Tesla Stock Moves Lower As Reuters Indicates That The Company Halted Plans To Expand Its Plant In China
Tesla shares opened with a gap down today after Reuters reported that the company had paused plans to expand its Shanghai plant.
According to the report, the reason for this decision is the uncertainty related to U.S. – China tensions. While the current U.S. President Joe Biden is not using harsh rhetoric against China like former President Donald Trump, the course of U.S. – China relations has not changed.
Other electric vehicle stocks like NIO or Li Auto have also moved lower at the start of today’s trading session but managed to attract buyers and moved closer to the positive territory. The continued deterioration of U.S. – China relations can hurt both Tesla and Chinese electric vehicle makers.
What’s Next For Tesla?
Tesla had a rough start of the week as tech stocks were under pressure due to inflation worries. Earnings estimates for 2021 and 2022 have continued to move higher in recent weeks but Tesla is still trading at 97 forward P/E for 2022. This is an extremely rich valuation which makes Tesla shares dependent on market mood in the near term.
It looks that market sentiment towards tech stocks has become more bearish in May. The tech-heavy Nasdaq made several attempts to get to new highs back in April but failed to develop sufficient upside momentum and pulled back towards March 2021 levels.
Inflation worries are growing, and investors start to pay some attention to valuations. In this environment, disappointing news finally begin to serve as bearish catalysts for tech stocks.
In Tesla’s case, worries about U.S. – China tensions look reasonable as current tariffs imposed on Chinese electric vehicles will likely remain intact for the foreseable future.
In addition, the broad-based sell-off in the tech space may continue as investors have a good reason to take some profits off the table after a huge bull run from the lows that were reached back in March 2020.
At the same time, it should be noted that Tesla is down by more than 30% from highs that were seen at the beginning of this year, and the continuation of the current pullback may attract more speculative traders who were waiting for an opportunity to buy the company’s shares at a discount.
Recent news broke that Peloton is recalling its Tread and Tread+ treadmills. This is due to 70+ safety incidents and a child’s tragic death.
Investors who bought into the growth story might be wondering if it was a colossal mistake.
To answer that, let’s first let’s revisit why Peloton looked like a great setup in the first place:
1-year sales growth of 100%
3-year sales growth of 103%
1-year earnings growth of 62%
Gross profit margin of 45%
It’s also owned by the big boys and girls with 78% institutional ownership. Peloton was also collecting lots of Big Money buy signals according to MAPsignals data: logging 12 Big Money buys since July 1st, 2014.
That just means that the shares were increasing in price as volumes increased.
Things looked great for Peloton to continue its massive bull run. But suddenly in mid-February, growth stocks met headwinds. Since then, high-growth stocks fell from grace in favor of value and dividend stocks.
PTON was already falling 30-40% when tragedy struck for some pets and children and their new product is now in recall for repair or refund. They’ve sold roughly 125,000 tread units as high as $4200 each. The company said this will impact Q4 sales by -$165 million.
This is definitely not great for the short-term at least. It’s got a lot of investors spooked and running for the hills.
The question remains though: Is it time to grab it or bag it?
Let’s first look at their most recent earnings report.
Peloton just reported a 3-cent EPS loss, beating the 12-cent loss expectations for their fiscal third quarter. They posted $1.26 billion in sales, beating estimates of $1.1 billion. Revenue grew a shocking 141% from a year ago.
PTON showed $239.4 million in subscription revenue, up 144%. This is a key point. The company looks like it sells exercise equipment, but they sell content. Their classes and content costs are a subscription fee paid monthly.
In a shareholder letter, Peloton explained they have over 4.4 million members (as of December 31, 2020). Total members grew 22.2% since the prior quarter, up from 3.6 million. At $39 a month, that’s $2 billion a year. And it’s growing.
Even with the recall impact, Peloton is still guiding $915 million in revenue for Q4, 2021.
First, the exodus from growth stocks dragged down the stock. Then terrible headlines hit further amplifying the stock’s pullback.
This reminds me of a current titan that was once a volatile young growth story: Tesla, Inc. (TSLA).
In 2013 news broke of a battery fire in the Model S after a driver ran over a large metal object. On October 3rd, 2013 a Reuters article read:
Two days after a video of a burning Tesla electric car went viral, the “green car” maker grappled with ways to contain the damage as investors shaved $2.4 billion off the company’s market value.
Tesla shares fell 4.2 percent to close at $173.31 on the Nasdaq. That came on top of a 6.2 percent drop on Wednesday.
I remember the media said Tesla stock was done. The story was ruined, and no one would buy their cars. The stock got smoked. Remember: it was trading at $173.
The battery and subsequent engine fires from crashes, look tiny in the rearview mirror now. TSLA peaked at around $883 in January and then pulled back to $635 as of this writing. From the bad 2013 headlines the stock is up 267% after peaking up 410%.
Very few companies change the game like Tesla did for cars, or Peloton for exercise.
Remember, there tends to be gloomy headlines from time to time for nearly all stocks. Years later, investors will likely forget them. When you have a great growth story on your hands, it doesn’t always mean a smooth ride.
In the case of Peloton, it’s hit a snag. But times like these could represent potential opportunity for the long-term investor. Only time will tell.
Disclosure: the author holds a long position in TSLA in personal accounts at the time of publication, but no position in PTON.
With 25% tariffs on imported Chinese electric vehicles imposed on top of existing levies under former President Donald Trump still in place, Tesla now intends to limit the proportion of China output in its global production, two of the four people said.
Tesla had earlier considered expanding exports of its China-made entry-level Model 3 to more markets, including the United States, sources told Reuters, a plan that had not previously been reported.
Tesla currently ships China-made Model 3s to Europe, where it is building a factory in Germany.
Tesla’s Shanghai factory is designed to make up to 500,000 cars per year, and is currently producing Model 3 and Model Y vehicles at a rate of 450,000 units per year.
In March, Tesla refrained from bidding on a plot of land across the road from the plant as it no longer aimed to boost China production capacity significantly, at least for now, three of the people said, declining to be named as the discussions were private.
In a statement to Reuters, Tesla said its Shanghai factory was “developing as planned”.
The Shanghai city government, a key supporter in Tesla’s establishment of a wholly-owned factory in China – the first and only foreign passenger car plant not required to form a joint venture – did not respond to a request for comment.
Tesla had never declared an intention to acquire the land, which is about half the size of the 200-acre (80 hectare) plot housing Tesla’s current facility and would enable the company to lift capacity by another 200,000 to 300,000 cars, said two of the people.
Tesla’s China sales are surging despite mounting regulatory pressure in the country after consumer disputes over product safety and scrutiny over how it handles data.
It generated $3 billion in revenue in China in the first three months of this year, more than tripling year-earlier sales and accounting for 30% of total revenue.
Led by mercurial CEO Elon Musk, Tesla is known for shifting gears on strategy, including in China.
Construction documents posted on a government website in March show Tesla is revamping its plant in Shanghai to add capacity.
Tesla still has land, designed for production but now used for parking, at its Shanghai site. One of the people said Tesla could expand its capacity beyond 500,000 on its existing site. Another said Tesla may acquire more land for more car production lines in the future.
Separately, Tesla is building facilities to repair and reproduce key components such as electric motors and battery cells and build EV chargers at its Shanghai plant.
The Shanghai government has been talking to several companies to sell the land for new-energy commercial vehicle production, said a person with direct knowledge of the matter.
Tesla faces intensifying competition in China with domestic players such as Nio Inc, which is considering making mass market products under another marque.
Even before the trade war tariffs, relatively few China-made cars were shipped to the United States.
General Motors Co sells its China-made Buick Envision in the United States, paying the additional 25% tariff, although the SUV is not a high volume model.
($1 = 6.4310 Chinese yuan renminbi)
(Reporting by Zhang Yan in Shanghai and Yilei Sun and Tony Munroe in Beijing; additional reporting by Hyunjoo Jin in San Francisco; Editing by Lincoln Feast.)
Tesla, which makes Model 3 sedans and Model Y sport-utility vehicles at its Shanghai factory, aims to launch the data platform this year, it said in a statement.
This is the first time an automaker has announced plans to allow customers access car data in China, the world’s biggest car market.
Automakers for the past several years have been equipping more vehicles with cameras and sensors to capture images of a car’s surroundings. Control of use, sending and storage of these images is a fast-emerging challenge for the industry and regulators worldwide.
China last month published draft rules to ensure the security of data generated by smart cars. Data collected from Tesla electric cars in China is stored in the country, a company executive said last month.
Tesla in April was targeted by state media and regulators after a customer, angry over the handling of her complaint about malfunctioning brakes, climbed on top of a Tesla car in protest at the Shanghai auto show. Videos of the incident went viral.
Tesla provided the data related to the brake incident to the customer complying with the local authorities’ order.
(Reporting by Yilei Sun and Tony Munroe; Editing by Christian Schmollinger, Rashmi Aich and Vinay Dwivedi)
Tesla’s change of strategy leading to more behind-the-scenes interaction with policymakers in Beijing compared to relatively little previously shows the seriousness with which the U.S. automaker views the setbacks in its second-biggest market.
It also comes at a time when China is trying to regulate large and powerful private companies, especially in the technology sector, on concerns about their market dominance.
Tesla did not immediately respond to a request for comment on Monday, a public holiday in China.
As they do elsewhere, regulators in China, the world’s biggest auto market, discuss industry policies and standards with global and local companies, industry associations and think tanks.
Manufacturers typically join such meetings in China, but unlike rivals including Toyota Motor and General Motors Co, Tesla officials were largely absent from the closed-door gatherings, according to four people familiar with the matter.
Instead, Tesla officials regularly speak at high-profile industry conferences. Outside China, Tesla’s outspoken chief executive Elon Musk regularly takes to Twitter to comment on or criticise regulators or rules.
But in past weeks, Tesla executives attended at least four policy discussions, on topics including auto data storage, vehicle-to-infrastructure communication technologies, car recycling and carbon emissions, the people said.
California-based Tesla, which makes electric Model 3 sedans and Model Y sport-utility vehicles at its own plant in Shanghai, did not make major commitments at the meetings, but participated in some discussions, they said.
Tesla is also expanding its government relationship team in China, one of the sources said.
According to two recruitment advertisements in April on its WeChat account, Tesla is hiring managers to update a policy database and maintain relationships with government and industry associations to “build a harmonious external environment to support Tesla’s business development in the regional market.”
It was not immediately clear how many managers Tesla was planning to hire for government relations.
Accounting for roughly 30% of Tesla’s global sales, China is the automaker’s second biggest market after the United States and helped it post record first-quarter vehicle deliveries.
Pressure has been building over the past few months on Tesla’s mostly excellent relations with Beijing.
In February, Chinese regulators summoned it over consumer reports of battery fires, unexpected acceleration and failures in over-the-air software updates.
And in March, Tesla came under scrutiny when the military banned its cars from entering its complexes, citing security concerns over vehicle cameras, sources told Reuters at the time. Days later, Musk appeared by video at a high-level forum, saying that if Tesla used cars to spy in China or anywhere, it would be shut down.
Last month, Tesla was targeted by state media and regulators after a customer, angry over the handling of her complaint about malfunctioning brakes, climbed on top of a Tesla car in protest at the Shanghai auto show. Videos of the incident went viral.
Grace Tao, a Tesla vice president who heads its government relations effort in China, was criticised in state media last month after she was quoted in a media interview questioning whether the aggrieved customer was acting on her own.
In response to the different complaints, Tesla has said it would set up a China data center, launch self-inspection to improve services and work with regulators.
(Reporting by Yilei Sun and Tony Munroe; Editing by Muralikumar Anantharaman)
A Tesla spokeswoman declined to comment on the report, referring to last month’s official statement by the carmaker that put the start of production at the Gruenheide site towards the end of 2021.
Initially, Tesla had planned to start production on July 1, 2021, but red tape and plans to also build a battery cell factory on the site have delayed the project.
Tesla last month slammed lengthy regulatory processes in Europe’s largest economy, saying its approval framework “directly contradicts the urgency to plan and realise such projects that is necessary to battle climate change”.
(Reporting by Christoph Steitz; Editing by Alex Richardson)
Tesla Stock Moves Lower As Traders Focus On Supply Chain Problems
Shares of Tesla found themselves under pressure after the company released its first-quarter results. Tesla reported revenue of $10.4 billion and adjusted earnings of $0.93 per share, beating analyst estimates on both earnings and revenue. GAAP earnings of $0.39 per share missed analyst estimates, but the market is traditionally focused on Tesla’s non-GAAP earnings.
The company reiterated its plan to achieve 50% average annual growth in vehicle deliveries in the long-term. In 2021, Tesla will have to deal with significant supply chain problems due to disruptions brought by the coronavirus pandemic and increased demand for certain parts, including chips.
Traders also keep an eye on revenue from regulatory credits which may decline as other automakers start producing electric vehicles in large quantities. At this point, the market does not look too worried about this issue, but traders may become more focused on regulatory credits and competition in general closer to the end of this year.
What’s Next For Tesla?
Analysts expect that Tesla will report earnings of $4.33 per share in 2021 and $5.93 per share in 2022, so the stock is trading at a roughly 120 forward P/E. Tesla is viewed as a disruptor to the mobility segment so traditional metrics do not provide a full picture of the company’s valuation, but the company will still have to show significant growth to justify current stock price levels.
Tesla stock had a very successful 2020 and was included into S&P 500, but now the company may need additional positive catalysts to gain sustainable upside momentum from current levels. Tesla’s report easily beat analyst expectations, and the company continues to grow at a fast pace, but the market may want even more at current stock price levels.
Tesla shares are trading more than 20% below yearly highs so many traders will view current prices as an opportunity to add to their positions or establish new ones, but it remains to be seen whether the stock will be able to get back to the upside mode in the near term amid supply chain problems.
Electric carmaker Tesla Inc dropped about 3% in premarket trading after it marginally beat analysts’ expectations for quarterly revenue, helped by a jump in environmental credit sales to other automakers and liquidating some bitcoins.
Focus is now on results from Microsoft Corp and Alphabet Inc when they report after markets close. Apple Inc, Facebook Inc and Amazon.com Inc are slated to report later in the week. The five companies combined account for about 40% of the S&P 500’s market capitalization.
Overall earnings for S&P 500 companies are expected to jump 33.3% in the first quarter from a year earlier, according to Refinitiv IBES data.
The S&P 500 and the Nasdaq ended at record levels on Monday, with the tech-heavy Nasdaq completing a full recovery from its 11% correction that began in February.
Recent data indicating that the U.S. economy was set for a strong rebound, backed by vaccine distributions and unprecedented monetary and fiscal support, has provided much of that support.
The Fed is not expected to change its policy guidance at the end of its two-day meeting on Wednesday but could shine some light on U.S. central bank’s thinking on inflation, bond buying and risks to the financial system posed by soaring asset prices.
At 06:19 a.m. ET, Dow E-minis were down 4 points, or 0.01%, S&P 500 E-minis were up 2.5 points, or 0.06% and Nasdaq 100 E-minis were up 11 points, or 0.08%.
(Reporting by Medha Singh in Bengaluru; Editing by Anil D’Silva)
The two richest men in the world have been sparring in a tightly fought global space race, vying for contracts from government agencies and businesses.
Blue Origin said on Monday it had filed a protest with the federal Government Accountability Office, accusing NASA of moving the goalposts for contract bidders at the last minute.
Musk fired back with a tweet that said: “Can’t get it up (to orbit) lol.” (https://bit.ly/3npEc0Z)
He did not elaborate on the tweet, but pasted a screenshot of a 2019 report about Bezos unveiling Blue Origin’s moon lander on the same Twitter thread.
Blue Origin has fallen far behind SpaceX and United Launch Alliance (ULA) on orbital transportation, losing out on billions of dollars’ worth of U.S. national security launch contracts that begin in 2022. ULA is a joint venture of Boeing Co and Lockheed Martin Corp.
The company was dealt another blow earlier this month, when NASA awarded SpaceX the contract to build a spaceship to deliver astronauts to the moon as early as 2024, choosing Musk’s company over Blue Origin and defense contractor Dynetics Inc.
The sought-after project aims to put humans back on the moon for the first time since 1972.
“NASA has executed a flawed acquisition for the Human Landing System program and moved the goalposts at the last minute,” Blue Origin said in an emailed statement.
“Their decision eliminates opportunities for competition, significantly narrows the supply base, and not only delays, but also endangers America’s return to the moon. Because of that, we’ve filed a protest with the GAO.”
Musk’s SpaceX bid alone while Amazon.com founder Bezos’ Blue Origin partnered with Lockheed Martin Corp, Northrop Grumman Corp and Draper.
The filing of the 50-page protest by Blue Origin was reported earlier by the New York Times.
(Reporting by Kanishka Singh and Subrat Patnaik in Bengaluru and Eric Johnson in Seattle; editing by Jane Wardell and Saumyadeb Chakrabarty)
The California-based electric vehicle and clean energy company Tesla is expected to report its first-quarter earnings of $0.79 per share, which represents year-over-year growth of over 240% from $0.23 per share seen in the same quarter a year ago.
The high-performance electric vehicle manufacturer’s revenue would grow over 70% to $10.2 billion. The electric vehicle producer has beaten earnings per share and revenue estimates by over 60% of the time in the last two years.
“Updating the model for the 1Q deliveries of 184,800 which were over 20% above our forecast. We also made adjustments to our volume forecasts for the remainder of the year to account for the strong start while allowing for potential supply constraints and other factors. The net result is we raise our FY21 delivery forecast by 3% to 809k units,” noted Adam Jonas, equity analyst at Morgan Stanley.
“We note our FY volume is modestly below consensus as we allow for a ‘margin of safety’ given highly fluid supply chain issues impacting the industry. Our forward year volume forecast increases very slightly (approx. 1%) to 1.1mm units. This impact, along with some other minor adjustments to the model lifts our target to $900 from $880 previously. We do not change our bull or bear case valuations at this time.”
ALPHABET: The parent of Google and the world’s largest search engine that dominates internet search activity globally is expected to report its first-quarter earnings of $15.45 per share, which represents year-over-year growth of about 57% from $9.87 per share seen in the same quarter a year ago.
The Mountain View, California-based internet giant would post revenue growth of more than 25% to around $42.2 billion. It is worth noting that the company, on average, has delivered an earnings surprise of over 25% in the last four quarters.
Alphabet’s better-than-expected results, which will be announced on Tuesday, April 27, would help the stock hit new all-time highs. Alphabet shares surged more than 30% so far this year. On Friday, the stock closed 2.1% higher at $2,299.93 – close to the record high of $2,304.09.
“GOOGL still favorable set up after strong YTD gains. GOOGL has outperformed major indices YTD as investor sentiment turned positive. Our checks have been broadly positive, indicating accelerating momentum in the ad business and sustained strength in Cloud,” noted Brent Thill, equity analyst at Jefferies.
“GOOGL remains a top large-cap pick as we believe it should benefit in 2021 from ad spend recovery, pent-up demand for Google Cloud, and call options on Waymo and other non-advertising initiatives.”
MICROSOFT: The Redmond, Washington-based global technology giant would report its fiscal third-quarter earnings of $1.76 per share, which represents year-over-year growth of over 25% from $1.40 per share seen in the same quarter a year ago. The world’s largest software maker’s revenue would rise over 17% to around $41 billion, up from the $35.02 billion a year earlier.
“An improving spending environment drives several sources of potential upside to Q3, most prominently around the hybrid cloud engine (Azure + Server Products) and Windows OEM. Strong positioning for multiple secular trends and an attractive valuation make MSFT a Top Pick in Software,” noted Keith Weiss, equity analyst at Morgan Stanley.
FACEBOOK: The world’s largest online social network is expected to report its first-quarter earnings of $2.35 per share, which represents year-over-year growth of over 37% from $1.71 per share seen in the same quarter a year ago.
The Menlo Park, California-based social media conglomerate would post revenue growth of over 33% to around $23.6 billion. It is worth noting that the company, on average, has delivered an earnings surprise of over 22% in the last four quarters.
“Monetization Potential: We are positive on FB’s monetization roll-out of Instagram as well as FB’s ability to continue to innovate and improve its monetization (Canvas Ads, Dynamic Ads, video). Combined with the high and growing engagement we see monetization upside going forward,” noted Brian Nowak, equity analyst at Morgan Stanley.
“Investing from Position of Strength to Drive Faster Long-Term Growth: We are modeling ~28% GAAP opex (excl. one-time items) growth in 2021, implying an incremental ~$15bn in opex. Our base case model implies opex per employee moderates in ’21 while FB hiring remains roughly flat on an absolute basis. We believe FB will grow EPS at a ~29% CAGR (2019-2022).”
APPLE: The consumer electronics giant would post its second-quarter earnings of $0.99 per share, which represents year-over-year growth of over 54% from $0.64 per share seen in the same quarter a year ago. The iPhone manufacturer would post revenue growth of over 33% to around $77.6 billion.
“We expect the strength of Apple’s broad portfolio of products & services to help re-rate AAPL shares, amplified by today’s product launch event. We forecast Product growth of 43% Y/Y and Services growth of 19% putting us at $80.2B in revs and $1.03 in EPS for the March Q, 4-5% ahead of consensus,” noted Katy Huberty, equity analyst at Morgan Stanley.
The eCommerce leader for physical and digital merchandise is expected to report its first-quarter earnings of $9.98 per share, which represents year-over-year growth of about 100% from $5.01 per share seen in the same quarter a year ago.
The Seattle, Washington-based multinational technology giant would post revenue growth of about 40% to around $105.1 billion. It is worth noting that the company, on average, has delivered an earnings surprise of about 187% in the last four quarters.
“We expect strong 1Q21 results with revenue and Op Inc. 3% & 11% above consensus estimates. Key rev. drivers include eCommerce, AWS, Adv., & Sub. rev. Our 1Q21 Op Inc. est. is driven by AWS & Adv., offset partially by COVID-19 costs. 2Q21 revenue guide is key, we expect AMZN eCommerce growth of +15% y/y despite tough comps. We remain bullish on’21 Op margin expansion, our est. is 17% above consensus,” noted John Blackledge, equity analyst at Cowen.
TESLA looks bullish with a potential break to $1,111,50; TSLA ETP to enhance profits
Dear traders, the article below will present my insights on TESLA (NASDAQ: TSLA) and Volkswagen (OTCMKTS: VWAGY) stocks. I will also explain how you can benefit from trading the ETPs.
Tesla Stock Trading Idea Explained
Many traders have been asking me different questions time and time again. Is Tesla a good stock to buy, how to short TSLA stock, what is TSLA? Tesla, Inc. is an American electric vehicle and clean energy company based in Palo Alto, California. It is listed on NASDAQ under the TSLA symbol. You can also trade TSLA with a factor of 2x or 3x leverage with a listed Tesla ETP instrument.
All other questions can be answered, but before we delve deeper, we need to explain some important things regarding the evaluation of TSLA stock and the forward P/E Ratio.
Price to Earnings Ratio
Price / Earnings ratio (P/E Ratio) is also like saying, how many years of Earnings does it take to pay back the price. A company with a Price/Earnings ratio of 14 says it might take 14 Years of Earnings to repay the price. So, in short, Earnings is the amount a Company Earns for the Year. On March 31, Tesla’s PE Ratio was 1,066.98.
The normal P/E Ratio should be somewhere between 10-25, which means using today’s earnings and valuation, it would take 1066 years of Earnings to pay back the current investment. It means, therefore, the price of the stock is mainly based on Future Earnings.
The conclusion is that investors expect the Future Earnings to rise substantially on TSLA stock.
Tesla belongs to the industry where there will be competition, but the investors think it’s the lead company in this space. Still, in my opinion, it is pretty much wrong to feel this way because there are car manufacturers with over 100 years of trading experience that will also play in the Electric Vehicles space and be competitive against Tesla.
Given the current political mandate on climate change, electric vehicles would be the only ones being sold in the post year 2030, so it has a large market to play in. While Norway is already banning new internal combustion vehicles from 2025, Sweden, Denmark, the U.K., Ireland, and the Netherlands, for example, are planning this step for 2030.
I wouldn’t be surprised if Germany and France follow suit in the next few years.
Significant factors in the electric vehicle industry will be:
The demand for batteries available for the new electric vehicles
The electric car bandwagon is gathering speed. Volkswagen now says 70% of sedan and SUV sales from its namesake VW brand in Europe will be battery-electric by 2030. Investment bank UBS raises its global electric predictions to unprecedented heights. Still, mainstream forecasters don’t share this exuberance.
People think that Tesla will have a monopoly on Electric Vehicles, but in my opinion, they are wrong as major car manufacturers are planning the same thing.
Volkswagen Stock Analysis
Short Term Stock Analysis
Volkswagen (VOWG.DE) is having a strong uptrend. Shares of Volkswagen, a German car giant, have been in an uptrend ever since a Wall Street analyst raised his bank’s price target for the stock on a bullish view of the company’s electric car plans. Obviously, the EV plans for the German giant boosted the price of stocks. 271-281 is the buying zone, and we can see a lot of confluence.
If the market bounces from the zone, we should expect a re-test of M H3 356.25. Loos for a breakout of the A-B-C pattern and the move to 400.87. VOWG.DE stock, in my opinion, has a good swing potential on the H4 timeframe.
Tesla Stock Analysis
Short term stock analysis H3
In the chart above, we can see a strong uptrend. The strong uptrend goes in accordance with supporting fundamentals where investors are very bullish. TSLA stock is a “risky” stock meaning that Tesla does have investments in bitcoin. They might be using bitcoin to deal in sales, so that might be inflating their value.
The value is definitely overpriced, and if you invest in Tesla, it’s similar to investing in Bitcoin. It is a herd mentality, and traders think it will take over the giants IBM and Apple. Due to that factor, the short-term TSLA trading idea is bullish.
We can see a strong buying zone around 616.50. See the zoomed chart below.
We can easily see rising trend lines and an A-B-C bullish pattern exactly at support. Targets are 764, followed by 820 and 887. Short-term rising ABC pattern, camarilla pivot points are supportive for bulls, and buying the dips is a good scenario. At this point, we see that price wants to retest the high of 889 but judging the current momentum and the price action, we could easily see a breakout towards 1111.50. This is the strongest camarilla resistance level Q 5 camarilla. When the price hits the level, short sellers will have the opportunity to sell the stock
Trading Tesla ETPs
In the case of ETP trades on TSLA stock, we can magnify the exposure even without the need for a margin or CFD account.
As you trade it like any other stock, the entry zone 616.50 (308.00 zone in TSL2) is the zone where you might get into a magnified exposure. The advantage of trading TSLA stock with the magnified exposure allows a trader to multiply the returns of any asset, in this case, TSLA.
Let’s see the example of the above trading idea where the 616.50 zone is a buying zone. For example, let’s assume you open a trade, the ETP that trades TESLA stock, and you go with a leverage factor of 2 (TSLA2). When the Tesla share increases by 2% during a trading day, your ETP (TSLA2) will increase by 4% (excluding fees and adjustments).
Conversely, if the value of Tesla drops by 2% on any given day, ETPs offering 2x exposure will lose 4%, respectively.
Swing TSLA Trading Idea
Now, moving back to a daily chart, the situation is similar, but there is a twist. The daily, being a swing trading time frame is susceptible to fewer fluctuations than H4 or H1, we can spot a clear breakout in the trend direction. As stated above, our fundamental analysis highlights the herd mentality, and investors follow the bitcoin pattern. Buying the dips as speculation takes place that TESLA will be the global leader in electric vehicles. Let me ask you a simple thing.
At the end of the day, would you rather have a Tesla EV in your garage or a Porsche EV?
I’d have the Porsche, and the VW Group company is worth only a mere fraction compared to Tesla. VW Group is USD1355Bln market cap, PE ratio of 17.61
Tesla is USD682Bln, PE Ratio of 1112.00; that’s just crazy. The price is over-inflated, and sooner or later, this is going to burst like a bubble. Watch it.
What is an ETP
Now, let’s talk about ETPs and how they could improve your potential gains while reducing trading risks with TSLA. The ETP stands for leveraged exchange-traded products. The standard definition of the ETP* is that Exchange-traded products (ETPs) are types of securities that track underlying securities, an index, or other financial instruments.
ETPs trade on exchanges similar to stocks meaning their prices can fluctuate from day-to-day and intraday. However, the prices of ETPs are derived from the underlying investments that they track.
Main Benefits of the ETPs
There are multiple benefits of trading the ETP compared to standard stock trading. You can choose leveraged (3x, 2x) and Inverse (-1x) exposure to stocks and blue-chip companies such as Tesla, Apple, Amazon. You don’t need a margin account (no margin calls). Additionally, you can trade ETPs just like any other stock/ETF on a regulated exchange (unlike CFDs) via most major brokers.
ETPs are listed on the London Stock Exchange and Euronext in EUR, GBP, and USD, and all of the ETPs are physically backed with the underlying shares, so there is no credit risk.
The pile-on by media and scolding by regulators show how precarious China can be for big foreign brands, and how a company’s handling of an incident can turn into a crisis if the country’s tightly-controlled news outlets turn against it.
Tesla’s defiance of industry convention, embodied by founder Elon Musk and a corporate culture that rarely admits mistakes, has won fans in the United States, but has backfired in China. Musk had such cachet that China’s government allowed Tesla to be the first foreign carmaker not forced to team up with a partner to make cars locally. Now, Tesla is learning lessons its longer-established rivals got years ago.
Tesla’s troubles in China also underscore a problem Musk and senior Tesla executives have acknowledged, though mainly in relation to the company’s North American business. Tesla’s rapid sales growth has outrun its capacity to repair vehicles when hardware goes bad.
“Service expansion is really important to the future strategy of the company,” Tesla Chief Financial Officer Zach Kirkhorn told investors in January.
When a Tesla customer, angry over the handling of her complaint about malfunctioning brakes, climbed on top of a Tesla in protest on Monday at the Shanghai auto show, videos of the incident went viral.
The incident escalated after Grace Tao, Tesla’s vice president for external relations – a former anchor at state broadcaster CCTV – questioned whether the angry customer, surnamed Zhang, was acting on her own.
In an interview with a local news outlet, Tao said, “maybe she … I don’t know, I think she is quite professional, there should be (someone) behind her.”
“We have no means to compromise, it’s just a process in the development of a new product,” she added.
Tesla scrambled into damage-control mode, asking the online news outlet to withdraw the report, the outlet said on Tuesday on WeChat.
Tesla issued a series of increasingly contrite late-night statements, from Monday’s “no compromise” to Tuesday’s “apology and self-inspection.” By Wednesday night, Tesla said it was “working with regulators for investigation.”
The official Xinhua news agency said Tesla’s apology was “insincere” and called for removal of a “problematic senior executive,” while the Global Times cited Tao’s comments in calling Tesla’s “blunder” a lesson for foreign firms in China.
Tao, who joined Tesla in 2014, could not be reached for comment. Tesla did not reply to a request for further comment.
“There have been consistent complaints on social media with Tesla in China regarding its quality and service issues, which seem to have been largely ignored by the local team until Tuesday,” said Tu Le, analyst at research firm Sino Auto Insights.
“It’s a delicate dance, though, since Tesla helps highlight the entire EV sector helping ALL companies grow their sales and raise their profiles,” he said.
Tesla cars, made at its own Shanghai factory, are highly popular in China, which is by far the world’s biggest EV market and accounts for 30% of Tesla’s sales.
Investors have not shown worry. Tesla shares rose this week.
Pressure on Tesla had been building.
Last month, it came under scrutiny when the military banned Teslas from entering its complexes, citing security concerns over vehicle cameras, sources told Reuters. Days later, Musk appeared by video at a high-level forum, saying that if Tesla used cars to spy in China or anywhere, it would be shut down.
Tesla appeared to have scrapped much of its public relations team in the United States last year, although it has been hiring public relations staff in China.
For communications, it relies heavily on Musk’s Twitter feed, which has over 50 million followers. As of Thursday, he had been silent on the China situation, which remained a hot topic, as Tesla owners took to Weibo to complain about quality issues such as sudden acceleration or steering failure.
On Thursday, Global Times Editor-in-Chief Hu Xijin said the intent is not to force Tesla from China.
“Our ultimate goal is to make foreign companies adapt to the Chinese market, seriously abide by Chinese laws and regulations, respect Chinese culture and consumers, and become a positive element in the Chinese economy. Whether it is a lesson or help, it all points to the same goal.”
(Reporting by Tony Munroe in Beijing and Yilei Sun in Shanghai; additional reporting by Hyunjoo Jin in San Francisco; Editing by Nick Zieminski)
The unusual public apology from Tesla followed criticism in state media, and an incident at the Shanghai auto show that got wide attention in China’s social media. An unhappy customer by clambered atop a Tesla at the auto show to protest the company’s handling of her complaints about malfunctioning brakes.
Videos that went viral on Monday showed a woman wearing a T-shirt emblazoned with the words “The brakes don’t work” and shouting similar accusations while staff and security struggled to restore calm.
The trouble for Tesla in China overlapped with new questions in the United States about the safety of the company’s Autopilot partially-automated driving systems. Police in Texas are investigating a fatal crash involving a Tesla Model S that hit a tree and burst into flames.
Rescuers found victims in the passenger and rear seat, not the driver’s seat. Federal regulators are investigating the crash, and have a total of 24 probes underway of accidents involving Teslas operating on Autopilot.
Tesla sells roughly 30% of its cars in China, made at its Shanghai factory. But it has faced occasional criticism over issues such as complaints of battery fires.
Monday’s incident led state broadcaster CCTV to call for an investigation of reported brake problems on Tesla cars, while China’s anti-graft watchdog weighed in with a commentary saying such disputes should be resolved within the rule of law.
“Individuals should not take extreme measures, and enterprises should not be arrogant and unreasonable,” the Central Commission for Discipline Inspection said late on Tuesday.
On Wednesday, a representative at Tesla’s store in Zhengzhou, where the protesting customer came from, told local state media the automaker will share data related to the brake incident with local market regulators for investigation.
Tesla said on Monday that the woman was a vehicle owner who had been involved in a collision earlier this year. It cited “speeding violations” for the crash, adding in a social media statement that it had been negotiating with her about returning the car, but the talks had stalled over a third-party inspection.
Last month, Tesla came under scrutiny in China when the military banned its cars from entering its complexes, citing security concerns over cameras in its vehicles, sources told Reuters.
That prompted founder Elon Musk to say that if Tesla used cameras to spy in China or anywhere, it would be shut down. Earlier this month, Tesla said cameras in its cars are not activated outside of North America.
The woman whose protest started it all will be detained for five days, Shanghai police said on Tuesday.
Police said the woman and a female accomplice – identified only by their surnames, Zhang and Li – “caused chaos” at the trade fair on Monday when they arrived at the Tesla display “to express their dissatisfaction due to a consumer dispute.”
Zhang was ordered detained for “disrupting public order,” while Li received a warning, police said. Zhang and Li could not be contacted for comment.
(Reporting by Josh Horwitz and Yilei Sun; additional reporting by the Shanghai newsroom; editing by Dan Grebler and Nick Zieminski)
For example, home mortgages get packaged and sold as CMOs (collateralized mortgage obligations). Yet CMOs are only one type of CDO (collateralized debt obligation).
Often described as financial abbreviations, the list is long and never-ending. It includes ARMs, CDs, ETFs, MMKTs, REITs, TSAs (no, not that TSA), UITs, etc.
Even individual stocks have their own trading symbols, such as BA (Boeing), AAPL (Apple), T (AT&T), TSLA (Tesla).
BANKING AND CORPORATE ACRONYMS
The banking world has its own terms of description. They include AIR, APR, EFT (not to be confused with ETF), FDIC.
Others terms of note include CAGR, CAPEX, COB, EPS, LLC, MTD, NAV, NDA, P&L, P/E, ROA, ROI, ROIC, RONA, ROS, SIV, and TSR.
Also, there are cute descriptive terms to describe various products. Some of these are general (strips and spreads); others are more specific (TGREs, pronounced ‘tigers’; and SPDRs, pronounced ‘spiders’).
And if all that isn’t enough, let’s go to the corporate world where officers in senior management are identified by their position. A CFO is Chief Financial Officer, a COO is Chief Operating Officer, and a CAO is Chief Accounting Officer.
More designations include CFA, CFM, CIA (Certified Internal Auditor), CMA, CPA, and CSO.
The corporate world’s tendency to assign three-letter designations to its officers also includes a CMO. This person’s full title is Chief Marketing Officer and has nothing to do with the CMO (collateralized mortgage obligation) referred to earlier in this article.
ACRONYMS FOR BROKERS
Apart from the tendency to describe and define using acronyms and financial abbreviations, there are brokers who in the investment world who identify themselves with various activities. Among these are stock brokers, bond brokers, commodity brokers, and foreign exchange brokers.
Yet the tendency persists. Foreign exchange is abbreviated as FOREX, or simply FX. And some FOREX brokers are known as ECN brokers, or, ECN Forex brokers.
The acronym ECN stands for Electronic Communication Network.
“ECN or Electronic Communication Network is a technology bridge built with the purpose to links retail Forex market participants or traders to liquidity providers. So eventually ECN is a non dealing desk bridge with straight-through processing execution that enables execution in a direct connection between the parties.”
There are also NDD Forex brokers and STP Forex brokers.
GOVERNMENT ACRONYMS AND MORE
No where is the proliferation of acronyms more prevalent than in government. Their use borders on excessive and the list is mind boggling. Here are some government agencies – NSA, NSC, CIA, NTSB, FDA, DEA, OMB, FAA, UST, IRS, HEW, OSHA, TSA, GAO, BATF, FBI, SBA, SEC and EPA.
The sports world is full of them: NBA, NFL, NHL, NCAA, PGA, NASCAR, NHRA.
Acronyms are all around us. Texting and social media reinforce their use for reasons of speed and expediency.
I suppose if there is an argument against their use, it is that we may have dampened our capacity for linguistics and conversation. I wonder how many of us know what a specific acronym stands for when we read something in which one or more of them are referenced; or when we hear them mentioned in a news report.
Tesla Inc. (TSLA) is trading higher by more than 1% in Monday’s pre-market following a major analyst upgrade. The stock has struggled since topping out at 900 in January despite better-than-expected production and deliveries in the first quarter, underpinned by strong Model Y demand in China. Worldwide chip shortages and forced assembly line shutdowns have contributed to the downturn and could weigh on shares through the second quarter.
In addition, the stock rallied more than 830% in 2020, setting off extreme overbought technical readings similar to 2013 and the first quarter of 2014 when it gained over 760%. Tesla posted no additional gains for the next three years, following the classic market adage that “the bigger the move, the broader the base”. Of course, it’s hard to forecast the beneficial impact to shares of the market bubble set into motion by U.S. and world stimulus since March 2020.
Canaccord Genuity analyst Jed Dorsheimer upgraded the stock to ‘Buy’ with a $1,071 target on Monday, noting “Tesla’s focus on first-principle engineering we believe will radically change the battery market, enabling the company to further the lead in BEVs and expand into the solar and home energy markets with its Powerwall products. Battery supply constraints will begin to alleviate in 2022, as the new 4680 cell design production comes online in Giga Nevada”.
Wall Street and Technical Outlook
Wall Street consensus has improved in the last three months, lifting to a ‘Hold’ rating based upon 13 ‘Buy’, 1 ‘Overweight’, 13 ‘Hold’, and 3 ‘Underweight’ recommendations. More importantly, six analysts still recommend shareholders close positions and move to the sidelines. Price targets currently range from a low of $67 to a Street-high $1,200 while the stock is set to open Monday’s session about $100 below the median $787 target. This placement bodes well for a bounce off corrective lows but another breakout may not be in the cards.
Tesla rallied above June 2017 resistance at a split-adjusted 77.40 in March 2019 and tested that level successfully during the pandemic decline. It cleared February 2020 resistance in June and took off on an historic trend advance that carved a picture-perfect Elliott five-wave rally into January 2021’s all-time high at 900.40. Monthly relative strength readings have now crossed into active sell cycles, predicting the stock will remain rangebound through most or all of the year.
Musk, the Tesla Inc CEO who was only a year old when Telesat launched its first satellite, is putting the so-called Starlink LEO into orbit with his company SpaceX, and Amazon.com Inc, which Bezos founded, is planning a LEO called Project Kuiper. Bezos also owns Blue Origin, which builds rockets.
Despite the competition, Dan Goldberg, Telesat’s chief executive officer, voices confidence when he calls Telesat’s LEO constellation “the Holy Grail” for his shareholders – “a sustainable competitive advantage in global broadband delivery.”
Telesat’s LEO has a much lighter price tag than SpaceX and Amazon’s, and the company has been in satellite services decades longer. In addition, instead of focusing on the consumer market like SpaceX and Amazon, Telesat seeks deep-pocketed business clients.
Goldberg said he was literally losing sleep six years ago when he realized the company’s business model was in peril as Netflix and video streaming took off and fiber optics guaranteed lightning-fast internet connectivity.
Telesat’s 15 geostationary (GEO) satellites provide services mainly to TV broadcasters, internet service providers and government networks, all of whom were growing increasingly worried about the latency, or time delay, of bouncing signals off orbiters more than 35,000 km (22,200 miles) above earth.
Then in 2015 on a flight home from a Paris industry conference where latency was a constant theme, Goldberg wrote down his initial ideas for a LEO constellation on an Air Canada napkin.
Those ideas eventually led to Telesat’s LEO constellation, dubbed Lightspeed, which will orbit about 35 times closer to earth than GEO satellites, and will provide internet connectivity at a speed akin to fiber optics.
Telesat’s first launch is planned in early 2023, while there are already some 1,200 of Musk’s Starlink satellites in orbit.
“Starlink is going to be in service much sooner … and that gives SpaceX the opportunity to win customers,” said Caleb Henry, a senior analyst at Quilty Analytics.
Starlink’s “first mover” advantage is at most 24 months and “no one’s going to lock this whole market up in that amount of time,” Goldberg said.
Telesat in 2019 signed a launch deal with Bezos’ aerospace company Blue Origin. Discussions are ongoing with three others, said David Wendling, Telesat’s chief technical officer.
They are Japan’s Mitsubishi Heavy Industries Ltd, Europe’s ArianeGroup , and Musk’s SpaceX, which launches the Starlink satellites. Wendling said a decision would be taken in a matter of months.
Telesat aims to launch its first batch of 298 satellites being built by Thales Alenia Space in early 2023, with partial service in higher latitudes later that same year, and full global service in 2024.
The Lightspeed constellation is estimated to cost half as much as the $10 billion SpaceX and Amazon projects.
“We think we’re in the sweet spot,” Goldberg said. “When we look at some of these other constellations, we don’t get it.”
Analyst Henry said Telesat’s focus on business clients is the right one.
“You have two heavyweight players, SpaceX and Amazon, that are already pledging to spend $10 billion on satellite constellations optimized for the consumer market,” he said. “If Telesat can spend half that amount creating a high-performance system for businesses, then yeah, they stand to be very competitive.”
Telesat’s industry experience may also provide an edge.
“We’ve worked with many of these customers for decades … That’s going to give us a real advantage,” Goldberg said.
Telesat “is a satellite operator, has been a satellite operator, and has both the advantage of expertise and experience in that business,” said Carissa Christensen, chief executive officer of the research firm BryceTech, adding, however, that she sees only two to three LEO constellations surviving.
Telesat is nailing down financing – one-third equity and two-thirds debt – and will become publicly traded on the Nasdaq sometime this summer, and it could also list on the Toronto exchange after that. Currently, Canada’s Public Sector Pension Investment Board and Loral Space & Communications Inc are the company’s main shareholders.
France and Canada’s export credit agencies, BPI and EDC respectively, are expected to be the main lenders, Goldberg said. Quebec’s provincial government is lending C$400 million ($317 million), and Canada’s federal government has promised C$600 million to be a preferred customer. The company also posted C$246 million in net income in 2020.
Executing the LEO plan is what keeps Goldberg up at night now, he said.
“When we decided to go down this path, the two richest people in the universe weren’t focused on their own LEO constellations.”
(Reporting by Steve Scherer in Ottawa; Editing by Matthew Lewis)
Tesla plans to have the factory up and running by July 1, 2021 to start building its electric crossover, the Model Y but the process has been slow and complicated by environmental disputes.
In December, Tesla was told by a court to suspend clearing of a forest at the site of the proposed factory after environmentalists said cutting down more trees could endanger hibernating snakes.
“The German approval framework for industrial and infrastructure projects as well as spatial planning directly contradicts the urgency to plan and realise such projects that is necessary to battle climate change,” Tesla said in a letter to a local court seen by Reuters.
Tesla, in the letter dated April 7, said it was “particularly irritating” that there was still no timetable for the final approval of the plant, located in Gruenheide outside Berlin, 16 months after the carmaker applied for it.
The letter, first reported by newspaper Frankfurter Allgemeine Zeitung, urges authorities to speed up processes to ensure investors have more transparency about when their investments in climate-friendly technologies pay off.
Red tape in Germany has also been a problem in the area of wind energy expansion, with some projects taking several years from application to realisation.
(Reporting by Nadine Schimroszik; Writing by Christoph Steitz; Editing by Bernadette Baum)
California-based electric vehicle and clean energy company Tesla reported better-than-expected production and deliveries in the first quarter of this year, largely driven by solid demand for the Model Y in China in mid-January, sending its shares up over 4% on Monday.
In the first quarter, the high-performance electric vehicles manufacturer produced just over 180,000 vehicles and delivered nearly 185,000 vehicles despite the ongoing semiconductor shortage in the auto industry. That was higher than the market expectations of 177,822 vehicles.
Following this, Tesla shares, which surged over 740% in 2020, closed 4.42% higher at $691.05 on Monday.
“Tesla 1Q deliveries (184,700) were 7% above consensus and 20% above MS. While we would prepare for 2Q volumes to fall modestly on a sequential basis (chip shortage), the magnitude of the 1Q beat is supportive to FY consensus expectations which stand at 842k units (MS at 785k units),” noted Adam Jonas, equity analyst at Morgan Stanley.
“Tesla’s strategy appears to prioritize volume and capacity expansion (more to come here) while vertically integrating on the battery cell side to ‘control its own destiny.’ We conservatively forecast Tesla’s EV volume growth to lag the overall market over the next decade. We forecast the company to expand to 10 vehicle assembly factories by 2030 supporting volume in the 5mm to 6mm unit range by that year.”
Tesla Stock Price Forecast
Twenty-seven analysts who offered stock ratings for Tesla in the last three months forecast the average price in 12 months of $681.48 with a high forecast of $1,200.00 and a low forecast of $135.00.
The average price target represents a -1.38% decrease from the last price of $691.05. Of those 27 analysts, ten rated “Buy”, ten rated “Hold” while seven rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $880 with a high of $1,272 under a bull scenario and $450 under the worst-case scenario. The firm gave an “Overweight” rating on the electric vehicle producer’s stock.
“A double-fly-wheel. We believe Tesla can leverage its cost leadership in EVs to aggressively expand its user base, over time generating a higher % of revenue from recurring/high-margin services revenue,” Morgan Stanley’s Jonas added.
“Services drives the upside. We forecast Tesla’s network services EBITDA as a % of total TSLA EBITDA to reach 11% by 2025, ~19% by 2030 and ~36% by 2040. Tesla Service revenue includes automated driving, infotainment, upgrades, supercharging, maintenance, telematics, etc. Valuation supportive vs. tech. Including Network Services, Energy & Insurance to our core auto fcsts, at $880 Tesla trades at approx 27x EV/EBITDA in 2025 and 6x 2025 sales. Expensive vs. auto but not vs. software/tech comps.”
Several other analysts have also updated their stock outlook. JP Morgan raised the stock price forecast to $155 from $135. Cowen and Company lifted the price target to $573 from $545. Wedbush upped the raises price objective to $1000 from $950. Jefferies lowered their target price to $700 from $775.
Gatik, which works with Walmart Inc in Arkansas and Louisiana and Loblaw Companies Ltd in Canada to deliver goods to stores from warehouses using autonomous trucks with safety drivers, has seen a boom in business as the pandemic has boosted sales at grocery stores.
“What I can share is our revenue is in the millions. So this is not a free service that we offer,” said co-founder and chief executive Gautam Narang. He said Gatik’s business model for now is to be a delivery service provider for retailers using self-driving technology rather than selling the technology to automakers.
Self-driving truck companies, especially those supplying big rigs that transport goods from warehouse to warehouse and drive along highways, have been gaining a lot of traction with investors keen to jump on the emerging technology. Still, the technology is years away from removing the driver completely.
Narang said Gatik and Walmart plan to test out fully driverless delivery in Arkansas later this year. “We actually worked with the Arkansas State Highway Commission to get the approval to take the driver out,” said Narang. He said approval for that came in December.
Gatik, which has raised nearly $30 million so far, said its trucks are owned by a major fleet operator which it isn’t yet disclosing. So far it has been using the Ford Transit chassis for its existing fleet of autonomous delivery trucks.
Ford Motor Co Executive Chairman Bill Ford’s venture capital fund Fontinalis Partners is an early investor in Gatik, according to Narang.
The collaboration between Isuzu and Gatik is limited to the United States and Canada and Isuzu will provide engineering support to Gatik for retrofitting its Series N medium-duty trucks, said Shaun Skinner, who leads Isuzu’s commercial truck division in those two countries.
Isuzu North America Corporation is a unit of Japan’s Isuzu Motors Ltd.
(Reporting by Jane Lanhee Lee; Editing by Christopher Cushing)
Dollar weakness was responsible for all of today’s gains as market participants bid the precious yellow metal lower by actively selling today.
After the three-day holiday weekend, U.S. equities had respectable gains with the Dow Jones Industrial Average gaining just over 393 points, which is a net gain of 1.13% and closed at its highest recorded price level of 33,527.19. The S&P 500 also closed at a new record high after factoring in today’s 58-point gain (+1.44%)., Currently, the index is at 4077.91. Although the NASDAQ composite did not close at a new all-time high it had the largest percentage gains of the three major indices. After factoring in today’s 225-point gain (+1.67), the heavy tech index closed at 13,705.59. A major bounce in the FANG stocks was largely responsible for today’s sizable gains in the NASDAQ with Facebook, Google, Microsoft, and Tesla providing strong tailwinds which led to the 1.67% gain in the NASDAQ.
In both gold futures and spot pricing it was dollar weakness that held any losses to a minimum. The dollar index lost 44 points, or -0.47% and is currently fixed at 92.61. According to the KGX (Kitco Gold Index) spot gold is currently fixed at $1728.10 which is a net decline of $2.20 on the day. On closer inspection market participants bid the precious metal lower by $9.50. Concurrently dollar weakness contributed $7.30 of value resulting in today’s marginal decline of $2.20.
The cryptocurrencies, specifically Bitcoin futures which trades on the Chicago Mercantile Exchange closed, in essence, unchanged but still remained extremely strong with a single coin valued just shy of $60,000 at $59,525.
While gold futures were able to eke out a fractional gain the same cannot be said for silver. Silver futures basis the most active May contract lost approximately 3 ½ cents in trading today (-0.15%) and is currently fixed at $24.915.
Today Reuters reported that the service sector gauge surged to a record high in March based on strong growth in new orders.
“A measure of U.S. services industry activity surged to a record high in March amid robust growth in new orders, in the latest indication of a roaring economy that is being boosted by increased vaccinations and massive fiscal stimulus.”
The record numbers reported from the Institute of Supply Management (ISM) coupled with Friday’s jobs report which revealed that the United States added 916,000 jobs last month (which is the largest monthly gain since August) clearly underscores that the economy in the United States is truly rebounding as the economic scenario in the United States continues to gain momentum. Considering those factors gold and silver prices held up rather well.
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Wishing you, as always, good trading and good health,