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Imagine a world where companies report earnings only twice a year, instead of every quarter. As John Lennon put it, “you may say I’m a dreamer, but I’m not the only one.” Donald Trump reminded us on Monday that he is a big proponent of switching to a half-yearly corporate reporting cadence, away from the quarterly one. His pitch is that doing so would encourage companies to focus on the long term, rather than the next quarter. This may be a Trump policy that transcends party politics. After all, as things stand now, it often seems we’ve barely finished one round of earnings when the next one starts.
And anyone who’s spent countless hours listening to quarterly earnings calls—sometimes little more than a marketing presentation (hello, Tim Cook)—knows what a mind-numbing experience it can be. (Don’t get me started on those suck-up analysts who preface every question with “Good quarter, guys”). Even so, the idea of reducing the frequency provokes much debate. Trump brought it up once before, in his first term, and that time the Securities and Exchange Commission invited public comment. Not surprisingly, various investor groups and individual fund managers—including BlackRock, CalPERS and T. Rowe Price—made clear they like the current system, which ensures investors have plenty of information to assess corporate performance.
Meanwhile, several companies that submitted comments back then—mostly smaller firms such as Ball Corp. and Daktronics—were supportive of moving away from quarterly reports, citing the time-consuming nature of frequent earnings updates. In that regard, the U.S. Chamber of Commerce made a good point when it argued, in its comment to the SEC, in favor of less frequent reporting. The Chamber's point was that the number of companies traded publicly had fallen sharply in the previous 20 years and that anything that reduces the burden of going public would be helpful.
That argument should resonate with tech investors. We know that private tech firms are staying private longer—look at Stripe—which deprives individual investors of a chance to get exposure to their growth. Changing the reporting cadence might not in itself prompt Stripe and other privateers to go public overnight. But it would be a start to making the public market more appealing.
Elon Musk’s Poor Timing
Elon Musk may be one of the worst investors around. He bought 2.568 million Tesla shares on Friday, paying between $374 and $396 a share (or about $1 billion in total) to lift his stake by a measly 0.08%, to 12.8%. Remember, though, that in 2022 he sold the equivalent of around 90 million shares at prices ranging from $156 to $324. Talk about selling low and buying high!
But Musk surely would have been better off not selling all that stock in 2022: he used the money he raised to buy Twitter, which still doesn’t look like a winning bet. Tesla investors rushing in behind Musk this week might want to remember his poor timing.
In Other News
Shares of Google rose nearly 4% to around $250, giving the company a market capitalization of $3.02 trillion. It joins Nvidia, Microsoft and Apple with a market capitalization above $3 trillion.
The U.S. and China have reached a deal on TikTok, allowing it to continue operating in the U.S., President Donald Trump hinted in a Truth Social post on Monday morning, as trade talks between the two countries progress. CNBC also quoted Treasury Secretary Scott Bessent, who is leading the trade talks for the U.S., saying the two countries had reached a “framework” agreement for TikTok.
Nvidia agreed to purchase $6.3 billion of cloud computing capacity from CoreWeave, the latest example of the chip company striking a deal to rent its own chips from a third-party cloud business.
Chinese regulators announced Monday that Nvidia violated antimonopoly law in its $7 billion acquisition of Israel’s Mellanox Technologies.
Today in The Information’s TITV
Check out today's episode of TITV in which You.com's CEO expands on why his company has backed off challenging Google search.
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