đŸ”» Tesla Misses Earnings

+ Earnings: Meta Bets Big, Microsoft Hits a Wall + Fed Hits the Pause Button

January 29, 2025

Good afternoon! Rich people aren’t just shopping online—they’re shoplifting, too. A new survey found that over half of Gen Z and nearly half of Millennials earning six figures admitted to committing “first-party fraud” in the past year, whether by falsely disputing charges, claiming lost packages that arrived, or even reversing losing sports bets. Unlike traditional theft, this form of fraud carries little risk, and many perpetrators see it as justifiable or even as a way to “fight back” against big retailers.

The mindset behind digital shoplifting? If corporations can afford it, why not? Nearly two-thirds of offenders say massive retailers can easily cover their bogus claims, and social media influencers are making these “hacks” look effortless. Fraud experts expect the trend to keep growing as more people realize how easy it is to game the system—especially when there’s no security guard standing at the exit.

MARKETS

*Stock data as of market close*

  • The Fed did exactly what everyone expected—kept rates steady at 4.25%-4.5%—but that didn’t stop markets from sulking. The Nasdaq fell 0.5%, the S&P 500 dipped 0.47%, and the Dow slid 0.3% as Powell reminded everyone that inflation isn’t quite tamed yet.

  • Tech stocks led the retreat, with Nvidia giving back some of Tuesday’s gains, while bond yields ticked up as traders braced for more economic data. With Big Tech earnings on deck, Wall Street is looking for something—anything—to shake off the post-Fed gloom.

STOCKS
Winners & Losers

What’s up 📈

  • Nextracker soared 24.28% after issuing a stronger-than-expected full-year earnings outlook, raising EPS estimates well above analysts' expectations. ($NXT)

  • Brinker International surged 16.29% following an exceptional quarter for the Chili’s parent company. ($EAT)

  • F5 jumped 11.40% after delivering strong earnings and better-than-expected guidance for the fiscal second quarter. ($FFIV)

  • Starbucks climbed 8.14% after beating both top and bottom-line estimates, with CEO Brian Niccol promising strong future growth. ($SBUX)

  • Trump Media popped 6.76% after announcing plans to expand into financial services, including potential crypto investments. ($DJT)

  • T-Mobile US gained 6.34% after posting an earnings beat and adding 903,000 postpaid phone subscribers, outpacing rivals Verizon and AT&T. ($TMUS)

  • Frontier Group rose 5.27% after proposing yet another merger with struggling Spirit Airlines, despite Spirit executives rejecting the deal. ($ULCC)

  • ASML added 4.29% as its Q4 net bookings significantly outperformed analyst expectations, indicating strong demand for its chipmaking tools. ($ASML)

  • Reddit gained 3.72% after Guggenheim highlighted its strong positioning in the digital ad space for 2025. ($RDDT)

What’s down 📉

  • LendingClub plummeted 14.32% after reporting higher-than-expected provisions for credit losses, overshadowing its financial performance. ($LC)

  • Moderna dropped 9.39% after Goldman Sachs downgraded the stock, citing concerns over slowing vaccine sales. ($MRNA)

  • Nvidia sank 4.10% as reports surfaced that the Trump administration may impose tighter restrictions on semiconductor sales to China. ($NVDA)

  • DataDog slipped 4.06% after Stifel downgraded the stock, citing revenue growth concerns and margin headwinds. ($DDOG)

  • Rivian Automotive fell 2.28% after Bernstein initiated coverage with an underperform rating, arguing that its long-term production goals aren't enough to create financial success. ($RIVN)

EARNINGS
Tesla Fourth-Quarter Results Miss Estimates As Automotive Revenue Drops 8%

Tesla’s Q4 results weren’t exactly electric—profits missed estimates, automotive revenue fell 8%, and margins shrank to 6.2%. But none of that mattered once Elon Musk started talking about Tesla’s glorious future. The stock initially dipped, then flipped positive after Musk reassured investors that 2025 will be the year Tesla returns to growth. With plans for a cheaper EV, self-driving tech, and even humanoid robots, Musk essentially told Wall Street: “Ignore the numbers, focus on the dream.”

Self-Driving Hype and a White House Connection

Musk is doubling down on AI, telling investors that fully autonomous Teslas will hit the streets this year and that the Cybercab—a driverless taxi—will arrive in 2026. Meanwhile, his growing influence in Washington could shape Tesla’s trajectory. As one of Trump’s key advisors, Musk has a front-row seat to potential regulatory shifts that could benefit his AI and self-driving ambitions. However, Trump’s proposed tariffs on Mexican and Canadian imports could dent Tesla’s bottom line, given its supply chain reliance on both countries.

Investors Are Betting on the Vision, Not the Numbers

Despite rising competition and an aging product lineup, Tesla’s market value has soared post-election, driven by optimism around Musk’s political clout. But reality looms: margins are shrinking, demand is softening, and price wars—especially in China—aren’t letting up. Tesla still holds a dominant position in the EV market, but it needs more than hype to maintain its $1.5 trillion valuation.

2025, Make or Break for Tesla: Musk insists Tesla will be “ridiculously good” by 2027, but investors won’t wait that long. The next 12 months will be critical, with cheaper EVs expected to revive demand, and self-driving tech facing regulatory and technological hurdles. For now, Tesla remains a high-stakes bet on Musk’s ability to turn grand visions into reality—and avoid getting lost in his own hype.

NEWS
Market Movements

EARNINGS
Big Tech’s AI Binge: Meta Bets Big, Microsoft Hits a Wall

Zuckerberg’s AI Ambitions Hype Up Investors

Mark Zuckerberg is on a mission to make Meta the AI kingpin. During Meta’s Q4 earnings call, he predicted that 2025 would be the year Meta AI reaches a billion people and that its AI engineering agents would rival mid-level software engineers. Despite a weaker-than-expected Q1 revenue forecast, the stock climbed 4.5% after hours as investors rallied behind Zuck’s AI-fueled optimism. Meta’s ad business remains strong, with Q4 revenue beating expectations at $48.4 billion, even as the company prepares to slash 5% of its workforce to “make space for new hires.”

Microsoft’s AI Boom Faces a Data Center Bottleneck

Meanwhile, Microsoft’s AI-powered growth is hitting a roadblock—there simply aren’t enough data centers to keep up with demand. While Azure AI services surged 157%, the company warned that cloud growth would remain sluggish until it expands capacity. That cautious outlook sent Microsoft’s stock down 5% in extended trading, despite Q4 revenue of $69.6 billion, slightly ahead of estimates. CFO Amy Hood reassured investors that the bottleneck should ease by the end of the fiscal year, but Wall Street remains skeptical of its $80 billion AI infrastructure investment.

The DeepSeek Disruption

Both Meta and Microsoft are plowing billions into AI, but a Chinese startup just threw a wrench into their plans. DeepSeek’s latest AI model claims to rival the best of U.S. tech at a fraction of the cost, sparking a $1 trillion market wipeout earlier this week. While Meta was spared from the carnage, analysts are questioning whether its $65 billion AI spending spree is visionary or just bloated. Microsoft, already struggling to monetize its AI push, now faces growing pressure to prove that its massive capital outlays will pay off.

AI Dreams vs. Investor Reality: Both tech giants are betting their futures on AI, but execution is everything. Meta is using AI to supercharge its ad business and roll out new consumer-facing tools, while Microsoft’s AI dominance hinges on fixing its cloud supply crunch. With investors growing impatient for returns, the real question is whether these AI moonshots will turn into sustainable profits—or just expensive hype.

ECONOMY
Fed Hits the Pause Button

Fed Chair Jerome Powell made it clear: interest rates aren’t going anywhere—for now. While traders were itching for a March rate cut, Powell’s message was more “let’s wait and see” than “get ready for liftoff.” The Fed wants proof inflation is truly under control before it starts easing, with Powell repeating (more than once) that policymakers need to see “serial readings” of cooling prices. Translation? The Fed isn’t convinced yet, and rate cuts might not come until June or later.

Trump vs. Powell: Round Two?

If you thought Trump and the Fed’s rocky relationship ended in 2020, think again. The former—and now current—president wasted no time slamming Powell on Truth Social, blaming him for past inflation woes and making it clear he wants rates slashed ASAP. Powell, unfazed, reiterated that the Fed’s decisions are driven by data, not presidential tweets.

Markets Take a Step Back

Investors weren’t thrilled. Stocks dipped, Treasury yields popped, and futures traders quickly adjusted expectations, pushing back bets on the first rate cut to June instead of March. While Powell didn’t slam the door on cuts this year, he also didn’t give the markets the green light they were hoping for. With inflation still hovering above the Fed’s 2% target and the economy chugging along, Powell isn’t in a rush to make moves.

Looking Ahead: The next big test? Inflation data in the coming months. If price pressures keep cooling, the Fed might start cutting sooner. But if Trump’s policies stir up inflationary headaches, Powell could be forced to keep rates higher for longer. Either way, expect more market drama as the Fed and the White House navigate what’s shaping up to be a bumpy economic ride.

Calendar
On The Horizon

Tomorrow

Thursday’s data drop is packed with fresh reads on the economy, including jobless claims, pending home sales, and an early look at Q1 GDP. Investors will be watching closely to see if the labor market and housing sector are holding up or showing signs of strain.

On the earnings front, another wave of corporate heavyweights is set to report. Visa ($V), Mastercard ($MA), Caterpillar ($CAT), Intel ($INTC), Shell ($SHEL), Altria Group ($MO), Thermo Fisher Scientific ($TMO), Blackstone ($BX), Cigna ($CI), Southwest Airlines ($LUV), and Nokia ($NOK) will all reveal their latest numbers, giving Wall Street plenty to chew on.

Before Market Open:

  • UPS is often seen as a pulse check for consumer demand, but lately, that pulse has been weaker than expected. The stock has tumbled over 14% in the past year as revenue growth slowed and profit margins took a hit. Still, investors are banking on a rebound, with automation improvements and a strong holiday shipping season potentially lifting results. Wall Street will be watching whether UPS can deliver on expectations. Consensus: $2.53 EPS, $25.41 billion in revenue. ($UPS)

After Market Close:

  • Apple is in damage control mode. Another day, another analyst downgrade— this time from Oppenheimer, citing weak iPhone sales in China. Between a lukewarm Vision Pro launch, skepticism around Apple Intelligence, and Warren Buffett offloading shares, the company is under pressure to prove it still has its magic. Investors need to hear a clear 2025 strategy, or this earnings call could spark more selling. Consensus: $2.35 EPS, $124.4 billion in revenue. ($AAPL)

NEWS
The Daily Rundown

  • 🧠 Vatican Warns AI Carries the 'Shadow of Evil': The Vatican issued a document, Antica et Nova, warning about the ethical dangers of artificial intelligence. Pope Francis approved the statement, which cautions that AI-driven misinformation could erode societal trust and calls for regulations to prevent political polarization and social unrest.

  • ✈ Private Jet Breaks Sound Barrier for First Time Since Concorde: Aerospace company Boom successfully completed a test flight of its XB-1 aircraft, which broke the sound barrier over the Mojave Desert. The supersonic jet maintained speeds above Mach 1 for four minutes, marking the first time a private aircraft has achieved this feat since the Concorde retired in 2003.

  • 📍 Google Maps to Rename Gulf of Mexico for US Users: Google announced that it will comply with President Trump’s executive order to rename the Gulf of Mexico as the "Gulf of America" for US users. While Americans will see the name change, Mexican users will retain the original designation, and global users will see both. Additionally, Google will rename Alaska’s Denali back to Mount McKinley.

  • 🛾 White House Dismisses New Jersey Drone Fears: White House Press Secretary Karoline Leavitt confirmed that drones seen flying over New Jersey late last year were not a national security threat. According to the administration, the drones were authorized by the FAA for research and recreational use, contradicting speculation of foreign surveillance.

  • đŸ©ș RFK Jr. Faces Tough Questions in Confirmation Hearing: Robert F. Kennedy Jr., Trump’s pick for health secretary, defended his vaccine stance, claiming he supports stricter safety measures rather than being anti-vaccine. He also blamed processed foods for America’s health crisis but assured Americans they could still enjoy fast food, nodding to Trump’s preferences. Kennedy shifted his abortion stance, calling every abortion a “tragedy” and supporting state-level control, drawing criticism from Democrats. While GOP senators praised his focus on public health reform, Bernie Sanders pressed him on high drug prices and past affiliations with anti-vaccine groups, with Democrats calling his responses evasive.

  • 📚 Bookshop.org Expands to Sell E-Books Supporting Indie Stores: The online book marketplace Bookshop.org, which directs funds to independent bookstores, has started selling e-books. Unlike Amazon, 100% of e-book profits will go to the buyer’s selected bookstore. The company is also working on making its e-books compatible with Kindle and Kobo devices.

  • đŸ›ïž Oklahoma’s Only Frank Lloyd Wright Skyscraper Sells for $1.4M: Price Tower, the only skyscraper designed by architect Frank Lloyd Wright, was sold for $1.4 million. The sale comes after parts of the historic building were illegally auctioned off to settle debts. The new owner plans to restore the landmark.

  • đŸ“± Microsoft in Talks to Acquire TikTok: President Trump announced that Microsoft is in discussions to acquire TikTok, pushing for a competitive bidding process. The potential sale comes amid ongoing security concerns about the social media platform’s operations in the US.

  • 🚀 Boeing CEO Optimistic Despite $4 Billion Quarterly Loss: Boeing CEO Kelly Ortberg acknowledged a nearly $4 billion fourth-quarter loss but remained optimistic about the company’s 2025 outlook. He cited restructuring efforts and investments in core businesses while admitting that cultural challenges would take years to address.

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