There were some big earnings this week. Last week, I previewed earnings, and now we will review earnings from Spotify, Alphabet, and Tesla. I do not own any of these companies, and it would take a lot to make me own any of these companies. Out of the three, Spotify is the one I hate the least. However, we’re going to start with Tesla first because my unbridled hate for the company forces me to write about them.

      I was at an academic summer camp for the past four weeks. My roommate was/is a Tesla-lover. He and I disagreed a lot, mostly about politics, but his Tesla love was something I genuinely never understood, and he could never explain to me why he was in the company. He asked me if he should sell out since his position was at a high, and I told him of course. I do not believe he sold out, and I would guess he wishes he had.

      Tesla was down 8% on the day, including after-hours trading, because the earnings were not great. EPS was about 16% worse than expected (52 vs. 62), and while revenue increased 2% over the past year, automotive sales (much more important) dropped 7%. While car deliveries were higher than expected, it was still worse than the same quarter one year ago, the second quarter in a row that has happened. The worst number, in my opinion, is the 45% drop in net income from one year ago.

       Don’t worry though, Elon says that the robotaxi will be out and driving people around by next year. Translation: “I am going to force my employees to work 18 hours a day, so we can get one robotaxi out for a super limited amount of time by December next year.” Tesla is losing market share with each passing day and with each new tweet from Elon. Their lineup is aging and there are alternatives that are cheaper and carry less baggage. Over the first six months of the year, other automakers watched their full EV sales jump 33%, while Tesla saw theirs fall 10%. This is all happening on a 65-forward P/E. THE VALUATION IS SO COMPLETELY INSANE ON AN UNDERLYING ASSET THAT SUCKS.

       And Elon will not shut his mouth. He keeps endorsing and supporting Donald Trump, a moron btw, while only 13% of Republicans are interested in buying an EV, compared to 45% of Democrats.

     Elon is sooooooooooo bad at running a business. Pleaseeeeeeeee do not invest in Tesla.

     I feel less intense about our next company. Alphabet had a decent beat on earnings. EPS was $1.89, beating the $1.85 prediction. Revenue was $400 million higher than predicted, advertising revenue was $100 million higher than expected, and six billion more than last quarter. Basically, it was a 6/10 quarter, nothing too special.

      The only item of note is the $2.2 billion they dumped in AI over the past quarter. That is a lot of money, and nobody knows when AI will start making money, but I don’t mind. Companies must innovate, or they die, and AI is where companies should be innovating. I would not invest in Google because I think the people there do not believe in the company. Google is a company that will be a shell of itself in 20 years unless some major change happens due to a lack of positive culture; 6/10 earnings, 2/10 company.

     Spotify has proved me wrong for sure. I thought they would always struggle to make a profit, or at the least, struggle to make a consistent profit. Revenue was as expected and monthly active users fell (expected after a price hike), but they laid a bunch of people off and introduced music-only and audiobook-only tiers. Guidance was very strong for the next quarter, but the growth since last year is impressive. They pulled in $300 million in net income compared to a $330 million loss one year ago. Margins were 29.2% compared to the 28% expected, and margins are supposed to trend even higher up to 30%+ in the next quarter.

      If you weren’t in Spotify a year ago, or if you were hating on Spotify vehemently a year ago, you missed the boat, I think. I obviously have been wrong about this company in the past, but I think they have hit their peak. Spotify has made some great changes to its business, but whatever they do does not change the underlying business, which sucks. Music distribution is an awful, awful business to be in, with virtually nothing distinguishing Apple Music, Prime Music, etc. from Spotify. The underlying business for Spotify sucks, and while they have crushed it recently, making changes that needed to happen, none of it matters to me.

      It has been a 10/10 year for Spotify, but they are still in a 1/10 industry.