The staggering run into this report lets go straight to phil lebeau with all the details. A beat on the top and bottom line and the beat on the bottom line is significant. Lets run through some of the numbers. Much better than expected earnings per share and its a fourth straight profitable quarter for tesla. 2. 18 is how much it earned in the Second Quarter the street was expecting three cents profit revenue just over 6 billion as i mentioned, a fourth straight profitable quarter for tesla. We know the significance of that it is the last hurdle the company needed to clear in order to be included in the s p 500. Lets drill down some numbers within the report that are going to get attention operating cash flow, 418 million. Automotive revenue was actually down it declined by 3. 4 in the quarter, not a surprise given the fact that you had the freemont factory shut down for five or six weeks. But the automotive regulatory credits revenue, thats where they made it up. That was up 317 million the model y production, overall it is increasing remember, theyre building that out at the freemont plant. China made model 3 production, it is also increasing. That is an area of growth for the company. In terms of the next factory, theyre teasing us well learn more perhaps during the Conference Call coming up in about 25 minutes they say that they have selected a site for that sect factory here in the United States. Theyve begun preparations for that site. But theyre not going to tell us what the location is is it austin, tulsa . Perhaps well get more clues in about a half an hour tesla is reaffirming its 2020 delivery target of delivering at least a half million vehicles this year. There was some question, because they did not specifically reaffirm it during the last Earnings Call. They have done that today. So, guys, overall if you are a tesla bull, theres a lot to like in this report. Phil, thank you phil lebeau. Steve, ill go to you, your take on these numbers we have seen so many times, even if a Company Delivers and beats, its a sell on the news sort of event. Here we are with the shares almost up by 5 . The most important thing is what phil said the fourth consecutive quarter of profitability thats what everyone was focused in on. The door is open and remains open for the s p add i think thats what people are looking at when you look at the stock, its overbought, but it runs overbought quite often and it works off an overbought, which means a relative strength index, reading of higher than 70. Its at 72 currently that is nothing for tesla to be working off right now. So i would say deliveries, i wouldnt worry about them. I wouldnt worry about anything until you get to that level where theyre either include in the s p index, i think i think that you have to be a buyer of this stock. Youre going to see them try to raise some cash here, raise some capital here this price is unbelievable its already run over every short thats out there shortages went from 30 down to nothing. So i would think that the s p is going to be your ability to say let me short the news at that point. But until then, the stock is higher. Part of this is technical, right, in terms of this move, tim . Knowing that there could be inclusion around the corner, theres probably some buying 4. 5 trillion in assets are indexed to the s p 500 either directly or indirectly theres advance buying of the stock and then you have the Short Interest fiveyear lows, a Short Interest in the stock, which is about 10 right now. So that is down quite a bit over the past few months. Yeah, and i dont think its zero, but i think steves point is that its gone from being one of the things you talked about with the stock, maybe its something you talk about now because the Short Interest was part of the reason youve had the move the two things that i think are the most important numbers or the things you focus on, first of all, an additional 500 million in cash and now 8. 6 billion in cash on the Balance Sheet. At one point this was a big issue. And its not an issue. Will they go out and raise i think it would make sense. I think they should be raising as much as they can. The other thing i would focus on are lower asp prices theyre not getting as much for their cars they had Lower Services revenue. Two quarters in a row and back to the red credits where theyre really profitable. If you look at the numbers, look, a company can do whatever they want and report within the context of u. S. Gap and, yes, its important that they got four straight quarters of profitability for this how overemphasized s p story so the Company Seems to take the good news i mean the market, the market certainly from the bulls case, deliveries over 500,000 reaffirmed and yet its really never supposed to be about the shortterm for this company because theres no way it could be if you look at the valuation. So weve had upgrades over the last month, theyve included for every reason as related to their technology, their miles driven, their software and the Gross Margins in it. But most importantly, what a move after the market, after this move in the stock its hard to argue with that. Regulatory credits must be clear, theyre up 286 year on year to 428 million of 5. 2 billion in revenue. So even though it did jump, thats not the reason why the stock is, you know, not up more. Lets get more on teslas quarter. Less bring in gene munster welcome back i want to get your back on this quarter. Everyone was focused on the s p 500. I dont think thats the real story. The reason they got there is actually sustainable the tax credits are coming from other Automotive Companies that simply dont have an ability to make evs fast enough, so i think thats the real takeaway here, is this is not just about getting the s p 500. This is about a company that is laying the framework for predictability around profitability. Hard to imagine were talking about the tesla story, but i think thats what is driving the stock higher in after hours. Karen, you got a question i do. Gene, what about the free cash flow, which obviously was a big surprise to the upside but im wondering how much of that is working capital adjustments that could end up turning around once production is back up and they are paying full payroll how do you think about that number i think its going to be sustainable. I think theyre getting some efficiency out of shanghai thats ultimately driving that so just taking a step back, the free cash flow, a second big part of the story, very impressive i think it is sustainable. In terms of the lower average selling price of the vehicles, gene, is that mainly because the model 3 or is it also because of the price cuts that weve seen in some of the models either in china or here in the United States model 3 and model y, too. I think model y was up to 15,000 units, so it was 5,000 last quarter. Do you think that weve seen the last of the price cuts no. What theyre doing is really driving efficiencies and driving lower price to ultimately drive market share and i think thats going to be the piece thats going to surprise investors over the next several quarters. And gene, just quickly on the Conference Call, if you could, what question would you have for elon musk . Its really all about whats beyond cars. I think the Energy Aspect is an underappreciated part of the story so i think well hear a lot more about that on the call. Well check in with you a little bit later on. Dan nathan, how do you think about tesla at this point . We do see followthrough after the report in this run yeah, well, i think you guys have just said it, it just confirms the fact that a 300 billion Market Cap Company thats not in the s p 500, but when people talk about how many trillions are indexed to the s p 500, this is not going to be a massive buy. Maybe its 10, 20, 30 billion. Theres people that are going to come out clearly with the calculation. So at this point some of those Fund Institutions have probably been buying the stock ahead of time, which has helped this story a little bit listen, this has been a very volatile company on the earnings front. They obviously were gearing towards the s p add, but also there were some other milestones where some executives got really paid so im not telling you this company is not doing a good job executing. It sounds like they did a good job executing in what should to be a lights out quarter as far as demand, but it didnt happen that way steve said youve got to buy it. Hes talking like a trader hes selling i wouldnt sell it. At the end of the day, its a very expensive story everyone was poohpoohing the auto thing the forward story is going to be about software at the end of the day there will be sizable competition in the next year or two in the high end where these guys play, and i would even add the model 3 as the high end at that price point without those credits, when theyre going down, its probably a 40,000 car thats not exactly a lowend car. Again, stock is up 5. 75 . The Conference Call will be under way in 20 minutes and well circle back to tesla lets turn to other afterhours moving, microsoft dropping despite a beat on the top and bottom line. Josh so the bottom line, solid results against elevated expectations microsoft was up about 30 year to date. Commercial cloud Revenue Growth of 32 he says speaks to strength in the crowd. Azure growth of 50 , could have been expecting better, kirk says, which could explain some of the weakness. His question on the call, how are linkedin and office franchises set up for q1 if you look at the print itself, theyre saying cloud usage and demand increasing as more of us are working and learning from home but transactional licensing purchasing continued to slow, in other words, as small and medium size businesses come under pressure, microsoft seeing some slowing in Onetime Software purchases. Linkedin revenue increased 10 but they say it was negatively impacted by a weak job market. Same goes for search advertising, revenue, traffic acquisition costs decreased 18 . They said the search was negatively impacted by reductions in advertising spend. On the other hand, windows oem revenue, so licenses to device makers up 7 in the quarter. This call starts at 5 30 eastern, at which point you would expect cfo amy hood to give guidance. Josh lipton, thank you. This is a stock that had nice earnings, but it did have a couple of misses on key line items that investors were watching, and that would be azure. Also, the business process segment shy of consensus revenues, operating margin was also below consensus so karen, where do we go with this stock down here 2 after hours . Well, give than its had an enormous run and that they didnt sort of knock the lights out in every single category, i think its actually hanging in there pretty well. I thought it was a really good quarter. It had to be a really good quarter. So down this much is really i dont think a big deal ill be interested to see how analysts look at it tomorrow, whether theyve changed their outlook at all the stock got expensive 30 some odd times. Im long, im sort of thinking, all right, im going to hang onto it. If its going to trade down a little bit, i probably wont buy more it would have to trade down significant le for me to think i want to have a bigger position at this price. Im still optimistic on cloud and i come back to it again and again, i dont have a better place to put the money. Dan i think you nailed it with the azure. Q4 last year they had 64 year over year growth so 50 Constant Currency sounds like a pretty reasonable deceleration and i think it decelerated from if q3 last quarter that was in the high 50 . So expectations just got really high i saw a lot of notes from a lot of people on the street today talking about how the whisper number for azure got up to mid 50s percent gains and thats telling you that people are getting a little nervous relative to consensus. Im with karen if youre a bull and you want to look past what is going to be a really rocky second half of this year as it relates to enterprise spending, then youre saying to yourself i want to see some of these stories come down. Its trading 30 times next years earnings. That is an alltime high for microsoft, at least going back 20 years so the opportunity to buy some of these stops on the pullback would be very nice for a lot of people who really buy into this story that a lot of this kind of acceleration of some of these trends that were precovid are going to exist afterwards. But microsoft, not going to go from 200 to 300 in a Straight Line youre going to have to have an opportunity to buy it at some place. I think 190ish would be an ideal place to reload. This stock traded as if it were covidproof we see profitability coming in short and you think what is the exposure of microsoft to small and Medium Size Enterprises as we go into a potentially tough period for the economy if you think the economy is all right, i guess you think microsoft is all right but if you think the economy is going to hit a speed bump, you might think microsoft could feel some impact from that. I look at it actually the opposite way if you think the economy is okay, i think people are going to start to rotate into value. So for me, ive had a pretty good run in this one i actually sold all of my microsoft at the end of last week i sold all of my apple as well, because tech versus value. So, for me, youre right, it is the azure, it is gaming, it is intelligent cloud, regular cloud. But this was priced for perfection i hate that saying, but it was i took my chips and i put them elsewhere for now. Do you own any big cap tech at this point, steve no, im out of all big cap tech i put my bets basically in a lot of these high beta switches, virgin galactic, sonos and a lot of value plays right now im out of tech completely. Lets get to the other big market driver, the race for a coronavirus vaccine. A 2 billion deal from the Trump Administration sending two stocks soaring today meg joins us with the details. The deal is with pfizer and biontech, the german biotech partner to secure 100 million doses of the covid19 vaccine if its successful. It has to get through the phase three trials and get fda approval in order for the contract to be struck. But 1. 95 billion would secure the doses. Theres also an option to acquire an extra 500 million doses and they say that this vaccine will be given for free to all americans now, the Companies Say that they plan to start phase three trials this month if all goes well, they could be applying for Regulatory Approval in october and then be supplying 100 million doses globally by the end of the year. Interestingly, this kind of gives us our first real price point in terms of what these vaccines may actually be priced at and trying to make some calculations about their profitability for these companies. They put a note out today saying the 1. 95 deal for 100 million doses, thats going to be 19. 95 a dose people will get two doses. He estimates the cost of goods sold for this will be in the low single digit dollar range, which he estimates will yield a profit margin of about 60 to 80ers i reached out to pfizer, they did not dmecomment on these specific projections but they did note there are investing more than 1 billion in the development of this and they told me they are not getting any money from the government unless it gets through the process and has proven a high level of efficacy. Pfizer is up 5 , tim. There you have it. The question weve all been asking, is pfizer or any of these Big Pharma Companies or buy oh techs going to make anything on any of these vaccines it looks like maybe pfizer could. It looks like they could, but they dont have a vaccine. And so if you think about r d and think about where they are and listen to the cdc or whoever you want to listen to on this, where they may or may not be on a vaccine, yes, i think this is potentially a driver but what weve seen so far is these announcements have changed being spikes and catalysts for the stock to ultimately being more market related dynamics i own pfizer outright. I think you own pfizer based upon it trading relatively trade, about 15 to its fiveyear average, a fantastic Balance Sheet and theyre in the hunt i think the headline today is important to send the message that some of the best and the biggest Drug Companies in the world are hard at work and close to at least having a deal in place with the government. But again, we dont know that its going to be 20 and we dont know that the gross margin on the underlying is going to be what it is its not a reason to go out and buy pfizer today. So basically you like the stock and the vaccine as an option yes, absolutely and i think the Market Dynamics of all of this are that much more important i wouldnt be playing weve talked about whether you want to own biontech mega cap pharma, but whether you would want to own both of those. Retail wreckage, why one retailer says it is time to ring the register and were not done with earnings this hour. Stick around for all the afterhours action much more fast money in two. Flexshares may look like other etfs. But inside. Theres advanced research, modeling and refinement. Constructing funds that dont simply follow an index. But explore new terrain. Helping you fill portfolio gaps. Connect to client goals. And strengthen confidence in you. Flexshares. Powered by over a century of investment expertise. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. 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