It is all about earning today; Tesla stock plummeted, Volkswagen confirmed its resilience and Total on track for share buybacks
Volkswagen
The world's biggest carmaker disclosed in its earning that softening demand has left a dent on its operating profit which fell by 8.1 percent. However, the company didn't back down from its full year outlook, unlike its rivals. The drop in profit was mainly due to the reason that less cars were delivered. Having said this, the company is in a much better shape and it has shown its resilience to the current industry turmoil. VW’ strategy to offer SUVs among its fleet of cars paid off good dividend because this was the area where VW didn't perform well before.
The key to be successful in the auto industry is to stay ahead of the curve and the race is on between all major brands to develop electric and driverless cars, something which requires enormous investment. The recipe to keep the cost low is to develop spare parts which can be used across various different models because this help in saving cost given that the company does offer small and mid-size vehicles.
Overall, we hold optimistic views on VW and it's especially because the company has also targeted truck business by bringing its own model Traton SE.
Tesla
Misery isn't over for Tesla and it seems that there is plenty more to come. This was the prime message or let's say the key takeaway from companies recent earning. Tesla shares plummeted due to worse than expected loss and there is more to come. The company lost $1.12, a share a number which is far bigger than the market expectation and the hopes of company returning to profit have diminished once again.
For Tesla the strongest demand comes from the Model 3, but unfortunately there isn't enough margin to cushion expenses. Thus, the record deliveries of Tesla Model 3 could not help the company. The firm needs to create a successful sales model not only for the US but also for its foreign market.
Another bombshell was dropped on investors by the founder of the company, Elon Musk. He changed another person at a senior executive role. J.B Straubel, who served the company for 15 years as a CTO, left the position and became an advisor. In January this year the chief financial officer was also change in a similar fashion. Changes at the management level under these conditions isn’t unusual but in the short time, it does rattle investor confidence.
Total
The French energy giant reported its earnings today, its net income dropped to 2.89 and there was a strong disappointment in its profit number, it fell short of estimates. Another lacklustre area was adjusted net income which was almost a fifth lower than the previous year. The weakness in the earnings is mainly due to the economic slowdown and the softness in the commodity prices. Nonetheless, the company's cash position is still strong and this enabled it to go ahead with the planned share buyback programme. Overall, we believe that the results aren’t bad at all from a shareholder’s perspective because Total has adopted aggressive measures for cost cuts and this enabled it maintain its dividend even if the oil price was below $50. investment
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