Wednesday’s Closing Stock Market Stats
Closing Volume
– NYSE volume 11% below its one-month average;
– NASDAQ volume 1% above its one-month average;
– VIX index: down 3.64% to 16.68
Breadth
S&P 500 Sectors
% Movers
Heat Maps
Position: None
Tesla Shares Higher After Surprise Positive Cash Flow But Then Turn Lower
Tesla ($TSLA) shares are up a little over 1% after beating on the bottom line and reporting $1.5 billion of positive free cash flow versus expectations for a loss of $5 billion, assuaging some concerns surrounding the firm’s increased investments into robotics and AI. In that regard, capex was well under expectations at $4.73 billion (vs $2.25 billion the year-ago period). $7.95 billion was expected according to Bloomberg.
Gross margin also beat at 19.6%, while adjusted EPS of 48 cents topped estimates. Weakness was seen though in operating income which fell 56% from the year-ago quarter.
Revenue in Tesla’s core automotive business declined 3% from a year earlier, and while positive, free cash flow was down 62% year-over-year.
Active full self-driving (FSD) subscriptions rose to 1.74 million, up from 1.48 million in Q2.
The full slide deck presentation is here.
Bloomberg also has an ongoing live blog for Tesla.
Update: Tesla shares turned lower after Travis Axelrod, Tesla’s head of investor relations opened up the conference call with “We will not be addressing any questions today on a potential merger with SpaceX ($SPCX).”
Good News for Tesla and Meta, But Good Enough to Attract New Buyers?
Mark Zuckerberg said his company hit major milestones toward what he calls personal super intelligence.
Wednesday’s After-Hours Movers
At 4:20 p.m.:
Position: None
Meta Rises After Raising Guidance and Introducing New Share Class
Meta Platforms ($META) shares are up 3% in the after-hours after better than expected Q3 revenues and a raise to Q4 guidance to $73 billion to $76 billion, above analyst estimates of $73.6 billion according to Bloomberg. The firm though declined to provide a 2027 outlook.
The company also lifted the bottom of its 2026 capex to $135 billion (to $145 billion) from $130 billion previously.
But the headline may be the creation of a new class of publicly listed non-voting Class C common stock, with an effective date in January 2027. The goal is to “provide Meta the ability to finance its growth and help the company remain a leader among fierce competition both domestic and international.” The new class of shares will be distributed to existing investors through a stock dividend. Holders will get one share of the new stock in what will essentially be a two-for-one stock split, Meta said.
“Our investments are paying off, the core business is strong, and we’re seeing velocity across the board,” Chief Executive Officer Mark Zuckerberg said in Wednesday’s report.
Bloomberg has a live chat ongoing if you want to follow the twists and turns of the earnings call.
Taking a Small Short in Tesla
After a quick look at the EPS release (revenues in line) I am taking a small trading short rental in Tesla ($TSLA) at $394.34.
This is a low conviction trade.
Position: Short TSLA (S)
Back to S on SPY Short
Back shorting $SPY at $773.46. Back to S from VS.
Position: Short SPY (S)
There’s No Gold in Them Thar Hills Today
Position: None
Will Meta Break Hyperscaler Bond Drought?
Ahead of Meta’s ($META) earnings, 5-year credit default swaps hit new record highs on Tuesday across a range of the largest Tech companies.
“Credit default swaps tied to Oracle Corp. ($ORCL), broadly seen as a barometer for AI debt risk, traded as high as a record 343 basis points, ICE Data Services data shows. A gauge of Meta’s credit risk has also touched an all-time high, soaring as much as 6.3 basis points to 114.8 basis points ahead of its earnings report Wednesday, the data shows.”
“We have yet to find some kind of a landing zone for the level of debt issuance that the market needs to absorb,” said Lotfi Karoui, multi-asset credit strategist at Pacific Investment Management Co in an interview Tuesday. “There’s still a wide range of estimates as how much debt capital this build out will end up consuming in general.”
That comes after $451 million of hyperscaler bonds were bought on Monday, the highest net buying since mid-September — likely a result of investors selling hyperscaler debt due to supply and demand concerns, according to Bank of America.
With the rise in funding costs there hasn’t been a hyperscaler bond deal in two months. We’ll see if we get news of one from Meta who previously said in April they would not issue again until the fourth quarter. Notably, Meta has moved up its normal last Wednesday of October reporting date a week, many think to do just that.
Source: Bloomberg