Tesla’s Collapse, Netflix’s Surge, and $15,000+ Profit Trade
Today was an eventful day in the chatroom. Avi casually made $15,000 trading $NVDA calls, while I managed a $5,000 profit trading Tesla and NVIDIA, and Ardi sold puts on $NFLX at $380 for Oct 20th. If you’d like to see how we tackled the morning action, check out our YouTube channel.
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But before we delve into the recap, let’s take a look at what the market had in store today. Two major earnings reports rocked the boat yesterday.
The world’s largest EV maker experienced a dramatic plunge of up to 10% today, adding to its previous days’ losses, and is now down over 25% in the last 3 months. Tesla’s earnings, released after the bell yesterday, fell short of Wall Street expectations. The company reported adjusted earnings of $0.66 on revenues of $23.35 billion, missing the $0.73 and $24.1 billion anticipated. It marked the first time since Q2 2019 that Tesla missed on both the top and bottom lines.
Quarterly revenue growth has stalled over the past year, mainly due to increased competition and high monthly payments for new buyers. Elon Musk expressed concerns about the high-interest rate environment and emphasized the need to reduce the cost of Tesla’s vehicles. He acknowledged shareholders’ demands for more aggressive advertising but noted that it doesn’t help to promote cars people can’t afford.
Operating margins dropped from 17.2% last year to 7.6% this quarter, primarily due to expenses related to Cybertruck, AI, and other R&D projects. Investors are closely watching Tesla’s ability to generate free cash flow while investing in future growth drivers.
Today, I had a successful 1-minute Opening Range Breakup trade on Tesla. You can watch the recap here.
Netflix surged over 15% today after reporting better-than-expected results, with total memberships exceeding expectations. The company added 8.76 million global subscribers during the quarter, well above estimates of 5.49 million suggesting that the recent crackdown on password-sharing may be boosting subscriptions. Netflix also announced price increases, with its basic plan now at $11.99 (+$2.00) and the premium plan at $22.99 (+$3.00), while the standard and ad-supported tiers remain at $6.99 and $15.49, respectively.
Price hikes may not be welcomed by Netflix customers, but investors are pleased as they indicate higher potential profitability. So far, it seems the password-sharing crackdown and price increases have not caused as much churn as feared, but it’s early days, especially if the economy weakens and consumers cut discretionary spending.
Ardi sold some puts at $382.5 for tomorrow’s expiry, as he mentioned in the chatroom.
Today, we have several mentorship sessions. John started his mentorship at 11 a.m. in the webinar room for all Elite members. Megan and Jared are hosting their Options Strategy mentorship at 2:00 p.m., and Thor is holding his mentorship at 8 p.m. ET for all Elite members.
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