đźš— Tesla's profit, Elon's outburst

Friday, May 1, 2020 by Snacks
Microsoft to Zoom: "You are not enough"

Microsoft to Zoom: "You are not enough"

Yesterday’s Market Moves
Dow Jones
24,346 (-1.17%)
S&P 500
2,912 (-0.92%)
Nasdaq
8,890 (-0.28%)
Bitcoin
$8,753 (+0.15%)
10-Yr US Treasury
0.636%

Hey Snackers,

After about a year, April is (finally) over. May the 1st be with you, and may the thirst be with these two guys who live in a London pub — locked down with free beer on tap, not too shabby.

US markets dipped on some sad economic data: over 3.8M Americans filed for unemployment last week, bringing the total of newly unemployed to 30M in just 6 weeks. Consumer spending dropped 7.5% in March, exceeding the previous record drop of 2.1% set in January 1987. Still, US stocks had their best month since 1987 — the S&P 500 gained almost 13% in April.

FYI, join our Instagram Live "Snacks Break" @ 4:30pm EST today — we're chatting corona-conomy takeaways, answering your questions, and may wear slammin' salmon head-to-toe — @RobinhoodSnacks

Earn

1. Tesla makes a (surprise) profit, Elon makes a (surprise?) outburst — A Tale of Two Outlooks

Congratulations, it's a profit!.. Tesla cutting its earnings reveal cake. The electric car icon made investors smile after posting its 3rd straight quarter of profitability (its longest streak ever), despite corona-related production disruptions like the shutdown of its key Shanghai and Bay Area factories. Tesla can thank a combo of cost cuts + sales bumps for that:

  • +32%: How much Tesla's sales increased compared to first quarter 2019.
  • -13%: The drop in Tesla's operating expenses compared to 2019.
  • $16M: Tesla's profit on $6B in sales — it lost $702M during the same quarter last year.
  • 25.5%: Tesla's gross margin (how much sales $$$ it actually keeps after expenses) — up from 20.2% last year.

PR's having whiplash... Tesla's PR team barely had 5 minutes to bask in this post-earnings glow when Elon decided to leave no doubt about where he stands vis-a-vis lockdowns (this all happened mid-earnings call, btw). Spoiler: he hates them.

  • "Forcibly imprisoning" — What Elon thinks the gov-sponsored lockdowns are doing (against people's constitutional rights). He called enforceable orders to stay at home "fascist."
  • "Dumb" — What Elon called the coronavirus panic back in early March. He also predicted there would "probably" be "close to zero" new US COVID-19 cases by end of April.
  • "A serious risk" — Musk is worried that Tesla won't be able to resume operations at its major factory in the SF Bay Area. In March, Elon defied state-wide lockdown orders to keep the plant open (but was later compelled to shut it down). Now the Bay Area has extended its stay-at-home order through all of May.
THE TAKEAWAY

Two sides of the "end corona-conomy" debate... The more publicly touted, less media-stirring position is that current lockdowns are necessary until COVID-19 infection rates fall more. Facebook's Zuck is worried reopening too fast will lead to future outbreaks and worse health/economic consequences. Then there are biz leaders like Elon who believe the biggest threat is the actual effect of the locked down economy (rather than the virus). Zuck vs. Musk.

Thrive

2. Microsoft crushes earnings — now it's ready to crush an unlikely competitor

Don't call it soft... The world's most valuable publicly-traded company, Microsoft, just revealed extra strong quarterly earnings. Success in its high-flying cloud biz offset corona-related losses (like interruption of Surface laptop/tablet production). The OG software star seemed to barely feel any pandemic business pain at all. Au contraire...

  • Sales jumped 15% to $35B and profits came in at a thick $11B — that's 22% more profit than what Microsoft squeezed out of the same quarter last year.

Just crushed earnings, BRB... Have to go crush my rival now. Microsoft’s remote workplace tool, Teams, has been referred to as a less-sexy version of Slack. But Teams DGAFs because its daily users jumped 70% from 44M in mid-March to 75M today. On 1 day in April, a whopping 200M people were logged into Teams. And Teams' new enemy isn't Slack... it's Zoom:

  • “Teams is not just about having lots and lots of video meetings...” it's about "actually getting work done where meetings and video is one part" — Microsoft's CEO threw down this (not so) subtle shade at Zoom.
  • "Videoconferencing is not enough": What Microsoft wants Zoom to know — Teams offers video, but also a bunch of other collab functions.
THE TAKEAWAY

"One & Only" companies have weaknesses... "One & Only" companies like Zoom do just 1 thing really well. But a "One & Many" company like Microsoft can offer better integration with its existing products (think Word/Excel/PowerPoint and a broader suite of services to scale. Unless a company is a just-born young startup, it's more likely to go with a familiar option like Microsoft long-term over Zoom's single-product.

What else we’re Snackin’

  • Tweety: Twitter posts its strongest quarterly user growth ever, but also its first loss in 2 years because of ad-pocalypse.
  • Polynesian: Chick-fil-A launches meal kits, just a month after its sauces started selling at some big supermarkets (spoiler: the only meal kit option is chicken parm).
  • Oh: Zoom admits that it doesn't actually have 300M daily active users — it has 300M daily participants (Becky with the 10-meeting marathon gets counted 10X).
  • L'Eggo: Kellogg's Eggo waffle sales surge a sweet 45% in March as you eat more breakfast at home.
  • Crunchy: Disney is in a lockdown programming crunch so it's releasing blockbusters (including Star Wars) straight to Disney+ ahead of scheduled summer theatrical releases.
  • Crew: J. Crew is reportedly prepping for a bankruptcy filing that could happen in the next few days — the private retailer is looking for $400M to fund its bankrupt operations.

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Friday

Disclosure: Authors of this Snacks own shares of Tesla and Microsoft

ID: 1173023

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