Editor’s note: This article was originally published on September 30, 2018.
New York
CNN Business
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1. Back to the topic: The SEC is no longer ignoring Elon Musk. Now he and Tesla can get back to another thorny problem – making and selling cars.
Tesla is due to deliver a key production report on Tuesday that will show investors whether the company can maintain and exceed its long-promised goal of producing 5,000 Model 3 vehicles per week.
The report will go a long way in determining whether Tesla (TSLA) can fulfill Musk’s promise to be profitable in the third and fourth quarters.
Since going public, Tesla has only been profitable for two quarters. The company recorded its largest-ever loss in the second quarter as it ramped up production and topped 5,000 gold bars in the last week of June.
This seems like a long time ago. Musk’s tangle with regulators began in early August with a tweet in which he vaguely announced that he had “secured funding” to take Tesla private at $420 a share. .
The Securities and Exchange Commission said he had no such thing and last week sued Musk for misleading investors.
Under the settlement announced Saturday, Musk agreed to step down as chairman for three years, and both he and Tesla agreed to pay a $20 million fine. According to the settlement, Musk neither admitted nor denied wrongdoing.
The SEC lawsuit may be behind us, but Tesla still has some serious IOUs looming. Goldman Sachs said Tesla has a total of $2.7 billion in debt maturing this year and next.
This is one reason why production and profit targets are so important: Tesla needs cash to pay down all its debt.
The market reflected investor concerns. Tesla bonds due August 2025 were trading at 84.5 cents on Friday, near a record low. Within hours of the unfortunate tweet, Tesla shares had fallen 31% from their highs.
Now that uncertainty about Musk’s future has been removed, the stock could rebound on Monday. But Wall Street still wants something else — results.
2. Work, work, work: Analysts expect another month of solid growth when the Labor Department releases its September jobs report on Friday.
More important may be the wage growth figure: will it hit 3% for the first time since April 2009? If so, will this make investors worried that the Fed is too aggressive?
3. Changing of guard at Goldman Sachs: Lloyd Blankfein will end his tenure as CEO of Goldman Sachs (GS) on Monday. His replacement is Goldman Sachs president and part-time DJ David Solomon.
The investment firm’s shares have fallen more than 10% since the beginning of the year. Solomon will need to contend with falling revenue from Goldman’s trading unit, which charges clients fees to buy and sell bonds, commodities and currencies.
4. Profit observation: It’s been a relatively slow week for corporate reports, but big names reporting results include Pepsi, Stitch Fix, Bon-Ton and Costco.
For PepsiCo, this will be the last earnings report under CEO Indra Nooyi, who will soon be replaced by global operations chief Ramon Laguarta he. The stock could use a caffeine boost: It’s down 7% this year.
5. Restart business news: On Thursdays, CNNMoney becomes the all-new CNN Business, covering the companies, people and innovations that are driving business.
This new initiative will shine a spotlight on the biggest financial story of our generation: how technology is disrupting every corner of the global economy, forcing businesses, workers and society itself to adapt quickly or be left behind.
6. Launched this week:
on Monday — Stitch Fix and Wage Works earnings; David Solomon to become Goldman Sachs CEO; Eurozone unemployment
Tuesday ——PepsiCo’s earnings; U.S. auto sales in September
Wednesday — Lennar earnings; ADP employment report
Thursday — Costco (COST) earnings; CNN Business launches
Friday ——U.S. employment report