Tesla x AI

Hey Superheroes,

We’ve got a lot of stories fighting for the headline this week! 

U.S. President Joe Biden dropped out of the presidential race, the Paris Olympics kicked off today and Tesla and Google reported Q2 2024 earnings.

Unsurprisingly, we’ve got our eyes on the last one. Let’s jump into it.

Tesla: Earnings, xAI, Robotaxi and Model 2

So, here’s the gist – Tesla shares have dropped over 11% in the past week.

That’s a total of nearly US$88 billion in market cap wiped out in a few days.

So what in the world happened? Well, here’s our best attempt at condensing all of Tesla’s most recent stories.

🙅 A big earnings miss 

Here’s how Tesla performed compared to analyst expectations:

• Revenue: $25.5B actual vs $24.7B expected (↑3.07%)
• EPS: $0.52 vs $0.62 (↓16.15%)

And as if missing EPS expectations by 16% wasn’t enough, this quarter marks Tesla’s fourth consecutive quarter of earnings misses.

Additionally, Tesla’s total automotive revenues was 7% lower and net income was 45% lower in Q2 2024 than in Q2 2023. While Tesla indicated lower production costs per vehicle, vehicle production and deliveries shrunk year-on-year, contributing to the lacklustre results. 

Similarly, Tesla posted restructuring charges of US$622m this quarter. Excluding these one-off charges, net income would have shrunk by a smaller 22% year-on-year.

🤔 A good reason for the results?

For those who keep track of Tesla’s news, you might remember that Elon Musk previously anticipated a slowdown in vehicle production numbers as Tesla focuses on the “next generation vehicle.”

Commonly called the “Model 2,” the new vehicle is set to be Tesla’s most affordable, entry-level model. While this was initially planned to go in production in H2 2025, Musk’s latest update shows it may come as early as H1 2025.

Besides the Model 2, Tesla is set to unveil its new “Robotaxi” this October – fully self-driving vehicles that require no human intervention. 

📊 Elon Musk’s X poll gets majority vote

And finally the last piece of big news: Elon Musk’s recent X poll on whether Tesla should invest US$5 billion in his own AI startup, xAI.

After a quick majority vote in favour of the idea, Musk stated that he’d take it to the board for discussion. 

The idea of Tesla investing in Musk’s own start up may sound controversial… but given Musk’s notoriety, you might not be too surprised to hear it’s already happened before. Would you support the xAI investment?

Google: Revenue up, share price down

Similar to Tesla, Google’s (i.e. Alphabet) share price is down over 6% this week.

Interestingly, this came despite the tech giant exceeding both overall revenue and earnings expectations. 

📺 It’s hard to please sometimes

Here’s how Google performed compared to analyst expectations:

• Revenue: $84.74B actual vs $84.19B expected (↑0.65%)
• YouTube ad revenue: $8.66B vs. $8.93B (↓3%)
• Google Cloud revenue: $10.35B vs. $10.20B (↑1.5%)
• EPS: $1.89 vs $1.84 (↑2.7%)

Revenue for the quarter grew 14% year-on-year, with Google even expanding operating margins by 3%.

Analysts are attributing the share price fall to Google missing expected numbers for YouTube ad revenue.

🔦  Some other things we’re shining the Spotlight on:

• UN-ZIPPING YOUR WALLET: Zip Co has commenced its share purchase plan to raise up to A$50m with the goal of paying off debt and accelerating its U.S. growth plans. This comes after its successful institutional capital raise of A$217m.
• SPOT THE NEW ETFs: Spot Ethereum ETFs began trading on Wall Street for the first time this Tuesday. Several of them are offering fee waivers to attract new investors. These ETFs are now available on Superhero.
• THE ANZ OF ASIC’S EYE: ANZ is under investigation for allegedly manipulating the markets when it facilitated the sale of A$14b worth of government bonds last year. ANZ has since fired and suspended a number of staff following the news. Its share price is trading relatively flat for the week.

Next week is set to be a massive week with Microsoft, Meta, Apple and Amazon among those reporting earnings. 

Local analysts are also keeping an eye on Australia’s latest monthly CPI figure, to be released on 31 July.

Keep up to date on the markets by following us on Instagram, @superheroau!