Tesla, Inc. (TSLA) shares surged by 14.42% to reach $165.54 at the time of writing, while Boeing Co. (BA) shares gained 1.06% to $170.98. This rally occurred despite both companies reporting disappointing financial results.
Tesla’s free cash flow, a measure of cash left over after meeting operating and capital expenditures, dropped sharply from $441 million in the first quarter (Q1) of 2023 to a negative $2.28 billion in Q1 2024. Boeing’s free cash flow also declined significantly to a negative $3.93 million, compared to a loss of $786 million in the same period last year.
CNBC’s Mad Money host, Jim Cramer, expressed his disapproval of these negative cash flow figures. He stated that investors were overlooking these concerns and claimed that the market reaction was based on fiction rather than facts.
However, Tesla’s stock surge may be attributed to optimism surrounding the potential launch of a low-end model. During the Q1 earnings call, CEO Elon Musk emphasized that Tesla should be recognized as an AI or robotics company instead of solely an auto manufacturer.
Meanwhile, Boeing’s moderate share gain suggests that traders focused on the company meeting lowered expectations. Boeing’s fundamentals have been impacted by safety concerns and production ramp-up challenges.
Both Tesla and Boeing operate in capital-intensive industries, requiring substantial investment. Positive cash flow indicates that a company has sufficient funds to cover its daily expenses and invest in future growth. Conversely, negative free cash flow can hinder a company’s ability to compete effectively.
Despite the negative cash flow issues, Tesla is reportedly considering entering the AI or robotics sector, while Boeing’s fundamentals remain under pressure due to ongoing challenges. Investors should closely monitor the developments for both companies.
