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.
Still, the deal is likely to stick in the craw of Uber, which Waymo currently is suing over allegations of misappropriating trade secrets and patent infringement. Waymo is accusing former employee Anthony Levandowski of taking confidential documents with him when he quit Waymo in 2016, then brought those to Uber when they bought his new startup, Otto.
GOOGL shares are up marginally this morning, adding to 20% year-to-date gains.
PureFunds ISE Cyber Security ETF (HACK)
HACK shares are jumping through the roof as the waking business world deals with the fallout from the explosion of WannaCry ransomware.
WannaCry — which exploits a weakness in Microsoft Corporation (NASDAQ:MSFT) operating software systems and forces victims to pay hundreds of dollars to unlock their files — was discovered late Friday and has since infected more than 200,000 individuals’ computers, as well as 10,000 organizations, across 150 countries.
A fix has been found for the original version of the malware, but two new versions have already been detected, and experts believe another attack is on the way.
The cybersecurity industry is popping as a result, including a 7%-plus gain for PureFunds’ HACK — one of the biggest single-day jumps in the fund’s two-plus years of trading. HACK invests in 35 cybersecurity-related stocks, including FireEye Inc (NASDAQ:FEYE) and Symantec Corporation (NASDAQ:SYMC), both of which are up significantly in Monday’s early trade.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.