Tesla earnings, Netflix revenue, American Airlines forecast: 3 Things to know
Summary Points:
- Tesla shares slump after disappointing earnings call, hinting at further price cuts and higher spending in the future.
- Netflix shares also slumped as its third-quarter revenue forecast disappoints despite a crackdown on password sharing that boosted subscribers.
- American Airlines shares slumped despite raising its full-year profit forecast.
Here are three things you need to know this morning regarding Tesla, Netflix, and American Airlines.
Tesla:
Tesla's shares faced a significant slump following a disappointing earnings call, which indicated possible future price reductions and increased spending. The concern was centered around margins falling below expectations, with the company reporting an operating income of $2.4 billion, significantly missing the street estimates. CEO Elon Musk stated that if interest rates continue to rise, Tesla will have to keep lowering prices. He also confirmed that third-quarter production would slow down due to factory upgrades. Investors were hopeful for a detailed roadmap on the Cybertruck, but instead, they were struck by Musk's comments on the Dojo supercomputer, which is expected to cost over $1 billion by the end of 2024.
Netflix:
Netflix also experienced a decline in its shares as its third-quarter revenue forecast failed to meet expectations, despite efforts to curb password sharing, which boosted subscriber numbers. Although Netflix managed to grow its subscriber base by 8%, surpassing expectations, its average revenue per member fell by 3% compared to the previous year, mainly due to regional pricing variations. Sales growth was also underwhelming, with a mere 2.7% increase to approximately $8.2 billion in the second quarter. Notably, Mark Mahaney, Evercourse, stated that the fundamental story for Netflix is getting stronger.
American Airlines:
American Airlines witnessed a decline in its shares, even after raising its full-year profit forecast. The adjusted earnings per share came in at about $92, surpassing the expected $1.59. Additionally, the revenue also comfortably beat expectations, reaching just over $14 billion. American Airlines reported making substantial progress towards its goal of reducing debt by $15 billion by the end of 2025. This report follows United, which posted record quarterly earnings and a bullish third-quarter forecast. Last week, Delta also raised its forecast for full-year earnings.
Investors will be closely watching how these companies respond to their respective challenges in the coming months. As the market dynamics continue to evolve, it remains to be seen how Tesla, Netflix, and American Airlines navigate the future.
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