Electric Vehicle Vacuum

 

Market Scorecard


The excitement around the potential Moderna vaccine started to wane yesterday as people started to reflect on the phase one test results. Due to only having 45 people in the phase one test, limited conclusions can be drawn from the numbers. Further testing is needed to know if the vaccine is truly effective. Even if this vaccine is ineffective, there are many more in development and starting their own testing. You have to back humanity to create a vaccine. The only question is how long it will take.

Yesterday the JSE All-share closed up 1.11%, the S&P 500 closed down 1.05%, and the Nasdaq closed down 0.54%.

Our 10c Worth


 

One thing, from Paul

British inventor and industrialist Sir James Dyson is now the UK’s richest persons. He is best known for the dual cyclone bagless vacuum cleaner. He’s been in the news a bit over the last few days because he cancelled plans to build a range of electric cars after blowing through GBP500 million in development costs. The prototype vehicle pictured below had an impressive range of almost 1 000 kms per charge, but Dyson could find no way to produce the seven-seater for anything less than GBP150,000 ($182,000).

The Dyson electric car project started in 2017, and at one point employed over 600 people. They planned to build a manufacturing plant in Singapore and were also working on solid-state batteries for the vehicle. The whole project is on ice now, and this is the first time that pictures of the car have emerged.

All this serves to underscore just how well Elon Musk’s electric car company Tesla has performed in recent years. It sold just under 90,000 vehicles in the first quarter of 2020. There are 102 Vestact clients who own Tesla shares in their New York portfolios, and it has done very lately. The company has a market capitalisation of $152 billion. If you’d like to own some Tesla shares too, let us know.


 

Byron’s Beats

The race for content continues. I bet the studios who own old but popular shows cannot believe their luck that these shows are still making money. Apple Buys Older Shows for TV+. Stepping Up Netflix Challenge. According to the article from Bloomberg, TV + has around 10 million subscribers but only half are regular users.

Apple needs to step it up if they want to seriously challenge Netflix and Disney + (who has over 50 million subscribers already); I agree that some old popular shows will help. People love rewatching these classics.

Apple is such a big, profitable business that a smaller venture like this failing has no real risk to the company, but if they achieve scale it could be a big profit driver. The risk/reward ratio for the streaming business is in their favour.

On a separate note, I was very happy to see Once Upon a Time in Hollywood on Netflix in SA. Having a non-original, big blockbusters makes the Netflix product even better. The movie is a Sony Pictures production.


 

Michael’s Musings

One of the arguments against owning Tesla stock is that other vehicle manufacturers will start to produce decent electric cars too. The assumption is that demand for Tesla cars will drop when viable alternatives arrive in the market. The problem with that assumption is that people are assuming a static market size. The assumption is that for VW or BMW to sell one Electric Vehicle (EV), Tesla has to sell one less EV.

That is not the case though! In the first quarter of 2020, the EU saw EV registration increase by 57% when compared to 2019. Even with growth like that, EV’s only account for 4% of total registrations. If there is a fivefold increase in EV sales, they will only be 20% of the car market. There is still massive room for growth in the industry!

As it stands, Tesla’s competition is combustion engines not other EV manufacturersElectric car sales in Europe jump, but still just 4% of market.


 

Bright’s Banter

On Friday, the US Census Bureau released April’s retails sales numbers, which marked a historic decline in economic activity for the biggest economic engines in the world. Retail and food services sales slipped by 16.4% in April after, following on from face planting by 8.3% in March.

This is the biggest monthly drop in retail sales in the US for a very long time. For reference, at the height of the 2008 financial crisis, retail sales only slipped just under 4%. US retail sales tend to be pretty resilient to outside shocks, which could be one way to confirm that we are in uncharted territory right now.

Retail and food services revenues were $403.9 billion in April, the lowest since August 2012. Clothing sales was the segment the most hit by the pandemic, they tanked 79% on a month-to-month basis, and tanked almost 90% on a year-to-year basis; online and food sales showed strong resilience.

These numbers will help us manage expectations on what is to come on the clothing retail front on the JSE. Scrap those valuations and expectations, and wait for 2021.

Infographic: U.S. Retail Sales Drop to Lowest Level Since 2012 Amid Lockdown | Statista You will find more infographics at Statista

Linkfest, Lap it up


Has the pandemic made you worry about the future of humanity? If so, you can buy a bunker for as little as $35 000 – COVID-19 is fueling a boom in the doomsday bunker market.

Not having any live sport to watch meant that when the Bundesliga restarted over the weekend, there was a surge in viewership. Probably from many people who don’t even follow the league.

Infographic: Bundesliga Return Attracts Record Audience | Statista You will find more infographics at Statista

Signing off


Data out today is mostly focused on central banks. In the UK, the BOE governor testifies to the government about the current economic environment, and then this evening the minutes from the most recent Fed meeting is published. In the current environment, markets can be more sensitive than normal to what is said from the BOE and the Fed, particularly around talk of negative rates. The Rand is stronger this morning at $/R 18.28.

Sent to you by Team Vestact.

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