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Wednesday February 20, 2019



Tesla Releases Earnings Report

Tesla Motors, Inc. (TSLA) released its quarterly and full-year earnings on Wednesday, February 7. The company posted increased revenues and a lower-than-expected net loss for the quarter.

The manufacturer of electric automobiles reported $3.29 billion in revenue for the quarter, exceeding the $2.99 billion reported at this time last year. For the full year, the company posted revenue of $11.8 billion, up from $7.0 billion the previous year.

"2018 will be a transformative year for Tesla, with a high level of operational scaling," said Tesla Chairman and CEO Elon Musk and Chief Financial Officer Deepak Ahuja in a letter to shareholders. "As we ramp production of both Model 3 and our energy products while keeping tight control of operating expenses, our quarterly operating income should turn sustainably positive at some point in 2018."

Tesla posted a net loss of $675.4 million for the quarter, exceeding the $121.3 million loss reported during the same quarter last year. For the full year, the company reported a loss of $1.96 billion.

Tesla, known for its drive to be on the cutting edge of electric automobile innovation, has struggled to turn a profit. The company's optimism rests in its ability to meet production goals on its new Model 3. In addition to its automobiles, Tesla is increasing production of its Solar Roof product, which is a solar panel that resembles traditional shingles. The company recently announced it will be partnering with Home Depot to market and sell its solar products in 2018.

Tesla Motors, Inc. (TSLA) shares ended the week at $310.42, down 8.2% for the week.

Hasbro Reports Earnings

Hasbro, Inc. (HAS) reported its fourth quarter and full-year earnings on Wednesday, February 7. The toy company reported increased revenue but a decrease in net earnings for the year.

The company posted revenue of $1.59 billion for the quarter, down from $1.63 billion during the same quarter last year. For the full year, Hasbro reported $5.2 billion in revenue, up from $5.0 billion the previous year.

"Hasbro's global team's execution of our Brand Blueprint drove revenue gains in Franchise Brands, Hasbro Gaming and Emerging Brands, including immersive brand experiences across consumer products and digital gaming," said Hasbro Chairman and CEO Brian Goldner. "Our strong performance ranked Hasbro #1 across the G11 markets for the full-year 2017."

Hasbro reported a net loss of $5.3 million for the quarter. At this time last year, the company posted net earnings of $192.7 million. For the full year, the company reported net earnings of $396.6 million, down from $533.1 million during the prior year.

The company's decrease in sales for the quarter can be attributed, in part, to the performance of its Partner Brands segment. Hasbro reported a 21% decline in revenue for Partner Brands for the quarter and 10% for the full year. The company noted that revenue was down for its Star Wars and Disney Frozen branded products. In contrast, Hasbro's Gaming segment posted a 10% increase for the year.

Hasbro, Inc. (HAS) shares ended the week at $97.73, up 3.9% for the week.

Yelp's Earnings Rise

Yelp Inc. (YELP) released its latest earnings report on Wednesday, February 7. The company reported increases in both quarterly and full-year sales and profits.

Revenue for the fourth quarter was $218.2 million. This was an increase of 12% over the $194.8 million in revenue the company reported at this time last year. Yelp reported $846.8 million in revenue for the full year.

"We finished 2017 strong with rising growth in new advertiser acquisition and continued improvements in revenue retention from the prior year," said Yelp co-founder and CEO Jeremy Stoppleman. "In 2018, we are focused on increasing consumer usage through deepening our product experience in the Restaurants category and attracting advertisers through expanding sales channels and increased ad product flexibility."

Yelp reported net income of $142.1 million for the quarter, a sharp increase from $8.3 million at this time last year. For the full year, the company's net income was $152.9 million.

The company is widely known for its namesake website and smartphone app, which allows users to rate and review local businesses. The company's desktop website received visits from 77 million visitors during the fourth quarter. An additional 64 million visitors accessed Yelp's mobile website during that time and 29 million devices accessed the Yelp app.

Yelp Inc. (YELP) shares ended the week at $38.28, down 13.6% for the week.

The Dow started the week of 2/5 at 25,338 and closed at 24,190. The S&P 500 started the week at 2,741 and closed at 2,620. The NASDAQ started the week at 7,166 and closed at 6,874.

Treasury Yields Soar as Stocks Plummet

Yields on the 10-year Treasury note rose this week to their highest levels in four years. The yield spike has been a cause for concern in the stock markets, contributing to the stock market's plunge into a correction.

The benchmark10-year Treasury note yield was volatile throughout the week, opening at 2.85% on Monday and rising to a high of 2.88% before settling at 2.71% at the end of the day. By Thursday, however, the yield again reached its four-year peak of 2.88%.

"Quite honestly, getting to 3[%] or a little higher wouldn't be surprising to us," said Craig Bishop of RBC Wealth Management. "At this point it'll take another piece of economic data to do that."

The rise in bond yields is one of several factors contributing to this week's stock market volatility. The Dow Jones Industrial Average fell more than a thousand points on Monday. Stocks rebounded somewhat midweek before another thousand-point plunge on Thursday.

"The big question to look toward is if rates are moving higher for a good reason," said Newfleet Asset Management Chief Investment Officer David Albrycht. "If rates are moving higher because we have a moderate pickup in growth and inflation, they're going up for the right reasons."

Despite the topsy-turvy week for markets, the Federal Open Market Committee (FOMC) still appears set to raise rates three times in 2018, with the first hike coming as early as the FOMC's March meeting. The federal funds rate target range is currently 1.25% - 1.5%.

The 10-year Treasury note yield finished the week of 2/5 at 2.85%, while the 30-year Treasury note yield was 3.14%.

Mortgage Rates Continue Upward Trend

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, February 8. Mortgage rates continued their steady rise this week.

The 30-year fixed rate mortgage averaged 4.32%. This is up from last week's average of 4.22%. During this time last year, the 30-year fixed rate mortgage was at 4.17%.

The 15-year fixed rate mortgage averaged 3.77% this week, up from 3.68% last week. Last year at this time, the 15-year fixed rate mortgage averaged 3.39%.

"The U.S. weekly average 30-year fixed mortgage rate rocketed up 10 basis points to 4.32% this week," said Len Kiefer, Deputy Chief Economist at Freddie Mac. "Following a turbulent Monday, financial markets settled down with the 10-year Treasury yield resuming its upward march. Mortgage rates have followed."

Based on published national averages, the money market account finished the week of 2/5 at 0.83%. The 1-year CD finished at 1.86%.

Published February 9, 2018
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