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Meeting to be held in Boston on June 3 hosted by Roth MKM.
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The Trump-Musk rift is realistically 'permanent' after fallout
Tesla (TSLA) stock is staging a recovery Friday morning after sinking and erasing $153 billion of market value on Thursday in response to CEO Elon Musk's ensuing feud with President Trump. This all comes one week ahead of the EV developer's launch of its robotaxi beta in Austin, Texas. ROTH MKM senior research analyst Craig Irwin and The Washington Note Founding Editor at Large Steve Clemons join the Morning Brief team in discussing Musk and Trump's relationship and whether this fallout could impact Musk's other businesses. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. That kind of turns an eye to the vindictive activity that President Trump has been known to have in the past, expecting that they would just come together and high five at the end of this. So, as you're kind of looking through the the other broader risks here, not just the Tesla, but of course, and not within a coverage universe right now, SpaceX and the other businesses, seems like there are different areas where Trump could go after Musk, and Tesla might not be the the core focus of that, but it still is the one that investors have to grapple with at least in the near term whether they want to hold Tesla voluntarily or do as a result of it being in one of the indexes. So both of them have have a record of being highly vindictive, right? There's some some stories that haven't really found their way into these books that have been written about Elon Musk, but he has really humiliated some of the executives that he's fired over the last many years. Um, President Trump, I guess most of the public first knows him from his time on on the apprentice, right? Where his uh, he was humiliating people by by the way he was firing them, but then it was turned more or less into a comedy, right? And I think that Trump has shown shown the ability to rechannel that vindictiveness, um, maybe a little bit more effectiveness than than effectively than Musk in in the last couple years. Um, and they do both tend to step back from, you know, mistakes or heated situations and re-evaluate. So I'm not I'm not overly concerned about the short-term. I mean, the tremendous downdraft in Tesla yesterday did not give me a good feeling, but I think at the end of the day, we have two men that have the shared interest and shared vision of the future that differs slightly, and they'll both understand that, and I think there will be a coming together, and I do see a high five, um, probably not today, but in the not too distant future. Steve, we got to go 15 seconds. Are you expecting a high five? We still talking about this story next week, or this the pop I I think it's I I mean, I don't think this is a kumbaya situation between these two men. You know, I think this is going to be a permanent rift. Um, I I think that uh, I think they've gone nuclear with each other and and gone after each other in such a way and so publicly. I don't I don't see that as a realistic option. I do see both sides surviving well. But, you know, when you accuse somebody of saying, hey, they're in the Epstein files, which is really a lot about sexual innuendo, and you're talking about removing all grants and trying to sort of destroy the other person, you know, you know, Musk is sort of the Da Vinci of our times, and he's complicated, but when you have that, this is not going to end in a way that's nice for either one of them. Both equities of the US government and Donald Trump will be fine, you know, and and Tesla will be fine. I agree with Craig in that, but they're not going to high five. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
ETSY Stock Stages 35% Resurgence With Higher Highs Expected
Etsy's (ETSY) stock has been on a wild ride—skyrocketing during the pandemic before plunging in the years that followed as growth stalled. In that time, sales plateaued, buyer numbers fell, and the business struggled to rediscover its momentum. But beneath the surface, Etsy has quietly transformed into a cash flow machine, generating $685 million in free cash flow over the past 12 months. Combine that with aggressive share buybacks and a hefty 22% short interest—a potential powder keg—and its 35% rally from April lows could be just the beginning of a much larger move. Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter At first glance, Etsy's investment case doesn't look particularly compelling. Its latest earnings report paints the picture of a company spinning its wheels. Consolidated gross merchandise sales (GMS) dropped 6.5% year-over-year to $2.8 billion, with the core Etsy Marketplace faring even worse, down 8.9%. On the earnings call, CEO Josh Silverman attributed the weakness to a 'challenging environment,' where cost-conscious consumers are prioritizing essentials over Etsy's unique assortment of handcrafted goods. A newly introduced $29 seller fee, aimed at weeding out lower-quality shops, also led to a trimmed seller base, hardly a catalyst for growth. Meanwhile, shopper engagement is waning. GMS per buyer declined 3.5% to $120, suggesting users aren't sticking around or spending like they used to. It's not that Etsy has lost its appeal—its mobile app now accounts for a record 44.5% of Marketplace GMS—but macroeconomic pressures like inflation and global uncertainty are putting a damper on discretionary spending. Etsy is pushing back with AI-powered personalization to enhance the browsing experience, but for now, that effort feels more like a flicker than a flame. Other e-commerce players such as Wayfair (W) and eBay (EBAY) are navigating similar headwinds, but Etsy's niche focus raises the stakes. Without a breakout product category or a surge in new buyers, Etsy remains on the defensive, leaning heavily on its loyal community of artisans and vintage sellers to carry it through. The big question is whether that's enough to shift the momentum. Etsy isn't just grappling with a tough macro environment—it's also struggling to keep its core metrics from sliding further. The company is leaning heavily into technology, introducing a new 'Discovery Centric Shopping' experience that has nearly doubled engagement on personalized homepages. While promising, these initiatives are still in their infancy, and whether they'll meaningfully move the needle remains uncertain. The recent $105 million sale of Reverb, Etsy's musical instrument marketplace, served as another wake-up call. Though the move helped streamline operations, it came with a steep price: a $102 million non-cash impairment charge that contributed to a painful Q1 EPS miss of -$0.49—well below the $0.47 analysts had expected. The retreat from diversification likely didn't sit well with investors either. Etsy is now fully committed to its core marketplace, but unloading assets like Reverb can feel more like retrenchment than progress. Meanwhile, competitive pressure continues to mount. Goliaths like Amazon (AMZN) and Walmart (WMT), with their vast product ranges and competitive pricing, are encroaching on Etsy's artisanal niche. Etsy's take rate, which climbed to 23.3% in Q1, is healthy on paper—but without a rebound in buyer demand, it's more of a cosmetic win. The company is betting on AI and machine learning to deepen shopper engagement, but with consumers tightening their belts, Etsy's growth engine is sputtering. But here's the plot twist. Despite the growth slump, Etsy has turned into a free cash flow machine. Over the trailing 12 months, the company generated $685 million in FCF, converting an eye-popping 87% of its adjusted EBITDA. In Q1 2025, it pulled in $35 million despite seasonal cash outflows. This wasn't achieved by chance. Etsy's capital-light model, connecting buyers and sellers without the burden of inventory, keeps the cash flowing. CFO Lanny Baker, on the earnings call, called it a 'strong financial foundation,' with Etst also having nearly $1 billion in cash on hand. At this stage, management is not pursuing moonshot acquisitions or risky expansions. Instead, it has honed its mature business to run lean and mean, while returning all of its free cash flow back to shareholders in the form of share buybacks. In particular, with growth on hold, Etsy is doubling down on returning cash to shareholders. Over the past 12 months, it has plowed $820 million into stock buybacks, which, for context, accounts for over 13% of today's market cap, even after the 35% rally over the past month. In Q1 alone, $189 million was spent on buying back shares, a clear signal that management believes the stock is undervalued at current prices. Now factor in the 22% short interest, and you've got the makings of a high-stakes setup. The recent surge in Etsy's share price has put pressure on bearish positions, and if the company continues generating strong cash flow while aggressively reducing its share count, those short bets could unwind quickly, setting the stage for a potential short squeeze. With momentum already building, this rally might just be getting started. Wall Street remains relatively skeptical about Etsy's prospects. ETSY stock features a Hold consensus rating, with eight analysts currently bullish, 13 neutral, and four bearish. ETSY's average stock price target of $48.17 indicates ~22% downside potential over the coming twelve months. Etsy presents a bit of a paradox. It's a company facing sluggish growth, yet it's churning out solid cash flow and buying back shares at an aggressive pace. That 35% rally over the past month isn't just market noise—it's underpinned by strong free cash flow and buybacks that signal real confidence in the stock's intrinsic value. With 22% of the float sold short, the conditions for a short squeeze are hard to ignore. Growth may be elusive for now, but Etsy's financial strength and strategic capital returns could continue to drive the stock higher, making it a name worth watching closely. Disclaimer & DisclosureReport an Issue
Yahoo
2 hours ago
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Boeing (BA) Eyes Production Boost Without Compromising Quality
Boeing (BA) is reestablishing its presence in the Chinese market—a move that brings both notable opportunities and meaningful risks. The aerospace giant is operating within a challenging regulatory landscape, intensified by the January 2024 Alaska Airlines door plug incident, which drew global attention and even warranted a dedicated entry on Wikipedia. Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Compounding the complexity are the lingering effects of President Trump's tariffs and trade tensions, which continue to affect Boeing's international operations. However, there has been a recent positive shift: China has lifted its temporary ban on Boeing aircraft, enabling the company to begin fulfilling its growing backlog of orders. As a result, Boeing's stock has regained much of the ground lost in the wake of the earlier safety incident. However, moving forward, Boeing must balance unpredictable geopolitical trade tensions and regulatory scrutiny that ushered in a 'new normal,' prioritizing safety over profits, making me cautiously neutral on its stock. Boeing is now operating under heightened regulatory oversight, with more inspectors present in its factories than in previous years—a direct consequence of several high-profile in-flight incidents involving its aircraft. Subsequent investigations uncovered deep-rooted quality control issues and broader cultural problems that contributed to these events. As part of this intensified scrutiny, the Federal Aviation Administration (FAA) has imposed a strict production cap, limiting Boeing to 38 units per month of its 737 MAX jet—a model widely regarded as the 'workhorse' of the airline industry due to its dominance in short- and medium-haul routes. This cap is intended to slow production, allowing Boeing to prioritize safety and quality improvements. The FAA has made it clear that any increase in the production rate will be contingent on demonstrable improvements in manufacturing standards. However, this restriction poses a significant challenge for Boeing's business model. It not only curtails output during a period of strong demand and a large backlog of orders, but also delays revenue generation, since Boeing is typically paid upon aircraft delivery. Demand for Boeing remains strong, with a backlog exceeding 6,000 aircraft, equivalent to roughly 11 years of production at current rates. However, airline customers won't wait indefinitely. Boeing faces mounting pressure to deliver, especially as its main European rival, Airbus SE, is unlikely to cede any competitive ground. China represents a critical market for Boeing, accounting for nearly 10% of its total unfilled orders. As such, China's recent decision to resume accepting aircraft deliveries marks a significant positive development, likely helping Boeing reduce some of its existing inventory—aircraft that would otherwise remain idle. Complicating matters, planes built for Chinese airlines differ in configuration from those intended for U.S. carriers, making it costly and inefficient to reconfigure them for other markets. Looking ahead, Boeing has limited influence over the trajectory of U.S.-China trade relations. While a temporary truce provides some relief, long-term access to the Chinese market remains vulnerable to geopolitical uncertainty. All of this is unfolding against the backdrop of substantial cash outflows in recent quarters. In 2024, Boeing reported a net loss of nearly $12 billion, mirroring the amount of cash it consumed in operating activities. This financial strain was driven by a combination of safety incidents, ongoing quality control challenges, and a seven-week machinists' strike that disrupted production. While Boeing does hold almost $24 billion in cash and short-term investments as a financial cushion, the company remains heavily leveraged, adding further pressure to stabilize its operations and restore investor confidence. On Wall Street, Boeing's stock sports a Strong Buy consensus rating based on 16 Buy, three Hold, and one Sell ratings in the past three months. BA's average price target of $217.32 implies 2.77% upside potential over the next twelve months. Recently, Bank of America analyst Ronald Epstein upgraded Boeing from a Neutral rating to a Buy rating and set a price target of $260. The analyst is optimistic that production will stabilize and its cash burn will subside. He noted some uncertainties, such as the production cap and its ability to recapture public trust. Josh Sullivan of Benchmark Co. also has a Buy rating on Boeing. He noted that 'anticipated production increments, occurring no sooner than six months apart, suggest a structured and achievable growth path.' Boeing faces the difficult task of ramping up production while ensuring rigorous quality standards—a balance that's easier said than achieved. Each incremental increase in the production cap presents new challenges, requiring the company to meet strict performance benchmarks. Overcoming its deeply rooted legacy of quality issues will take time and sustained effort; it's not a transformation that can happen overnight. In the interim, Boeing must also navigate a complex mix of geopolitical tensions, supply chain constraints, and trade tariffs. The recent reopening of the Chinese market provides a much-needed tailwind, but it may prove to be temporary. Although Boeing's first-quarter earnings showed narrower losses and revenue growth, its return to consistent profitability will depend on a combination of internal execution and external stability, factors that remain highly uncertain. Still, the aerospace duopoly remains intact, and if Boeing can normalize production, its massive backlog positions it for significant upside. For risk-tolerant investors seeking to outperform the market, BA stock could present a compelling opportunity. Disclaimer & DisclosureReport an Issue Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
