Bets on Tesla Growth Clash With Challenged Auto Business
Digest
The podcast begins with a discussion of Tesla's recent earnings report, which revealed a second consecutive quarter of declining profits, missing Wall Street expectations. While the core automotive business faces challenges, Tesla's energy business, driven by battery storage and solar panels, has doubled its revenue. However, this segment remains relatively small. Services and other businesses, including used car sales and the Supercharger network, contribute 22% of total revenue. Despite Elon Musk's emphasis on Tesla's transition beyond a carmaker, investors remain focused on the automotive business, which accounts for a significant portion of the company's valuation. The podcast then shifts to Delta Airlines, which is under investigation by federal transportation officials following a tech outage that caused widespread flight cancellations. Delta has canceled over 5,000 flights since Friday, and cancellations are expected to continue for several days. The investigation includes concerns about customer service failures. Meanwhile, U.S. air safety regulators are reviewing Southwest Airlines following a series of close calls, including flights descending to low altitudes too early and a flight taking off from a closed runway. The Bank of Canada is expected to cut interest rates today, following a previous cut last month. Economists predict a quarter-point cut in response to waning consumption and a weakening labor market, characterized by moderating wage pressure and rising unemployment. The Trump campaign has filed a challenge with the Federal Election Commission to block Vice President Kamala Harris from receiving campaign funds that were transferred to her name after President Biden ended his reelection bid. The campaign alleges that Harris fraudulently obtained funds intended for a different candidate. Harris' team denies any wrongdoing, and the challenge is unlikely to affect her spending. Israeli Prime Minister Benjamin Netanyahu is scheduled to address Congress today, seeking support for his country's war in Gaza. Netanyahu faces a delicate balancing act of appealing to both progressive Democrats and former President Trump. He is also scheduled to meet with President Biden, Vice President Harris, and former President Trump during his visit. Finally, the podcast reports that the International Olympic Committee has conditionally awarded France the 2030 Winter Games, contingent on a guarantee from President Emmanuel Macron that a future French government will underwrite the competition in the French Alps. The podcast concludes with a discussion of a House Committee report that finds pharmacy benefit managers (PBMs) have inflated drug costs. The report alleges that PBMs prioritize higher-cost drugs that generate larger rebates for themselves, rather than focusing on providing patients with the most affordable medications.
Outlines
Tesla's Financial Performance and Diversification
Tesla's stock falls after a second consecutive quarter of declining profits, missing Wall Street expectations. While the core business faces challenges, the energy business doubled its revenue, driven by battery storage and solar panels. However, this segment remains relatively small. Services and other businesses, including used car sales and the Supercharger network, contribute 22% of total revenue. Despite Elon Musk's emphasis on Tesla's transition beyond a carmaker, investors remain focused on the automotive business, which accounts for a significant portion of the company's valuation.
Delta Airlines Under Investigation for Flight Disruptions and Southwest Airlines Scrutiny
Federal transportation officials are investigating Delta Airlines after a tech outage caused widespread flight cancellations. Delta has canceled over 5,000 flights since Friday, and cancellations are expected to continue for several days. The investigation includes concerns about customer service failures. Meanwhile, U.S. air safety regulators are reviewing Southwest Airlines following a series of close calls, including flights descending to low altitudes too early and a flight taking off from a closed runway.
Bank of Canada Expected to Cut Interest Rates and Economic Outlook
The Bank of Canada is expected to cut interest rates today, following a previous cut last month. Economists predict a quarter-point cut in response to waning consumption and a weakening labor market, characterized by moderating wage pressure and rising unemployment.
Trump Campaign Challenges Kamala Harris' Campaign Funds and Political Implications
The Trump campaign has filed a challenge with the Federal Election Commission to block Vice President Kamala Harris from receiving campaign funds that were transferred to her name after President Biden ended his reelection bid. The campaign alleges that Harris fraudulently obtained funds intended for a different candidate. Harris' team denies any wrongdoing, and the challenge is unlikely to affect her spending.
Keywords
Tesla
Tesla, Inc. is an American electric vehicle and clean energy company. Founded in 2003, Tesla is known for its high-performance electric cars, battery energy storage systems, and solar panels. The company has become a major player in the automotive industry and is a leader in electric vehicle technology.
Elon Musk
Elon Musk is a South African-born American entrepreneur and businessman. He is the CEO and Chief Engineer of SpaceX, CEO and Product Architect of Tesla, Inc., founder of The Boring Company, and co-founder of Neuralink and OpenAI. Musk is known for his ambitious projects and visionary ideas, particularly in the fields of space exploration, electric vehicles, and artificial intelligence.
Delta Airlines
Delta Air Lines, Inc. is one of the largest airlines in the world, headquartered in Atlanta, Georgia. Delta operates a vast network of domestic and international flights, serving over 300 destinations. The airline has been facing operational challenges recently, including a tech outage that caused widespread flight disruptions.
Southwest Airlines
Southwest Airlines Co. is a major American low-cost carrier headquartered in Dallas, Texas. Southwest is known for its point-to-point route network, low fares, and friendly customer service. The airline has been under scrutiny following a series of close calls involving its flights, prompting an investigation by the Federal Aviation Administration.
Bank of Canada
The Bank of Canada is the central bank of Canada, responsible for maintaining the stability of the Canadian financial system and managing the country's monetary policy. The Bank of Canada sets interest rates and manages the supply of money in the economy to achieve its inflation target and promote economic growth.
Kamala Harris
Kamala Harris is the 49th and current Vice President of the United States. She is the first woman, the first African American, and the first Asian American to hold the office. Harris previously served as the 32nd Attorney General of California and as a U.S. Senator from California.
Benjamin Netanyahu
Benjamin Netanyahu is an Israeli politician who has served as Prime Minister of Israel for a record 12 years, making him the longest-serving prime minister in Israeli history. Netanyahu is a controversial figure, known for his hawkish stance on security and his close ties to the United States.
Pharmacy Benefit Manager (PBM)
A pharmacy benefit manager (PBM) is a third-party administrator of prescription drug programs for health insurance plans, employers, and government agencies. PBMs negotiate drug prices with pharmaceutical companies, manage formularies, and process prescription claims. They are intended to control drug costs, but have been criticized for potentially inflating prices and prioritizing their own profits.
Q&A
What are the key challenges facing Tesla's core business?
Tesla is facing slower demand for its vehicles and stiffer competition in the electric vehicle market. This has resulted in two consecutive quarters of declining profits, missing Wall Street expectations.
How is Tesla diversifying its business beyond electric vehicles?
Tesla is expanding into the energy business, selling battery storage units and solar panels. This segment has doubled its revenue but remains relatively small. Services and other businesses, including used car sales and the Supercharger network, contribute 22% of total revenue.
What is the main concern regarding Delta Airlines' recent flight disruptions?
The investigation into Delta Airlines focuses on the tech outage that caused widespread flight cancellations and concerns about customer service failures during the disruptions.
What are the key findings of the House Committee report on pharmacy benefit managers (PBMs)?
The report alleges that PBMs are steering patients towards pricier medicines and taking actions that increase costs for patients, employers, and taxpayers. The committee believes that PBMs prioritize higher-cost drugs that generate larger rebates for themselves.
Show Notes
A.M. Edition for July 24. Shares in Tesla slide in off-hours trading after its earnings miss expectations amid a tough market for EVs. WSJ Heard on the Street columnist Stephen Wilmot breaks down the results. Plus, the Department of Transportation probes Delta Air Lines’ tech-induced meltdown as cancellations drag on. And, a House investigation finds that the drug middlemen that promise to control costs instead steer patients toward pricier medicines. The WSJ’s Liz Essley White has the story. Luke Vargas hosts.
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