Saturday, May 2, 2020

what would cause a spiral in price of automotive industry - not Covid, a tweet !!


Covid 19 ensured that people remain at home – not all by themselves but by Govt ordered lockdown ! – yes in many ways lockdown produces   a parallel human misery—with millions not able to earn their daily bread, and extreme financial anguish.  In a Capitalist economy, there is a categoric relationship between spending and income, consumption and production.  We buy the things we want and need, and in exchange give money to the people who produced those things, who in turn use that money to buy the things they want and need, and so on, forever.

Governance is the toughest thing – but whatever may be the grave pressure – people, Govt and everyone should not worry about economy more than the people. Saving lives should always be uppermost than supporting economy – if a society considers economy as the foremost, then there is definite degeneration of society !

 More and more people talk about automobiles – being in a Metropolitan city – I have not taken out my Scooter or my car for more than a month, now. Almost what petrol price is, how to shift gears, how to drive ?  .. .. .. Tesla  reported this  Wednesday that it earned $16 million and generated $5.985 billion in revenue in the first quarter, results buoyed by improved automotive margins and reductions in operating expenses. Tesla’s first quarter earnings were lower than the fourth period as the COVID-19 pandemic disrupted operations and dampened sales. But the company still managed to squeeze in a profit, its third consecutive quarter of profitability, despite the COVID-19-related disruption.

In India following global pattern, the new financial year started on a sour note for the beleaguered auto industry with zero sales reported in April. This was mainly because factories and dealerships were closed for business on account of the lockdown.  For the first time, over 100 factories of automotive companies that make scooters, motorcycles, cars,  trucks and buses did not produce even a single vehicle during the entire month of April 2020.

Do you trade in Shares ? – how often, what % of assets constitute stocks, and how often you do trading ? – and are you following the market now and managing your investments now too ? 

Tata Motors shares rose  4% as firm plans to raise Rs 1,000 crore through NCDs – and another report states that  Tata Motors share are  trading at 11-year low.  Its  share was the top gainer on Nifty in Thursday's trade amid report that its UK arm Jaguar Land Rover has restored three-fourth of its budgeted production in China. Share price of Tata Motors gained 20% to Rs 93.75 compared to the previous close of Rs 78.15 on BSE. The stock has gained 25.56% in four days. .. .. .. all these would have no impact on me .. .. do you know what would impact share prices and what would you consider before deciding on buying or selling a particular share ?

Miles away, Tesla Inc -   is an American electric vehicle and clean energy company based in Palo Alto, California. The company specializes in electric vehicle manufacturing, battery energy storage from home to grid scale and, through its acquisition of SolarCity, solar panel and solar roof tile manufacturing.  As of 2020, Tesla has many models in the market.  Tesla Motors was founded in July 2003 by engineers Martin Eberhard and Marc Tarpenning. The company's name is a tribute to inventor and electrical engineer Nikola Tesla. The next three employees were Ian Wright, Elon Musk, and J. B. Straubel, all of whom are retroactively allowed to call themselves co-founders of the company.   Musk, who formerly served as chairman and is the current CEO, said that he envisioned Tesla Motors as a technology company and independent automaker, aimed at eventually offering electric cars at prices affordable to the average consumer.  It is stated that Tesla has never had a profitable year;  however, it has had several individually profitable quarters.

In stock market analysis, the word often heard is ‘fundamentals’.   Analysts, executives, and investors appear on financial news  to talk about the fundamentals of a stock. Fund managers are always talking about how this stock or that one has strong fundamentals. There are also some traders who, in turn, proclaim that fundamentals don't actually matter and investors should rely on a stock's technical merits instead.  In the broadest terms, fundamental analysis involves looking at any data which is expected to impact the price or perceived value of a stock. This is, of course, anything aside from the trading patterns of the stock itself, As the name implies, it means getting down to basics.

Fundamental analysis focuses on creating a portrait of a company, identifying the fundamental value of its shares, and buying or selling the stock based on that information. Some of the indicators commonly used to assess company fundamentals include: Cash flow;  return on assets;   conservative gearing; history of  profit retention for funding future growth;  the soundness of capital management for the maximization of shareholder earnings and returns.  In order to follow and better understand prices of stocks, it is generally recommended to have a working knowledge of the main valuation ratios, even if you do not use them yourself. P/E is the price-to-earnings ratio and EPS is the earnings per share.   Earnings per share  is calculated by taking the net income earned by the corporate and dividing it by the number of outstanding shares issued; while Price / Earnings ratio  is measured by dividing the share price by the earnings per share. Many investors use P/E and EPS to understand if a share is correctly valued. This is fundamental analysis.

It is  never advisable to use a share price ratio in isolation (it should always be compared to its industry or market peers), these ratios are used frequently.  Because the P/E ratio isn't enough in and of itself, many investors use the price to earnings growth (PEG) ratio. Instead of merely looking at the price and earnings, the PEG ratio incorporates the historical growth rate of the company's earnings. – all that is market jargon; the price could go for a tumble, by a simple tweet – yes message on twitter !

Tesla CEO Elon Musk couldn’t stop himself from busting out a mix of random, bizarre, and legally dicey tweets on Friday, sending the price of Tesla shares falling by at least 12 percent. “Tesla stock price is too high,” he wrote in one tweet. “I am selling almost all physical possessions. Will own no house,” he wrote in another. The multi-billionaire tech entrepreneur posted a string of excerpts from the national anthem, preceded by a tweet that said, “Now give people back their FREEDOM.”

Now there is  news that Tesla boss Elon Musk wiped $14bn (£11bn) off the carmaker's value after tweeting its share price was too high. It also knocked $3bn off Mr Musk's own stake in Tesla as investors promptly bailed out of the company. In other tweets, he said his girlfriend was mad at him, while another simply read: "Rage, rage against the dying of the light of consciousness."   In 2018, a tweet about Tesla's future on the New York stock market led to regulators fining the company $20m and Mr Musk agreeing to have all further posts on the platform pre-screened by lawyers.  Tesla's share price has surged this year, putting the electric carmaker's value at close to $100bn, a mark that would trigger a bonus payment of hundreds of millions of dollars to the entrepreneur.

Strange are the ways of people ! ~ all these for people who have some money and indulge in share market – for the rest, it is only interesting 1 minute read news.

With regards – S. Sampathkumar
2.5.2020.

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