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Apple’s Auto Magic; QuantumScape Goat; Peloton: Fitness Bike Under the Tree

Apple’s Auto Magic; QuantumScape Goat; Peloton: Fitness Bike Under the Tree

According to “two people familiar with the effort,” Apple’s iCar — an electric vehicle (EV), no less — could hit production in 2024.

Apple’s iCar-ly Moment

Rumors flew today that a “real” Tesla competitor is on the way. No, we’re not talking about your father’s old Cadillac Fleetwood, Mac.

We’re talking Apple (Nasdaq: AAPL) and what the market already dubbed “the iCar.”

Yes, I know that Wall Street talk of an Apple car is secondhand news at this point. However, these rumors come from a supposedly reputable songbird from within Apple’s Project Titan.

According to Reuters, “two people familiar with the effort” said that Apple’s iCar — an electric vehicle (EV), no less — could hit production in 2024. But rumors don’t stop there.

Apple’s EV design focuses on a radical new battery design that will reduce battery costs, lower charge times and increase the car’s range.

Another EV? Seriously? I don’t want to know.

Trust me; I share your reservations and concerns. The EV market is out of hand as it is. But I’m not pulling your chain, and we’re not talking about some gold dust woman here.

This is Apple. And we all know the company has the funds, if not the technology, to make it happen.

“If there is one company on the planet that has the resources to do that, it’s probably Apple. But at the same time, it’s not a cellphone,” said a person who worked on Project Titan.

True, it’s not an iPhone. But you can’t tell me that there won’t be tons of integrated services and features dedicated to Apple’s flagship product. That alone would be a major selling point for iPhone owners.

As I’ve said before, Apple doesn’t always invent revolutionary products. It does, however, make revolutionary products better. The iPod and iPhone are testaments to that legacy. Apple has always gone its own way, and this time, it’s sure to make driving fun. Assuming these rumors are true, that is.

At this point, though, that’s all these are: the iCar, the revolutionary battery … they’re all rumors. In fact, Apple refused to comment on any future plans.

But that hasn’t stopped Wall Street from crooning like Stevie Nicks at a Fleetwood reunion. AAPL jumped roughly 5% on the Reuters story.

Great Ones know that I have a love-hate relationship with Apple. The company shifted from hardware to software services as its main bread and butter. It’s just not as exciting as Steve Jobs’ “one more thing” developments of old, nor is it as profitable.

But if Apple really is developing an iCar — all it’d take is official confirmation from the company — I could easily become an Apple bull once more. Who better to take on Tesla head-to-head in the states than Apple?

Hey … you forgot a song! What about “Oh Daddy?”

A die-hard Fleetwood Mac fan, huh? Well, I won’t touch that song, and you can’t make me.

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Great Stuff, The Good, The Bad and The Ugly

The Ugly: Quantum Valuation

Investors are buying QS because they believe that EV makers will race to buy QuantumScape batteries in order to compete with Apple.

We’re going in reverse today to start with “The Ugly,” … not to be edgy or anything.

Freshly SPAC’ed battery company QuantumScape (NYSE: QS) is a monster of a hype machine on Wall Street. Before it went public, QuantumScape was backed by Bill Gates and Volkswagen — so you know it’s a pretty big deal, right?

The company’s claim to fame is its supposedly revolutionary solid-state battery design. QuantumScape claims its battery — which won’t be available for about five years — will revolutionize the EV market with faster charge times, higher capacities, increased safety and battery longevity.

Clearly, the company hit all the right buzzwords in the EV and battery markets right now. QS is up more than 520% since it went public via a merger with a SPAC back in September.

That alone would be reason enough to talk about QS today. However, rumors that Apple has its own “revolutionary” battery sent investors scrambling. The speculation goes like this: Investors are buying QS because they believe that EV makers will race to buy QuantumScape batteries in order to compete with Apple.

So, putting all our ducks in a row, we have rampant speculation on demand for a QS product that doesn’t exist yet … based on a rumor about increased competition from an Apple product that doesn’t exist yet.

Does your head hurt yet? Mine does. This is like Inception meets Six Degrees of Separation, and it all takes place in Alice in Wonderland.

QS shares surged more than 25% on this speculation. Naturally, it goes without saying that you shouldn’t invest in QS right now, that is, unless you’re the kind of investor who hangs out in Las Vegas casinos playing slots or Keno.

The Bad: Maxed Out?

CarMax knocked it out of the park during a pandemic — and it’s not even an online-only operation like Carvana.

It’s a tale as old as time … or at least as old as 2020.

It’s certainly more prevalent this year.

CarMax (NYSE: KMX) beat Wall Street’s earnings and revenue forecasts, but the shares fell due to a lack of guidance. Typical. Here are the numbers:

  • Earnings per share: $1.42 versus $1.13 expected.
  • Revenue: $5.18 billion versus $5 billion expected.

What’s more, CarMax didn’t beat lowered expectations like so many other companies this year. Earnings rose 36.5% from last year, while revenue was up 8.2%.

“Despite the near-term market challenges due to the trajectory of the pandemic, our fundamentals remain robust and reflect the strength of our diversified business model spanning retail, wholesale and auto finance,” said CarMax CEO Bill Nash.

Robust fundamentals, indeed. CarMax knocked it out of the park during a pandemic — and it’s not even an online-only operation like Carvana. That says volumes about the company’s multi-channel business model and its performance.

Still, the company didn’t provide guidance due to COVID-19, and that got some blinders-wearing investors a bit nervous.

CarMax has been a Great Stuff Picks holding since June 2019. The stock is only up about 11.9% during this period, which is, admittedly, lackluster. Still, the company’s strong fundamentals amid a pandemic speak for themselves. As such, today’s 7% drop is a buying opportunity.

The Good: Christmas Shopping

This morning, Peloton announced the acquisition of Precor — one of the biggest fitness equipment makers in the world.

Yes, Virginia, even corporations go Christmas shopping.

It’s no secret that stationary bike specialist Peloton (Nasdaq: PTON) had trouble keeping up with demand. Customers have long complained about long delivery times and order cancellations.

This Christmas, all Peloton wanted was to put a bike under everyone’s tree … well, next to the tree.

But, given the company’s production issues, it seemed like it would take a miracle.

Well, since Santa wasn’t going to help, Peloton took matters into its own hands. This morning, the company announced the acquisition of Precor — one of the biggest fitness equipment makers in the world.

If you’ve spent any amount of time in a gym — seriously, what’s that like? — then you’re probably familiar with the Precor brand.

Peloton dropped $420 million to snap up Precor, which is about the same price as two PlayStation 5s on eBay.

Now, typically, large acquisitions send stocks lower as investors don’t like it when companies spend money on themselves and don’t just hand it out to stockholders. However, Peloton’s production issues are in such a state that even investors are happy the company spent money on growth.

In fact, PTON surged more than 14% on the news. With the stock now at an all-time high, this is no time to chase PTON, no matter how in shape you are. That said, the company should have a banner holiday sales season, and any pullback in the stock could be an opportunity for PTON bulls.

Great Stuff Quote of the Week

Closely held MGM has tapped investment banks Morgan Stanley and LionTree LLC and begun a formal sale process… The company has a market value of around $5.5 billion, based on privately traded shares and including debt.

Our Quote of the Week comes to you from none other than those infamous “people familiar with the matter!” There’s a lot of that going around this week … apparently.

In addition to Apple’s iCar and QuantumScape’s batteries, those people also happen to be familiar with the next case of consolidation in the media domain. MGM Studios hopes to sell itself to jump on the streaming wave, and its timing couldn’t be more perfect after last week’s content deluge from Walt Disney (NYSE: DIS).

The mouse’s house is furiously running all treadmills on the streaming front; even ol’ Netflix (Nasdaq: NFLX) will have to throw its Hurst shifter into high gear and get with the content-churning program. Add in the heat from the HBO Max deal with Roku (Nasdaq: ROKU), and you have a boiling pot in the streaming market ready to spill over.

This isn’t the first time that MGM has tried to sell itself, either. The company fired its then-CEO in 2018 after he tried to strike up a $6 billion deal with Apple. The MGM board chairman later claimed he could fetch as high as $8 billion for the studio and its near-centurylong backlog of work.

Say, you know what? Wouldn’t it be a tad easier to just skip the middle man and buy out some of that content?

Yeah, Netflix should go and buy MGM! Forget the effort of more mid-pandemic productions. Just sign those checks, son, and move on. This is how you avoid another Fuller House situation…

I mean, Netflix has more than enough cash on hand (about $8.39 billion in its last report) to cover MGM’s $5.5 billion private valuation. And, with NFLX trading just shy of all-time highs, a stock deal would also be more than possible.

I’ll call it now: MGM is about to be bought out and brought headfirst into the streaming realm. Whether that’s by Granddaddy Netflix itself is still anyone’s guess. You either die a movie studio or live long enough to be a streaming buyout.

Great Stuff: Let’s All Go to the Lobby

On second thought, let’s all go to the Great Stuff inbox instead.

What do you think about the possibility of an electric Apple car? Should Netflix buy MGM Studios? And how about that whole “Christmas shopping” shebang? (Somebody, please, think of the Pelotons!)

Drop me a line at GreatStuffToday@BanyanHill.com with all those teeming thoughts any time of day or night. We’ll be back tomorrow, but you can check us out on social media for now: Facebook, Instagram and Twitter.

Until next time, stay Great!

Joseph Hargett

Editor, Great Stuff

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