MarketBites Daily Investment Commentary: EV Wars: Tesla Down, Lucid Up I Snap Has Become A Growth Monster

Stock Market Commentary for 2/24/2021:
  • The Big Picture:
    Fed Chair Jerome Powell, eased investors’ anxiety about rising yields and inflation. Powell stated that inflation remains soft, and an interest-rate increase from the Fed isn’t imminent. Energy and financial stocks continued to rally.

    – High-growth technology stocks and more speculative SPAC stocks, plummeted in early trading on Tuesday. Mr. Powell’s comments on inflation and rates tamed the drop, but it still wasn’t enough to turn the technology sector, or SPAC ETFs, green on the day.

  • Stock Talk:
    The Winner of the Day: Snap
    Snapchat was Tuesday’s big winner, as the stock flew 11.10%. Snap dominated headlines: check out our second story for a more in-depth look!What’s Moving Pre-Market: Square Inc.
    Square announced during Tuesday’s earnings report that it purchased $170M of Bitcoin last quarter. Cash App continues to expand revenue for the firm, but uncertainty around Bitcoin and growth rate concerns caused the stock to trade 4.56% lower after-hours.

    The Loser of the Day: Churchill Capital IV
    Churchill Capital’s involvement in Lucid’s SPAC has sent the stock tumbling. Read more about Churchill’s involvement here. Lucid’s SPAC is highly anticipated, and is topic of discussion in today’s primary story!

  • The Data Room:
    – Per Johns Hopkins, the U.S. reported 59,614 new Covid-19 cases yesterday. So far, 44.5 million Americans have received their first round of vaccinations.

– By Raymond Kanyo


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Top Investment Story #1: Lucid’s EV Dream

What is Happening?

While Tesla just entered “bear market” territory, competitor Lucid Motors is ready to go public through a SPAC. Lucid Motors will be valued at around $60 billion, making it the eighth most valuable automaker on the planet. Lucid has yet to sell a single vehicle!

Why does this Matter?

First, why is Tesla down 20% from its January 26th peak? We have 3 reasons:

  1. Elon Musk tweeted that Bitcoin’s price was “too high,” even though his company is an investor. Bitcoin is down 20% since the tweet.
  2. Rising interest rates and inflation fears have been punishing high-growth, rich-valued stocks such as Tesla.
  3. Last Thursday, Tesla cut the price of the Model 3 and Model Y by $1,000. Some say Tesla is feeling the pressure from new entrants in the EV space.

One of these new entrants is Lucid Motors, run by former Tesla engineer Peter Rawlinson. Since Lucid is going public with a SPAC deal, investors can already trade Lucid Motors through the ticker $CCIV. At a $60 billion valuation with no sales, Lucid is the second most expensive EV stock in the world (second to Tesla).

Why? – It is hard to say definitively. Lucid is targeting the luxury sedan market with its first vehicle. It also touts first-class battery technology with an impressive 500-mile range! (Lucid’s battery technology is also used in Formula E.) Lucid will raise roughly $4.6 billion through the SPAC, and is backed by Saudi-Arabia’s sovereign wealth fund. The funds will be used for expansion (adding 3,000 employees and rolling out an SUV by 2022).

Barron subscribers read the story here
Don’t have a subscription? Read a snippet here

The Takeaway:

The EV space is one of the hottest segment of the stock market right now. Tesla will soon be facing another competitor in Lucid Motors. While Lucid is going to be a “new” EV stock to trade, the company is already the second most expensive EV stock in the world. BYD, Nio, XPeng, Li Auto, and Fisker all trade for significantly less than Lucid.

Liked this story? Forward it to your friends 

– By Raymond Kanyo

– Published in MarketBites Daily Newsletter

Top Investment Story #2: Snap’s Growth Story
What is Happening?

Snapchat hosted their investor day, Tuesday. Many expected firm executives to put more color on the firm’s growth aspirations during the conference, and they did exactly that.

Why does this Matter?

Snap’s Senior Director of Ad Products, Peter Sellis, disclosed the expectations and capabilities of Snap’s self-serve advertisement ecosystem. Investors reacted aggressively as $SNAP popped 11.10% during Tuesday’s trading session.

“Via the work on our self-serve ad platform, we’re in a position to drive multiple years of 50% plus revenue growth”
– Peter Sellis

While the 50% revenue increases per year seem to be lofty at first glance, analysts believe Sellis could be right. The platform’s unique bidding system and algorithm have proved effective in both increasing conversion for advertisers, and producing a favorable return for $SNAP.

Shares of $SNAP closed at $70.45 Tuesday, just below the stock’s 52-week high of $72.95. The stock’s run in the last year is impressive, even compared to other players in the social media space. Since last February, $SNAP has returned over 357%.

The Takeaway:

Snap appears to have become the growth machine many had hoped it would be when it debuted. After many years, the firm is capturing incredibly impressive growth.

– 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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