Month: May 2022

If you’re looking to bolster your income portfolio with some blue chip ASX 200 dividend shares, then you may want to check out the ones listed below.

Here’s why analysts rate these dividend shares as buys:

Telstra Corporation Ltd (ASX: TLS)

The first ASX 200 dividend share that could be in the buy zone is Telstra.

After a decade of struggles, the telco giant is back and has solid and sustainable growth in its sights. This is being underpinned by the successful execution of its transformative T22 strategy and the impending growth-focused T25 strategy.

The team at Morgans has been pleased with its turnaround and saw a lot to like in the telco giant’s half year results in February.

It commented: “TLS’s 1H22 result showed the second consecutive half of underlying growth, with underlying EBITDA up 5%, underlying EPS up substantially and the DPS flat yoy. Mobile was the star performer. Performance is tracking in the right direction and FY22 guidance was re-iterated.”

Morgans has an add rating and $4.56 price target on its shares and expects fully franked dividends per share of 16 cents in FY 2022 and FY 2023. Based on the current Telstra share price of $3.98, this will mean yields of 4%.

Woolworths Group Ltd (ASX: WOW)

Another ASX 200 dividend share that could be in the buy zone is this retail giant.

Woolworths has just released its third-quarter update, which went down well with the team at Goldman Sachs. In response, the broker has retained its buy rating and lifted its price target to $41.70.

Goldman commented: “WOW reported 3Q22 sales +9.7% YoY and slightly ahead of GSe (+2.6%) and Visible Alpha Consensus Data (+0.6%).

“Management noted that WOW gained market share both from value and volume perspective during the quarter. Additionally, outlook commentary on the investor call was cautiously optimistic, with a good 4Q start to strong Easter trading and DC service levels are expected to recover to 95% by end 4Q22.”

As for dividends, Goldman Sachs is forecasting fully franked dividends per share of 96 cents in FY 2022 and $1.18 in FY 2023. Based on the current Woolworths share price of $38.25, this will mean yields of 2.5% and 3.1%, respectively.

The post Analysts name 2 blue chip ASX 200 dividend shares to buy appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Why did the Telstra share price beat the ASX 200 in April?
• Here’s how some of the biggest ASX 200 shares are responding to the RBA’s rate rise
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Rates are up! Expert names 2 ASX shares for a global downturn

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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AGL Energy Limited (ASX: AGL) is the talk of the town this week after Australian billionaire Mike Cannon-Brookes swept up 11.28% of the company’s shares in a bid to block its planned demerger.

And now the energy producer and retailer’s managing director and CEO, Graeme Hunt, has stepped into the conversation, slamming Cannon-Brookes’ plot as “a lot of rhetoric but really no plan”, reports The Australian.

At the time of writing, the AGL share price is $8.41, 0.72% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is also up 0.5%.

AGL CEO weighs in on Cannon-Brookes’ stance

Owners of AGL shares were potentially gearing up to flick through the company’s long-anticipated demerger scheme documents later this month.

However, they’re likely now entranced as the company’s management goes head to head with its brand new major shareholder.

Cannon-Brookes claims the company’s split into energy-producing business Accel Energy and energy retailer AGL Australia will cause “further value destruction”.

Indeed, the AGL share price has tumbled nearly 70% over the last five years.

Cannon-Brookes believes the downward spiral is due to the company’s failure to transition away from fossil fuels.

But Hunt argues the billionaire doesn’t have a plan to manage the company’s energy transition beyond blocking its demerger.

“It’s okay for people that have conviction about what they think the future should look like. But our shareholders have got to make a choice between a plan and no plan,” Hunt told The Australian.

It’s really a choice between a plan that the company has worked on for over a year, which included looking at a whole host of various options and not just a single minded approach towards the demerger by a company that’s been in the sector for over 185 years… against someone who has got no plan…

We can do a better transition as two companies than one. And if it isn’t a measured transition, and that glide path is too steep, and someone wants to put the company and the transition into a nosedive, then that’s bad for shareholders, and that’s bad for consumers, and bad for employees and communities and everything else.

Graeme Hunt as quoted by The Australian

What’s next for AGL shareholders?

AGL shareholders can expect to receive more details on the demerger later this month.

They can also look forward to going to the ballots in mid-June.

As The Motley Fool reported yesterday, if Cannon-Brookes votes against the plan, the decision rests on the voting power of 13.72% of AGL’s shares.

If approved, the demerger should be implemented before the end of the financial year.

AGL share price snapshot

The last few years have been rough on the AGL share price. Luckily, 2022 is proving to be brighter.

The company’s stock has gained 31.8% since the start of this year. Though, it’s still 8.2% lower than it was this time last year.

The post Own AGL shares? Boss slams Cannon-Brookes’ plan as ‘transition into a nosedive’ appeared first on The Motley Fool Australia.

More reading

• AGL share price dips despite $2 billion energy transition deal
• Why AGL, Booktopia, Cleanaway, and Corporate Travel Management shares are dropping
• ASX 200 midday update: Woolworths’ Q3 update, AGL falls on Cannon-Brookes raid
• Own AGL shares? Here’s why the company’s demerger could be dead in the water
• AGL share price in focus amid Cannon-Brookes raid

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Coles Group Ltd (ASX: COL) share price has been a positive performer over the last 12 months.

Since this time last year, the supermarket giant’s shares have risen 12%.

This is more than triple the return of the ASX 200 index over the same period.

Can the Coles share price keep rising?

The good news for investors is that one leading broker still sees plenty of room for the Coles share price to climb further from here.

According to a note out of Morgans, in response to Coles’ third-quarter update, its analysts have retained their add rating and lifted their price target to $20.65.

Based on the current Coles share price of $18.54, this implies potential upside of approximately 11.5% over the next 12 months.

In addition, the broker is forecasting fully franked dividends of 61 cents per share in FY 2022 and 64 cents per share in FY 2023. This implies yields of 3.3% and 3.45%, respectively.

What did the broker say?

Morgans was pleased with Coles’ performance during the third quarter and notes that the company’s sales came in ahead of its estimates.

It commented: “Supermarkets LFL sales increased 3.9% (vs MorgansF +3.6%) which benefitted from elevated demand in early January due to Omicron but was impacted by floods in NSW and QLD with supply challenges impacting availability and sales.”

“Online was again a key standout with sales growth of 45% reflecting increased capacity and Omicron-related isolation demand. Online now represents 7.8% of total sales vs 5.6% in the pcp.”

Why is Coles a buy?

The note reveals that Morgans believes the Coles share price is trading at an attractive level considering its defensive qualities and growth opportunities.

The broker concludes: “Trading on 24.1x FY23F PE and 3.4% yield we continue to see COL as offering good value with the company possessing defensive characteristics and a strong balance sheet (1H22 net cash $54m) allowing ongoing investment for growth.”

The post Time to stock up: Broker says Coles share price is ‘good value’ appeared first on The Motley Fool Australia.

More reading

• Here’s how some of the biggest ASX 200 shares are responding to the RBA’s rate rise
• Leading brokers name 3 ASX shares to buy today
• Analysts name 2 ASX 200 dividend shares to buy next week
• ASX 200 midday update: Coles, Fortescue, and Pilbara Minerals release quarterly updates
• Coles share price in focus amid solid Q3 sales growth

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Over the last 24 hours, the price of The Sandbox (CRYPTO: SAND) cryptocurrency traded nearly 5% higher as of 12:07 p.m. ET today after Dubai’s virtual asset regulator said it plans to put a virtual headquarters in the Sandbox metaverse.

So what

The Sandbox is a virtual gaming world run on the Ethereum blockchain network, where users can create non-fungible tokens (NFTs) to use in the virtual world.

Today, Dubai’s Virtual Assets Regulatory Authority (VARA), which seeks to promote Dubai as an international leader for virtual assets and to develop a digital economy in Dubai, announced that it plans to create a metaverse headquarters in the Sandbox.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why The Sandbox Cryptocurrency Is Up Today appeared first on The Motley Fool Australia.

More reading

• Why The Sandbox cryptocurrency is soaring today
• Should you buy Metaverse real estate?

Bram Berkowitz has positions in Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Ethereum. The Motley Fool Australia owns and has recommended Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Airtasker Ltd (ASX: ART) share price is currently halted after the tasking platform business announced an acquisition and a capital raising.

Airtasker has revealed that it’s going to buy Australia’s third largest local services platform called Oneflare. It’s also launching a capital raising to acquire the business.

Oneflare deal

Airtasker has entered into a binding agreement to buy Oneflare, which has a “strong” presence in trades, home improvement and professional services according to Airtasker.

The acquisition price is $9.8 million. This will be $2.25 million in cash and $7.55 million in Airtasker shares.

Airtasker noted that the deal represents a valuation of 1.6 times the forecast revenue for FY23 which is expected to be more than $6 million.

Reasoning for the acquisition

Airtasker said that the deal will bring together Australia’s number one marketplace for local services with Oneflare, which will “strengthen marketplace network effects, offering more job opportunities to service pros (both independent taskers and verified businesses) whilst providing customers with access to a greater range of services, skills and faster response times.”

The company also pointed out that this will “accelerate Airtasker’s strategic expansion into high-value service categories including trades, home improvement and professional services.”

It will also mean that both businesses operate on a single technology platform to serve a “significantly larger user base” and create a range of synergies across technology, data, brand and financial areas.

Oneflare reportedly serves more than 540,000 customers and 14,500 verified businesses each year. It has 480,000 unique visitors to the Oneflare platform each month. More than 50,000 jobs are posted each month. The estimated average task price is $2,300.

How is Airtasker going to fund this acquisition?

Airtasker is launching a fully underwritten $6.25 million equity placement at an Airtasker share price of 43 cents. This will be used to fund the cash component of the deal, the FY23 estimated investment in Oneflare and the acquisition and placement costs.

The directors of Airtasker will subscribe for $3.55 million in the placement, though this will be subject to shareholder approval.

Airtasker will also carry out a share purchase plan (SPP) to raise up to $1.2 million for eligible shareholders in Australia and New Zealand.

Management commentary

The Airtasker co-founder and CEO Tim Fung said:

I’m super stoked to bring together Airtasker and Oneflare to create Australia’s number one marketplace for local services.

Together, we can offer our customers access to an even greater range of local services and faster response times whilst creating more job opportunities than ever before.

By acquiring Oneflare, we also accelerate a push into higher value service categories including trades, home improvement and professional services to deliver on our mission: to empower people to realise the full value of their skills.

Airtasker share price snapshot

Over the last six months, the Airtasker share price has dropped by over 50%.

The post Airtasker share price on ice amid major acquisition news appeared first on The Motley Fool Australia.

More reading

• Best ASX shares to buy in May 2022
• Top brokers name 3 ASX shares to buy today
• Are these 2 ASX tech shares top ideas for May 2022?
• ‘Super pleased’: Why the Airtasker share price is rocketing 12% today
• Brokers name 3 exciting small cap ASX shares to buy

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Airtasker Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Bank of Queensland Ltd (ASX: BOQ) share price is heading south in early Wednesday morning trading.

At the time of writing, the regional bank’s shares are down 1.72% at $7.98.

Why are Bank of Queensland shares falling today? 

Investors are likely eyeing Bank of Queensland shares as they go ex-dividend today after the company released its half-year results on 14 April.

Typically, one business day before the record date, the ex-dividend date is when investors must have purchased shares. If the investor did not buy Bank of Queensland shares before this date, the dividend will go to the seller.

What does this mean for shareholders?

For those eligible for Bank of Queensland’s interim dividend, shareholders will receive a payment of 22 cents per share on 26 May. The dividend is fully-franked, which means investors can expect to receive tax credits from this.

The latest dividend reflects a 29% increase compared to the prior corresponding period of 17 cents per share.

It is also equally the biggest dividend the bank has paid since the COVID-19 pandemic first wreaked havoc on ASX shares in March 2020.

Investors who elect for the dividend reinvestment plan (DRP) will see a number of shares added to their portfolio. This will be based on a volume-weighted average price from 9 May to 20 May.

The DRP discount rate is set at 2.5% and the last election date for shareholders to opt-in is on 6 May.

Are Bank of Queensland shares a buy now?

A couple of brokers have weighed in on the Bank of Queensland share price following the company’s financial scorecard.

The team at Goldman Sachs cut its 12-month price target by 5.1% to $9.34 for the regional bank’s shares. Its analysts believe that there is still more upside in Bank of Queensland shares in line with its performance recently.

Based on the current share price, this implies an upside of about 17% for investors.

Furthermore, Credit Suisse also slashed its rating on Bank of Queensland shares by 12% to $10.00 a pop. This also implies an upside of around 25% from where the company trades today.

Bank of Queensland share price summary

Bank of Queensland shares have lost 13% on the back of weakened investor sentiment over the past 12 months. In comparison, the S&P/ASX 200 Index (ASX: XJO) has risen by 4% over the same timeframe.

Bank of Queensland shares reached a 52-week high of $9.84 in October, before backtracking amid inflationary movements and the cost of living.

Based on today’s price, Bank of Queensland commands a market capitalisation of roughly $5.11 billion, and has a trailing dividend yield of 4.90%.

The post Why is the Bank of Queensland share price sliding today? appeared first on The Motley Fool Australia.

More reading

• Why did the Bank of Queensland share price tank 7% in April?
• Hoping to bag the Bank of Queensland dividend? Read this
• The Bank of Queensland share price has lost 30% in 5 years. Have the dividends been worth it?
• Broker says selloff of Bank of Queensland shares was unjustified
• Top brokers name 3 ASX shares to buy today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price is sliding in morning trade, down 2.4%.

The S&P/ASX 200 Index (ASX: XJO) travel share closed yesterday at $22.70 and is currently trading for $22.15 per share.

Below we look at some highlights from the company’s Macquarie Conference Presentation that look to be spurring ASX investor interest today.

What was reported at the presentation?

The Flight Centre share price is falling today despite the company’s CFO, Adam Campbell revealing it had returned to earnings before interest, taxes, depreciation and amortisation (EBITDA) profit in March.

With its leisure business approaching breakeven and its global corporate business back in the green, Flight Centre reported $8 million in underlying EBITDA for March.

Campbell said total transaction volumes (TTV) for March were almost 3 times what they were in the prior corresponding period, reaching 59% of their pre-COVID levels. Corporate business was even stronger, returning to 76% of pre-pandemic figures.

Despite the rebound, revenue margin was said to be below pre-COVID levels “as expected”.

The company’s balance sheet was also looking strong, reporting $2 million in operating cash inflow in March. And it repaid its short-term United Kingdom loan of 115 million pounds in March.

Flight Centre said it’s continuing to invest in people and technology ahead of the larger scale recovery expected ahead.

Flight Centre share price slides on FY22 losses

The Flight Centre share price may be slipping following the guidance provided for the 2022 financial year (FY22).

The company forecast an overall EBITDA profit for the 5 months to 30 June, with continued recovery in the travel sector expected. This follows on a $184 million EBITDA loss in the first half of the year, which was impacted by the Omicron wave.

However, Flight Centre still expects to post a full FY22 underlying EBITDA loss in the range of $195 million to $225 million.

Russia’s invasion of Ukraine has not had a material impact on its business, but tight labour markets and a lack of current capacity on international routes out of Australia were cited as industry wide headwinds.

Flight Centre share price snapshot

The Flight Centre share price is up 20% year-to-date, well outpacing the 3% loss posted by the ASX 200.

The post Flight Centre share price slips despite return to profitability appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Travel’s back! 3 ASX shares this expert loves right now
• Why is the Flight Centre share price trouncing ahead of the ASX 200 today?
• Why are ASX 200 travel shares having a first-class end to the week?
• How long will the Flight Centre share price keep getting battered by COVID-19?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The AVZ Minerals Ltd (ASX: AVZ) share price rocketed out of the gates this morning.

In early trade, the lithium explorer’s shares were up 19% to $1.18.

The AVZ Minerals share price has since pulled back but remains up 6.5% to $1.06.

Why did the AVZ share price rocket higher?

Investors were bidding the AVZ share price higher this morning after the lithium explorer provided an update on the Manono Lithium and Tin Project in the Democratic Republic of the Congo.

According to the release, the Minister of Mines has awarded a mining licence to AVZ’s 75% owned Dathcom Mining SA business for the flagship Manono Project.

The mining licence will cover the entirety of the Roche Dure mineral resource (401 million tonnes at Li20 1.65%) and the Carriere de l’Este exploration target. It does, however, exclude a portion of the land holding to the north. AVZ intends to have discussions with the government in the near future regarding this land.

The company is now advancing its early works program ahead of a final investment decision to commence major works and first production toward the later months of 2023.

“A watershed moment”

AVZ’s Managing Director, Nigel Ferguson, was pleased with the news. He said:

“The receipt of the Ministerial Decree to award the Mining Licence is leading to a watershed moment for AVZ and our partners, with the official award of the Mining Licence from CAMI expected in a matter of days.

This paves the way for AVZ to start developing what is arguably one of the most important new mining projects in the world that will significantly contribute to the global green energy transition, while also uplifting the lives of the Congolese people who will contribute and receive sustained benefits from the Project for many decades to come.”

The post AVZ share price rockets 19% on ‘watershed moment’ appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why is it such a mixed day of trade for ASX lithium stocks?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Macquarie Group Ltd (ASX: MQG) share price zoomed ahead of the ASX big four bank shares over the last few months, but some experts think its outlook is less certain.

Shares in the home-grown investment bank jumped over 13% in the past two months and closed at $203.43 yesterday.

Macquarie Group share price beating its peers

This compares with the National Australia Bank Ltd (ASX: NAB) share price gain of just under 11%. NAB was the strongest performer among the big four banks.

The Commonwealth Bank of Australia (ASX: CBA) share price added 8%, while the Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) share prices advanced around 6% each.

Outlook getting cloudier

But this could be as good as it gets for the Macquarie Group share price, according to UBS. The broker initiated coverage on its shares with a neutral recommendation and warned of downside risk to its earnings per share (EPS).

“One of the attractions of the MQG investment case is the diverse product and country mix split between annuity and risk based earnings streams, adding stability to the group’s earnings profile,” said UBS.

“MQG’s revenue in the Macquarie Capital division (20% of group) appears elevated.”

Macquarie’s earnings risk building

This is because of investment income and gains on asset sales. Further, high merger and acquisition advisory fees and lower credit impairment charges also bolstered the division’s revenue.

“As activity levels stabilize, we anticipate some revenue normalisation and a high water mark level for division profits,” added UBS.

“CGM (40% of group) also has revenue streams which are episodic and difficult to forecast.”

CGM is the group’s Commodities and Global Markets division. It is benefitting from very strong commodity prices and high levels of volatility due to the war in Ukraine and other COVID-induced supply chain disruptions.

Reasons to like the Macquarie Group share price

However, UBS does acknowledge several positives that could attract investors to the Macquarie Group’s share price.

“The group’s value proposition to stakeholders is differentiated among global [investment banks], with a leading position in infrastructure investments and renewable energy, complimented [sic] by its top 3 global commodities franchise,” said the broker.

“Tailwinds in alternative assets, integrated capabilities in renewables advisory, and a history of stable earnings and prudent capital management are all positives.”

What are Macquarie shares worth?

Unfortunately, from UBS’ perspective, the good news is already priced into the Macquarie Group share price.

The broker’s 12-month price target on the shares is $205 a pop. That leaves little room for price appreciation.

On the other hand, not all brokers think the upside for Macquarie is lacklustre. JP Morgan is urging investors to buy Macquarie Group shares ahead of the company’s profit results on Friday.

In early trade on Wednesday, Macquarie shares are climbing nearly 1% at $205.42.

The post What is the outlook for the Macquarie share price in May? appeared first on The Motley Fool Australia.

More reading

• Here’s how some of the biggest ASX 200 shares are responding to the RBA’s rate rise
• Can ASX 200 banks live up to the $11 billion ‘big expectation’ when they report this month?
• Own Macquarie shares? Here’s what to watch when the bank reports this week
• Why is the Macquarie share price getting hammered today?
• Own the Vanguard Australian Shares High Yield ETF? Here’s what you’re invested in

Motley Fool contributor Brendon Lau has positions in Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Macquarie Group Limited, National Australia Bank Limited, and Westpac Banking Corporation. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of leading electric vehicle maker Tesla (NASDAQ: TSLA) jumped in morning trading on Tuesday, up 1.5% as of 12:04 p.m. ET.

You may be able to thank government officials in China for that.

So what

The mega-city of Shanghai, as you’ve probably heard, suffered an outbreak of COVID-19 in March. In response, the government imposed strict quarantines during March and April, which — among other things — essentially shut down production at the city’s factories. Tesla’s Shanghai Gigafactory went dark for 22 days.

The good news is that, according to news reports, this latest coronavirus outbreak now appears to be under control in Shanghai. PBS reported on Monday that new cases in the city fell below 10,000 per day over the weekend, and government authorities are beginning to relax restrictions on movement in the metropolis.    

However, the better news came from Reuters which, in an exclusive report, says it’s seen a letter from Tesla to the Shanghai government that confirms that the government had assisted Tesla in restarting production, even as the wider lockdown remained in place. The city government provided decontamination teams to help sterilize the factory, and buses to shuttle its 6,000 workers from home to the factory and back to reduce the chances that they would get infected.  

Now what

The Shanghai Gigafactory resumed production on April 19. Granted, Reuters notes that, by its calculations, Tesla lost about 50,000 vehicles’ worth of production during the 22 days it was shut down. But here’s the thing:

That actually sounds like good news to me.

Consider: Tesla’s Shanghai Gigafactory produced 484,100 vehicles in 2021. The company has said it wants to expand production toward one million cars a year. But if a 22-day shutdown — about 6% of the year — prevented the production of 50,000 Teslas, this implies that Gigafactory Shanghai is now capable of producing as many as 830,000 cars annually.

In short, the real story here wasn’t that China helped out Tesla. It was that Tesla already has greater production capacity in China than many investors may realize. That’s good news for the automaker, and a good reason for Tesla’s stock price to be rising Tuesday.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock popped on Tuesday appeared first on The Motley Fool Australia.

More reading

• Why Tesla stock dropped, then popped on Monday
• Elon Musk just sold $5.6 billion of Tesla shares. What’s the deal?
• Why Tesla stock is bouncing back today
• Why Tesla stock just crashed 7%
• Why Dogecoin is rising today

Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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