Traders work on the floor at the New York Stock Exchange, January 14, 2020.
Brendan McDermid | Reuters
U.S. stock futures were pointing to a nearly 400 point gain for the Dow Jones Industrial Average at Wall Street's open Tuesday. The Dow had been up 350 points at one stage on Monday but closed 143 points higher. Tuesday's indicated gains coupled with Monday's advance would put a major dent in the Dow's 603-point slide from Friday. Tesla jumped another 15% in Tuesday's premarket, and it is set to open on Wall Street at a new record high. Major shareholder Ron Baron forecast the company would top $1 trillion in revenue in a decade. As investors who bet against the stock scrambled to catch up, Tesla climbed nearly 20% on Monday to $780. Investors are still watching coronavirus developments as well as awaiting delayed Iowa caucus results, President Donald Trump's State of the Union address Tuesday night, and the Senate impeachment trial vote Wednesday.
2. Google-parent Alphabet falls after revenue miss
Carsten Rehder/picture alliance via Getty Images
Shares of Google-parent Alphabet were falling about 3% in the premarket after the tech giant beat estimates with quarterly earnings but fell short on revenue. Alphabet broke out YouTube and cloud revenue for the first time. YouTube ads generated $15.15 billion in revenue in 2019, with $4.72 billion in the fourth quarter. Google's cloud business generated $8.92 billion in revenue in 2019, with $2.61 billion in Q4. This was the first earnings report since co-founders Larry Page and Sergey Brin announced in December they were stepping away from day-to-day operations.
3. Disney to report earnings including Disney+ launch
The new Continue Watching area in Disney+.
Todd Haselton | CNBC
Disney reports fiscal first quarter earnings after the bell Tuesday. Analysts expect the media giant to deliver per-share profit of $1.46 on revenue of $20.78 billion. The results from Q1, which ended in December, include the launch of Disney's streaming platform Disney+, which competes with platforms like Netflix, Amazon Prime Video and Apple TV. Disney signed up 10 million subscribers on its first day. Investors will be looking for any guidance on how the coronavirus might impact earnings going forward, with Shanghai Disney temporarily closing as of late last month and many dark movie theaters in China.
4. Coronavirus deaths in China rise to 425 with over 20,000 confirmed cases
The medical staff visit occupants in a hotel accommodating isolated people in Wuhan in central China's Hubei province Monday, Feb. 03, 2020.
Barcroft Media | Getty Images
Chinese health officials said 425 deaths and 20,438 cases of coronavirus have been confirmed in the country. Hong Kong's Hospital Authority told CNBC that a 39-year-old man had died in the city's first coronavirus-related death. Singapore and Thailand each reported six new cases of coronavirus Tuesday. While many countries confirm their own cases, the vast majority are still in China. The Philippines on Sunday reported the first death outside China.
5. Democratic Iowa caucus results delayed by technical glitches
Volunteers tally votes during the first-in-the-nation Iowa caucus at the Southridge Mall in Des Moines, Iowa, U.S., on Monday, Feb. 3, 2020.
Al Drago | Bloomberg | Getty Images
Democratic results from the Iowa caucuses, the first-in-the-nation presidential nominating contest, were delayed Monday night. The state's Democratic Party said a "reporting issue" caused "inconsistencies" in some data. A source told NBC News that technical glitches hit an app for reporting results and a backup phone line for relaying information was "a disaster." The contest was too early to call, according to NBC News. However, that didn't stop ex-Mayor Pete Buttigieg from claiming victory. The next nominating contest is a week from Tuesday: the New Hampshire primary.
GP: Elon Musk, chief executive officer of Tesla Inc., speaks during an event at the site of the company's manufacturing facility in Shanghai, China, on Monday, Jan. 7, 2019.
Qilai Shen | Bloomberg | Getty Images
Tesla jumped again on Tuesday, smashing past the $800 level and set to open at a new record high as major shareholder Ron Baron forecast the company will top $1 trillion in revenue in a decade and as investors who bet against the stock scrambled to catch up.
The more than 14% surge comes after Tesla on Monday climbed 19.9%, its biggest one-day gain in six years. Tesla's stock roared after Argus Research raised its price target to a new Wall Street high of $808 a share. But even Argus' price target is below where the stock is set to open on Tuesday.
Tesla shares are up more than 80% this year through Monday's close, fueled by analysts raising price targets to catch up to the stock and short-covering by investors betting against the shares. Analysts still can't keep up with the run. The average 12-month price target of analysts is $493, up from $334 in December, according to FactSet. That new target is more than 40% below where the stock is trading in premarket trading Tuesday.
Two years ago Tesla CEO Elon Musk promised the "short burn of the century" was coming soon, saying in a tweet that "flamethrowers should arrive just in time." Within an hour of Monday's close, Musk tweeted three flame emojis.
Baron's investment firm holds nearly 1.63 million Tesla shares – worth more than $1 billion at current levels.
"It's nowhere near ended at that point and time," Baron said on "Squawk Box." "There's a lot of growth opportunities from that point going forward."
Baron's seemingly wild optimism has become much less outlandish after the stock's rally over the past six months. He is among a group of money managers who have given massive forecasts for Tesla before, including Ark Investment Management founder Catherine Wood. Last month, Wood told CNBC that she believes Tesla could be worth more than $6,000 per share in the next five years – upping her prediction of $4,000 a share that she made two years prior.
'Watch out Tesla believers'
But some Wall Street analysts are not so sure Tesla's gains will last, and even political activist Ralph Nader chimed in on Twitter: "Watch out Tesla believers."
"When the stock market bubble implodes, it will have been started by the surge in @Tesla shares beyond speculative zeal," Nader said.
Billionaire investor Ron Baron believes Tesla will hit $1 trillion in revenue in 10 years and continue to grow from there.
"It's no where near ended at that point and time," he said Tuesday morning on "Squawk Box." "There's a lot of growth opportunities from that point going forward."
Baron, whose eponymous investment firm holds nearly 1.63 million Tesla shares, said his Baron Capital firm will not sell a single share of company, saying Tesla's recent run is "just the beginning."
Tesla's stock has climbed nearly 220% in the past six months, including roughly 86.5% this year. The company's market cap is now more than $140 billion -- nearly triple that of General Motors but below Toyota Motor at roughly $227 billion.
The stock closed up 19.9% on Monday at a record high $780 per share. Shares were up more than 6% in pre-market trading on Tuesday to about $833 per share.
Monday marked the best day for Tesla since May 2013, when the company reported its first quarterly profit and Consumer Reports gave the Model S a "near perfect" score.
Investors betting against Tesla's stock have lost more than $8 billion since the beginning of the year, according to data from S3 Partners, including nearly $2.5 billion in losses on Monday's surge alone.
In 2018, Baron first made headlines by saying Tesla could generate $1 trillion in revenue by 2030. Tesla's revenue was $21.5 billion in 2018, up from $11.8 billion a year earlier. It reported revenue last week of $24.6 billion in 2019.
US stock futures jump Jim Cramer cites Democratic disarray and imminent impeachment end - MarketWatch
Market Snapshot
By Steve Goldstein
Published: Feb 4, 2020 4:20 am ET
U.S. stock futures and an array of risky assets climbed on Tuesday morning, reflecting possible optimism toward the prospect of a re-election of President Donald Trump.
Technology problems and reporting inconsistencies kept Iowa Democratic Party officials from releasing results from Monday’s caucus. Sen. Bernie Sanders, the Vermont independent, released figures showing he was in front, while the former mayor of South Bend, Ind., Pete Buttigieg, said “by all indications, we are going on to New Hampshire victorious.”
Trump meanwhile is likely to be cleared by the Senate on Wednesday.
Jim Cramer, the “Mad Money” host, tweeted that the political situation was what was driving stock futures higher.
Futures on the S&P 500
ES00+1.14%
climbed 1% to 3,278.70, and Dow industrials
YM00+1.12%
futures rose 276 points.
Commodities also surged. Oil futures
CL
rose by over $1, with light sweet crude trading over $51 a barrel. Copper futures
HG00+2.05%
climbed by nearly 3%.
The Dow Jones Industrial Average
DJIA+0.51%
closed 143 points higher on Monday, in its best one-day performance since Jan. 28. Manufacturing data came in surprisingly strong.
Overall revenue at Sony Corp. was up 3 percent at $22.6 billion, while operating profit was down 20 percent at $2.76 billion. Net profit for the October-to-December quarter was down 46 percent to $2.1 billion.
Sony's film unit recorded a $51 million (6.2 billion yen) profit for the October-to-December quarter, down from $107 million in the same quarter the previous year.
Sales for the division were down 12 percent to $2.17 billion.
Jumanji: The Next Level, which earned more than $750 million globally, contributed to profits, though its December release dates means around a third of that will be included in the current quarter's figures. Charlie's Angels severely underperformed, taking just over $70 million at the global box office, hitting the division's bottom line.
The surprise success of Venom, which took more than $855 million worldwide, boosted results for the same period the previous year.
For television, higher licensing revenue for season 3 of The Crown was offset by an increase in production costs for new U.S. network shows.
Sony left its full-year profit forecast at the pictures division unchanged at ￥70 billion, $643 million at current exchange rates.
Overall revenue at Sony Corp. was up 3 percent at $22.6 billion, while operating profit was down 20 percent at $2.76 billion. Net profit for the October-to-December quarter was down 46 percent to $2.1 billion.
Foreign exchange rates negatively impacted most segments.
PlayStation 4 console sales dropped from 8.1 million in the same quarter in 2018 to 6.1 million, while software sales fell slightly to 81 million units. This dragged down sales at the game division by 20 percent to $5.8 billion and profits down to $491 million.
Sales at the music division were up slightly at $2 billion, but profit fell sharply due to the gain in the same period of the previous year from the consolidation of its stake in EMI Music Publishing. Best selling artists included Harry Styles, TOOL and Celine Dion.
The electronics division saw a fall in sales of 9 percent to $5.97 billion on lower television and mobile phone sales, but a growth in profit to $74 million thanks to lower costs at its mobile phone operations.
The imaging and sensor business, which makes semiconductors for smartphones and other devices, continued to be a bright spot for Sony, registering sales up 29 percent to $2.7 billion and profits up sharply to $690 million.
Activist investor Daniel Loeb is once again putting pressure on Sony Corp. to spin off its entertainment and semiconductor businesses, despite the rise in Sony's share price over the last year.
Sony stock was up slightly at ¥7,700 ($70.82) in Tokyo trading late on Tuesday afternoon, before the earnings announcement. It is up more than 50 percent on this time last year.
A Ford engineer hosted an “ask me anything” (AMA) thread on Reddit over the weekend. In it, they let us in on a few new bits of information about the car (including battery and charging specs), and talked about his opinion of it, particularly in comparison to the Tesla Model Y, which will target a similar market as the Mach-E.
The thread has since been deleted, but many of the questions and answers were archived by the folks over at Mach E forum.
There are no particularly Earth-shattering revelations, but it’s interesting to hear about the car in a fairly unfiltered manner from someone on the inside. Though some of his independently-verifiable statements were inaccurate, so take all of this with a grain of salt.
Regarding charging and battery specs, the engineer stated that Ford is being “conservative” in their statements about what the car will be capable of.
When Mach-E specs first leaked, we learned there would be 230- and 300-mile battery options – similar to the Tesla Model Y. It turns out those options translate to 75 and 98kWh battery packs, which are significantly larger yet provide less range than the Model Y (~75kWh, 315 miles).
Some companies hold back a large portion of their battery pack to protect against degradation, so this is likely part of the reason that Ford’s big battery doesn’t offer as much range as Tesla’s smaller one. While the engineer didn’t explicitly confirm this, they did say Ford wanted to be conservative in order to avoid problems down the line (like Tesla’s legal issues related to capacity).
In response to a question about the Mach-E’s 150kW charge rate and whether the car would ever be able to charge any faster than that, the engineer pointed out that it would be silly to build a car with wires capable of accepting 350kW and not use them.
The Mach-E does have slightly disappointing charging specs. Ford states that it will be capable of 150kW charging, which is more than most cars on the road these days. But Ford also says that the car will be able to add 47 miles of charge in 10 minutes. This works out to a peak charge rate of about 90-100kW based on the car’s battery size and range, not 150kW. This must be another thing Ford is being conservative on. In comparison, Teslas are currently capable of 250kW charging – and the engineer was highly complimentary of Tesla’s battery and charging capabilities.
Related to these battery and charging specs, the engineer said that the Mach-E has been built with the same operating temperatures in mind as the rest of Ford’s vehicles. Ford considers -50C to 60C (-58F to 140F) as their vehicles’ operating spec, and the Mach-E is being built with those temperatures in mind. So the Ford ought to be able to operate even in the coldest winters or the hottest summers.
The engineer was less complimentary of Tesla’s manufacturing capabilities. While they had great things to say about Tesla’s battery and motor engineering (which “outpaces the industry by 5yrs easy”), they were very negative about Tesla’s build quality. In contrast, they said that they think the Mach-E’s interior quality is “probably the nicest interior we offer outside of Lincoln, it’s jaw dropping.”
The engineer also stated that Ford’s warranty is superior, “with all powertrain components covered by 8yrs, instead of just the battery in Tesla” (this is not true, Tesla’s powertrain warranty covers both the battery and drive unit and has for several years).
In response to questions about the decision to call the Mach-E a “Mustang” and whether Ford is serious about this car, the engineer pointed out that Ford employees seem increasingly onboard with the Mach-E project. Even the skeptical among them have had their minds changed as they’ve learned more about the Mach-E. They specifically called out Dave Pericak, former chief engineer for the Mustang line, as being “really hard to convince, but he’s a Mach-E supporter now.”
Part of the reason the traditionalists came around is because the Mach-E is seen as the vehicle that could save the entire Mustang line. With stricter standards for fuel economy and emissions, and with the public coming around to the knowledge that electric is better for performance anyway, the big V8s of traditional muscle cars can’t really stick around forever. The engineer repeatedly pointed out that the Chevy Camaro is being discontinued (this may or may not be true), and that Ford wanted to avoid the same fate for the Mustang.
GM has explicitly stated this as their motivation for building EVs, saying that they need electric cars in order to sell more SUVs. It seems that Ford, despite all indications that the Mach-E project is being taken very seriously within the company, has the same mentality as GM in this respect. Not quite the best way to reduce emissions if all you’re going to do is offset your reductions by selling more gas guzzlers.
So, Ford employees seem to like the Mach-E. Why?
The engineer teased a few features which do seem novel. The Mach-E has a face camera in the steering wheel cluster which will be used for future autonomous driving purposes. It will be able to detect whether or not the driver is in the seat and paying attention to the road. The engineer suggests that this will be better than Tesla’s “autopilot nag” warnings which require steering wheel movement every once in a while, allowing a “more natural experience and you can rest your arms.”
Another way the engineer sees the Mach-E as being better than Tesla is in the infotainment cluster. As we pointed out in our Tesla Model 3 review, Tesla’s infotainment is just so much better, more responsive, more usable, etc., than every other car out there. The engineer stated that Ford’s infotainment has one-upped Tesla in his opinion. They consider the infotainment system the “coolest thing” in the Mach-E.
The reason for this is because of the physical control knob that Ford has added to the bottom of the screen, allowing easier operation without taking the driver’s eyes off the road.
Also, the Mach-E’s cluster will be capable of side-by-side displays of both Ford’s “sync” infotainment system and Apple CarPlay or Android Auto. Tesla does not use either CarPlay or Android Auto, and many owners have asked Tesla to add it. So for those who want access to it, or prefer having a choice between using the native car system or their phone’s system, Ford will provide more flexibility there.
The engineer said the car’s computer has been overengineered with more than enough processor power and memory for very fluid operation and plenty of futureproofing. This should help as Ford plans to put out over-the-air updates, in similar manner to Tesla, to improve the car after release. The engineer couldn’t confirm whether those over-the-air updates would be free, but said “it will be an analogous situation to the Tesla ownership experience,” which suggests they will be. They teased interesting updates, saying “The OTA is really going to bring some special things. Stay tuned!”
Finally, the engineer repeated a couple other points several times. First, they stated that what they like about the Mach-E is that it has so much more “soul” than any other electric car out yet. One can imagine that many electric car owners, who almost without exception love their electric cars and would buy one again, would disagree with the idea that EVs have no soul.
Second, the engineer said many times that the Mach-E shapes up well against the Model Y for one big reason: incentives. They stated that “our vehicle is more targeted at meeting federal and state rebates.” We are not sure what they meant by this, because there’s nothing specific in the design process required to meet those incentives (other than minimum battery capacities which are easy to meet).
But the Mach-E will qualify for incentives which the Model Y won’t qualify for. Because of the silly way that the US federal EV incentive is structured, companies that got a head-start on electrification and led the industry even when it was hard to do so are now disadvantaged against late movers. Every company gets 200,000 vehicles worth of credits before a gradual expiration of those credits begins, and Tesla has already worked through those credits (so has GM, but Ford has not).
So now that Ford shows up onto the scene about a decade late, they get a leg up on the company that paved the way for them. This means that, in comparison to the Tesla Model Y, the Mach-E has a big price advantage.
It should be noted that if Ford really is “targeted” at meeting incentives, this betrays a “compliance” mindset within the company. Ford told us that the Mach-E began as a compliance car and then changed into a more serious performance project, and the engineer echoed those comments in their AMA.
But we’ve seen other hints of this “compliance mindset” still existing in the Mach-E project. For example, Ford has already stated that they’ll send the majority of first-year production to Europe – for compliance with EU regs.
I’d like to reiterate that there were a number of inaccuracies in the engineer’s comments, and none of this is official from Ford, so it may or may not be true and of course, lots of things are subject to change before the car comes out at the end of this year. Do feel free to go and read the engineer’s full comments if you want to read some more rumors about this car. And let us know in the comments if you find anything else juicy.
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