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Tesla vehicles in the U.S. are seeing significant price cuts.
The decision makes the vehicles more affordable and likely eligible for federal tax credits but tanks the resale values of cars for current owners.
Analysts say the price cuts suggest Tesla is prioritizing sales over profits and that it could spur a price war in electric vehicles.

A Tesla showroom is seen in the City Center shopping center on January 17, 2023 in Washington, DC.
Anna Moneymaker | Getty Images

DETROIT — Tesla vehicles in the U.S. are seeing significant price cuts, and that’s proving to be a double-edged sword for the electric carmaker and the greater automotive industry.
Tesla earlier this month slashed prices of its new cars by as much as 20%, making the vehicles more affordable and likely eligible for federal tax credits. But it also tanks the resale values of cars for current owners and is sending ripple effects through the auto industry.

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CEO Elon Musk hasn’t directly addressed the price cuts, which are counterintuitive to his claims that the company’s cars will be appreciating assets — a rarity for the market aside from classics and collectible vehicles.
Analysts say the price cuts suggest Tesla is prioritizing sales over profits, potentially signaling a demand problem.
“There’s demand weakening, and they want to improve their sales — or it’s a market share grab,” said Michelle Krebs, Cox Automotive executive analyst.
For the industry at large, Tesla’s price cuts put pressure on other automakers to offer more affordable EVs despite rising commodity costs, creates havoc for used vehicle retailers that will need to write down the vehicles and has Wall Street concerned about the first EV pricing war amid recessionary fears.
“Tesla’s price cuts make all other EVs and [internal combustion engine vehicles] look incrementally more expensive, is margin compressive and sends a chill across the used car market,” Morgan Stanley analyst Adam Jonas wrote in a Friday investor note.

Automakers change prices regularly on new vehicles. It’s typically done through incentives or when a new model year comes out. But the adjustments, upward or downward, are historically small to avoid upsetting the automotive ecosystem for both consumers and car dealers.
Musk foreshadowed such a move last month in predicting a recession later this year.
“Do you want to grow unit volume, in which case you have to adjust prices downward? Or do you want to grow at a lower rate, or go steady?” Musk said Dec. 22 during a Twitter Spaces conversation. “My bias would be to say let’s grow as fast as we can without putting the company at risk.”
Tesla is due to report fourth-quarter earnings Wednesday after market close.

Used prices

When the price of a new vehicle drops, the value of the used models also takes a hit. In the case of Tesla, some of the new models were going for almost the same price — just thousands of dollars off — as their used counterparts. That’s problematic for current owners as well as used vehicle retailers and Tesla, which sells used models directly to consumers.
In the first 17 days of January, Edmunds reports, used prices of 2020 model year or newer Teslas dropped to an average price of $58,657 — 24.5% off their June peak of $76,626.

Tesla’s stock performance over the past year.

Cars.com reports list prices for used vehicles on the consumer-shopping website declined 3.3% for the Model Y and Model 3 as owners attempt to hold the line on resell pricing despite cuts to the new vehicles.
“The Tesla price cuts will affect consumers quite differently depending on which side of the news they sit,” Ivan Drury, Edmunds’ director of insights, said.
On one hand, Tesla owners have complained to billionaire CEO and Twitter owner Musk on the social media platform that the price cuts devalue their vehicles. In China, where price cuts took effect earlier than in the U.S., protesters reportedly gathered at the automaker’s showrooms and distribution centers demanding rebates and credits.
Recent Tesla buyers who missed out on the fresh price cuts are petitioning Musk and the company to make them whole. They have sought free, premium driver-assistance upgrades, free Supercharging and other pluses to offset their higher price tags.
At the same time, Cars.com and Edmunds both report interest in and searches for Tesla vehicles have skyrocketed since the reductions.
CarMax, the nation’s largest seller of used vehicles, quickly sold hundreds of Teslas after realigning prices. It only had about 150 Tesla cars for sale as of Tuesday, down from hundreds before the company cut prices.
“We continuously adjust retail vehicle pricing in real time to match market conditions and offer competitive pricing,” CarMax Chief Operating Officer Joe Wilson said in an emailed statement. “As such, we adjusted pricing to respond to the market conditions related to new car price reductions and this has been received positively from consumers looking to purchase a used Tesla.”

Peer pressure

Wall Street analysts were largely positive on the cuts for Tesla as a boon for sales.
Tesla has enjoyed significantly higher profit margin on its EVs compared to traditional automakers. Its software and subscription offerings, including its advanced-driver assistance systems and in-vehicle Wi-Fi, could help cushion anticipated profit losses due to the recent price cuts, as could EV tax credits.
Plus, the price reductions pressure other automakers, or OEMS, to cut prices on their own EVs.
“Most OEMs are currently losing money on EVs, and these price cuts are likely to make business even more difficult, just as they are attempting to ramp production of EV offerings,” BofA Securities analyst John Murphy wrote to investors earlier this month.
Gerald Johnson, General Motors’ head of global manufacturing, said Tesla’s cuts don’t change the company’s manufacturing plan for electric vehicles. The automaker currently sells its sub-$30,000 Chevy Bolt EV models — among the most affordable in the industry — as well as higher-priced models on a new battery system.
“We believe we have an EV for every price bracket and every market segment that we’re rolling out here,” Johnson said Friday during an event in Flint, Michigan. He said Tesla’s price cuts signal that the vehicles “may have been overpriced to begin with.”
GM cut the prices of its Bolt models by thousands of dollars last year, only to recently raise them by hundreds of dollars, citing industry pricing pressures.
– CNBC’s Lora Kolodny and Michael Bloom contributed to this report.

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Slowing inflation hasn’t brought relief for consumers yet because prices are still well above where they were a year ago.
Commodity and freight costs are falling, but won’t immediately trickle down to consumers in part due to supplier contracts and some companies’ desire to boost profit margins.
But retailers are fighting back by pushing their private label products, which could win over consumers with cheaper prices and force manufacturers to offer better deals.

A grocery store in New York.
Wang Ying | Xinhua News Agency | Getty Images

Inflation may be cooling. But, for most Americans, the price of a cup of coffee or a bag of groceries hasn’t budged.
In the months ahead, the big question is whether consumers will start to feel relief, too.

Over the past few months, many of the key factors that fueled a four-decade high in inflation have begun to fade. Shipping costs have dropped. Cotton, beef and other commodities have gotten cheaper. And shoppers found deeper discounts online and at malls during the holiday season, as retailers tried to clear through excess inventory. Consumer prices fell 0.1% in December compared with the prior month, according to the Labor Department. It marked the biggest monthly drop in nearly three years.
But cheaper freight and commodity costs won’t immediately trickle down to consumers, in part due to supplier contracts that set prices for months in advance.
Prices are still well above where they were a year ago. The headline consumer price index, which measures the cost of a wide variety of goods and services, is up 6.5% as of December, according to Labor Department data. Some price increases are eye-popping: The cost of large Grade A eggs has more than doubled, while the price tags for cereal and bakery products have climbed 16.1%.
“There are some prices, some goods for which prices are falling,” said Mark Zandi, chief economist of Moody’s Analytics. “But broadly, prices aren’t falling. It’s just that the rate of increase is slowing.”
Retailers, restaurants, airlines and other companies are deciding whether to pass on price cuts or impress investors with improved profit margins. Consumers are getting pickier about spending. And economists are weighing whether the U.S. will enter a recession this year.

Sticky contracts, higher wages

During the early days of the Covid pandemic, Americans went on spending sprees at the same time that factories and ports shuttered temporarily. Containers clogged up ports. Stores and warehouses struggled with out-of-stock merchandise.
That surge in demand and limited supply contributed to higher prices.

Now, those factors have started to reverse. As Americans feel the pinch of inflation and spend on other priorities such as commutes, trips and dining out, they have bought less stuff.
Freight costs and container costs have eased, bringing down prices along the rest of the supply chain. The cost for a long-distance truckload was up 4% in December compared with the year-ago period, but down nearly 8% from March’s record high, according to Labor Department data.
The cost of a 40-foot shipping container has fallen 80% below the peak of $10,377 in September 2021 to $2,079 as of mid-January, according to the World Container Index of Drewry, a supply chain advisory firm. But it is still higher than prepandemic rates.
Food and clothing materials have become cheaper. Wholesale beef prices dropped 15.6% in November compared with a year ago, but are still historically elevated, according to the U.S. Department of Agriculture. Coffee beans fell 19.7% in the same time, according to the International Coffee Organization’s composite global price. Raw cotton’s cost plunged 23.8%, according to Labor Department data.
However, to protect against unpredictable spikes in prices, many companies have long-term contracts that set the prices they pay to operate their businesses months in advance, from buying ingredients to moving goods across the world.
For example, Chuy’s Tex Mex locked in prices for fajita beef that are lower than what the chain paid last year, and it plans to also lock in prices for ground beef during the third quarter. But diners will likely still pay higher menu prices than they were last year.
Chuy’s plans to raise prices about 3% to 3.5% in February, although it has no more price hikes planned for later this year due to its conservative pricing strategy. The chain’s prices are up about 7% compared with the year-ago period, trailing the overall restaurant industry’s price hikes.
Similarly, coffee drinkers are unlikely to see a drop in their latte and cold brew prices this year. Dutch Bros. Coffee CEO Joth Ricci told CNBC that most coffee businesses hedge their prices six to 12 months in advance. He predicts coffee chains’ pricing could stabilize as early as the middle of 2023 and as late as the end of 2024.
Supplier contracts aren’t the only reason for sticky prices. Labor has gotten more expensive for businesses that need plenty of workers but have struggled to find them. Restaurants, nail salons, hotels and doctors’ offices will still reckon with the cost of higher wages, Moody’s Zandi said.
A shortage of airplane pilots is among the factors that will likely keep airfares more expensive this year. The price of airline tickets have dropped in recent months but are still up nearly 30% from last year, according to the most recent federal data.
However, Zandi said, if the job market remains strong, inflation eases and wages grow, Americans can better manage higher prices for airfare and other items.

Annual hourly earnings have risen by 4.6% over the past year, according to the Bureau of Labor Statistics — not as high as the consumer price index’s growth in December.
Yet in some categories, softening demand has translated to price relief. Several hot pandemic items, including TVs, computers, sporting goods and major appliances have dropped in price, according to Labor Department data from December.

Budget pressures for families

Top retail executives said they expect families’ budgets will still be under pressure in the year ahead.
At least two grocery executives, Kroger CEO Rodney McMullen and Sprouts Farmers Market CEO Jack Sinclair, said they do not expect food prices to drop anytime soon.
“The increase is starting to moderate a little bit,” said McMullen. “That doesn’t mean you’re going to start seeing deflation. We would expect to see inflation in the first half of the year. Second half of the year would be meaningfully lower.”
He said there are some exceptions. Eggs, for example, will likely become cheaper as as Avian flu outbreak recedes.
Over the past two years, consumer packaged goods companies have raised prices of items on Kroger’s shelves or reduced packaging sizing, a strategy known as “shrinkflation.” McMullen said none have come back to the grocer to lower prices or step up discounting levels from a year ago. Some are keeping aggressive prices, as they play catch-up after margins got squeezed earlier in the pandemic or as they sacrifice volume for profits, he said.
At Procter & Gamble, for example, executives plan to increase prices again in February. Prices on P&G’s consumer staples like Pampers diapers and Bounty paper towels have climbed 10% compared with the year earlier, while demand slipped 6% in its latest quarter.
In other cases, companies are still dealing with factors that contributed to inflation. For example, farmers are raising cows, but have fewer than before the pandemic, and grains and corn are less plentiful as the war in Ukraine continues, according to McMullen.
“If before you were spending $80 and now you’re spending $90 [on groceries], I think you’re going to be spending $90 for awhile,” he said. “I don’t think it’s going to go back to $80.”
Utz Brands CEO Dylan Lissette echoed that sentiment back in August, telling investors that list prices usually don’t fall even when costs come down.
“We don’t take something that was $1, move it to $1.10 and then a year or two later, move it to $1,” he said.
Instead, food companies such as Utz typically offer steeper and more frequent discounts to customers as costs drop, according to Lissette, who was once in charge of pricing Utz’s pretzels and kettle chips.
Over the next few years, companies may reverse “shrinkflation” packaging changes that result in cheaper snacks on a per ounce basis. And two or three years after that, shoppers may see the introduction of new value pack sizes, Lissette said.

Retailers’ ace in the hole

But retailers may be able to speed up that timeline. They can use their own, lower-priced private brands, such as the peanut butters, cereals and laundry detergents that resemble the well-known national brands.
Kroger last fall rolled out Smart Way, a new private brand with more than 100 items like loaves of bread, canned vegetables and other staples at its lowest price point.
McMullen said the grocer already planned to launch the private label, but sped up its debut by about six to nine months because of shoppers’ interest in value amid inflation. And he added, if a national brand loses market share, they’re more likely to get aggressive on discounts — or even permanently lower the price.
Zandi, the Moody’s economist, said while customers may grow frustrated, they are not powerless. By choosing competing brands or opting for items on promotion, they can send a message.
“Businesses do respond to shoppers,” he said. “If consumers are price-conscious, price-sensitive, that’ll go a long way to convincing businesspeople to stop raising prices and maybe even provide a discount.”
— CNBC’s Leslie Josephs contributed to this story.

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FIA President Mohammed Ben Sulayem at the F1 Grand Prix of Bahrain on Mar. 20 2022.
Mark Thompson | Getty Images

Formula One bosses have accused FIA president Mohammed Ben Sulayem of “unacceptable” interference in the alleged sale of the sport.
After reports of a $20 billion (£16.3 billion) Saudi Arabian bid to buy F1’s commercial rights, Ben Sulayem raised concerns on Twitter about the potential consequences of an “inflated” takeover such as higher ticket prices for fans if the new owners tried to recoup their investment.

He added that a potential buyer of F1 should “come with a clear, sustainable plan — not just a lot of money.”
Sky Sports News revealed on Monday his remarks angered senior F1’s officials and now legal bosses have written to the FIA warning that Ben Sulayem’s tweets had “interfered with our rights in an unacceptable manner”
In a letter first reported by Sky News, but also seen by Sky Sports News, F1 general counsel, Sacha Woodward Hill, and Renee Wilm, chief legal and administrative officer of Liberty Media Corporation, F1’s controlling shareholder, have accused the FIA — motorsport’s governing body — of straying beyond its remit.
The letter has also been circulated to all 10 F1 teams. Sky Sports News contacted the FIA for a response but has received no comment.
Ben Sulayem’s comments came in response to a report last week by Bloomberg News that Saudi Arabia’s sovereign wealth fund had explored a $20 billion takeover bid for the sport in 2022.

Neither F1 nor Saudi’s Public Investment Fund have commented on the report.
The letter, warned the FIA that “Formula 1 has the exclusive right to exploit the commercial rights in the FIA Formula One World Championship” under a 100-year deal.
“Further, the FIA has given unequivocal undertakings that it will not do anything to prejudice the ownership, management and/or exploitation of those rights.
“We consider that those comments, made from the FIA president’s official social media account, interfere with those rights in an unacceptable manner.”

The response to Ben Sulayem’s comments comes at a time of heightened tensions between F1 and its governing body.
The letter from Woodward Hill and Wilm also said the suggestion, implicit in the FIA president’s remarks, “that any potential purchaser of the Formula 1 business is required to consult with the FIA is wrong.”
It added that Ben Sulayem had “overstep[ped] the bounds of the FIA’s remit,” saying that “any individual or organisation commenting on the value of a listed entity or its subsidiaries, especially claiming or implying possession of inside knowledge while doing so, risks causing substantial damage to the shareholders and investors of that entity, not to mention potential exposure to serious regulatory consequences.”
“To the degree that these comments damage the value of Liberty Media Corporation, the FIA may be liable as a result.”
Contacted by Sky News, an F1 spokesperson declined to comment.
F1 teams question FIA president’s position after latest disagreements
Analysis by Sky Sports News’ Craig Slater…

Ahead of the 2023 season, this is a big conflict at the top of the sport.
Formula 1 is owned by an American company, Liberty Media, and is a listed company. If someone of the standing of the FIA president makes an observation into what the appropriate value potentially is, that could be to the company’s commercial detriments.
This is just one of a number of issues which over the course of Mohammed Ben Sulayem’s tenure has irked not just F1, but some of the teams as well.
I have been in contact with a number of F1 teams, and they’ve had various views on what has gone on this week.
One senior figure has said to me there is a discussion amongst a number of teams about just how long Mohammed Ben Sulayem can continue in this job.
There are questions being asked about his tenure because of what’s becoming an increasingly fractious (relationship) between the governing body and the commercial rights holder, and by extension the teams.
It’s a style of leadership as much as anything else. It all dates back to an unease, which some people in the sport have, of the arrangement by which the FIA (then headed by Max Mosley) over a decade ago sold the lease of the commercial rights for 100 years to an organisation then run by Bernie Ecclestone to exploit the commercial rights.
It was felt at the time that it was leased out far too cheaply, and some people see Mohammed Ben Sulayem publicly signalling that he is uncomfortable with this arrangement.
This runs quite deep, and it is an historic issue that the governing body and commercial rights holder have to wrestle with.

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Tesla said in a statement that its its expanding facilities in Nevada will include a 100 GWh battery cell factory and high-volume factory to manufacture the Semi.
Today, the original Gigafactory primarily manufactures and supplies Tesla’s Fremont, California, vehicle assembly plant with high-voltage battery packs.
Tesla CEO Elon Musk held a ceremony in Nevada in December to kick off deliveries of the company’s Tesla Semi to a key early customer, PepsiCo.

An aerial view of the Tesla Gigafactory near Sparks, Nevada
Bob Strong | Reuters

Tesla plans to spend $3.6 billion more on expanded battery and heavy duty truck manufacturing in Nevada, the company said Tuesday on social media.
According to its public statements, Tesla intends to hire 3,000 more people across two new facilities eventually.

It wasn’t immediately clear whether Tesla’s plans expand the company’s manufacturing footprint beyond the property it is already developing outside of Reno in Sparks, Nevada.
Tesla said in a statement that its new facilities will include a 100 GWh battery cell factory, where the company expects to have the capacity to produce battery cells for 2 million light duty vehicles annually, and a high-volume factory where it will eventually manufacture its class 8 heavy-duty, fully electric truck, the Tesla Semi.
Tesla began construction of its first battery factory in Nevada in 2014. It operates this plant today with a key cell supplier, co-tenant and co-investor in the factory, Panasonic. The sprawling factory is known as GF1, Giga Nevada or the original Tesla Gigafactory. It primarily manufactures and supplies Tesla’s Fremont, California, vehicle assembly plant with high-voltage battery packs.
Republican Nevada Gov. Joe Lombardo revealed details about Tesla’s plans for expansion in the state early on Monday. Tesla confirmed the plans on Tuesday ahead of its fourth-quarter earnings update, which is scheduled for Wednesday after markets close.
Tesla CEO Elon Musk held a ceremony in Nevada in December to kick off deliveries of the company’s Tesla Semi to a key early customer, PepsiCo. Tesla first announced its plans to produce the Semi in 2017, and had a targeted start of production in 2019 that was delayed until 2022. The company is not yet manufacturing a high volume of Semi trucks, but is making some at the Nevada Gigafactory.

Fans and critics of Tesla have been posting images of Tesla Semi trucks emblazoned with Pepsi Frito Lay branding that they’ve seen on the road since that announcement, including some broken down on the shoulder.
Tesla has yet to reveal publicly how much each truck costs, and did not say how many it has produced or sold in its fourth-quarter deliveries report.
The company is expected to share further details on its Semi program in its Q4 earnings call.

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It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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Inmode Ltd: “It sells for incredibly cheap. … Frankly, I don’t get it, and that makes me want to look more into it, not just say buy.”

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Exact Sciences Corp: “They’re losing too much money, to be honest. I’m baffled. … That’s what I don’t like about it.”

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Rupert Murdoch withdrew his proposal to explore a reunion of Fox News’ parent and Wall Street Journal owner News Corp.
Murdoch and his son Lachlan Murdoch “determined that a combination is not optimal” at this time.
The proposal has been withdrawn as News Corp is in advanced discussions to sell its stake in Move Inc. to CoStar, News Corp confirmed Tuesday.

Rupert Murdoch, chairman of News Corp and co-chairman of 21st Century Fox, arrives at the Sun Valley Resort of the annual Allen & Company Sun Valley Conference, July 10, 2018 in Sun Valley, Idaho.
Drew Angerer | Getty Images

Rupert Murdoch has withdrawn his proposal to re-combine Fox Corp and News Corp.
Fox said Tuesday its board received a letter from Murdoch, its chairman, and his son and Fox CEO Lachlan Murdoch that “determined that a combination is not optimal for the shareholders” of either of the companies at the time.

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The withdrawn proposal comes as News Corp has been in advanced discussions to sell its stake in Move Inc., the parent company of Realtor.com, to commercial real estate company CoStar Group, according to a person familiar with the matter.
News Corp confirmed in a regulatory filing Tuesday that it is engaged in discussions with CoStar regarding a potential sale of its stake in Move.
“Any potential transaction would support News Corp’s strategy to optimize the value of its Digital Real Estate Services segment, while strengthening Realtor.com’s competitive position in the market,” News Corp said in the filing. News Corp added that there was no assurance a transaction would result from the talks and it wouldn’t comment further on the matter at this time.
A CoStar Group spokesperson said in a statement Tuesday the company “continuously evaluates M&A opportunities across a broad range of companies to maximize shareholder value.”
A News Corp spokesperson didn’t respond to requests for further comment on the matter. Reuters first reported the deal talks.

In addition to Wall Street Journal Publisher Dow Jones, News Corp also owns assets such as book publisher HarperCollins and the New York Post. In 2014, News Corp acquired an 80% stake in Move. REA Limited Group, an Australian real estate business that News Corp holds a 61.6% interest in, acquired the remaining 20% stake in Move.
News Corp CEO Robert Thomson told employees Tuesday the decision to call off the proposed deal would have no impact on employees, according to a memo reviewed by CNBC. He also urged them to keep tight-lipped about the matter.
“As I advised at the beginning of this process, it is best not to speculate on speculation, and so if you do hear from any media, shareholders, customers or others, please alert the communications team in your business,” Thomson wrote.
In October, the companies said they had formed a special committee to consider the deal.
A combination of the two companies would have unified leadership in Murdoch’s empire and cut costs at a time when the audience is shrinking for both print and TV media. News Corp owns Wall Street Journal publisher Dow Jones. Fox, with what was left over from the $71.3 billion Twenty-First Century Fox sale to Disney in 2019, owns right-wing networks Fox News and Fox Business, which is a CNBC competitor.
Murdoch had split up the companies in 2013. The Murdoch family trust controls about 40% of the voting rights of both companies.
At the time, the thinking behind the reunion would have been to simply give the merged company greater scale to compete at a time when media companies are competing for subscribers and digital advertising spending, CNBC previously reported.
The potential merger had faced opposition from shareholders in recent months, who didn’t believe a merger would show the true value of News Corp. if it merged with Fox.
Some shareholders, like Independent Franchise Partners, believed the merger wouldn’t have realized the full potential value of News Corp, and other alternatives, such as a breakup of News Corp, should have been considered. The London firm is one of the largest shareholders in both News Corp and Fox that isn’t Murdoch.
Irenic Capital Management was another shareholder that pushed back on the proposed merger, saying Fox didn’t serve News Corp’s strategic goals. Both Irenic and Independent Franchise believe News Corp shares are undervalued. Class A shares of Fox closed at $32.67 on Tuesday, while News Corp’s Class A shares closed at $19.53.
–CNBC’s Gabrielle Fonrouge contributed to this article.

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CNBC’s Jim Cramer on Tuesday reminded investors to pay close attention to the scope of an analyst’s calls.
He used recent notes on Advanced Micro Devices to illustrate his point.

CNBC’s Jim Cramer on Tuesday reminded investors to pay close attention to the scope of an analyst’s calls.
“In the crazy world of Wall Street, it’s not enough to think about the company or the sector or the asset class or the macro, including the [Federal Reserve] — you also need to consider the reaction and even the reactors themselves,” he said.

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He used recent analyst calls on Advanced Micro Devices to illustrate his point:
Barclays upgraded the semiconductor maker to overweight from equal weight on Monday, sending the stock up 10%. A day later, Bernstein downgraded the company’s stock to market perform from outperform, citing concerns over a worsening PC market. Shares of AMD fell 2.39%.
Cramer said that in this case, neither analyst is necessarily wrong, because their arguments rely on different timeframes.
“The bearish analyst [is] right as rain because AMD’s business is awful now and shows no signs of improving, but over the long-haul, the bullish analyst is going to be right, because eventually, the semiconductor downturn will end,” he said.
Cramer added that while those periods of trading can be confusing, they can also be advantageous to investors, as long as they don’t act rashly.

“As we head into the heart of earnings season, I need you to understand that the reaction is often right, depending upon your time frame. However, it can also be wrong,” he said, adding, “Either way, if you have conviction, the reaction can often be a great opportunity to buy, buy, buy, or sell.”
Disclaimer; Cramer’s Charitable Trust owns shares of AMD.

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Wells Fargo on Tuesday said it expects Walt Disney (DIS) to “come out swinging” when the entertainment conglomerate reports fiscal first-quarter results early next month. At the Club, we’re slightly more cautious and will be looking closely for a detailed turnaround plan from CEO Bob Iger. When Disney releases its first-quarter earnings on Feb. 8, analysts expect earnings-per-share to come in at 80 cents a share, down 24.5% from the same period last year, while total revenue should climb 7% year-over-year, to $23.35 billion, according to estimates from Refinitiv. “We think DIS management will come out swinging on the F1Q23 call to fend off criticism. We see a refocus on [intellectual property] instead of [subscriber targets], aggressive cost action and the potential for earnings upgrades. We like this setup into the print,” Wells Fargo analysts wrote in a research note. The analysts predicted Disney’s financial performance could improve if the company revives its focus on generating revenue from intellectual property assets like brands, characters and properties associated the classic entertainment franchise, rather than chasing direct-to-consumer subscriber targets. At the same time, Wells Fargo forecasted Disney could announce a roughly $2 billion cost-cutting plan at its direct-to-consumer (DTC) business — mainly comprised of its beleaguered streaming operations — to jump start profitability by early fiscal year 2024. The streaming division includes Disney+, Hulu and ESPN+. Disney launched an advertising tier for Disney+ in early December, but the company has said it doesn’t expect to reap the rewards until later this year. Disney suffered a $1.47 billion operating loss at its DTC unit in the company’s fiscal fourth — a dismal quarter that prompted the board to oust CEO Bob Chapek and return veteran Disney executive Bob Iger to the corner office. The run-up to Disney’s next earnings release comes as Nelson Peltz, the CEO and founder of activist investment firm Trian Partners, has been waging an ongoing proxy battle to gain a seat on Disney’s board. Peltz has said he wants to “work collaboratively with Bob Iger and other directors to take decisive action that will result in improved operations and financial performance.” Disney’s board earlier this month unanimously decided against offering Peltz a seat, according to a recent SEC filing. Trian currently holds a nearly $1 billion stake in Disney. Like other investors — including the Club — Trian has expressed frustration over Disney’s streaming losses, overspending and a share price decline of more than 44% last year. Shares of Disney have climbed by more than 21% since the start of 2023. “Trian wants a higher stock price and is going to push management to decisions that it believes will deliver that aim,” according to Wells Fargo. The bank reiterated its overweight, or buy, rating on Disney, with a price target of $125 a share. Disney closed out Tuesday up 0.29%, at $106 apiece. The Club take Disney’s upcoming earnings will be a chance for Iger to recalibrate the company’s strategy and address some of the pain points investors are worried about, including excess spending, debilitating losses in streaming and a deteriorating balance sheet. If the company announces a robust and comprehensive plan to rein in costs, it could help improve Disney’s profitability over the long run and allow the stock to move higher. As we have argued for months, many companies — particularly those in the technology space — need to make a pivot toward profitability, and we think cost reductions would be well received by the market. We remain guardedly optimistic that Iger, who in his prior postings as CEO and chairman helped generate value for an iconic company, can right the ship at this pivotal moment. But we are also in support of Peltz joining the board because he would push for the cost discipline the company sorely needs. (Jim Cramer’s Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Disney World’s Magic Kingdom in Orlando, Florida.
Joe Raedle | Getty Images News | Getty Images

Wells Fargo on Tuesday said it expects Walt Disney (DIS) to “come out swinging” when the entertainment conglomerate reports fiscal first-quarter results early next month. At the Club, we’re slightly more cautious and will be looking closely for a detailed turnaround plan from CEO Bob Iger. More