The Chinese Tesla Trap
Hey, Great Stuff Picks investors!
We have a new recommendation below: Hyzon Motors. Scroll down to Best for the deets. But before that…
Yo, Elon Musk … let’s kick it!
All right, stop. Collaborate and listen. China’s back with a new investigation. Regulators grabbed ahold of Tesla tightly. Investigating safety issues both daily and nightly.
Will it ever stop?
Yo, I don’t know…
What I do know is that the financial media isn’t talking about this threat right now. They’re more interested in Tesla (Nasdaq: TSLA) buying $1.5 billion in bitcoin, or how bitcoin isn’t green. Yes, Great Stuff is guilty as well … I freely admit that I missed the Chinese regulatory crackdown amid the bitcoin fervor.
Oddly enough, the fact that no one’s talking about China’s Tesla investigation is exactly why it caught my attention. You see, Tesla is under pressure…
Dude … “no man ask for” that pun.
Agreed, but China is pressing down on Tesla … pressing down on Musk. It’s a pressure that could burn that building down, split investors in two … put people on streets. Um ba ba be!
Here’s the deal: Five Chinese regulatory bodies — including the State Administration for Market Regulation, China’s top market regulator — have summoned Tesla to answer questions about the quality of Chinese-made electric vehicles (EVs).
Among the issues Chinese regulators want addressed are the same issues Tesla battled stateside in years past, including abnormal acceleration and battery fires. In a statement on Chinese social media site Weibo, Tesla said it would “deeply reflect on the company’s operational shortcomings and comprehensively strengthen self-inspection.”
Self-inspection? In China? Oh, Tesla … you sweet summer child.
This is just the beginning. There’s a two-pronged offensive against Tesla in China right now. The first is Chinese regulatory attention, as noted above. The second is public opinion … like the recent op-ed in Liaowang, a Chinese state-run news magazine.
The op-ed derided Tesla for “passing the buck to Chinese users’ driving habits.” The article continued: “This kind of Tesla-style arrogance can’t be tolerated.”
I’ve said this for a while: Chinese consumers prefer Chinese products. Tesla is a status symbol right now for the Chinese middle class. But symbols fall, and it would appear that China is shifting gears into tarnishing Tesla’s image and facilitating that fall.
Remember, Tesla’s Chinese sales were $6.6 billion last year. China is Tesla’s second-biggest market. If consumer confidence in the brand fails there, it’s bad news bears for Elon Musk and company.
Psst! It’s also good news for Chinese competitors like Nio (NYSE: NIO) and XPeng (NYSE: XPEV).
I’m not saying this is Tesla’s last dance. The company will bend over backward to make nice with Chinese regulators and consumers. But we haven’t heard the last of this issue.
This is Tesla … under pressure. Word to your broker.
Longtime Great Ones know this isn’t the first time Tesla has faced some self-inspection … tried to get away before the jackers jack. EVs are on the scene — you know what I mean.
One California company — started by one of Tesla’s original employees — may be far from a household name. But it holds all 100 patents on a “superbattery” that could power a whole American city … for free!
If there was an energy problem, yo, this solved it!
Check out the details here while my DJ revolves it.
The Good: General Exuberance
General Motors (NYSE: GM)? Good? I’m still warming up to the concept myself, but the Detroit dynamo’s push into EVs means GM has had more than its usual share of the limelight lately.
The rest of the market’s enthusiasm about GM, however, does not match mine — especially after the company’s latest earnings.
GM reported a beat-and-raise quarter today, but the market booed and tore the stock down after reports of a global chip shortage — you know, the same chip shortage we’ve known about for months.
The very same shortage the market should’ve expected by now, be it from Big Tech or Big Auto.
While CEO Mary Barra doesn’t expect GM to lose production on its more-profitable pickup line, she noted some models might need to be partially built and then finished later once enough chips come through.
Barra also predicts the semiconductor shortage might slash this year’s earnings by as much as $2 billion. But after GM’s latest quarter, that setback might be mere chump change.
Per-share earnings came in at $1.93, versus estimates for $1.64. Revenue also blew past estimates and landed at $37.5 billion, compared to expectations for $36.12 billion. Yet, fears over future earnings have GM sinking more than 5% today.
Chips aside, you know the drill by now: When earnings are this good, the market’s overreaction is a buying op for any of you looking to grab GM.
All Right, I Lied.
I’m not done talking up bitcoin just yet. Neither is Ian “the Crypto” King!
The crypto market’s being driven by four powerful catalysts that Ian revealed in his presentation right here — catalysts that are pushing the entire cryptocurrency market to astronomical new highs, just as Ian predicted.
Ian’s also going to show you how a group of little-known crypto opportunities could hand you profits that are five … 10 … even 40 times bigger than bitcoin over the next five years.
Better: No Canary
When Twitter (Nasdaq: TWTR) cleaned house, investors were concerned. “How would Twitter survive without the Tweeter-in-Chief?” they asked.
This morning, CEO Jack Dorsey and Co. answered that question: “We are a platform that is obviously much larger than any one topic or any one account. 80% of our audience is outside the United States.”
Of course, ad revenue — and lots of it — helped to smooth over investor concerns.
In its fourth-quarter report, Twitter unveiled revenue of $1.29 billion, up 28% year over year. A major part of that revenue came from ad placement. In fact, ad revenue soared 31% to $1.15 billion. Remember that ad revenue resurgence we’ve been talking about? This is it. (Just wait until Roku (Nasdaq: ROKU) reports!)
Meanwhile, earnings arrived at $0.38 per share, $0.07 better than the consensus. Daily active users rose 26% to 192 million, arriving just shy of expectations for 196.5 million.
While missing the active user target typically is a bad thing for social media companies like Twitter, analysts were apparently mollified by the significant boost in ad revenue. It’s a quality over quantity thing.
Twitter rounded out its stellar report by setting current-quarter revenue expectations between $940 million and $1.04 billion. That’s above current Wall Street estimates.
Finally, unlike Facebook and other whiny personal-data grubbing social media companies, Twitter said it expected only a “modest impact” from Apple’s new privacy changes.
So, if you were looking for a social media company to invest in, Twitter just might fit the bill.
Best: Great Stuff Picks Hyzon Motors
On Monday, I handed Great Ones a red-hot hydrogen investing tip. Today, I’m happy to say that this tip has come true!
Hyzon Motors has agreed to merge with SPAC Decarbonization Plus Acquisition (Nasdaq: DCRB) — effectively taking Hyzon public.
The deal is expected to close in the second quarter, with Hyzon listing on the Nasdaq under a yet-to-be-determined ticker symbol.
The deal values Hyzon at about $2.7 billion, which is a severely low-ball valuation in the current hydrogen market.
I mean, Nikola (Nasdaq: NKLA) sports a $9.11 billion valuation, doesn’t have any vehicles on the road, and it gets its hydrogen fuel cell tech from GM!
Hyzon has its own in-house fuel cell tech, and it currently has more than 400 vehicles on the streets. And they aren’t rolling down hills, either.
But the major difference between Hyzon and Nikola is that the former fashions itself more as an engine manufacturer than a vehicle builder. Like a new-energy Cummins (NYSE: CMI) or a more vehicle-centric Plug Power (Nasdaq: PLUG).
PLUG currently trades near $66, while CMI trades near $246. Wouldn’t you have loved to have bought either PLUG or CMI at $16? That’s where DCRB is right now.
Hyzon is about to go public in a potentially $11 trillion hydrogen power market. You know we can’t ignore that opportunity.
I might as well go ahead and say it … we’re adding Hyzon to the Great Stuff Picks portfolio.
It’s poll day here at Great Stuff headquarters! All the votes for last week’s poll are in — just in time for a new poll to begin.
We’ve heard time and again from you pot stock hoarders out there. But last Wednesday, we wanted to hear from you pot stock avoiders — all y’all who have stayed out of the cannabis market’s green pastures so far.
Specifically, why? What’s your reason for not buying into pot stocks? (If you have reasons other than these, drop me a line in the inbox!) When it comes to your fellow Great Ones:
- 3.6% of you watched too much Reefer Madness.
- 16.4% said it’s illegal and should stay that way.
- 25% said it was still too early, that you’d wait for federal legalization
- But 54.5% coughed up a lung, then chose “wait, what was the question?”
Thank you, Great Ones, for joining me ‘round the drum circle once again. Now, if you’d like some fresh ‘Stuff to partake in, why not answer this week’s poll?
With Tesla falling under China’s relentless regulatory hammer, how long do you think Tesla has left in China? Click below and let us know!
Some error has occured.
Of course, our weekly polls aren’t the only way you can get in touch with us. If you haven’t tuned in for Reader Feedback Thursdays yet, you’re in for a treat!
Tomorrow, we jump headfirst into the Great Stuff inbox and rummage ‘round for the latest and greatest emails from you and your fellow readers. Of course, we can’t reply to you unless you write in! So why not share what’s on your mind — market related or otherwise?
GreatStuffToday@BanyanHill.com is where all the cool kids hang out. We’ll meet you there!
Until tomorrow’s edition of Reader Feedback, you can always check out Great Stuff on the web (click here) or follow us on social media: Facebook, Instagram and Twitter.
Until next time, stay Great!
Editor, Great Stuff