Friday, January 18, 2019

Tesla TSLA CEO Elon Musk is making headlines once again this morning, following his decision to cut 7% of the work staff from his leading electric vehicle manufacturer. No specific amount of job cuts were announced, but estimates are north of 3000 or 3100. Shares took a hit upon the news, and remain down more than 5% at this hour in today’s pre-market.

At issue here is the attempt by Tesla to both ramp up production of its Model 3 vehicle and bring down costs of the car. After all, the Model 3 was intended to be the discount item in the company’s portfolio, yet its price tag remains over $50K at this time. Ideally, Tesla would like to bring this down to the $35-40K range, and to do that the company must cut overhead costs. Ergo the new layoffs.

Musk calls this “an extremely difficult challenge,” and he’s not wrong. Cutting staff while also ramping up production is a crucible of sorts for any automaker, let alone one with as many distinct issues as Tesla has. There is also the matter of a convertible debt payment of $980 million coming due; should Tesla share prices head back up, this shouldn’t be a problem. But if shares continue to falter — and a key date here would be February 6, when Tesla reports earnings — the company will have to come up with that scratch to pay it off.

Q4 Earnings Roundup

Plenty of new earnings reports have hit the tape this morning, as well. At a glance, they appear to be in-line with the modestly mixed bag we’ve seen from Q4 reports elsewhere this quarter:

Zacks Rank #3 (Hold)-rated Kansas City Southern KSU met estimates of $1.56 per share, up from the $1.38 per share reported in the year-ago quarter. Revenues of $694 million represent a slight beat over estimates. The railway major has only beaten estimates on the bottom line once in the past four quarters. For more on KSU’s earnings, click here.

The world’s largest oilfield services company, Schlumberger SLB, also came in-line with the Zacks consensus of 36 cents per share (compared to 48 cents a year ago), on $8.18 billion in quarterly sales which slightly outperformed expectations. The stock, currently sitting at a Zacks Rank #5 (Strong Sell), is trading up more than 15% since the start of calendar 2019, and +3% so far in today’s pre-market. For more on SLB’s earnings, click here.

Product brand major V.F. Corp. VFC topped estimates for its quarterly report this morning, posting $1.31 per share versus $1.09 expected. This also compares favorably to the $1.01 per share the company reported for fiscal Q3 2018 a year ago. Revenues of $3.94 billion outperformed the Zacks consensus by 1.72%, and shares are bidding up quite nicely: +9% in today’s pre-market. For more on VFC’s earnings, click here.

Mark Vickery
Senior Editor

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Key Earnings Reports For Jan 20, 2019