Wall Street Breakfast

Goldman plays catchup to Tesla's big run

Goldman hikes target, but Bill Gross says Tesla trades like a meme stock. (0:16) Samsung's 'indefinite' strike. (3:20) Citi says take AI profit. (4:03)

Show Notes
Carvana adds features to make it easier to buy electric vehicles
Baidu climbs after Beijing proposes draft rules for robotaxis

Episode transcripts: seekingalpha.com/wsb
Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.

Duration:: 5m
Broadcast on:: 10 Jul 2024
Audio Format:: mp3

Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action news and analysis. Good afternoon, today is Wednesday, July 10th, and I'm your host, Kim Ka. Our top story so far is today the day that Tesla's streak ends, bulls are looking for an 11th straight winning session, and its touch and go with shares slightly lower. Today Goldman Sachs boosted its price target to $248 on the stock after factoring in the Better Than Expected Q2 Deliveries report. Analyst Mark Delaney says, "The reduction in inventory levels is a positive sign for future pricing, all else equal. He still has a neutral rating on the stock, amid concerns about weak market conditions, two three production numbers, valuation and tariff risk." Investors have been bidding up Tesla and it now trades higher for the year after crossing the $250 level. Short interest on Tesla stands at only 3.3% of the total float. On Tuesday, bond guru Bill Gross said Tesla is acting like a meme stock with sagging fundamentals and straight up price action. "There seems to be a new meme stock every other day now," he said, of which most are pump and dump. He also mentioned chewy, zap electric and old favorite game stop. Speaking of winning streaks, the S&P 500 hasn't had a losing session in the second half. The benchmark index is slightly higher, with the NASDAQ performing better. Dollar yields are under a little pressure, as Fed Chief J. Powell speaks to Congress again, this time before the House Financial Services Committee. Powell said he believes that current Fed monetary policy is restrictive and that the neutral interest rate has moved up, at least in the short term. On the data front, may wholesale inventories are 0.6% on the month in line with consensus and up from a 0.1% rise in April. On a year-to-year basis, though, inventories fell 0.5%. Following active stocks today, Needham upgraded Carvana to buy from hold, calling it a secular growth story with a cyclical recovery kicker. Analyst Chris Pierce says Carvana can grow unit sales and industry share by leveraging its digital-first customer experience and underutilized physical footprint. In addition, Carvana announced the launch of new features that it said will make shopping for and buying used electric vehicle or plug-in hybrid easier and more accessible. That streamlined process highlights vehicles that qualify for the Clean Vehicle Tax Credit in the search experience and allows eligible customers to apply for up to $4,000 in savings from the credit checkout. Baidu's stock jumped in Hong Kong after Beijing authorities said they will support the introduction of robo-taxis in ride-hailing car rental fleets in the city. Baidu operates robo-taxi Apollo Go, its sixth generation was launched in Wuhan in May. Bloomberg says draft guidelines posted by the Beijing Municipal Bureau of Economy and Information Technology indicate that autonomous vehicles should have drivers or safety officers on board or be able to intercept remotely while robo-taxis are working. And Redburn Atlantic cut Spotify and order music group to sell rating, cite a competitive environment for the industry, and structural challenges that will curb broad-raced price hikes. As Baidu said, while Spotify's operating momentum has been impressive, consensus is simply forecasting too much growth, while the industry's looming structural risks have started to show and Warner's share price performance. In other news of note, what was initially a three-day strike has turned indefinite as unionized workers at Samsung attempt to pressure the company to provide higher wages and better benefits. Members of the National Samsung Electronics Union, which accounts for roughly 30,000 Samsung employees, say the company have not been willing to negotiate with them. Of the 30,000 employees, roughly 6,500 have walked out, including 5,000 of those in the company's semi-conductor division. The AP says Samsung has said no disruption to production has been incurred, and that the company remains committed to engaging in good faith negotiations with the union. The union said, though, that there have been certain disruptions to production in an effort to get management to negotiate. Even in the Wall Street Research Corner, city sales investors should take some gains in AI-high flyers, specifically those that are enablers, such as semiconductors, to redistribute them more broadly across other AI-value stocks. Unless Drew Pettit says, "This is predicated on our estimates of what market prices imply about future fundamental growth relative to consensus estimates, outright price action relative to historical growth index moves, and put versus call options market pricing." He said that although AI is not considered a bubble, certain names could be concerning, with unusually strong upside price action and options markets that are uncharacteristically pricing in greater near-term upside than downside volatility. City estimates that markets are pricing in about 19-27% free cash flow growth annually for the next five years for the market cat-weighted aggregate of high AI exposure stocks. Some of the best AI performance this year are Nvidia, Procept by Aerobotics, Aeroviriment, Helix Energy Solutions Group, Intuitive Surgical, Pegasystems, MicroStrategy, and Meta platforms. That's all for today's Wall Street Lunch. Look for links for stories in the shownet section. Don't forget, these episodes will be up with transcriptions at SeekingAlpha.com/WSE, and join the elite community of real investors to unearth great investing ideas. head to seekingalpha.com/subscriptions. [BLANK_AUDIO]