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- 📈 Tesla profit down 71%, but stock rises | Tariffs to cost Australia $13 billion
📈 Tesla profit down 71%, but stock rises | Tariffs to cost Australia $13 billion
Here's what you need to know today
Equity Mates
April 23, 2025
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Tesla’s profit was down 71% year-on-year but shares were still up 5% after the announcement
Here’s what you need to know today
The International Monetary Fund has cut Australia’s growth forecast from 2.1% to 1.6% in 2025. It also revised up its estimate of Australian inflation from 2% to 2.5%. The reason? It forecasts Trump’s tariffs and the resultant trade war will cost the Australian economy more than $13 billion this year. (SMH)
It isn’t just Australia. The IMF cut growth forecasts across the board. It cut forecasts for the US, the remaining G7 nations, as well as India and China. It also forecast that tariff-driven inflation and uncertainty have raised the chances of a US recession from 25% to 40%. (BBC)
Meanwhile the US-China trade war has moved to the United Nations. China has convened an informal meeting of the UN Security Council to accuse the US of “unilateral and bullying acts of power politics”. In a test of the impact of China’s decades-long campaign of chequebook diplomacy, it has invited all 193 UN member nations to speak at the meeting. It will be interesting to see which nations do speak. (Reuters)
Bitcoin crossed back above US$90,000 for the first time in six weeks. The flagship cryptocurrency had been sold off alongside the global stock market, and was down as much as 29%, but has jumped up 10% since Easter.
Tesla reported a disappointing set of Q1 earnings. Vehicle deliveries were down 13%, revenue was down 9% and profit was down 71%. However, shares jumped 5% in after-hours trading after Tesla reported, as energy storage revenue was up 67% and the company reported mass production of Cybercab robotaxis would start in 2026. (ABC | StockTitan)
Australian oil and gas giant Santos has won federal government approval for its Barossa gas project, situated in the Timor Sea north of Darwin. The $5.8 billion project has been subject to multiple legal challenges and Santos’ own documents project it to produce 15.2 million tonnes of CO2 per year. (ABC News)
Peter Dutton announced a $21 billion boost to Australian defence spending if he is elected Prime Minister on 3 May. This will be part of a target to increase military spending to 2.5% of GDP by 2030. (AFR)
America’s defence contractors were the latest to report tariff challenges. RTX (formerly Raytheon) suggested that Trump’s tariffs could cost $850 million a year because of the increased cost of steel and aluminium as well as cross-border trade disputes with US partners. (Quartz)
Another pharmaceutical giant is investing heavily in the US to avoid tariffs. Swiss company Roche announced a $50 billion investment over 5 years, which follows Eli Lilly’s $27 billion commitment, Johnson & Johnson’s $55 billion and Merck’s $8 billion. (AP News)
What the…?
As the Meta antitrust trial continues, we’ve been learning some interesting information about the inner-workings of Mark Zuckerberg’s empire. One of his more surprising ideas to keep Facebook relevant? Delete everyone’s friends and make them start again.
He pitched the idea in 2022 as Meta executives tried to find ways to keep the once-dominant Facebook relevant. One reason it was shot down, somewhat ironically, was the negative impact it may have on the functioning of Instagram. (Quartz)
Investing is a lifelong journey
Here’s what you can learn today.
When the market busts, load up
This is an excerpt from our conversation with Roger Montgomery, titled ‘When the market busts, load up’ on Equity Mates Investing (Apple | Spotify | YouTube)
Q: What's your process for evaluating companies at a reasonable price?
A: Let's say you've got a business with equity of $10 and it's generating a 20% return on equity. So it's generating $2 of earnings on its $10 of equity every year. In this environment, I'd be happy with a 10% return so I could pay double the equity - $20 for that $10 of equity to get a 10% return. I search the market looking for those opportunities - where can I pay the lowest multiple of equity for a business that's sustainably going to generate a high rate of return on equity? Don't ask yourself if this stock is going up tomorrow - ask if it's going to earn a lot more money in five years.
Q: For investors with cash, what's the best way to approach investing in a falling market?
A: Turn the stock market off. Turn off all the noise. When you buy a house or a farm or a Domino's Pizza franchise, you don't go on the screen and look at where it's trading at lunchtime. Look at the business and say, I think this business is a good one, it's got structural tailwinds, it's going to keep growing irrespective of what's happening in the economy. Then turn the stock market back on - where's it trading? If it's fallen 40%, fantastic, buy it, then turn the stock market back off again. Stop looking at it. If the business does what you analysed it would do, the share price will look after itself.
Q: What should young investors keep in mind during market downturns?
A: If you're in your twenties, you're going to be investing for potentially another 80 years. You don't think you are, but you are. And I promise you, there's going to be more booms in the next 80 years and there'll be some busts in the next 80 years. But when you see the busts, load up, you're going to do fine. Your job as an investor is to purchase at a rational price a part share of an easy to understand business whose earnings are virtually certain to be materially higher in five, ten, 20 years from now.
All Equity Mates episodes are now released in-full on YouTube. So if you’d prefer to watch this interview with Roger, check it out on the Equity Mates YouTube:
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