Elon Musk makes two big moves #Breaking112
Unlike in the past, Tesla isn’t in desperate need of cash. It had $14.5 billion on hand at the end of September, more than double what it had at the start of the year.
Instead, the stock sale appears to be an effort to turn paper gains into real money, given that the company’s valuation topped $600 billion for the first time this week. (Here’s your reminder that Tesla trades at almost 1,290 times trailing earnings. Toyota and Volkswagen, which produce far more vehicles, are trading at roughly 15 and 18 times earnings, respectively.)
“We believe this is the smart move at the right time for Musk & Co. after the parabolic rally in shares with the appetite strong among investors,” Wedbush Securities analyst Daniel Ives said in a note to clients.
Tesla has a number of big expenses coming up, after all. It’s in the process of building new plants in Germany and outside of Austin, Texas, and is working to bring a pickup truck and a semi-tractor to market for the first time, my CNN Business colleague Chris Isidore notes.
The Journal notes that Texas doesn’t collect state income or capital gains tax for individuals, a potential boon for the second richest man in the world.
It’s the latest knock to a state that’s long been a hub for tech innovators but is starting to come under pressure. Hewlett Packard Enterprise said earlier this month that it was moving from California to Texas. Palantir, which has been a critic of Silicon Valley’s culture, recently moved its headquarters from Palo Alto to Denver, Colorado.
Tesla is still headquartered in California, as is SpaceX, Musk’s aerospace firm — though Musk has clashed with officials this year over a shutdown of Tesla’s Fremont factory during the coronavirus pandemic.
Apple’s fitness service is coming for Peloton soon
Apple’s new subscription fitness service officially has a launch date — and Peloton investors are taking note.
Fitness+, which offers on-demand video workouts, will go live on Monday, Dec. 14, my CNN Business colleague Kaya Yurieff reports.
Peloton offers a similar membership for $12.99 per month with on-demand and livestreamed classes, including yoga, running and cycling. Its all-access membership costs $39 a month and requires Peloton hardware, such as its bike.
In September, Peloton CEO John Foley said Apple’s announcement showed the value of the content they were producing.
“It’s quite a legitimization of fitness content, to the extent the biggest company in the word, a $2 trillion company, is coming in and saying fitness content matters. It’s meaningful enough for Apple,” Foley said.
He noted that Peloton differentiates itself with its high-tech bikes and treadmills, while Apple isn’t planning on introducing competing fitness hardware.
Peloton’s stock is up 316% this year as at-home workouts boom during the pandemic. But the increasingly crowded workout space is worth watching.
Boris Johnson has important dinner plans
Much of the time, it’s not too important what UK Prime Minister Boris Johnson has planned for dinner. This week is different.
Johnson is due to travel to Brussels on Wednesday for a meal with European Commission President Ursula von der Leyen, where the two leaders will be tasked with hashing out the thorny issues still standing in the way of a Brexit trade deal, including fishing rights and state aid.
Time to come to terms is running out — for real this time. The final summit of EU leaders for 2020 takes place on Thursday and Friday. It’s the last scheduled chance for the 27 EU member states to approve any agreement between the two negotiating teams.
Investors are also on tenterhooks given the potential ramifications for the pound. It’s trading at $1.35 as investors bet on a deal, but one isn’t secured.
“We still don’t know if the UK and the EU can overcome their differences and strike a free-trade deal,” UBS economist Dean Turner told clients Tuesday. “We expect a deal to be agreed, but accidents can happen.”
How much is Airbnb worth? We’ll find out later today, when the company is expected to price shares for its initial public offering.
- DoorDash shares begin trading on the New York Stock Exchange.
- Campbell Soup ( reports earnings before US markets open. )Adobe ( follows after the close. )
Coming tomorrow: The European Central Bank is expected to announce additional economic support, with Hungary and Poland continuing to block the bloc’s budget and Covid-19 recovery fund.