Month: May 2022

What a journey the Lynas Rare Earths Ltd (ASX: LYC) share price has been on over the past few years. This was a company that was worth 80 cents a share five years ago. Today, Lynas shares are going for $9.39 at the time of writing after hitting a new all-time high of $11.59 last month. That puts the share price down around 8% year to date in 2022, but still up 76% over the past 12 months.

So if you still own Lynas shares, you most certainly aren’t alone. Much has been made of the company’s strategic position as the largest producer of rare earth minerals outside China. And that could be partly why some big institutional investors have been drawn into Lynas shares. Let’s check them out.

As it is obliged to do, Lynas lists its largest shareholders in its annual report. Unfortunately, Lynas’ last annual report was delivered back in September last year which is getting a bit far away now. But, still, let’s see what this report revealed about Lynas’ institutional ownership.

Largest investors in Lynas shares revealed

So Lynas’ 2021 annual report lists the company’s 20 largest shareholders. By far the largest of these was the bank HSBC, which owned almost 288 million shares, or 31.91% of the company’s total, as of the 2021 annual report. HSBC’s fellow bank JPMorgan was next with close to 114 million shares, or 12.64% of the total. Citicorp, another bank, had the bronze medal with 101.72 million shares (11.28%).

Other substantial Lynas shareholders included BNP Paribas, Merril Lynch, and Argo Investments Ltd (ASX: ARG). Lynas CEO Amanda Lacaze is the largest single investor, owning 2.63 million shares (0.29%) through a partnership.

So these institutional investors are some of the largest shareholders of Lynas Rare Earths. No doubt these investors would be basking in the afterglow of Lynas’ stellar past 12 months today.

At the current tLynas share price, this ASX rare earths producer has a market capitalisation of $8.44 billion.

The post Own Lynas shares? So do these big institutional investors appeared first on The Motley Fool Australia.

More reading

• The Lynas share price has surged 15% in 2 weeks. What’s the deal?
• Here are the top 10 ASX shares today
• Why is the Lynas share price powering ahead today?
• Falling ASX 200 mining shares ‘an opportunity to invest in sector leaders’: broker
• Why is the Lynas share price storming higher today?

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen has positions in JPMorgan Chase. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended HSBC Holdings. 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 Minbos Resources Ltd (ASX: MNB) share price is on fire on Wednesday.

In afternoon trade, the phosphate and green hydrogen focused exploration and development company’s shares are up 21% to 15.7 cents.

Why is the Minbos share price shooting higher?

Investors have been bidding the Minbos share price higher today after the company announced the completion of the sale of its interests in the Ambato Rare Earths Project in Madagascar.

According to the release, the company has received sale proceeds of A$2.46 million from ALS (Hong Kong) from the divestment.

These proceeds will now be used to complete the definitive feasibility study (DFS) for the Cabinda Phosphate Project and studies for the Capanda Green Hydrogen-Ammonia Project. Both projects are based in Angola.

Management believes the Capanda Green Hydrogen-Ammonia Project will become another key value driver for the company. Particularly given its supply agreement with RNT-EP, Angolan’s power network operator.

Minbos previously revealed that it has agreed in principle to supply RNT-EP with 200MW of Zero-Carbon hydro electrical power from the project. This appears to have caught the eye of other parties, with Minbos revealing the receipt of a number of unsolicited enquiries from potential technical, offtake and investment partners today.

Finally, the company also revealed that it has received initial in-bound enquiries on the ability to use phosphate from the Cabinda Phosphate Project for the production of Lithium Iron Phosphate batteries.

Management commentary

Minbos CEO, Lindsay Reed, was pleased with the news. He said:

Our hard work and persistence in Angola is starting to pay dividends, with multiple potential business opportunities on the table that we believe will quickly overtake our phosphate project in relation to returns for shareholders.

Our positioning with the Green Hydrogen-Ammonia Project puts the Company ahead of most, if not all, other ASX listed peers giving Minbos a significant time, infrastructure spend and power pricing advantage. These advantages cannot be underestimated.

The post Minbos share price rockets 21% on green hydrogen news appeared first on The Motley Fool Australia.

More reading

• Why Apple escaped Tuesday’s Nasdaq meltdown
• Own Lynas shares? So do these big institutional investors
• Could Tabcorp’s newly demerged Lottery Corporation become a takeover target?
• The ASX 200 share with ‘hidden value’: fund manager
• Could the new Labor Government herald better days for Treasury Wine shares?

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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There is little attention being paid to the Lottery Corporation Ltd (ASX: TLC) share price today with it trading flat. However, only one day into its listed life and investors are already discussing the potential of the Tabcorp spin-off becoming a takeover target.

As the clock ticks past midday, shares in the recently demerged lottery company are uneventfully sitting at $4.70.

Could a buyout be on the radar?

As a quick recap, the Lottery Corporation encompasses what was formerly the lottery and Keno businesses under Tabcorp Holdings Limited (ASX: TAH). Management made the decision to split this division off in a bid to create value for shareholders.

Now that the Lottery Corporation is destined to walk its own path, there are a few prime ways for it to fulfill its goal of creating further shareholder value, these include:

• A re-rating in the price-to-earnings (P/E) ratio the market is willing to pay
• Driving a higher share price through strong earnings growth
• Returning excess capital via dividends to shareholders; or
• Pursuing a takeover from another party.

Ultimately, all of these ways will require newly appointed CEO Sue van der Merwe to drive growth in the business. However, the odds are already in favour of the Lottery Corporation receiving a bid in the next few years of being a standalone company.

An analysis conducted by investment group Perpetual of 28 demergers showed that in nearly 65% of cases one of the two separated companies ended up being acquired within three years of breaking apart.

The appetite for relatively defensive ASX companies has been somewhat insatiable lately. Already this year companies such as Ramsay Health Care Limited (ASX: RHC), Uniti Group Ltd (ASX: UWL), and Cimic Group (ASX: CIM) have all been targeted by private capital.

What do analysts think of the Lottery Corporation share price?

Take-up of coverage by analysts for the Lottery Corporation is only beginning to trickle in. Yet, Morgan Stanley has been one of the first to share the possible future for this ASX share.

This morning, analysts at Morgan Stanley stuck an ‘overweight’ rating on Lottery Corporation shares. The broker believes the company holds “monopoly positioning” across the regions in which it operates.

Further explaining its bullish sentiment, Morgan Stanley stated that the company provides a rare mix of defensiveness, growth, and yield.

For these reasons, the broker holds a $5.15 price target. This would suggest an 8.5% upside from the current Lottery Corporation share price.

The post Could Tabcorp’s newly demerged Lottery Corporation become a takeover target? appeared first on The Motley Fool Australia.

More reading

• Tabcorp share price slumps another 7% following demerger
• Why Nufarm, Sayona Mining, Tabcorp, and TechnologyOne shares are falling
• Here are the 3 most traded ASX 200 shares on Tuesday
• Here’s what you need to know about the Tabcorp demerger
• The Lottery Corporation share price debuts on the ASX boards

Motley Fool contributor Mitchell Lawler 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 recommended Ramsay Health Care 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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It’s not often you find hidden value in an S&P/ASX 200 Index (ASX: XJO) share.

Generally, you’re more likely to find undiscovered value in the smaller end of the market, which receives a lot less analyst research and coverage.

So, when we hear about an ASX 200 share that could have hidden value, we pay attention.

The ASX 200 share with hidden value

The ASX 200 share in question is News Corp (ASX: NWS), among Australia’s largest media organisations.

Among its other ventures, News Corp is a majority shareholder in global online real estate advertising company REA Group Limited (ASX: REA), which operates realestate.com.au.

Commenting on potential tailwinds for the News Corp share price on Livewire, head of investment strategy at Wilsons David Cassidy said, “we still think there is hidden value” in the ASX 200 share.

“We’ve always had a view there that you’re getting an REA for quite a cheap price,” he said. “We think it’s even more the case now, given the weakness in News Corp over the last week or so.”

According to Cassidy:

We think at current levels, let’s call it $24, $25, News Corp is undervalued, particularly because of that REA piece, which has been under pressure, but we do think either you’re getting REA cheaply or you’re getting the rest of News Corp and there are some good assets outside of REA for quite a cheap price at the moment.

So that’s another sort of hidden value situation, if we’ve got an REA demerger. I’m not sure if we’re going to get it, but if we did, that’ll be a potential catalyst to release that value out of News Corp.

News Corp share price snapshot

The News Corp share price has come under selling pressure this year, with the ASX 200 share down 23.5% since the opening bell on 4 January. By comparison, the ASX 200 is down 5.5% year-to-date.

News Corp shares pay a 1.1% trailing dividend yield, unfranked.

The post The ASX 200 share with ‘hidden value’: fund manager appeared first on The Motley Fool Australia.

More reading

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• Here are the top 10 ASX shares today

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 REA 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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Treasury Wine Estates Ltd (ASX: TWE) shares have suffered against Chinese tariffs in recent years. The company has even decided to produce its famous Penfolds wine in the nation to avoid them.

But could Chinese sanctions change alongside Australia’s government?

Newly elected Prime Minister Anthony Albanese apparently won’t be letting such trade bans slide, slamming Chinese tariffs on Australian goods at this week’s Quad meeting.

At the time of writing, the Treasury Wine share price is 0.87% higher than its previous close.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is boasting a 0.78% gain.

Let’s take a closer look at what Albanese’s latest comments might mean for Treasury Wine shares.

Albanese slams Chinese tariffs

Treasury Wine shares could be in for a good run if Albanese sticks to his staunch stance against Chinese trade bans.

The Chinese Ministry of Commerce slapped Treasury Wine’s products with a massive duty rate back in 2020.

Prior to the hike, China accounted for around 30% of all Treasury Wine’s earnings. Their implementation understandably devastated the company’s bottom line.

Now, Australia’s new Labor Government’s apparent push against such tariffs could bring brighter days for the Treasury Wine shares.

Albanese slammed Chinese trade sanctions this week, saying the country should drop tariffs on Australian goods to improve the relationship between the two nations.

The comments came after Chinese Premier Li Keqiang sent a letter congratulating Albanese on his election win.

“The Chinese side is ready to work with the Australian side … to promote the sound and steady growth of the China-Australia comprehensive strategic partnership,” the letter stated.

But the olive branch wasn’t accepted unconditionally by Australia’s new leader. Speaking to press in Tokyo, Albanese said:

Australia seeks good relations with all countries. But it’s not Australia that’s changed, China has.

It is China that has placed sanctions on Australia. There is no justification for doing that. And that’s why they should be removed.

Treasury Wine share price snapshot

The Treasury Wine share price has suffered through 2022 so far. Though, things might not be as bad as they seem.

While the company’s stock has tumbled 6% year to date, it’s trading relatively in line with the broader market. Right now, the ASX 200 is 5% lower than it was at the start of 2022.

Additionally, the wine maker’s stock has outperformed the index over the last 12 months, gaining around 3% against the ASX 200’s 1% rise.

The post Could the new Labor Government herald better days for Treasury Wine shares? appeared first on The Motley Fool Australia.

More reading

• Treasury Wine share price beating the sell-off amid ‘made in China’ push
• Can a new $165m ‘state-of-the-art facility’ help restore the Treasury Wine share price?
• Broker tips the Treasury Wine share price to pop 23% higher
• Broker names 2 of the ‘best’ blue chip ASX 200 shares to buy now
• Broker names the best ASX shares to buy right now

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 recommended Treasury Wine Estates 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 Fortescue Metals Group Limited (ASX: FMG) share price has surged in the past week, despite the recent market volatility.

Since this time last Wednesday, the iron ore mining outfit’s shares are up 10% buoyed by upbeat investor sentiment.

And today, Fortescue shares are currently adding to those gains to edge 1.49% higher to $21.08.

For context, the S&P/ASX 200 Index (ASX: XJO) is also in the green, up 0.80% to trade at 7,186 points.

Let’s take a closer look at what’s driving the miner’s shares upwards lately.

Iron ore prices rebound

After hitting a near 3-month low of around US$123 on 18 May, the price of iron ore has suddenly rebounded.

Courtesy of Trading Economics, the steel making ingredient is trading at US$130 per metric tonne at the time of writing. This represents an increase of roughly 5.6% compared to last Wednesday’s closing price.

Nonetheless, the uptick in iron ore prices will have a positive impact on Fortescue’s bottom line.

The company reported industry leading C1 costs of US$15.28 per wet metric tonne for H1 FY22.

C1 costs refer to the ‘direct’ production costs incurred in mining and processing the iron ore.

What’s causing iron ore prices to surge?

A major driving force that’s rallying up the iron ore price rise is China’s latest move to cut borrowing rates and reduce stockpiles of the steel making ingredient. This has led to optimistic sentiment in which futures have climbed across overseas markets.

To support economic growth, Chinese banks slashed interest rates for long-term loans by a record amount last week. Inevitably, this lessens mortgage costs for consumers and thus supports demand to take up new loans.

On the other hand, iron ore stockpiles at major Chinese ports fell for the eighth consecutive week.

The country’s strict COVID-19 zero policy and well documented property slump have weakened demand in the construction sector.

However, while government restrictions have weighed down on market confidence, iron ore consumption is expected to return to normal levels. This is based on stimulus packages released to the public to spur economic activity.

Fortescue share price snapshot

It’s been a rollercoaster ride for Fortescue shares, having moved unpredictably over the past 12 months. Its shares are down almost 2% since this time last year.

Based on valuation metrics, Fortescue presides a market capitalisation of approximately $63.77 billion.

The post Why has the Fortescue share price gained 10% in a week? appeared first on The Motley Fool Australia.

More reading

• Can Rio Tinto shares deliver 20% growth AND a juicy dividend yield in the coming year?
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• Better buy, BHP or Fortescue shares?
• Here’s why the Fortescue share price is surging on Monday
• How are ASX 200 mining shares responding to the election outcome?

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 Airtasker Ltd (ASX: ART) share price is currently up by 8% after the business received the go-ahead to buy Oneflare.

Both Airtasker and Oneflare are local service platforms. A few weeks ago, Airtasker announced that it was going to buy the Oneflare business, using a capital raising to fund the deal. However, an enquiry by the Australian Competition & Consumer Commission (ACCC) halted the process.

ACCC update

Airtasker told the market today that the acquisition of Oneflare will proceed on 25 May 2022.

The ASX tech share told the market that the delay was due to queries from the ACCC about the acquisition.

The ACCC’s response? It confirmed that it does not intend to conduct a public review of the acquisition in regards to the Competition and Consumer Act 2010.

With that response, Airtasker will complete the acquisition and settle the private placement that it told the market about. That’s an underwritten placement of approximately 14.5 million new shares at $0.43 per share. The plan is to raise approximately $6.25 million. This will be used to fund the cash part of the deal, the FY23 estimated investment in Oneflare, and acquisition and placement costs.

What about the share purchase plan (SPP) Airtasker had planned for regular investors? This is the company’s answer:

Given the current share price is below the 43 cents price per share agreed for the placement, the board has decided to withdraw the SPP, noting that current shareholders can acquire shares in the company on-market at a lower price than the price previously anticipated for the SPP offer.

What is Oneflare?

Airtasker says that Oneflare is Australia’s third-largest local services platform with a strong presence in trades, home improvement and professional services.

Oneflare serves more than 540,000 customers and 14,500 verified businesses each year.

It has 480,000 unique visitors to Oneflare’s platform per month, with more than 50,000 posted jobs per month. The average task price is more than $2,300.

Why is Airtasker buying Oneflare?

There are three main factors that Airtasker points to.

First, it can strengthen network effects. Customers of both platforms will gain access to a wider range of skills and faster response times. Meanwhile, the taskers/businesses will get access to more job opportunities.

Next is that it can unlock the high-value trade opportunity. Airtasker said both platforms will gain access to a suite of features designed to empower ‘service pros’ in high-value service categories like trades, home improvement and professional services.

The third point was a single technology platform. It noted that operating a single technology platform to serve a significantly larger user base will create a range of technology, data, brand and financial synergies.

Airtasker share price snapshot

While the business is seeing a large rise today, the Airtasker share price has fallen by 26% in the last month amid the volatility for technology stocks on the ASX and internationally.

The post Here’s why the Airtasker share price is leaping 8% on Wednesday appeared first on The Motley Fool Australia.

More reading

• Where I’d invest $10,000 into ASX shares this week
• Buy these great value 2 ASX growth shares: experts
• Why is the Airtasker share price edging higher today?
• Airtasker share price dives 6% as trading resumes
• Analysts say these small cap ASX shares have big futures

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 Challenger Ltd (ASX: CGF) share price is sliding in lunchtime trade, down 3.7% to $7.25 per share.

Shares in the financial services company lost 0.4% yesterday, following its investor day presentation.

Those losses came despite the company reporting its normalised net profit after tax (NPAT) guidance for the 2022 financial year was likely to be at the higher end of its $430 million to $480 million guidance estimate.

With the Challenger share price down another 4% today, is it a buy?

An ASX share to benefit from rising rates

While some sectors are facing significant headwinds from rising interest rates – we’re looking at you ASX tech shares – others can benefit from higher rates.

Indeed, the Challenger share price could be one to get a lift, as rising yields from its annuity products are likely to attract fresh interest from retirees and other income investors.

So, are Challenger shares a buy?

According to UBS, yes.

Citing benefits from a rising interest rate environment – following record low rates during the pandemic years – the broker lifted its price target and upgraded Challenger to buy.

UBS said (courtesy of the Australian Financial Review) that Challenger was “on the cusp of a material rebound in life profitability“.

UBS head of insurance and diversified financials Scott Russell said:

It is not clear to us that consensus has fully factored this in. This has also addressed our previous concern that the group’s ROE [return on equity] was below its cost of equity, eroding shareholder value. We have lifted our price target and upgrade to a buy rating.

Challenger share price snapshot

The Challenger share price has been a strong performer, up almost 6% year-to-date and 44% higher over the past 12 months.

That compares to a year-to-date loss of 5.4% posted by the S&P/ASX 200 Index (ASX: XJO), while the ASX 200 is up 1.0% over the 12 months.

Challenger shares pay a 2.9% trailing dividend yield, fully franked.

The post The Challenger share price is sliding 4% today. Is it a buy? appeared first on The Motley Fool Australia.

More reading

• What’s going on with the Challenger share price today?
• 2 ASX shares (not banks!) to boom from rising interest rates: experts
• 3 ASX 300 shares rocking new 52-week highs on Thursday
• ‘Outlook bright’: expert picks 2 ASX shares to buy right now

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 Challenger 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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Shares of AGL Energy Limited (ASX: AGL) are tracking higher on Wednesday to trade at $8.58 apiece.

Investors are bidding up the AGL share price despite further action against the energy giant’s planned spinout of its coal assets, reports say.

In wider market moves, the S&P/ASX 200 Energy Index (ASX: XEJ) has also climbed 71 basis points on the day.

AGL faces renewed pressure against demerger

In the latest blow for AGL’s planned divestment, industry super fund giant HESTA has stepped into the ring and shown its apprehension to the move.

HESTA owns a 0.36% stake in the energy giant per Bloomberg data. In a statement, the $68 billion super fund giant affirmed it will reject AGL’s demerger when voting next month, with CEO Debby Blakey noting AGL’s “emissions [are] effectively flowing through [HESTA’s] portfolio”.

“Shareholders are pushing for greater action on climate change and a more rapid transition that aims to enhance the company’s ability to create long-term, sustainable value,” Blakey said, cited by The Australian.

“AGL is one of Australia’s biggest emitters…If AGL commits to Paris-aligned emission reduction targets this will have a hugely positive impact on Australia’s pathway to net zero, lowering the overall systemic risk exposure of our members’ investments,” she added.

HESTA now joins the likes of billionaire tech entrepreneur Mike Cannon-Brookes – who earlier this year stepped in to veto the demerger in buying an 11% stake in the company – and a raft of other heavyweights in opposing the manoeuvre, including activist investor Snowcamp and Wilson Asset Management (WAM) chair Geoff Wilson.

Commentary from HESTA’s Blakey confirms the supergiant is well aligned with the criticism from these above entities:

We cannot simply divest away from the risk of Australia being slow to transition to a low-carbon future.

Responsible investors have a responsibility to their members to go to where the biggest emissions are and as owners try and first change the behaviour of these companies.

The demerger meeting is scheduled for 15 June and needs a 75% voting majority to go ahead. Interesting times in the month ahead for AGL, that’s for sure.

In the last 12 months, the AGL share price has clipped a 4% gain but has soared more than 40% this year to date.

The post AGL share price lifts despite intensifying demerger opposition appeared first on The Motley Fool Australia.

More reading

• What might a Labor government mean for ASX energy shares?
• AGL share price struggles as WAM boss slams demerger plan
• What might an ‘election won and lost on climate’ mean for AGL shares?
• Here’s why AGL shares hit the headlines again on Friday
• Why have AGL shares been getting so much love on Tuesday?

Motley Fool contributor Zach Bristow 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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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

After a brief respite on Monday, shares of electric vehicle (EV) leader Tesla (NASDAQ: TSLA) turned back south again on Tuesday. As of 11:50 a.m. ET today, the stock was down 4.5%.

So what

Tesla has announced plans to resume full-capacity production of EVs at its Shanghai Gigafactory as early as today. If it succeeds in getting production back up to full speed, it could be churning out nearly 950,000 vehicles per year in China, putting it back on track toward its goal of producing 1.5 million EVs per year. But probably not this year.

As Daiwa warns today in a note covered by The Fly, Tesla has already lost about 100,000 units of potential production in Shanghai as it sat on the kerb and waited for Chinese COVID containment regulations to lapse. Adding to Tesla’s troubles, Daiwa believes production ramp-ups at Gigafactories in Texas and in Germany have been slower than planned, reducing total 2022 potential production by another 80,000 vehicles.  

Result: In a year when Tesla aimed to produce 1.5 million EVs, it might succeed in building only 1.2 million.

Now what

And that’s OK. On the one hand, Daiwa cites this expected production miss as the reason it’s cutting its price target on Tesla by more than 30%, to $800 a share. Yes, this lower value on shares could complicate Elon Musk’s plan to finance his acquisition of Twitter (as analysts at Bernstein commented today). And yes, rival Volkswagen could very well try to take advantage of Tesla’s weakness at this point to accelerate its own EV plans and overtake it in sales by 2025.  

But it’s pretty irrelevant whether Tesla achieves 1.5 million EVs produced this year. In the grand scheme of things, that’s a short term and rather arbitrary milestone. What’s important is whether the company succeeds in producing at the rate of 1.5 million cars per year after the lockdown ends. And not only does Daiwa think it will, but that analyst estimates the company will keep growing its production, probably hitting 1.8 million cars in 2023.

That’s the goal you should focus on: what happens after the lockdown goes away and Tesla’s growth is able to rev higher unhindered. As long as it keeps doing that, this growth story remains intact.

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

The post Why Tesla stock turned south today appeared first on The Motley Fool Australia.

More reading

• Why Tesla stock finally bounced today
• Nasdaq sell-off: 2 growth stocks billionaires were buying in Q1
• Down almost 30% in the past month, here are 2 reasons to buy Tesla shares and 1 reason to hold off
• Why Tesla stock fell again today
• Why Tesla stock got dented 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 and Twitter. 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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