Bloomberg Daybreak: Europe 06/13/2025
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CNN
a minute ago
- CNN
Get ready for more bad news from Tesla
Tesla's sales plunge over the last 18 months has been a stunning turn for a company that recorded only one quarterly year-over-year sales drop before 2024. And the company faces significant trouble ahead. Investors already know that second-quarter sales fell a record 13.5% compared to a year earlier, the second straight quarter in which its sales were off at least 13%. But a second-quarter earnings report, due after the market closes at 4pm ET, could shed light on other, potentially bigger problems as well, as the company faces losing its title as the world's biggest EV maker to China's BYD. The first-quarter sales drop sparked an even larger 71% drop in net income in that period. Tesla is expected to post another decline in the second quarter, albeit not as large. Analysts estimate net income dropped about $350 million, or nearly 24%, in the March through June period. Looking ahead, though, a $7,500 tax credit for US EV buyers will go away in October, which could force the company to further cut prices, and thereby profit margins, to support sales. US buyers account for nearly half of Tesla's sales. Tariffs could bite, as well. Unlike all other major automakers, Tesla (TSLA) builds every car it sells in the US at its two American plants, helping it avoid 25% import car tariffs. But Tesla does depend on imported parts and raw materials, which are still tariffed. Last week, the Chinese graphite used in its batteries became subject to another tariff that raised the costs 160% from last year. Perhaps the most serious financial problem facing Tesla is the elimination of the market for regulatory credit sales, which has fed $10.6 billion to the company's bottom line since 2019. Gas-powered carmakers in the past bought emissions credits from Tesla, since its EVs came in below emissions limits. But the Republican tax and spending bill passed earlier this month removed financial penalties for automakers violating emissions rules. Tesla would have lost money in the first three months of the year without its revenue from selling those credits. Tesla CEO Elon Musk will undoubtedly try to focus investor attention on the company's plans for robotaxis and humanoid robots to offset those concerns. It started a long-promised robotaxi service in June – but just a portion of its hometown of Austin, Texas, to friends and fans of the company, and with an employee sitting beside the empty driver's seat. It could be years before a robotaxi service actually makes money for the company. And there's a wildcard: Three months ago, Tesla's quarterly earnings were dominated by the news that Musk was leaving the Trump administration and would be spending most of his time once again running Tesla. But while he stepped away from an official role, he hasn't been able to quit politics entirely, having since had a falling out with President Donald Trump. Now he's announced plans to start a third political party. What that could mean for Tesla's own future is murky at best.
Bloomberg
2 minutes ago
- Bloomberg
Ex-Citadel Money Manager Wins Qube's Backing to Start Hedge Fund
Former Citadel money manager Sean Murphy is preparing to start his own hedge fund with backers including multistrategy investment firm Qube Research & Technologies. Murphy is seeking regulatory approval for Jerpoint Capital, with an aim to start trading during the final quarter of the year, according to people with knowledge of the matter. Initially he will run a $200 million separately-managed account for Qube and take in cash from other investors, the people said, asking not to be identified because the information is private.
Bloomberg
2 minutes ago
- Bloomberg
The US Can Survive Tariffs. That Doesn't Mean They're Worth It.
On hearing of the Continental Army's pivotal victory at the Battle of Saratoga in 1777, John Sinclair told Adam Smith, 'The British nation must be ruined.' As Sinclair recalled, the author of The Wealth of Nations (published the year before) urged him to calm down. 'Be assured, my young friend, there is a great deal of ruin in a nation.' Dedicated though he was to the benefits of free trade, Smith would doubtless say the same about today's turn toward mercantilism. It's a blow, but not the end of the world. That's worth noting: Catastrophism, a popular mode of discourse these days, is usually unhelpful. But champions of President Donald Trump's approach to trade are apt to make the opposite mistake — namely, thinking that if the roof hasn't fallen in, the policy must be succeeding. If it results in slower growth and persistent underperformance, that might not be 'ruin,' but it sure isn't victory.
