Markets finished the week on a positive note Friday, with major benchmarks like the Dow Jones Industrial Average (^DJI 2.12%) and the S&P 500 (^GSPC 1.45%) closing with moderate gains. Pharmaceutical stocks, including biotechs, moved higher along with retail shares, while the energy and real estate sectors were laggards.
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As for individual stocks, Tesla (TSLA 3.11%) fell after unveiling its futuristic pickup truck and Splunk (SPLK -0.12%) jumped following a strong quarterly report.
Big reveal of Tesla's pickup flops with investors
Tesla CEO Elon Musk introduced the company's much-anticipated pickup truck, dubbed "Cybertruck," last night and investors registered disappointment today, sending shares down 6.1%. Musk had teased about the futuristic styling of the vehicle, but investors may be thinking that the radical design could relegate it to a niche, rather than challenging the mainstream in the lucrative truck market.
Musk wants to define the electric truck market with a vehicle that has better utility than today's trucks with more performance than a sports car. Cybertruck will have a dent-proof stainless-steel exterior, seating for six adults, and a payload capacity of 3,500 pounds. The high-end model will have a towing capacity of 14,000 pounds, a range of over 500 miles, and be able to accelerate from 0 to 60 in under 2.9 seconds.
The splashy event had a cringeworthy moment when a demonstration of the armor glass failed, but Tesla will have plenty of time to work out any kinks. Production on the base model, which starts at $39,900, is not expected until late 2021 at the earliest, with production of the $69,900 top-of-the-line model beginning in late 2022.
Subscription growth boosts Splunk's results
Shares of Splunk jumped 10.8% after the data analytics specialist beat expectations for the top and bottom lines for the 14th straight quarter. Revenue in fiscal Q3 2020 grew 30% to $626 million after the company had said three months ago to expect $600 million. Splunk lost $0.38 per share, even with a year ago, but excluding items such as stock-based compensation, amortization, and acquisition costs, earnings per share came in at $0.58, exceeding the average analyst estimate of $0.54.
Splunk is shifting its customers to a renewable subscription model, and the company said that transition is nearly complete, with revenue from renewable software in Q3 accounting for 92% of the total. Annual recurring revenue (ARR), defined as the annualized value of contracts as of the last day of the period, was $1.44 billion, up 53% from the period a year ago.
Splunk reiterated on the conference call that it expects negative cash flow until fiscal 2022, a situation that unnerved shareholders earlier this year, but one that investors in the growth stock were willing to shrug off today.