Ford launches new business model in Europe

Ford to cut 12,000 jobs in Europe by end of 2020

Ford to realign its European operations, Stockwinners

Ford (F) said in a statement that it is launching a new business model and fresh vehicle line-up as part of the most comprehensive redesign in the history of its business in Europe.

The company also is on track to significantly improve its financial results in Europe this year, paving the way to sustainable profitability and its longer-term goal of delivering a 6% EBIT margin.

The new European operating model and resulting organization are effective July 1.

Three new business groups – Commercial Vehicles, Passenger Vehicles and Imports – are being established to facilitate fast decision-making centered on customer needs, Ford said.

Ford Kuga will now be manufactured in China instead of Europe, Stockwinners

Ford is freshening and expanding its vehicle line-up in Europe, introducing at least three new nameplates in the next five years as it continues to grow its utility vehicle portfolio, including the all-new Mustang-inspired fully electric performance utility.

The new nameplates are in addition to all-new Kuga, Puma and Explorer Plug-In Hybrid coming by early 2020.

Manufacturing efficiency is being improved through the previously announced proposed or confirmed closure or sale of six assembly and component manufacturing plants by the end of next year: Proposed closure of Bridgend Engine Plant in South Wales; Closure of Ford Aquitaine Industries Transmission Plant in France; Closure of Naberezhnye Chelny Assembly, St. Petersburg Assembly and Elabuga Engine Plant in Russia; Sale of the Kechnec Transmission Plant in Slovakia to Magna.

This Ford Mustang designed for the European market, Stockwinners

As a result, Ford’s manufacturing footprint in Europe will be reduced to a proposed 18 facilities by the end of 2020, from 24 at the beginning of 2019.

In the U.K., the Ford of Britain and Ford Credit Europe headquarters in Warley also will close later this year and operations consolidated in Dunton.

In addition, Ford is implementing shift reductions at its assembly plants in Saarlouis, Germany, and Valencia, Spain, as well as a more streamlined management structure and marketing and sales operations.

In total, approximately 12,000 jobs will be impacted at Ford’s wholly owned facilities and consolidated joint ventures in Europe by the end of 2020, primarily through voluntary separation programs.

Around 2,000 of those are salaried positions, which are included among the 7,000 salaried positions Ford is reducing globally.

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Tesla higher after raising money

Tesla offers $650M of shares, $1.35B of notes to ‘strengthen’ balance sheet

Tesla Model 3 named Popular Mechanics' Car of the Year
Tesla higher after raising money, Stockwinners

Tesla (TSLA) confirmed in a press release that it disclosed this morning offerings of $650M of common stock and $1.35B aggregate principal amount of convertible senior notes due in 2024 in concurrent underwritten registered public offerings.

In addition, Tesla has granted the underwriters a 30-day option to purchase up to an additional 15% of each offering.

Elon Musk, Tesla’s CEO, will participate by purchasing $10M of common stock.

The aggregate gross proceeds of the offerings, assuming full exercise by the underwriters of their option to purchase additional securities, would be approximately $2.3B before discounts and expenses.

Concurrently with this offering of common stock and pursuant to a separate prospectus supplement, Tesla is offering convertible senior notes due 2024 to the public in an aggregate principal amount of $1.35B, or $1.55B if the underwriters for the concurrent convertible notes offering exercise in full their option to purchase additional notes.

Tesla intends to use the net proceeds from the offerings to “further strengthen its balance sheet, as well as for general corporate purposes.”

The notes in the offering will be convertible into cash and/or shares of Tesla’s common stock at Tesla’s election. The interest rate, conversion price and other terms of the notes are to be determined.

Goldman Sachs and Citigroup are acting as lead joint book-running managers for the offering, with BofA Merrill Lynch, Deutsche Bank Securities, Morgan Stanley and Credit Suisse acting as additional book-running managers, and Societe Generale and Wells Fargo Securities acting as co-managers.

Wolfe Research

#Wolfe Research analyst Daniel Galves downgraded Tesla to Peer Perform from Outperform and cut his price target for the shares to $265 from $375. Tesla’s product is “truly differentiated” with a multi-year sustainable advantage in long-range electric powertrains and highly-assisted driving, Galves told investors in a research note. However, the analyst says it is now clear that “broad consumer awareness doesn’t happen overnight.”

In the interim, he believes shares of Tesla will be driven by investor confidence in the company’s medium-term demand and earnings power. And #Galves no longer has confidence in substantial free cash flow at Tesla until its Model 3 volumes rise to 7,000 per week. As such, the analyst moves to the sidelines saying he can no longer recommend the shares.

Shares of Tesla are up 4%, or $9.09, to $243.55 in Thursday’s trading following the news.

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Fiat Chrysler to invest $4.5B in Michigan

Fiat Chrysler to invest $4.5B in five existing Michigan plants

FCA (FCAU) would invest $1.6 billion to convert the two plants that comprise the Mack Avenue Engine Complex into the future assembly site for the next-generation Jeep Grand Cherokee, as well as an all-new three-row full-size Jeep SUV and plug-in hybrid (PHEV) models, adding 3,850 new jobs to support production.

The Company intends to start construction of the new Detroit facility by the end of Q2 2019 with the first three-row vehicles expected to roll off the line by the end of 2020, followed by the all-new Grand Cherokee in the first half of 2021.

Also as part of this announcement, the Jefferson North Assembly Plant would receive an investment of $900 million to retool and modernize the facility to build the Dodge Durango and next-generation Jeep Grand Cherokee.

FCA expects to create 1,100 new jobs at Jefferson North. The reborn Mack facility would be the first new assembly plant to be built in the city of Detroit in nearly three decades.

In 1991, Jefferson North was the last new assembly plant built in the city.

When complete, Mack would join Jefferson North as the only automotive assembly plants to be located completely within the city limits of Detroit. The Pentastar engines – the 3.6-, 3.2- and 3.0-liter – currently built at Mack would be relocated to the Dundee Engine Plant as part of a $119 million investment. Pentastar production at Mack I would end by Q3 2019.

Mack II has been idle since it ceased production of the 3.7-liter V-6 in September 2012.FCA also confirms the investment at Warren Truck to retool for production of the all-new Jeep Wagoneer and Grand Wagoneer, announced in 2017, along with their electrified counterparts, would increase to $1.5 billion.

The Pentastar Engines currently built at Mack would be relocated to the Dundee Engine Plant, Stockwinners

Production is expected to launch in early 2021. In addition to the new Jeep models, the plant would continue building the Ram 1500 Classic, which is being extended to meet market demand. It is expected that 1,400 new jobs would be added.

As a result of this investment announcement, production of the all-new Ram Heavy Duty will continue at its current location in Saltillo, Mexico.

To support the additional production, the Company’s Warren Stamping (Warren, Michigan) and Sterling Stamping (Sterling Heights, Michigan) plants would receive investments of $245 million and $160 million, respectively, with Sterling Stamping expected to add more than 80 new jobs.


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Musk’s tweet sends Tesla shares lower

Tesla slides after Elon Musk mocks SEC on Twitter

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Musk’s tweet sends Tesla shares lower

Shares of Tesla (TSLA) dropped in Friday’s trading after Elon Musk, the company’s CEO, mocked the Securities and Exchange Commission in a tweet, calling the agency the “Shortseller Enrichment Commission.”

Last weekend Musk reached an agreement with the SEC to settle fraud charges, and that charge is currently pending approval from a federal judge.

MUSK MOCKS SEC

On Thursday, Musk tweeted, in apparent reference to the SEC, “Just want to [sic] that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!”

Musk’s tweet came just hours after Musk and the SEC were told by U.S. District Court Judge Alison Nathan, who must approve the deal, to explain why the settlement is “fair and reasonable” by October 11, Bloomberg reported.

Separately, Musk took aim at BlackRock (BLK) and other large fund managers for fueling short sellers.

Musk alleged in a tweet that BlackRock and other firms pocket “excessive profit from short lending while pretending to charge low rates for ‘passive’ index tracking.”

SEC SETTLEMENT

This past weekend, the SEC announced that Musk agreed to settle the securities fraud charge brought against him last week.

The settlement requires that Musk will step down as Tesla’s chairman and will be ineligible to be re-elected chairman for three years.

Additionally, Tesla will appoint two new independent directors to its board and both the CEO and company will each pay $20M penalties to settle allegations that Musk misled investors in August by tweeting that he was considering taking Tesla private and had secured funding for the effort.

According to the SEC’s complaint, Musk’s misleading tweets caused Tesla’s stock price to jump by over 6% on August 7, and led to “significant market disruption.”

Additionally, the SEC is requiring that Musk get approval from the company’s lawyer before tweeting anymore company news, which reports had said could clamp down on Musk’s “headline-grabbing, unpredictable approach to promoting Tesla’s brand.”

Recode’s Teddy Schleifer reported via Twitter after the “Shortseller Enrichment Commission” tweet that the SEC agreement on Musk’s tweets “does not take effect for 90 days from the settlement date, per source. So he still has ~80 days to tweet whatever he wants.”

The SEC declined to comment on Musk’s tweet, Schleifer said.

Additionally, Fox Business Network’s Charlie Gasparino also tweeted, saying that the “@SEC_Enforcement continues to investigate @Tesla over possible misstatements on production/profitability targets-sources focus is on stated targets for Model 3/co profitability.

SEC sources say case is tougher case than @elonmusk ‘funding secured’ tweet.”

PRICE ACTION

In Friday morning trading, shares of Tesla are down 4.2% to $270.17.


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Tesla drops as executives leave

Tesla drops as second executive departs in less than a week

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Tesla drops as executives leave

Shares of Tesla (TSLA) dropped in Wednesday trading following a report that said a top financial executive is leaving the company, the second executive departure in less than a week at the electric car maker.

LATEST EXECUTIVE DEPARTURE

Susan Repo, Tesla’s corporate treasurer and VP of finance who joined the company in 2013, has departed the company to take on a CFO position at another firm, Bloomberg reported last night, citing a person familiar with the matter.

Repo’s departure comes less than a week after Tesla Chief Accounting Officer Eric Branderiz left the company for “personal reasons,” Tesla disclosed on March 7.

The departures of Repo and Branderiz are the latest in a string of executive departures at Tesla over the last 12 months.

In addition to Repo and Branderiz, Tesla has also lost Jon McNeill, president of global sales and service, who left the company in February to become Lyft’s COO.

The company also lost former CFO Jason Wheeler in 2017. Other departures include Chris Lattner, who left after leading Tesla’s Autopilot engineering team for less than six months, Lyndon and Peter Rive, Kurt Kelty and and Diarmuid O’Connell.

Model 3 Tesla

TESLA UNDER PRESSURE

Tesla is expected to report production and deliveries results for its Model 3 Sedan, which has faced challenges including quality issues and a production halt.

Elon Musk, the company’s CEO, has delayed manufacturing goals several times for Model 3. Reuters said last week that Tesla had to temporarily suspend Model 3 factory lines in February to “improve automation” and “increase production rates.”

Additionally, Green Car Reports said on March 9 that the quality of the 2018 Tesla Model 3 is “terrible,” and that the build quality was “the worst we have seen on any new car from any maker over the last 10 years.”

WHAT’S NOTABLE

Tesla shareholders are expected to vote whether to approve CEO Musk’s $2.6B pay package, which the board recommends and proxy firms ISS and Glass Lewis do not, at a meeting of shareholders on March 21.

Musk has said that he will not accept the package unless the company reaches a market cap of $650B.

VOLKSWAGEN CHALLENGE

Tesla is also facing challenges from other automakers in the electric car space, including Volkswagen (VLKAY), which said it will equip 16 factories to produce electric vehicles by the end of 2022, compared with three currently.

As of next year, the group plans to roll out a new battery-powered model “virtually every month,” CEO Mathias Mueller said.

“When the technology and the price are right, customers are ready to change over. With the I.D. family, we will take the lead in the electric movement,” Volkswagen executive Herbert Diess said yesterday.

PRICE ACTION

Tesla dropped 2.2% to $334.42 in Wednesday’s trading.


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Honda recalls 465,000 vehicles with faulty airbag

Honda to recall additional 465,000 vehicles with faulty airbag inflators

Honda to recall additional 465,000 vehicles with faulty airbag inflators. Stockwinners.com
Honda to recall additional 465,000 vehicles with faulty airbag inflators

In the third phase of planned recalls announced by NHTSA in May 2016 and based on recent Defect Information Reports from the airbag inflator supplier Takata (TKTDY), Honda (HMC) will conduct recalls covering approximately 717,000 Honda and Acura automobiles in the United States to replace, for free, Takata passenger front airbag inflators that do not contain a moisture absorbing desiccant.

Excluding vehicles subject to the earlier Takata airbag inflator recalls, approximately 465,000 additional Honda and Acura vehicles in the U.S. will become subject to recall for the first time as a result of this action.

Including the recall announced today, Honda has adequate replacement part supplies to repair all Honda and Acura models currently included in inflator recalls in the United States.

Owners of affected vehicles can seek repair immediately at authorized Honda and Acura dealers.

No additional driver front airbag inflators in Honda or Acura automobiles will be subject to recall in this action, as all potentially affected driver inflators already are subject to prior recalls.

However, some vehicles previously repaired under earlier driver front inflator recalls will now require replacement of those vehicles’ passenger front inflators under this new action.

In addition, 960 Honda Gold Wing Airbag motorcycles from the 2009-2016 model years will be recalled to replace optional Takata non-desiccated airbag inflator modules installed on those vehicles.

Due to the relatively small vehicle population and an adequate supply of replacement inflators, Honda has elected to pull forward the recall of motorcycles that would have been included in Phase 4 of NHTSA’s recall plan (scheduled for January 2019), placing them under recall earlier than required.

With this action, all Honda motorcycles equipped with defective inflators in the U.S. are now eligible for repair. There have been no Takata airbag inflator ruptures involving Honda motorcycles globally.

With this new action, a total of approximately 11.9 million Honda and Acura automobiles have been or now are subject to recall for replacement of a Takata driver and/or passenger front airbag inflator in the United States, with approximately 4,540 Honda motorcycles subject to recall for the replacement of the Takata airbag inflator module.

HMC closed at $36.00


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Tesla’s Cash Burn Accelerates

Tesla burning through cash at $480K per hour pace

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Tesla’s (TSLA) latest announcement of designing a sports car should take a back seat to investors’ focus of the company’s cash burn, says Bloomberg, estimating that at the current rate, Tesla would be out of cash by August 6th.

Bloomberg Intelligence analyst Kevin Tynan estimates that the company may have to raise at least $2B in fresh capital by mid-2018.

The report adds that the bond market route may not be welcoming, as Tesla investors who bought $1.8B in debt 3 months ago remain under water.

Over the past 12 months, the electric-car maker has been burning money at a clip of about $8,000 a minute (or $480,000 an hour), Bloomberg data show. At this pace, the company is on track to exhaust its current cash pile on Monday, Aug. 6.

To be fair, few Tesla watchers expect the cash burn to continue at quite such a breakneck pace, and the company itself says it’s ramping up output of its all-important Model 3, which will bring money in the door. Investors don’t seem concerned.

The Founders Series Roadster will cost buyers a $250,000 down payment even though it’s not coming for more than two years. Orders of those cars are capped at 1,000, meaning they alone could generate $250 million. Tesla is charging a total of $50,000 for reservations of the regular Roadster. Companies can also pre-order electric Semi trucks for $5,000, though they don’t go into production until 2019.

Tesla has said it has ample money to meet its target of producing 5,000 Model 3 sedans by the end of March. After that date, the company expects to “generate significant cash flows from operating activities,” Tesla said in a Nov. 1 letter to shareholders. Tesla’s capital expenditures should also decline as the company pays off its expenses related to the Model 3, CFO Deepak Ahuja said on a conference call the same day.

TSLA last traded at $314.40


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Tesla to unveil its electric semi-truck tonight

Tesla to unveil its electric big-rig truck tonight

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Tesla Inc (TSLA) to unveil a prototype electric big-rig truck, which may be able to drive itself, tonight at 8 pm PST.

Chief Executive Elon Musk has described electric trucks as Tesla’s next effort to move the economy away from fossil fuels through projects including electric cars, solar roofs and power storage.

Reuters in August reported that Tesla was working on self-driving technology for the truck. Several Silicon Valley companies see long-haul trucking as a prime early market for the self-driving technology, citing the relatively consistent speeds and little cross-traffic trucks face on interstate highways and the benefits of allowing drivers to rest while trucks travel.

The truck would have a working range of 200 to 300 miles, at the low end of what is considered “long-haul” trucking, Reuters reported. Diesel trucks are capable of traveling up to 1,000 miles on a single tank of fuel.

Musk said this week that the truck would “blow your mind clear out of your skull” when it was introduced in a webcast on Thursday at 8 p.m. PST.

He later tweeted, the truck “can transform into a robot, fight aliens and make one hell of a latte.” Musk seems to be embracing the criticism and he’s a hype man and making light of it.

“Semi specs are better than anything I’ve seen reported so far. Semi eng/design team work is aces, but other needs are greater right now,” Musk tweeted in October.

A Tesla truck with a range of 300 to 450 miles would be able to address less than half of the total semi-truck market, estimated Bernstein analyst .

The original debut date for the truck was October 26, which was delayed because of Model 3 production delays, and Tesla’s battery projects in Puerto Rico after the hurricane took out power on the island country after Hurricane Maria.

“A lot of people don’t think you can do a heavy-duty, long-range truck that’s electric, but we are confident that this can be done,” Musk told Tesla shareholders at its annual meeting in September. “So we’ll be showing off a working prototype not too long from now, at the end of September.”

Musk has said the Tesla Semi Truck will hit the roads in 2019. “We will probably reach scale production on the semi in about two years,” he said at the shareholder meeting in September. “Maybe 18 months, but probably about two years.”

TSLA last traded at $313.92.


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Model 3 production issues send Tesla lower

Tesla slips amid signs of Model 3 production troubles 

Model 3 production bottlenecks send  Tesla lower. See Stockwinners.com

Shares of Tesla (TSLA) dropped in Friday’s premarket trading after the company was downgraded by an analyst due to a more cautious view on Model 3 production.

Following reports that Tesla is planning to cut Model 3 parts orders from a Taiwanese parts supplier, another analyst trimmed his estimates on Tesla.

CUTTING MODEL 3 PARTS ORDERS

Tesla is planning to cut its orders for parts for the Model 3 sedan from Hota Industrial, a Taiwanese auto component maker and long-time Tesla supplier, by 40% due to a “bottleneck” in Model 3 production, Reuters reported this morning, citing a report from the Economic Daily News.

According to Hota Chairman Seh Kuo-jung, Tesla told Hota that orders would be cut to 3,000 sets per week from 5,000 sets beginning in December.

Additionally, Tesla may also delay scheduled weekly shipments of 10,000 parts in March by a few weeks until May or June. Hota makes gears and axles for vehicles.

BOTTLENECK BACKGROUND

Tesla has said bottlenecks had left the company behind its planned ramp up for the Model 3, which began production in July.

After reporting third quarter production and deliveries, Tesla said that there are “no fundamental issues with the Model 3 production or supply chain,” adding that it “understands what needs to be fixed and is confident of addressing the manufacturing bottleneck” in the near-term.

Elements of Tesla’s Model 3 body line are “still in development” at Thai Summit America, a Michigan-based supplier, but were not yet installed at Tesla’s plant in Fremont, a source told Daily Kanban on October 5.

In July, Tesla CEO Elon Musk told employees that “Frankly, we’re going to be in production hell” for the Model 3 “for at least 6 months, maybe longer.”

Musk previously tweeted that he sees the company producing 20,000 Model 3 cars per month in December.

As a result of the Model 3 bottlenecks, Tesla has delayed the unveiling of its all-electric semi truck to November 16 from October 26.

ANALYST COMMENTARY

Evercore ISI analyst George Galliers this morning downgraded Tesla to In Line from Outperform and cut his price target on shares to $312 from $330.

In a note to clients, Galliers explained the downgrade, saying he believes the Model 3 is the “most important piece” of the Tesla investment story in the coming quarters.

At this point, he has “little insight” into how production is running. Galliers added that “clearly” Q3 production was weaker than the company expected. Galliers cut his Model 3 delivery forecasts for this year, 2018, 2019 and 2020 and lowered his automotive revenue forecasts.

Jefferies analyst Philippe Houchois cut his estimates for Tesla by 3%-4% for 2017 and 2018 to reflect the delayed Model 3 ramp up.

The analyst, who kept an Underperform rating on Tesla with a $240 price target, told clients in a note called “Q3 – Street Cred Stress Test” that he believes Tesla’s cash numbers could surprise positively given the benefit of de-stocking Models S and X, but acknowledged that the $10B drop in value over the past six weeks could be pricing in near-term risk.

TSLA closed at $326.17. They last traded at $321.00


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Ford announces Safety Recall

Ford issues four safety recalls in North America 

Ford Issues Safety Recall. See Stockwinners.com for details

Ford (F) is issuing four safety recalls in North America:

Ford is issuing a safety recall for approximately 73,000 2015-17 Ford Transit vehicles equipped with a trailer tow module for water intrusion into the module and connector resulting in potential wiring corrosion and damage to the module.

In affected vehicles, water intrusion into the module may result in rapid flashing of the turn signals, loss of the instrument cluster display, loss of heater and air conditioning controls, and loss of multimedia including radio, screens and SYNC.

Ford is not aware of any accidents or injuries associated with this issue.

Ford is aware of two reports of vehicle fires on Canadian fleet vehicles potentially related to this condition. Affected vehicles include 2015-17 Ford Transit vehicles built at Kansas City Assembly Plant, Feb. 3, 2014 to Aug. 2, 2017.

The recall involves approximately 73,443 vehicles in North America with 5,206 in the United States and federalized territories and 8,365 in Canada. The Ford reference number for this recall is 17S34.

Ford recalls F-150s. See Stockwinners.com for details

Ford is issuing a safety recall for approximately 15,000 2018 Ford F-150 vehicles with 3.3-liter engines, six-speed transmissions and column-mounted shift lever for inaccurate gear selection that could result in unintended vehicle movement.

In affected vehicles, rapid movement of the transmission shifter from park to drive may cause loss of PRNDL gear indication in the instrument cluster and momentary engagement of reverse operation before the vehicle achieves forward drive function.

Ford is not aware of any accidents or injuries associated with this issue.

Ford is issuing a safety recall for approximately 15,000 2017 Ford F-150 vehicles with 10-speed automatic transmissions for an inability to shift the transmission using the shift lever.

In affected vehicles, the pin attaching the transmission shift linkage to the transmission may come out. If this happens, movement of the shift lever by the driver will not change the transmission gear, which will remain in the gear it was in when the pin came out regardless of the position of the shift lever. Ford is not aware of any accidents or injuries associated with this issue.

Ford is issuing a safety recall for approximately 30 2018 Ford F-150 vehicles with 3.5-liter engines for possible loss of motive power and engine failure. In affected vehicles, certain cylinder heads manufactured for 3.5-liter engines are missing machined holes intended to supply lubrication to the camshaft-bearing journals.

Ford is not aware of any accidents or injuries associated with this issue.

F last traded at $12.00.


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Tesla lower on production bottlenecks

Tesla slides after Model 3 production miss

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Shares of Tesla (TSLA) are slipping after the company reported deliveries and production for the third quarter last night. While Model S and X deliveries were better than expected, Model 3 numbers came in below estimates. Commenting on the news, Baird analyst Ben Kallo recommended using any weakness as a buying opportunity as he sees the update as good enough, while his peer at Bernstein argued that the report raised more questions than answers.

PRODUCTION, DELIVERIES UPDATE

Last night, Tesla reported that in the third quarter it delivered 26,150 vehicles, of which 14,065 were Model S, 11,865 were Model X, and 220 were Model 3. The company said this was its all-time best quarter for Model S and X deliveries. In total, the company expects to deliver about 100,000 Model S and X vehicles in 2017.

In addition to the third quarter deliveries, about 4,820 Model S and X vehicles were in transit to customers at the end of the quarter, which will be counted as deliveries in the fourth quarter. Meanwhile, third quarter production totaled 25,336 vehicles, with 260 of them being Model 3.

Model 3 production was less than anticipated due to production bottlenecks.

Tesla also noted that “is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain. Tesla understands what needs to be fixed and is confident of addressing the manufacturing bottleneck issues in the near-term.”

[youtube https://www.youtube.com/watch?v=GbOU5Ey02F8?rel=0&controls=0&w=560&h=315]

BUYING OPPORTUNITY

In a research note this morning, Baird’s #Kallo argued that although Model 3 deliveries were slightly below the range he had outlined before due to manufacturing bottlenecks, production should continue to ramp and he believes Model S and X demand remains strong.

Further, he pointed out he had expected the third quarter to be the most challenging part of the Model 3 production ramp and said he would be an “aggressive” buyer on any weakness as he believes Tesla is only two to four weeks behind schedule.

Kallo reiterated an Outperform rating and $411 price target on the shares.

Meanwhile, his peer at KeyBanc told investors in a research note of his own that he thinks the Model 3 miss was somewhat priced in. Analyst Brad #Erickson argued that he sees Model 3 euphoria likely to persist. Nonetheless, high-end demand and likely shortfalls in Model 3 profitability remain his concern and primary focus.

MORE QUESTIONS THAN ANSWERS

Also commenting on Tesla’s update, Bernstein analyst A.M. #Sacconaghi, Jr. noted that the company’s Model 3 production was “dramatically” lower than forecast, and worse than feared.

While acknowledging that Model S and X deliveries were strong, the analyst said he believes the fourth quarter guidance of nearly 27K units is ambitious, and that several factors helped S and X demand this quarter, including aggressive price cuts and promotions, the discontinuation of the lowest-end Model S, third quarter seasonality, and publicity from the Model 3 launch.

Tesla’s production and deliveries report raised more questions than answers, he contended. He continues to believe that the Tesla investment thesis hinges on the success of Model 3, and the company’s ability to ramp production, make the car profitable, and deliver good initial build quality.

He reiterated a Market Perform rating on the shares.

His peer at Goldman Sachs also said while Model S and X topped expectations, he remains cautions on the Model 3 ramp. Analyst David #Tamberrino believes this likely puts downward risk to the company’s communicated S-curve to the Model 3 production ramp, where it targets 5,000 per week at some time in December 2017.

He reiterated a Sell rating on Tesla shares.

PRICE ACTION

In Tuesday’s trading, Tesla dropped about 1% to $339 per share.


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Wabco to exit Meritor WABCO joint venture

Wabco agrees to buyout of Meritor WABCO joint venture

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WABCO Holdings (WBC) announced that it will further expand its commitment and operations in the commercial vehicle market in North America by taking full ownership of the Meritor WABCO joint venture. WABCO has signed an agreement to purchase Meritor (MTOR) stake in the joint venture business.

WABCO’s purchase price is $250M. The transaction is expected to close on October 1, 2017 and immediately prior to closing, Meritor will receive a final closing partnership distribution.

Meritor WABCO, employing approximately 200 persons, is headquartered in Troy, Michigan, U.S.A. and had sales of $300M in fiscal year 2016.

It currently sells and distributes a range of WABCO’s leading safety and efficiency technologies for commercial vehicles in North America.

With this agreement, WABCO will take over the former joint venture’s application engineering and supply chain operations, including the distribution center and customer service hub in Hebron, Kentucky.

In addition, WABCO will continue to have exclusive access to a winter test track in Sault St. Marie, Michigan, and joint access to a year-round test track in East Liberty, Ohio to support local customers.

Following closure of the buyout, WABCO has agreed for Meritor to continue to be its exclusive distributor for a certain range of WABCO’s Aftermarket products in the U.S. and Canada, and its non-exclusive distributor in Mexico.

In connection with the purchase transaction, both parties have the option to terminate the distribution arrangements at certain points during the first three and half years, for an exercise price between $225M-$265M based on the earnings of the business.


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Autoliv to split into two companies

Autoliv initiates strategic review of separating business segments

Autoliv to split into two companies. See Stockwinners.com for details.

Autoliv (ALV) announced that its board has instructed management to conduct a strategic review of its operating structure with the intent to create separate companies of its current business segments, Passive Safety and Electronics.

The intent is to create two publicly traded companies capable of addressing two distinct, growing markets with leading product offerings and thereby create additional value for shareholders, customers and other stakeholders as compared to the current, combined structure of Autoliv.

The strategic review process will evaluate this and other options.

Although the strategic review has been initiated there is no guarantee that the review will result in any transaction, including a separation or listing of the businesses. Electronics consists of Active Safety Products, Restraint Control and Sensing and Brake Systems.

Its market is characterized by a high pace of change and growth which requires an agile innovation and partnering model as well as significant upfront investments to capture future growth.

It is estimated that the total available market for Safety Electronics will grow from around $20B in 2017 to more than $40B in 2025.

The objective for Electronics is to capture a significant portion of that growth while continuously improving the profitability of the unit. Electronics is one of the leaders in Active Safety today with one of the broadest and most advanced product portfolios in the industry.

Over the last two years Electronics has further positioned itself to be a major player in automotive electronics, including the competitiveness of the product portfolio, becoming a qualified supplier with a high number of OEM’s for active safety and entering into important partnerships with companies like Volvo Cars, NVIDIA (NVDA) and LiDAR experts Velodyne for the next generation of highly automated cars.

In 2016, Electronics sales were $2.22B, with a target to reach $3B in revenue in 2020.

Passive Safety consists of airbag systems, steering wheels and seatbelts.

Its market is characterized by stable growth and incremental innovation which requires the highest requirements on quality and manufacturing efficiency. It is estimated that the total available market for Passive Safety will grow from around $20B in 2017 to around $25B in 2025.

During the same period Passive Safety is expected to outgrow the market and light vehicle production, which is expected to grow by close to two percent annually.

The objective for Passive Safety is to remain the market and innovation leader while maintaining a high level of quality and capital efficiency and further improving its margin performance. Passive Safety is the global market leader with a market share of 39% in 2016.

Over the last 2.5 years Passive Safety’s share of order intake has been around 50% or more indicating significant market share expansion ahead. Standalone, Passive Safety will have increased freedom to further optimize its performance.

In 2016 Passive Safety sales were $7.9B, with a target to reach more than $10B in revenues in 2020. If the separation takes place, the process is estimated to take around one year under most separation scenarios.

Updates to the progress of the strategic review will be provided in a timely manner.

Autoliv (ALV) has been reporting its Passive Safety and Electronics businesses as two separate segments since the beginning of 2016.

PRICE  ACTION

ALV closed at $113.25. It has a 52-week trading range of $93.31 – $117.54. Shares last traded at $123.60 in pre-market trading.


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Barron’s is bullish on WalMart, bearish on Papa John’s

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin

BULLISH  MENTIONS

Wal-Mart, BlackRock attractive amid seasonal market volatility – September and October may bring seasonal volatility that could push stocks around, Steven Sears writes in this week’s edition of Barron’s, while recommending that rather than just trading the swoons, one should focus on companies with indestructible, “cockroach-like qualities.” Some nearly indestructible stocks seem to be Wal-Mart (WMT) and BlackRock (BLK), the publication notes.

Wall Street may want to look at Japan – Investors worried about valuations and an impending correction on Wall Street may want to take a look at Japan, as its macroeconomic fundamentals have not looked this good in years, Assif Shameen writes in this week’s edition of Barron’s. Honda (HMC) and Sony (SNE) hold attractions, the publication noted.

Gartner Inc. (IT) could earn $8 a share of free clash flow in 2019, and potentially could trade 20 times or more to at least $160, Andrew Peck, a fund manager at Baron Capital Management, tells Barron’s. The tech research and advisory firm closed at $120.79 on Friday. TransUnion (TRU), which closed at $47.81, could rise to the mid $60s by 2019 as it expands its data products from credit to health care, Peck says. Online travel giant Priceline Group Inc. (PCLN), which closed at $1,850 on Friday, could rise to $2,500.

Nathan’s Famous trading at 40%-45% discount – Nathan’s Famous (NATH) has gobbled up share in the premium hot-dog market, while its stock has done well, compounding at 17% a year in the past decade, but the stock is not followed by Wall Street analysts and the company is “poorly understood,” Adam Seessel writes in this week’s edition of Barron’s. At a recent $58, Nathan’s trades at a 40%-45% discount to his estimate of intrinsic asset value, he notes.

Most of Harvey insurance money will go to replace flooded cars – A big part of Harvey insurance dollars will go to replace flooded cars, Alex Eule writes in this week’s edition of Barron’s. Wall Street analysts spent the last few days trying to better understand the transfer of wealth from insurance companies to car makers and auto dealers, with investors quick to pounce on their findings, the publication notes. Publicly traded companies that saw their shares rise include Group 1 Automotive (GPI), AutoNation (AN), and Penske Automotive Group (PAG), Eule adds.

Refiner shares probably volatile, long run opportunity – Hurricane Harvey flooded refineries and forced about a quarter of U.S. capacity off-line, but the damage “didn’t faze Wall Street,” and most refining stocks rose afterward, Avi Salzman writes in this week’s edition of Barron’s. While this dynamic may be short-lived, and the refiners could give back those gains in the near-term, in the longer-term, U.S. refining stocks are attractive, and people looking to profit from U.S. energy independence should consider buying them, the publication notes. Publicly traded companies in the space include Delek US (DK), HollyFrontier (HFC), Marathon Petroleum (MPC), Phillips 66 (PSX), Andeavor (ANDV), Valero (VLO) and Western Refining (WNR).

BEARISH  MENTIONS

Papa John’s run of underperformance may continue– Papa John’s (PZZA) is lagging behind the S&P 500 this year and, despite a plan to spend $500M to buy back shares, its run of underperformance may continue as competition hits its plans for growth, Leslie Norton writes in this week’s edition of Barron’s. Competition is everywhere as pizza will increasingly be delivered by Amazon (AMZN) and Uber, she notes, adding also that the choices have expanded dramatically, with chicken nuggets and fries being ordered from McDonald’s (MCD) or soup and a bagel from Panera.

Dialysis providers claim they make no money on patients – Although 88% of dialysis patients are insured by government programs, dialysis providers say they make no money on those patients, Bill Alpert writes in this week’s edition of Barron’s. And if private insurers succeed in cutting payments to dialysis firms, either by refusing subsidized premiums or simply reducing reimbursement rates, DaVita (DVA) and American Renal (ARA) will see their profits contract, he notes. Other dialysis providers include Fresenius Medical Care (FMS).


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Used Car Dealers and SubPrime Lenders to Benefit from Harvey

Analysts weigh in on Harvey impact on used car market

Hurricane Harvey Should benefit used car dealers. See Stockwinners.com

Hurricane Harvey has left a path of destruction in Texas. Commenting on the potential impact the storm will have on the used car market, Janney Capital analyst John Rowan argued that non-bank financials that cater to consumers lower in the credit bureau score spectrum are at an advantage, while his peer at Craig-Hallum sees Carvana (CVNA) as a potential prime beneficiary post-Harvey.

SUBPRIME FINANCING

Janney Capital analyst John Rowan told investors that a new report by Cox Automotive claims that up to half a million cars will be scrapped as a result of Hurricane Harvey, which if accurate would be a significant event for the used car market that could go a long way toward removing the increased wholesale supply of used vehicles and could lead to better pricing later in the year.

While some percentage of the damaged vehicles will be replaced with new ones, Rowan thinks most will be replaced with a used vehicle.

[youtube https://www.youtube.com/watch?v=U8Mm6Syb1CI?rel=0&controls=0&w=560&h=315]

Speculating on who could benefit the most in such a scenario, the analyst argued that non-bank financials that cater to consumers lower in the credit bureau score spectrum are at a “disproportionate advantage.”

The demographic data of the Houston metro area skews toward a greater concentration of un/under-banked consumers, he noted.

Companies that specialize in subprime automotive financing include Ally Financial (ALLY), America’s Car-Mart (CRMT), OneMain Holdings (OMF) and Santander Consumer (SC).

CARVANA MAY BENEFIT

In a research note of his own, Craig-Hallum analyst Steven #Dyer said that while he is cognizant of the near-term disruption in auto sales as a result of Hurricane Harvey, he expects investors will begin looking for beneficiaries from the associated replacement sales. With estimates of more than 500,000 vehicles to be scrapped, the analyst is expecting a surge in replacement sales over the coming months, which is likely to benefit automotive dealers in the associated areas impacted by Harvey.

In his universe, Dyer believes #Carvana (CVNA) could be the prime beneficiary. The company has been in the Houston market since the fourth quarter of 2015 but keeps little-to-no inventory onsite, has about 7,500 vehicles in inventory at any given time and its largest reconditioning center is just up the road in Dallas, the analyst highlighted.

Furthermore, Dyer believes the company’s proven and successful delivery and logistics strategy could allow them to benefit disproportionately from replacement sales. He reiterated a Buy rating and a $24 price target on Carvana’s shares.

COPART

Copart, Inc. (CPRT) is the leading junk car yard or used autoparts. It offers a range of services for processing and selling vehicles over the Internet through its Virtual Bidding Third Generation Internet auction-style sales technology to vehicle sellers, primarily insurance companies, as well as to banks and financial institutions, charities, car dealerships, municipalities, fleet operators, and vehicle rental companies.

PRICE ACTION

In Thursday’s trading, shares of Ally Financial, America’s Car-Mart and OneMain Holdings are all up about 1%, while Santander Consumer’s stock is slipping almost 0.5%. Shares of Carvana have gained over 4%.  Its services also comprise services to sell vehicles through CashForCars.com; and U-Pull-It service that allows buyer to remove valuable parts, and sell the remaining parts and car body.

CPRT is up 14 cents to $32.01.


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