TSLA and NFLX Disappoint With Earnings Report

Benzinga

Good Morning Investors: With U.S. stock futures trading lower this morning on Thursday, some of the stocks that may grab investor focus today are as follows.  - Michael O'Connor, David Willey  STOCKS TO WATCH:  $JNJ $TSLA $AAL $NFLX $ABT  Wall Street expects Johnson & Johnson (NYSE:JNJ) to post quarterly earnings at $2.62 per share on revenue of $24.66 billion before the opening bell. Johnson & Johnson shares gained 0.2% to $159.09 in after-hours trading.  Deep Dive: J&J CFO Joseph Wolk Said Amgen Settlement Gives Co More Confidence About Hitting Its 2025 $57B Target For Pharma Sales  Tesla Inc (NASDAQ:TSLA) reported better-than-expected earnings and sales results for its second quarter, but said operating margin narrowed to 9.6% from 14.6% in the year-ago period. Tesla shares fell 4.2% to $279.07 in the after-hours trading session.  Deep Dive: Tesla's Earnings Twist: Short Seller Jim Chanos Says Q2 Beat Was 'Entirely' Due To This Surprising Factor  Analysts are expecting American Airlines Group Inc. (NASDAQ:AAL) to have earned $1.58 per share on revenue of $13.74 billion for the latest quarter. The company will release earnings before the markets open. American Airlines shares rose 2.2% to $19.00 in after-hours trading.  Deep Dive: American, JetBlue begin Northeast Alliance wind-down.  Netflix, Inc. (NASDAQ:NFLX) reported upbeat earnings for the second quarter, while sales missed expectations. Netflix shares fell 8.1% to $438.70 in the after-hours trading session.  Deep Dive: Netflix added nearly 6 million new subscribers amid password sharing crackdown.  Analysts expect Abbott Laboratories (NYSE:ABT) to report quarterly earnings at $1.05 per share on revenue of $9.70 billion before the opening bell. Abbott shares rose 0.3% to $107.60 in after-hours trading.  Deep Dive: Renal Disease Market Growing Massively by Abbott (US)

Transcript

00:00 Good morning, Zinger Nation. Welcome back to Daily Stocks to Watch. Today is Thursday,

00:10 July 20th and the year is 2023. David Willey, my illustrious co-host, as I like to say.

00:18 Mr. Willey, how are you doing today? It is a pretty nice day in Detroit right now, but

00:24 how's the day treating you so far?

00:26 It's going fantastic, thanks, Mike. Yeah, doing really well and excited for our stock

00:31 pick today. We've got some pretty interesting ones.

00:34 Yeah, we've got a nice follow up from yesterday. If you were watching the earnings yesterday

00:39 coming out, especially Tesla and Netflix, we've got them on the list today. We're going

00:42 to give you some updates. We wanted to also look at, especially Carvana, we were talking

00:48 about it yesterday, insane movement out of Carvana recently. We wanted to kind of tie

00:52 it in to some of these names that took either big rises or big dips in the last year.

00:59 So we're going to be getting into, I think, a fun, informative and engaging list with

01:04 an extra bonus stock in there as well. So cracking into the list and then we'll get

01:09 you out to your trading day. Number one, we've got Carvana. Number two, oh, I didn't give

01:15 you the ticker there. Oh, OK. CVNA is the ticker for Carvana. Ticker number two is Tesla.

01:21 Number three, we've got WeWork, ticker W-E, we like that. Number four is Bed, Bath and

01:28 Beyond. That's ticker B-B-B-Y. And number five, we have Netflix, ticker N-F-L-X. Starting

01:36 off with Carvana, a absolutely monster movement yesterday. Monster movements for a while now

01:44 up over 500 percent in the past three months, nearly 550 percent. If you look at the year

01:50 to date, it's insane. But then you zoom out a little bit, you look at where it was a little

01:55 while ago, a $360 high and you realize, wow, OK, it really tanked. We saw a big downward

02:03 movement when coronavirus was kind of getting back to normal. Things were absolutely insane

02:08 in the used car market anymore. They'd expanded a ton. They tried all these different things.

02:13 Valuation had skyrocketed. And then we saw some pretty precipitous down movement for

02:18 Carvana pretty much from its high in August of 2021 all the way down to some very low

02:24 lows of this past December coming back up even after declaring bankruptcy and trying

02:30 to resell some of its assets, trying to reorganize a really interesting ticker. Has it become

02:38 officially a meme stock? Maybe. We've got Bed, Bath and Beyond on this list. We got

02:42 some meme stock action here. I've heard some people say, yep, Carvana is 100 percent a

02:46 meme stock now, especially with the gigantic rally that we've seen. Others are saying,

02:51 no, you know, there's some real value prop here. There's some stuff going on that takes

02:57 some more digging to fully understand. So I don't know. I'm still kind of in the middle

03:01 on what exactly is going on with Carvana, whether or not to call it, you know, some

03:07 big moves from the street or if this is some meme movements, but 100 percent a stock to

03:12 watch.

03:13 Yeah. And that raises the interesting question, Mike, of how do you tell when something is

03:19 a meme stock? You know, these movements with Carvana seem pretty wild, almost a bit hard

03:26 to believe, really, this this incredible climb out of what seems like seemed like a total

03:32 destruction for the stock. And so, you know, how what are some ways that you can look at

03:37 this where you can say, OK, that's a meme stock versus this is a stock that's actually

03:41 rising on the strength of the company, on the strength of changes that have been made?

03:47 That's a great question. And I think it's tricky. It's not always cut and dry, not always

03:52 straightforward. I've heard some people define it as, OK, so a meme stock is a stock that's

03:56 being being swept up in kind of a popular opinion, a popular zeitgeist of people are

04:03 just wanting to trade it because they believe everyone else is going to buy it. And so it's

04:07 going to go up. The whole meme idea of of, you know, buy buy a specific stock because

04:13 it's just going to keep going up is I think it's a pretty good definition. But I think

04:18 it's it's not totally full. I think there are other elements of a meme stock where it's

04:23 it's becoming well known. It's becoming like a meme. The knowledge of the ticker travels

04:29 quickly, especially in the retail sector. We love covering meme stocks here at Benzinga

04:34 and seeing what's going on. But it's not always easy to define. And sometimes you'll see,

04:40 you know, big, genuine financial movements. I think Carvana is kind of a tricky one to

04:45 look at because they are doing some pretty serious restructuring. I have heard some anecdotal

04:51 statements that, no, they're actually they're doing pretty good. But on the other side,

04:56 we have some analysts with some pretty pretty significant sell ratings, some good amount

05:01 of pessimism for pretty good reason. So it's not always easy to define. I think one example

05:07 later on the list, I think Bed Bath & Beyond is pretty clearly a meme stock because its

05:12 value in the marketplace has been so heavily affected by simply sort of the mass appeal

05:19 of trading it, even while it's declared bankruptcy and closed numerous stores and run into some

05:24 very large difficulties. So I think it's kind of that that play between the the idea of

05:29 this stock as an opportunity because other people are going to get interested in it as

05:34 a cultural phenomenon as a meme stock versus the more kind of traditional sense of you

05:39 look at the the numbers, you look at the statistics, look at the financials. But it's interesting

05:44 because the whole idea of the meme stocks really started with GameStop, which was fundamentally

05:50 in pretty darn undervalued and far oversold, at least for short selling. So the whole idea

05:56 of a meme stock has come from real technical analysis from some very smart, very interesting

06:01 traders and just kind of blew up from there. So it's a complicated story. But I think overall,

06:09 it's one to look into if you're into meme stocks and you you think about it and you

06:13 go, well, actually, I don't know exactly why this is a meme stock. Look into it. Is it

06:17 just the psychology? Is it just everyone is piling on this because it's the new ticker

06:22 to pile on? Or are there some actually technical stuff going on behind the scenes? If you know

06:28 the phrase a short squeeze, if you know what Delta surges are, take a look into it if you

06:33 don't and do a little digging on this, especially I like the history of meme stocks. It's a

06:37 very interesting history and fascinating to look at.

06:41 Absolutely. No, that and that makes a lot of sense. And I think a stock which we can

06:46 say pretty safely is not a meme stock is the second on our list. Tesla, that's ticker TSLA.

06:54 Now Tesla have reported better than expected earnings and sale results from the second

07:00 quarter and the operating margin narrowed to nine point six percent from fourteen point

07:07 six percent in year to date. Tesla shares fell about four, just over four percent to

07:14 around two hundred and seventy nine dollars in after hours trading. And yet it's about

07:19 two seventy eight right now. So we've got an interesting combo here, right, because

07:25 we see them reporting better earnings per share, ninety one cents per share, beating

07:31 estimates by over 10 percent. They reported better revenue than estimated, estimated almost

07:38 twenty five billion. And the lowered prices on the cars didn't seem to affect their profits

07:43 because of the narrowed margins. Now, obviously, you know, there's been some concern around

07:50 this and it'd be worth digging into that around, you know, the slight drop off in the

07:56 after the announcement by Musk. But overall, I mean, Tesla has since January, I mean, their

08:03 share price has increased over one hundred and ten, one hundred and fifteen percent.

08:08 They've added one hundred and fifty dollars to the stock price. So this is seen an incredible

08:13 climb just in twenty twenty three. This is an example of, you know, I don't I don't

08:19 unlike Carvana, obviously, they didn't have the big drop off following Covid. They've

08:23 just steadily climbed and they've really seemed to ride this wave of EV adoption. And now

08:30 with launching the Cybertruck, obviously, that's going to see, I'm sure, another sort

08:35 of draw of interest in the market. Yeah, it's interesting, Mike, that the shares dropped

08:41 off a little bit in following this report from Musk.

08:45 Well, it's interesting. And I like that you mentioned that, you know, you don't think

08:51 that Tesla is a meme stock. Some analysts would disagree with you, especially in terms

08:55 of the valuation. We've always seen a pretty big value multiple for Tesla. It's been one

09:00 of the most foremost, arguably, I would I would say it's the foremost name in retail

09:06 for a while, maybe including GameStop for a while there. But Tesla is kind of the the

09:10 everyman's stock. But it has consistently been showing strength, especially in the last

09:18 few years in terms of profitability, in terms of revenue, in terms of actual production

09:22 of cars. I mean, we're still looking at, you know, over an eighty five ratio. So pretty

09:28 high, especially compared to the other car manufacturer. So it's kind of one of those

09:32 high growth mentality stocks. It's still there, but it is just proven very resilient. I mean,

09:39 we saw a pretty significant dip right around January of this year, that whole section between

09:46 September of last year through through the new year and now a big comeback for Tesla.

09:52 And it's a very resilient name. The thing the thing that I always I always think of

09:57 is that the cars are pretty darn good. I mean, the autonomous driving is impressive, but

10:04 even just down to the design of the interiors, the actual driving experience, all of the

10:11 insane stats and stuff, I think it's easy to forget. I mean, when these came out, when

10:14 the Model 3 came out and Model S came out, they were, you know, mind blowingly fast,

10:20 pretty darn cheap for what you're getting pretty, pretty good range. Now that we have

10:25 more options in the electric vehicle space, some more competition, things like a truck,

10:30 Rivian's trucks, Lucid's sedans and stuff. I think we've forgotten a bit of the magic

10:37 that Tesla has been able to create. I think it's it's a good sign for the future. It's

10:43 good to see Cybertruck finally starting to gain a little traction and some more notoriety.

10:48 But I don't know. I have a feeling that Tesla is not done innovating and not done coming

10:54 up with new, really cool products, which I think is a is something that sets it apart

10:58 as a company compared to some other, you know, quote unquote meme stocks or highly popular

11:02 stocks is the product is phenomenal, in my opinion. So that's just me. Stock to watch

11:08 number three is WeWork. That's ticker W-E-W-E. Love to see these these aptly named stocks.

11:16 One of the one of the pretty darn controversial names over the years, the whole if you don't

11:22 know Adam Neumann, check out his story. It is pretty, pretty ridiculous. But down almost

11:28 95 percent in the past year, WeWork was a darling for a while. One of the big I think

11:36 it was they were the biggest buyer of commercial real estate for a good chunk of time. They

11:42 had an absolutely insane amount of buildings that they had purchased or leased, rented

11:47 out for their co-working spaces, which a lot are still operational. WeWork is an interesting

11:52 one of the shares down almost 95 percent. They're still in operation. They're still

11:56 running the lights. They're still a company. You can go out and get a WeWork membership.

12:00 Peck is one right across from us in Detroit. That's pretty nice. There's another one in

12:04 Detroit. So they're still going. Stock price far, far, far down, especially if you look

12:10 at an IPO of ten dollars back in 2020. It's not that long ago. It's easy to forget how

12:16 recent WeWork IPO. And it's it's still kind of cooking. It's a six hundred million dollar

12:24 really over six hundred million dollar market cap compared to a lot of real estate holdings.

12:29 Now, the problem is they're facing as well. We've seen the commercial real estate market

12:34 have some really tough viability with remote work, with rising interest rates, with more

12:39 and more people leaving some metropolitan areas. WeWork could be one of those names

12:44 that is some of the hardest hit in terms of the sector. And I think that's why we've seen

12:48 such a continued downward movement this year. And kind of contrasting it to Tesla and Carvana,

12:54 which are these insane year to date winners. WeWork, one of the big year to date losers.

13:01 Yeah. And I think for some some companies, it's just, you know, they make a bet on a

13:06 trajectory and then it's just it doesn't play out. And sometimes that's a very predictable

13:12 pattern and sometimes it's a bit of a one off, like they just made one bad bet. And

13:18 you know, that's sort of the story as well with our next ticker, ticker for Bed, Bath

13:24 and Beyond. That's ticker BBBYQ, which is perhaps the least intuitive of the tickers

13:31 that we've given so far. It's trading at around 0.28 of a cent on over-the-counter

13:38 markets right now. And this has been a real sort of a sad story, the story of Bed, Bath

13:46 and Beyond in the past few years. You know, they've dropped about 88 percent in the past

13:50 six months. In April, it filed for bankruptcy and was delisted from NASDAQ. And this is

13:56 another example, as you mentioned earlier, Mike, of a meme stock. So, you know, they've

14:00 had a last year, they've sort of had periodic rises. And, you know, it's worth saying, you

14:05 know, it's it feels as if Bed, Bath and Beyond, there's no coming back for them. But, you

14:11 know, I guess, as you said, Carvana also declared bankruptcy and now we're trying to weigh up

14:16 whether they're a meme stock. So obviously, it feels a bit more unlikely with Bed, Bath

14:21 and Beyond that they come back. But it's really interesting that there was a you know, there

14:26 was a sort of very this is what I mean by the predictable pattern versus the one off

14:29 the sort of their story of failure is pretty typical in the sense of it was just a retail

14:36 store that failed to embrace the Internet. And in 2019, when they got a new CEO, they

14:40 looked to to try and move more towards the e-commerce sector. And at that point, it was

14:46 just a bit late. And obviously, no one could have seen COVID coming, but they just were

14:49 not prepared for the big shift to e-commerce that was coming in 2020 and 2021. And then

14:57 also they made some some pretty big mistakes, which I just sort of one off. You know, they

15:03 did six hundred twenty five million buying back shares. They did a big marketing push

15:09 where they tried going for sort of very unique brands and that didn't work. And so, as you

15:15 said, they've they've closed a lot of their stores. They've declared bankruptcy. And it

15:20 seems as if now they have actually gained over about 11 percent in the past couple of

15:24 days. You know, there's a there's a bit of trading you can see right at the end that

15:27 there's a bit of trading coming up again. But I think it's pretty safe to say that Bed,

15:32 Bath and Beyond is nothing more than a meme stock.

15:35 Bold words, David, very, very bold words and an interesting take, I think I think it's

15:44 one of those ones where it's become more and more difficult to to decouple the idea that

15:51 there is serious problems in terms of the core business model from the idea that things

15:56 can turn around. And I think real quick to hit our bonus stock for the day, we've talked

16:02 about some big gainers, very big losers, losers, looners this past year in kind of the post

16:10 covid era. Zoom, a really interesting name, a similar kind of trajectory as Carvana. I

16:17 mean, you see that the five year model listed only not very long ago.

16:21 I mean, twenty nineteen four years is not that crazy.

16:24 The time list for thirty six dollars a share absolutely exploded in October of twenty

16:30 twenty two over five hundred fifty dollars a share, a massive almost fifteen hundred

16:34 percent move. And then since then, back down to about seventy three dollars per share

16:40 right now. Seventy three or five at the opening today, a little bit of a down movement

16:45 pre-market, but kind of flat on the week, up a little bit on the month, but nothing

16:50 too crazy down 30 percent on the year compared to its covid highs.

16:55 You can just see a massive mountain. And that was that was its era. That was its big time.

17:02 I know a lot of people, at least anecdotally, were like, yep, we're we're buying a bunch

17:06 of Zoom going into covid and never sold. And that just kind of started to slide down, especially

17:11 as the institutional side and Wall Street bought more and more into that.

17:16 People are going to go back to work. It wasn't going to be as big of a name.

17:19 The competitors came around. Microsoft teams seem to be gaining a lot of traction along

17:24 with Google meets one of those free options.

17:28 So Zoom, one of the one of the tough ones for the last few years, the post covid era.

17:33 Finally, we're going to update you on Netflix.

17:35 That's ticker NFLX stock to watch number five for the day.

17:39 We had some disappointing. So it's interesting.

17:42 I think there was some some good stuff in the report that was maybe not as stressed

17:47 as it could have been and was not exactly focused on by Wall Street.

17:53 The bad stuff came out more to a head this morning after the opening.

17:58 Now we're down over six percent today on a miss for four mixed results, issuing some

18:07 soft revenue guidance as well. Not exactly what you want to see.

18:12 But I think one of the interesting things is that they essentially argued and shown

18:16 that the the project to reduce the number of shared accounts was working, that they

18:22 are transitioning to more and more accounts and projecting that that was going to continue

18:26 and projecting the profitability was going to continue.

18:29 I think that Netflix is I think it's a very interesting one to be looking at and watching,

18:36 especially what's going to be different for next quarter.

18:38 So if you're in Netflix right now, if you watch, listen to the earnings last night,

18:42 definitely keep an eye on.

18:44 I think the difference that we see this upcoming quarter, whatever is going to be the next

18:48 announcements, however, the tone is going to be next earnings.

18:51 I think paint a very important picture, both in contrast to what we saw and heard last

18:55 night and what is in the future for Netflix.

18:58 All right. Back over our list and we'll get you out on your trading day.

19:03 Stocks to watch. Number one was Carvana.

19:06 That's ticker CV and a number two was Tesla.

19:09 That's ticker TSLA.

19:10 Number three, we had we work with ticker W.E.

19:13 Number four was Bed Bath and Beyond used to be ticker BBB.

19:16 Why now a Q got added on the end there because it is on the OTC markets.

19:20 And number five was Netflix.

19:23 That's ticker and F.L.X.

19:25 Hope everyone has a wonderful Thursday.

19:27 We're getting back toward the weekend again, but we will be back tomorrow with more stocks

19:32 to watch for you.

19:34 Thanks, Mike. Take care, everyone.

19:35 [BLANK_AUDIO]

Category

Transcript

Recommended