MarketBites Daily Investment Commentary: Apple Goes EV: What To Look For In ’24 | Walmart Did Not Listen To Pharmacists

Stock Market Commentary for 12/23/2020:
  • U.S. stocks fell for a third day, as optimism over the $900B stimulus package slumped on the emergence of a new Covid-19 strain. The mutation that emerged has now caused major lockdowns and restrictions across the U.K. and Europe. Markets could turn bullish if vaccine makers can prove that their Covid-19 vaccines are just as effective against the new strain.

  • Stock Talk:
    – Moderna and BioNtech posted their worst day for vaccine stocks in a month. BioNTech indicated that even if the mutation made the current vaccine ineffective, the company could develop another within weeks.
    – Peloton gained 11.65% after it agreed to buy commercial fitness equipment provider Precor, for $420 million in cash.
    – Travel and energy stocks fell mainly from fear of new lockdowns
  • Coronavirus tracker: Per Johns Hopkins, the U.S. reported 201,294 new cases yesterday, and current hospitalizations are at 115,351.

By Raymond Kanyo

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Top Investment Story #1: Apple Enters EV

What is Happening?

In the EV space, Tesla is the software-focused, cool brand that seems to be untouchable by traditional car makers. This might change, as Apple is back in the car business with a self-driving vehicle slated for 2024. Apple’s abundance of cash, brand loyalty, and supposed revolutionary battery tech, can make the software giant a dangerous foe in the EV world.

Why does this Matter?

Apple’s first attempt at an EV came in 2014. The effort was short-lived and rather disappointing. Why then have investors bid up Apple stock over 5% ($110 billion value) since the announcement this time?

The signs:
– The project is now led by Apple’s Artificial Intelligence Chief. The move supports Apple’s desire to build a car focused on software and AI.
– Foxconn announced that it is getting into EV manufacturing. Foxconn is responsible for building almost all iPhones in the world.
-Apple has told Automotive supplier ‘Taiwan Hota Industrial Manufacturing,’ to ramp up EV parts production ahead of a launch as early as next September.

Why Apple could make a formidable competitor:
– The car business is notoriously expensive. Apple could buy two Volkswagens, three Daimlers (Mercedes), almost four BMWs, four Hondas, almost six Fords, and about 10 Nissans.
– Rumors are circulating that Apple’s battery tech is beyond anything currently available in the market.
– Traditional car companies continue to rely on gas-powered cars to finance their EV development. Apple can be a pure EV player, that isn’t bogged down by a declining gas-engine business.

The Takeaway:

Apple could become a formidable and dangerous competitor of Tesla in the EV space. However, car development and production is a massive undertaking, even for Apple. Let’s not forget that it took Tesla 17 years to reach profitability.

-By Raymond Kanyo

– Published in MarketBites Daily Newsletter

Top Investment Story #2: Walmart & The Opioid Crisis

What is Happening?

The United States government is suing Walmart for its role in the opioid crisis, claiming that executives failed to hear pharmacists’ concerns and ordered them to fill suspicious prescriptions.

Why does this Matter?

This lawsuit has the potential to hurt Walmart greatly, should they find executives culpable. Walmart argues that the government’s claims are inconsistent, loose, and that the issue stems from Drug Enforcement Administration failures.

The United States cites the continued fulfillment of prescriptions from an Oklahoma doctor who was under investigation. Pharmacists warned their superiors of the seemingly loose scripts, and repeat customers. Between 2014 – 2017, orders from the doctor were fulfilled at an average of 13 per day; totaling over 1.5M doses. The doctor in question was sentenced to 20 years in federal prison.

In 2019 alone there were over 50,000 deaths related to opiate overdoses. U.S. prosecutors claim that this incident in Oklahoma was one of many scenarios in which Walmart executives ignored the concerns of their pharmacists.

Walmart claims it cannot possibly be responsible for their pharmacists supplying addicts who were overprescribed, but there is mounting pressure and precedence in such cases. Johnson & Johnson is on the verge of settling similar allegations for $26B, on opioid responsibility. Purdue Pharma has famously filed for bankruptcy, after activists flooded the firm with lawsuits over OxyContin. Low pricing and emphasis on rapid fulfillment hurt Walmart’s case in such matters.

The Takeaway:

Legislators are increasingly serious about tackling the opioid epidemic. As household names continue to sustain heavy losses from cases levied against them, one has to wonder why Walmart seems so confident they can escape unscathed.

– Written By Jack Dunne

– Published in MarketBites Daily Newsletter

Meet the Authors

Raymond grew up in Budapest, Hungary, where he played tennis for the Hungarian Junior Davis Cup team. At the age of 16, he received the Davis United World College Scholarship, which was established by legendary investor Shelby Cullom Davis, allowing him to attend the Taft Boarding School in Watertown, CT. After Taft, Raymond received a Presidential Scholarship to the Robins School of Business at the University of Richmond, where he studied Quantitative Economics and Finance. Raymond is a CFA Level III Candidate. Prior to joining Taylor Hoffman, Raymond worked at various financial institutions in the insurance, asset management, and financial consulting space. Outside of the office, Raymond enjoys playing tennis at ACAC and Westwood Country Club.

Raymond Kanyo
Product Manager & Investment Analyst

Jack graduated from the Robins School of Business at the University of Richmond with concentrations in Marketing and Finance in 2019. Prior to joining Taylor Hoffman, he worked in high-growth B2B SaaS marketing; assisting Fortune 100 firms to improve their web performance experience. A Long Island New York native, Jack’s hobbies include passionately supporting the Mets and Islanders, and he enjoys skiing whenever he can.

Jack Dunne
Investor Education Specialist
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