In today’s briefing:
- Tesla Q4 Miss Is Big & Sets the Stage for a Drop in 2023 Profits
- S&P (SPGI US) VS S&P (SPX Index): A Leveraged Play on Rate Expectations
- Technical Analysis On Exxon Mobil
- Comment on Exchange Rate EUR/USD – December 30, 2022
- HYDB: Optimistically Backing High-Yield Corporate Bonds
- UI: Inventory Environment
Tesla Q4 Miss Is Big & Sets the Stage for a Drop in 2023 Profits
- Tesla reported a 6% Q4 EPS beat, but stripping out a one-off deferred revenue booking & higher than expected regulatory credits, Q4 results missed by 9%.
- Tesla rose +5.5% post market close after Musk said YTD orders are “2x” output. None of the data we have seen implies such demand, especially weekly China sales.
- What went unnoticed on the earnings call is that Tesla created a $7bn credit facility this month, which should dash all hopes of them doing a share buyback in 2023.
S&P (SPGI US) VS S&P (SPX Index): A Leveraged Play on Rate Expectations
- S&P (the company) may be a lot more exposed than S&P (the index) if rates stay higher for longer and bets against the Fed unwind in 2H23.
- While we like the rating agency and financial data provider’s business portfolio, valuation is looking a bit stretched based on fundamental, relative and technical valuation metrics.
- We believe it is unlikely that the stock will push through the USD375/share resistance level in the near term, and would look for entry opportunities closer to USD325/share.
Technical Analysis On Exxon Mobil
- Exxon Mobil Corporation is engaged in energy business. The Company’s principal business involves the exploration for, and production of, crude oil and natural gas, and the manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a range of specialty products.
- The Company’s segments include Upstream, Downstream and Chemical.
- The Upstream segment is organized and operates to explore for and produce crude oil and natural gas.
Comment on Exchange Rate EUR/USD – December 30, 2022
- The EUR/USD exchange rate has been moving upwards, as seen in Graph 1. There were four secondary movements throughout the considered time period.
- More specifically, the currency pair showed an upward movement from November 30th up to December 2nd.
- From 3rd to 12th of December, the exchange rate fluctuated up and down, ending with a higher price range on December 14th.
HYDB: Optimistically Backing High-Yield Corporate Bonds
We might get a reasonable amount of flak for this article, as many investors fear a recession, and concurrently are staying away from high-yield bonds.
However, credit spreads are narrowing, and the equity market is receiving substantial support.
Thus, we believe the time is right to “risk it” on cyclical, high-yield corporate bonds with favorable interest rate sensitivity.
UI: Inventory Environment
- The enterprise segment has fueled revenue growth at Ubiquiti (UI) and it should remain the same in the fiscal second quarter
- Ubiquiti has expanded its product offering for enterprise customers where it includes a complete solution down to the EV charging station
- We have made several adjustments to our earnings model. We continue to assume gross margin rising sequentially due to lower costs
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