Stocks generally moved higher on Thursday, with U.S.-China negotiations lifting trade-sensitive stocks in the Dow Jones Industrial Average (DJINDICES: ^DJI). The S&P 500 (SNPINDEX: ^GSPC) posted a modest gain. Materials and energy sectors moved higher, but technology stocks were a weak spot.
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As for individual stocks, Tesla (NASDAQ: TSLA) reported disappointing delivery numbers for the first quarter, and strong beer sales gave Constellation Brands (NYSE: STZ) shares some fizz.
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Tesla struggles to meet delivery goals
Shares of Tesla fell 8.2% after the company reported that deliveries in the first quarter were down from the last quarter. Vehicle deliveries of 63,000 were up 110% over the quarter a year earlier, but 31% below the figure for Q4. Model 3 deliveries of 50,900 were down 19% from last quarter and deliveries of Model S and Model X fell 52% sequentially to 12,100.
Tesla blamed the shortfall on logistical problems in getting the cars to Europe and China after the company began delivering Model 3s there for the first time in Q1. There were 10,600 vehicles in transit at the end of the quarter, but in last quarter's report, the company had said to expect that deliveries would be lower by 10,000 vehicles due to transit times to those markets. Even accounting for vehicles in transit, deliveries were disappointing compared with the 90,700 total last quarter.
Model 3 production in Q1 did increase 2.5% sequentially to 62,950, but that of Model S and X fell 44% to 12,100.
Tesla was also dealing with demand that was pulled forward into Q4 due to a step down in the federal tax credit, but despite the challenges in the quarter, the company maintained its earlier guidance of 360,000 to 400,000 vehicle deliveries in 2019.
Premium brand strategy is working at Constellation
Constellation Brands reported fiscal fourth-quarter results that beat expectations and shares rose 6.5%. Net sales grew 2% to $1.8 billion, beating the analyst consensus of $1.73 billion. Earnings per share, excluding gains on its equity investment in marijuana producer Canopy Growth, fell 2.6% to $1.84, well above the Wall Street estimate of $1.72.
As it has in recent quarters, strength in Constellation's premium beer brands has been making up for weakness in its wine business. Beer shipments grew 8% and depletion volumes -- the sales from distributors to retail locations -- were up 8.1%. Wine and spirits sales dropped 9% on a 4% decline in depletion volumes.
The Corona and Modelo beer brands continue to deliver growth for Constellation, but the company is moving to rid itself of lower-priced wine and spirit brands that have been a drag on growth. The company is selling 30 of those brands to E. & J. Gallo for $1.7 billion.
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