News and analysis

Investors who were betting on further Tesla stock rising finally won with a big piece of profit during a shorter work week on Wall Street before the US Independence Day. The giant EV maker has done a mighty jump over a $200 per share barrier to touch above $240 in just three days. This impressive step after six months of accumulating phase to quality price action followed the delivery number of 443,956 vehicles in the last quarter, reported on July 2. Preliminary analyst pool estimates were already high enough at nearly 438,000 on average, yet the actual result was even better and up 14.8% from the preceding quarterly period. Tesla deliveries are still almost 5% lower YoY, yet progressing is evident to tamp down fears of prolonged negative scenarios due to the competition factors and rather prohibitive costs of many models for consumers.

However, it was a set of price cuts and incentives (0% or low-rate financing for a car purchase), which helped stimulating demand. This allows the EV maker to conquer more regions of the world by expanding Tesla market outlets but may put down its business marginality. Therefore, some cautious profit taking could be appropriate ahead of Tesla's financial Q2 results, scheduled for the night of July 23. All now-optimistic crowd members would also have two weeks more to digest the whole picture before the RoboTaxi Day on August 8, where the billionaire Elon Musk and his colleagues are going to describe more details on the autonomous driving options.

A more than 20% comeback in the heart of the summer automotive season is great, yet a 2023/2024 comparison marked the first YoY sales fall. High interest rate background contributed to this failure as well, as Elon Musk repeatedly cited the central bankers' pressure. Tesla CEO said in January that he expected "notably lower" growth in deliveries this year, and the company even dropped its previous target of delivering 20 million vehicles a year by 2030 in its annual impact report in May. An affordable EV model is badly needed, which had been expected to cost $25,000, but its appearance was postponed. Next year may bring better news, but the current headwinds are here, which may result in lasting technical consolidation of Tesla shares, basically between $210 and $255, if the nearest July 23 quarterly report and Robo Taxi event would not reveal more miracles.

Wedbush Securities said the worst is now likely in the rear-view mirror for the company, yet Goldman Sachs only maintained a Neutral rating on shares of Tesla with a price target of $175.00, while Citigroup has its longer-term price target of $182.00, even though it is anticipating "improved sentiment towards Tesla's shares in the coming months".

One of the most known producers of athletic footwear, apparel and sport equipment in the world dropped its market value to the lowest level since the first coronavirus month of 2020. During the last trading session of June, Nike's share price got the most crushing one-day blow in over two decades. Much worse is that the stock may hardly succeed in clinging on a ledge of rock where the first stop on the way down happened. Nike may show even more weakness, and so we feel more reasonable to think more on the idea of selling possible upticks at $85 or $90 (if there would be any attempts to get there) than a hypothetical plan of purchasing Nike considering lower levels in between of $55 and $65.

Despite Nike's adjusted earnings release at $1.01 per share for the second quarter, which was nominally 20% above average estimates of the Wall Street's pool of analysts at $0.83, the outlook for the rest of the year looked grimy. The lack of demand because of the rising competition from new footwear brands like Deckers' Hoka, New Balance and on led Nike losing its market share. The company's management projected sales to drop by 10% during the current quarter already. Nike’s CFO, Matthew Friend, foresees "a high single-digit decline" in sales. He marked softer traffic in Nike's factory stores, which used to sell discounted shoes and clothing. So, many on the market have been really scared that Nike may say goodbye to its former status of the long-time industry bellwether, which automatically provided its domination for many years.

An expected decline in sales numbers is due to "aggressive management of classic footwear lines", as well as challenges in digital sales, because Nike's direct-to-consumer division stopped generating growth. Decreasing wholesale orders in China added to the list of troubles. Even though the average target price for Nike by large investment houses is still above $100 per share, this could be too optimistic. Nike is now planning to roll out its new line-ups of $100-and-under sneakers but nobody is sure this will guarantee a business recovery. Nike is selling its top-end Air Force 1 sneakers for about $150 on the producer's website, yet its rival's Adidas is selling its three-striped white and black Samba and multi-coloured Gazelle sneakers within the price range between $100 and $120. However, even new Clifton 9 running shoes for $145, made by Hoka, are now among bestsellers in North America. This is a great competitive challenge.

Nike had been repeatedly disappointing the crowd's expectations on the company's forward guidance, which may contain additional dangers for its market dynamics. A negative trend for Nike's own projections for 2025–2027 is still here.

In the last few months, I never touched upon the subject of Airbus shares. The largest European maker of commercial aircrafts set a new record high of €172.78 before the end of March, following a wave of massive purchases in response to continuing troubles of its main global rival Boeing. You may recall that, as I set my pen to a number of articles about the consequences of worsening the market's attitude to Boeing assets in favour of growing investments to Airbus. And, of course, I had also bought some stocks of Airbus for myself in the first decade of January, as soon as the incident with the lost door plug during Boeing's 737 MAX 9 flight from Portland to Oregon happened.

This kind of behaviour quickly paid off, as the whole story began at nearly €140 per share, so that it managed to add more than 20% before peaking. Later on, there was a moderate pullback in April and May, which ultimately resulted in the Airbus stock's surprising fall at a two-digit percentage pace after June 25 when the Airbus management cut its own financial projections for 2024. Airbus now expects underlying operating income of around €5.5 billion, instead of a previous estimate within a range between €6.5 billion to €7 billion, and free cash flow of €3.5 billion instead of €4 billion. The mentioned reasons were extra costs in its space systems division, combined with temporary supply chain issues, including part shortage.

While lowering its forecast for deliveries to around 770 jets from around 800, Airbus also took a hefty €900 million charge for its space activities and tempered previous plans to raise output of its best-selling A320neo family, by delaying the date of reaching a planned production speed of 75 jets a month to 2027 from 2026. Airbus produces an estimated 50 jets each month now. Of course, this was a significant adjustment in the company's forward guidance message. Yet, falling short at the end of deliveries is not the same thing as troubles with a lack of orders and demand, which Boeing faces.

If you cannot provide enough engines for your best-selling planes, you get less money flow, yet you are going to seize it over the horizon in the next couple of years. So, a kind of postponed shipment doesn't look like a critical problem for Airbus business. Meanwhile, its share price dropped to levels, which are even 6.5% below the area where I just first time and happily bought Airbus in January.

Therefore, one need not buy any well-discounted shares of its rival Airbus, only if feeling that the whole air shipping industry is going to die or emerging into a deep crisis like it was in the covid era. I buy Airbus here and now, just a bit above €131 per share, as I strongly believe that the lion's share of all aircraft orders will continue to go to Airbus, and not to Boeing, even if Airbus would be unable to keep up the pace of growing orders for a while. Even if Airbus would come to some lower levels like €115 or €120 before a great recovery, I can easily live with that and will survive.

As to Boeing, it is still not O.K. The latest news is that the US authorities are waiting for Boeing to accept "a plea deal to settle felony fraud charges related to two fatal crashes of its 737 Max planes", according to Associated Press, which would mean Boeing's potential agreement to independent monitoring for compliance with anti-fraud laws after the Justice Department said Boeing violated the terms of a 2021 agreement, which shielded it from prosecution over deadly crashes. And any bad news for Boeing is now good news for its main rival.

Ripple (XRP) has risen by 3.4% to $0.4886 this week, outperforming Bitcoin (BTC), which has added 1.1% to $62,689. A series of positive developments have fueled this surge, pushing XRP prices higher. On June 20, U.S. District Court Judge Phyllis Hamilton of the Northern District of California dismissed most of a class action suit against Ripple. This legal victory alleviates some of the regulatory pressures that have been weighing on XRP. Additionally, Dubai recently approved Ripple for global transfers, expanding its use case and adoption, which is a significant milestone for Ripple's international operations.

Ripple unlocked 1 billion XRP for sell-off on July 1, potentially increasing liquidity in the market. Following Judge Hamilton's ruling, the SEC was forced to reduce its settlement offer to Ripple. Despite this, Ripple rejected a reduced $102 million settlement offer from the SEC, demonstrating its commitment to defending its interests and possibly signaling confidence in its legal standing.

XRP prices are approaching the key resistance level of $0.5000. Breaking through this level could pave the way for further gains. The ongoing question remains whether Ripple is classified as a security or a commodity. This legal determination will significantly impact its future growth targets. A classification similar to Bitcoin or Ethereum (as a commodity) could enhance its market appeal and regulatory flexibility.