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The Parallels of GM's Hummer EV and Tesla's Roadster

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On October 20th, General Motor (GM) revealed the all-electric Hummer starting at $112K. A lot of the talk since then has focused on the hefty price tag and many articles were published on how GM is out of touch with reality because Tesla's Cyber Truck is much cheaper. I think all that talk misses the point that the Hummer EV could be a transformational moment for electric trucks, just as Tesla's Roadster was for electric cars when it launched in 2008. In retrospect, this could prove to be the moment EV trucks become mainstream. At launch, the Roadster was also priced well above $100K and it ignited the first real frenzy around electric vehicles - at least in Silicon Valley. The Hummer can be that for the rest of America. At $112K, the Hummer EV may look like its targeted customers are Hollywood and/or literal royalty, but it can be a huge boon for electric trucks in general, at least from a marketing perspective. Hummer is an iconic and extremely popular brand, with a loyal fan...
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GM's embarrassing deal with Nikola

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Earlier this week, Nikola's CEO said the company's plans are intact even if GM deal unravels . This is not surprising for me. He and the other Nikola executives are begging for it to be November 30th already. That's when they will be able sell their shares. For me, Nikola is all hype and no substance. Most of its value is in the idea, the concept, and that simply can’t justify the $20 billion valuation it was at not long ago, or even the $7 billion valuation where it is at now. After all, it's a company that does not have a product yet, and won't have one anytime soon if some of the accusations about its technology from short-selling firm Hindenburg Research are true. Per the Hindenburg report, Nikola hyped its technology to attract investors and land partnerships with other auto makers, including General Motors (GM). Following the report, Nikola's founder and former CEO resigned. Even though the stock has bounced from its lows on the news of the resignation, I ...
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SPAC: Why many unicorns won't hop on the SPAC wagon

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2020 has certainly been the year of blank check acquisition companies - or SPACs.  That's how Nikola- the sexy electric truck shop-, Utz - the iconic snacks company- and Virgin Galactic went public earlier in the year. Plus, it's also how electric vehicle makers Fisker, Canoo, and Lordstown Motors announced they will go public. Plus Plus, famous investor Bill Ackman recently took his SPAC (Pershing Square Tontine) public in the largest-ever blank-check IPO (it raised A whopping $4B). The objective is to buy a mature unicorn. Ackman actually said Pershing might buy a “mature unicorn” 6 times in the filing. However not all private companies are psyched about merging with SPACs to go public. Airbnb reportedly turned down an offer to merge with Bill Ackman's SPAC, saying it prefers going public via traditional. Airbnb isn't alone. Snowflake, Slack, Shopify and BigCommerce are other flashy SPACs that declined the backdoor to going public and opted for the front door through...
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The business of calm

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Last week was a long one. The stress of the election coupled with the pandemic has a lot of us looking for ways to relieve anxiety and invest in wellness from the comfort of home. Increasingly, many are resorting to mental health and meditation apps. Calm, a meditation app, topped Apple's health and fitness category on Election Day — and other mindfulness apps like Headspace weren't far behind.  Why are these apps popular? The anxiety-inducing times, along with poor access to mental healthcare and high smart phone penetration are big contributing factors. However, these are not the only ones. For me, the biggest factor is that the companies making these apps have finally figured out that they are content creators and not just app makers. The features that were available through these apps 5 years ago were a lot more rudimentary compared to what we have today, and so was the content. These apps have heavily invested in improving their content. It's telling that the biggest a...
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Bad signs for the epic market rally

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In the previous post, I discussed reasons that the stock market is rising despite the economic devastation of the pandemic. In this post, I’ll discuss ominous signs from the market rally: Top 1% account for most of the gains: The market is very top-heavy. 1% of the stocks in the S&P 500 - Alphabet, Amazon, Apple, Facebook and Microsoft - account for more than a fifth of the S&P 500’s market value. While those tech giants have gained around 40 percent so far this year, the 495 other stocks in the index have collectively lost a few percentage points. This is bad because the US workforce is concentrated in the other 99% of the stocks. Insider selling is booming: Some leaders of corporate America are skeptical about the sustainability of this rally and are rushing to cash out. According to CNN Business and TrimTabs Investment Research, insiders have dumped more than $50 billion worth of shares since the start of May. The same source also notes that August is on track to be the thi...
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