Today in the Market (7/20/2023)

Good Evening! In Thursday’s trading session, stock market performance varied. The Nasdaq experienced a significant decline due to Tesla (TSLA) and Netflix (NFLX) updates, which diminished the positive sentiment surrounding the earnings season.

The Nasdaq Composite experienced a decline of 2.05%. In contrast, the S&P 500 had a more moderate decrease of 0.4%. The Dow Jones witnessed an increase of 0.47% primarily due to a significant 6% surge from Johnson & Johnson (JNJ).

MARGINS ARE DOWN

Tesla’s (TSLA) experienced a significant decline of 10.10%, marking its worst performance since April. This decline followed the company had surpassed revenue and earnings expectations. However, the report also indicated that Tesla’s profit margins fell short of anticipated levels.

  • Revenue: $24.9 Billion vs. $24.51 Billion Expected
  • Earnings Per Share: $0.91 vs. $0.81 Expected
  • Gross Margin: 18.2% vs. 18.8% Expected
  • Operating Margin: 9.6% vs. 10% one year ago

For anyone still waiting for the Cybertruck… Tesla announced that it is currently engaged in the installation of Cybertruck equipment at its gigafactory in Austin, Texas. The company plans to commence initial production and customer deliveries of the Cybertruck “later this year.”

Looking forward… Musk disclosed that Tesla currently possesses approximately 50,000 Supercharger connectors and more than 5,000 stations worldwide. Also, Musk revealed that the company is currently engaged in preliminary negotiations with a significant original equipment manufacturer (OEM) regarding the licensing of its complete autonomous driving software, known as full-self driving (FSD) software.

WHO WILL WIN?

Temu, a Chinese e-commerce platform known for offering inexpensive products, has initiated an antitrust lawsuit in a United States federal court against Shein, another Chinese fast-fashion application. Temu alleges that Shein exerted pressure on manufacturers to discontinue their association with Temu

So how far has Shein gone? The lawsuit claims that Shein engaged in bullying tactics against 8,338 individual suppliers in China, pressuring them into signing loyalty agreements that prohibited them from manufacturing Temu products. Additionally, fines were imposed on those who collaborated with the competitor.

Why try and fight Shein? Shein generates annual sales of $30 billion, surpassing traditional fast-fashion brands such as Forever 21 and H&M. However, Shein is now facing competition from imitators such as Temu, which is beginning to outperform Shein in its own field. In May, the U.S. allocated a 20% greater amount of funds to Temu compared to Shein. So imagine what would happen if manufacturers can go back to making products for Temu?

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