speaking of glitches…

Image courtesy of xedos4/FreeDigitalPhotos.net

Image courtesy of xedos4/FreeDigitalPhotos.net

Well it’s not really a glitch…maybe just a hiccup – a summer hiccup.  The Labor Department released its numbers and well, it’s sort of a bummer. Turns out that applications for jobless benefits rose this week by 15,000 applicants to a total of 297,000 people. That is the highest number it’s been since February, when that awful figure hit a very unpleasant 327,000. However, there is a silver lining here, I kid you not. Most of those applications came from Michigan and Ohio and are likely due to auto-plant shutdowns who are in the midst of retooling its models for the next year. At least that’s what the experts think and well, they’re probably right. Anyways, it’s a lot more reassuring than any other reason experts can think of. As it stands, 2.33 million people are receiving jobless benefits (I’m pretty sure there’s an oxymoron somewhere in there), and while that figure may seem rather high, it is still 10% less than last year at this time. Besides, last week unemployment hit a seven year low and the number of folks applying for jobless benefits on a weekly basis has remained under 300.000 for over four months. All the more reason to breathe a sigh of relief. Sort of.

Blame it on the United States, why don’t you…

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Maybe they’re just bitter because the American Women’s Soccer team won the World Cup Finals, but according to the International Monetary Fund, the United States is to blame because the rest of he world is experiencing slow growth. The IMF is predicting that the world’s growth will grow at a pace of 3.3%, .2% less than what it predicted back in April. And that, my friends, is what you call a downgrade. That is apparently the slowest growth pace since 2009, when there was a recession in effect and the economy didn’t grow but, in fact, shrank. Because the United States economy is apparently the biggest one in the world, and because we had a particularly frightful winter, fiscally speaking, the economy shrank .2% between January and March. When the the U.S economy shrinks, it drags down the rest of the world. So they say. Meanwhile, Greece’s inability to balance its books has been dominating financial news, yet its troubles are predicted to have a limited impact on the rest of the world. Even China, which happens to have a gargantuan economy, is walking away unscathed despite the fact that its stock market plunged. According to Mr. pish-posh IMF research chief Olivier Blanchard, “We don’t see it as a major macroeconomic issue.” Whatever.