Tesla, AT&T, Amazon, HBO Max and the U.S. Labor Market

Tesla shocks the world with a fourth consecutive quarterly profit, AT&T butts heads with Amazon over HBO Max and the U.S. labor market’s recovery slows down.
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Newsweek magazine with Elon Musk on main page in a hand.
MIAMI, USA - AUGUST 23, 2018: Newsweek magazine with Elon Musk on main page in a hand. (By Dennizn)

Good morning! Today’s word count is 1,145 words, or a 6-minute read. Let’s get to it:

Tesla Posts Fourth-Consecutive Quarterly Profit, Defying Pandemic Shutdown

Elon Musk did it. For the first time in its 17-year history, Tesla reported a fourth-consecutive profitable quarter. As the pandemic raged and states shut down, analysts cast doubt on the electric vehicle maker’s ability to emerge unscathed. Wednesday’s report proved them wrong. And Musk now has a prime example to point to for anyone doubting his ability to “usher in the age of fully electric cars.”

Why It Matters

The achievement has multiple implications, stemming far beyond the accomplishment of persevering amid global chaos. Tesla can now be considered for the S&P 500 index, which could lead to a race of large index funds buying up shares. It also should finally silence the naysayers that have clung the idea that electric cars were too costly to make. Musk and Tesla have shown it is possible to make money, and a lot of it, on electric vehicles.

It’s been a long road. Tesla faced financial collapse on several occasions, losing more than $6.78 billion since 2003. But the company seemed to turn a corner after losing $408 million in the second quarter a year ago as the “Model 3 fueled massive growth and after Tesla successfully opened its first overseas assembly factory in China.”

Numbers to Consider

  • $104 Million – Tesla’s reported second-quarter profit this year.
  • 500,000 Vehicles – The electric vehicle maker’s pre-pandemic goal, a 36 percent increase from last year, which it says it’s still targeting for this year.
  • $428 Million – What Tesla earned in revenue from selling to competitors and receiving regulatory tax credits, which “essentially goes straight to the company’s bottom line and has been an important way the company has eked out profits in the past.”

Read More: (WALL STREET JOURNAL)

AT&T and Amazon Butt Heads Over HBO Max Access

AT&T’s WarnerMedia unit and Amazon are stuck at an impasse. As AT&T works to grow its HBO Max subscriber base, the telecom giant can’t find a compromise to offer the new streaming service on Amazon’s Fire devices, unless it does so through its Amazon Channels tier of Prime Video. The tie-up prompted AT&T CEO John Stankey to publicly call out Amazon for treating HBO Max and its subscribers differently than other streamers, days before Amazon CEO Jeff Bezos testifies before the House Judiciary Committee on big tech antitrust concerns.

Why It Matters

Here’s the rub. Amazon is willing to offer HBO Max. It just wants to do so as a part of its Amazon Channels tier of Prime Video, where it gets a cut of the subscription fee. WarnerMedia sees things differently and wants direct access to all of its subscribers.

Now more than ever, the success of HBO Max is crucial to AT&T. The telecom company has seen significant declines in paid TV subscribers, mostly from its DirecTV satellite unit. AT&T reported a subscriber loss just shy of a million to go with a similar number for the year before.

Numbers to Consider

  • 1 Million – The number of new HBO Max subscribers coming directly from AT&T, while the streaming service reached 3 million users total.
  • 36 Million – The total number of subscribers between HBO and HBO Max.
  • 886,000 – AT&T’s reported loss in video subscribers this year.

Read More: (THE INFORMATION)

A Quick Look

U.S. Initial Unemployment Claims Rose to 1.4 Million Last Week

  1. Initial unemployment claims jumped by a seasonally adjusted 109,000 to 1.4 million for the week ending July 18, according to the U.S. Department of Labor. The trend shows a slowing of improvement in the U.S.’s labor market.
  2. It’s a sharp decline from a peak of 6.9 million in late March, but still significantly higher than the previous highest week on record before this year, which was 695,000 in 1982.
  3. The number of Americans receiving unemployment benefits from regular state programs that cover the majority of workers dropped by 1.1 million to 16.2 million for the week ending July 11. Between May and June, employers added a combined 7.5 million jobs after shedding 21 million jobs in March and April, according to Labor Department data.

Read More: (WALL STREET JOURNAL)

Worth Your Time

Unbridled Energy: As Tesla reached its fourth consecutive quarter of profitability, its energy storage business “picked up steam and even played a minor role” in the profit bump. Energy storage is still a mere slice of Tesla’s business. But results from Q2 offer a glimpse of a potentially bright future for the sector. CEO Elon Musk has even gone as far as to predict Tesla’s energy business would be roughly the same size as its automotive unit in the long term. (TECH CRUNCH)

The Big Time: Nvidia, the world’s largest maker of chips for artificial intelligence projects, is mulling a significant acquisition. The company recently approached Arm Holdings about a potential purchase. A merger with ARM could offer Nvidia the opportunity to expand its business into new categories. But there’s plenty of reasons to doubt the deal, especially the regulatory fallout of possibly creating the largest company in the history of the chip industry. (BLOOMBERG)

Start Me Up: MissFresh, the Tencent-backed Chinese grocery startup, raised $495 million in its latest round of funding. The fallout from the Covid-19 pandemic has continually pushed shoppers online in multiple industries. MissFresh is looking to capitalize on the home delivery trend but faces fierce competition from e-commerce giants like Alibaba and JD.com. (BLOOMBERG)

Until The Next Time: Wondering where Covid-19 might hit next? Apple’s retail store closures have consistently preceded surges in Covid-19 cases. The Wall Street Journal “tracked hundreds of store closures, coronavirus statistics and lockdown measures to piece together Apple’s shutdown strategy.” Check out the video. (WALL STREET JOURNAL)

Tidbits

Twitter admitted last week’s hack of multiple high-profile Twitter accounts, such as that of Barack Obama, Jeff Bezos, Wiz Khalifa and more, exposed the direct messages of many of those users.

It could be the end of Facebook’s “Like” button as the social media platform is testing a new page design with a “cleaner layout.”

China launched an uncrewed rocket to Mars, a significant milestone in its push to develop its space program and challenge the dominance of the United States and Russia in the sector.

Walmart announced it was selling its India store chain to Flipkart to bolster the latter’s wholesale arm and market position amid growing competition with Amazon.

As Covid-19 test kit supplies dry up, health authorities are starting to narrow their recommendations on who should be tested.

A Couple Cents Content

Watch Justin Oh discuss managing your own fund versus investing in a growth mutual fund. (YOUTUBE)

Check out the live market update from Monday’s Live Show. (YOUTUBE)

Depending on how interested you are in Spartan Energy’s acquisition of Fisker:

  • Check out a brief overview. (TIKTOK)
  • Dive deeper on the topic. (YOUTUBE)
  • Evaluate for yourself using Justin Oh’s $SPAQ versus $TSLA excel model (DOWNLOAD)

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