Nowadays, Tesla [Nasdaq: TSLA] is largely making headlines not for of its financials but for the tweets of its charismatic chief executive, Elon Musk. His thoughts on cryptocurrencies such as bitcoin and doge coin, which, depending on the time of day, he says are a really good or a really bad deal, can dominate whole news cycles. Someone recently brought up the huge amounts of energy needed to mine them. As it turns out, the process uses non-renewable sources of energy, which could end up reflecting badly on the image of battery-electric cars as well. In response, Musk said he will rethink his position on bitcoin, which helped cause the cryptocurrency’s price to plunge from over USD 60,000 to USD 30,000. One might wonder what his behavior did to Tesla’s own USD 1.5 billion bitcoin investment.
That Tesla chief Elon Musk would, one way or another, place his trust in Bitcoin was to be expected. He had already stated his interest and his enthusiasm for the cryptocurrency many times in the past and had previously considered switching the whole of his corporate financing to this digital money format. Words turned to action, with Tesla investing USD 1.5 billion in bitcoins.
The hammer fell on Nov. 30, 2020. General Motors will not buy into Nikola. But according to the new memorandum of understanding, GM still wants to work with Nikola on battery and fuel cell technology. Consequently, the Badger pickup truck will not emerge from GM’s assembly line as planned. And the originally projected USD 2 billion investment is also rendered moot. As a result, Nikola stock plummeted.
It may seem contradictory, since joining an important market index is a very good thing, requiring funds to adjust their holdings. In Tesla’s case, I see at least USD 8 billion would have to be invested through them. I tend to doubt this will automatically lead to a massive increase in valuation. Index funds may already have positions based on a variety of investment vehicles, such as options that can be turned into shares without any relevant influence on the price. Perhaps out of pure contrariness, the stock could turn sour when things are looking their best because analysts, investors and the media see only rising prices, completely ignoring the risks.
Fuel cell and hydrogen stocks are riding a wave of popularity as a new megatrend sweeps the market. So far, every single one of these stocks has exceeded expectations. But how long will the love affair between investors and the industry last? Will analysts and shareholders use new methods to evaluate business models, prospects, backlogs, submarkets and revenues, and, above all, the potential for profit? And will the market separate the wheat from the chaff? I’d say yes, that will definitely happen.
US manufacturer Nikola is the company currently making the most waves in the nascent hydrogen market, emerging as another success story similar to Tesla‘s. Its critics, however, consider the Phoenix-based would-be truck maker to be just as overrated as its competitor from Fremont, as it has yet to deliver on most of its promises.
What for ups and downs Tesla has seen. High-volume trading each day prior to the 5-1 split pushed the price to more than USD 2,200 – at the beginning of this year, it was below USD 400. A USD 420 billion market cap for what exactly?
An unexpectedly profitable three months propelled Tesla’s stock to over USD 850 before it plunged to USD 670 when the electric carmaker’s chief executive, Elon Musk, sent out a tweet complaining about the high price. Not much later, though, the stock rallied again, racing toward USD 1,000 after sister company SpaceX, which is also headed by Musk, announced it successfully sent one of its rockets into orbit.
Since the beginning of the year, the fuel cell stocks covered in this issue had seen a fast uptrend, which ended with the spread of Covid-19 around the world. Fears over the impact of the disease on the global economy meant some gains were quickly lost. Still, in light of increased news coverage, multiple project announcements and the growing popularity of green hydrogen, it has become clear that hydrogen and fuel cells are entering the mainstream and their breakthrough into the market is approaching rapidly.
In the previous H2-international issue, I wrote that the price rally from USD 250 to more than USD 430 already represented a short squeeze. However, I was quickly disabused of that notion when I saw Tesla’s stock hitting an intraday high of USD 1,000 before pulling back in recent weeks.