Oil is making a big jump as the markets prepare for their Monday open, with West Texas Intermediate leaping to multiweek highs amid reports that Russia and Saudi Arabia are discussing a deal to extend oil production cuts for another nine months. The optimism isn’t bleeding over into the markets, however, with S&P 500 futures only slightly higher in Monday’s premarket action.
While earnings season will get up and running again as the week churns on, the spotlight this morning belongs to technology — specifically Tesla Inc (NASDAQ:TSLA), Alphabet Inc (NASDAQ:GOOGL) and the PureFunds ISE Cyber Security ETF (NYSEARCA:HACK).
Here’s what you need to know:
Tesla Inc (TSLA)
TSLA shares are going to start the week solidly lower after an analyst downgrade — from a longtime bull, no less.
Morgan Stanley’s Adam Jonas has downgraded Tesla stock to “Equalweight” on worries about lackluster Model 3 deliveries. The company believes Tesla will deliver just 2,000 units this year, and 90,000 units in 2018 — both far lower than current Wall Street estimates. Jonas believes that “subsequent reiterations from management and the spotting of release candidates testing on public roads have increased expectations of timing and volume significantly.”
Jonas also updated the firm’s model on TSLA stock, and none of it is good.
Morgan Stanley now believes OP losses in 2017 and 2018 will be higher, primarily thanks to higher R&D costs, SG&A and “the impact of higher capex,” and as a result, expects Tesla to report GAAP net losses until late 2019. Jonas also widened his estimate for cash burn from $2.3 billion to $3.1 billion.
MS maintained its $305 price target, but that now sits about 6% below current prices at $325.
TSLA shares are primed to drop about 3% this morning, which would mark the second time that the stock has failed around the $327 mark.
Alphabet Inc (GOOGL)
Alphabet’s self-driving car initiative just got a little more fascinating with news that the company is partnering up with ride-hailing service Lyft.
According to the New York Times, two anonymous sources say Waymo and Lyft have signed a deal to further self-driving technology — a report that Waymo and Lyft spokespeople later confirmed.
“Lyft’s vision and commitment to improving the way cities move will help Waymo’s self-driving technology reach more people, in more places,” a Waymo spokesperson told the Times.
The Times report said that details about the deal were “scant,” offering up nothing about potential products or services, nor a timeline.