This story first published in the CNN Business newsletter Before the Bell. You’re not a subscriber yet? You can register right now. A week ago, nobody’s concept of a hot stock was Europe’s largest automaker. The company’s CEO, Herbert Diess, announced plans on Monday to build six “gigafactories” across Europe by 2030. Volkswagen (VLKAF) went even farther on Tuesday, announcing that by 2025, it would sell more than 2 million electrified vehicles, hire 6,500 coding professionals over the next five years, build its own operating system, and overtake SAP as Europe’s second largest software company (SAP). It was a frenzy of announcements, and it was well received by investors: Last week, Volkswagen’s main Frankfurt shares rose about 20%, increasing the company’s 2021 gains to 45 percent. Meanwhile, after a big drop on Friday, its less-liquid ordinary shares are up 65 percent. Volkswagen may soon usurp Tesla’s throne. Retail traders in the United States also joined in on the action, sending the company’s thinly traded American depositary receipts (ADR) skyrocketing. ADRs are a type of stock that allows investors to buy and sell overseas stocks on US stock exchanges. Continue reading Volkswagen has been forthright about the magnitude of its electric ambitions, stating that it will invest EUR35 billion ($42 billion) in the technology, making the timing of the stock jump difficult to explain. It’s known as the Tesla effect: Elon Musk’s electric car company is valued at around $625 billion, compared to $170 billion for Volkswagen. Last year, Tesla sold roughly 500,000 cars, compared to 9.3 million for Volkswagen. However, Volkswagen is beginning to resemble Tesla in the areas that matter most to investors. According to UBS analysts, Tesla could be matched in sales by Volkswagen as early as 2022, with the owner of Audi and Porsche selling 300,000 more electric vehicles than Tesla in 2025. Volkswagen’s technological goals are considerably more important. It is working hard to improve its software capabilities, and announced last month that the ID.3 will receive its first wireless updates this summer. Diess is even behaving more like Musk these days. The German CEO has joined Twitter, and his investor and media presentations are beginning to take on a “tech startup” feel, with slickly created decks. Volkswagen is investing much in batteries in order to reduce the cost of electric vehicles. Investors have failed to appreciate the pace with which Volkswagen is gaining ground on Tesla, according to UBS analysts. “”We have more confidence than ever that Volkswagen will deliver the rare combination of volume growth and margin stability or increase from here, making them the world’s largest [electric] carmaker, together with Tesla, as soon as next year,” UBS analyst Patrick Hummel stated recently. That is something that goes completely unnoticed.” Other conventional automakers are also getting a second look from investors. Both General Motors (GM) and Ford (F) have seen their stock prices rise by around 45 percent this year as executives have revealed more specifics about their electrified goals. Volkswagen, General Motors, and Ford are excellent instances of established firms adapting to massive changes brought on by the climate problem. Companies in the energy sector confront comparable difficulties. One explanation is that, according to the International Energy Agency, gasoline demand has peaked. In a report, the International Energy Agency said, “Gasoline consumption is unlikely to recover to 2019 levels, as efficiency gains and the shift to electric vehicles eclipse robust mobility development in the developing world.” What can we glean from GameStop’s profits? GameStop has had a crazy start to the year. In January, retail traders on the Reddit community WallStreetBets created a trading frenzy in the beleaguered store. As GameStop’s stock rose, Redditors applauded. They used diamond emojis (a symbol for long-term ownership) and headlines like “NEXT STOP IS THE MOON BABY” with rocket emojis, implying that they believe the stock will continue to rise. But here’s the deal: Some of these traders bought GameStop in order to penalize hedge funds who were speculating on the stock’s decline. Others, though, say the company is undervalued and might gain from increased interest in video games and new consoles during the epidemic. After the closing bell on Tuesday, GameStop (GME) will release its fourth-quarter and fiscal-year 2020 earnings. On the same day, at 5:00 p.m. ET, it will hold an investor conference call. Will the numbers point to a recovery? That isn’t apparent. Do the results, however, matter to the Reddit community? It’s also a mystery. What’s next? Monday: Existing house sales in the United States; Tencent Music earnings Tuesday: New home sales in the United States; Adobe and GameStop earnings Wednesday’s events include an EIA update on oil inventories and earnings from General Mills. Thursday: Jobless claims in the United States; fourth-quarter GDP in the United States (third estimate) Continue reading
