Major benchmarks staged a big comeback on Thursday, plunging in the morning after a disappointing report on activity in the service sector, but then turning higher on hopes of further interest rate cuts. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) closed with modest gains, with technology shares leading the market.
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Tesla deliveries disappoint investors
Tesla reported record production and deliveries in the third quarter, but the numbers fell short of expectations, and shares slumped 4.2%.
Tesla delivered a total of 97,000 vehicles in Q3, up 1.7% from the second quarter, and missing analyst expectations of 99,000. Model 3 deliveries increased 2.5% sequentially to 79,600 and deliveries of Model S and Model X fell 1.8% from last quarter to 17,400. Production grew 10.5% compared to Q2 to 96,155 vehicles, with Tesla ramping production of the Model 3 by 10% and Model S and X by 12.4%.
Last week, investors got excited by a leaked email from CEO Elon Musk that suggested that deliveries in the quarter could hit 100,000. The stock jumped 6% on that news, and today's reaction to the actual numbers just gave back some of those gains. Shares of Tesla, however, are still 39% below their 365-day high, as investors remain concerned about demand in the face of expected competition.
Tesla has guided to deliveries of 360,000 to 400,000 vehicles for the full year, which means the company will have to deliver about 105,000 next quarter to meet the low end of its forecast.
Bed Bath & Beyond results: Not as bad as they could have been
Bed Bath & Beyond reported mixed results for its fiscal second quarter, and investors with low expectations were apparently satisfied with the progress the struggling retailer is making, sending shares up 2.7%. Net sales were down 7.4% to $2.72 billion, which was just shy of the $2.75 billion analysts were expecting. The company lost $1.12 per share, but excluding transformation costs like store closures and a big inventory writedown, adjusted earnings per share declined 11% to $0.34, better than the $0.27 analyst consensus.
Comparable sales fell 6.7%, mostly because of a drop in traffic in the retailer's stores. Comparable sales in physical stores slumped by a high-single-digit percentage, and even the company's digital channel saw a slight decline.
Bed Bath & Beyond is accelerating store closures, with management stating on the conference call that it decided to increase store closures in 2019 from 40 to 60. It also took a $194 million inventory writedown in the quarter, saying it plans to "aggressively reduce" up to $1 billion in inventory over 18 months, including removing $350 million in inventory this holiday season through markdowns and clearance events.