Nikola Vs. Tesla; Uber Out; GameStopped
The EV Soap Opera Drama
Like sands through the hourglass, so are the days of electric-vehicle (EV) lives!
In yesterday’s episode of EV Days, upstart Nikola Corp. (Nasdaq: NKLA) tried to take advantage of a weakened Tesla Inc. (Nasdaq: TSLA). While Tesla still recuperated in a hospital bed from a nasty virus, Nikola announced that it’d soon start taking orders for its new EV truck.
I mean, how dare Nikola? Can’t he see that Tesla is just lying in the hospital bed struggling with this sickness? What about all of Tesla’s Model children? (Sniff … sniff…)
Well, today, Tesla decided it had enough of Nikola’s drama. In another leaked memo — the second this week, how needy can you be, Elon Musk? — the Tesla CEO said that it was time to “go all out and bring the Tesla Semi to volume production.”
Now, you may not know this unless you’re a die-hard EV Days soap fan, but Nikola’s main business is EV trucks, and that includes semitrucks.
So, Tesla is stealing the spotlight and taking direct aim at one of Nikola’s core businesses.
Oh, I almost forgot one of the juiciest bits! Nikola also talked smack about old man Ford Motor Co. (NYSE: F).
“My goal is to take the throne from the Ford F-150,” said Nikola Founder Trevor Milton.
But old man Ford? He didn’t care. He’s not interested in all this drama. Ford skipped off to Germany to hook up with long-time friend Volkswagen.
The duo looks to make eight million new pickups and vans — that’s a lot of kids! — including a new European EV based on Volkswagen’s Modular Electric Drive Toolkit. How utterly posh.
How will this all turn out? Will Tesla finally recover and leave the hospital? Will Nikola continue to flaunt its newfound fame? Will Ford and Volkswagen combine to form Voltron and retake the U.S. auto market?
Hey, this is a soap parody. No sci-fi allowed!
You clearly didn’t watch enough soaps in the ‘80s, my friend. Anyone else remember the weather machine in General Hospital that Luke, Robert and Laura tried to stop? Err … not that I remember it either … but, you know, whatever.
Editor’s Note: No matter the badge on the Badger … EV’s everywhere need juice. Where are all those electrons going to come from? They won’t just materialize out of thin air. Our power grid, you say? That antiquated spiderweb that cuts out every time the wind blows the wrong way?
It’s time for an upgrade! And there’s a radical energy revolution coming soon to 50 million American homes. It’s not solar. It certainly isn’t wind. Yet, it’s poised to create more millionaires than pot stocks, cryptos and Big Tech combined!
The Good: Uber Eats, Shoots and Leaves Grubhub Deal
Snapping up Grubhub would’ve given Uber’s food delivery unit — Uber Eats — a massive competitive edge in the market. But that deal crashed down today. The Wall Street Journal reported that Uber will lose its bid on Grubhub to European rival Just Eat Takeaway.com.
So, why is this good? Well … it’s a shade of good.
You see, Uber would likely give up its takeover plans anyway due to growing antitrust concerns in Washington. Several U.S. senators already wrote letters to antitrust officials to urge them to investigate the deal.
Sure, having a rival steal your acquisition out from under you is bad. But it would have been worse to spend gobs of capital on a buyout, then have that buyout axed due to antitrust legal woes — not to mention the money spent on defending that legal case.
Just remember that Uber Eats was the star of the company’s last quarterly earnings report, with sales growth of 54%. So, while losing Grubhub is a setback, Uber is still poised to grow considerably from here onward. No antitrust lawyer fees? No problem.
The Bad: The Game Stops Here
As a lifelong video game fan, GameStop Corp.’s (NYSE: GME) continued existence is a conundrum. Who buys physical copies of games anymore? I mean, aside from your grandma when she’s looking for a birthday present. And who pays GameStop’s prices? Just baffling.
But it’s not nearly as baffling as today’s post-earnings rally.
The brick-and-mortar video game retailer reported a loss of $1.61 per share. Revenue plunged 34% to $1.02 billion. Both figures missed Wall Street’s expectations by a long shot.
GameStop blamed the poor quarter on the pandemic and the closure of all but 10% of its stores worldwide.
Let’s be honest: GameStop’s sales were already saying “Nintend — oh no!” before the lockdown. Digital game sales are on the rise, and GameStop tried moving toward pop-culture collectibles to make up for lost revenue. Desperate times call for desperate merchandise, after all.
The only reason I can find for GME’s post-earnings rally is a comment from CEO George Sherman noting that e-commerce sales rose 519% during the quarter. (Virtual game downloads can’t go out of stock … can they?)
I’ll admit, a 519% sales jump is really impressive. But it’s nowhere near enough to offset the loss of in-store sales. Once stores start to reopen, that figure will drop like a rock … or like a copy of 1982’s E.T. the Extra-Terrestrial video game.
Analysts say that this quarter’s results may be enough to keep GameStop afloat until next-generation consoles launch this holiday shopping season, including the PlayStation 5 and the new Xbox Series X.
First, mere survival until the next gen launches is not good investing advice. Second, the next gen relies even more on digital games than the last.
So, essentially, analysts think that GameStop will live long enough to sell the devices that will finally end its existence. You know, kind of like how Blockbuster lived long enough to launch a streaming service, right before it died.
The bottom line is that GME is a short-term speculator’s dream and a long-term investor’s nightmare.
The Ugly: Stock Go Vroom
Call me geriatric … an old man, if you will. But I don’t get this whole newfangled age of forking over my hard-earned cash to buy a vehicle I’ve never seen, touched or driven.
Back in my day, we walked to the dealership, sat in the sweltering heat for 12 hours to haggle a deal that took no less than 48 trips to “check with my manager,” and walked back home again to wait for our car to come in. The trip was uphill both ways, and we liked it, dadgummit!
Needless to say, this new movement toward online car shopping unnerves me a bit … but it clearly works for investors.
If you’re not familiar, Carvana, where have you been during the online retail revolution?
Vroom doesn’t have car lots or dealerships, and it only owns one vehicle reconditioning center; it subcontracts the rest.
Because of this, Vroom is a much more streamlined operation. The company hopes this is enough to give it an advantage over Carvana.
Now, I don’t like this online shopping for automobiles. I don’t mind shopping online — in fact, I love that aspect of these companies. I also love the no-haggle approach to car buying. But I draw the line at not being able to test drive a vehicle before buying it!
It’s why I prefer CarMax Inc. (NYSE: KMX) to both Carvana and Vroom from a long-term investing standpoint. It offers both the online shopping and the no-haggle approach … and it allows me to drive before I buy.
But, then again, judging from CVNA and VRM’s price action, I’m probably just an old man yelling at the clouds again.
By the way … if you’re curious about how many of your fellow Great Stuff readers are into the IPO a-go-go … last week’s Poll put y’all fairly down the center. About 48% of you preferred stocks aged like fine wine, rather than those fresh baked IPO biscuits — or whatever Vroom tastes like.
After yesterday’s first episode of EV Days, a bunch of you already wrote in to share your take on driving EVs. And I’ve earmarked a couple of your emails for tomorrow’s edition of Reader Feedback!
Keep it coming. GreatStuffToday@BanyanHill.com is where the party’s out.
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Great Stuff: We’ll Take It Higher
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Until next time, stay Great!
Editor, Great Stuff