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Friday, December 3, 2021

Investors increase stocks of electric vehicles

President Biden yesterday visited the General Motors plant in Detroit, which will begin production of electric vehicles next year. He gave a speech to highlight how his recently signed $ 1.1 trillion infrastructure bill will accelerate America’s transition to electric vehicles.

Shares in electric vehicle companies have already climbed to shocking highs. And some have yet to make cars, not to mention profits. The desire of politicians to stimulate sales of electric vehicles has helped the sector, as has climate conscious awareness among some car buyers. But the mania also reflects a general optimism that has gripped many assets that can be difficult to reconcile with traditional financial fundamentals.

The rise in share prices is indicative of investor enthusiasm.Neeraj Chokshi and Jack Ewing report to The Times. Take Lucid Motors, which began shipping 520 limited-edition sedans last month and plans to produce 20,000 vehicles next year. Lucid shares, which have more than doubled in the past month, give the company a market value of nearly $ 90 billion, up $ 10 billion over Ford, which sold nearly 4.2 million vehicles last year. Rivian, an electric pickup maker that has yet to start selling cars, went public last week and is now worth $ 127 billion, or more than GM. And then there is Tesla, of course, over $ 1 trillion, or just about all the big companies. the automaker combined.

Wall Street seems eager to hit the road. In a report to clients this week, leading auto analyst at Morgan Stanley, Adam Jonas, said Lucid could be worth as much as $ 100 billion. Here’s what you need to do to achieve this:

  • By 2030, sell 700,000 vehicles a year, or about the same as BMW and Mercedes sell each year in the US combined.

  • Make an average profit of $ 80,000 per car, roughly double what consumers currently experience. to pay for a medium car in the USA

Jonas, for the record, said it was unlikely. “We believe the market has an extremely high likelihood of success,” he wrote, referring to Lucid’s estimate.

Dan Ives, a technical analyst at Wedbush Securities who oversees the electric vehicle industry, said Lucid could be worth up to $ 150 billion. How did he get there?

  • Ives reckons there will be $ 5 trillion worldwide on electric vehicles by 2030.

  • Tesla will get half of that, which leaves $ 2.5 trillion for Lucid, Rivian and all the rest of the automakers.

  • Even if Lucid can capture 3 percent of the EV market, it will justify the current share price – and not much.

Aswat Damodaran, a professor at New York University who is considered the authority on company valuation, is not so sure about all of this. “Let’s be honest,” Damodaran told DealBook. “Wall Street analysts don’t value Rivian or Lucid. They chase the price and find ways to rationalize it. “

The CEO of Activision Blizzard is under more pressure. The head of the Sony PlayStation group asked the video game developer to explain an article in the Wall Street Journal about how its boss, Bobby Kotick, is reportedly downplaying claims of sexual harassment and assault on employees. The company’s shares have dropped 9 percent since the release of the report.

Alibaba falls short of P&L expectations. The Chinese e-commerce giant reported a 38 percent drop in third-quarter profits and lower sales growth than analysts expected as it faced harassment of tech companies from Beijing and a slowdown in economic growth. Its shares fell 4% in the premarket.

Deere employees end five-week strike. Some 10,000 workers who have gone on strike over wages have ratified a new six-year contract that improves conditions over the previous proposal. This is the last time workers have demonstrated their bargaining skills in the face of labor shortages.

Biden’s choice as chief financial regulator is undergoing rigorous scrutiny. At today’s nomination hearings, Saule Omarova, elected by the White House to head the Office of the Comptroller, will face questions from the Senate committee about her commitment to capitalism, her position as a scholar, and her 1995 misdemeanor arrest. pay.

Apple is ditching fixes for iPhone and Mac. The company will sell parts and operating instructions to consumers from early next year as a win of the right to repair mechanism. Regulators have pressured tech giants to allow customers to more easily repair their own devices, rather than pushing them to buy new ones after a malfunction.

Yesterday at an event on the future of electric vehicles (see above), President Biden also acknowledged a bigger problem: the pain Americans are experiencing due to higher gas station prices. He proposed to solve this problem through antitrust policy by analyzing the bargaining power of large oil companies.

Biden asked the FTC to investigate the “anti-consumer behavior” of the oil giants.arguing that “gasoline prices remain high even as costs for oil and gas companies are declining.” The two largest US manufacturers, Exxon Mobil and Chevron, are set to double their bottom line by initiating billions of dollars in share buybacks and dividend payments.

This step is a warning shot. The FTC, led by trustee Lina Khan, is likely not to take any action anytime soon, and Biden’s announcement is likely not to drive prices down in the short term. But that could prompt the agency to investigate how oil companies set prices, providing evidence for future regulatory action. And this is the latest sign that the Biden administration is ready to use antitrust laws more aggressively to curb the influence of big business in the economy.

Read Also:  Colorado Democrats' Transportation Steps Are Agitating Republicans Out of Power as They Look to the 2022 Election

– Rupert Murdoch at News Corp. AGM, where he said conservatives need to play an “active, decisive role” in the debate about education, wealth and the economy. “This will not happen if President Trump continues to think about the past,” he said, referring to Trump’s influence on the Republican Party and his concerns about the 2020 elections.


Oprah Winfrey, Reese Witherspoon and Bumble founder Whitney Wolf Heard are joining Blackstone to invest in Spanx, DealBook reported. Blackstone today closes its $ 1.2 billion acquisition of a shapewear brand.

It all started with Oprah. Founded over 20 years ago, Spanx has become synonymous with the product it sells. Winfrey helped the brand early when she named Spanx as her favorite product of the year in 2000. (Sara Blakely, founder of Spanx, said Winfrey had previously confirmed her business idea when a talk show host once told an audience that she cut off her legs in her pantyhose.)

This is the latest investment deal for Winfrey and Witherspoon.whose financial support is valued as a sign of endorsement for consumer brands. The TV and film stars are also familiar Blackstone partners. Winfrey has invested with Blackstone in Oatly, an oat milk brand that went public earlier this year. Blackstone also recently acquired production studio Hello Sunshine Witherspoon, adding it to the board of directors of its parent media company. The dating app Wolfe Herd’s Bumble was acquired by Blackstone in 2019 before going public this year.


Senator Elizabeth Warren yesterday sent a letter to Securities and Exchange Commission chairman Gary Gensler asking if he was looking into a recent deal between former President Donald Trump’s media company and a specialized acquisition firm, according to DealBook. The Massachusetts Democrat is worried about issues highlighted by a recent Times investigation, which showed the deal may have circumvented securities laws and stock exchange rules, in particular a ban on public offering of firms with blank checks with an already agreed merger goal.

To summarize: Digital World Acquisition, SPAC, announced its deal with Trump Media and Technology Group within weeks of going public, an unusually short period of time, and did not disclose that Patrick Orlando, who heads SPAC, had previously held talks to acquire Trump Media. with another SPAC. Some securities lawyers have said that these previous negotiations should have been disclosed, while bankers have said that if SPAC’s serial sponsors such as Orlando negotiate the merger on behalf of one SPAC, that does not prevent them from buying this company with another SPAC. Relatively little is still known about Digital World and Trump Media, and SPAC did not submit its quarterly report by the November 15 deadline, saying it needs “more time to gather the information it needs.”

Warren’s letter makes the deal and SPAC more thorough in general. The Trump Media merger could already have attracted regulatory attention, given the former president’s involvement and the trade hype he caused. (SPAC is up nearly 500% since the deal was announced.) “For some time I have been concerned about the inconsistent incentives underlying SPAC deals, which are often structured to leverage retail investors to benefit large institutional investors.” – Warren wrote. The Securities and Exchange Commission under Gensler has made SPAC regulation a priority, and Congress also has stricter rules.

Transactions

  • US regulators have joined their UK and EU counterparts in raising concerns over Nvidia’s takeover of chip maker Arm. (FT)

  • The SEC will allow shareholders to mix and match directors from competing lists during a proxy competition for activist investors. (Reuters)

  • Chobani, a yogurt brand, has filed for a public offering through an IPO, signaling sales gains and losses. (Bloomberg)

  • Warner Music is reportedly in preliminary talks to purchase David Bowie’s song catalog. (FT)

Politics

  • At least 70 of the largest US companies could pay more taxes in line with the Democrats’ proposal for a minimum corporate tax. (New York Times)

  • Florida lawmakers have approved rules to impose fines on companies for imposing coronavirus vaccination requirements on employees. (Bloomberg)

  • The SEC is reportedly investigating cassava, the highly advanced maker of an experimental drug for Alzheimer’s disease. (WSJ)

  • A key government witness in a tax fraud case against investor Robert Brockman unexpectedly testified in court about the billionaire’s innocence. (Bloomberg)

The best of the rest

  • Inside, Zillow’s failed bet on house coups. (WSJ)

  • Amazon said it will stop accepting Visa credit cards in the UK due to a processing fee dispute. (New York Times)

  • Disney Cruise Line now requires all guests aged 5 and over to be vaccinated against the coronavirus. (Insider)

  • US cities are striving to become centers for the production of computer chips. (New York Times)

  • A team of leaderless crypto enthusiasts are bidding on a copy of the US Constitution at auction. The event faces logistical hurdles, including who will pick it up and where they will store it. (New York Times, WSJ)

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