Why Elon Musk changed his Tesla tune between the second and third quarters
There was a stark difference in tone on Tesla’s third-quarter earnings call compared to the company’s second-quarter call.
Following a strong earnings beat for the second quarter of the year, Elon Musk and other Tesla (TSLA) - Get Free Report executives sat down for the company's quarterly conference call in July. And while Musk certainly took note of macroeconomic headwinds, both his tone and message were markedly positive.
He noted at the time that rising interest rates essentially result in giving all cars a bigger price tag. The solution at the time — and one Tesla has maintained — revolved around reducing the price of the car to compensate.
But even with that cautious macroeconomic perspective, Musk's stance on Tesla remained quite strong.
Related: Elon Musk on Tesla's stock "10X-ing" as Cathie Wood has predicted
"I have very high confidence in the long-term value of Tesla, I see it, I really see a path to a 10x, maybe call it a 5x increase in the value of the company," Musk said. "Maybe a 10x. Where things go along the way, the trials and tribulations and the mood of the markets, one cannot predict."
He went on to dismiss the "short-term variances in gross margin and profitability," calling them "minor" compared to Tesla's long-term picture.
"Autonomy will make all of these numbers look silly," Musk said. "I strongly believe Tesla is an epic long-term investment, and don't sweat it when things go up and down. I feel confident we'll deliver over the long term but can't control the short term."
Then came the third quarter misses
Tesla's third-quarter conference call was decidedly somber in comparison.
The theme of the call was one of tempered expectations in the face of inflation as Musk expressed extreme concern over the current macroeconomic environment. Beyond informing investors that the Cybertruck — which will begin deliveries in November — will take 12 to 18 months to become a "significant positive cashflow contributor," Musk's July confidence in the company's long-term strength seemed mostly depleted.
"I'm not saying things will be bad. I'm just saying they might be," Musk said. "Tesla is an incredibly capable ship. But if the macroeconomic conditions are stormy, even the best ship is still going to have tough times."
Weaker ships, he said, will sink. Tesla is "not going to sink."
"But even a great ship in a storm has challenges."
The reason for Musk's pessimism is at least in part due to high interest rates, which he said have and will continue to impact the affordability of cars.
"I keep harping on this interest thing, but I mean, it just raises the cost of the car," Musk said, citing an internal report which found that, even after price cuts, the monthly price of the Model Y after inflation was almost unchanged.
"The interest rates have to come down," Musk said. "I just don't have the visibility. I don't want to be going top speed into uncertainty."
Related: Elon Musk's Tesla earnings call was a 'mini disaster'
The other reason for the billionaire's self-described paranoia around the macroeconomic environment has to do with his "PTSD from 2009."
"People hesitate to buy a new car if there's uncertainty in the economy," Musk said, seemingly answering the question of whether Tesla is a car company or a tech company. "Car companies do very well in good economic times and they don't do as well in tough economic times."
Analysts, even Tesla bulls like Wedbush's Dan Ives, largely cut their price targets in the wake of the earnings report and call. Ives referred to the earnings as the dictionary definition of a "disaster."
Shares of Tesla plummeted more than 10% the day after the report. The stock fell nearly 16% this past week and are off 29% from their 52-week high.
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Major healthcare company defaults and files Chapter 11 bankruptcy
50-year-old nursing home operator files Chapter 11 bankruptcy after defaulting on over $50 million in loans.
Operators of nursing homes and senior living facilities were severely impacted during the Covid-19 pandemic in 2020 as about 40% of residents had or likely had Covid-19 that year. More than 1,300 nursing homes had infection rates of 75% or higher during surge periods, the U.S. Department of Health and Human Services Office of the Inspector General reported.
The high infection rates led to severe staffing challenges, including significant loss of staff and substantial difficulties in hiring, training and retraining new staff, according to a February 2024 report.
Those staffing challenges, however, continue today, as rising inflation makes it more expensive to compensate these essential workers.
Related: Another discount retailer makes checkout change to fight theft
In addition to staffing challenges, operators have also faced a number of economic issues that have driven some of these companies to file for bankruptcy or, in some cases, shut down facilities. Rising inflation, which affects products, supplies and employee wages, and higher interest rates over the past couple years have severely impacted operators' budgets. On top of those economic issues, operators are battling inadequate Medicare, Medicaid and insurance reimbursements that can lead to capital shortfalls.
Senior care facility bankruptcies rise
Financial hardship has led dozens of operators of senior facilities to file for bankruptcy over the past three years, with 13 companies filing petitions in 2021, 12 debtors filing in 2022 and 15 more in 2023, according to advisory firm Gibbins Advisors.
Notable Chapter 11 filings over the past year have included Evangelical Retirement Homes of Greater Chicago, which filed Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Illinois in June 2023 to sell its assets at auction. Also, Windsor Terrace Health, an operator of 32 nursing homes in California and three in Arizona, filed its petition in the U.S. Bankruptcy Court for the Central District of California in August 2023 listing $1 million to $10 million in assets and liabilities and unable to pay its debts.
More recently, Magnolia Senior Living, an operator of four facilities in Georgia, filed for Chapter 11 protection on March. 19 in the U.S. Bankruptcy Court for the Northern District of Georgia.
Loan defaults, ransomware attack force Petersen into bankruptcy
Finally, Petersen Health Care, operator of about 100 nursing homes, assisted-living and long-term care facilities in Illinois, Iowa and Missouri, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Delaware on March 20.
The company, which had revenue of $340 million in 2023, was suffering financial distress from increased overhead, low reimbursements and a ransomware attack in October 2023 that interrupted the company's efforts to bill patients and insurance companies.
The company's financial problems worsened as it defaulted on payments on more than $50 million in loans that led to 19 of the company's facilities being placed into receivership.
Petersen asserted in a March 21 statement that it will continue to operate its business as normal, as it is seeking court approval of a $45 million debtor-in-possession financing commitment from lenders to fund post-petition operating expenses and working capital.
“Petersen will operate as usual, and our team remains committed to continuing to provide first-rate care for our residents,” CEO David Campbell said in a statement. “We will emerge from restructuring as a stronger company with a more flexible capital structure. This will enable us to continue as a first-choice care provider and a reliable employer for our staff.”
The Peoria, Ill.,-based company, founded in 1974, operates skilled-nursing facilities, assisted/independent living communities, memory care services and homes for the developmentally disabled.
bankruptcy bankruptcies pandemic covid-19 interest ratesUncategorized
Key healthcare firm files Chapter 11 bankruptcy after defaulting
50-year-old nursing home operator files Chapter 11 bankruptcy after defaulting on over $50 million in loans.
Operators of nursing homes and senior living facilities were severely impacted during the Covid-19 pandemic in 2020 as about 40% of residents had or likely had Covid-19 that year and over 1,300 nursing homes had infection rates of 75% or higher during surge periods, the U.S. Department of Health and Human Services Office of the Inspector General reported.
The high infection rates led to severe staffing challenges, including significant loss of staff and substantial difficulties in hiring, training and retraining new staff, according to a February 2024 report. Those staffing challenges, however, continue today, as rising inflation makes it more expensive to compensate these essential workers.
Related: Another discount retailer makes checkout change to fight theft
In addition to staffing challenges, operators have also faced a number of economic issues that have driven some of these companies to file for bankruptcy or, in some cases, shut down facilities. Rising inflation, which affects products, supplies and employee wages, and higher interest rates over the past couple years have severely impacted operators' budgets. On top of those economic issues, operators are battling inadequate Medicare, Medicaid and insurance reimbursements that can lead to capital shortfalls.
Senior care facility bankruptcies rise
Financial hardship has led dozens of operators of senior facilities to file for bankruptcy over the past three years, with 13 companies filing petitions in 2021, 12 debtors filing in 2022 and 15 more in 2023, according to advisory firm Gibbins Advisors.
Notable Chapter 11 filings over the past year have included Evangelical Retirement Homes of Greater Chicago, which filed Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Illinois in June 2023 to sell its assets at auction. Also, Windsor Terrace Health, an operator of 32 nursing homes in California and three in Arizona, filed its petition in the U.S. Bankruptcy Court for the Central District of California in August 2023 listing $1 million to $10 million in assets and liabilities and unable to pay its debts.
More recently, Magnolia Senior Living, an operator of four facilities in Georgia, filed for Chapter 11 protection on March. 19 in the U.S. Bankruptcy Court for the Northern District of Georgia.
Loan defaults, ransomware attack force Petersen into bankruptcy
Finally, Petersen Health Care, operator of about 100 nursing homes, assisted-living and long-term care facilities in Illinois, Iowa and Missouri, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on March 20, suffering financial distress from increased overhead, low reimbursements and a ransomware attack in October 2023 that interrupted the company's efforts to bill patients and insurance companies.
The company's financial problems worsened as it defaulted on payments on over $50 million in loans that led to 19 of the company's facilities to be placed into receivership.
Petersen asserted in a March 21 statement that it will continue to operate its business as normal, as it is seeking court approval of a $45 million debtor-in-possession financing commitment from lenders to fund post-petition operating expenses and working capital.
“Petersen will operate as usual, and our team remains committed to continuing to provide first-rate care for our residents,” CEO David Campbell said in a statement. “We will emerge from restructuring as a stronger company with a more flexible capital structure. This will enable us to continue as a first-choice care provider and a reliable employer for our staff.”
The Peoria, Ill.,-based company, which was founded in 1974, operates skilled-nursing facilities, assisted/independent living communities, memory care services and homes for the developmentally disabled.
bankruptcy bankruptcies pandemic covid-19 interest ratesUncategorized
Major healthcare facilities operator files Chapter 11 bankruptcy
50-year-old nursing home operator files Chapter 11 bankruptcy after defaulting on over $50 million in loans.
Operators of nursing homes and senior living facilities were severely impacted during the Covid-19 pandemic in 2020 as about 40% of residents had or likely had Covid-19 that year and over 1,300 nursing homes had infection rates of 75% or higher during surge periods, the U.S. Department of Health and Human Services Office of the Inspector General reported.
The high infection rates led to severe staffing challenges, including significant loss of staff and substantial difficulties in hiring, training and retraining new staff, according to a February 2024 report. Those staffing challenges, however, continue today, as rising inflation makes it more expensive to compensate these essential workers.
Related: Another discount retailer makes checkout change to fight theft
In addition to staffing challenges, operators have also faced a number of economic issues that have driven some of these companies to file for bankruptcy or, in some cases, shut down facilities. Rising inflation, which affects products, supplies and employee wages, and higher interest rates over the past couple years have severely impacted operators' budgets. On top of those economic issues, operators are battling inadequate Medicare, Medicaid and insurance reimbursements that can lead to capital shortfalls.
Senior care facility bankruptcies rise
Financial hardship has led dozens of operators of senior facilities to file for bankruptcy over the past three years, with 13 companies filing petitions in 2021, 12 debtors filing in 2022 and 15 more in 2023, according to Gibbins Advisors.
Notable Chapter 11 filings over the past year have included Evangelical Retirement Homes of Greater Chicago, which filed Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Illinois in June 2023 to sell its assets at auction. Also, Windsor Terrace Health, an operator of 32 nursing homes in California and three in Arizona, filed its petition in the U.S. Bankruptcy Court for the Central District of California in August 2023 listing $1 million to $10 million in assets and liabilities and unable to pay its debts.
More recently, Magnolia Senior Living, an operator of four facilities in Georgia, filed for Chapter 11 protection on March. 19 in the U.S. Bankruptcy Court for the Northern District of Georgia.
Loan defaults, ransomware attack force Petersen into bankruptcy
Finally, Petersen Health Care, operator of about 100 nursing homes, assisted-living and long-term care facilities in Illinois, Iowa and Missouri, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on March 20, suffering financial distress from increased overhead, low reimbursements and a ransomware attack in October 2023 that interrupted the company's efforts to bill patients and insurance companies.
The company's financial problems worsened as it defaulted in on payments on over $50 million in loans that led to 19 of the company's facilities to be placed into receivership.
Petersen asserted in a March 21 statement that it will continue to operate its business as normal, as it is seeking court approval of a $45 million debtor-in-possession financing commitment from lenders to fund post-petition operating expenses and working capital.
“Petersen will operate as usual, and our team remains committed to continuing to provide first-rate care for our residents,” CEO David Campbell said in a statement. “We will emerge from restructuring as a stronger company with a more flexible capital structure. This will enable us to continue as a first-choice care provider and a reliable employer for our staff.”
The Peoria, Ill.,-based company, which was founded in 1974, operates skilled-nursing facilities, assisted/independent living communities, memory care services and homes for the developmentally disabled.
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