Tesla Motors Inc
Today is Christmas in March for Tesla Motors Inc (NASDAQ:TSLA) fans. After a year and a half long period of anticipation, the electric car giant is finally set to unveil its smaller, cheaper Model 3 sedan tonight.
This launch has people excited, and interested buyers have been lining up outside Tesla dealerships in hopes of getting on the reservation list. Previous Tesla owners get first dibs on the Model 3, but for just $1,000 down, drivers could get their name on the list on a first-come-first-serve basis as the dealerships opened today.
It’s also an important day for Tesla investors, as it marks the company’s first venture into a lower-cost market that could open up a valuable new revenue stream. The stock seems to be riding the hype, as shares of TSLA are up nearly 2.5% in morning trading.
We all know that hype can make stocks move, but the real question here is simple: is the Model 3 actually a game changer, and will it continue to boost this stock long-term? In order to find an answer, we need to look at some other questions regarding the Model 3.
Elon Musk and Tesla have been pitching the Model 3 as a sub-$30,000 sedan for over a year now. That number is based off a $35,000 base price and a federal tax credit that could get the starting cost of the Model 3 down to about $27,500.
This price is important for Tesla to be at, as it keeps the Model 3 right in the range of General Motors’ Chevy Bolt and the Nissan Leaf.
While this sounds good on paper, the federal tax credit that Tesla is banking on won’t last forever. The credit was intended to encourage automakers to get started on the move towards electric vehicles by helping with some of the forward costs. It only applies to the first 200,000 electric vehicles that the company sells in the U.S.
Tesla only started releasing regional sales numbers in 2014, and since then it has sold about 42,000 vehicles in America. Add in the 90,000 Model S and Model X cars that Tesla projects to sell this year, and the company is already well over halfway to the end of the credit.
While that would still give Tesla about 70,000-80,000 cars to sell under the credit, the Model 3 won’t actually begin production until the end of 2017. By then, Tesla’s tax credits will be used up and the plan will begin to roll back over the next 12 months.
Without a tax credit, this puts the Model 3 in the higher end of the range of its competition, and it could affect long-term sales after this initial hype wears off.
As mentioned above, the Model 3 is exciting for investors because it could open the company up to a large section of the market and bring in new revenue. Nevertheless, it’s important to update ourselves on Tesla’s current financial situation.
Despite increasing sales, Tesla remains a loss-making company. In each quarter of 2015, Tesla reported higher net losses compared to the corresponding quarters in 2014. Additionally, Elon Musk stated last year that the company may not achieve profits until the Model 3 hits full-scale production in 2020. It goes without saying that four more years of losses won’t make Wall Street too happy.
Furthermore, Tesla’s operating expenses are expected to rise by 20% due to development costs related to the Model 3. With rising expenses and growing losses, Tesla’s cash has slipped. The company’s cash and cash equivalents declined to $1.20 billion at the end of 2015 from $1.91 billion a year prior.
So, how will the Model 3 affect Tesla’s stock price? Well, for now, expect it to ride the hype. With potential buyers literally lining up to reserve a Model 3, there should be a big enough initial wave to keep the market interested, so long as tonight’s reveal doesn’t come with any unexpected bad surprises.
Nevertheless, there remains some serious questions about Tesla’s long-term strategy. Musk himself has said the company won’t turn a profit until 2020, and that’s probably based on the most optimistic expectations for the Model 3.
Simply put, many hopeful investors thought that the lower-cost Model 3 would finally be Tesla’s ticket out of the red, but now it looks like things won’t be that easy.
On Thursday, shares of fitness wearable maker Fitbit Inc (NYSE:FIT) rose almost 13% to $15.15 a share after its stock was rated a ‘Buy’ by Longbow analysts.
In addition to upgrading FIT stock, analysts at Longbow also set a price target for the company of $20 per share. This suggests a potential increase of 32% from Fitbit’s current stock price.
Another reason for FIT’s climb today is the company announced it sold 1 million units each of its Blaze smartwatch and Alta device, which surpassed analyst expectations and exceeded Fitbit’s own internal forecasts.
The Blaze is the #1 best selling device in the smartwatch and heart monitor categories on Amazon.com, and it has earned over 1,200 reviews on the site, with 83% giving the device a 4- or 5-star rating. It sells for $199.95.
The Fitbit Alta, a fitness wristband catered toward women, is also one of top selling fitness tracker and pedometer devices on Amazon, and is priced at $129.95.
“At Fitbit, we continue to focus on developing innovative and motivating fitness-first products that our customers love and that help them achieve their health and fitness goals,” said Woody Scal, Chief Business Officer of Fitbit. “The positive response we’ve received to Blaze and Alta demonstrates our continued ability to innovate and drive strong demand for Fitbit® products, which is what has made and kept us the leader in the global wearables category.”
BP plc (ADR)
U.K. supermajor BP plc (ADR) (NYSE:BP) announced that has entered into a broad framework agreement with state-owned Kuwait Petroleum Corp. (“KPC’’). Per the agreement, the two companies will explore opportunities for joint investment in oil and gas exploration alongwith trading deals.
The agreement will also cover investments in midstream and petrochemical projects globally, including any use of BP’s proprietary paraxylene technology as part of KPC’s petrochemicals projects. In 2014, the energy major signed a technical services agreement with KPC subsidiary Kuwait Oil Co. for oil recovery in the Burgan field.
In recent times, the performance of the beleaguered commodity crude leaves much to be desired for. Over the past week, West Texas Intermediate (WTI) crude futures dived approximately 4% and is now hovering around $38 per barrel, while natural gas prices are around the $2.000 per million Btu (MMBtu).
BP expects first-quarter 2016 production to be broadly flat with fourth-quarter 2015. Also, full-year 2016 underlying production is expected to be broadly flat with 2015. For the first quarter, the company projects sequentially lower refining margins.
London-based BP plc is one of the world’s largest energy companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemical products. It operates in three segments: Exploration and Production, Refining and Marketing, and Other Businesses and Corporate.
Genocea Biosciences Inc
On Thursday, shares of Genocea Biosciences Inc (NASDAQ:GNCA), a company known for their vaccine development, are skyrocketing today, up almost 90% in late-afternoon trading after the company announced positive 12-month efficacy data related to its GEN-003 Phase 2 dose optimization trial.
GEN-003, a therapeutic vaccine used to treat patients with genital herpes, showed significant and sustained viral reductions in comparison to a baseline across multiple dose groups.
The treatment also illustrated efficiency at multiple dose levels across secondary endpoints. In the trial, GEN-003 showed no adverse events related to immunotherapy.
Genocea CEO Chip Clark said “We are very pleased with these data, which show that GEN-003 has strong and durable effects on both HSV-2 viral activity and genital herpes clinical disease.”
Clark also believes GEN-003 could “become a cornerstone treatment” for patients who suffer from genital herpes.
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