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Largest Outside Investor Is Unfaithful to Tesla: NIO Stocks Jumps

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In yesterday’s trading on the NYSE, stocks of the Chinese e-car manufacturer NIO put a real rally on the floor. The reason may be a new investor, but he’s also invested in probably the biggest competitor Tesla.
Investment firm Baillie Gifford has bought an 11.4% stake of rival NIO. Investors were pleased with Monday trading on the NYSE. Baillie Gifford apparently relies on e-mobility, after all, the group already holds a large stake (second-biggest shareholder) in Tesla.

Bloomberg Report Pushes NIO Stocks

On Monday, NIO stocks rose sharply and finished with a whopping 22.35% gain at $ 7.39. Initially, the rally was triggered by a Bloomberg report. Here, the US news site reported that a new major investor should now hold 11.44% of all NIO shares.

On Tuesday morning, they confirmed a mandatory notification to the US Securities and Exchange Commission the process. Newsflash: the new NIO shareholder, Baillie Gifford, is also the largest outside Tesla investor. Only Elon Musk holds more shares of his company.

More Confidence in the Chinese Market?

According to CNBC, the investment firm from Edinburgh currently holds around 9% of Tesla. So why invest in another e-carmaker? The reasons can only be speculated on. NIO wants to focus primarily on the Chinese market, which in the near future is also considered the largest market for electric cars. Although there are expansion ambitions, China is clearly in the spotlight.

Unlike Tesla, which builds its vehicles in the United States and could find it difficult to compete in the Chinese market because of the trade war between the United States and China (despite news of opening a Chinese production plant), NIO has the home advantage here.

Tesla Produces News Headlines in Particular

In addition, Tesla stocks make one thing special: volatility. The stocks of the e-car manufacturer from Palo Alto vary significantly with each new headline. However, the price turbulence is rarely due to fundamentals. Mostly it’s about the latest tweets of Tesla’s boss Elon Musk on Twitter.

Future profitability is often doubted by experts, even if the billionaire never tires of emphasizing the opposite. In addition, the scrutiny of the CEO with the US Securities and Exchange Commission brings further uncertainty for investors.

Whether Baillie Gifford joins NIO because he believes in the success of NIO, or rather because he sees a failure of Tesla, remains open to debate. In any case, the new investor gave NIO stocks a boost.

NIO didn’t dare to jump onto New York’s trading floor until September 12. With a value of currently 7.39 US dollars, the securities are trading well below their previous high of 13.80 US dollars, which they hit the day of NIO’s IPO.

Tesla’s Fans with an Unequivocal Request to Elon Musk

After another verbal kick against the US Securities and Exchange Commission, Tesla’s CEO Elon Musk turned numerous fans against him. Not the authorities, but he himself is the problem of the stock price decline it seems.

Elon Musk and Social Media

Tesla’s CEO Elon Musk does not seem to have learned anything from the Securities and Exchange Commission (SEC) ruling. Despite charges of securities fraud on the part of the US Securities Exchange and a lenient outcome for Musk, he cheerfully keeps on tweeting.

The e-carmaker Tesla and the 47-year-old were, after the out-of-court settlement with the SEC, each fined $20 million in penalties. In addition, Musk must give up his post as Chairman of the Supervisory Board and renounce this authority for the next three years.

The Tesla stocks responded with a price increase. A justification, as required by the Federal Judge Alison Nathan by October 11 by both parties, has not yet been received. But one thing is for sure: the Tesla CEO harms the company more and more with his social media appearances.

It seems like every time the electric car maker announces positive news that they are on the rise, Musk places a tweet that damages the stock. In addition to marijuana consumption in an interview with Joe Rogan, which he claims to have done only to impress his ex-girlfriend, Musk draws attention in recent months with more and more negative headlines.

Fans Speak Up

After Elon Musk entitled the SEC on Twitter as “Shortseller Enrichment Commission,” Tesla fans addressed the CEO directly. Some fans asked Musk to stop tweeting.

For many, the negative impact of Musk’s machinations on the Tesla stocks seems to be a thorn in the side. Some report losses in recent months from Musk’s media appearances.

One of Tesla’s shareholders noted his displeasure live:

“Dude, your Twitter account is doing far more damage to my TSLA stock holdings than the SEC or shorts ever have, and it’s been that way for a long time. The stock price is basically a roller coaster between positive Tesla news and you tweeting dumb stuff.” – Justin Meade (@jameade87) October 5, 2018.

In the following words, Ross Gerber, co-founder of the Gerber Kawasaki Asset Management, asks Musk to stop: “WTF please stop tweeting. Feel free to call me to vent. We want to see Tesla succeed. You’re just helping the enemy. I don’t get it.

 

Charts from https://www.tradingview.com/chart/

Featured Image from Tesla

Marko Vidrih was born in Slovenia and has always been fascinated by the worldwide economy and evolving technologies, such as Blockchain. With his background in finance and gained knowledge he decided to share information with others and became a freelance writer.

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Is Starbucks a Buy? Depends on How Much You like Coffee

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Starbucks shares are approaching a 52-week high after activist investor Bill Ackman announced a $900 million investment for accumulating 15.2 million of the company’s shares.

Starbucks has a market value of $29.2 billion and is the third-largest restaurant chain in the world. The company has 28,218 locations in over 75 markets, and more than 238,000 employees worldwide.

Ackman Says Starbucks Is a Good Bet

Ackman believes Starbucks shares could double in value in the next three years. According to the investor, the company has many business opportunities ahead, both in the US and in the Chinese market.

Moreover, Ackman didn’t forget to mention Starbucks’ plans for some serious share buybacks of $14 billion in the next few years. Doing the simple math, earnings per share have a growth potential of between $3.70 and $4.35 by 2021, from $2.40 in 2018.

Such a performance would push the Starbucks stock to a value of $93 to $117, by 2021. The company has already started with a $5 billion accelerated share repurchase agreement.

Besides, coffee is still a strong business worldwide. Despite its domestic performances, Starbucks has seen significant revenue growth, and has a financial position widely-recognized as reliable; its earnings per share have a notable record.

Starbucks earnings per share

Starbucks earnings per share / Nasdaq

Starbucks has 3,300 stores in China and continues to open about 50 new ones each month. The company’s market share in China reached 80% last year, in a coffee shop market estimated at $3.4 billion.

Things aren’t all smooth for the company, though. As the Chinese market is expected to grow, more competitors are looking to overtake Starbucks, the most important being the Chinese chain Luckin Coffee and Coca-Cola’s Costa Coffee.

Starbucks Is Making Significant Changes in Europe

With so many events ahead, Starbucks is planning a revolution across its business operations. CEO Kevin Johnson announced changes starting next week, as the company enters a new era of challenges due to the inactive domestic market, a mammoth expansion into the Chinese market, and harsher competition. CEO Kevin Johnson said:

“Starting next week and into mid-November, there will be leadership shifts and non-retail partner impacts as we evolve the direction of teams across the organization in size, scope, and goals.”

The first strategic move will happen in Europe as Starbucks sells 83 stores to Alsea, its South American partner. The Mexico City-based company that already owns 900 stores across Central and South America will add coffee shops in Belgium, Luxembourg, France, and the Netherlands to its portfolio. However, the roasting plant in the Netherlands will continue to be owned by Starbucks.

The company is planning to close outlets in Amsterdam and focus on its presence in London instead. The management encourages its 186 employees who will suffer from this move to apply for jobs available in London. If Brexit doesn’t stop them in their tracks.

Is Starbucks a Buy?

Starbucks has enough room for growth, despite competitors, the restructuring in Europe, and a possible slow down in the Chinese market. So, even if Ackman’s predictions don’t come true, the company is probably still a good bet for long-term investors who don’t get scared off by temporary downward trends.

Featured image from Shutterstock. 

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