Tesla's Already Bringing Its Gloom Into 2023. Elon Musk Needs to Act Now. -- Barrons.com

Barron's · 01/06/2023 06:45

-- The report said the tender could total at least $300 million in OpenAI share sales, they said. In the deal, the investors would buy the shares from existing shareholders such as employees. The deal isn't final and terms could change, the Journal said. OpenAI didn't comment. -- OpenAI, led by technology investor Sam Altman, started as a nonprofit in 2015, with initial backers including Tesla CEO Elon Musk and LinkedIn co-founder Reid Hoffman, the report said. It created a for-profit arm in 2019. -- ChatGPT can answer inquiries to questions users input and can produce essay answers. Its users crossed the one million mark shortly after it was introduced in November. OpenAI's goal is to create technology to mirror human intelligence and capabilities.-- Bed Bath is seeking more time to file its third-quarter results. Unaudited results project a wider-than-expected net loss of approximately $385.8 million. The company cited lower customer traffic in its stores and reduced inventory levels. -- Separately, Walgreens Boots Alliance slid 6.1% Thursday after its fiscal first-quarter earnings beat estimates but posted a $6.2 billion first-quarter operating loss, compared with $1.3 billion in operating income a year ago, because of a $6.5 billion pretax charge for opioid-related litigation. -- Stitch Fix, an online personal styling company, said its CEO was stepping down, and founder Katrina Lake is coming back as interim CEO. The company is further cutting staff by 20% -- about 330 jobs -- as it transforms into a "leaner, more nimble" organization. It announced 15% cuts in June. -- In contrast, warehouse retailer Costco Wholesale said same-store sales for December rose 5.5% compared with November's 4.3% gain. Core sales, excluding currency and fuel fluctuations, rose 7.3% compared with 4.6% in November.-- Samsung, seen as a bellwether for other big technology companies such as Apple, said profit probably declined 69% in the last three months of 2022 from a year earlier, in a trading update. Revenue is expected to have fallen 8.6%. -- Samsung said the reason for the drop in profit was due to reduced orders and price drops in its memory chip business, as well as poor sales of electronics and home appliances. -- The South Korean company is a major supplier to Apple and is also one of the world's biggest producers of smartphones and TVs in its own right. -- The tech sector had a rough year in 2022 as rising interest rates and faster inflation weighed on the economy. The tech-heavy Nasdaq index slumped more than 30%.-- As of Thursday evening, California Rep. Kevin McCarthy had failed to win the gavel after 11 ballots. He needs 218 votes with the whole chamber voting to prevail, but has lost successive votes over three days, largely because of 20 conservative GOP holdouts. -- Until a Speaker is elected, Congress can't form committee leadership or bring legislation to the floor, including GOP priorities such as border security. A House Rules package needs to be passed by the end of Jan. 13 or certain staff payrolls can't be processed. -- Former Rep. Billy Long tweeted Tuesday that until members are sworn in, they cannot legally help constituents with passports, taxes, veterans' issues, the postal service, and immigration. They also can't get briefed on national security issues. -- The District of Columbia, home to Congress and the rest of the federal government, won't be able to make new laws until Congress gets back to work, since it depends on Congress to pass them on its behalf, MarketWatch reported.-- Advanced Micro Devices CEO Lisa Su announced updates to the chip maker's Ryzen processors, including integrated artificial intelligence capabilities that make it 20% faster than the Apple M2 processor. It also unveiled an accelerator chip for the El Capitan supercomputer under development. -- Stellantis, the auto maker parent of Chrysler, Jeep, and other brands, unveiled a new battery-electric version of its Ram 1500 pickup truck, a Peugeot Inception concept car, a Dodge Charger Daytona SRT electric concept car, and a FIAT-branded metaverse showroom. -- Sony will sell a line of electric and autonomous cars in a joint venture with Honda under the brand Afeela. Sony Honda Mobility will take preorders in the first half of 2025 and start shipments in 2026. Sony also unveiled its second-generation PlayStation VR2 headset, launching Feb. 22. -- Qualcomm disclosed a deal with communications company Iridium to offer satellite-based two-way text messaging in Android phones starting in the second half of 2023. It also has a deal with Salesforce to track consumer behavior inside cars, including the media people use and how they drive.

Tesla's terrible start to 2023 only seems to be getting worse. The stock is already down more than 10% this year after just three full trading days and Friday looks to be another tough one.

The EV maker has cut prices in China again, presumably to boost demand, after deliveries fell to 55,800 in December from more than 100,000 in November. Tesla's global deliveries of 405,000 vehicles in the fourth quarter was a record but missed Wall Street expectations.

A Model 3 is now priced at 229,000 yuan, or about $33,000--around 30% cheaper than the same car on the U.S. website.

Demand is clearly becoming a problem for Tesla, particularly in China. The prospects of a global recession, and its vehicles becoming less affordable for consumers, suggests an upturn in demand is not around the corner.

Tesla is holding out as a global leader in the electric vehicle market but competitors are hot on its heels. The CES tech conference is providing a further reminder of that, with Sony, BMW and Stellantis all unveiling new electric vehicles.

After a poor 2022, during which the stock fell around 65%, those hoping the new year would bring fresh optimism for the stock have already suffered a heavy dose of disappointment.

Despite a bad run, the stock is still relatively expensive, trading at around 20 times forward earnings. In comparison Ford trades at 7 times forward earnings, and BMW at 6 times.

If Elon Musk has been distracted by his takeover of Twitter, a criticism leveled at him recently, now really is the time to refocus on Tesla. Investors need to know he has a plan.

-- Callum Keown

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Electric Vehicles, Artificial Intelligence Featured at CES 2023

The giant tech trade show CES is in full gear as an array of companies unveil their latest projects. On Thursday, agricultural equipment maker Deere's CEO John May described its latest technology to dramatically cut how much fertilizer farmers use in planting and an electric excavator for use on construction sites.

What's Next: Delta Air Lines is working with T-Mobile to offer free onboard Wi-Fi starting Feb. 1 on all domestic mainline flights through its SkyMiles membership program. It is also planning to reveal a new in-flight entertainment system this summer that will remember user preferences.

-- Janet H. Cho and Eric J. Savitz

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No House Speaker Means No Congressional Business

Until Republican members of the House of Representatives muster enough votes to elect someone House Speaker, representatives-elect can't get sworn in for the next Congress and a number of other congressional responsibilities remain on hold.

What's Next: Coming up, President Joe Biden is supposed to make his State of the Union address in Congress in the first quarter, along with introducing his budget. The Covid-19 public-health emergency could expire on April 10, and the student loan payment moratorium ends in June.

-- Janet H. Cho

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Samsung's Poor Performance May Have Implications for Apple

Consumer electronics giant Samsung said operating profit will drop sharply in the fourth quarter as demand for its products weakened.

What's Next: Samsung and Apple officially release earnings later this month. Samsung's estimated results published this week are well below analysts' forecasts.

-- Brian Swint

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Bed Bath & Beyond Ponders Bankruptcy as Some Retailers Struggle

Bed Bath & Beyond's stock fell 25% in its worst day since 1993 after the home-goods retailer expressed "substantial doubt" about its ability to stay in business, adding it was pursuing all options including restructuring debt or bankruptcy. Third-quarter sales are expected to drop 33%.

What's Next: Bed Bath & Beyond said it continues to pursue actions to improve its cash position. Despite reports it could seek bankruptcy within weeks, the company told Barron's that no determinations have been made, and it wouldn't comment on speculation.

-- Sabrina Escobar and Janet H. Cho

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ChatGPT's Creator In Deal Talks Aimed at $29 Billion Valuation

OpenAI, the research lab that runs the ChatGPT chatbot, is in talks with venture capital firms Thrive Capital and Founders Fund to sell existing shares in a tender offer that would value the company near $29 billion, The Wall Street Journal reported, citing people familiar with the matter.

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January 06, 2023 06:45 ET (11:45 GMT)