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Tech Industry Is Being Smashed By Coronavirus

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Tech Companies Corona Virus

The officially named “2019-nCoV” virus is a type of coronavirus with flu-like symptoms. Those infected usually go on to develop pneumonia but it’s doing more than just seriously threatening people’s health as it wiped out more than $230 billion from Big Tech stocks. Shares of Big Tech companies took a hit last Monday as the company started calling out its impact on their operations, causing fears of a global economic slowdown to resurface. Altogether, Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Google’s parent Alphabet (NASDAQ:GOOGL), the five most valuable U.S. companies by market cap, lost more than $238 billion. And stock prices have continued to plummet as these five tech companies make up nearly one-fifth of the value of the S&P 500, which also dropped.

Microsoft

Microsoft co-founder Bill Gates said the coronavirus is starting to behave like the once-in-a-century pathogen he has been warning the world about for quite some time now as Microsoft issued a financial warning regarding the consequences of the pandemic. While its fast-growing cloud computing business is not affected, the personal computing segment that includes Windows installations and Surface laptops and tablets, is expected to have lower sales comparing to what was told investors only one month ago. The financial warnings from Microsoft and Apple, two of the most valuable publicly traded companies in the world, only emphasize the vulnerability of technology supply chains in China.

Apple

Unlike Microsoft which does not sell much in China as the market accounts for less than 2 percent of the company’s revenue, Apple has by far the largest exposure to China. It relies heavily both on manufacturing due to plants that make its best-selling products but also on Chinese consumers to buy its star product- the iPhone, of course. The company warned that it does not expect to meet its own guidance for the March quarter. But we must state the obvious: Apple is fine because it has plenty of money. And the slowdown of the market in China just means that its insane profits will be a little less insane.  And this effect might even be only short-term. However, if the coronavirus epidemics intensifies along the road and therefore continues, now that can already make some serious trouble to Apple that shareholders should worry about.

Working around the COVID-19

Apple’s CEO Tim Cook replied to CNBC that the company is already seeking ways to work around the coronavirus. And Apple has reopened about half of its retail stores in China for limited hours. Also, it is restricting the number of customers that can enter the store. Apple assembler Foxconn Technology Group is paying workers extra to return to plants, the iPhone site, but it isn’t clear what capacity the factories can deliver at this time. Along with Apple, they are among the first corporations to try and quantify the impact of the epidemics. And considering Foxconn is China’s largest private employer and a key partner to many of the world’s most recognizable consumer brands, this company has become a high-profile symbol of how the outbreak is disrupting Chinese manufacturing and the entire world’s supply of electronics.

But Apple is thinking ahead as it is already looking for alternative sources for parts to fill in where Chinese manufactures would likely fall behind. Because of demand impacts in China and a slower than expected manufacturing schedule, Apple supplied a wider than normal guidance for the second fiscal quarter earnings to be on the safe side, as it predicted between $63 billion to $67 billion in the quarter in an effort to account for the impact of the epidemics. Meanwhile, Apple’s RAM supplier, SK Hynix, is keeping coronavirus away by instructing possibly infected workers to stay at home. And this is exactly why Facebook and Google are much better-off since they are entirely absent from China in this regard. However, their stock was also hit with the wave of fears that the epidemics will further weaken global economy. So really, no one is safe.

Even Tesla got hit

Tesla shares took a plunge on Monday amid a broader market sell-off mainly driven by investors’ coronavirus concerns. It surely doesn’t help that Tesla opened a Shanghai car plant and is heavily reliant on Chinese suppliers to make its electric cars. But perhaps an even bigger concern for Tesla Investors are the final results of an Autopilot-related crash investigation by the National Transportation Safety Board that is scheduled to be released on Tuesday afternoon in Washington D.C. Although Tesla’s value has exceeded that of General Motors (NYSE:GM) and Ford Motors (NYSE:F) combined, there are quite a few analysts who fear the Coronavirus is about to burst Tesla’s bubble. And despite its recent success, Tesla has still a long way to go in order to achieve long-term profitability.

Outlook

It’s not unusual that investors turn to tech stock during times of a macroeconomic weakness, supposedly hoping they are the ones who can change the course of the game. But it is also why many fear that it is tech stock which will drag us to yet another financial crash. So, it is certainly not pleasant to hear that the Coronavirus will have a negative impact on the operations of the above companies, but it’s the truth. And well done to these companies for having disclosed it early on – as this will encourage others companies to do so as well. Despite not being practiced so often, honesty is always the best policy. For better or worse. And again, stating the obvious: these companies are fine and they have shown they are able absorb this and perhaps even much worse.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com
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BenzingaEditorial

The US Is Catching Up In the EV Race

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Worksport Terravis Solar System On Electric Pickup Truck

Europe has overtaken China as the world’s biggest EV market. Encouraged by subsidies and offerings, consumers bought EVs at a record pace last year, nearly doubling the continent’s share of global new electric car sales to 43%. But this success is largely owed to government support programs, some of which will expire this year which is why analysts warn the momentum could be reversed if and when that support is withdrawn. Meanwhile, the U.S. is going full speed ahead and unlike Europe, the US market is not as sensitive to government and company discounts.

The US is “waking up”

Around 65 new EV models launched in Europe last year which is twice as many as in China, with another 99 scheduled to hit the market this year. North America saw 15 launches last year, but 64 are planned for this year. What happened with Europe is that manufacturers had the right products to offer such as Volkswagen AG (OTC: VWAGY), Europe’s biggest auto maker, with its ID.3 and ID.4 models. But, the US is well on its way to catch up as legacy automakers are set to being rolling out electric versions of their iconic models. General Motors (NYSE: GM) went as far as making a Super Bowl ad starring Will Ferrell, who called on American consumers to buy EVs and crush Norway that ended up as the world’s biggest EV market per capita last year.

Legacy automakers are catching up

GM’s EVs are starting to take shape with the new lower-priced Chevy Bolts, the first in its lineup of ‘affordable’ EVs. Ford Motor (NYSE: F) vowed to sell only EVs in Europe and the UK by 2030, making it the largest automaker to commit to all-electric sales on the continent by that timeframe with its first Mustang Mach-E arriving hitting dealerships. Although this vehicle needs to convince Wall Street that Ford is headed in the right direction, Ford’s most eagerly anticipated EV, the electric F-150 is a year away.

Electric pickups are coming

Until recently, the EV revolution was limited to small vehicles, with the most popular vehicles in the US, pickups and SUVs, absent from the offerings. But that is about to change this year as advances in battery technology made it more affordable to insert battery technology into heavier vehicles with many pickups due to hit the market over the next 12 to 24 months, including new entrants, Rivian R1T, Atlis XT pickup and Hercules Alpha, along with revived Hammer for GM not to miss any action.

Worksport expands capacity

Atlis Motor Vehicles and Hercules Electric vehicles partnered with innovative truck tonneau cover manufacturer Worksport to configure its ground-breaking TerraVis system, the world’s first solar charging and power storage system for pickups, into its eagerly anticipated models. This revolutionary technology helped Worksport receive its first trademark registration in China in February.

Expansion

Worksport LTD (OTC:WKSP) announced this morning its strategic manufacturing expansion. The company is in final phases of discussions with a few very-high-value strategic partners, Tier-1 and Tier-2 OEM manufacturing power houses in Canada to expand its manufacturing into North American state-of-the-art facilities with 20,000 to 50,000 square feet of operating space to meet its recent U.S.-based Private Label customer growth.

New ecosystems

These discussions involve logistics for the best and most effective ways to support the company’s growth and ensure scalability in Worksport’s manufacturing processes. The company tapped into both the pickup market as well as the consumer market by extending its solar fusion line with mobile TerraVis COR™ system that can be used independently and recharged via solar or A/C power. The expansion will not only support Worksport’s expanding and maturing footprint, it will give the company control over capital expenses, greatly reducing risks of overextending its financials during periods of intense demand while building its major-player Automotive, Freight & Transport, Marine, and Rail ecosystems, at helm of its CEO Steven Rossi. The company is going all in to exceed customer expectations and all of its efforts directly enhance and benefit the EV market.

Takeaway

While most industry leaders welcome government efforts to fuel new technology markets such as EVs, auto makers worry that subsidies will only have a short-term impact. A global adoption without broader structural changes won’t create a self-sustaining market. What governments should focus on is developing the supporting infrastructure such as charging stations.

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

This Week’s Stars Are Zoom, Target and Costco

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Zoom Video Communications (NASDAQ: ZM) will open the week on Monday after market close whereas big box retailers highlight the week’s other big releases, led by Target Inc. (NYSE: TGT) on Tuesday and Costco Wholesale Corp. (NYSE: COST) on Thursday.

Zoom Video Communications

According to Financial Times, researchers at Stanford University have confirmed what millions of remote workers already knew, that “Zoom fatigue” causes greater stress than meeting in real life because of the “non-verbal overload” of endless video calls. Not to mention that users are seeing reflections of themselves at a frequency and duration that hasn’t been seen before in the history of media and the history of people. Although some problems could be solved with trivial changes to its user interface, such as automatically hiding the “selfie” window, the bigger problem is On Zoom, behavior ordinarily reserved for close relationships such as faces seen close up has suddenly become the way we interact with casual acquaintances and even strangers. This new way of communication takes a toll on our mind and that could eventually hamper Zoom’s success with the stocking already having lost its luster due to vaccine developments.

Novavax (NASDAQ: NVAX) is preparing to launch its COVID-19 vaccine after 33 years of failed attempts and facing delisting from the Nasdaq as it couldn’t deliver a single approved shot. We will get a new chapter in a fairytale-like story of a little company that was on the verge of potentially closing getting the chance to play with the big boys in the race for the Covid vaccine. As soon as its vaccine gets approved, it is ready to produce 150m doses a month.

Nio (NYSE: NIO) will pop the hood after market close. Earlier it stated that Q4 deliveries were at a record of 17,353 vehicles which is an increase of 111% YoY and over the upward end of its guidance. But, when it comes to EVs, profitability has frequently taken a back seat and despite the encouraging deliveries, the company has been in the red.

Tuesday

Kohl’s (NYSE: KSS) and Target are due to report before market open. Last week, a group of activist investors pressured the department store to address stagnant sales and operating margins so it will be interesting to see how the story continues as critics find the company isn’t moving fast enough to turn itself around. On the other end, Wall Street expects Target to post a profit of $2.54 per-share on $27.4 billion in revenue which would be an impressive 50% profit increase. Some of its biggest peers have already reported fourth-quarter earnings but investors have big expectations for its holiday quarter. We already know Target had a good season as it revealed that sales grew 17% during the holidays which on its own is enough to outpace Walmart (NYSE:WMT), which just reported a 9% holiday quarter boost. But, this is a slight slowdown from its third quarter’s 21% growth so we’ll learn whether Target continued to win market share in each of its core selling categories. Nordstrom (NYSE: JWN) and Box Inc. (NYSE: BOX) will board the reporting train after market close.

Wednesday

Dollar Tree (NASDAQ: DLTR) will report before market open with Okta (NASDAQ: OKTA), Snowflake (NYSE SNOW) known for its ‘too hot to handle IPO’, Vroom Inc (NASDAQ: VRM), Splunk (NASDAQ: SPLK) will reveal their earnings after market close.

Thursday

Kroger (NYSE: KR) will report before market open with Opendoor Technologies (NASDAQ: OPEN), Broadcom (NASDAQ: AVGO), SmileDirectClub (NASDAQ: SDC), Costco and The Gap (NYSE: GPS) closing the earnings week after market close.

This week will be full of retail that was dramatically changed by the pandemic. We will also get a better idea if Zoom can maintain its success beyond the pandemic as despite its many benefits, digital communication didn’t measure up to in-person socializing.

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

Airbnb Delivered a Loss in Its First Post-IPO Earnings Report

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With its first earnings report as a public company, Airbnb Inc (NASDAQ: ABNB) posted an annual loss. Annual deficit of $4.6 billion was the result of the coronavirus pandemic ravaging the travel industry. But the uptick in local travel, combined with a successful cost cutting strategy helped the company’s market capitalization to exceed more than $100 billion which makes it more valuable than Marriott International Inc., (NASDAQ: MAR), Hilton Worldwide Holdings Inc. (NYSE: HLT) and Hyatt Hotels Corp. (NYSE: H) combined. Airbnb also had a far less sever revenue decline compared to its main rivals, Expedia (NASDAQ: EXPE) and Booking.com (NASDAQ: BKNG), which were down 67 and 63 per cent respectively over the same period. Airbnb’s share price nearly doubled from their IPO price.

There’s no going back

The pandemic did initially crushed the home-sharing giant’s business when lockdowns were imposed across the globe. But, Airbnb avoided a disastrous outcome thanks to an unforeseen increase in local excursion. Although yearly revenue declined, it wasn’t as much as analysts expected as no one considered that people will find a way to get out of their everyday routine, even if it’s by making a local trip. The company’s CEO Brian Chesky doesn’t think to the world of travel will ever go back to how it was before COVID-19 started its relentless march across the globe but the company found a way to live with that.

Capitalize on new trends

Mr. Chesky outlined how the health crisis had reshaped the business, pointing to a significant uptick in long-term stays as people around the world work from home which will offer the freedom to live more nomadic lives. Some large employers have said they would offer that flexibility even when things return to normal, and Airbnb can capitalize on that trend.

Dealing with the pandemic

Although hotel chains with a significant footprint in big cities suffered, Airbnb redesigned the company’s website and app to show prospective travelers everything from lavish beach houses to rustic cabins nearby. Combined with cost-cutting efforts, it managed to weather to storm that paralyzed the whole world.

Figures

Fourth-quarter revenue fell 22% YoY to $859 million with full-year revenue dropping 30% to $3.3 billion. Fact Set analysts expected fourth-quarter revenue drop of 33% and and a drop of 32% for the full year.

The company trimmed a quarter of its staff, paused noncore operations and slashed its hefty marketing budget to keep expenses down. Although it couldn’t avoid a loss, the $3.9 billion loss for the quarter ended in December also includes IPO-related costs of $2.8 billion and an $827 million adjustment for the loans it needed to navigate through the crisis. Last year’s fourth quarter saw a loss of $351 million, but the latest loss brought the company’s full-year deficit to $4.6 billion, which is more than its losses in the previous four years combined, exceededing the average forecast of analysts surveyed by FactSet.

Airbnb’s full-year expenses rose 31% to $6.97 billion on the back of IPO-related stock compensation in the fourth quarter. However, before accounting for stock compensation, expenses in each category, from product development to operations and support services were lower. In this case, sales and marketing expenses declined 66% in 2020 compared to 2019 whereas when those costs are accounted for, the same expenses rose 44%.

Like other companies, Airbnb offered an adjusted metric that excludes such costs so the negative EBITDA shrank to $251 million compared to $253 million in the previous year. On the same basis, its Q4 loss narrowed significantly to $21 million from 2019’s Q4 loss of $276 million.

Outlook

Airbnb declined to give any formal guidance for the year ahead due to uncertainty of the undergoing health crisis. While the third quarter is the busiest for Airbnb, the company has turned a profit in that period since 2018, even during the pandemic, the first quarter is the slowest. But it expects bookings in the three months through March to be better than in the same period last year, when the health crisis first struck, but still below 2019 levels. The home sharing company plans to invest in marketing and product development during the first half of this year, so it is positioned to benefit from an expected rebound in the second half that the whole travel industry is hoping for. Management assured investors that costs will be controlled from soaring to pre-pandemic levels.

Airbnb’s valuation plummeted to $18 billion nearly a year ago, as it raced to secure funds to weather the crisis. Its rapid growth also came with its share of challenges as homeowners from Arizona to Florida and Massachusetts are campaigning for laws to govern short-term rentals as they mind the increased noise, as well as connect it to crime and falling property values. The bottom line is that remote work helped Airbnb’s earnings hold up better than expected amid a crushed travel industry and it could easily be the source of its future revenue. It suffered heavy losses, mostly due to costs related to its long-awaited market debut in December, but it is also confident about its post-Covid-19 prospects as it adapts to new lifestyle trends.

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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