Tesla Brings Home The Bitcoin Bacon
Great Ones, I’m feeling a bit ranty on Tesla (Nasdaq: TSLA) today.
But the question isn’t “Why am I about to go on a Tesla rant?” but rather, “Why aren’t YOU about to go on a Tesla rant?”
I mean, did you see the details of Tesla’s first-quarter report? We have record earnings that aren’t quite record earnings, and a deliveries warning that isn’t quite a deliveries warning. Before we get to that, let’s look at the headline numbers every single financial publication reported today.
Tesla said it earned a record $0.93 per share or $1 billion in net income for the first time in history. Furthermore, revenue rose 74% to $10.4 billion in the quarter. Analysts expected a profit of $0.75 per share on sales of $10.48 billion.
Most analysts and investors won’t quibble over the slight miss on revenue. We’re still in a pandemic, and Wall Street has been a bit forgiving on that front as a result. But analysts did key in on the fact that Tesla raked in $518 million by selling regulatory credits — i.e., credits Tesla receives for making eco-friendly vehicles.
Since Tesla brings in more credits than it can use, it sells those credits to traditional automakers like Ford, GM, etc. But what happens when the major automakers don’t need to buy those credits anymore because they make their own EVs?
It’s an interesting concern for Tesla bulls made more disturbing when you realize that the company has historically made more money off selling credits than selling cars.
However, the real story here is Tesla’s earnings. Yes, they beat expectations … but it wasn’t electric vehicle (EV) sales that pushed Tesla’s profit over the top. In fact, it was bitcoin (BTC).
During the quarter, Tesla sold about 10% of its bitcoin holdings, generating income of about $101 million.
Furthermore, Tesla also benefitted from tax benefits and the sale of regulatory credits.
The combined boost to earnings from these factors was about $0.25 per share.
In other words, based solely on its core businesses of EVs, batteries and solar panels, Tesla missed Wall Street’s targets. But that’s not the end of it.
Tesla also didn’t give firm guidance on deliveries for 2021. Part of the problem is the uncertainty surrounding global semiconductor supplies.
Tesla uses a lot of chips in its vehicles, and this is a critical chokepoint for the company.
Tesla did reiterate that it expects 50% annual growth in deliveries “over a multi-year horizon,” but it gave no specifics for 2021.
So, to reiterate: Tesla beat expectations, but not really. The company’s revenue growth is in question due to its reliance on regulatory credits. And Tesla did not provide any deliveries guidance for 2021.
It’s no wonder TSLA fell more than 4% today. The lipstick is starting to come off the pig here … if you catch my drift.
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If everyone who claimed they “wouldn’t be caught dead wearing Crocs” never actually bought Crocs … the comfy clog creator wouldn’t still be here. But you madlads continue to buy these ugly things, in secret probably.
Crocs (Nasdaq: CROX) blew away quarterly expectations on both fronts, with revenue growing 64% year over year. I guess when no one sees below your waist on a Zoom call, Crocs join gym shorts as “remote life chic.”
But the company doesn’t expect Croc sales to slow down amid the reopening. Crocs estimates full-year sales will be up 40% to 50% — double its own estimates back in February — with plans for new sandals and, regrettably, platform Crocs.
I don’t claim to be a shining beacon of style, but … jeez.
CROX is up 19% today because, frankly, this is what an amazing earnings report looks like (sorry, not sorry TSLA).
Remember way back ‘round the beginning of the year — I know, it’s forever ago — when shipping companies and the U.S. Postal Service were awash in seemingly endless shipments? And it took, like, almost a month to send anything cross-country?
Yeah, United Parcel Service (NYSE: UPS) went absolutely insane during that time, and the company’s latest earnings blowout shows it. The courier commander earned $5.47 a share, whereas the Street only expected $1.72 a share. UPS’s revenue shot up 27% to $22.9 billion — well above the $20.49 billion predicted.
That said, the company neglected to give any guidance for the rest of the year. Unpredictable economic conditions and whatnot. But UPS shares are up 10% today … which is nice if you preempted the beat.
Mind On My Money, Money On My MindMed
Today, psychedelic-based medicines got a foothold on the public markets … albeit with much less fanfare than crypto’s mass-market moment with Coinbase (Nasdaq: COIN).
MindMed (Nasdaq: MNMD) just started trading on the Nasdaq this morning. The company develops experiential therapies and psychedelic-derived medicines to help treat anxiety, addiction and ADHD in adults. Understandably, its potential products are still in the clinical stages. Yet, the stock’s listing on a major exchange gives it a tad more legitimacy among investors who’d rather not buy illiquid over-the-counter psychedelic stocks.
Personally, I think MindMed’s method for targeting these diseases is fascinating … but it’s definitely not the right time to get on the hype train. MindMed shares have more than doubled since the Nasdaq listing was announced, and they’re overdue for a comedown from today’s highs.
Funny Mushrooms, Meet Fake Steak
Eager to stave off the growing onslaught from competitor Impossible Foods, Beyond Meat (Nasdaq: BYND) is launching a new version of its plant-based patties, dubbed the Beyond Burger 3.0.
Impossible has long held the crown for fake-meat tasting like real meat, but Beyond isn’t resting on its low-cholesterol laurels any longer.
The meatless wonder plans to launch its Beyond Burger 3.0 in a value pack — four faux patties for $9.99.
Hopefully, “the new meat model” tastes better than its current cat food-esque iteration. Also, if your main competition is traditional beef sellers … Beyond might want to try a more appetizing and less-robotic-sounding name.
Today’s Quote of the Week is brought to you by the budding war between Alphabet’s (Nasdaq: GOOGL) Google and Roku (Nasdaq: ROKU). And you thought carriage disputes were only for traditional cable TV … ha!
The crux of the issue here is that YouTube TV is nearing the end of its carriage deal on Roku devices — including Roku-enabled smart TVs. This means that, unless a new deal is struck, Roku users won’t be able to view their YouTube TV subscriptions on Roku devices.
This battle will be one to watch closely, as YouTube TV is the most subscribed live-TV streaming service — right behind Disney’s (NYSE: DIS) Hulu TV — while Roku is the most used streaming device.
According to Roku, Google is asking for:
- Dedicated YouTube search results on Roku devices.
- Blocked search results for YouTube competitors while using the YouTube app.
- Favoritism for YouTube music results from voice commands on Roku devices.
- New, more expensive chipsets in Roku devices.
Google, naturally disputes these claims … albeit indirectly:
Unfortunately, Roku often engages in these types of tactics in their negotiations. We’re disappointed that they chose to make baseless claims while we continue our ongoing negotiations.
All of our work with them has been focused on ensuring a high quality and consistent experience for our viewers. We have made no requests to access user data or interfere with search results. We hope we can resolve this for the sake of our mutual users.
Google calls it “high quality and consistent experience,” Roku calls it … well, we just saw a list of what Roku calls Google’s posturing.
If you want an example of how this war of words actually plays out, just take the claim that Google is trying to force Roku into more expensive chipsets for its devices.
Google denies this claim, yet, according to sources, Google is pushing Roku to adopt a new video format called AV1 during negotiations.
To Google, AV1 saves on bandwidth and is consistent with the company’s “high quality and consistent experience” claim.
To Roku, AV1 means that the company would have to build all-new devices with new, more expensive semiconductors. You see, Roku’s current streaming device offerings don’t support AV1.
Great Ones, y’all know I’m not a fan of Google. Every time I get hooked on a Google product, it winds up in the Google graveyard. In short, I’m not convinced that Google will continue to support YouTube TV even if Roku rolls over and gives Google what it wants. That’s just how Google rolls.
Normally, I’d bet on Roku winning this streaming squabble. However, Roku dropped the “M” word in its missive against Google: “[We’re] deeply disappointed in Google’s decision to use their monopoly power to try and force terms that will directly harm streamers.”
Google doesn’t like the “M” word at all, especially since it’s already dealing with a massive antitrust investigation by the Department of Justice. I expect the company to throw considerable weight behind its YouTube TV negotiations simply to prove that it is not a monopoly … thus kinda proving it’s a monopoly, but I digress.
I also expect that Roku will not cave … I mean, just look at how AT&T (NYSE: T) finally gave in on HBO Max.
The bottom line here is that neither party needs the other. But it will be harder for Google to maintain its “We’re not an evil monopoly” position without representation on Roku devices — especially if it pushes to undercut Roku with its Chromecast competitor. Google needs to tread very carefully here.
From an investment standpoint, any pullbacks in ROKU shares as a result of the Google dispute should be seen as buying opportunities — especially for Great Stuff Picks readers.
But what do you think? Should Roku buckle under Google’s “demands that totally aren’t demands?” Or should Google learn to play nice and give its monopolizin’ might a rest for once?
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Joseph Hargett
Editor, Great Stuff