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November 2018

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Tesla starts building four new sections at the Gigafactory to meet production demand of the Model 3

Tesla Motors Inc. (NASDAQ:TSLA) been rapidly building its lithium-ion battery plant, the Gigafactory, in multiple phases. Following the completion of the first phase (consisting of four sections), the automaker has started working on the second phase to fulfill demand for its all-electric compact sedan, the Model 3.

According to the Wall Street Journal, Tesla has also doubled its construction workforce to over 3,000 workers at the $5 billion battery plant, who have been working seven days a week on two shifts to ensure that cell production starts by the end of this year. The Journal quotes Tesla Chief Technology Officer JB Straubel: “We’re accelerating our construction plans and accelerating our planned ramp up of cell production.”

The Gigafactory currently covers 1.9 million-square-foot of workspace, representing just a portion of the final footprint of 13 million square feet. While the initially-planned battery pack output was 50GWh per year, Tesla CEO Elon Musk recently said that it could triple cell and battery output at the plant. The battery cost is expected to drop down by at least 30% after that plan materializes.

Last month, the company acquired permits for a new section at the Gigafactory. A new photo published by Tesla shows four new sections being constructed at the plant.

The photo shows that concrete has been poured in the new sections which are ready for a structure. While there is still a long way to go to complete construction of the Gigafactory, the company is indeed moving faster to do so.

Tesla raised $1.7 billion via an equity offer to accelerate production of the Model 3, whose cells will be produced at the plant, possibly in these new sections. The company is already building battery packs for Tesla Energy products, the Powerwall and the Powerpack, but the cells are being imported from Panasonic in Japan.

Panasonic will start producing battery cells with the new 20700 format at the Gigafactory later this year, instead of the 18650 format which is currently used to power the Model S and the Model X. Both the companies are ramping up hiring for advanced manufacturing positions.

The report comes just days ahead of the Gigafactory Grand Opening, which will take place at the factory on July 29. The event includes free test drives and factory tours, as well as a “remarks” session. The company has also been preparing for the opening.Teslarati published this photo which highlights areas for the security guard shack, helicopter landing zone, parking space, and tent the part:

Piper Jaffray reiterates an Overweight rating for Costco, presents price target of $173

Piper Jaffray in its sell-side report has reiterated an Overweight rating on Costco Wholesale Corporation (NASDAQ:COST) and presented a $173 Price Target for its stock ahead of Costco’s April Sales result. It is expected to announce its results this Wednesday.

The sell side firm mentioned that Costco’s core comparable sales were higher by around 4-6%, pretty much intact with its past two year’s trend of 10.6%. Moreover, foreign exchange is also expected to have a drag of 1% on its sales growth, an improvement of about 1.35% in March, and Twelve Month Trailing (TTM) average of 3.50%, primarily because of rally in Canadian Dollar.

Sean Naughton mentioned that before the results would be announced, he recommends investing in the company as its valuation has improved as compared to other players. Also, he believes that certain catalysts prevail which could further driver company’s earnings higher.

In his report, he mentioned that Piper Jaffray projects April’s core-comps to be increased by 4-6%, at the midpoint of two year stack trend. According to their estimate, foreign exchange and gas deflation is also expected to have a 2.40% aggregate impact, resulting in percentage increase to be around 4-6%.

In conclusion, he continued to recommend investing in Costco, especially considering enhanced valuation with respect to other consumer staples in the industry. Moreover, expected upside potential from potential increase in membership fees and tender change also projects better valuation for the company.

Costco has a consensus price target of $169.40. The highest price target for the stock is $198.0, while the lowest is of $136.0. Out of 27 analysts at the Street, 13 recommend it as a Buy, while eight rate it as a Hold.

 

The economic repercussions on US economy will not be good in the near term

“Brexit” has indeed been a source of depression throughout the Global markets, with US not being an exception. The country’s economic interests will be affected adversely following Britain’s decision to leave the European Union. The Country Caller would discuss on the wider economic repercussions of this on United States of America.

Let us take a step by step look at each of the macroeconomic factor. At first, we discuss the impacts on dollar. Significant flight of capital is expected to come in US from European markets as investors would seek safe havens for their investments and U.S assets are an ideal option. More flight of capital would make $ stronger, while pound and euro would depress further. IMF estimates that dollar is already trading 10-20% above its fair value.

A stronger dollar would mean more expensive exports and U.S may further lose its competitive position in export markets. Moreover, the departure of Britain would be a significant hit for America’s biggest trading partner, the European Union. Janet Yellen had already discussed the horrible effects of UK’s departure from the EU, earlier this week. Treasury Secretary Jacob Lew had also said that there will only be negative impacts on the country’s economy

Strong effects may also be seen in US relations with its major allies, and would also harm the strategic interests of the super power.  IMF Director, Christine Lagarde said that the actual effects of this decision would only be seen once its effects on the European markets are clear. A huge impact would be seen in the dealings of US banks that are operating in the UK.  

The impact on UK is also not well perceived. Many analysts feel that the decision may lead the country into recession. A significant dent for Britain would be the loss of trade within the EU. Moreover, Britain’s Prime Minister David Cameron has already announced his departure later this year. He further said that new leadership is required to face the challenges posing the country.

Overall, the Global outlook post Britain’s departure from the EU seems weak. It may take years than months for the markets to recover from this major exit.

We explain why Chesapeake stock has further upside potential amidst recovery in commodity pricesFocus Towards Capital DisciplineLowering Cash CostsConclusion

Chesapeake Energy Corporation’s (NYSE:CHK) stock performance for the year has been quite sluggish as it has declined by around 4.66%. However, the stock has started to gain momentum and has surged by around 3.58% in the past five trading days.

We expect the stock performance to improve on the back of recovery in commodity prices. Crude prices once at lower levels of around $30 a barrel, now the West Texas Intermediate (WTI) trades at around $48.15 per barrel while Brent Crude Trades at around $49.05 per barrel.

Chesapeake’s average realized price for oil in 1Q amounted to $37.74 per barrel. With crude oil price much higher now, we expect its performance to improve substantially in upcoming quarters. Moreover, the company is taking some major initiatives to drive its performance in the future. Some of these initiatives include:

Focus Towards Capital Discipline

Chesapeake Energy in its 1Q earnings report mentioned its intention to remain focused towards capital discipline. It mentioned that it lowered its Capital Expenditures (CAPEX) by around 75% in first quarter on year-over-Year (YoY) basis.

Moreover, it also stated that majority of its CAPEX for the year is focused towards DUC inventory drawdown. The good aspect for investors is that despite of substantial drawn down in its CAPEX, its production remained almost flat on YoY basis and is expected to remain flat in upcoming quarters. This would mean its revenues would remain unharmed while liquidity prospects would improve.

The image below is extracted from company’s 1Q earnings presentation.

Lowering Cash Costs

In addition to lower CAPEX, the company is also making efforts to lower its cash costs so that its liquidity improves no matter what price arena. In its 1Q presentation, Chesapeake stated that it expects to lower its general and administrative (G&A) expenses by around 15% this year.

It has been successful in its efforts and mentioned that it has lowered its cash costs by around 28% on YoY basis in 1Q. This translated to around $100 million reduction in its cash costs in the quarter as compared to the same period a year ago.

Chesapeake has a history of cash costs improvement, as depicted in the image below. If the company remains successful this year also, this would boost its liquidity and margins manifold.

Conclusion

Considering the recent improvement in commodity prices, coupled with Chesapeake management’s aggressive cost reduction, we expect the company’s performance to improve substantially manifold in the future. These steps could boost investors’ confidence and hence presents significant upside potential to investors.

Tesla’s recently produced Model S sedans provides power output equivalent to the Model X, as advertised

Tesla Motors Inc (NASDAQ:TSLA) faced some issues with the power output calculation of its vehicles last year, leading to mediation with over 100 of Model S owners in Norway and change in Model S P85D’s advertised horsepower (hp) to 463, down from 691. The issue was mainly related to identifying electric power concerning hp and the power output, which vary on the state of battery pack charge powering both the electric motors.

Following the updating of the advertised numbers, Electrek reported that the problem has been largely fixed. Though, the ‘Ludicrous’ feature rolled out on the Model X made things more complex again. The Ludicrous mode, which is an upgrade for top-of-the-performance Model S and Model X, was introduced last year.

The Ludicrous Mode allowed the company to increase the upper limit of the power output of the sedan’s battery pack by 200 Amps to 1,500 Amps. It reduces 0-60 mph and quarter-mile acceleration times of the Model S to 2.8 seconds and 10.9 seconds, respectively. For the Model X, the 0-60 mph time reduces to 3.2 seconds and quarter-mile time to 11.7 seconds.

Although the SUV weighs roughly 600 pounds more than the sedan, Tesla advertises that both the models have the same powertrain providing similar hp and torque – 532 hp with 397kW power output with the Ludicrous. Surprisingly, Model X owners have been able to replicate the performance of the P90D (Ludicrous), while the Model S P90D owners have been facing difficulty.

Despite having more weight, the crossover has been outperforming the sedan in terms of power output in max charge state. While the top-of-the-line Model X is able to achieve power outputs of more than 490kW, the P90D sedan barely crosses the 450kW mark.

Nevertheless, a Tesla Motors Club (TMC) user ShotgunF15E uploaded a log file of 0-60 mph launch on his new Model S P90D, delivered in March, which shows that the sedan achieved power output of as much as 494kW.

The tests were conducted after an over-the-air software update (2.20.30). Following the latest update (2.24.30), the owner was able to achieve 672 hp with 501kW on a full-charged latest battery pack (1071394-99-A).

In response to updated Model S output, a Tesla representative told Electrek reiterated that both of the models have the same hp and torque rating.

Separately, Drag Times create a graph of power output of Model S P90D (Ludicrous), Model X P90D (Ludicrous), and latest Model S P90D (Ludicrous):

The data points show the latest sedan is able to catch provide the same output as the SUV and before now the out between the two models varied. It is possible that Tesla can introduce the leaked Model S P100D, which would provide greater output, to overcome the issue altogether.

Things are heating up for this year’s Call of Duty game

Activision Blizzard Inc.’s (NASDAQ:ATVI) Call of Duty: Infinite Warfare has been on the receiving end of numerous rumors and speculations in the past couple of weeks. Now that the cat is out of the bag, the marketing team has jumped in to make the upcoming game’s presence known. There is a new chat bot for the game which is rather interesting.

The chat bot is activated when you send it a message and then a sort of mini game kicks off. The chat bot starts off by explaining to you about what seems to be an attack and how you need to find a 12-character code in order to crack the enemy’s defense grid. The first character is given to you as “G” and the rest you have to hunt through the many different social media channels for the Call of Duty game. This is, by no means, an easy task but a few users on Reddit managed to find the code (we are not going to spoil it for you) and those who are interested can check out the thread.

It is worth noting that finding the code will put a temporary stop to the game and according to the messages of the chat bot, it is going to continue at 9AM PT today. What is more interesting is that Infinity Ward tweeted about a livestream event which is set to happen at 10.30AM PDT today which basically means that both of these events are interconnected. It is expected that the livestream and the chat bot are going to give more info on the upcoming Call of Duty game and we can also expect an official announcement at the livestream event later today.

The chat bot was released when Activision outed the first teaser video for the game and the chat bot is named one Lieutenant Reyes. You can check out the full teaser from the official Call of Duty Facebook page.

The firm noted that the companies will offer improved consumer engagement tools and provide a shared pharmacy platform for consumers

Evercore ISI weighed in on positive announcement by CVS Health Corp (NYSE:CVS) that OptumRx customers will be offered the ability to fill 90-day drug prescriptions through both CVS retail drug stores and OptumRx home delivery. In addition to this, the company will provide a shared pharmacy platform and improved engagement tools for consumers. OptumRx’s commercial clients would be able to avail the 90-day benefit from July 01, 2017.

Ross Muken of Evercore ISI noted that the announcement shows the company is still in “fighting shape” as it has separated a significant area of potential long-term concern/conflict. “The bear thesis on CVS post several recent WBA wins (recently Prime Therapeutics and Tricare) is that CVS has been outcompeted (given PBM conflict risk) in the retail pharmacy space, which today’s announcement belies. The removal of this material risk shows that CVS will likely keep average or above average share at one of the fastest growing PBMs. (OptumRx has guided to 6-7% revenue growth at 4.5-4.7% margins for 2017 and long term targets of 5-8% revenue growth and 3-5% margins,)” said Mr. Muken.

Given the drug maker’s current market share and nearly 400 million commercial prescriptions, Mr. Muken estimates the 90- day program to add 15-45 million prescriptions over the period of next five to ten years. While the transaction slightly pressures gross retail margins, the additional prescriptions are likely to generate nearly $6-8 of GP per prescription, given the last prescription’s leverage. Therefore, it has the potential to add up $100 to $300 million of incremental EBITDA over that period, noted Mr. Muken.

Shares of the $81.71 billion stock closed up 1.47% on Tuesday at $75.88. The Woonsocket-based biopharmaceutical company has a 52-week high of $106.67 and a 52-week low of $69.30. It has a price to earnings multiple of 16.19.

A research firm has raised its price target on Oclaro shares today, leading the stock to trade higher

MKM Partners raised its price target on Oclaro, Inc. (NASDAQ:OCLR) from $8 to $10 today, after meeting with the company’s management. The raised price target reflects 26.90% upside potential over the stock’s last close. As a result, the stock jumped 3.24% to $8.14 as of 2:20 PM EDT today, carving a new 52-week high of $8.24 along the way.

Headquartered in San Jose, California and established in 1988, Oclaro is a $1.19 billion company which sells optical components. It was the first ever organization to make optical parts which could be integrated into silicon chips.

After meeting the company’s management, the equity research firm observed that Oclaro is sold out on various 100G and higher products for the upcoming two to three quarters. For other products, it remains well sold out for four to five quarters, reflecting that demand is much higher than supply.

The analyst pointed out an interesting fact: Oclaro shares have rallied over 205% over the past year, belittling the S&P 500’s 13.11% gain. He said that after meeting with CEO Gregory Dougherty and CFO Pete Mangan on the company’s “MKM Bus Tour” this week, his earnings per share estimate for fiscal year 2017 has grown from $0.38 to $0.48. For FY18, it has increased from a previous $0.48 to $0.58. The analyst also raised his revenue estimate for FY17 from $536 million to $548 million, and his FY18 estimate from $588 million to $614 million. While reiterating his Buy rating on the stock, he also added that his new price target was based on 17 times his FY18 EPS estimate.

The Street has mostly bullish sentiments on Oclaro shares. Of the nine analysts covering the stock, eight have a Buy, while one analyst has a Hold rating, according to FactSet Fundamentals. The consensus also has a $8.44 12-month mean price target on the stock, reflecting 7.10% upside potential over its previous close.

Want to try the new iOS 10 Beta but don’t have a developer account? Here’s how to manually install the beta

Yesterday, at its annual WWDC conference Apple finally let the covers off of its newest mobile OS installment, iOS 10. Apple is calling the update the biggest one yet and it includes a plethora of new features along with visual enhancements across the OS. Currently, Apple has only released the Developer Beta of the firmware to developers with the final version to follow in fall this year. Here’s all the supported devices: 

iPad 4th gen, iPad Air, iPad Air 2, iPad Pro, iPad mini 2, iPad mini 3, iPad mini 4, iPod touch 6th gen, iPhone 5, iPhone 5c, iPhone 5s, iPhone SE, iPhone 6, iPhone 6 Plus, iPhone 6s, iPhone 6s Plus. 

The Public beta for the new firmware will be released to consumers in July, however if you’re not a developer and yet still want to install the Developer Beta on your device, we’ve got a workaround for you which doesn’t involve purchasing the $99 Apple Developer account. With this tutorial, you’ll be able to install the iOS 10 Developer Beta through OTA on your non-developer device.  

Note: If your phone is jailbroken, it is essential that you first restore it to a fresh build of the latest version of iOS 9. Otherwise, your device may end up in a bootloop. Also, please ensure that you backup the contents of your device before installing the beta. 

How To Install iOS 10 Beta Without Developer Account or UDID 

Step 1: Launch the Safari browser on your device and visit either of the following files to download the Beta Configuration Profile which will allow the installation of the Beta. 

Download Link | Mirror 

Step 2: Download the file and select to install the downloaded configuration profile.  

Step 3: Once the profile is installed, reboot your device. 

Step 4: Upon reboot, launch the Settings application on your device and navigate to Software Update. You should see the OTA update for iOS 10 appear.  

And that’s it. Simply choose to install the update and your phone should download and then install the update. If you have any questions, please let us know in the comments below.

Tesla Motors Inc reported 276 thousand orders within 72 hours of the unveiling of its Model 3

Tesla Motors Inc (NASDAQ:TSLA) CEO, Elon Musk, promised that the company would be selling 500,000 cars annually by 2020 but the company has already crossed the half way mark at light speed in the first 3 days of preorders. Tesla announced this Saturday that since unveiling of the Model 3 on Thursday, it had already gotten 276,000 reservations for the $35,000 sedan. The development has not only highlighted the potentially eye popping potential of Tesla’s appeal in the mass market segment but also the dire need for Tesla to accelerate its ramp if it is to leverage this demand and not repeat the mistakes with the Model S and Model X.

Tesla is the youngest automobile company in the world with a revolutionary new product; the electric car, which it has been able to pitch as a luxury item with excellent reception. The Model 3 is an unthinkable, $35,000 mass market car which on its first day of pre-orders, raked in twice the number of reservations than the units of 3-series that BMW sold in all of 2015. Not impressed? By Saturday Tesla announced that its reservations for the Model 3 had risen close to 276,000 which translates to $11.6 billion in backlogged orders. 

Keep in mind that Tesla has only ever sold 110,000 vehicles since the company started and while its production line has steadily improved, it is unlikely that the company is prepared for a ramp of production, capable of matching the number of orders it is receiving. Investors can only take comfort in the fact that the reservations currently being taken aren’t orders until confirmed, an event which has not happened yet. However, at the current rate, it is likely that Musk’s 500,000 orders per year is now a more realistic goal. Tesla also has 18 months, with the Model 3 being released in late 2017, to ramp up production.