Thursday Jan.07, 2021

🚘 Tesla, Nio, and the "Year of the EV"

_EV makers rolling into 2021 like..._

Hey Snackers,

The nation was shaken yesterday – violent, pro-Trump rioters stormed the US Capitol building, halting the certification of Joe Biden’s Electoral College win, until lawmakers could reconvene to finalize Biden’s confirmation.

Despite these shocking events, stocks closed higher as a Democratic Senate win boosted hopes for more stimulus.

Elect

What the Georgia election results could mean for the stock market

Run it back... In the November elections, the state of Georgia went to Biden. But the Senate race went into overtime: a Georgia candidate needs to win over 50% of votes before advancing (it's a Georgia thing). That didn't happen, so we had runoff elections between the top-voted candidates this week. TLDR: Republicans had to win one seat to control the Senate, and Democrats needed two — the Dems unexpectedly took both.

November feels like eons ago... Back then, we were pretty sure Republicans would end up taking the Senate. That got Wall Street excited about a divided government (round 2).

The S&P 500 soared 11% in November on the tech rally, and the decreased chance that Trump's tax cuts would get undone.
Tech stocks jumped because a divided Congress makes it harder to pass legislation against Big Tech (or any legislation). Health care stocks shared the joy.
Pot stocks fell because a Republican Senate makes legalization at the federal level unlikely.

Yesterday, we saw "The Undoing"... A partial reversal of November's market moves (not the HBO show). The tech-heavy Nasdaq index dropped on regulation fears, while pot stocks like Aurora and Canopy surged on legalization hopes. The Dow jumped to a record high, led by banks and industrial companies like Caterpillar — which could benefit from more stimulus and the Dems' $1.5T infrastructure plan. What investors really have their eye on: more stimulus money, which could be a priority for the Dem-controlled Congress.

From Tesla to Nio, electric vehicles are having a global moment

"Ooh girl, shock me like an electric"... wheel. Electric vehicles are having a moment this week with a flurry of milestones from around the globe:

China: EV sales from January through November jumped more than 4% from a year ago, while overall car sales fell nearly 8%. Nio, the so-called "Tesla of China," said its deliveries more than doubled from a year ago to ~44K vehicles.
US: Rivian, the Amazon-backed electric truck startup, is reportedly close to raising funds at a sweet $25B valuation. Meanwhile, Tesla (the "Tesla of Tesla") delivered a record-breaking, expectation-beating 180.5K cars last quarter, for a 2020 total of nearly 500K (up from 367.5K in 2019).
Norway: EV sales rose to a record 54% market share in 2020 — the first year electric cars outsold gas and hybrid models. Sadly for Elon, Volkswagen replaced Tesla as the top EV producer in the country.
UK: Electric cars had their "best-ever year" — EV sales nearly tripled while UK auto sales as a whole hit the lowest level since 1992.

Ludicrous... While the rise of EVs is old news, this week's headlines prove what a remarkably good year 2020 was for the electric market.

Politics could make 2021 the Year of the EV... The top two barriers to EV-buying are range-anxiety and price. A Democrat-controlled Senate could pass legislation supporting EV cost incentives and infrastructure (think: more charging stations). Top Senate Democrate Chuck Schumer has already proposed a $454B 10-year plan to offer cash vouchers for EV purchases. That, coupled with swiftly-falling battery prices, could make 2021 the Year of the EV.

What else we’re Snackin’

Blocked: Twitter and Facebook removed posts from President Trump that they deemed to be inciting violence, and temporarily locked his accounts.
IPOat: Oatly, the popular oat milk brand backed by Oprah, is reportedly planning a 2021 IPO that could raise $1B.
Giggy: The Trump admin made it easier for gig companies like Uber and DoorDash to classify workers as contractors with a new rule.
Poshy: Fashion marketplace Poshmark set terms for its IPO after filing to go public. It was (shockingly) profitable over the past two quarters.
Alt: Plant-based meat icon Impossible Foods cuts prices for distributors for the second time in a year to better compete with beef prices.

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Thursday

Weekly jobless claims
Earnings expected from Walgreens and Constellation Brands

Authors of this Snacks own shares of: Uber

ID: 1469470

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Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?

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Hey it might not be the kind of AI stock investors are all hot and bothered over, but don’t sleep on the burrito business.

Chipotle posted much better-than-expected results on Wednesday, with sales rising 14% to a record $2.70B in the first quarter, which is like a billion additions of guac.

Profits jumped 23% to $359M.

Chipotle has quietly cruised higher over the last year. It’s up 63%, compared to the 24.5% gain for the S&P 500 over the 12 months through Wednesday’s close. Not bad for a rice-and-beans based business model.

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All in all the stock is down more than 10%. (Basically the opposite of what happened with Tesla yesterday).

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Despite terrible earnings numbers last night — declining vehicle sales, disappointing revenue and profit, enormous spending — Tesla stock is up more than 10% as of midday. That’s a welcome move for the car company, that’s been among the worst performers this year in the S&P 500.

Why the about face?

While Reuters reported earlier this month that Tesla is no longer making its long-awaited $25,000 mass-market car — news sent the stock, already suffering from headwinds across the EV industry, down even further— Tesla reported during its earnings that it’s going to make cheaper cars than it currently has.

Before the second half of next year, Tesla said it will release “more affordable models” that “will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”

So rather than release the $25,000 Model 2, Tesla is incorporating some of that technology into its existing models. UBS called it the Franken-3Y2.