Tesla News – Tesla, Nikola, and the Weirdness in EV Stocks
It’s getting strange in EV-land and this time it isn’t just
Should investors be worried?
Electric vehicle investors are used to a little weirdness. There are, after all, Elon Musk tweets featuring a dog in haute couture. And the Tesla Cybertruck, due to be delivered later this year, looks like something out of a Mad Max/Blade Runner crossover movie.
Still, Tesla took weirdness to another level Monday when, in a regulatory filing, the company announced Musk’s title now included “technoking” and that CFO Zach Kirkhorh would also be known as the title “Master of Coin.”
And then there is EV truck maker
whose stock has dropped 66% since September. Monday afternoon, it filed a prospectus with the SEC indicating the company planned to sell stock. Companies don’t usually issue cash at low stock prices if they don’t need the money now. Nikola now has more than $800 million in cash on its balance sheet. Its stock is down more than 2% Tuesday morning.
And remember, last week EV start-up
took a page out of Tesla’s book by launching a pickup truck that looks a little like a space pod. And the proposed vehicle has more hidden compartments and pullouts than a puzzle box.
Investors expect such oddities from Elon Musk and Tesla. Whether they will from other EV makers remain to be seen.
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Europe’s Shelving of AstraZeneca Jab Delays Troubled Vaccination Campaigns
Suspension of the Oxford/
vaccine is generalized in Europe after Germany and France emulated smaller countries on fear of undesired effects. Most medicine regulators have advised against the temporary ban, which will delay already-slow vaccination campaigns on the continent.
- Germany, France, Italy and Spain, joined Tuesday by Sweden, have followed the smaller countries that had suspended the Oxford vaccine after several patients suffered blood clots.
- AstraZeneca has noted that the number of people suffering from blood clots is not superior to that of the general population. Both the World Health Organization and the European Medicines Agency earlier this week advised governments to keep using the jab.
- The EMA is due to issue an advice on Thursday after a further review of the cases in Europe.
- The suspension decisions come as most European governments are trying to accelerate their vaccination drive, hindered by logistical miscalculations, bureaucratic paralysis and supply problems.
- In the nearly 3 months since vaccines became available, 38% of the British population, and 33% of the U.S., have received at least one shot of one of the available vaccines. That compares to about 11% in German, France or Italy.
What’s Next: Most European governments have acted as a precautionary measure designed to soothe fears among vaccine-skeptic populations. If the EMA once again gives the green light to AstraZeneca’s jab on Thursday, they will have the cover they need to resume using it. French President Emmanuel Macron has already said this could happen quickly after the EMA report.
Biden Looks for Ways to Finance Infrastructure, Push Economic Growth
Growing concerns about the U.S.’s rising deficit mean President Joe Biden will need to consider other financing options for future economic proposals—including his infrastructure spending package—like raising taxes.
- The Congressional Budget Office projects the U.S. deficit will reach $2.3 trillion this year. Republicans and moderate Democrats like Sen. Joe Manchin (D., W.Va.) have said that they won’t support big spending bills unless they are paid for—either with taxes or other spending cuts.
- Biden is planning a tax increase that could raise both the corporate tax rate and the individual tax rate for people earning more than $400,000 a year, Bloomberg News reported. Treasury Secretary Janet Yellen said Sunday that the administration “will be putting forth proposals to get deficits under control.”
- Earlier this month, Sen. Elizabeth Warren (D., Mass.) proposed an “ultra-millionaire tax” that could generate $3 trillion in revenue over a decade. On Monday, a Treasury Department watchdog group reported that the ultrarich collectively owe about $2.4 billion in back taxes.
What’s Next: Any proposed tax increase is sure to meet resistance. “Coming out of the pandemic and trying to rebuild this economy, there is no worse time to be raising taxes,” Rep. Kevin Brady (R., Texas) told The Wall Street Journal.
—Janet H. Cho
Streaming Services Dominate Oscar Nominations in Year of Pandemic
This year’s Academy Award nominations are in. With movie theaters mostly out of the picture for the past year, streaming services dominated.
garnered 35 Oscar nominations, including two for best picture. “Mank” received 10 nods, while Netflix’s other best picture contender, “The Trial of the Chicago 7,” earned six.
Amazon Studios racked up 12 nominations, led by “Sound of Metal” with six.
“Judas and the Black Messiah,” which released on
HBO Max and in theaters last month, was also tied for second with six nominations. The film marks the first time an all Black producing team received a best picture nod from the Academy Awards.
which also opted to release films on its streaming services earlier, received three nominations for the Pixar film “Soul,” and two for “Mulan.” “Nomadland,” from the company’s Searchlight Pictures, also received six nominations, including for best picture.
On the same day of the nominations,
AMC Entertainment Holdings,
the biggest movie-theater operator, reopened in its critical Los Angeles market after nearly a year of shutdowns because of the pandemic. AMC stock jumped 26%.
What’s Next: This year’s awards temporarily lifted a rule requiring contenders to hit theaters. But streaming services will likely be the center of next year’s affair, especially given WarnerMedia’s plans to release its entire slate on HBO Max as they hit theaters.
What to Watch as the Federal Reserve’s Rate Panel Meets
The Federal Open Market Committee will face significantly changed circumstances as it gathers this week for the first time since late January, as yields on both the 10-year Treasury and the 10-year Treasury inflation-protected securities are sharply higher since then.
- It’s certain that the FOMC will make no changes in current policy, instead maintaining its near-zero overnight federal-funds rate target and its current $120 billion monthly securities purchases.
- The market’s attention will be on the panel’s Summary of Economic Projections, which will be updated for the first time since Dec. 16. No doubt the Fed’s gross-domestic-product growth projection for 2021 will be lifted significantly from the previous 4.2%.
- All eyes will be on the group’s fed-funds rate projections. The December projections summary showed that the FOMC’s median expectation was for fed funds to hold near zero through the end of 2023.
What’s Next: Christian Scherrmann, U.S. economist at DWS Group, writes that the Eurodollar futures market has priced in no fewer than five quarter-point fed-funds rate increases in 2024. While that’s still a ways off, the stock market will be sensitive to any sign of higher interest rates in the future
—Randall W. Forsyth
Buffett’s Berkshire Has Bought Back $5 Billion of Stock in 2021—So Far
continued its strong pace of stock buybacks in the first two months of 2021, repurchasing about $5 billion of stock based on a Barron’s calculation.
- The company bought back $24.7 billion of its stock, or 5% of the shares outstanding, during 2020. The repurchases follow the roughly $9 billion of buybacks in both the third and fourth quarter of 2020, as CEO Warren Buffett ramped up the buying.
- Repurchase activity slowed from Feb. 16 to March 3 from the pace in the first six weeks of the year. That may be because Berkshire stock was rallying and Buffett is price sensitive. Or the company may have slowed buybacks ahead of its fourth-quarter earnings and annual report on Feb. 27.
- Buffett was paid a salary of just $100,000 in 2020 with no bonus as has been the case for more than 25 years—and that is before reimbursing the company $50,000 for postage and other incidental expenses. The company also paid $280,000 for his security services in 2020.
What’s Next: Berkshire is no longer as cheaply valued as it was in 2020. The stock now trades at around 1.35 times its year-end 2020 book value of $287,000 per class A share—in line with the five-year average. Berkshire traded at around 1.2 times book value during much of last year.
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—Newsletter edited by Anita Hamilton, Stacy Ozol, Mary Romano, Matt Bemer, Ben Levisohn
Tesla News – Tesla, Nikola, and the Weirdness in EV Stocks
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