—— Tesla Margins Shrink, Stock Tumbles; Netflix Disappoints, Dragging Nasdaq Lower; Blackstone Distributable Earnings Plunge; Apollo Launches Asset-Based Fund; California Resident Wins $1.08 Billion Lottery; CVC Raises Largest Private Equity Fund Ever; TSMC Warns of Sharp Revenue Decline
1. Tesla Margins Shrink, Stock Tumbles
After Wednesday’s market close, Tesla released its latest earnings report. CEO Elon Musk stated that if interest rates continue to rise, the company may further lower EV prices.
The company’s gross margin fell to a four-year low during the second quarter.
In addition, Tesla is heavily investing to ramp up production of the Cybertruck. Musk also plans to invest $1 billion by the end of next year to develop the Dojo supercomputer.
Due to factory hardware upgrades, Tesla’s EV output may dip in Q3, but the company still targets 1.8 million units for full-year 2023.
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2. Netflix Disappoints, Dragging Nasdaq Lower
On Wednesday, streaming giant Netflix reported its second-quarter earnings.
Subscriber count rose 8%, while revenue increased just 2.7% to $8.19 billion, slightly below analyst forecasts.
Additionally, average revenue per user declined, suggesting that the crackdown on account sharing didn’t yield the expected results.
Netflix projected Q3 revenue of $8.52 billion, below Wall Street’s $8.67 billion consensus.
LightShed Partners analyst Rich Greenfield said that while the results weren’t terrible, Netflix stock had risen too aggressively beforehand.
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3. Blackstone Distributable Earnings Plunge
According to its latest quarterly report, Blackstone’s distributable earnings fell 39% to $1.2 billion, marking a two-year low.
Assets under management rose from $940.8 billion a year ago to $1.001 trillion.
Due to valuation disagreements between buyers and sellers of private assets, Blackstone slowed new investments and project realizations — showing even the world’s largest alternative asset manager isn’t immune to industry trends.
Year-to-date, Blackstone shares have gained 46%, outperforming the S&P 500’s 19% and peers like KKR and Carlyle Group.
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4. Apollo Launches Asset-Based Fund
Private equity giant Apollo Global Management is preparing to launch a new asset-based financing (ABF) fund, expected to become the largest of its kind.
Sources say Apollo has already held preliminary talks with several investors. The fund will be open-ended, allowing investors to enter or exit freely.
Eric Siegel, formerly a portfolio manager at Tilden Park Capital Management, joined Apollo this month and will serve as the fund’s general manager.
As of March-end, Apollo managed $450 billion in credit assets.
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5. California Resident Wins $1.08 Billion Lottery
On Wednesday night, a California resident won the $1.08 billion Powerball jackpot — the third-largest prize in US history.
The winning ticket was sold at Las Palmitas Mini Market in Los Angeles. California does not tax lottery winnings, though the winner still owes a 37% federal income tax and possibly some local taxes.
The winner can choose between a $558 million lump sum or a 30-year annuity with 5% annual increases.
The largest-ever Powerball winner, who took home $2 billion, was also from California.
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6. CVC Raises Largest Private Equity Fund Ever
European buyout firm CVC Capital Partners has raised a record-setting €26 billion ($29 billion) for its latest private equity fund, exceeding its €25 billion target.
CVC managing partner Rob Lucas said the fundraising was driven not by how much they could raise but by how much they could effectively deploy.
CVC’s well-known acquisitions include watch brand Breitling and Spain’s La Liga football league.
Spun off from Citigroup in 1993, CVC quickly grew into a giant in LBOs, credit, growth equity, and secondaries investing.
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7. TSMC Warns of Sharp Revenue Decline
Today, the world’s largest semiconductor manufacturer, TSMC, warned that despite the AI boom, it cannot offset the broader chip market downturn caused by the global recession.
TSMC now forecasts a 10% revenue drop for 2023 — worse than its previous 5% forecast three months ago. This implies a 15% year-over-year revenue decline in H2 2023.
TSMC admitted it was more optimistic three months ago but cited China’s slower-than-expected recovery and AI demand being insufficient to offset weakness elsewhere.
TSMC is also dispatching engineers to the US to help train additional workers for its Arizona plant.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.