Tesla Earnings, Stocks flat as investors digest more earnings and the Fed’s Beige Book

US stocks ended flat after investors digested multiple earnings, a Beige book that didn’t show a recession was anywhere near, and ahead of what will probably be a steady stream of hawkish Fed speak.  Investors are staring down a list of Fed speakers that will probably push back on Fed’s Bostic call that they could hike once more and be done.  Fed’s Williams, Waller, Mester, Bowman and Harker might not agree with Bostic, while Goolsbee and Cook may lean towards him.

Tesla

Tesla shares were initially lower after a slight earnings miss and as they continue to signal further cost cutting measures.  Tesla price reductions are working,  but they struggled to hit the street’s gross margin estimates.  These cost reductions will support their market share advantage and ultimately help with their margins as production becomes more profitable.

Tesla is trying to do what it needs to do keep up the growth and that will be difficult given the current macro backdrop. Tesla was still able to affirm its guidance of 1.80 million vehicles, analysts expected 1.84 million. ​

Tesla Q1 Results (misses across the board):

• EPS $0.85 v $0.86 estimate
• Revenue $23.33 billion v $23.35 billion estimate
• Gross Margin 19.3% v 21.2% estimate
• Affirms Full-Year Production of 1.80 million vehicles v 1.84 estimate

Beige Book

The Beige Book noted that economic activity was little changed in recent weeks, which suggests this first key report that contained the early part of the banking crisis could suggest the Fed could be in a position to remain aggressive with fighting inflation.  Overall this report was not that downbeat as expectations for future growth were mostly unchanged, with only two districts having deteriorating outlooks.

Several Districts noted that banks tightened lending standards amid increased uncertainty and concerns about liquidity. The risks are there and only time will tell if lending volumes and load demand tank, but until they do, the Fed will have to remain vigilant with bringing down inflation.

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