Good morning for the penultimate time from Adam Lashinsky in San Francisco. I’m subbing for Alan Murray in New York. He’s keeping my seat warm at Data Sheet, Fortune’s tech-focused companion to CEO Daily. (Why’d we switch this week? Why not?)
Tesla turned in another unsatisfying earnings report Wednesday. It said it burned through $1 billion, failed once again to hit its hoped-for production goals of 3,000 mid-priced Model 3 sedans per week, and disavowed the need to raise more capital. Triple-threat entrepreneur Elon Musk (cars, rockets, solar panels) grew testy with analysts who asked pesky questions on behalf of their clients, Tesla’s shareholders. Adulation clearly suits Musk better than criticism, implied or otherwise.
A curious thing about Tesla’s aspirations is that they’re pinned on the segment of the U.S. automotive business that’s most out of fashion right now: passenger sedans. Multiple carmakers have pruned their sedan selections, prompting the delicious Wall Street Journal headline, “Car Makers Step Back From Cars.”
The examples are many. Embattled Ford, whose techno-visionary CEO Jim Hackett is approaching the one-year mark in the driver’s seat, is phasing out sedans nearly entirely. Gone will be the Taurus, Fusion, and Fiesta lines. Japanese stalwarts Honda and Toyota, while not giving up on sedans, have seen their U.S. sales of the models plummet.
This wouldn’t be the first time Tesla’s mature competitors zig while the Silicon Valley upstart zags. They’re responding to customer behavior that favors pickups and SUVs. Musk, in true Steve Jobs fashion, isn’t giving consumers what they want but rather what he thinks they need.
Musk’s biggest quandary may be whether he’ll have enough money left to finish the task.
| Adam Lashinsky | |
| @adamlashinsky | |
| adam.lashinsky@fortune.com |
Top News
Spotify Tumble
Spotify's first earnings release didn't go so great. Revenue matched analyst expectations and the Swedish streamer's losses are slightly down year-on-year, but it gave guidance for the current quarter that was a bit lower than expected, suggesting slower growth than investors would like to see. Spotify's stock dropped 8% in extended trading yesterday. CNBC
Soybean Switch
The rise in trade tensions between the U.S. and China has apparently led China to stop buying American soybeans altogether. "Whatever they're buying is non-U.S.," Soren Schroder, the CEO of oilseed processor Bunge told Bloomberg. "They're buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the U.S…How long that will last, who knows? But so long as there is this big cloud of uncertainty, that's likely to continue." Bloomberg
Xiaomi IPO
The Chinese smartphone giant Xiaomi has filed for a big IPO in Hong Kong. The flotation could value Xiaomi at more than $100 billion. It's the first case of a major company using new IPO rules in Hong Kong that allow companies with different share classes to list there. Xiaomi's could prove to be the biggest IPO since that of Alibaba, which chose to list in New York four years ago. Fortune
Adidas and Yeezy
Adidas CEO Kasper Rorsted is really not very keen on discussing star designer Kanye West's comments on centuries of U.S. slavery being "a choice." Despite a petition calling on the shoemaker to drop the rapper, Rorsted said the German company has not even had internal discussions about the matter. "We neither comment nor speculate on every single comment that our external creators are making," he said. Fortune
Around the Water Cooler
Starbucks Settlement
The two black men at the center of a recent Starbucks storm have settled with the city of Philadelphia for a symbolic $1 each. Donte Robinson and Rashon Nelson sat down at a Starbucks there, only to have a store manager call the cops on them a few minutes later; the cops arrested them. The settlement will see the creation of a $200,000 fund for helping young Philly entrepreneurs—Robinson and Nelson will sit on the committee that awards the grants. Mayor Jim Kenny said the pair came up with the idea "in an attempt to make something positive come of this." NBC
Stormy Payment
Although President Donald Trump previously said he was unaware of lawyer Michael Cohen's $130,000 payment to porn star Stephanie Clifford, a.k.a. Stormy Daniels, new Trump lawyer Rudy Giuliani says Trump reimbursed Cohen for the payment. However, he claimed the president may not have known the nature of the payment until recently. Giuliani also suggested that Trump's reimbursement of Cohen means the lawyer's payment to Daniels ahead of the 2016 election did not count as a campaign contribution. Washington Post
Ethereal Optimism
Reddit co-founder Alexis Ohanian is bullish on the future of Ethereum, the second-top cryptocurrency. He thinks it will increase 15-fold in value this year, reaching $15,000. Ohanian also told Fortune that he reckons Bitcoin will finally clear $20,000 by the end of this year. While Bitcoin is a relatively straight cryptocurrency, the Ethereum network is also used by developers to create self-executing "smart contracts." Fortune
Trump and Kim
Stratfor analyst Rodger Baker writes for Fortune that President Trump and Kim Jong-un's unconventionality might help them strike a deal over North Korea's nukes: "The leaders of both nations are relatively new and have unorthodox governing approaches…Kim Jong-un and his regime’s experiences—and changing circumstances—open them to new options if and when they sit down for direct talks with Trump. The question is whether this shift can converge with the current U.S. political climate to realize a different outcome to peace talks this time around." Fortune
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
