Tesla shares drop on "notably lower" sales to come

European Central Bank

Today, it is the turn of the European Central Bank (ECB) to decide on its interest rates. Like the Bank of Canada (BOC) yesterday, Christine Lagarde's team is expected to stay put. The main refinancing rate is forecast to remain at 4.5%, the deposit facility rate at 4%, and the marginal lending rate at 4.75%. The question remains: when will the central bank start lowering rates? At the end of last week, Christine Lagarde said that it is likely the ECB will start cutting rates this summer. Investors will surely expect the ECB president to expand on this during her press conference.

Halfords

Halfords maintains its profit guidance of a pretax profit fall in finacial year (FY) 2024, between $48 million and $53 million. The group says its cycling and consumer tyre markets' performance is significantly worse than anticipated. Britvic's revenue rose 8.1% in Q1 to $443.5 million, in line with the group's expectations. Revenue in the UK was up 6.9%. Trading was strong in December: group revenue was up 17.9%, with volumes up 6%. Also, watch out for Fevertree. FY group revenue rose 6%, and the group expects FY 2024 revenue to grow by about 8%. Mitie reiterates its FY guidance for operating profit of at least £190 million. Dr. Martens posted a 21% drop in third-quarter revenue.

ST Microelectronics

ST Microelectronics said earlier this morning that its first-quarter revenue would fall over 15% year-on-year. Fourth-quarter sales missed estimates because of softer automotive growth and further deterioration in the industrial sector.

Tesla

Tesla shares dropped more than 6% in extended trading last night after the EV maker's earnings and sales missed expectations. Investors were also taken aback by the group's forecast. On an adjusted basis, Tesla earned 71 cents per share in the fourth quarter, missing an average estimate from analysts of 73 cents. Revenue rose 3% to $25.17 billion, its slowest pace of growth in more than three years.

This was also lower than expected. The group warned of "notably lower" sales growth this year before the start of production of its next-generation vehicle at its Texas factory in the second half of 2025. Margins were also a concern for investors, as throughout the year, Tesla has been cutting its vehicle prices. Tesla reported a gross margin of 17.6% for the three months ended December, compared with 23.8% a year earlier. Analysts average estimate was 18.3%.

IBM

IBM shares jumped on Wednesday in after-hours trading on better-than-expected earnings and sales. Earnings came in at $3.87 per share, 10 cents higher than forecast. Revenue reached $17.38 billion. IBM also forecasts full-year revenue growth above market expectations.

The company expects 2024 revenue to grow between 4% and 6%, compared with Wall Street expectations of about 3% growth. IBM's generative book of business, comprising actual sales and bookings from various offerings, roughly doubled sequentially in the fourth quarter. The company will also lay off some employees in 2024 but will hire for more Al-centred roles. Headcount should be largely unchanged at the end of the year.

The US closing bell

Another three all-session stocks are due to report today. Tonight, after the US closing bell, Intel is expected to post earnings of 45 cents per share. Revenue is forecast to reach $15.16 billion. Also after the bell, Visa. The street anticipates earnings of $2.34 per share on revenue of $8.55 billion. American Airlines' earnings per share (EPS) is seen coming in at 11 cents, and revenue expectations are for $13.02 billion.

The Federal Aviation Administration

The Federal Aviation Administration (FAA) tightened pressure on Boeing yesterday. The planemaker is now barred from expanding production of its 737 MAX planes. Boeing can continue producing at the current monthly rate, but they cannot increase that rate. A blow for Boeing, which is seeking to increase production to keep pace with demand and catch up with Airbus.

The FAA offered no estimate of how long the limitation would last and did not specify the number of planes Boeing can produce each month. However, the FAA also agreed to allow the 737 MAX 9 to resume flying once inspections were completed. This came as a relief to U.S. operators Alaska Airlines and United Airlines, which had been forced to cancel thousands of flights. They aim to begin returning the planes to service at the end of this week.

Crude oil

On Wednesday, the Environmental Impact assessment (EIA) said crude oil inventories fell by 9.2 million barrels, compared with analysts' expectations in a Reuters poll for a 2.1 million-barrel drop. A draw was mainly driven by a drop in U.S. crude imports due to weather that disrupted transport. The winter storms also caused a 1 million-bpd drop in crude production to 12.3 million bpd, the biggest drop since September. 2021. Power outages and malfunctions at refineries sent utilisation rates lower by 7.1 percentage points to 85.5% of total capacity. Gasoline stocks rose by 4.9 million barrels, while distillate stockpiles fell by 1.4 million barrels.