Tesla’s Big Earnings Report… And Goldman Sachs’ Record Close 4/23/24

0:02Indeed it does live from the Nasdaq market site in the heart of New York City's Times Square This is Fast Money. Here's what's on tap tonight. A Tesla triumph shares of the EV maker soaring on hopes for new models and better than expected margins. Was this the turbocharged stock needs to get back on track? We're going to debate it. Plus, not so Gucci. The parent company of the luxury fashion brand seeing shares tank as it forecasts a massive drop in profit. Is this a sign that even the highest in consumer is starting to crack? And later, we're counting down to meta earnings. The homebuilders lay a strong foundation, and Goldman Sachs post a record close for the first time in more than two years.

0:40I'm Courtney Reagan, and this evening for Melissa Lee, we are coming to you live from Studio B at the NASDAQ. On the desk tonight, we have Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adame. But we've got to start off with Tesla. Taking off on Q1 results, shares actually soaring. This is despite a miss on the top and bottom lines. The investor is seemingly excited that the new models may be coming sooner than expected. If the gains hold tomorrow, it will be Tesla's best day since September. It hasn't had a lot of best days lately. CNBC's Phil Lebeau joins us now to break down the results.

1:11Phil, what happened here in this report? Well, it's what they said in the indication of new models that are coming, the more affordable priced models. That is exactly what the street wanted to hear. The street didn't really want to see what they saw for the first quarter. and let's go over those numbers. None of these numbers are good. Any way you look at it, this was an ugly quarter for Tesla. Earnings miss, 45 cents a share. The street was expecting 51 cent. Revenue down 9 % year over year, the worst since 2012. It fell short of estimates coming in at 21.03 billion. Operating margin of 5.5%.

1:48Negative free cash flow of 2.53 billion. Yeah, it was ugly any way you look at the first quarter. But then Tesla put out its future outlook, which is not always the clearest. But this time they were pretty clear, saying that they will accelerate new model launches, including more affordable vehicles. Leave that to your interpretation, whether or not you see one coming in at$25 ,000 or just a little more affordable than we see with the Model 3 right now. Start a production likely in the second half of 2025. But it's clear when you read the note from the company in the earnings release, it is clear they are moving quickly to roll out newer models.

2:28By the way, delivery growth notably lower in 2024 than 2023. And I think last year the delivery growth was something like 18, 19 percent. Notice that's not total deliveries. It's delivery growth. So the street's expecting 1.9 million vehicles to be delivered this year, guys. We'll see if that's going to be the case. We'll see how second quarter develops here. We know what the first quarter was when it was down 8.5 percent year over year. Guys, I don't mean this to be a trick question, of course, because it's always hard to predict Mr. Musk. But any indication of what we might be hearing on the conference call when that does kick off?

3:07Well, I think people one of the main questions is going to be how many vehicles are you looking at in terms of accelerating the development of? when you say more moderately priced vehicles, are we talking something substantial? They plan to incorporate the current existing lineup of vehicles as they roll out these newer ones. They want some clarity. That's what the analysts are going to be looking for. By the way, with regard to Robotaxi, there is one sentence in the release at the bottom in terms of the development of Robotaxi, simply saying that they will continue the development of this. Remember, August 8th is when they have said we will unveil the robo-taxi or give more details regarding the robo-taxi.

3:50No doubt that conversation will happen to a certain extent tonight during the call. But I think most of the call's questions will focus on the development of these newer models. Awesome, Phil. Thank you very much. Keep us posted on what you hear. We'll come back to you. All right, let's trade this one. Dan, I mean, why is the stock higher? OK, so we maybe have an acceleration of the new vehicles, but everything else is kind of a mess. Yeah, and it likely is just because going into the print, it was down 30 percent in the last, you know, five, six weeks. I mean, think about the magnitude of this sell-off in market cap terms, given everything that we've known since their Q1 delivery estimate that came out.

4:27And it was, you know, a massive miss. And I think a lot of investors just said, you know, shoot first, ask questions later. When you look at this report, I mean, Phil just said it, the quarter was not good. And there's nothing that actually leads you to believe that they're going to be turning the tide from a fundamental standpoint this quarter in Q2 and maybe not even in the back half of 2024. So to me, it just seems like, you know, stock got really nailed into the print and it's kind of releasing. Listen, this call hasn't even started yet. I mean, the fact of the matter is this stock could be down in an hour or so, given, you know, like the Q &A is going to be fairly combative.

4:58Just go look on Twitter over the last few weeks or so. The bulls are eating themselves alive right here. The Q crowd doesn't even have to do any of the work anymore because they have kind of turned on each other. Yeah, I mean, obviously, stocks higher, but down, what, 40 percent so far this year. And to your point, we're going to hear a lot more on the call. Karen, what about the negative free cash flow? Does that bother you at all? Well, I'm not long, so it doesn't really bother me very much. But, no, I mean, there's so many things to not like here, right? And it seems like what's happening is, OK, don't look at this.

5:26Let's distract you and talk about the things that we know you want to hear. You want to hear about a lower price model. So let's talk about that. I think, did Phil say it was second half of 25? So that's a long way off. As Dan said, I think, you know, the bigger event is in 24 minutes, which is the conference call and sort of anything can happen. I mean, they have sort of they haven't been wildly bullish in the last few weeks about anything, really. Certainly the stock investors haven't, but I don't think the company has either. So I don't know. I think it seems to me very odd, this communication of we are getting rid of the lower priced car, right?

6:06This is maybe three or four weeks ago. And we're going all in robo taxi. And I don't know if now this is, are they pulling back on that just because that's what they think the street wants to hear? Or is that in fact really the direction they are going? I don't know. That will be important on the call. Yeah, that's a good question. Yeah, Phil said there was just one line in the release about the robo taxi. So we have a lot more questions. Tim, I mean, delivery growth notably lower this year than last year. Well, again, no surprises on that. And I think we priced this in. And I think, you know, you can go to the headlines.

6:34The headlines are pretty shocking. It's their first year over year quarterly decline in revenues in four years. And it tells you this is the growth company with the growth multiple that doesn't grow. Model 2 lives. So it's a little bit to me. Dan's right. Let's listen to the call. It's a little bit of like the hocus pocus, nothing up my sleeve. While we talk about this, there's something going on over here. And I think that's exactly what's going on here. Meanwhile, it's kind of ironic, maybe, you know, lower price models. Meanwhile, their existing models are going lower to their cutting prices.

7:01They cut prices more over the weekend. The one thing that the analyst community can look at in terms of margins is is where the software adoption, the FSD adoption, because it's very accretive to margins. They're cutting prices there, too. What's that going to mean? Well, it might be ultimately actually positive for overall margins. But I just think that there was not any expectation here. That's why a 6 % is kind of a, you know, let's call this a relief rally. I don't think, and we've discussed this probably for the last three months, certainly since we got the delivery cuts in some sense that these numbers were going to be so poor a few weeks back, is that there's not a lot of great news for Tesla until we get, as we've said tonight, into the second half, a 25.

7:41Guy, when you look at the chart, we're so far off from even recent highs. I mean, what would it take to get us there? Is there a trade here? I don't think we're getting there to recent highs, number one. But we did hold a support line. I think Carter Worth actually talked about it last night over the last week or so. We traded right down and bounced off a level that we should bounce at. But in terms of levels, I mean, this is just another bounce that we've seen a number of times over the last six to nine months. And my sense is this can be faded as well. And just for context, In terms of free cash flow, the street was looking for a positive$650 million.

8:14It came in at obviously negative$2.5 billion. I mean, that's a pretty wild swing. And margins were not good. Margins continued to deteriorate. I think what the street took away was a fact, as Dan, Tim, Karen said, oversoul condition, yes. RoboTaxi may be faster than people expect. And I actually think that maybe the fact that they didn't sell any Bitcoin sort of played into this as well. But no reasons to be overly enthusiastic, I don't think. Dan, what about, you know, the reduction in the labor force, some of the executive turnover, any of that cause for concern as we look forward? Well, the reduction in labor force is good if you're shipping less cars.

8:48You know what I mean? Like, that's good. So right size that. The problem is, is that over the last year or so, over the last couple of years, they've had a lot of really senior leadership turnover. I think a couple of the gentlemen who left in the last month or so had been there for 18 years or something like that. So when you think about this, and this is something that, again, going back to the Tesla bulls, And I think some of them are starting to say, OK, wait, this guy was the CEO of a company that just a couple of weeks ago was six hundred billion dollar market cap company. Right. He's the CEO of SpaceX, which is probably the highest valued private company in the entire world right now.

9:20Right. And then you think about Neuralink, you think about Twitter, you think about a whole host of other things that we don't know what's going on. It just doesn't make any sense anymore. This company is facing an existential crisis as it relates to their own infrastructure. That doesn't mean about the shift towards EVs, okay? But this is the first year that we've seen, Tim's point, we're seeing year over year revenue declines and delivery declines. And they've never faced that because they've owned the market. Now in one of their biggest markets, which is China, they have competition from everywhere.

9:49And a year ago, if we said that on this show, people looked at you and they'd call you an idiot. You don't get what you're doing here. And you know what? BYD is shipping$20 ,000 cars. And Tim's point is a great one. Their$35 ,000 car is getting into the 20s because of their price cuts, and that's why the margins are going where they are. So to me, it seems kind of uninvestable if you just think of this as an auto company. And I know you guys probably have plenty to say about what GM just reported. And that's the important part. Well, GM, and so they've also kind of cautioned on margins maybe in the second half of the year because of rising EV production and delivery.

10:23But GM was up 4.5 % today. It was GM that actually beat and raised great output. And it does look like we know there's competition. It's just interesting. I'm not here to tell you that GM is the major competition for Tesla here. And in fact, I think we've all said that there's been this dynamic where people think maybe GM and Ford are more as certainly a Toyota are more game on in hybrids. But either way, it does highlight where you've got obviously a traditional OEM where you've got a real revenue, but a real margin story and a company that's never been more profitable in GM. And that's the name that I think you stay long.

10:58I think, you know, we can talk about that or we cannot. Either way, I think that's a company where I think the trend, both of the chart and the fundamentals, is on your side. We've got a little bit more on Tesla's results. Let's bring in Fast Money friend Gene Munster of Deepwater Asset Management. Gene, it's great to have you here. What are your thoughts here? We know the conference call hasn't kicked off and we only just have the releases, so still a lot of questions percolating. But what's top of your mind here? Well, I think what it's come down to is there's a question. Is Tesla smoke and mirrors or is it substance?

11:27And I think the results this quarter are going to give evidence for the smoke and mirrors camp to think that this is just another car company. And I think that there is really little to be gained. I think one thing to be gained is that margins are declining, but they're not plummeting. They actually did a little bit better than expectations still on the decline, but a little better than expectations. So they're going to survive. They got$26 billion in cash. But this ultimately comes down to is do you believe? If you believe that the future is going to be hybrid cars and it's going to take a long time, 20 years, to get to full electrification, stock's not going anywhere.

12:04If you believe that electrification, despite all of its troubles now, are going to accelerate for multiple reasons, and you believe in the concept of autonomy and robo-taxi and that they're actually going to get this out, Tesla's probably the best position, they are the best position company to deliver on that future around autonomy and electrification. It's a big market,$2.5 trillion market, the smartphone market,$600 billion. And so I think that's what this ultimately comes down to. As the panel has said, stock, it's going to move based on what happens on the earnings call at this point, some commentary.

12:40I still think the street numbers are coming down for 2024 on delivery, so I think that could pressure the stock tomorrow. But ultimately, this company is going to survive to see this next generation vehicle and to see FSD and see the rising tide of electrification. So I'm still a shareholder. I'm still optimistic. And I think that I just believe in what they're doing from an innovation standpoint. Do you think the stock movement is justified based on what we got from the release just on the next gen vehicles and perhaps better than expected margins when everything else was pretty crummy? No, it's it's understandable.

13:14I mean, you can reason why it's up because people are so desperate for any good news. And given the Reuters reporting more recently that they're canceling this initiative on the 2025 initiative, the fact that they're moving it up, that is a directional positive. But again, I think that 2024 is a throwaway. And stock could keep going down. It could be flat. If you, again, believe in a future of electrification, Tesla's the best-positioned company. But as far as this results, my guess is that stock probably fades in the next two weeks, finds its ground. And then as we get closer to 25, starts to rebound.

13:49Hey, Gene, it's Tim. So can we reframe the kind of the investment rationale in terms of either what we're talking about, a fair value, whether we're talking about growth versus something? And I can appreciate the dynamics here, which they are so far ahead. It's a technology company. But it does get back to that juxtaposition to they're not GM, but at the same time, they are an auto company. Can you talk about that multiple in Tesla and why you can stand behind that? So I believe that this should trade at a similar multiple ultimately to Apple. I think that what they're doing around hardware and software autonomy as a service, I think, justifies that type of a multiple.

14:26And when you right now, the multiple stocks going down because earnings are going down. But on a revenue multiple, I think that that is justified. And so why is that justified is because we get back into a growth phase. Investors tend to look more at revenue growth than they do at earnings growth. And so if you just to kind of put it all together, if you build a case that they can grow revenue at 20, 30, 40 % as they come out of this trough and do a seven multiple on that, the numbers you can get to a stock that's double where it is today. And so that's where I get it is a belief that the growth is going to reaccelerate.

15:01And why do I believe growth is going to reaccelerate? Because I think it's an undeniable truth around electrification. I think traditional auto is making some grave mistakes in terms of slowing, which is an advantage for Tesla longer term. Gene, it's Karen. Thanks for being on today. What do you think the math is around robo-taxis? How do you think about it? What is the model there? So it's pretty powerful. Again, you have to believe. It's like a religion. If you believe that this is going to get out. I happen to be in the camp that I think that they will eventually get this out. I think, by the way, Lyft and Uber, they're in big trouble if, in fact, Tesla does get this.

15:38Because, anyway, I think that they, that's a whole different topic. But as far as the impact, we have, let's, they're going to do, call it two million vehicles, more or less. If you get to, just for easy math, a million robo-taxis, a lot of those are going to be Tesla-owned. They're actually going to own their own taxis. Some of them will go to third parties. But if you get to that million and assume about three rides per day, you effectively can double the operating income. Now, I was just talking about the importance of revenue, but I think that that is the math. So that's about$10 billion per year.

16:13They did last year about$9.5 billion in operating income. That's with a million robo taxes. So that's a lot of them, but that's where you start to get it. The beautiful thing about it is there's a waterfall factor. As you continue to add those cars, the impact to the robo-taxi fleet continues to compound. Gene Munster, thank you so much for joining us. We'll check in with you when the call starts, Dan. I'm going to give you the final word here as Tesla shares up 8 % on the back of this crummy report. Yeah, I think it's going lower. I mean, listen, if you're buying this thing for robo-taxis in two or three years, push that expectation out.

16:47And then the other thing is Uber and Lyft. We spent the last five years litigating the fact those companies can't own the cars. It's a disaster. If you think the union economics suck already on rideshare, have the companies own the cars. That's a financial term, by the way. That's a financial term. Yeah, but I'm sorry. We got Conor over there. It's a family show here. No, but my point is, and Gene and I, I talk to Gene a lot. I love him, and I love his work, and I love his optimism about some of these big megatrends. I just don't believe that you will be buying this stock. I think Robotaxi could be huge five or ten years from now, But if they own a million of their own cars, it's going to be I just don't believe that's a good good business.

17:25He's an evangelist. You're not. I get it. Meanwhile, stocks continuing their rebound during the regular session with the Nasdaq leaning the gains up over a percent and a half. The S &P also rising for a second straight day while the Dow is now up four days in a row. J.P. Morgan CEO Jamie Dimon speaking at the Economic Club of New York earlier today, saying that the U.S. economy is unbelievable and booming. But, warning, the stagflation could reenter the market and that current geopolitical situation is more complicated than it's been since World War II. He also had some advice for whoever wins the election in November.

17:58I want the next president, whoever it is, to put the other party in their cabinet. That's what I'd like to see. So if it's Biden, did he put some Republicans in his cabinet? If it was Trump, he put some Democrats in his cabinet. And I would like to see practitioners go back to government like all of us, like not me, but you to go help, you know, and serve. Karen, you were at the event. What did you make of Diamond's comments? Well, he's pretty feisty. I thought it was interesting. You don't get a lot of economists to clap, but they did seem to like that bipartisan, you know, which is something he's been talking about for a long time.

18:35He was more optimistic, I think, than his letter sounded. You know, the economy is doing pretty well. So, you know, I love J.P. Morgan, love Jamie Dimon. I'm long. People pushing him probably to be that next president at that event, of course. He said only if he's anointed. Yeah. There you go. Speaking of. He might be. I know. I know. Exactly. Yeah. I don't put it past any of us. Right. Well, coming up, we will get more on Tesla's quarter when their conference call starts later this hour. What about 11 minutes from now? And there are even more earning booboofs on deck. Tech shares of Texas Instruments Visa both on the move after reporting.

19:08Those details are next. Plus, Gucci's not-so-glamorous report, the parent company, forecasting a major drop in operating profit. So is it time for the retailer to tighten its belt? We'll debate when Fast Money returns. You're watching Fast Money here on CNBC. We'll be right back.

19:35Welcome back to Fast Money. Let's get you a few more earnings results out after the bell. Let's start with Texas Instruments. Christina Partsinevelis has those numbers for us. Hi, Christina. Hi. Well, Texas Instruments, often considered a bellwether for the chip space, given its exposure to everything from cars, fridges, and electronics. And today's earnings report shows Q2 revenue, as well as EPS guidance, that falls in line with estimates, which is a bigger deal for TI, considering expectations were so low going into this name. That's why the stock was down 3 % as of the close on the year. Many calling for a bottom.

20:06And that appears to be the case in Q1. Yes, it was a beat, but revenue decreased 16 % year over year. Revenue specifically declined to cost all end markets. Industrial down 25%, auto down low single digits year over year. Comms equipment down 50%. There's actually only one segment, and that's what they said on the call, personal electronics, the only one up in Q1. Similar trends, though, that we saw from Taiwan Semi very recently. On the earnings call as well, the CFO warning, quote, don't expect a significant or even any drain on inventory for Q2, implying Texas inventory amounts will remain high.

20:41But investors are optimistic. You can see that in the share price up 6%, maybe on this bottoming out process and the guidance that came in line. Very interesting stuff. Christina, thank you so much. Guy, you find that one kind of interesting. I mean, all revenue segments are lower, a lot of disappointment there. A quarter coming in in line, but shares up 6%. Expensive stock. It's probably north of 30 times now. Makes sense technically, if you look. And we talked about this in the fall. Traded down about 148 was a low that we made two years prior. But this stock has been nowhere since the fall of 2021, like many stocks.

21:14I mean, it's been sideways to slightly lower ever since. I mean, can you still rally maybe up to 180? So yeah, second quarter guide wasn't particularly great. I think, again, like we're seeing with Tesla to compare a relief rally in a stock that I guess people are trying to find value in. I think it's expensive. Tim, does it really seem like the stock's done much, what, in the last four or five years there? Look at that chart. Well, I guess five years up. Well, it hasn't. And if you think about where we were kind of right in the middle of a lot of supply chain dynamics, especially with autos, especially around chips, I mean, this was a nightmare for the auto space.

21:46Part of that, I think, is where just Texan really lost that period. It's obviously not at all giving you any of the AI boom. It's a company that I think trades more like a commodity, and it actually is as cyclical as chips often is. This one is that. Interesting stuff. Meanwhile, Visa moving higher after reporting a top and bottom line beat after the bell. Let's go to Kate Rooney for those details. Hi, Kate. What are you seeing? Hey there. Yeah, Court. So Visa is really shrugging off any concerns about slowing economy and inflation. The beat was driven by strong payments growth. CEO Ryan McInerney calling it stable consumer spending.

22:20The consumer is looking good, according to Visa. also reiterating its guidance, looking for low double-digit revenue growth for the year. That was really what investors were looking for going into the print today. Revenue grew about 10 % in the quarter. Payments volume was up 8 % while cross-border. Volume was up 16%. That tends to be a gauge of international travel, so that was strong. U.S. volume was up 6 % year-over-year. International payments, meanwhile, now volume was up 11%. Also highlighted some renewed co-branded airline agreements, Alaska, for example, and then its credit card with Robinhood talked a lot about partnerships on the call.