theStreetFika: Scones, Sips, Strategy & Stocks

This week, the SEC announced that Volkswagen is being investigated over its “Voltswagen” April Fools debacle. So what happened? Voltswagen was the actual new name (for about 24 hours) that automotive giant announced for their US subsidiary on March 31st, in a bid to promote the company's renewed focus on electric vehicles and its new all-electric SUV. Initially leaked as an upcoming April Fools joke, the name change was later confirmed on official VW corporate channels, before company spokesman Mark Gillies said on Tuesday that the statement was indeed an early April Fool’s Day joke. For a company found guilty of lying in a big way about emissions (Dieselgate), this was a high-risk gag with poor delivery. Joke or not, VW is very serious about its ambitions for electric vehicles. Last year, between the company's 12+ brands the group delivered around 230,000 all-electric vehicles. That might only be around 2% of Volkswagen Group's total vehicle deliveries, but it is already a...

Over the past year, Bitcoin has increased ~9x in value as corporate and retail investors have poured into cryptocurrency. In January, the crypto market hit $1T in total value (mostly Bitcoin). Now, the mainstream-ification is intensifying: Venmo-owner PayPal, which has a whopping 377M active accounts, officially launched "Checkout with Crypto" in the US, allowing users to pay with crypto at online stores. And in the coming months, PayPal will expand crypto checkout to 29M merchants. Customers with PayPal digital wallets can pay in Bitcoin, Ether, Bitcoin Cash, and Litecoin. This comes after Visa also announced that it'll allow people to use the cryptocurrency USD Coin (a US dollar-backed stablecoin) to settle payments. How will it work? Paying with crypto... but not really paying with crypto. Customers' crypto holdings will be converted into fiat currencies (like US dollars) at checkout. It's kind of like selling a fraction of your BTC, then using the sale money t...

2020 was a big year for NIO. It went from being nearly bankrupt to cementing itself at the forefront of the Chinese EV cohort with strong delivery numbers. Last week NIO delivered its Q4 earnings. The results did not impress due to slight currency impacts to EPS and forward looking commentary on deliveries from chip shortages. NIO's management upbeat take on the earnings didn't stop the shares from dipping double-digits on Friday. Despite shedding 50% of its January high valuation, I remain bullish on NIO's long-term prospects and think that the stock was a catch at prices it was trading on last Friday and Monday. The stock is likely to continue to struggle in the next few weeks due to worries over NIO's short term performance which will be impacted by chip shortages. The shortages are expected to decrease the monthly production run rate by 25% to 7,500 units for Q2, However, these issues are expected to ease through the second half of the year, allowing capacity to ram...

Earlier this week, Telsa announced that it will soon accept Bitcoin as payment for cars. This along with Tesla's purchase of $1.5B of bitcoin sent the price of the cryptocurrency through the roof. But does it make sense for customers to pay for a Tesla with Bitcoins? I don't think so. Let me elaborate. In a previous article , I mentioned that if the end goal for Bitcoin is to become the currency of use for the entire planet then something probably has to go disastrously wrong with the institutions behind our current system — government backed fiat currency. That's a bold bet to make and I don't believe it will happen. I find it hard to believe Bitcoin will replace even weaker currencies.  The fundamental problem for Bitcoin as a currency and as a way to pay for a Tesla has to do with the very thing lots of people like about it—namely that the supply of Bitcoin is controlled and limited. Because the supply is limited, when demand for Bitcoin rises (because, say, people a...

The iCar rumors are heating up again. In December, Reuters reported that Tim Cook is building a ridiculously techy personal automobile and now we finally know who the manufacturer might be. Spoiler alert: it's not Tesla or any of the other fancy car manufacturers). Similar to the rest of Apple's products, the "Apple Car" will be designed in Cupertino but Apple isn't building/assembling it itself. That honor will reportedly go to Hyundai-Kia. Tentative ETA for production: 2024. Of course, secretive Apple didn't confirm. Why does Apple wants to make cars? Apple's first car attempt, "Project Titan" (bold name), began in 2014 and crashed in 2019. So why is Apple trying again? In short, the TAM is huge. TAM is Total addressable market. It is the the total amount of money companies could make selling a specific product/service. Morgan Stanley put out a research note stating that while the annual TAM for smartphones is $500B, the TAM for global mobility...

In light of what happened with Gamestop and AMC's respective stocks, there will be lots of hearings and calls for reforms in short-selling. What I really hope is that predatory hedge funds and their lobbyists don't get their way and undo  SEC rule 204 , which regulates the close out requirements for shorts- i.e. when a short seller is on the hook to actually buy a stock they borrowed.  Currently, short-sellers are forced to deliver on their short sale transaction by no later than the beginning of regular trading hours on the settlement day following the settlement date. The predatory hedge funds will call for this requirement to be relaxed to give short sellers more time to buy the stock and close their positions. They will argue that giving short sellers more time will reduce the rush to buy back the shares and help avoid a short squeeze. Giving them more time will only enable them perform these charades on many more good companies - they almost destroyed Tesla not so long ag...

Many of the big, incumbent automakers are going to be big losers in the next decade. Disruptive and existential threats have been coming for big, incumbent automakers for a while, but they are now playing out faster and in more dramatic fashion than originally predicted. So much so that many of the incumbents will vanish over the next two decades. Those who survive won't be anything close to their current form and will be miles behind Tesla and other new entrants such as NIO. The closest analogy to the fate of the automakers is what happened to mobile phone manufacturers (remember Ericsson, Nokia, Sony etc.). The auto giants have not been sitting idle. Since 2017 - when Tesla's stock started its ascent - many have done massive overhauls of their structure to become more nimble and efficient. They have also been reducing their costs. Despite all these efforts, they find themselves in a more precarious situation than in 2017. What has really changed that they didn't foresee -...

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...

Earlier this week, Tesla announced that it will sell up to $5 billion in stock. The announcement came a day after the company completed an investor pleasing 5-for-1 stock split. Tesla said in a filing with the Securities and Exchange Commission that the additional shares will be sold "from time to time" and "at-the-market" prices. It said banks will sell shares based on directives from Tesla. Tesla gave few details about how it planned to use the $5 billion, but in a stock market filing it said: “We currently intend to use the net proceeds from this offering to further strengthen our balance sheet, as well as for general corporate purposes.” How does the move affect Tesla and investors? For Tesla, it’s a very smart and timely move after the historic rally in its shares and with the appetite still strong among investors. Instead of tapping the debt markets and hence paying interest for years, Tesla is taking advantage of its share price which has seen an almost 1,000...