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Nio (NYSE:NIO) should be a better investment than it is, but Nio stock looks as if it's going to lose the EV race in a big way.Source: THINK A / Shutterstock.com The electric car revolution is coming and investors are readying their portfolios. Not only are the quieter and cheaper to run than their combustion-engine counter parts, but they're seen as better for the environment which has helped them catch on in heavily polluted places like China.However, while electric cars themselves are destined to gain momentum over the next decade, electric car stocks are another story. Some appear to be based solely on hope for the industry rather than solid fundamentals and that's the case when it comes to Nio.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBack in March NIO stock was flying high at $10 per share as investors likened the firm to Tesla (NASDAQ:TSLA). However, the enthusiasm quickly faded after the firm's lofty future plans started to look flimsy as its earnings pointed to a much rockier future. With Nio's stock price down to just $3 per share today, you might be wondering if there's a bargain to be had-- but I'd hold off as the stock isn't all its cracked up to be. The Trouble with Nio StockWhile there will undoubtedly be a huge market for electric vehicles in China over the next few years, it's important to note that investing in NIO doesn't necessarily mean you'll get a piece of that pie. * 7 Discount Retail Stocks to Buy for a Recession As Luke Lango pointed out, there are 486 EV companies currently operating in China. Although China has a massive population and there's certainly room for more than one player, that's a lot of competition. In America there are between 20 and 30 EV firms serving the market.That means that the next few years will likely bring on the demise of quite a few Chinese EV players. More companies will fail than will make it, so you have to pick your player wisely.With those terrible odds in mind, NIO stock may not be your top pick. For one thing, the firm has elected to go with a platform outside the mainstream to run its cars.Beijing has gotten behind a standardized platform called MEB which big names like Ford (NYSE:F) and Volkswagen (OTCMKTS:VLKAY) are also supportive of. NIO has elected to go its own way with a different platform, which could create regulatory issues down the road. Recovery Depends on DeliveriesIn any case, those factors which cast a bearish shadow over NIO stock were true back in March when investors were singing the automaker's praises and bumping its share price up to $10.What brought NIO back to earth was a poor earnings release that showed vehicle deliveries were lower than expected. Since then, deliveries haven't made a meaningful improvement- July deliveries came in at just 837. August deliveries will be the true reflection of whether or not the March earnings were the beginning of the end for NIO. The company was forced to recall a number of its vehicles due to battery issues, which management said was largely to blame for the poor delivery figures in June and July. In August, management is expecting to deliver somewhere between 2,000 and 2,500 vehicles. Hitting that target would send a positive message to Wall Street and put the buy-case for NIO back on the table. However, another month of dismal deliveries says NIO is heading for rock bottom. The Bottom Line on Nio stockThere's no urgency to buy NIO stock right now. The firm is due to release its August delivery figures at the end of September and I'd wait for that to even consider adding Nio to your portfolio.However, even if the August numbers hit management's guidance, NIO is risky. It's hard to pick out a clear winner in such a large and diverse field, but choosing the one that has gone against Beijing's standardized platform seems to be a risky strategy.If you're looking to buy "the Tesla of China," perhaps you should just buy Tesla-- the firm is building its own factory in Shanghai and its cars are not subject to the 10% purchase tax that its foreign peers are weighed down by. For now, NIO is a no-go for me at least until deliveries are firmly back on track.As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Big IPO Stocks From 2019 to Watch * 7 Discount Retail Stocks to Buy for a Recession * 7 Stocks to Buy Benefiting From Millennial Money The post As Huge as the EV Market Will Be, Nio Stock Isn't Worth the Risk appeared first on InvestorPlace.
Perhaps no stock on the NASDAQ is as disparaged these days as Nio (NASDAQ:NIO). The Chinese maker of luxury electric vehicles is currently seeking a $200 million cash infusion from Tencent Holdings (OTCMKTS:TCEHY) and CEO William Li. Meanwhile, it's due to report August deliveries on September 24.Source: THINK A / Shutterstock.com If the delivery numbers are as bad as July's 837, it could spell the end for the hugely hyped company. This is especially true given a recall of 4,803 ES8 vehicles over battery issues.Shares of NIO stock that were trading at over $10 as recently as March closed yesterday at $3.14. The company's market cap has been whittled down to $3.17 billion, against $6.6 billion of debt as of March. That's the most recent financial report on record, and was delivered in late May, unaudited.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Wrong ApproachI called Nio too speculative in July, after the stock rose on an unexpected pick-up in deliveries.The problem here isn't the EV market but Nio's approach to it. Despite disappearing subsidies, electric cars will be a mass market in China. Beijing is committed to a standard platform dubbed MEB that has already won support from Volkswagen (OTCMKTS:VLKAY) and Ford Motor (NYSE:F) in the U.S.The problem is that Nio is not using MEB. Instead it is trying to define a high-performance category of electrics and compete directly against Tesla (NASDAQ:TSLA), which is building a factory in Shanghai. * 7 Deeply Discounted Energy Stocks to Buy Nio lent its high-end EP9 for review by The Grand Tour, an Amazon (NASDAQ:AMZN) Prime show, and the hosts were impressed. But that vehicle isn't street legal. The car has set new track speed records and it might still impress as a race car. But Nio sold out its racing team in April. Electrics are ComingElectric cars are coming. They're simpler than internal combustion engines. They need less service. They're quiet. They cost less to run. Tesla has proven the market for them. China is committed to them.But China has its own way of building industries. It subsidizes early entrants heavily, establishes standards, then removes incentives as production ramps up. That's what is happening now.The biggest winner looks to be BYD (OTCMKTS:BYDDF), which had sales of over 73,000 vehicles in the second quarter. Warren Buffett took a nearly 10% stake in BYD a decade ago when it was just a battery maker.While cars using fossil fuels succeed based on design and mass production techniques, electrics are all about the batteries. Getting the batteries right, getting them into mass production efficiently, makes everything else possible. That's what Tesla did. The company's secret sauce is all in its Nevada battery Gigafactory. That's the approach BYD is taking, focusing first on the battery, then on low-cost production standards. Li's Not MuskNio CEO Li seems obsessed with Tesla CEO Elon Musk. He launched dozens of companies before Nio, selling BitAuto, a provider of online services for China's auto industry, in 2013. * 7 Stocks to Buy In a Flat Market Before NIO stock's IPO, Li convinced many big companies to invest, including Baidu (NASDAQ:BIDU), Tencent and Lenovo (OTCMKTS:LNVGY). Forbes says he's worth $1.3 billion. But if most of that is in Nio, Li could wind up as China's Preston Tucker rather than its Elon Musk, which made for a great movie but a tragic story. Bottom Line on NIO StockInvestorPlace writers are unanimous: No to NIO stock.It should be cheaper, says Vince Martin. It may not survive its cash drain, says Mark Hake. It's a bust for the foreseeable future, writes Luke Lango. Keep saying "no," adds Thomas Niel.Sadly, they're right.Dana Blankenhorn is a financial and technology journalist. He is the author of the environmental story, Bridget O'Flynn and the Bear, available at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post Impatient Investors Say 'No' to Nio Stock and China's Elon Musk Wannabe appeared first on InvestorPlace.
Gilead Makes Galapagos Move AIDS and hepatitis C giant Gilead (NASDAQ:GILD) is making another move on Galapagos NV (NASDAQ:GLPG) to gain rights outside Europe for certain treatments. Gilead agreed to pay nearly $4 billion plus another $1.1 billion in shares at $158.49 per share, increasing its stake in the company to 22% from 12.3%. The […]The post Market Morning: Gilead Moves On Galapagos, Hong Kong Keeps Fighting, Trump Tweets appeared first on Market Exclusive.
There's an old Wall Street proverb that even a dead cat will bounce if tossed from a high-enough building. In Mandarin, dead cat bounce translates to Sǐ māo tantiao or 死猫弹跳. A Chinese example of such a rally is Nio (NASDAQ:NIO).Source: Shutterstock Nio was called the "Chinese Tesla (NASDAQ:TSLA) when it went public last September. On its opening day of trading it sold for as much as $12.69 per share. Since then, except for a brief period in March, it has been all downhill.But a surprising pick-up in deliveries gave the shares a 45% rally in one week recently. With 87.4 million shares traded July 9, Nio had the highest volume on any U.S. exchange.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSo, buy, buy, buy? No, no, no. Wait, wait, wait!At least, know what you're getting into. Nio Stock and the EV RevolutionThis much is true. There's an electric vehicle revolution going on. China is at the heart of it. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond But as government subsidies have been pulled, sales have declined. Thus, it was a big surprise when the China Passenger Car Association said sales in June rose 4.9% from a year earlier.Nio itself delivered 1,340 vehicles. Deliveries for the full quarter were 3,553. Tesla, by comparison, delivered 95,200 vehicles in the second quarter. Nio is not Tesla.Before this good news, all the commentary on Nio was bad. Some 4,803 cars were recalled after the batteries in three of them caught fire. Lithium ion batteries are subject to this risk, and a short-circuit can mean big trouble.The views of our David Moadel were typical. "Can the Nio Stock Wreckage Be Salvaged?" he asked on June 28. Nio, he concluded, is a speculative bet. It was a perfect set-up for anything perceived as being good news to send the stock rocketing upward.But at its July 11 opening price of $3.69 per share, Nio is still $2.50 per share away from what had been its trading range around $6 per share last Christmas. It's a $4.2 billion market cap on $4.9 billion of 2018 revenue, on which it lost $23.3 billion. (Ouch.) Seeking HopeThat doesn't mean a speculation on Nio isn't one some young investors might want to make.The company has begun deliveries of a new "crossover," the ES6. The ES6 has a swappable battery pack, so its range can be upgraded. There's also a "hypercar" called the ES9 on the horizon, which is setting speed records. Nio is once again talking about building its own factory, rather than relying on state-owned JAC Motors.Despite the subsidy pull-back, and despite the spectre of a Tesla factory going up in Shanghai, the fact is the Chinese government remains big on electric cars, and especially big on Chinese electric car companies. The MEB platform being pushed by Volkswagen (OTCMKTS:VLKAY) could create a China-based, global standard for mass-market electrics within 5 years.In that world, a luxury Chinese electric might sell well. The Bottom LineSadly, I agree with our Thomas Niel, who warned investors away from Nio on July 5. He sees the local market as saturated, the export market subject to the trade war.I think there are better ways to play the trend. Warren Buffett has invested in BYD Company (OTCMKTS:BYDDF) He took a 9.9% stake for $282 million 10 years ago, when BYD was just a battery maker. BYD is growing faster than the Chinese electric car market, with sales of 73,172 vehicles in the last quarter.If you're going to bet on electric cars, bet on the mass market, not the class market.Dana Blankenhorn is a financial and technology journalist. He is the author of the mystery thriller, The Reluctant Detective Finds Her Family, available at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this article. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post Nio Stock Is Still Too Speculative for Most Investors appeared first on InvestorPlace.
Volkswagen (OTCMKTS:VLKAY) has decided to turn away from Silicon Valley and back toward the car business for its future.VLKAY dropped their alliance with Aurora Innovation, a self-driving startup backed by Amazon (NASDAQ:AMZN). Instead it is now in talks with Ford (NYSE:F) for electric and autonomous car technology.Volkswagen's Modular Electric Drive Kit (MEB) will eventually be married to Argo AI, a start-up for autonomous vehicles Ford invested in back in 2017.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Retail Stocks to Buy for the Second Half of 2019 The loser is Alphabet's (NASDAQ:GOOGL, NASDAQ:GOOG) Waymo unit, which seems to have the best autonomous tech but whose proposed agreements were believed to be one-sided by the industry. Amazon and Aurora are still working with Korean nameplates Hyundai and Kia. Waymo is expected to wind up with Nissan, Renault and Mitsubishi. The Ford/VLKAY DealUnder their deal, Ford and Volkswagen will place their strengths into one another's hands starting in 2022. Ford will make pick-ups for Europe under the VW nameplate, while VW will produce a city van Ford can sell. Volkswagen is going full speed ahead with the MEB platform in China, where a joint venture called SAIC Volkswagen will begin making up to 300,000 vehicles per year in 2020. Another joint venture, FAW-Volkswagen in Foshan, recently doubled its capacity to 600,000 vehicles, although some are gas-powered.For Volkswagen, its electric car alliances in China are a way to get past its Dieselgate scandal. The scandal led to the firing of Audi's CEO, over 7.000 layoffs, and tens of billions of dollars in fines and court costs.For Ford, the VW alliance gives it a stable electric vehicle platform and control over its path in self-driving cars. It could also bring Ford back into markets like Europe, South America, and Africa, from which it had been retreating. It's also a step back for CEO Jim Hackett, who was brought in two years ago in part because he had connections to Silicon Valley as head of Steelcase, a furniture company. What Comes NextVolkswagen is roughly twice the size of Ford. It has a market cap of about $86 billion, against $40 billion for Ford. Its sales last year came to about $264 billion, against $160 billion for Ford. Despite Dieselgate, VW sells for one-third its sales while Ford sells for one-fourth.The market poverty of the car business, compared with technology, where companies frequently sell for 8-10 times sales, has created an unequal balance. It may have led Waymo to push terms the auto industry could not abide. The car makers are now teaming up and sharing costs because, if they wanted, Waymo, Amazon, or Apple (NASDAQ:AAPL) could build their own factories. The combined market cap of Ford and Volkswagen, about $120 billion, still pales in comparison to Amazon's $943 billion.The car makers insist no one has learned how to make money in electrics or autonomous cars. They insist even Tesla (NASDAQ:TSLA) hasn't cracked the puzzle, although its success in the luxury segment recently cost BMW (OTCMKTS:BMWYY) CEO Harold Kruger his job. This came just months after BMW signed a manufacturing alliance with Microsoft (NASDAQ:MSFT). The Bottom LineThe Ford-VW tie-up is a defensive alliance that boosts China and begins what may be the auto industry's last stand against Silicon Valley.Making electric cars takes fewer employees than making gas-powered cars. But autonomy remains a tough nut to crack. Tech companies believe they have the hole cards, but automakers want a better deal before they accept a back seat.Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O'Flynn and the Bear, available now at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in MSFT, AAPL and AMZN. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on College Students' Radars * 7 Retail Stocks to Buy for the Second Half of 2019 * The S&P 500's 5 Best Highest-Yielding Dividend Stocks The post Ford and Volkswagen: Throwing Rocks at Silicon Valley appeared first on InvestorPlace.
Since Tesla (NASDAQ:TSLA) stock started scaling production, the question for potential investors has become whether this is a car stock or a tech stock.Source: Shutterstock If it's a tech stock, it's dirt cheap. Sales roughly doubled from 2017 to 2018, and after the first quarter they were on pace to double again. Tesla is doing this at scale, with revenue for the first quarter alone at over $4.5 billion.If it's an auto stock, it's frightfully expensive. Tesla opened for trade June 17 with a market cap of $38.2 billion on trailing-year sales of $21 billion. Auto stocks like General Motors (NYSE:GM) have traded this whole decade at roughly one-third sales, even with big earnings and dividends that yield 4.56% if you buy today.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSo far in 2019, investors are calling Tesla a car stock. The shares are down 38% and skepticism about the company's future is growing. But is that fall a buying opportunity? Change Over?Tesla was launched in 2003 in an impossible dream, to produce a luxury electric car (at scale) and the battery that went into it. Later it added a second goal, to make that car capable of driving itself.Tesla has done all that. Tesla has succeeded so well that its goals are now shared by the entire industry, and now impact all price levels. Volkswagen (OTCMKTS:VLKAY), whose diesel engines were the dirtiest in the industry, is now fully committed to Tesla-izing itself, with Chinese help. So is the rest of the auto pack.In its first-quarter report, released in April, about 20% of Tesla's revenue came from things other than cars. Tesla services, Tesla solar panels and (especially) Tesla batteries all contributes. The battery operations are even profitable. But their contribution hasn't changed -- Tesla remains a car company, and the solar panels are a sore point. The design keeps changing and the price keeps rising.Tesla's hope for continued growth is its Model 3 sedan, designed to cost $35,000. This may be the source of the bearishness. Questions have emerged about Tesla production levels, quality and demand. CEO Elon Musk insisted at this month's shareholder meeting that demand is not a problem. Tesla Stock and the China CardThere is another card in the Tesla deck: the China card.Tesla owners in China are volunteering to help speed up deliveries, since the company is closing its dealer network. And its Chinese-owned Shanghai factory is already having production equipment installed. Hopes are it will produce 3,000 cars per week by the end of the year. The U.S. factory seems to have hit its production limit at 7,000 cars per week. The Bottom LineTesla shares bottomed in May at levels last seen in 2016.The company has never made money. Capital gains have been the only reason to buy the shares. Traders have done much better with Tesla than any other auto stock, as it has been highly volatile.But I'm an investor. I like to buy good stocks, put them away for five years, and see a profit at the end of that time. In June of 2014 Tesla was selling at about $230 per share, $15 more than its current price.For speculators, then, the party's over. Investors need to ask themselves if Tesla can scale, if Tesla can find a profit, if the battery and solar panel operations will ever contribute, and if China can be a significant boost.All that may happen, but I'm not putting any money on it. That GM dividend should have paid back one-fourth of my investment by that time.Dana Blankenhorn is a financial and technology journalist. He is the author of the mystery thriller, The Reluctant Detective Finds Her Family, available at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this article. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 5 Red-Hot IPO Stocks to Buy for the Long Run * 5 Stocks to Buy for $20 or Less * 4 Dow Jones Stocks Ready to Rise Compare Brokers The post Tesla: Car Stock or Tech Stock? appeared first on InvestorPlace.
Earlier today, US Commerce Secretary Wilbur Ross once again hinted at President Donald Trump’s willingness to impose auto tariffs on Europe. While talking to CNBC, Ross said that he is positive about a US-Europe trade deal.
Huawei Fumes at FedEx as Packages Allegedly Diverted The trade war is bleeding into new areas in the global economy. Huawei is now mad at FedEx (NYSE:FDX) for allegedy rerouting packages addressed to Huawei from Japan, to the United States without authorization. Huawei says that the parcel delivery company also attempted to divert two more […]The post Market Morning: Huawei Fumes, Volkswagen Feuds, Novartis Wins, Farage Threatens appeared first on Market Exclusive.
Shares of Nio (NASDAQ:NIO) were downright explosive earlier this year. Nio stock was putting in a series of higher lows and ripped above $10 on optimism that its electric vehicle was seeing stronger-than-expected demand.Source: Shutterstock Then it reported earnings, and it wasn't pretty.Shares cratered, falling more than 30% from above $10 to $7 in just three trading sessions. A few weeks later, the stock was below $5, down more than 50% from its highs earlier that month. Hovering just below this mark now, it's got investors who are looking for a cheap play contemplating a position. For the speculative buyer, perhaps it will pay off.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Cloud Stocks to Buy on Overcast Days As it stands though, the charts do not look all that promising. Trading Nio Stock Click to EnlargeOver the last week or two, Nio has been coiling under the 20-day moving average and below this $4.90 to $5 area. The latter had been support in March, but gave way and turned to resistance in April. That's what has me feeling not-so-great about the chart right now.That said, Nio did put in a lower high this month.So what's the trade? Interested speculators (because remember, this is a speculative stock) may not want to buy right now. However, a move over $5 could trigger a long position. Should the stock close above this level, it will propel Nio stock above the 20-day moving and $5 resistance.It will open up a run to the 50-day moving average and possibly the $6 level, which is former range support. We flagged this level in March and told investors to be careful when Nio stock showed that it could not reclaim this level. Now it will have the opportunity to test it again, provided it can get over $5.On the flip side, watch $4.70. Below it breaks Nio's uptrend support and puts the May low of $4.57 on the table. That also puts the 52-week low of $4.43 on the table. New lows is not an attractive setup, particularly for a sub-$5 stock. Remember how Blue Apron (NYSE:APRN) has done?That's why I believe it would be wiser to buy into momentum rather than buy and hope a breakout occurs. Without a breakout, we get a breakdown and nobody wants that for their long position. Bottom Line on Nio StockInvestors who like Nio do so with the hope that the company becomes the next Tesla (NASDAQ:TSLA). Admittedly, the outlook seems rosy, as Nio makes some attractive-looking electric vehicles and as China is the world's largest electric vehicle (EV) market. Worth pointing out is that Nio is a Chinese automaker.Given the growth of China's middle class and the government's push toward clean energy, Nio seems like a worthwhile bet.But there are certainly concerns. For starters, Tesla is now shipping its vehicles to China, while working to assemble its Gigafactory 3 production plan in Shanghai. In other words, Nio will soon have increased competition from the world's largest EV producer right on its home turf.Tesla's not the only one, either. Daimler (OTCMKTS:DDAIF) via Mercedes, Volkswagen (OTCMKTS:VLKAY, OTCMKTS:VLKAF), Ford (NYSE:F), General Motors (NYSE:GM) and seemingly every other automaker is making a push into electric vehicles.As we've seen with Tesla, profitability takes a very long time. Further, it takes a number of big investments over and over for a young company to stay ahead of its deep-pocketed peers. Tesla had to start from a harder spot, coming out of the Great Recession with essentially no EV infrastructure and little consumer interest. Tastes are changing through and governments are getting on board.That's good for Nio, although it still has a full plate with high costs and increasing competition. Plus, it lacks the Elon Musk factor. Love him or hate him, the man can sell a vision and that's exactly how he raised so much money for Tesla over the years.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell held no position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Cloud Stocks to Buy on Overcast Days * 6 Stable Stocks Worth Buying for Protection * 5 Active Vanguard Funds That You Have to Own Compare Brokers The post Nio Stock Could Make New Lows If It Fails to Breakout appeared first on InvestorPlace.
The European Union is looking to catch up with Asian battery producers after years of neglecting the lack of local energy storage production capacity
Large automakers such as GM, Nissan and Volkswagen are falling behind in the EV race as they are competing with more experienced Chinese EV producers
How Foreign Automakers' US Sales Looked in February(Continued from Prior Part)US auto sales in February 2019In this series so far, we have looked at February 2019 US vehicle sales of auto giants (IYK) including Fiat Chrysler (FCAU), Honda (HMC), and
How Foreign Automakers' US Sales Looked in February(Continued from Prior Part)Ratings on foreign automakers According to Reuters, 22% of 23 analysts covering Fiat Chrysler Automobiles (FCAU) stock gave it “buy” ratings. By comparison, about 73%
said it plans to cut between 5,000 to 7,000 jobs by 2023 as the German carmaker shifts its focus to electric vehicles. Volkswagen is expected to invest a total of $19 billion over the next five years to make electric vehicles, moving away from gas-powered engines in the wake of emissions scandals that have cost the the company $30 billion.
While the overall markets have been mostly in an uptrend this year, Tesla (NASDAQ:TSLA) stock has been anything but. Rather, it's been a wild ride. TSLA stock began the year by hitting roughly $350 in January before plunging to $285 by the month's end. Elon Musk & Co. would see a nice bounce back to $322 in February, but it would not last long. Tesla stock is currently trading hands at $297.But hey, this kind of volatility is typical. And it probably will not change any time soon. Despite all this, I'm still a cautious bull. In the near term, there are some potential catalysts for TSLA. Keep in mind that the company plans to begin selling the Model 3 in Europe and China in the next few months. We should also get some details on the Tesla Y crossover.Of course, on a long-term basis, the company has opportunities for substantial growth. Just look at artificial intelligence (AI). Because of the large number of vehicles on the road, Tesla is continuously building a valuable database -- and its computer systems are getting smarter and smarter.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn the meantime, the company continues to post profits and has $3.7 billion in the bank. While all this is great, Tesla stock still faces considerable risks. According to Elon Musk, the company came close to imploding last year; and such dire circumstances seem like a quarterly occurrence for the often-beleaguered automaker. * 10 Blue-Chip Stocks to Lead the Market So for investors looking at Tesla stock, it's a good idea to think about the potential landmines. (And yes, there are many.) Some of these landminds are especially treacherous. See for yourself: Risks to Tesla Stock: Musk DramaMusk has one of the best track records in tech. In the mid-1990s, he founded Zip2 and sold it for more than $300 million. Then he launched PayPal (NASDAQ:PYPL), which revolutionized digital payments. And yes, he would eventually put together SpaceX.While Musk is certainly brilliant, he can also be unpredictable. Last year's ill-fated attempt to take his company private is an example of this. It resulted in penalties from the SEC, which included revamping the board.Musk's mercurial personality could ultimately lead to even worse consequences, though. Keep in mind that there has been significant turnover in the executive suite, which could hamper growth. Some of the latest departures include Tesla's in-house counsel and chief accounting officer. According to the Wall Street Journal, more than 50 executives have left the company during the past two years. Risks to Tesla Stock: Quality and ScaleProduction has been one of the biggest issues for TSLA stock. Let's face it, the company's cars are highly complex and require sophisticated processes. The company has also been hamstrung because of a lack of sizeable production capacity.True, Musk has done a tremendous job in improving things. But it seems like a good bet there will be ongoing challenges as volumes ramp up. * 7 IPOs to Get Excited for in 2019 Note that Consumer Reports recently nixed its recommendation of the Tesla Model 3 because of reliability and quality problems. Of course, Musk quickly responded, indicating that the problems have been resolved. Yet he has certainly been prone to making statements that have proven to be overly optimistic. Risks to Tesla Stock: CompetitionGoing mainstream is a herculean task in the auto industry. It has meant the destruction of many startups. Tesla has beaten the odds.But as time goes by, it will get tougher as the competition grows more intense. In the next couple years, the market will see a flood of EV offerings from operators like Volkswagen (OTCMKTS:VLKAY), Toyota Motor (NYSE:TM), General Motors (NYSE:GM), Ford (NYSE:F), Nissan (OTCMKTS:NSANY) and Nio (NYSE:NIO). Oh, and tech operators like Alphabet's (NASDAQ:GOOGL, NASDAQ:GOOG) Waymo will certainly continue to gain traction with autonomous vehicles.In fact, there are already signs that TSLA is getting antsy about the competition. For instance, Tesla plans to provide an option for consumers to lease its vehicles, and the company has also reduced the price of the Model 3. Price cuts aside, Tesla's Model 3 is still above the $35,000 mark Musk promised (and really, needs) to win over the mass-market consumer.Considering that it's about to find itself outclassed in everything from cash to brand loyalty, Tesla stock is currently stuck between a rock and a hard place.Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Strong Buy Stocks Top Investors Are Buying Now * 7 Cheap Stocks That Make the Grade * 5 Clinical-Stage Biotech Stocks to Buy Compare Brokers The post 3 Risks That Could Torpedo Tesla Stock appeared first on InvestorPlace.
Apple (NASDAQ:AAPL) has laid off 200 people from its "Project Titan" self-driving car project, leading some to ask whether the company can still innovate. This, in turn, has made investors question the growth prospects behind Apple stock's longer-term story. An Apple spokesman called the move a "reshuffling," saying the company was still interested in "autonomous systems." This was preceded by analysts writing the project was being scrapped and by one of its leads, Alexander Hitzinger, being poached by Volkswagen (OTCMKTS:VLKAY). InvestorPlace - Stock Market News, Stock Advice & Trading Tips The move is considered fallout from the "failure" of the Apple XR iPhone model to take off during the holidays, and a memo to employees from CEO Tim Cook promising action. For Apple stock owners, this seemed to underscore the wisdom of a selloff that followed its September earnings report, which eventually lobbed-off nearly one-third of Apple's market cap. Its value entering trade Jan. 25 was about $722 billion. It had been over $1 trillion. But reports of Apple's death are greatly exaggerated, as is the doom and gloom surrounding AAPL stock. ### Whither the Self-Driving Car? The move by AAPL led to speculation that technology for self-driving cars remains years away. This specuation came despite numerous tests, including the Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) Waymo launch of a fleet of self-driving taxis in Phoenix, and its opening of a factory near Detroit to outfit vehicles for autonomous use. * 10 Triple-A Stocks to Buy in February While it's true that fully autonomous cars are still confused by things like rain, and having no driver leaves them vulnerable to attack by Luddites, the technology continues to move ahead. Rather than Apple deciding against the technology, it may be that the technology is just not for Apple … at least not in that form. A host of companies, both on the car side and the tech side, are chasing full vehicle autonomy. Apple's version, seen in October, did not seem especially innovative. ### AAPL Stock: Where's the Growth? At its opening price of $157 per share, AAPL stock was selling for under 13 times earnings, despite having over $200 billion in cash and securities. This is the position it was in back in 2014, when Cook decided to split AAPL stock, launch a dividend and commit to spending big on cloud data centers. Apple still uses third-party data centers, including those of Amazon (NASDAQ:AMZN) and Alphabet, for storing raw files, retaining the metadata, while it puts $10 billion more into such centers, having already built in Nevada, North Carolina and China. Apple has also begun the laborious process of getting Food and Drug Administration approval for medical applications on the Apple Watch, starting with its EKG sensor. I have written a number of times that health applications, identifying and monitoring chronic conditions, are where Apple's next trillion dollars will come from, and it now dominates wearables with 4.7 million units shipped in the September quarter alone. ### The Bottom Line on Apple Stock It took about 30 years for the PC to reach "technical exhaustion," prices falling below $500 as new capabilities proved not worth paying for. After PCs reached this point, it took Microsoft (NASDAQ:MSFT) years to settle on a new, cloud-based growth path. At its nadir, Microsoft was selling for multiples little different from where Apple stock is now. Assuming it meets December's estimates, Microsoft will be selling for about 22 times earnings. * 7 Recession-Proof Stocks to Buy ... According to Goldman Sachs It has taken the smartphone just 10 years to reach technical exhaustion, a point made clear by the Apple's XR "failure." But notwithstanding its retreat on self-driving cars, AAPL is further along in recreating itself than Microsoft was. Young investors will have time to take advantage, because analysts are still going to see AAPL stock through the prism of the iPhone until it becomes obvious that cloud services and the Watch can make the company grow again. Their patience will be rewarded. Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing, he owned shares in AAPL, MSFT and AMZN. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Semiconductor Stocks to Buy Now * 10 of the Best Stocks to Invest In for February * 5 Top Stocks for a FOMO Rally Compare Brokers The post Without Self-Driving Cars, Where Is the Growth for Apple Stock? appeared first on InvestorPlace.
Ford Motor (NYSE:F) is due to report earnings after the market closes Jan. 23, and analysts are wondering just how bad things can get. Expectations are for 30 cents per share of earnings on $36.96 billion of revenue. Hitting the number should send the stock higher, because those earnings would be twice the company's 15-cent-per-share quarterly dividend, and the stock is already selling at a super-low 5.5 times trailing-12-month earnings. But there are growing hints Ford may miss estimates, and possibly by a lot. Worse, some of those hints are coming from Ford itself, which forecast a miss last week and said it couldn't be confident about 2019 either, thanks to the Trump tariffs and Brexit. InvestorPlace - Stock Market News, Stock Advice & Trading Tips ### Trouble Ahead for Ford Stock Ford is known as a U.S. carmaker, but it is also the top-selling brand in England, and a "no-deal" Brexit, which is increasingly likely, could send that economy into a tailspin. Ford has an international supply chain, so tariffs on imported parts are going to hit its U.S. operations and overall profitability. Also, large industrial companies hate uncertainty, and that's what the current U.S. administration specializes in. * 7 Dark Horse Stocks You Really Need to Look at for 2019 There are even rumors that James Hackett, who was placed in the CEO chair in May 2017, could get the axe. The former Steelcase CEO and University of Michigan athletic director has been unable to complete any big tech deals, and the alliance with Volkswagen (OTCMKTS:VLKAY) announced at last week's Detroit Auto Show impressed no one. It's possible that William Clay Ford, 61, a descendent of founder Henry Ford who personally ran the company from 2001 to 2006, may be forced to take back control to steady the ship. Hackett announced a major restructuring plan last year, aiming to cut costs in gasoline engines by $14 billion, getting out of cars and investing that money into electrics and hybrids. The plan wasn't bad. Rival General Motors (NYSE:GM) has since announced similar plans. Ford is retreating from Europe but staying in China. Like the manager of a losing football team Hackett has called for patience and told investors big surprises are in store for 2019. ### The Debt for F Stock? The problem is he hasn't been specific enough to calm the skeptics. If it can continue delivering 15 cents per share to shareholders this year, Ford will be yielding 7.18% at current prices, while GM's yield has fallen to 4%. The problem is no one believes Hackett can deliver those earnings. Ford is very vulnerable to a recession right now. It lists only $12 billion of long-term debt but it also borrows to help buyers with their purchases, and if you include Ford Motor Credit, the combined debt is over $102 billion. Moody's has downgraded that debt to near-junk status, raising fears of a dividend cut. Ford has also been fighting overextended dealers in court. ### The Bottom Line Hackett has tried to be transparent about his plans and Ford continues to make a lot of money on its F-Series trucks. The shares traded as low as $7.50 each but have recently bounced back as bargain-hunters have circled it. At its current price, Ford is worth just $34 billion. That's less than its expected fourth-quarter sales. Meanwhile, Tesla (NASDAQ:TSLA) has a market cap of $52 billion when it's expected to have just $21 billion in sales for the year. If the global economy contracts before those trucks' buyers can pay off their loans -- which have longer-and-longer durations as the price of their trucks has risen -- the company could collapse. On the surface Ford is an incredible bargain, but I bought that argument in 2017 and paid for it with a fat loss in 2018. Fool me once shame on me, fool me twice, won't get fooled again. Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this article. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 High-Growth Stocks for the Return of the Bull * The 10 Best Index Funds to Buy and Hold * 10 Lithium Stocks to Buy Despite the Market's Irrationality Compare Brokers The post How Low Can Ford Stock Go? appeared first on InvestorPlace.
Tesla (NASDAQ:TSLA) finally has competition. Oodles of it. * 12 2018 Winners That Will Be Big Ol' Losers in 2019 Germans like Volkswagen (OTCMKTS:VLKAY), Japanese like Toyota Motor (NYSE:TM), Chinese -- even Indians. In America, General Motors (NYSE:GM) has produced an electric Cadillac and Ford (NYSE:F) is now offering an an electric pick-up. InvestorPlace - Stock Market News, Stock Advice & Trading Tips What they all have in common is a desire to grab both Tesla's market -- and its mojo. At its Jan. 18 opening price of $325 per share, investors are still paying over three times sales for Tesla shares, while they can have General Motors for less than one-third sales. The market cap of Tesla -- about $58 billion after a 6.5% overnight drop -- remains $4 billion ahead of GM, $25 billion ahead of Ford Motor, and is more than double that of Fiat Chrysler (NASDAQ:FCAU), all of whom dwarf it in sales, profits, and numbers of employees. The posse is on to Tesla How is Tesla going to compete? By cutting employees, cutting costs and raising profits, according to CEO Elon Musk. In his e-mail to employees announcing the job cuts, Musk cited the end of U.S. tax breaks on electrics and said the Model 3 needs to be priced closer to its $35,000 base price promise to compete and admitted that "the road ahead is very difficult." Tesla is now facing a host of competitors, with more coming all the time. Nissan (OTCMKTS:NSANY) is just the latest big car company promising an all-electric line and a "complete reinterpretation" of what such cars can do. Tesla also faces a host of competitors in the area of autonomous vehicles, starting with Alphabet's (NASDAQ:GOOGL) Waymo, which is already running driverless Fiat Chrysler Pacificas in Phoenix. General Motors plans to start tests of self-driving cars in San Francisco this year. Fiat Chrysler's Jeep unit is experimenting with rentals and car-sharing. ### Tesla's Not-So-Secret Weapon Given the reality of other car makers' low valuations, Tesla's high valuation, and Musk's admission of trouble ahead, is there anything that might still attract an investor to the stock? Yes. Tesla's battery factory in Nevada is churning out two battery packs per minute, 24 hours each day, at a cost of $116 per kilowatt hour (kwh). The cheapest competitor pays $146 per kwh -- and Tesla is making more such battery packs than the rest of the world combined. Tesla has plans to build two more battery plants, in Shanghai and in Europe, and to continually redesign its batteries so they both cost less and last longer. Tesla executives say the Nevada plant is profitable and cash flow positive. The problem is that batteries remain a very small part of the Tesla story, at just over 10% of revenue, even when its solar cells are added in. Also, even here there are competitors, promising to do even better. ### The Bottom Line on TSLA Stock Tesla has succeeded in shifting the direction of the auto industry, away from gas guzzlers, toward electrics and toward vehicles that drive themselves. But its valuation has attracted enormous competition, and expectations for its own financial performance keep rising. Tesla is next due to report earnings Feb. 6 and the consensus is for net income of $2.12 per share, while the "whisper number" (what analysts are telling their top clients to expect) is $2.41, on revenue of $6.36 billion. Compare that to earnings of $1.75 per share, fully diluted, reported for third quarter, on $6.8 billion in sales. * 12 2018 Winners That Will Be Big Ol' Losers in 2019 Even if Tesla beats these estimates, it's becoming less unique, as all its competitors are now focused on making the same kind of all-electric, autonomous vehicles it has been promising. Its relative valuation today is based entirely on its lead in batteries, and battery technology. Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this article. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Companies Apple Should Consider Buying * 7 Beaten-Up Housing Stocks Due for a Bounce Back * Take Buffett's Advice: 5 Vanguard Funds to Buy Compare Brokers The post Competition Is Closing In on Tesla and TSLA Stock appeared first on InvestorPlace.
Microsoft (MSFT) and LG announce partnership at CES 2019. Azure cloud platform and AI potency of the tech giant will enable LG to ramp up its ADAS projects.
China's automobile market, the world's largest, recorded its first annual decline in more than two decades last year as new car sales slumped amid a slowing economy and rising trade tensions between Washington and Beijing. The China Passenger Car Association said Wednesday that sale fell 6% over the whole of 2018 to just over 22.7 million units. Curiously, European auto stocks were among the top gainers in mid-morning trade despite the weaker China data, with investors betting that the consistent suggestion of progress in U.S.-China trade talks, which extended into an unscheduled third day today in Beijing, could allow for deeper access for non-Chinese manufacturers.
According to data compiled by MarkLines Data Center, Toyota (TM), the largest Japanese automaker, reported a solid YoY (year-over-year) increase of 23.8% in its Chinese sales to ~135,700 vehicle units in November. The data were better than Ford’s 55% YoY decline in Chinese sales in November to 52,434 units, which we discussed in the previous two parts of this series. In October, Toyota’s Chinese market sales rose 19.5% YoY to ~134,600 units.