Ford CEO Jim Farley takes off his mask at the Ford Built for America event at Fords Dearborn Truck Plant on September 17, 2020 in Dearborn, Michigan.
Nic Antaya | Getty Images
DETROIT – Ford Motor is set to report its fourth-quarter earnings after the bell Thursday. Here’s what Wall Street is expecting, according to Refinitiv consensus estimates:
Adjusted earnings per share: 62 cents
Automotive revenue: $40.37 billion
In October, Ford confirmed its prior full-year guidance of adjusted earnings before interest and taxes of between $11.5 billion and $12.5 billion. Through the first three quarters of the year, its brought in $7.9 billion, led by its North American operations.
If Ford meets or exceeds Wall Street’s top- and bottom-line expectations, EPS would more than double the 26 cents it reported for the same period a year earlier. Revenue would be an increase of 14.5% from the fourth quarter of 2021.
While investors will be monitoring the fourth-quarter results for signs of any waning consumer demand or profit dilution, Ford’s 2023 guidance is expected to be more of a focus.
Wall Street expects Ford’s full-year 2023 adjusted earnings per share outlook to mark a nearly 16% decline from 2022, according to Refinitiv estimates. That’s despite forecasting full-year revenue up 3.4% year over year to more than $151 billion, signaling lower operational profit compared with recent years.
Automakers have posted record or near-record results during the coronavirus pandemic amid a tight supply of new vehicles and resilient consumer demand. But that scenario is slowly normalizing, leaving new vehicle prices and profits in flux.
On Monday, Ford cut the price of its electric Mustang Mach-E, an early sign of a burgeoning EV price war spurred by Tesla.
Earlier Thursday, Ford reported January new vehicles sales that showed slight improvement over the same period last year.
There’s pressure on Ford to deliver a strong fourth quarter and relatively solid guidance. Crosstown rival General Motors on Tuesday significantly outperformed Wall Street’s expectations. The automaker also forecast stronger-than-expected 2023 results, including adjusted earnings before interest and taxes of $10.5 billion to $12.5 billion and adjusted earnings per share of between $6 and $7.
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Fordis boosting production of its popular Mustang Mach-E electric SUV and dropping its sticker price weeks after Tesla dropped prices of its vehicles. The move represents a substantial roll-back of price hikes Ford announced last summer on the 2023 models – but buyers may still be paying somewhat more than before the increases.
The Mustang Mach-E, a midsize electric family SUV, was the first serious electric effort for the Dearborn, Michigan-based automaker. Priced and aimed squarely at the Tesla Model Y, which has its own starting price of $53,490, the Mach-E is Ford’s bet to get new car buyers to dip their toes into the battery-powered future. it has since been joined in the electric Ford lineup by the workhorse Ford F-150 Lightning. But the company still considers the Mach-E a crucial step for the company’s electric-powered growth.
Late last year, Darren Palmer, Ford’s vice president of electric vehicle programs, told CNN Business that the Mach-E was completely sold out and the automaker was holding off on launching it in more global markets in order to catch up with US demand.
“We could sell it out at least two or three times over,” he said a the time.
The price cuts Ford announced Monday were biggest on the most expensive versions of the SUV, just as the increases had been biggest on those models. The base sticker of the Mustang Mach-E GT Extended Range, a high-performance version of the SUV, dropped to about $64,000 from $69,900 before, a decrease of $5,900. But that model had been about $62,000 before price increases last August.
When it announced those price bumps, Ford also said it was putting more standard features into the vehicles, including advanced driver assistance features.
The price of the least expensive Mach-E, the rear-wheel-drive standard range model, was cut $900, going from about $46,900 down to $46,000. The price of the extended range battery pack option, by itself, dropped from $8,600 down $7,000.
Tesla announced price cuts of as much as 20% on its electric vehicles earlier this month, after raising prices in 2022.
When Ford announced the price increases last summer, citing supply chain issues, the automakers indicated it would continue monitoring market conditions throughout the upcoming model year.
Ford announced last summer that it was increasing production of the Mach-E as it added capacity for more battery production. The automaker also announced in late August that it was reopening order banks for the Mach-E which had been closed as the company worked to meet existing orders.
Customers who complete the transaction for their Mach-E after today’s announcement will pay the new lower price, Ford said. Ford will reach out directly to Mach-E customers with a sale date after January 1, 2023 who already have their vehicles,the automaker said.
At least some versions of both models are currently eligible for federal electric vehicle tax credits, according to the Internal Revenue Service, but both are treated as cars, not SUVs, under the tax rules, unless equipped with a third row of seats.
That means that tax credits are available for the two-row only Mach-E and two-row Model Y only if the sticker price is below $55,000. For versions of the Model Y with a third row of seats, a $4,000 option, buyers may get tax credits with a sticker price up to $80,000.For the Mustang Mach-E, a third row of seats isn’t offered.
The final amount of the tax credit may depend on when the vehicle is actually delivered to the customer and, also, whether the customers themselves meet annual income requirements.
Customers wearing protective masks looks at the interior of a vehicle for sale at a Ford Motor Co. dealership in Colma, California, Feb. 1, 2021.
David Paul Morris | Bloomberg | Getty Images
DETROIT — As automakers chase Tesla-like profits on new electric vehicles, they face an existential question: how best to bring franchised auto dealers along with them as they transition to EVs.
Some, such as General Motors, are asking luxury dealers to go all-in on EVs or get out of the business. Others like Ford Motor are offering dealers different “EV-certification” levels, while most other carmakers, or OEMs, know they need to change the sales process to fit the evolving industry, but are still try to figure out how to do it.
“I think we’re all building this airplane as we fly,” Michael Alford, president of the National Auto Dealers Association, a trade association that represents more than 16,000 U.S. new franchised dealers, told CNBC. “Depending on the OEM, the level of engagement or the intensity of the engagement varies.”
Automakers and franchised dealers have a complex relationship that is backed, in many states, by laws that make it difficult, if not illegal, to bypass franchised dealers and sell new vehicles directly to consumers. (Tesla and other newer EV startups have worked around such regulations to cut costs.)
Both automakers and franchised dealers want to maximize profits, but they’re separate businesses that heavily rely on one another to succeed. Dealers rely on automakers for product to fill and move off lots, and the carmakers in turn rely on dealers to sell and service vehicles as well as serve as concierges for customers.
How that historical relationship fits into an all-electric future is expected to be at the forefront of discussions between automakers and dealers at the National Auto Dealers Association Show occurring through Sunday in Dallas. The event attracts thousands of franchise dealers annually to hear from their respective automotive brands.
For dealers — from mom-and-pop shops to large publicly traded chains — EVs will mean new employee training, infrastructure and substantial investments in their stores to be able to service, sell and charge the vehicles. Depending on the size of the dealer, those upgrades could easily cost hundreds of thousands, or millions, of dollars. Of course, they want to make sure their investments will pay off.
“The tone and tenor of this subject matter has evolved, and I think it’s very, very clear this year that our legacy OEMs absolutely realize that we are essential going forward,” said Alford, who runs Chevrolet and Cadillac dealerships in North Carolina.
Competing with Tesla
As more automakers introduce EVs, they’re rethinking the sales process, including selling new vehicles largely, if not fully, online. Tesla was among the first automakers to embrace online sales for a large portion of its business, though it still has physical dealerships, information sites and service shops.
A greater shift online may limit the role of dealers to strictly processing, maintenance and as delivery centers going forward and eliminate the need for large lots of cars that they then sell to consumers.
“By and large, the franchise system remains in place even for EVs by traditional automakers, although they all seem to be looking at ways to tweak it to be more competitive, so they say, with the Teslas of the world,” said Michelle Krebs, Cox Automotive executive analyst.
Automakers believe doing so will provide consumers a more streamlined and cohesive sales process, but they also consider the dealers to be their partners and to offer “strategic advantages” when it comes to other sales and maintenance issues.
A Tesla dealership in Colma, California, on Wednesday, Jan. 26, 2022.
David Paul Morris | Bloomberg | Getty Images
Honda Motor has said it plans to move more sales online, including 100% online sales for its luxury Acura brand for EVs. Mamadou Diallo, American Honda vice president of sales, said the plan is to facilitate the ordering process online, but with the vehicle being picked up or delivered by dealers. Those procedures are still being worked out, though, he said.
“We want to proceed with ensuring that we provide convenience with what customers are looking for, with no intention of bypassing our dealer body,” Mamadou said Tuesday during a media call.
Jay Vijayan, who assisted in building out Tesla’s digital and IT systems, doesn’t believe selling EVs exclusively online will pan out. He said a mix of sales points is best, which is why Tesla and newer EV startups are selling online as well as opening new showrooms and service centers.
“Apple still opens new stores, right? And every company you think is going to go direct is also opening new stores in the automotive space,” said Vijayan, founder and CEO of Tekion, a cloud-based dealer service provider.
Wall Street analysts have largely viewed direct-to-consumer sales as a means to optimize profit. However, there have been growing pains for Tesla when it comes to servicing its vehicles.
Ford CEO Jim Farley has said he wants the automaker’s dealers to cut selling and distribution costs by $2,000 per vehicle to be competitive with Tesla’s direct-to-consumer model.
Automaker approaches
Ford is among the automakers receiving the most pushback from dealers for its EV push, which includes EV-certification tiers that could cost more than $1 million per store, depending on the size of the dealership.
The Detroit automaker is facing legal challenges to the certification program from dealers who argue that the plan violates franchise laws. A group of 27 dealerships in Illinois filed a protest with the state’s motor vehicle review board, and four dealers in New York filed suit against the automaker last month, according to Automotive News.
Ford dealer Marc McEver said he signed on for the highest EV-certification tier at his dealership near Kansas City, Kansas, but he worries about the cost and timing of the program.
“I think we’re all concerned that what they’re having us put in now, by the time we really get some vehicles, will be outdated and need to be upgraded or replaced,” McEver, who also owns a Lincoln dealership, said.
Aside from the investments, dealers who opt into selling Ford EVs will need to abide by five standards to stay within good standing: clear and nonnegotiable pricing; charging investment; employee training; and improved vehicle purchasing and ownership experience for customer, both digitally and in person.
Ford on Saturday plans to outline some changes to its EV-certification tiers, according to two people familiar with the plans. The changes, as first reported by Automotive News, would narrow the differences between the program’s two tiers. The bottom tier comes with lower capital investment but also a smaller allocation of EVs from Ford.
Ford, though, unlike archrival General Motors, is allowing dealers to opt out of selling EVs and continue to sell the company’s gas-powered cars.
GM has offered buyouts to its Buick and Cadillac dealers that don’t want to shell out to sell EVs. About 320 of Cadillac’s 880 retailers took buyouts. Buick’s buyouts are ongoing, according to a spokesman.
Toyota Motor, for its part, has no plans to overhaul its franchised dealership network as it invests in electrified vehicles, CEO Akio Toyoda told dealers to resounding applause in September.
“I know you are anxious about the future. I know you are worried about how this business will change. While I can’t predict the future, I can promise you this: You, me, us, this business, this franchised model is not going anywhere. It’s staying just as it is,” said Toyoda, who will step down as CEO to become chairman in April.
CNBC’s Jim Cramer said that Thursday’s rally is thanks to a batch of strong company earnings.
“I’ve said over and over again that during earnings season, what matters is companies and the CEOs with the smarts to direct them,” he said.
related investing news
Stocks rose on Thursday as investors digested the latest batch of earnings and new gross domestic product data showing the U.S. economy grew by a higher-than-expected 2.9% in the fourth quarter.
Cramer said that contrary to what many might believe, the economic data didn’t drive the trading session’s rallies.
“That’s a classic misdirection play — just totally wrong. It’s stale. It doesn’t count. We’re in earnings season, for heaven’s sake,” he said, adding, “Stocks did well today because many of them delivered good numbers.”
He went over several examples of corporate news and earnings reports that fueled Thursday’s gains:
“It’s very confusing if you’re on permanent negative autopilot because you only pay attention to the [Federal Reserve]. If you watched the individual companies, these moves would be a lot less surprising,” Cramer said.
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The Nasdaq Composite rose Thursday as fourth-quarter gross domestic product came in above expectations, and investors parsed through the latest batch of corporate earnings.
The tech-heavy index jumped 1.2%, while the Dow Jones Industrial Average traded 104 points, or 0.3%, higher. The S&P 500 rose 0.6%.
GDP data released Thursday showed the economy expand at an annualized rate of 2.9% during the fourth quarter, the Commerce Department said. That’s above the 2.8% Dow Jones estimate, but represents a slight cooldown from the third-quarter reading.
“With today’s better-than-expected GDP number, I think investors are thinking, maybe we can get away with a pretty soft, mild recession that is not likely to throw us into an even deeper bear market when all is said and done,” said Sam Stovall, CFRA Research’s chief investment strategist.
Meanwhile, earnings season trudged on, with strong results from Tesla giving the Nasdaq and electric vehicle stocks a boost. Tesla jumped 9% after posting record revenue and solid earnings. Beaten-up technology giants Microsoft, Apple, Amazon and Alphabet added more than 1% each.
Airline earnings also rolled out, with Southwest falling on a larger-than-expected loss fueled by its holiday meltdown. American Airlines rose on a fourth-quarter beat.
Elsewhere, Chevron added 3% after announcing a $75 billion share repurchasing program.
Wall Street is coming off a mixed session, but all the major averages are headed for weekly, and monthly, gains. The Dow and S&P are up 1.5% and 1.9% so far this week, respectively. The Nasdaq has gained 3.1% this week and is on pace for its best month since July.
Focus now shifts to next week’s Federal Reserve policy, where the central bank is widely expected to announce a 25 basis point hike as it battles high inflation. Investors will be on the lookout for clue into how much further the Fed intends to hike before it cuts rates.
A Southwest Airlines Co. Boeing 737 passenger jet pushes back from a gate at Midway International Airport (MDW) in Chicago, Illinois.
Luke Sharrett | Bloomberg | Getty Images
Check out the companies making the biggest moves premarket:
Southwest — The airline dropped 2.1% after reporting a $220 million loss for the fourth quarter after the holiday meltdown cost the company millions in expenses and drove up expenses.
Comcast — The media company reported fourth-quarter earnings that beat Wall Street’s expectations, with earnings per share coming in at 82 cents, adjusted, versus the 77 cents expected from analysts surveyed by Refinitiv. Revenue was $30.55 billion compared to the $30.32 expected. Shares, however, were down less than 1% in the premarket.
Tesla — The electric-vehicle maker soared 7% after reporting record revenue and an earnings beat. CEO Elon Musk said Tesla might be able to produce 2 million cars this year.
Las Vegas Sands — Shares of the hotel and casino operator rose about 4% despite the company posting weaker-than-expected financial results for the most recent quarter. Wall Street analysts cited upbeat comments about its reopening in Macao on the company earnings call for their positive outlook on the stock.
Levi Strauss — Shares of the denim maker popped 6% premarket on a better-than-expected quarterly report. Levi Strauss topped analysts’ revenue estimates and beat earnings projections by 5 cents a share.
Blackstone — Blackstone shares dipped less than 1% after the asset manager reported mixed earnings results. Total segment revenues fell short of expectations, while distributable earnings beat estimates by 12 cents a share.
Chevron — The energy giant jumped more than 3% in premarket after the company announced a $75 billion stock buyback program and a dividend hike to $1.51 from $1.42 per share. The buyback program will become effective on April 1.
Dow — The chemicals giant posted fourth-quarter earnings, revenue and adjusted EBITDA that missed analyst expectations before the bell Thursday, sending the stock down more than 3% in premarket trading.
IBM — Shares of IBM shed 2.7% after the company reported quarterly results Wednesday that generally exceeded Wall Street’s expectations but included an announcement that the firm will cut 3,900 jobs. IBM reported adjusted earnings per share of $3.60 per share on $16.69 billion in revenue where analysts expected $3.60 per share and $16.4 billion in revenue, per Refinitiv.
American Airlines — The airline gained 1.5% after its fourth-quarter profits beat Wall Street’s expectations, thanks to strong holiday demand and high fares.
Seagate Technology — The data storage company jumped more than 8% in premarket trading after reporting earnings and revenue for the last quarter that beat expectations.
Pfizer — The pharma giant was downgraded by UBS on Thursday, which said Pfizer’s Covid franchise estimates need to come down and its pipeline is too premature. Pfizer was up less than 1% in the premarket.
— CNBC’s Carmen Reinicke, Yun Li, Samantha Subin, Tanaya Macheel and Michael Bloom contributed reporting.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
Stock futures fell in early trading on Wednesday as traders pored through the latest batch of corporate earnings.
Futures on the Dow Jones Industrial Average futures declined by 222 points, or 0.66%. Nasdaq-100 futures shed 1.3%, and S&P 500 futures fell 0.8%.
Shares of Microsoft dropped 2%. Initially shares rose after the tech giant posted fiscal second quarter per-share earnings that exceeded analysts’ estimates. However, shares declined after the company offered lackluster guidance on its earnings call.
Investors are bracing for more high-profile corporate earnings amid fears of a recession. So far, more than 70 S&P 500 companies have reported fourth-quarter earnings, and 65% of them posted stronger-than-expected results, according to Refinitiv.
“With the bulk of earnings still in front of the market, the question as to whether the shift towards growth being signaled by recent rallies is warranted could be answered by upside earnings surprises and solid guidance,” said Quincy Krosby, chief global strategist at LPL Financial.
Tesla, Boeing, IBM and AT&T are among the companies slated to post numbers on Wednesday.
The moves followed a three-day winning streak for the blue-chip Dow. All three major averages are up at least 1% week to date.
A Tesla showroom is seen in the City Center shopping center on January 17, 2023 in Washington, DC.
Anna Moneymaker | Getty Images
DETROIT — Tesla vehicles in the U.S. are seeing significant price cuts, and that’s proving to be a double-edged sword for the electric carmaker and the greater automotive industry.
Tesla earlier this month slashed prices of its new cars by as much as 20%, making the vehicles more affordable and likely eligible for federal tax credits. But it also tanks the resale values of cars for current owners and is sending ripple effects through the auto industry.
CEO Elon Musk hasn’t directly addressed the price cuts, which are counterintuitive to his claims that the company’s cars will be appreciating assets — a rarity for the market aside from classics and collectible vehicles.
Analysts say the price cuts suggest Tesla is prioritizing sales over profits, potentially signaling a demand problem.
“There’s demand weakening, and they want to improve their sales — or it’s a market share grab,” said Michelle Krebs, Cox Automotive executive analyst.
For the industry at large, Tesla’s price cuts put pressure on other automakers to offer more affordable EVs despite rising commodity costs, creates havoc for used vehicle retailers that will need to write down the vehicles and has Wall Street concerned about the first EV pricing war amid recessionary fears.
“Tesla’s price cuts make all other EVs and [internal combustion engine vehicles] look incrementally more expensive, is margin compressive and sends a chill across the used car market,” Morgan Stanley analyst Adam Jonas wrote in a Friday investor note.
Automakers change prices regularly on new vehicles. It’s typically done through incentives or when a new model year comes out. But the adjustments, upward or downward, are historically small to avoid upsetting the automotive ecosystem for both consumers and car dealers.
Musk foreshadowed such a move last month in predicting a recession later this year.
“Do you want to grow unit volume, in which case you have to adjust prices downward? Or do you want to grow at a lower rate, or go steady?” Musk said Dec. 22 during a Twitter Spaces conversation. “My bias would be to say let’s grow as fast as we can without putting the company at risk.”
Tesla is due to report fourth-quarter earnings Wednesday after market close.
Used prices
When the price of a new vehicle drops, the value of the used models also takes a hit. In the case of Tesla, some of the new models were going for almost the same price — just thousands of dollars off — as their used counterparts. That’s problematic for current owners as well as used vehicle retailers and Tesla, which sells used models directly to consumers.
In the first 17 days of January, Edmunds reports, used prices of 2020 model year or newer Teslas dropped to an average price of $58,657 — 24.5% off their June peak of $76,626.
Tesla’s stock performance over the past year.
Cars.com reports list prices for used vehicles on the consumer-shopping website declined 3.3% for the Model Y and Model 3 as owners attempt to hold the line on resell pricing despite cuts to the new vehicles.
“The Tesla price cuts will affect consumers quite differently depending on which side of the news they sit,” Ivan Drury, Edmunds’ director of insights, said.
On one hand, Tesla owners have complained to billionaire CEO and Twitter owner Musk on the social media platform that the price cuts devalue their vehicles. In China, where price cuts took effect earlier than in the U.S., protesters reportedly gathered at the automaker’s showrooms and distribution centers demanding rebates and credits.
Recent Tesla buyers who missed out on the fresh price cuts are petitioning Musk and the company to make them whole. They have sought free, premium driver-assistance upgrades, free Supercharging and other pluses to offset their higher price tags.
At the same time, Cars.com and Edmunds both report interest in and searches for Tesla vehicles have skyrocketed since the reductions.
CarMax, the nation’s largest seller of used vehicles, quickly sold hundreds of Teslas after realigning prices. It only had about 150 Tesla cars for sale as of Tuesday, down from hundreds before the company cut prices.
“We continuously adjust retail vehicle pricing in real time to match market conditions and offer competitive pricing,” CarMax Chief Operating Officer Joe Wilson said in an emailed statement. “As such, we adjusted pricing to respond to the market conditions related to new car price reductions and this has been received positively from consumers looking to purchase a used Tesla.”
Peer pressure
Wall Street analysts were largely positive on the cuts for Tesla as a boon for sales.
Tesla has enjoyed significantly higher profit margin on its EVs compared to traditional automakers. Its software and subscription offerings, including its advanced-driver assistance systems and in-vehicle Wi-Fi, could help cushion anticipated profit losses due to the recent price cuts, as could EV tax credits.
Plus, the price reductions pressure other automakers, or OEMS, to cut prices on their own EVs.
“Most OEMs are currently losing money on EVs, and these price cuts are likely to make business even more difficult, just as they are attempting to ramp production of EV offerings,” BofA Securities analyst John Murphy wrote to investors earlier this month.
Gerald Johnson, General Motors’ head of global manufacturing, said Tesla’s cuts don’t change the company’s manufacturing plan for electric vehicles. The automaker currently sells its sub-$30,000 Chevy Bolt EV models — among the most affordable in the industry — as well as higher-priced models on a new battery system.
“We believe we have an EV for every price bracket and every market segment that we’re rolling out here,” Johnson said Friday during an event in Flint, Michigan. He said Tesla’s price cuts signal that the vehicles “may have been overpriced to begin with.”
GM cut the prices of its Bolt models by thousands of dollars last year, only to recently raise them by hundreds of dollars, citing industry pricing pressures.
– CNBC’s Lora Kolodny and Michael Bloom contributed to this report.
Alex Spiro, attorney to Elon Musk, center, departs court in San Francisco, California, US, on Tuesday, Jan. 17, 2023.
Benjamin Fanjoy | Bloomberg | Getty Images
Tesla CEO Elon Musk appeared in a San Francisco federal court on Friday to defend tweets he posted to his tens of millions of followers in August 2018.
The tweets said he had “funding secured” to take his electric vehicle company private for $420 per share, and that “investor support” for such a deal was “confirmed.”
Tesla’s stock trading initially halted after the tweets, then shares were highly volatile for weeks. Musk later said that he had been in discussions with Saudi Arabia’s sovereign wealth fund and felt sure that funding would come through at his proposed price. A deal never materialized.
The SEC charged Musk and Tesla with civil securities fraud after the tweets. Musk and Tesla each paid $20 million fines to the agency, and struck a revised settlement agreement that required Musk to temporarily relinquish his role as chairman of the board at Tesla.
His 2018 tweets also triggered a shareholder class action lawsuit from Tesla investors. They alleged that Musk’s tweets misled them and said relying on his statements to make trades cost them significant amounts of money.
The shareholders’ trades in question took place during a 10-day period before Musk seemed to admit a take-private deal was not going to happen in 2018.
Musk said under oath on Friday that it’s difficult to link Tesla’s stock price to his tweets.
“There have been many cases where I thought that if I were to tweet something, the stock price would go down,” Musk said. “For example, at one point I tweeted that I thought that, in my opinion, the stock price was too high…and it went went higher, which was, which is, you know, counterintuitive.”
A big increase in trading volume after he tweeted
It’s rare for top executives at publicly traded companies to discuss their stock price because any commentary can influence price movements.
Daniel Taylor, director of the Wharton Forensics Analytics Lab and professor at the University of Pennsylvania, analyzed every trade in Tesla stock occurring on Aug. 7, 2018, the day that Musk tweeted. He calculated the total trading volume every minute from the time the market opened through the time of Musk’s tweets about a buyout.
Taylor found that the trading volume the minute Musk tweeted, at 12:48 p.m. ET that day, was over $350 million, and the trading volume for Tesla shares the next minute was over $250 million. By comparison, the average volume five minutes before Musk tweeted was $32 million per minute. The minute before Musk tweeted, trading volume was $24 million.
“It is generally true that correlation is not causation,” Taylor told CNBC on Friday, after Musk’s first day on the witness stand. “However, I am unaware of any alternative explanation for a 10-fold increase in trading volume the same minute that Elon Musk tweeted.”
Musk also testified about his low opinion of short sellers on Friday.
“I believe short selling should be made illegal,” Musk said, referring to short sellers as “bad people on Wall Street” who “steal” from other investors. He said they also plant stories in the media to “get the stock to go down” and will “do anything in their power to make a company die.”
Tesla was among the most heavily shorted stocks in August 2018, when Musk made the statements about taking Tesla private. Tesla’s share price surged about 10% during trading that day. Short sellers face enormous losses when shares in a given company climb higher.
Some of the plaintiffs in the trial that’s underway claim that Musk’s “funding secured” tweets were intended to put upward price pressure on Tesla’s stock driving a so-called “short squeeze.”
Musk’s testimony is not yet complete and the court plans to hear from him again on Monday.
A sign is posted in front of a Wendy’s restaurant on August 10, 2022 in Petaluma, California.
Justin Sullivan | Getty Images
Check out the companies making headlines in midday trading.
JPMorgan – Shares of the biggest U.S. bank by assets rose more than 2% after the firm posted fourth-quarter profit and revenue that topped expectations. The New York-based bank said profit jumped 6% from the year earlier period to $11.01 billion, or $3.57 per share. Interest income at the bank surged 48% on higher rates and loan growth.
Citigroup — Citigroup’s stock added more than 1% as the company reported a record fourth quarter for fixed income. The bank said net income decreased during the period by more than 21% over last year as it set aside more money for potential credit losses.
Delta Air Lines — The airline stock edged about 4% lower after the company said in its outlook that higher labor costs would hurt its first-quarter profits. Delta topped analysts’ expectations on the top and bottom lines for the fourth quarter.
Wendy’s — The fast-food chain’s stock added 5.7% after Wendy’s shared positive preliminary fourth-quarter results and announced a handful of reshuffles within its corporate structure. A regulatory filing also indicated that Nelson Peltz does not want to take over Wendy’s.
Wells Fargo – The bank stock dipped 0.1% after the firm reported shrinking profits, weighed down by a recent settlement and the need to build up reserves amid a deteriorating economy. Wells Fargo’s net income tumbled 50% to $2.86 billion from $5.75 billion a year ago. The bank set aside $957 million for credit losses after reducing its provisions by $452 million a year ago.
Bank of America —The financial stock rose less than 1% on Friday after Bank of America beat estimates on the top and bottom lines for the fourth quarter. A sharp rise in net interest income helped the results, though management cautioned that the metric could decline sequentially in the first quarter. CEO Brian Moynihan also said that a mild recession was the firm’s baseline assumption for 2023.
Virgin Galactic Holdings — The space tourism company jumped nearly 13% after it said it was on track for a commercial launch in the second quarter of 2023. The company also announced its president of aerospace systems, Swami Iyer, was leaving.
Tesla — Shares of the electric-vehicle maker shed more than 2% after being downgraded to sell from neutral by Guggenheim and cutting prices on its vehicles in the U.S. and Europe. In its downgrade, Guggenheim cited concerns with Tesla’s fourth-quarter estimates.
Bank of New York Mellon — Shares of the mid-sized bank rose 2.5% on Friday after the company reported net income of $509 million for the fourth quarter. That was down 38% year over year but up about 60% from the third quarter. That profit rose to $1.1 billion, or $1.30 per share, when excluding certain items, but it is unclear if those results were comparable to analysts’ estimates.
UnitedHealth — The health-care stock advanced more than 1% after the company surpassed Wall Street’s fourth-quarter expectations. UnitedHealth reported adjusted earnings of $5.34 a share on $82.8 billion in revenue. Analysts polled by Refinitiv expected earnings of $5.17 per share on revenues of $82.59 billion.
Lockheed Martin — The defense stock slipped more than 3% after Goldman Sachs downgraded shares to sell from a neutral rating. The firm said shares could fall if the government trims defense spending. Northrop Grumman shares also dove 5% on Goldman’s downgrade to a sell from neutral rating.
Salesforce — The software stock shed 1% following a downgrade to neutral from overweight by Atlantic Equities. The firm said the stock would likely be hurt by executive departures and slowed growth.
Logitech — Shares of the consumer electronics company dipped 3.3% after Deutsche Bank downgraded the shares to a hold from a buy rating. The decline built on Thursday’s losses after reporting preliminary results that signaled slowing sales and earnings.
Warner Music Group – Shares of Warner Music Group shed 5.5% after Guggenheim cut its rating on the stock to neutral from buy and trimmed its price target to $35 from $38, citing worries about revenue from the music streaming service.
Copa — Shares of the Latin American airline jumped 4.9% following an upgrade to overweight from a neutral rating by analysts at JPMorgan. The bank said shares could rally 50% as air travels resurges.
AutoNation — AutoNation’s stock fell 4.3% as Wells Fargo downgraded the automotive retailer to equal weight from an overweight rating, saying that its valuation looks “reasonable” and estimates look too high.
— CNBC’s Jesse Pound, Yun Li, Michelle Fox, Alex Harring and Carmen Reinicke contributed reporting
