In today’s briefing:
- Tesla’s Problem Is Fading Demand, Not Disruptive Factory “Updates”
- NEE & NEP Selloff Prompted by Higher for Longer Rates Sentiment
- ATEN: Order Delays Continue, PT to $15
- ADEA: Adjusting to Customer Dispute
Tesla’s Problem Is Fading Demand, Not Disruptive Factory “Updates”
- Factory shutdowns for “updates” doesn’t explain Tesla’s huge Q3 miss on deliveries.
- Why? Because bloated excess inventory was enough to cover the 20k “miss” some 3-5x.
- A better explanation: Tesla’s accelerating demand erosion, which I have been tracking since last year in every major market.
NEE & NEP Selloff Prompted by Higher for Longer Rates Sentiment
- Higher for longer rate regime makes it difficult for NextEra Energy Partners to raise debt to fund high growth forcing a reduction in growth forecasts.
- Markets have reacted sharply to slashed forecasts with shares of NEP (-52%) & NEE (-22%). Growth is expected to remain lower in the future.
- NEE has performed markedly better than NEP. This is reflected by analyst price targets. However, NEE’s long-term growth story has stumbled raising investor concerns.
ATEN: Order Delays Continue, PT to $15
- ATEN continues to experience challenges with order timing from some of its largest customers. ATEN lowered Q3 revenue forecast after North American service providers delayed their purchases in the quarter
- ATEN has spent the entire year trying to add more enterprise customers to offset this volatility and, while successful, it was not enough in the third quarter.
- ATEN is projecting third quarter revenue between $56.5 million and $58.5 million compared to our estimate of $75.3 million.
ADEA: Adjusting to Customer Dispute
- ADEA revised its full year outlook after electing to sue long-time customer Shaw Communications for breach of contract
- Shaw was acquired by Rogers Communications (RCI). ADEA claims Shaw is no longer paying ADEA even though the two companies had signed a license renewal in 2019
- We are reducing our 2023 revenue forecast to approximately $387.7 million with operating income of $250.8 million
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