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Auto Stock Roundup: Tesla Upsizes Model 3 Funds, General Motors Expands Ride and Delivery

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Traditional U.S. auto companies are facing challenges. A decline in July sales for most of these companies, have prompted a business reorientation.

Competition from foreign SUVs and electric cars has necessitated these auto companies to prepare for the future differently. However, that does not mean that these companies have taken their eyes off the present.

A few auto companies are already mulling over ride-hailing services, which is presently dominated by Uber and Lyft. Moreover, these companies are gearing up for the purchase of artificial intelligence and robotics startups to keep their market share in tact.

(Read the previous roundup here: Auto Stock Roundup for Aug 10, 2017)

Recap of the Week’s Most Important Stories

1.    Tesla Inc. (TSLA - Free Report) has announced that it will issue and sell $1.80 billion in aggregate principal amount of senior notes due in 2025. The announcement came barely a week after the first announcement of raising $1.5 billion, through the offering of senior notes due 2025. The company intends to use the proceeds of these notes offering to support the production of its latest Model 3 sedan and other corporate objectives.

Tesla is set to sell $1.8 billion of eight-year unsecured bonds at a 5.25% yield. In fact, despite a spate of skepticisms, there has been no dearth of funds for Tesla to popularize electric cars. In the second quarter, Tesla made total cash investment of $1.16 billion for development of Model 3’s capacity and to amplify its battery output. Launched in Jul 2017, the price of the new sedan vehicle starts at $35,000 (read more: Tesla Upsizes Notes Offering for Model 3 Production).

Currently, Tesla has a Zacks Rank # 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2.    Lear Corporation (LEA - Free Report) has announced that its Board of Directors has declared a quarterly cash dividend of 50 cents per share.  The dividend will be paid on Sep 19, 2017 to shareholders of record as of Aug 31, 2017.

Currently, Lear Corporation carries a Zacks Rank #3.

3.    Advance Auto Parts Inc. (AAP - Free Report) reported a 16.8% decline in adjusted earnings to $1.58 per share in the second quarter of fiscal 2017 (ended Jul 15, 2017) from $1.90 earned in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $1.65. Adjusted net income declined to $117 million from $141 million in the second quarter of fiscal 2016.

Advance Auto Parts came up with revenues of $2.26 billion, almost in line with the Zacks Consensus Estimate.

Revenues were 0.3% higher than the year-ago quarter figure. During the quarter, comparable store sales (comps) were almost flat year over year (read more: Advance Auto Parts Earnings Miss in Q2, Decline Y/Y).

Currently, Advance Auto Parts has a Zacks Rank # 5 (Strong Sell).

4.    Per a Reuters report, General Motors Company’s (GM) car-sharing operation Maven is taking initiatives to expand its partnerships in ride and delivery services. Maven has decided to take such a step because its parent, General Motors, is mulling over entering the on-demand mobility business, which is presently controlled by Uber Technologies and Lyft Inc.

However, Maven has already taken steps to pull out from Lyft, in which General Motors holds a 9% stake. With its own Gig leasing business, Maven can now offer the automaker ride-sharing drivers (read more : General Motors’ Maven Expands Ride and Delivery Services).

Currently, General Motors has a Zacks Rank # 3.

5.    Toyota Motor Corporation (TM - Free Report) has teamed up with Servco Pacific Inc. (Servco) to test a new car-sharing technology in Honolulu, Hawaii. The suite of software and services are designed to enable dealers and distributors to launch car-share programs in local markets. Moreover, this is an important part of Toyota’s Mobility Services Platform (MSPF), which will offer various functions to enable a more convenient mobility experience.

Currently, Toyota has a Zacks Rank # 3.

Performance

Among these stocks, General Motors is the only stock which recorded positive price movement in the last one week. All other stocks declined in the last one week. Advance Auto Parts registered the maximum decrease of 16.2% in the past week.

In the last six months, Tesla in the only stock stocks whose price has risen, while Advance Auto Parts registered the steepest decline.

CompanyLast WeekLast 6 Months
GM1.3%-4.0%
F-1.1%-14.2%
TSLA-0.2%33.3%
TM-0.6%-1.2%
HMC-0.5%-12.3%
HOG-0.5%-16.5%
AAP-16.2%-43.4%
AZO-1.6%-29.3%

   
What’s Next in the Auto Space?

The earnings season for the quarter ending Jun 30, 2017 is nearing its end. However, a few auto companies are yet to report their results.

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