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Loup TV 134: Tesla + Apple Wallet; MR’s Rough Road; Peloton’s Unlikely Suitors

Loup TV 134: Tesla + Apple Wallet; MR’s Rough Road; Peloton’s Unlikely Suitors

Takeaways:

  • The Tesla insurance card can now be added to Apple Wallet. The seemingly insignificant integration speaks to the fact that many Tesla owners are also iPhone owners. No surprises here, don’t expect any more software tie-ins between the companies anytime soon.
  • Microsoft is having difficulties delivering a mixed reality headset to the Department of Defense. The challenges speak to how hard it is to deliver a mixed reality headset to the mainstream.
  • Google continues to get rid of old and build new tools to help advertisers navigate around IDFA. Like it or not, ad tracking is will continue to be part of our everyday lives.
  • While a Peloton shareholder activist is demanding change at the top, John Foley’s job is safe. Talk of Peloton ($9B market cap) getting bought is just that, with the long shot suitor being Nike ($230B market cap).

Disclaimer

Themes
1 min. read Show less
Loup TV 133: The Market; What to Make of Crypto; Apple’s Iconic Cash Flow

Loup TV 133: The Market; What to Make of Crypto; Apple’s Iconic Cash Flow

Takeaways:

  • Volatility continued in the markets in anticipation of the upcoming Fed commentary on Jan. 26. The Fed can make this easy for investors on Wednesday by removing the uncertainty around timing and slope of upcoming rate increases. All in, we believe the market forms a bottom over the next one to three months.
  • Crypto has been in even greater free-fall than the greater markets YTD. While volatility will undoubtedly continue, we believe crypto is here to stay.
  • Netherlands Regulatory Commission issued a small fine to Apple related to needling payment changes within the App Store. The 5M€ fine, which is material, is dwarfed by the strength of Apple’s free cash flow.

Disclaimer

Themes
1 min. read Show less
Loup TV 132: Tesla and Apple Previews

Loup TV 132: Tesla and Apple Previews

Takeaways:

  • Buckle up, we have a big week with Tesla and Apple reporting, along with IBM, Microsoft and Intel. 

Aside from the usual variables around quarterly results, this week we get the much anticipated commentary from the Fed that will be shared on January 26th. Bottom line: tech stocks will likely not get the credit the deserve for strong fundamentals given the Fed’s ongoing interest rate mop-up work.

  • Tesla already reported impressive deliveries of 71%^ YOY growth in December, compared to Ford down 6.8%. 

The focus for Tesla earnings will be on auto gross margin, and it should be a win/win for the company. In September the metric was 28.8%, and we believe in December it will be flat to up slightly despite the component environment along with inflation pressures. If they report increasing auto gross margin, investors will become increasingly optimistic about the potential for 40% long-term auto gross margin. If margins decline sequentially, we expect investors to be somewhat understanding given the broader component environment.

  • For Apple, it’s all about the supply chain. 

Back in October Apple indicated there would be a greater than $6B revenue headwind in the December quarter related to the supply chain. We believe the actual headwind will exceed $8B based on our weekly lead-time checks. The good news is that Apple’s position as foundational to the ongoing accelerating digital transformation remains intact. We expect after given time to reflect on Apple’s results, investors will leave the quarter optimistic about the company’s long-term prospects. Don’t hold your breath for any commentary regarding the MR headset or ambitions in auto. We expect those new product category questions will come up on the call, and anticipate Apple will opt for the well-traveled response that they continue to look at new markets that leverage their expertise in hardware, software and services.

Disclaimer

Apple, Tesla
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