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BenzingaEditorial

EV Stocks With Long-Term Potential

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Despite 2020 being an unprecedented year due to the pandemic, it will also be remembered as the year for the EV revolution. While EV companies, led by Tesla (NASAQ: TSLA), have been around for a while, 2020 was the year the markets officially became infatuated with its potential to disrupt the traditional automakers. Tesla shares are up nearly 600% for the year, and a number of upcomers have showed strong performances and even greater promises.

Although this performance might not be sustainable over the long-run, the potential of electrification is real. Traditional automakers such as the German giant Volkswagen Group (OTC: VWAGY) know it and are investing heavily to catch the electric wave. But despite such ‘safe-bets’, there are also many other upcomers such as Li Auto (NASDAQ:LI), NIO (NYSE: NIO) and XPeng (NYSE: XPEV) who show great potential.

The SUV specialist

Li Auto went public only in late July, but the shares of the Chinese maker of premium electric SUVs are up 142% in just four months since then. Its market cap, at $34 billion, is in line with that of Ford Motor Company (NYSE: F)despite having one-tenth of the revenue.

Li might be selling only one vehicle at the moment, family-sized SUV named the Li One, but it has four additional SUVs planned. More importantly, the Li One also comes with an onboard gasoline generator that supplements the battery and acts as a range extender, removing the range anxiety for its customers as the charging infrastructure is yet to catch up. Li Auto expects to sell about 30,000 vehicles this year, but Goldman Sachs (NYSE: GS) analyst Fei Fang finds Li has what it takes to manufacture up to about 500,000 annually by 2025 and without much added construction cost.

But even if there could be some near-term turbulence, Li has positioned itself well in an attractive niche in the Chinese market with a product that is selling well.

A well-positioned Chinese EV Maker

China is the world’s largest new-vehicle market with the government pushing the adoption of electric vehicles. According to Bank of America (NYSE: BAC), NIO and Tesla together have about 90% of the market for premium electric vehicles in China. Nio is the homegrown favorite and that counts for something. Moreover, after a near-bankruptcy experience early in 2020, it’s now the cash and resources to increase production. It’s a safe bet to expect that big sales growth is coming given its production plan.

Next-generation autonomous EVs

From barely $1 million in sales in 2018, XPeng has booked more than half a billion dollars in sales over the last 12 months. By 2022, data from S&P Global Market Intelligence reports that analysts project XPeng will tip the scales at a mind-boggling $4.1 billion. If this ends up being the case, it means XPeng will go from $1 million to more than $4 billion in sales in less than four years.

Last week, it unveiled a “next-generation autonomous driving architecture” with which its EVs will become increasingly autonomous. This self-driving feature will be accomplished through cameras, radar, ultrasonic sensors and lidar. Lidar is a laser for imaging, detection, and ranging. According to its press release will be the first car company in the world to incorporate lidar into a production-ready car, beginning with vehicles in its 2021 lineup.

Such ground-breaking technological leadership should help XPeng secure a strong position in the Chinese automotive market, where EV sales are expected to grow 43% annually over the next five years.

Volkswagen’s new EV

The German giant aims to produce 1.5 million electric cars by 2025. In November, it increased its planned investment in electrification to $86 billion over the next half of a decade. The carmaker increased the proportion of hybrid and electric vehicles in its European car sales from a previous target of 40% to 60% by 2030.

To boost its sales in the EV era, Volkswagen is bringing forward the development of a small electric car for the mass market in anticipation of tougher EU climate regulations, according to plans seen by Reuters. A “Small BEV (Battery Electric Vehicle)” will be available in the range between $24,000 and $30,000. This would make it cheaper than Volkswagen’s ID.3 electric car that was launches for sale in September. Besides revealing it will be around the size of a Polo, no information was provided regarding its look, launch date or  the place where it will be built.

With great risk comes great reward

There’s a lot of risk involved in EV stocks, but also a lot of potential as a whole new era is ahead. The above four companies are well-positioned to benefit from this supertrend.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

BenzingaEditorial

HP and Dell Rejoice as Offices Reopen

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As companies continue commiting funds to lure employees back into offices by improving their experience, PC demand keeps on going strong.

During Tuesday’s extended trading, HP Inc’s (NYSE: HPQ) shares jumped 8% after the computer hardware maker reported better-than-expected quarterly results and provided strong guidance for the undergoing quarter. Dell Technologies Inc (NASDAQ: DELL) also posted strong results, aided by commercial PCs and sales of high-end consumer devices, pulling its stock up 0.6% in after-hours trading.

HP’s quarter results

The PC and printer maker generated sales of $16.68 billion exceeding the expected $15.4 billion, according to Refinitiv. Sales increased 9.3% from the year-ago period. It made $3.1 billion in net income, including a one-time $1.78 billion legal settlement, also exceeding Wall Street estimates. It made $0.94 in adjusted earnings, exceeding the expected $0.88.

Per segment

Although consumer PC sales dropped 3% compared to last year’s lofty figure, commercial PC revenue expanded 25%. However, total PC unit sales were down 9%. Personal systems net revenue rose 13% YoY as it came in at $11.8 billion.

Printing business saw its revenue grow 1% YoY as it generated sales of $4.9 billion. Commercial printing revenue was up 19% YoY while consumer printing revenue fell 6%.

Trends

According to HP CEO Enrique Lores, in an environment shaped by supply constraints, the company is prioritizing its commercial clients due to better margins.

The (mixed) pandemic effect

HP’s PC business boomed and the sale of home printers also increased, but the shutdown of offices across the globe weighed on its ability to revitalize its important print-services business. Fortunately, this is no longer the case as offices have started reopening.

According to IDC, HP ranked second in world-wide PC shipments over the latest quarter. It is close behind Lenovo Group Ltd. (OTC: LNVGY) but it managed to beat Apple Inc (NASDAQ: AAPL) and Dell. However, its shipments were down almost 6% in reference to last year’s comparable figure year while nearly all of the other top companies’ shipments increased YoY. Mr. Lores did state that the strong results are owed in part by emphasizing shipments of more-lucrative models.

Guidance

HP expects strong demand for its personal computers to linger for the foreseeable future. For the undergoing quarter, it expects to earn  $0.92 to $0.98 per share and for the full fiscal year that is due to end on October 31st, 2022, it expects them to be in the range between $3.86 to $4.06, with both forecasts beating Wall Street expectations.

Dell

The PC maker reported its strongest-ever third quarter due to strong growth of commercial PC and high-end consumer devices. Dell generated sales of $26.4 billion that resulted in $3.9 billion in profit. It also topped expectations as it expects revenue of the undergoing quarter to increase at least 12% from the year-ago period and reach $27 billion to $28 billion. Chief Financial Officer Tom Sweet expects growth to continue next year.

Outlook

Despite chip supply shortages and port congestions causing delays, the holiday quarter seems promising. According to International Data Corp, the global PC market has grown for six consecutive quarters and these challenges have stopped sales from taking off even more. Therefore, HP and Dell seem to be covered as they are making the best of the situation in an environment defined by mess COVID-19 created across global supply chains.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Ford Is Doing Whatever It Takes To Overthrown Tesla

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The legendary Blue Oval has its eyes set to become the biggest US-based EV manufacturer. To pull that off, Ford Motor (NYSE: F) needs to greatly ramp up its production so it doesn’t come as a surprise that the company is now expecting to produce 600,000 EVs per year globally by end of 2023, which is double compared to the original plan. According to Automotive News, this figure will be made by Mustang Mach-E, F-150 Lightning and E-Transit. Moreover, Jim Farley Tweeted this will happen before Blue Oval City and other EV sites come online.

Ford is now feeling much more confident

Ford is enjoying much stronger EV demand than expected. The Mustang Mach-E is being sold on three continents. Since it was unveiled, the Ford F-150 Lightning has been as popular as it gets by receiving 100,000 reservations within the first three weeks, after which they increased to 160,000. Due to the high demand for America’s bestselling vehicle, the F-150 pickup, Ford previously decided to invest $250 million to boost its production, creating 450 new jobs to help it make 80,000 trucks a year but it remains to be seen how will that change considering it doubled its manufacturing goal.

Bonus points for dropping joint vehicle with Rivian

A large, legacy manufacturer tying up with a new startup that has the right technology and specs to make an electric version of an American favorite — the SUV, sounded as a match made in heaven. Although the companies remain linked as Ford still holds a 12% stake in Rivian Automotive (NASDAQ: RIVN) with shares now worth billions of dollars,  the two companies canceled their plans to jointly develop an electric vehicle publicly on November 19th .

Rivian’s successful public debut

Since its IPO on November 10th,  Rivian’s market capitalization skyrocketed to mindblowing $110 billion, leaving Ford behind at $78.2 billion. The start-up became the third most valuable automaker behind Tesla Inc (NASDAQ: TSLA) and Toyota Motor (NYSE: TM), pushing Volkswagen (OTC: VWAGY) to fourth place with only two models in its portfolio- the R1T being produced and its R1S production postponed with earliest deliveries pushed back from January 2022 to March-April 2022 due to supply chain disruptions no carmaker is immune to. But, the interest for its vehicles is there.

Ford doesn’t need Rivian anymore

Several points indicate Farley may be right about Ford not needing Rivian any longer. Reservations for Ford’s electric pickup truck, the F-150 Lightning, surpassed 150,000 units in September as the model appears designed to benefit from immense and lasting popularity of US’ best selling pickup – the Ford F-150, emulating much of its utility. The Lightning is also more of a “workhorse truck” than the Rivian R1T that is being marketed mainly for recreation.

Ford also announced an $11.4 billion joint investment with a South Korean battery maker, SK Innovation, so it clearly has a bigger picture in mind. Rivian helped the legacy automaker gain courage and ground while it was making its first EV steps.

Ford potentially gained a major boost for its EV plans by separating from the EV start-up.

According to CNBC, Ford accumulated approximately 102 million shares in all, spending a total of $820 million in the process for its current 12% stake that is now worth approximately $13 billion. By selling these shares, which it now no longer needs since it is not partnering with Rivian on any future projects, Ford has cash at its disposal to boost and accelerate its EV plans.

There is the risk of Rivian’s shares dropping after the initial IPO euphoria, resulting in a greatly reduced cash windfall for Ford who would still make immense gains above the initial average $8.04 it paid. Whatever the case, Ford has the near-future option to enhance its liquidity with billions of additional dollars if it sells its Rivian shares. These gains would be taxed, but they wouldn’t be burdening the company’s balance sheet with debt.

However, Ford hasn’t given any indications of doing that and it will presumably have to wait for the lockup post-IPO period to expire.

Competitors aren’t standing still

Before it achieves its ultimate goal as the US-based leader, Ford first needs to become the second largest behind Tesla. It remains to be seen whether it can achieve that with 600,000-a-year production target. Meanwhile, its long-time Detroit rival General Motors (NYSE: GM) is expecting to sell 1 million electric vehicles by 2025 across the globe so it is also ramping up production. Then there are many other start-ups such as Atlis Motor Vehicles and Hercules Electric Vehicles whose electric pickups are scheduled to hit the roads next year, with both of their models being equipped with ground-breaking solar technology by Worksport Ltd’s (NASDAQ: WKSP) subsidiary TerraVis Energy.

Ford’s strategy

In Farley’s words, the legacy automakers’ approach was reflected when it built ventilators and personal protective equipment to contribute to the battle against COVID-19. Whatever it takes, Ford finds a way- and its strategy seems to be working.

With its aggressive investments such as its massive Blue Oval City EV, fast-moving construction of cutting-edge facilities such as battery factories, and strong progress on the Lightning, Ford seems to be on track with its electrifications plans. Along with the addition of a reserve of cash accessible by liquidating its Rivian shares, Ford now has more flexibility and greater resources to support the production of its EV lineup.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

The Mighty Alibaba Has Fallen

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Last Thursday, the all-mighty Chinese multinational technology company missed revenue and earnings expectations for the September quarter. Moreover, Alibaba Group Holdings Limited (NYSE: BABA) warned of weaker growth this year as China’s economy slows and Beijing continues its regulatory crackdown with the latest fine hitting the company over the weekend.

Fiscal second quarter figures

For the quarter ended in September, the company’s earnings per share declined 38% YoY as it earned 11.20 yuan per share, below the estimated 12.36 yuan. Its EBITDA fell 27% YoY to 34.84 billion, but this is largely due to investments into new businesses.

But overall revenue grew 29% YoY, as it amounted to 200.69 billion yuan which translates to $31.4 billion) but still below the estimated 204.93 billion yuan.

The revenue of its core commerce business expanded 31% YoY but also missed expectations as the segment generated 171.17 billion yuan. Cloud computing, one of its most important assets that the company is building its future upon, grew 33% YoY to 20 billion yuan with adjusted EBITA for the segment amounting to 396 million yuan. This is a great improvement from 567 million yuan loss it made in last year’s comparable quarter.

However, the largest portion of the company’s sales comes from customer management revenue (CMR) and that segment grew only 3% YoY due to slow growth of sales on its platform. As China’s economy slowed down, so did consumption. Besides the slowing market conditions, Alibaba is also facing an increasingly crowded e-commerce market in China.

An increasingly crowded market

JD.com Inc (NASDAQ: JD) hasn’t been the only one giving it a headache, as newer players such as Pinduoduo Inc (NASDAQ: PDD) and even TikTok-owner ByteDance are putting up a good fight.  Both Alibaba and JD.com achieved record sales on Singles Day record but this will be reflected in the undergoing quarter’s report. Both companies also touted their commitment to a more sustainable future during the event, but it seems that this wasn’t enough for Beijing.

Fines

Beijing is determined to teach the country’s largest tech firms to behave with a slew of new regulations. Alibaba, Tencent (OTC: TCEHY)  and Baidu (NASDAQ: BIDU) were among the corporations who were all slapped with fines over the weekend for violating antitrust laws. Alibaba was already fined $2.8 billion back in in April as part of an anti-monopoly probe.

Outlook

The company slashed its current fiscal year revenue guidance from expecting revenue to amount 930 billion yuan, which would have been about 29.5% YoY growth to now expecting only 20% and 23% YoY growth.

The CEO Daniel Zhang emphasized that Alibaba continues to firmly invest into its three strategic pillars to establish solid foundations for long-term sustainable growth. Alibaba is betting on domestic consumption, globalization, and cloud computing to create firm grounds for a more sustainable future, but regulatory action threatens to derail its growth prospects. Only time will tell if the e-commerce tech giant can rise from these unfavourable circumstances.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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