Breakfast | Tesla's financial report surprises and stimulates a 10% surge after hours, while Apple is reported to cut Vision Pro shipments

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Overnight Morning Market

The newly released economic data showed that the preliminary value of the S&P Global US PMI in April is favorable for the market's expectation of a Fed rate cut. Both major US stock indexes, the S&P 500 and the Nasdaq, have rebounded for several consecutive days this week. The S&P 500 index closed up 1.2%, marking its best single-day performance since February. The Nasdaq rose by 1.59%, marking a consecutive two-day increase. The Dow Jones Industrial Average rose by 0.69%, marking a four-day consecutive increase.

Nvidia continued to lead the gains at the close, rising nearly 3.7%. Tesla halted its seven-day decline, rising by 1.8%, with an after-hours increase of over 10%. Among the six major FAANMG technology stocks, all except Netflix have risen for two consecutive days.

Several AI concept stocks surged. SoundHound rose by 10.3%, BigBear by 9.6%, Super Micro Computer (SMCI) by over 6%, and Astera Labs (ALAB) by 9%.

Popular Chinese concept stocks generally followed the market higher. XPeng rose by 2.9%, Xiaomi rose by nearly 1.5%, Nio rose by nearly 0.3%, Li Auto fell by over 0.4%. Pinduoduo, Kingsoft Cloud, and Tencent rose by over 3%, Alibaba and JD.com rose by over 2%, New Oriental rose by nearly 2%, Baidu rose by 1%, while Bilibili fell by 2% and NetEase fell by nearly 2%.

Blue Chips and Hot Stocks

Tesla's Revenue Encounters Waterloo, Unexpectedly Announces Push for Affordable Models to Boost Stock Price

Tesla's first-quarter revenue fell by 9%, marking the largest decline since 2012; operating profit dropped from $2.513 billion in the same period last year to $1.13 billion, a 55% decrease. The decline in sales even exceeded the company's first decline caused by the pandemic in 2020. EPS was $0.34, below the market expectation of $0.44 and last year's $0.73. The gross margin exceeded expectations, reaching 17.4%. Free cash flow was -$2.53 billion, compared to the market estimate of $653.6 million.

Tesla's stock surged by over 10% after hours, as it unexpectedly announced the accelerated launch of affordable models in its financial report, with Musk mentioning the affordable models again during the earnings call.

Musk: Hybrid is not the future, Tesla firmly believes in pure electric vehicles, and electric vehicles will "ultimately dominate the market"; the 4680 battery is not important in the short term. If Tesla generates positive cash flow, it may buy back stock. Sales this year will be higher than last year. The goal is to deliver Semi electric semi-trucks to regular customers by 2026. Negotiations are underway with a major automaker for authorization on Full Self-Driving (FSD).

Musk: Tesla's humanoid robot may go on sale by the end of next year; the autonomous taxi is named "CYBERCAB". The new (affordable) model is expected to start production in early 2025, even if not later this year.

Tesla has released a new Model 3 Performance version priced at $52,990. The Model 3 (Performance version) has a speed exceeding that of a Porsche 911.

Tesla's Chief Financial Officer: Due to the mismatch between production and delivery, as well as expenditures on artificial intelligence, the free cash flow in the first quarter was negative. The decline in revenue was mainly due to seasonal factors.

Martin Viecha, Tesla's Investor Relations Officer, announced his resignation. Tesla will lay off over 3,000 employees in California. The Tesla Berlin factory will lay off 400 people.

Institutional analysts stated that Musk claimed the new car model will be launched in early 2025 or by the end of this year. Does this mean that the new model is just a minor adjustment to the existing product lineup? If not, when can we expect to see them?

TF International Securities analyst Ming-Chi Kuo believes that due to a demand decline "significantly beyond expectations," Apple has cut the shipment volume of the Vision Pro headset and revised the 2024 VisionPro shipment volume to 400,000-450,000 units. Apple is reevaluating and adjusting the headset development blueprint, with the current expectation that the 2025 VisionPro shipment volume may decline year-on-year.

Apple announced a special event on May 7th. The media reported that Apple will release a new iPad, possibly introduce a new Apple Pencil, and a redesigned Magic Keyboard with an aluminum casing and a larger trackpad.

Xiaomi Chairman Lei Jun: It is expected that the gross margin of Xiaomi SU7 will be around 5%-10%. Xiaomi's first major OTA upgrade plan for its cars will be announced soon, with some feature optimizations being pushed out starting tomorrow.

Li Auto: Li ONE will not reduce its price, and the L7 and L8 will not introduce an Air model.

The Shenzhen Stock Exchange issued a letter of concern to Tianqi Lithium, requesting an analysis of the significant increase in losses in the first quarter and an explanation of whether there is a risk of continued losses.

Chips and Artificial Intelligence

Musk: By the end of this year, Tesla will have 85,000 NVIDIA H100 GPUs for training artificial intelligence. We will continue to enhance the core artificial intelligence infrastructure capabilities in the coming months.

Dark Side of the Moon responds to founder Yang Zhilin cashing out tens of millions of dollars: The news is not true.

Cryptocurrency

Grayscale Ethereum Trust: Plans to list on NYSE Arca with the code "ETHE."

Two U.S. crypto firms, Blockchain Association and Crypto Freedom Alliance of Texas, sue the U.S. SEC, claiming that the SEC has exceeded its authority by approving an arbitrary and capricious rule. The new regulations are vague, overly broad, and do not explain their impact on participants in the crypto market.

Macro: Taking You Around the World

Given the ongoing questions surrounding the U.S. economy and corporate earnings, Morgan Stanley's Chief U.S. Equity Strategist Mike Wilson has decided to avoid making predictions about the overall U.S. stock market and instead focus on finding investment opportunities hidden beneath the surface. Over the past four to five months, we haven't talked much about index performance because we intend to focus on relative value trading.

Official from a relevant department of the People's Bank of China: The central bank conducts the buying and selling of government bonds in the secondary market as a liquidity management method and monetary policy tool reserve. Long-term government bond yields will operate within a reasonable range that matches long-term economic growth expectations Shenzhen encourages the exchange of old homes for new ones in the commodity housing market