Investors on low battery after Tesla’s latest results

Stocks stumbled into the new year posting a loss on the first day of trading, a spillover from last year’s worries. Bond yields pulled back, but it wasn’t enough to goose growth equities, which started the year in the red.

Do what you say. Imagine a time where rows of bookkeepers, smartly dressed, embellished with sleeve garters, donning green-shaded visors, tapping their sore fingers on mechanical adding machines, while others compiled masses of numbers in neat columns in large green ledgers. The overwhelming sound of click, click, click, crunch, crunch must have been overwhelming. Walking up and down the aisles were even more-smartly-dressed supervisors who nervously checked their pocket watches as they glanced over the shoulders of their subordinates. Far above that floor would be the directors glancing down on the affair through big glass windows. They would be found mashing on cigars and pacing back and forth in their offices. The pacing would be punctuated with a secretary announcing over an intercom that a board member was waiting on line 1. Hair quickly straightened and waistcoat re-buttoned, the director hurried back to a desk piled high with folders, several newspapers, and a big black telephone. Picking up a heavy receiver and untangling the long inflexible line, the first discernible sound over the fuzzy connection might have been the tick, tick, tick of a ticker tape machine in the background. Next would come a clearing of the throat, and finally… “Jasper, when can the board expect to get the results of last quarter, you know we are up against a deadline?”

Missing from Jasper’s office was a wall of computer screens and a large television screen with financial news. He could only sit on his squeaky, brown, leather couch and relook at the neat pile of projections collected from managers. There were ruler-straight cross-outs, inserted footnotes, and plenty of penciled in notes on the margins. Would these projections be met?

Those were the days, when captains of industry spent their hours and days… er, captaining (a real word), and waiting to see if there was a return on their investments. Those results would be reported to the press and stockholders would interpret those results and decide whether to reward or to exact financial pain. Clearly, quite a bit has changed since those days, which interestingly, we now look upon with a sense of nostalgia. But one thing has not changed. The stock market is always eagerly awaiting news of progress, standing ready to reward success and punish anything less than overwhelming success. Gone are the rows of bookkeepers, typing pools, stenographers, and inkwells. Instead, there are computer server rooms, notebook computers, shiny tablets, and there is ERP (Enterprise Resource Planning) software. Mangers, directors, and board members, all have customized dashboards to track progress. Companies use software to make projections, sometimes even utilizing Artificial Intelligence, to predict and plan for future sales. What is more interesting is that these companies are willing to share this information with Wall Street analysts and even the public. Chief Executive Officers regularly appear on financial news channels to share projections and progress… wearing casual clothes. Imagine that!

That is great news for investors because it allows them to adjust their holdings mid-quarter, based on positive progress… or short comings. Of course, that adds to the volatility and sometimes inserts some confusion along the way. But in the information age, we all expect to be able to keep at least loose tabs on the inner workings of our investments. If a company is doing well, expecting great results, and beating forecasts, that could be good news for the company’s stock, and… um vice versa for misses. Tesla Inc (TSLA) is a good top-of-mind example. Yesterday, the company announced that it delivered 405,278 vehicles in the past three months. While that may seem impressive as a three-month record representing significant growth, it was indeed a bust of sorts. You see, the company itself had predicted a larger number, leading analysts to forecast 420,760 vehicles. The shortfall overshadowed the fact that the company just turned in its first 400,000+ delivery quarter. No, the company missed not only analysts estimates, but its own forecasts. The result was a punishing by shareholders as the stock slid by -12.24% in yesterday's session, topping the S&P500 loser board.

Tesla is just one example and likely the first of many positive and negative surprises which will come out in the days and weeks ahead. Earnings will start to bubble in over the next few days and Q4 earnings season will start next week with the big banks. The financial news channels will feature wall to wall executives, clad in not-suits, announcing successes and failures… and projections for next quarter and beyond. That will be your invitation to be that supervisor walking up and down the rows of bookkeepers. It will be a great opportunity to check on the progress of your investments. Don’t miss the opportunity. No suit is required, and pocket watch is optional.

Tesla Inc. (TSLA) shares are higher by +1.06% in the premarket after Cathie Wood’s Ark Investment Management announced that it picked up 176,000 shares of the stock, taking advantage of yesterday's rout. The company will announce its Q3 earnings on 1/25. Cathy will be paying close attention. Potential average analyst target upside: +114.6%.

YESTERDAY’S MARKETS

Stocks traded into the red yesterday overtaken by continued economic growth fears. The S&P500 fell by -0.40%, the Dow Jones Industrial Average slipped by -0.03%, the Nasdaq Composite dropped by -0.76%, and the Russell 2000 Index pulled back by -0.60%. Bonds gained and 10-year Treasury Note yields gave up -13 basis points to 3.73%. Cryptos advanced by +2.69% and Bitcoin slipped by -0.53%.

NEXT UP

• ISM Manufacturing (Dec) is expected to have pulled back to 48.5 from 49.0.
• JOLTS Job Openings (Dec) is expected to come in with 10.050 million vacancies, up slightly from last month’s 10.334.
• FOMC Meeting Minutes from its Dec 14^th meeting will be released at 2:00 PM Wall Street Time. Traders will watch this closely to get further insight into the Fed’s plans for 2023.