Tesla 3Q23 Earnings, Musk Realism, What Happened to Tesla CFO Kirkhorn?

Hello everyone. We will continue our earnings discussion today with Tesla.

Earlier today, Apple announced an upcoming online event on Monday evening (8 pm ET). I believe this is the first time Apple is holding an 8 pm event. Based on the following images, the Mac will be in the spotlight.

My initial thought was that the 8 pm ET time suggests the event is being held when more people will be watching it on their TV sets at home. This would imply some Apple TV+ announcements to go along with Mac news.

Tesla 3Q23 Earnings

For the past few quarters, there have been an elevated number of questions surrounding the Tesla story. Elon Musk’s decision to slash vehicle pricing was a sign of slowing demand (lower pricing is said to offset higher monthly financing costs). This has put Tesla’s +50% vehicle sales growth (annual) target in jeopardy.

The big takeaway from Tesla’s 3Q23 earnings is that the company’s auto growth story continues to evaporate. Musk thinks the difficult operating environment will continue as long as interest rates stay where they are.

Musk is now saying that Tesla is “hitting law of large numbers situations” as they run out of people who can afford Tesla vehicles. Musk, who for the first time said Tesla will do some limited advertising, doesn’t think advertising will help as Tesla would be informing people of a car that they can’t afford. It’s “a big deal,” he says.

The average cost of a Tesla vehicle was

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Tesla Earnings, Tesla Lessons for Apple (Daily Update)

Hello everyone. Earnings season is upon us.

The plan for this earnings cycle is to focus in particular on larger themes and base our discussions around any changes or developments to those themes. We will kick things off with Tesla and the auto space. After going over the main takeaways from Tesla’s earnings, we look at some lessons that Apple can learn from regarding how best to navigate the EV space.

Tesla Earnings

Here’s the WSJ:

“Tesla Inc. felt the pain of a recent wave of price cuts, as a reduction in the average price of its cars contributed to a 24% decline in first-quarter profit.

Elon Musk’s electric-vehicle maker has lowered prices for models in the U.S. by between 14% and 25% this year as it contends with weaker demand, higher interest rates and burgeoning competition. The latest round of reductions came on the eve of earnings.

‘We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin,’ Mr. Musk, Tesla’s chief executive, said Wednesday on an earnings call, adding that he expects to be able to harvest additional software revenue down the line.

Teslas sold for an average of around $46,000 in the first quarter, less than the company had forecast and down from some $52,200 in the first three months of 2022.”

Tesla's core automative gross margins – excluding ZEV credits – declined to 16% from 26% the previous year. While those are good margins for an automaker, many have spent years saying Tesla wasn't a regular automaker. Vehicle deliveries were

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Tesla Earnings, Goldman Sachs Pulls Back on Consumer Business, Apple Card’s Future (Daily Update)

Hello everyone.

Apple reports earnings next Thursday (Feb 2nd). We will go over my expectations early next week.

For today's update, we kick things off with Tesla and then switch to Apple Card.

Tesla Earnings

Heading into Tesla’s earnings, there was an increase in anxiety regarding demand for Tesla vehicles. While it was too early to say Tesla faced a demand “problem,” cracks were starting to form in the company's growth story.

Here’s Tesla kicking off its 4Q22 update:

“Q4-2022 was another record-breaking quarter and 2022 was another record-breaking year. In the last quarter, we achieved the highest-ever quarterly revenue, operating income and net income in our history. In 2022, total revenue grew 51% YoY to $81.5B and net income (GAAP) more than doubled YoY to $12.6B.

As we progress into 2023, we know that there are questions about the near-term impact of an uncertain macroeconomic environment, and in particular, with rising interest rates. The Tesla team is used to challenges, given the culture required to get the company to where it is today. In the near term we are accelerating our cost reduction roadmap and driving towards higher production rates, while staying focused on executing against the next phase of our roadmap.”

Thanks to 4Q22 price cuts, some weakness in deliveries, and inflation, core gross margins – excluding ZEV credits and FSD recognition – declined to 22% from 27% the previous year. The concern some have is that

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