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Kamis, 04 April 2019

Tesla just undermined Elon Musk's defense against the SEC, JPMorgan says - Fox Business

Tesla released its first-quarter delivery numbers early Thursday morning, sending shares of the electric-car maker plummeting and possibly endangering CEO Elon Musk’s defense against the SEC, according to JPMorgan.

Shares of Tesla plunged during Thursday trading after the company disclosed that first-quarter deliveries of its vehicles fell 31 percent from the previous three-month period, warning that its first-quarter income would be negatively impacted.

Ticker	Security	Last	Change	%Chg
TSLA	TESLA INC.	267.38	-24.43	-8.37%

Tesla also reaffirmed its previous guidance of 360,000 to 400,000 vehicle deliveries in 2019. But in a note to clients, JPMorgan analyst Ryan Brinkman wrote that by issuing that year-ahead guidance, Tesla had inadvertently hurt Musk’s case with the Securities and Exchange Commission.

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“Full year delivery guidance was stated in the release to have been ‘reaffirmed’ at the prior level of 360-400K units, in our view undermining a key tenet of CEO Elon Musk’s legal defense against the SEC,” he wrote.

At the end of February, the SEC alleged in a federal filing that Musk had violated a previous settlement with the agency when he tweeted about Tesla’s 2019 production targets. Per the terms of the October settlement Tesla is required to review Musk’s tweets containing information pertinent to investors prior to posting on his personal account.

But Musk came under fire when he tweeted that Tesla would make around 500,000 cars in 2019, a figure he later clarified would be closer to 400,000. The SEC determined that the initial tweet was not approved by Tesla before it was sent, according to the filing.

In response, Musk said the SEC “forgot to read Tesla earnings transcript” -- referring to the company’s fourth-quarter earnings call -- in which he told investors that Model 3 output would reach 500,000 “sometime between Q4 of 2019 and Q2 of 2020.” The SEC, however, argued that there was no “pre-approved written communication” that said Tesla would produce 500,000 vehicles by the end of 2019.

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But the newest guidance, which falls in line with what Tesla has previously said, raises questions about the validity of Musk’s reasoning that “his February 19 tweet that Tesla will make around 500K vehicles in 2019 was not new information needing pre-approval because he had superseded guidance in the 4Q18 shareholder letter for 360-400K full year deliveries with comments just hours later on the firm’s earnings conference call guiding to 350-500K of the Model 3 alone,” the note said.

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2019-04-04 16:46:07Z
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Tesla stock roiled by ‘ugly’ delivery numbers - MarketWatch

Tesla Inc. shares fell more than 8% on Thursday as Wall Street analysts used some choice words to describe their dismay at the car maker selling fewer-than-expected vehicles in the first quarter.

“Ugly,” ”weak” and “disappointing” featured in initial notes, as the miss fueled renewed doubts about Tesla’s future profitability, growth and cash position.

At their lowest level Thursday, Tesla TSLA, -8.16% shares were off nearly 11%, the worst percentage decline since Jan. 18. The shares are a distant 30% from their record high close of $385 in September 2017.

The car maker pinned the miss on “massive” backlogs in China and in Europe. Tesla delivered about 63,000 vehicles in the first quarter, including 50,900 Model 3s; that compared with expectations of around 76,000 vehicles, including 54,600 Model 3s, according to FactSet.

Tesla reaffirmed its 2019 sales guidance of 360,000 and 400,000 vehicles.

With the weak start to the year, “they’re going to be hard pressed” to hit that guidance, especially with federal electric-vehicle tax credits being reduced mid-year and going away at year-end, said Garrett Nelson, an analyst with CFRA.

The “massive” 31% quarter-on-quarter drop also has negative implications for Tesla’s cost of sales per vehicle and “we know they’ve been lowering prices in order to prop up sales, all of which should equate to a pretty ugly quarter from a margin perspective,” he told MarketWatch.

Analysts at Bernstein, led by Toni Sacconaghi, highlighted the unexpected weakness in sales of luxury Model S and Model X vehicles, down 50% quarter on quarter. Possible explanations include seasonality, the tax credit reduction, and more competition, but “we remain perplexed by the magnitude of the decline,” they said in a note.

Tesla “is now in the uncomfortable position of likely needing to raise capital from a position of relative weakness,” the Bernstein analysts said.

“Very weak” production and delivery numbers should make Tesla bulls nervous, said a note from analysts at Cowen, led by Jeffrey Osborne. Tesla “has largely exhausted the pent-up demand for Model 3 versions priced above $37,000,” they said.

Analysts at Roth Capital highlighted “a busy day” for Tesla investors with Thursday also marking the court date for the Securities and Exchange’s contempt charges. The hearing stems from Chief Executive Elon Musk’s tweets about annual production targets for Tesla in light of last year’s settlement with the SEC over Tesla’s going-private saga.

The analysts said they don’t expect any “draconian” measures from the court that would punish Tesla’s shareholders, but viewed the “entire process as self inflicted by Musk, reckless, and unnecessary.” Another fine would have no impact, they said.

Analysts at RBC Capital questioned Tesla’s assurances that, while first-quarter earnings will suffer from the delivery shortcomings, it ended the quarter “with ’sufficient’ cash on hand.”

“We expect a sizeable cash burn in (the first quarter.) We estimate that the vehicles in transit alone could be a ~$500mm working capital use,” said the RBC analysts, led by Joseph Spak.

Analysts at Deutsche Bank struck a somewhat more optimistic tone.

“With standard range versions being rolled out in the U.S. and bottleneck addressed overseas, we believe Model 3 deliveries will ramp up materially in the quarters ahead, but investors are unlikely to give Tesla credit for them until there is clarity on their mix and gross margin profile.”

Investors are likely to turn their focus to Tesla’s April 19 investor day, the Deutsche Bank analysts, led by Emmanuel Rosner, said in a note.

Tesla has vowed to provide a “deep dive” into its self-driving software and hardware, including its in-house self-driving computer.

Tesla shares have lost 6% in the past 12 months, and are down 19% so far this year. That contrasts with gains of 9% and 15% for the S&P 500 index SPX, -0.08% in the same time periods.

The company’s bonds also took a beating. The 5.300% notes that mature in August of 2025 were last trading at 85.688 cents on the dollar, or at a yield spread of 592 basis points over Treasurys, a full 46 basis points wider on the day, according to MarketAxess.

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2019-04-04 16:20:00Z
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Elon Musk assists Sheryl Crow after Tesla screen goes black, singer says she's stuck in parking lot - Fox News

After struggling to turn her Tesla on Wednesday, singer Sheryl Crow turned to her nearly 320,000 Twitter followers for assistance. One follower, in particular, rushed in to save the day.

"Help! Who knows what to do when your @Tesla screen goes black and the reset doesn’t work? Return it and get your money back??" asked Crow, revealing that she was stuck in a parking lot at the time.

More than 5,600 fans replied to Crow's tweet and submitted dozens of suggestions — but no one's expertise on the subject compared to Tesla's own CEO Elon Musk.

ELON MUSK'S SECURITY CLEARANCE IS UNDER REVIEW

Musk responded with simple instructions, "Change your screen preference from night mode to auto."

"Night mode with 0% brightness is actually too dark during the day," he added. "This is ultimately our fault. We will update our software so that 0% brightness is always usable relative to ambient conditions."

A Twitter user then pointed out to Musk that a reset should have fixed the problem, however. Musk said he "agreed" that should have been the case.

The 57-year-old country crooner thanked Musk, giving him a thumbs-up for his help.

"Problem solved with that solution after getting to @Tesla. Might I suggest adding some screen controls to the app so that you’re not stuck when the screen goes black?" Crow wrote to Musk.

She later confirmed to her followers that her issue was resolved and thanked everyone for jumping in to offer suggestions.

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"LOVED all of your creative responses. Best one was suggesting my kids take a look... which would have been helpful since my kid was the one who changed the settings / caused it to go black in the first place! I knew I should have interrupted school..." replied Crow. "Also, for the haters: I love my @Tesla, and have very few problems. I got the basic model, nothing overly fancy, and it was cheaper than my minivan!"

Nearly 20,000 people liked Musk's advice for Crow, though some questioned if he was only quick to respond because of Crow's fame.

"Only for famous ppl," one fan responded, though a woman then argued that she's seen him "reply and help people, famous or not."

"He can't do that for everyone obviously, he is only human (as far as we know ) but he does it surprisingly a lot," the woman continued.

"Hahahahaha this is AMAZING! Bet you didn’t think Elon was going to respond directly!" another user wrote.

"This is like the peak of customer service," a follower observed.

Musk is currently under fire for allegedly violating an agreement with the U.S. Securities and Exchange Commission (SEC) when he tweeted about Tesla's vehicle production in February without a lawyer's approval. A federal judge will hear oral arguments Thursday about whether Tesla CEO Elon Musk should be held in contempt of court.

It's unclear if Musk plans to attend the hearing. Musk has said his tweet didn't need pre-approval because it wasn't new information that would be meaningful to investors. His attorneys say the SEC is violating his first amendment rights to free speech.

Tesla's shares are falling 9% in early trading after the company said it churned out 77,100 vehicles in the first quarter, well behind the pace it must sustain to fulfill Musk's pledge to manufacture 500,000 cars annually. As of Wednesday's close, Tesla shares were down 12.3% so far this year.

The Associated Press contributed to this report.

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2019-04-04 16:01:29Z
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Tesla reports record low sales, Elon Musk faces off with the SEC - Yahoo Finance

Tesla reported a 31% drop in sales in the first quarter of 2019, only delivering 63,000 vehicles in Q1. The electric car maker’s problems don’t end there, as CEO Elon Musk heads to court in his ongoing battle with the SEC. The regulator is seeking to hold Musk in contempt, arguing his tweets violated a September settlement. Yahoo Finance’s Dan Roberts, Akiko Fujita, Myles Udland, and Alexis Keenan break down what this means for Tesla’s future.

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2019-04-04 14:22:00Z
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JP Morgan says Tesla just undermined Elon Musk's defense against the SEC - CNBC

Tesla may have just hurt Elon Musk's own case in his battle with the SEC, according to J.P. Morgan.

"The now clear incongruence of CEO outlook statements with official company guidance may hurt the perception of management commentary, eroding investor confidence and potentially placing additional pressure on the shares," J.P. Morgan analyst Ryan Brinkman said in a note to clients late Wednesday.

"Full year delivery guidance was stated in the release to have been 'reaffirmed' at the prior level of 360,000 to 400,000 units, in our view undermining a key tenet of CEO Elon Musk's legal defense against the SEC — that his February 19 tweet that Tesla will make around 500,000 vehicles in 2019 was not new information needing pre-approval," Brinkman said.

Musk is heading to Manhattan federal court on Thursday to continue his faceoff with the Securities and Exchange Commission, which claims that he violated an earlier deal by posting material information about Tesla on Feb. 19.

At that time, Musk tweeted to his more than 24 million Twitter followers: "Tesla made 0 cars in 2011, but will make around 500k in 2019."

tweet

Tesla shares fell more than 10 percent in premarket trading Thursday morning.

Though the government claims that Musk's tweet violated his agreement not to post material information without first seeking approval from company lawyers, the CEO has claimed that the information was innocuous and did not need to be vetted. He will try to convince the court that he did not violate an October fraud settlement and should not be held in contempt.

But Tesla's press release Wednesday night may undermine that argument with the latest production updates.

"Despite pull forward of demand from Q1 2019 into Q4 2018 due to the step down in the federal tax credit, US orders for Model 3 vehicles significantly outpaced what we were able to deliver in Q1. We reaffirm our prior guidance of 360,000 to 400,000 vehicle deliveries in 2019," the press release said.

Said Brinkman: "Even if it could be argued that official full year guidance somehow increased from 360-400K deliveries at the time of the shareholder letter to 350-500K of the Model 3 alone just hours later, to 420-600K total production on February 28 — and now back down to 36-400K deliveries — the choppiness and inconsistency of this communication would still in our view erode investor confidence."

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2019-04-04 12:51:10Z
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JP Morgan says Tesla just undermined Elon Musk's defense against the SEC - CNBC

Tesla may have just hurt Elon Musk's own case in his battle with the SEC, according to J.P. Morgan.

Musk is heading to Manhattan Federal Court Thursday to continue his face-off with the U.S. Securities and Exchange Commission, which claims that he violated an earlier settlement deal by posting material information about Tesla on Feb. 19.

At that time, Musk tweeted to his more than 24 million Twitter followers: "Tesla made 0 cars in 2011, but will make around 500k in 2019."

tweet

Tesla shares fell more than 10 percent in premarket trading Thursday morning.

Though the government claims that Musk's tweet violated his agreement not to post material information without first seeking approval from company lawyers, the CEO has claimed that the information was innocuous and did not need to be vetted. The electric car executive will try to convince the court that he did not violate an October fraud settlement and should not be held in contempt.

But Tesla's press release Wednesday night may undermine that argument with the latest production updates.

Said JP Morgan's Brinkman: "Even if it could be argued that official full year guidance somehow increased from 360,000 ti 400,000 deliveries at the time of the shareholder letter to 350,000 to 500,000 of the Model 3 alone just hours later, to 420,000 to 600,000 total production on February 28 — and now back down to 360,000 to 400,000 deliveries — the choppiness and inconsistency of this communication would still in our view erode investor confidence."

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2019-04-04 11:34:37Z
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MIT suspends ties with China's Huawei and ZTE - CNN

MIT, one of the top universities in the United States, said the move followed a new review of international projects or partnerships that pose an "elevated risk."

"MIT is not accepting new engagements or renewing existing ones with Huawei and ZTE or their respective subsidiaries due to federal investigations regarding violations of sanction restrictions," Maria Zuber and Richard Lester, the university's vice president for research and associate provost respectively, said in a letter to the school community on Wednesday.

The administrators also said that the university had determined that working with certain countries — particularly China, Russia and Saudi Arabia — "merit additional faculty and administrative review beyond the usual evaluations."

Any projects involving funding from people or entities from these countries, or MIT faculty or students doing work there, would face further review, they said.

The university added that it would "revisit" its collaborations with Huawei and ZTE (ZTCOF) over time, and could revise the list of countries as circumstances change.

Students working in a glass cube on the Massachusetts Institute of Technology campus in 2018. The university is suspending ties with Huawei and ZTE.

Huawei, one of the world's biggest providers of telecom equipment, smartphones and other devices, is under international scrutiny as the United States leads an effort to curb the company's ambitions to become the global leader of 5G, the next generation of wireless technology.

Washington has been urging allies to restrict or ban the use of Huawei equipment in their 5G networks, alleging Beijing could use the company's products to spy on other nations. Huawei denies that any of its products pose a national security risk.

US prosecutors have also accused Huawei and its chief financial officer, Meng Wanzhou, of violating US sanctions on Iran. Huawei and Meng deny the charges.

Huawei is failing to convince the UK it can be trusted

It is unclear what partnerships Huawei and ZTE currently have with the university. MIT didn't respond to a request for additional comment outside of regular business hours. ZTE declined to comment on the university's statement.

"We're disappointed by MIT's decision, but we understand the pressure they're under at the moment," a Huawei spokesman told CNN Business.

"We believe that scientific research is carried out for the benefit of all mankind, and should be free from the influence of geopolitics. Huawei denies the allegations of the US government, and we trust the US judicial system will ultimately reach the right conclusion," he added.

As of August 2018, Huawei was listed as a member of MIT's Media Lab consortium, which has more than 80 members that include other major tech companies such as Cisco (CSCO), Intel (INTC) and Salesforce (CRM).

The consortium provides the bulk of the lab's annual budget of about $75 million to conduct research on technologies such as "wearable computing, tangible interfaces, and affective computing," according to MIT's website.

Huawei's profits jump by 25% despite US efforts to curtail its business

University officials said that the new review process would pay special attention "to risks related to intellectual property, export controls, data security and access, economic competitiveness, national security, and political, civil and human rights, as well as potential impacts on the MIT community, consistency with MIT's core values, and alignment with MIT's academic mission."

ZTE, a Shenzhen-based firm that also makes smartphones and telecommunications equipment, was banned from buying components from American companies for several months last year. The ban was tied to ZTE allegedly breaking US sanctions on Iran.

Last month, Stanford University also suspended its partnership with Huawei, temporarily prohibiting the acceptance of gifts "and other support" from the company, according to its student newspaper.

"We are sensitive to the federal government's concerns about technologies being appropriated by other countries to the detriment of U.S. national security," a campus spokesperson told The Stanford Daily.

Sherisse Pham contributed to this report.

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https://www.cnn.com/2019/04/04/tech/mit-huawei-zte/index.html

2019-04-04 10:49:00Z
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