BYD Races Past Tesla

Good morning.

On Wednesday, DoorDash delivered for investors, reporting its first quarterly profit since going public in 2020. The win was powered by an 18% year-over-year spike in orders, to around 643 million in the quarter, with a total transaction value of around $20 billion. Also on Wednesday: The US Commerce Department announced that the country's GDP increased at a 2.8% annual rate in the third quarter, continuing a two-year streak of growth. If paying $27.57 to have a $12 sandwich delivered to their doorstep isn't a sign of a resilient US consumer, we don't know what is.

Better mind the passing lane, Elon. 

In its third-quarter earnings call on Wednesday, Chinese electric vehicle giant BYD announced revenue of just over $28 billion in the three months ending September — a company record, and the first time BYD has surpassed Tesla's sales in the same quarter. 

Drive to Survive

BYD has been gaining on Tesla for a while now. In the final quarter of last year, the group surpassed Tesla in total EVs sold for the first time ever — around ​​526,000 to 484,500, both records for their respective companies. Not that anyone's shocked — BYD has focused on consumer-friendly models, with its cheapest unit, the Seagull EV Honor Edition, going for just 69,800 yuan (or around $9,800). Tesla, on the other hand, just pulled its cheapest model, the $39,000 Model 3 Standard Range Rear-Wheel-Drive, from the market, leaving a $42,500 Model 3 Long Range Rear-Wheel-Drive as its most consumer-friendly option (it sells for 285,900 yuan in China). 

Earlier this year, Tesla scrapped its long-gestating plans for a low-cost "Model 2," rumored to cost around $25,000. That sparked investor backlash, and earlier this month Elon Musk promised another low-cost alternative would begin shipping in the first half of next year. 

BYD's revenue win this quarter highlights a handful of strategies that Tesla has yet to replicate — and comes despite the carmaker being all but boxed-out of US and European markets:

• Unlike Tesla, BYD has embraced the increasingly high demand for hybrid cars. In fact, its plug-in hybrid sales well outpaced its EV sales in the latest quarter, around 685,000 units to 443,000.
• The hybrid sales mark a 75% increase year-over-year, offsetting slowing sales growth in its EV unit. Meanwhile, the company continues to benefit from a vertically integrated supply chain that keeps costs down.

BYD, which stands for Build Your Dreams, also scored a record for net income in the latest quarter, with profits reaching 11.6 billion yuan (around $1.6 billion).

Shipping Out: Whether BYD can eventually bust out of its China containment remains the biggest question. Bolstered by generous incentives from both federal and local governments, the Chinese market accounted for over 90% of BYD's sales in the quarter. The Chinese carmaker is making inroads in Europe, even in the face of roughly 45% tariffs (much higher US tariffs keep BYD from offering cars to Americans). In the latest quarter, the company sold almost 100,000 cars overseas, up nearly 33% year-over-year.

Written by Brian Boyle

If you rely on credit card rewards to earn points, miles, or cash back, you need to know about the Credit Card Competition Act (CCCA). 

This proposed law could change how credit card transactions are processed, forcing them onto less secure and untested networks. The result? Your valuable rewards programs could vanish, leaving you with higher fees (and far more costly summer trips to Europe).

Beyond rewards, the CCCA puts your financial security at risk by allowing your personal data to be routed through networks that haven't invested in protecting your privacy. While giant retailers stand to profit, everyday consumers and small businesses will lose.

Protect your points – learn how you can take action today.

Sales of Eli Lilly's game-changing weight-loss drug Zepbound soared, but that didn't whet many appetites on Wall Street. Pfizer beat the Street's expectations and saw revenue shoot up over 30% in the third quarter, but its shares were stuck in neutral as activists hungered for more.

It's just another earnings week in the life of pharmaceutical CEOs, with blockbuster expectations running up against cruel reality.

Hard Times and Great Expectations

Among the pharma companies to report earnings Wednesday was Biogen, which beat third-quarter revenue and profit estimates, only to see its share price slide a yawn-worthy 1%. US sales of the company's Alzheimer's treatment Leqembi rose 33% over the previous quarter to $39 million, but were well below the consensus estimate of $55 million, Mizuho Financial analysts said. That, combined with a 9% decline in revenue from multiple sclerosis treatments to $1 billion, put the brakes on any hope of shares popping.

Eli Lilly and Pfizer had to contend with their own market malaise:

• Sales of Eli Lilly's Zepbound, which launched last November, reached $1.2 billion in the third quarter, but that fell short of FactSet's consensus expectations of $1.7 billion. Diabetes drug Mounjaro's sales more than doubled to $3.1 billion from $1.4 billion a year ago, but it also missed lofty expectations of $3.8 billion. Eli Lilly's shares dipped 6% Wednesday as it failed to meet the high bar.
• Pfizer, which reported Tuesday, said third-quarter earnings climbed 31% to $17.7 billion. But an acquisition spree in the wake of the company's COVID-19 windfall and a 50% decline in share price since its pandemic high point has given activist investor Starboard, which revealed a $1 billion stake earlier this month, room to rile up investors about bigger returns.

CEO Albert Bourla said conversations with Starboard, which has all but called for his ouster amid its stinging criticisms, have been "constructive and cordial."

Bopped by a Flop: The swings and roundabouts of pharma can be even crueler to small firms. After an antibiotic candidate flopped at trial, Spero Therapeutics disclosed in an SEC filing this week that it will lay off about 39% of its staff to extend its cash runway. As of December 2023, the company had 46 employees, with around two-thirds working on research and development.

Written by Sean Craig

Forget about the Frankensteins straight out of Shelley or the Shrunken Head Bobs from "Beetlejuice." 

The most spine-chilling monster this Halloween is inflation. The cost of manufacturing chocolate and confectionery from cocoa has risen a terrifying 45% this year, according to the Producer Price Index. 

A Nightmare on Main Street

As consumers flee sinister price hikes this year, Halloween spending in the US will fall to $11.6 billion after a record $12.2 billion in 2023, according to a forecast by the National Retail Federation.

Chocolate has been vanishing from store shelves like a ghost. "Chocolate candy, there's just not as many items per retailer on shelf," Dan Sadler, a confection analyst at Circana, told Reuters. "We're seeing double-digit increases in non-chocolate items." That could lead to a few jump scares next earnings season:

• TD Cowen analysts said this week that NielsenIQ data shows candy sales down 1.6% in the four weeks leading up to Oct. 19. The "rather weak Halloween" could bury chocolate heavyweight Hershey's earnings — the company already went Michael Myers on forecasts in August, slashing its sales growth guidance to 2% from the range of 2% to 3%.
• The Wall Street Journal noted Wednesday that sugar candies (namely gummies) are rising to take chocolate's place; they have seen sales rise 74% since 2020, according to data from Euromonitor. That outpaces the 38% chocolate sales increase.

Here's a Treat: It's not all ghastly news for chocolate fans: Cocoa futures trading on the Intercontinental Exchange rose 1.3% to $7,361 per metric ton Wednesday. That's a massive drop from June, when prices topped $10,000 per metric ton for the second time this year amid crop concerns.

Written by Sean Craig

Natural is Heading to the Nasdaq. Natural solutions are already better for the environment. Med-X is taking it a step further: their natural pesticides in some cases outperform chemical alternatives. That's led to 200% revenue growth as they scale in their $17B market. Become an early Med-X shareholder ahead of their planned Nasdaq listing.*