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EV shocker: Tesla (TSLA), Rivian (RIVN) and Fisker (FSR) fall after Hertz (HTZ) hits the gas pedal. (00:27) CVS paring down pharmacy footprint inside Target (TGT): WSJ. (02:39) Amgen (AMGN) may be evaluating Cytokinetics bid; CYTK wants $130-$145 a share – report. (03:35)
This is an abridged transcript of the podcast.
Thursday on the afternoon edition of this podcast Wall Street Lunch we told you that Hertz (HTZ) is cutting its losses in its adoption of electric vehicles and has decided to sell ~20,000 EVs, or one-third of its global fleet, and reinvest a portion of the proceeds in internal combustion engine vehicles.
How did EV stocks respond to that news? The Hertz (HTZ) development may be a contributing factor to downward share price movement for EV names.
Tesla (NASDAQ:TSLA) -2.87%, Fisker (FSR) -6.31%, Lucid Group (NASDAQ:LCID) -4.40%, Rivian Automotive (NASDAQ:RIVN) -1.47%, and Polestar Automotive (PSNY) -8.00%.
Detroit automakers Ford (F) -1.01% and General Motors (GM) -1.24% were also in negative territory.
Although the volume of Hertz EVs being sold is not overwhelming, the decision means that the original plan to buy 100K Teslas for its fleet is unlikely to happen soon. It has also added to growing demand worries in the electric vehicle sector, which have been amplified by pullbacks on some of the aggressive EV production targets.
The automobile stock that bucked the tape on Thursday is Toyota Motor (TM), which closed up 1.16%.
Meanwhile, Tesla’s (NASDAQ:TSLA) Berlin factory is suspending production for two weeks as the conflict in the Red Sea slows deliveries of necessary components.
“The considerably longer transportation times are creating a gap in supply chains,” the carmaker said in a statement cited by Reuters.
The factory in Germany will be closed Jan. 29 to Feb. 11.
In other Tesla news, according to a report by Bloomberg, a flyer posted at Tesla’s (NASDAQ:TSLA) factory in Fremont, Calif., revealed its plans to increase pay at U.S factories.
The flyer says the raises are a “market adjustment pay increase,” but this comes on the heels of the United Auto Workers revealing plans to target and organize workers at Tesla (TSLA), Toyota (TM) and other non-unionized auto companies.
Last month, Tesla (TSLA) announced a 10% jump in pay for some of its hourly workers at a Nevada gigafactory.
UAW recently solidified “historic contracts” with workers at Ford, General Motors (GM) and Stellantis (STLA).
CVS Health (NYSE:CVS) aims to close dozens of pharmacy locations operating inside Target (NYSE:TGT) stores.
The Wall Street Journal reported this on Thursday, citing a company spokeswoman.
The closures will take place between February and April, she said, adding that the decision is “based on our evaluation of changes in population, consumer buying patterns and future health needs.”
CVS launched pharmacies across Target (TGT) stores in late 2015 when it acquired the retailer’s business for about $1.9B. Since then, it has expanded to nearly 1,800 locations inside Target’s (TGT) over 1,900 retail footprint.
The decision will impact only a small percentage of TGT’s locations. CVS (CVS) operates nearly 9,000 locations, and the company has previously said it is shutting down about 900 stores, or about 10% of its U.S. units, between 2022 and 2024.
Another US pharma giant is speculated to be circling Cytokinetics (NASDAQ:CYTK) amid a WSJ report that Novartis (NVS) has decided to walk away from its pursuit of the biotech firm.
There’s speculation that Amgen (AMGN) may be interested in acquiring Cytokinetics (CYTK), according to a Betaville “uncooked alert.” Johnson & Johnson (JNJ) is also speculated to indicate interest in CYTK, with its offer including a Contingent Value Right.
Novartis (NVS) may have decided to back out of a Cytokinetics (CYTK) deal as there’s speculation that the CYTK board was holding out for $130 to $145 a share, according to Betaville, which cited people following the matter.
Cytokinetics (CYTK) shares fell 16% on Thursday.
On our earnings watch for the day, in addition to big banks reporting before the opening bell, Delta Air Lines is also reporting today during the market. At 10:00 a.m. Delta Air Lines (DAL) will hold its earnings call. Currently, Delta is projecting its Q4 EPS to land in a range of $1.05 to $1.30, while revenue is expected to be 9% to 12% higher. For the full year, Delta saw revenue growth of up to 20%, an operating margin of around 11.5%, and EPS of $6.00 to $6.25.
However, on consensus, quarterly EPS is estimated to be $1.16 (-21.6% Y/Y) and the consensus revenue estimate is $13.8B (+2.7% Y/Y).
Over the last 2 years, DAL has beaten EPS estimates 63% of the time and has beaten revenue estimates 100% of the time.
Delta’s update is expected to be closely watched across the sector to see if the strong year-end traffic figures in the U.S. lead to a confident outlook for 2024.
Other articles to look out for on Seeking Alpha:
Boeing given formal notice of FAA probe into 737 Max 9 mishap
Meta Materials announces $1M civil penalty to settle SEC investigation
McKesson looking to sell Rexall pharmacy chain in Canada – report
U.S. stocks on Thursday experienced a choppy trading session, with the major equity indexes in the red for a large part of the day following the latest consumer inflation report. The averages eventually ended mixed.
The Nasdaq (COMP.IND) closed in the green by a small fraction. The Dow (DJI) added 0.04% and the S&P 500 (SP500) ended 0.07% lower.
Nine of the 11 S&P sectors ended in the red. Tech and Energy were the two gainers.
The 10-year yield (US10Y) was down 4 basis points to 3.99%. The 2-year yield (US2Y) was down 11 basis points to 4.26%.
Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the red. The Dow is up a down 0.1%, the S & P 500 is down 0.1% and the Nasdaq is down 0.2%. Crude oil is up 4.3% at more than $75 per barrel. Bitcoin is down 2.2% at more than $46,000.
In the world markets, the FTSE 100 is up 0.8% and the DAX is up 0.8%.
The biggest movers for the day premarket: Several shipping stocks witnessed a surge during the early trading hours of Friday against the backdrop of escalating tensions in the Red Sea, prompted by U.S. and British airstrikes in Houthi-controlled areas of Yemen. Notable increases were observed, with ZIM Integrated Shipping (NYSE:ZIM) rising more than 5%, Nordic American Tankers (NYSE:NAT) by 3.4%.
On today’s economic calendar:
