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Stocks in focus after the close: Tesla, Southwest Airlines, Mastercard

Yahoo Finance Live’s Seana Smith and Dave Briggs check out several trending stocks after the closing bell, including how airlines are faring during earnings season and in the fallout of holiday cancellations.

Video Transcript

- Kicking off with Tesla. Tesla closing up just about 11%, the leader in the NASDAQ 100 today, closing at its highest level that we've seen in the last six months after fourth quarter results came in better than feared. Now, Wall Street reacting positively to the numbers and the comments about strong demand from CEO Elon Musk. We have Citigroup, Bank of America, Wolfe Research, Wells Fargo, Cowen, Wedbush among the names they're raising their price targets today.

And, Dave, taking a look at the momentum that we're clearly seeing in Tesla stock, we talked to Gary Black earlier in the show. He's a future fund managing partner there. Clearly, a Tesla bull. He was saying that the Cybertruck is going to be one of the huge catalysts, get people back on the hype train when it comes to Tesla, and really take it back to those higher levels that we had seen. When you check out some of the losses that we've seen over the last 12 months, I'm not sold yet. But, clearly, the Street very encouraged by what we did get from Tesla and by the commentary that we heard from Musk.

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- Are you on team Briggs with the Cybertruck because, look, I just don't see it.

- And you love pickup trucks. You love trucks.

- I love trucks. And I love Teslas. But that car will not be driven by most Americans. It, frankly, will not. And people always use the preorders as the real catalyst. Those preorders are fully refundable. $100 fully refundable deposit. I'm not buying it. But he also pointed out they're not just a car company, Gary Black, pointing out that megapacks, for example, could be a real catalyst for tremendous earnings down the road.

But he said something really interesting as well about Elon Musk's macro talk about the economy. He said investors really don't pay attention to it. But the problem is Elon Musk on that call really undermined his own argument on that call by saying we're going to go through a pretty difficult recession and then saying he sees skyrocketing demand for very expensive EV that is the Tesla, and the potential for 2 million. So how do you-- even if he's wrong, how does he justify in that brilliant mind that there's going to be a recession while there's going to be tremendous demand for Teslas? I don't see it.

- Yeah. Something's not adding up there. But I think maybe the positive spin on this, at least from the Street's perspective-- Deutsche Bank did weigh in on this. If, in fact, we do see a slowdown, they were saying, obviously, not great for Tesla. But the company is better positioned given its cash position, given the levers that it does have at its disposal than some of the competitors out there. But you got a question if we do head for a recession, maybe a larger downturn than what we are anticipating at this point, it's not going to be good for Tesla. It's not to be good for many consumer-facing companies.

- Yeah. I would have just liked to hear his justification for why he sees that coming. Just one other note. His CFO I thought was interesting in saying we're going to, quote, "attack every area of cost." That does play into the potential for recession. And maybe that's helpful in cutting the cost of the supply chain. So that was interesting. All right. More earnings news. Reaction in the market today with several airlines moving following quarterly reports. American, JetBlue, and of course the one we've all been waiting for, Southwest reporting today.

But you can see Southwest the loser of the bunch today. The company revealing an $800 million loss due to that holiday travel meltdown in December. Their CEO Bob Jordan telling Bloomberg, quote, "we know for a fact we were absolutely staffed to operate our schedules. I do not believe the issue is staffing." Now, these comments coming on the same day Southwest says it plans to hire 7,000 workers in 2023. So still a bit of a mixed picture from the airline after it canceled 16,000-plus flights in late December.

And that isn't just a drag on this quarter, but probably Q1 2023 and, Seana, quite frankly, maybe well after. Remember, their pilot captain of the union Casey Murray told us-- I asked him, if you were a customer right now, would you fly Southwest? And he said point blank no, no way, and laid out the reasons for it.

- Yeah. I think we're certainly are seeing some of that overhang from all the flights. Over 16,000 flights canceled. Clearly, they are seeing cancellations, something that CEO Bob Jordan talked about on the earnings call. What surprised me was the fact that he only sees this as being Q1 issue. I do tend to agree with you, Dave, that I have a hard time buying that maybe some people are going to be a little hesitant when booking with Southwest into Q2, maybe even Q3.

But when you take a look at these numbers, clearly, it's going to be a challenging several months here for the airline. The company did say that they do expect a negative revenue impact of $350 million to $350 million in the current quarter. Whether or not that of course drags on to the second quarter only time will tell. CEO Bob Jordan also going on to say that they are working with a consulting firm to try to determine some of those issues. To address those issues, it's going to take a huge investment. And like we've talked about time and time again, it's a fix that's not going to happen overnight. It's going to take some time. So Southwest currently has their work cut out for them.

- I was just curious why you thought JetBlue was down slightly on a really good report. Is that because the good news is already baked in? They've already have had a pretty solid month?

- Yeah. They've had a pretty solid month. And when you take a look at some of those larger charts, you have seen-- longer term charts, I should say. You have seen a bit of a rebound more recently, the stock barely closing negative there. But like you were saying, it was a very different quarter than what we just heard from Southwest. They said that they were on track to deliver those cost reductions that they had been targeting of $250 million through 2024. The CEO saying that the demand environment remains solid this year. So, clearly, totally different picture over at JetBlue.

Let's take a look at Mastercard because shares at the credit card company closing lower here. You can see it off just over 1% after the company warned that revenue growth could slow faster than expected in the current quarter. Still, though, Mastercard's CEO saying in a statement that, quote, "while macroeconomic and geopolitical uncertainty persists, consumer spending has been remarkably resilient." He then went on to say, "we are well prepared to adjust our investment profile quickly if needed."

So it's interesting just to weigh that against the reaction that we're seeing in the stock price today. And taking a look at the analyst reaction here, they actually said that trends in January look, quote, unquote, "healthy" so far. So a drop of 1%, not too much to be worried about.

- No. And it's so interesting. Again and again and again we hear these predictions of recession. And more from the earnings call from their CEO, pointed out strong labor market, low unemployment, rising wages, elevated consumer savings levels. And it's a lot like we heard from Paul Riley, Raymond James CEO, early in the show saying, I just don't see it. We don't see it in our clients. We don't see it in our customers. But we're going to prepare for it. So it's a strange dichotomy going on with this economy where everyone's coming out and saying we don't see a recession in our customers and our clients, but we're going to potentially prepare.

- Hopefully, we don't see it.

- Yeah. Hopefully, we do not.