Category: Stock Market

The S&P/ASX 200 Index (ASX: XJO) is on form again and pushing higher. At the time of writing, the benchmark index is up 0.2% to 7,393.8 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are sinking:

Appen Ltd (ASX: APX)

The Appen share price is down 4% to $13.43. This decline appears to be largely due to a pullback on the tech heavy Nasdaq index overnight. It isn’t just Appen that is under pressure. At the time of writing, the S&P/ASX All Technology Index (ASX: XTX) is trading 0.55% lower. In other news, Appen will be kicked out of the ASX 100 index next week. This could have added to the selling pressure today.

Orocobre Limited (ASX: ORE)

The Orocobre share price has tumbled 5% to $5.95. This is despite there being no news out of the lithium producer. However, a number of lithium shares are sinking this week. This may be due to profit taking from investors after some stellar gains so far in 2021. Even after falling 11% in the space of a week, the Orocobre share price is still up 31% year to date.

Sandfire Resources Ltd (ASX: SFR)

The Sandfire Resources share price is down 5% to $6.98. Although the copper producer released an announcement today, this decline doesn’t appear to be due to that. Instead, a 5% decline in copper prices for delivery in July overnight seems to be behind this weakness. The base metal came under pressure amid concerns that Chinese authorities were going to try to curb a recent rally in commodity prices.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price has fallen 3% to $2.04. This appears to have been driven by a broker note out of Citi this morning. According to the note, the broker has downgraded the coal miner’s shares to a neutral rating with a $2.20 price target. It made the move largely on valuation grounds.

The post Why Appen, Orocobre, Sandfire, & Whitehaven Coal shares are sinking appeared first on The Motley Fool Australia.

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• Why the Sandfire (ASX:SFR) share price is tumbling today
• 4 ASX shares to gain exposure to international market growth: fund manager
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• ASX 200 Weekly Wrap: ASX edges even higher, led by tech rebound

James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd. The Motley Fool Australia owns shares of and has recommended Appen Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in Nuix Ltd (ASX: NXL) spent this morning on the up, despite the company facing another major shakeup yesterday. Then, over the course of half an hour, the Nuix share price plummeted around 4% for no immediately obvious reason.

At the time of writing, the Nuix share price is 3.99% lower than yesterday’s close ­– shares in the company are swapping hands for $2.65 apiece.

Yesterday, the embattled software company announced two executives were leaving the company following nearly a month of media criticism.

Quick refresher

In mid-May, Nine Entertainment Co Holdings Ltd (ASX: NEC) media outlets including Australian Financial Review, The Age, and The Sydney Morning Herald published a joint investigation series into Nuix. The series involved 5 daily articles that ran over the course of a week.

The articles included claims that Nuix had been poorly governed and had a history of bad financial disclosures.

They also reported on 2 class actions the company is purportedly facing, questioned its former chair’s ethics, and foreshadowed an Australian Federal Police investigation into a questionable Nuix options package.

The latest news on Nuix

Yesterday morning, Nuix announced its chief financial officer (CFO) Stephen Doyle had been “terminated by mutual agreement”. He will leave the company on 21 June.

Just half an hour later, Nuix chief executive officer (CEO) Rod Vawney notified the market of his retirement from the company. Vawney will continue as CEO until a replacement is found.

On the back of the news yesterday, the Nuix share price rallied 6% higher before falling 2.5% in the final hour of trade.

Former Star Entertainment Group Ltd (ASX: SGR) CFO Chad Barton will step into the role of Nuix’s interim CFO next week.

Nuix share price snapshot

The Nuix share price has been battling through its first year on the ASX.

Currently, the Nuix share price is 66% lower than the day of its initial public offering (IPO) in December.

It’s also 77% lower than its 52-week high of $11.86.

The post Nuix (ASX:NXL) share price wobble after company upheaval appeared first on The Motley Fool Australia.

More reading

• ASX 200 rises, Nuix jumps, REA buys stake of Simpology
• Nuix (ASX:NXL) share price charges higher after announcing CEO and CFO exits
• 3 unloved ASX shares set to take off: analysts
• BetMakers and Zip were among the most traded ASX shares last week
• Macquarie and Nuix face ASIC investigation: report

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 recommended Nuix Pty Ltd. The Motley Fool Australia has recommended Nuix Pty Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Hazer Group Ltd (ASX: HZR) share price is in reverse during late morning trade. This comes after the hydrogen producer provided an update on its Commercial Demonstration Project (CDP).

Hazer’s CDP is being constructed at Water Corporation’s Woodman Point Water Recovery Facility in Western Australia. The company aims to convert natural gas and similar methane feedstocks, into hydrogen and high-quality graphite, using iron ore as a process catalyst.

At the time of writing, Hazer shares are down 11.43% to 93 cents. This is a stark contrast from when the company’s share price reached an all-time high of $1.885 in February 2021.

What’s dragging the Hazer share price down?

Investors are heading for the hills, selling Hazer shares following the company’s shock announcement.

In a statement to the ASX, Hazer advised its CDP is experiencing significant cost pressures since its last update in March.

The company stated that during the last quarter, it completed a number of set targets. This included civil site preparation, awarding contracts for the reactor and high-temperature heat-exchanger materials, and taking delivery of the iron-oxide catalyst.

Hazer ensured the materials selection and fabrication specifications of the reactor and equipment met the required safety criteria. It noted that a considerable amount of effort has been dedicated as it progresses the first-of-kind design.

However, the company is facing increased costs due to COVID-19 related disruptions to global supply chains for equipment. Surging freight costs has also restricted the number of suppliers able to meet the technical requirements to supply the project.

Furthermore, Hazer revealed that labour, equipment and services costs in Western Australia are higher than originally indicated. This is due to the strong resource industry with final pricing for many of the packages above the initial project budget.

As a result, the company is now expecting the final project cost to come between $20 million and $22 million. This is a blowout of 17% from its March update, and 29% from the June 2020 Final Investment Decision (FID) project budget.

Fabrication of equipment modules is underway at various supplier sites, with equipment packages to be delivered through the second-half of 2021.

Site installation and construction activities will begin in July and is expected to be completed in the fourth-quarter of 2021.

Management commentary

Hazer Group CEO, Geoff Ward commented:

The Hazer team and our engineering partner Primero Group are continuing to make good progress on the Hazer Commercial Demonstration Project, a complex, first-of-kind technical project.

Scaling up a technology from pilot to demonstration stage is a key step with many engineering, safety and operational complexities that must be thoroughly investigated to ensure the plant achieves its operational goals safely.

… We remain fully funded to complete the Project and focussed on completing construction to achieve our target of commencing commissioning by end December 2021.

The Hazer share price has doubled in value over the past 12 months, and is up over 20% year-to-date.

The post What’s going on with the Hazer (ASX:HZR) share price today? appeared first on The Motley Fool Australia.

More reading

• Firefinch (ASX:FFX) share price soars 11% on lithium joint venture
• NAB and Zip were among the most traded ASX shares last week
• Most Aussies will get a pay raise next month… will you?
• Why AVITA, Cettire, Lifestyle Communities, & SEEK are storming higher
• Here’s why the Orthocell (ASX:OCC) share price is on the move 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 Bruce Jackson.

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The Firefinch Ltd (ASX: FFX) share price is soaring following news of two significant developments for the company, which is headquartered in Australia but focused on mining operations in Mali, West Africa.

At the time of writing, the Firefinch share price is trading at 50.5 cents ­– 10.99% higher than its previous closing price. In early trade, the share price reached an intraday high of 57 cents.

The gold and lithium miner has announced a joint venture with the world’s largest lithium company by production capacity, Ganfeng Lithium Co Ltd.

Ganfeng is a Chinese lithium chemicals and metals producer listed on the Hong Kong Stock Exchange
and Shenzhen Stock Exchange with a market capitalisation of about US$26 billion.

The companies plan to jointly develop and operate the Goulamina Lithium Project in Mali, which is wholly owned by Firefinch.

Firefinch says Goulamina is among the world’s highest quality and largest undeveloped lithium deposits.

Additionally, Firefinch has awarded a joint venture mining contract for its 80%-owned Morila Gold Mine, which it acquired in November 2020. The mine is also located in Mali.

Firefinch shares entered a trading halt early yesterday. Today is their first trading session since Friday’s close.

Let’s take a detailed look at the latest news from Firefinch.

New joint venture with Ganfeng

Firefinch shares are having a bumper day after the company announced it has signed a binding term sheet with Ganfeng to enter a 50:50 joint venture to develop and operate the Goulamina Lithium Project.

The joint venture will see the project funded by Ganfeng and operated by Firefinch.

A separate company, Mali Lithium BV, will be formed to hold Firefinch’s 50% interest in the joint venture and US$130 million of Ganfeng’s funding. As the project develops, Ganfeng will progressively gain a 50% interest in Mali Lithium.

Ganfeng will also provide up to US$64 million in debt facilities. Ganfeng’s debt facility and funding is expected to finance Goulamina through to production.

Additionally, Ganfeng will enter an offtake agreement to buy the products of Goulamina, providing a guaranteed revenue stream.

The companies expect a final investment decision on the project in 6 months, dependant on transaction approvals.

Goulamina’s pre-feasibility study found the project’s production will likely be around 436,000 tonnes of spodumene concentrate annually. That would make around 64,700 tonnes of lithium carbonate equivalent.

Goulamina is expected to have an initial 23-year mine life.

As previously announced, Firefinch plans to demerge the Goulamina project to a separate lithium-focused ASX listed entity named Lithium Co. The demerger won’t happen until a final investment decision is made on Goulamina.

Mining contract awarded

Additionally, after yesterday’s close, Firefinch announced it has awarded the mining contract for its Morila Gold Mine to a joint venture between international mining contractor, Mota-Engil and Malian contractor Inter-Mining Services.

The contract is worth around US$360 million. Work at the mine will commence in August.

Firefinch share price snapshot

Today’s boost has added to the stellar performance of the Firefinch share price on the ASX lately.

Currently, Firefinch shares are around 178% higher than they were at the start of 2021. They have also gained around 376% since this time last year.

The company has a market capitalisation of around $392 million, with approximately 785 million shares outstanding.

The post Firefinch (ASX:FFX) share price soars 11% on lithium joint venture appeared first on The Motley Fool Australia.

More reading

• NAB and Zip were among the most traded ASX shares last week
• Most Aussies will get a pay raise next month… will you?
• Why AVITA, Cettire, Lifestyle Communities, & SEEK are storming higher
• Here’s why the Orthocell (ASX:OCC) share price is on the move today
• 2 excellent ASX healthcare shares named as buys

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 Bruce Jackson.

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Australia’s leading investment platform provider CommSec has released data on the most traded ASX shares on its platform from last week.

Here’s the data:

Zip Co Ltd (ASX: Z1P)

This buy now pay later provider’s shares were once again the most traded on the CommSec platform last week. Zip’s shares accounted for 2.2% of trades on the platform, with the buying and selling largely even. The buyers will have been the happier group of investors, though. The Zip share price rose 2.6% during the week after tech shares rebounded.

National Australia Bank Ltd (ASX: NAB)

This banking giant’s shares were attributable to 1.4% of trades on the platform last week. However, despite 74% of the volume coming from buyers, it couldn’t stop the NAB share price from losing 3.8% of its value during the period. This was driven by concerns over an AUSTRAC investigation into potentially serious and ongoing non-compliance with AML/CTF laws.

Betashares Nasdaq 100 ETF (ASX: NDQ)

Investors were buying this popular ETF again last week, leading to its units being accountable for 1.4% of trades on CommSec. Almost three-quarters of the volume came from the buy side. Fortunately for those buyers, the Nasdaq 100 ETF rose 2.1% over the five days. The index then climbed to a record high on Monday.

Imugene Limited (ASX: IMU)

Traders have been buying this immuno-oncology focused biopharmaceutical company’s shares again. This led to Imugene’s shares accounting for 1.2% of trades on CommSec last week. And while 64% of the volume came from buyers, it couldn’t stop the Imugene share price sinking 11.5% over the five days. Concerns over its lofty valuation appear to be weighing on its shares.

iShares Core S&P/ASX 200 ETF (ASX: IOZ)

Another ETF that was popular with investors was the iShares Core S&P/ASX 200 ETF. It was attributable to 1.2% of trades on Commsec, with a massive 86% of the volume coming from buyers. However, despite the buying pressure, the ETF was largely flat last week. Though, it is up a solid 12% since the start of the year.

The post NAB and Zip were among the most traded ASX shares last week appeared first on The Motley Fool Australia.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended BETANASDAQ ETF UNITS and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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You might not realise it, but most Australians are in line to get a pay rise next month. Under laws that passed the Australian parliament a few years ago, the superannuation guarantee is scheduled to rise from 9.5% to 10% from 1 July. That means that anyone who received superannuation payments from their employers (which is almost everyone who is currently employed) will get a pay rise of 0.5% in just a couple of weeks.

Yes, it is super. But before anyone brings up how you won’t see this money in your bank account, remember that super is your money too. And a rise in the superannuation guarantee will result in anyone receiving it becoming more wealthy. As well as better placed for a comfortable retirement.

Any money that flows to superannuation is typically invested on your behalf as well. So this extra cash that most workers will be receiving will head straight into assets like bonds, term deposits, and yes, ASX shares, to grow over time.

Suped-up super

Of course, many Aussies might prefer to just pocket the extra cash themselves. But remember, money that goes to super is usually taxed less than ordinary income. So it’s a win from that perspective as well.

However, not all Aussie workers night be enjoying this upcoming rise. According to a report from the ABC this week, there are a number of workers who might not feel the benefit. The report cites a ‘loophole’ in the laws that allow businesses that pay super as part of a total salary package to simply rebalance their employees pay to reflect the higher super guarantee. In other words, they can take the extra 0.5% they have to pay in super out of their employees’ pay packets.

This isn’t technically a ‘pay cut’ since the employee in question is no worse off on paper. But it will certainly upset many of these employees that might not appreciate a reduction in their take-home pay. The ABC included the results of a survey conducted by research firm Mercer. This found that almost two-thirds of firms with a ‘total salary package’ structure for their workers were considering taking the super increase out of their employees’ existing pay packets.

The report also states that the federal government sees no problem with this situation. It points out that Superannuation Minister Jane Hume recently cited a trade-off between providing more superannuation and wage increases. This is something that The Motley Fool’s chief investment officer Scott Philips recently discussed. So if you’re not sure if you’re on a ‘total salary package’, it might be a good time to find out!

The post Most Aussies will get a pay raise next month… will you? appeared first on The Motley Fool Australia.

More reading

• Why AVITA, Cettire, Lifestyle Communities, & SEEK are storming higher
• Here’s why the Orthocell (ASX:OCC) share price is on the move today
• 2 excellent ASX healthcare shares named as buys
• Why Tesla’s restaurant plan is an unprofitable detour
• The Vulcan Energy (ASX:VUL) share price is rising today

Motley Fool contributor Sebastian Bowen 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 Bruce Jackson.

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In early afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is defying overnight weakness on Wall Street and is pushing higher. At the time of writing, the benchmark index is up 0.3% to 7,400.8 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are storming higher:

AVITA Medical Inc (ASX: AVH)

The AVITA Medical share price has stormed 12% higher to $5.61. This morning the regenerative medicine company announced that it expects to outperform its fourth quarter revenue guidance. Instead of quarterly revenue of US$8.2 million to US$8.6 million, it is now expecting revenue in the range of US$9.5 million to US$9.7 million.

Cettire Ltd (ASX: CTT)

The Cettire share price is up 6% to $2.10. The online luxury goods seller’s shares are rebounding on Wednesday following a sharp decline on Tuesday amid concerns over its business model and the authenticity of the products it sells. This morning Cettire defended its business and refuted the claims. It said: “Cettire has confidence in the sustainability of its supply chain and the authenticity of the products available on its platform.”

Lifestyle Communities Limited (ASX: LIC)

The Lifestyle Communities share price has jumped 7.5% to $15.37. This appears to have been driven by a broker note out of Goldman Sachs this morning. According to the note, the broker has retained its conviction buy rating and lifted its price target to $16.50. Goldman believes its shares are attractively priced given its solid growth prospects thanks to its exposure to the ageing populations tailwind.

SEEK Limited (ASX: SEK)

The SEEK share price is up 2.5% to $33.07. Investors have been buying the job listings company’s shares after it was the subject of a bullish broker note out of Macquarie. According to the note, the broker has retained its outperform rating and lifted its price target to $40.00. Macquarie believes SEEK will benefit greatly from improving yields on its ads when discounts are removed. It also expects the Australian unemployment rate to fall to 4% in 2023, underpinning strong growth in ad volumes.

The post Why AVITA, Cettire, Lifestyle Communities, & SEEK are storming higher appeared first on The Motley Fool Australia.

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• ASX 200 up 0.35%: SEEK upgraded, Afterpay lower
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• Why the AVITA (ASX:AVH) share price is jumping 8% today
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James Mickleboro owns SEEK shares. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Avita Medical Limited and Cettire Limited. The Motley Fool Australia has recommended Avita Medical Limited, Cettire Limited, and SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Orthocell Ltd (ASX: OCC) share price is climbing today. At the time of writing, it’s at 57.5 cents, up by 1.77%, settling back after jumping 4% in early trading.

Let’s have a look at the latest announcement from the regenerative medicine company.

What announcement did Orthocell make?

The Orthocell share price is moving higher after the company announced China and New Zealand have granted patents for its CelGro collagen medical device platform.

Australia and Japan have already granted patents for CelGro. Orthocell also said its patent applications were progressing in the United States and the European Union.

CelGro is a suture-less repair process used to regenerate soft tissue, meaning no potentially damaging stitches are needed. According to the statement, the process can improve the outcomes of surgeries by reducing surgery time, simplifying the techniques, and lessening the risk of additional trauma caused by stitches.

Orthocell reported preclinical studies indicate CelGro provides improved nerve repair and return of muscle function in patients with severed peripheral nerves compared to using sutures.

Orthocell’s managing director, Paul Anderson, commented on the new patents:

These patents are an important addition to our global intellectual property portfolio, further strengthening our position in regenerative medicine product development and novel surgical techniques for soft tissue repair.

Sutureless or tensionless repair is of particular importance in the optimal repair of damaged nerves and is a key part of the repair process undertaken in the CelGro nerve regeneration clinical study. This comes at a perfect time for the company as we move our exciting pipeline products in nerve, tendon and ligament repair through the registration process in the US, EU and AUS.

The CelGro patents are set to expire on 12 October 2035.

Orthocell share price snapshot

Orthocell is currently trading at 57.5 cents per share. That puts Orthocell shares up by 64% over the past 12 months, well surpassing the 27% gains posted by the All Ordinaries Index (ASX: XAO).

Year-to-date, the Orthocell share price has continued to outperform, up 26% so far in 2021.

The post Here’s why the Orthocell (ASX:OCC) share price is on the move today appeared first on The Motley Fool Australia.

More reading

• 2 excellent ASX healthcare shares named as buys
• Why Tesla’s restaurant plan is an unprofitable detour
• The Vulcan Energy (ASX:VUL) share price is rising today
• Are Telstra (ASX:TLS) shares still cheap today?
• ASX 200 up 0.35%: SEEK upgraded, Afterpay lower

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. Bernd Struben 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 Bruce Jackson.

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If you’re interested in gaining some exposure to the healthcare sector, then you might want to read on.

Listed below are two ASX healthcare shares that have been given buy ratings. Here’s what you need to know:

Ramsay Health Care Limited (ASX: RHC)

Ramsay Health Care could be an ASX healthcare share to consider. It is a leading private healthcare company with operations across the world.

It has also just announced plans to bolster its network in the United Kingdom market with the proposed acquisition of Spire Healthcare for $1.8 billion. This is expected to create a leading private health care services provider in the lucrative market. It will also diversify Ramsay UK’s payor sources, and case mix, expanding the geographic reach of its capabilities and improving capacity utilisation.

In the meantime, the company looks well-placed to benefit from a post-pandemic backlog in surgeries in the near term.

One broker that is particularly positive on Ramsay is Citi. Last week the broker upgraded the company’s shares to a buy rating from neutral and increased its price target from $67.00 to $76.00.

Citi commented: “While the business currently remains severely impacted by the pandemic, we expect incremental news to be positive as health systems return to more normal conditions in FY22 and FY23.”

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a healthcare technology company that provides software which leverages artificial intelligence imaging algorithms to help with the early detection of breast cancer.

Management notes that its innovative products have an ever-increasing number of patents, trademarks, and regulatory clearances. The latter includes FDA clearance and CE marking.

Over the last few years, the company has been growing its market share at a rapid rate in the United States. For example, at the end of FY 2021, approximately 32% of US women had a Volpara product applied on their images and data. This compares to 27% from a year earlier.

This helped underpin a 57% increase in revenue to a record of NZ$19.7 million for the 12 months ended 31 March.

Pleasingly, more of the same is expected in FY 2022. Management has provided revenue guidance of approximately NZ$25 million to NZ$26 million, which represents year on year growth of 27% to 32%.

Morgans is a fan of the company. It currently has an add rating and $1.87 price target on its shares.

The post 2 excellent ASX healthcare shares named as buys appeared first on The Motley Fool Australia.

More reading

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• Why Brickworks, Ecofibre, Frontier Digital, & Ramsay are storming higher
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• When the music stops… the investment bankers stop getting paid!

James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. 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 Bruce Jackson.

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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.

Back in 2018, CEO Elon Musk shared in a Tweet that Tesla (NASDAQ: TSLA) will open an old-school drive-in restaurant featuring roller skates and famous movie clips in a California Supercharger station. Historically, Musk has made some bold claims online, and not all of his ideas have come to fruition.

For this reason, it made headlines when Tesla actually filed for trademarks in the restaurant services industry — over three years later.  Despite the hype, if Tesla goes through with a restaurant in its Supercharger network, investors need to carefully consider whether it is a worthwhile investment of capital and management energy.

The problem Tesla wants to solve

Tesla’s Supercharger network consists of 908 Supercharger stations  across the country, each with varying numbers of individual Superchargers. The problem is that charging a Tesla takes time, and the company wants to provide Tesla drivers with entertainment while they wait to hit the road again.

However, doing some digging on Tesla’s Supercharger map reveals some insight into this problem. In the U.S., not a single Supercharger can be found beyond a short walking distance to a restaurant, coffee shop, grocery store, or service plaza. Tesla has located most Supercharger stations near several of these establishments, and some even have direct access to shopping centers.  

With Supercharger stations already providing Tesla drivers with options for spending their downtime, the Supercharger network does not translate to a surefire captive market for Tesla. However, Elon is set on bringing retro-style entertainment to the Supercharger network in hopes that it will nonetheless drive revenue and attract new customers.

Is this problem worth solving?

Before addressing this question, it’s important to understand all the charging options that Tesla drivers have. Supercharger stations, destination chargers, and at-home chargers all have different use cases, pros, and cons.

Supercharger stations are located in most major cities and along popular travel routes for high-speed charging during long-distance drives.  A standard Tesla Model 3 can charge to full capacity in under an hour at a Supercharger. Charging fees can vary based on location, charge volume, and seasonality but generally run around 28 cents per kilowatt-hour (kWh).  

Destination chargers are installed by Tesla’s ‘Charging Partners’ — usually shopping centers, hotels, movie theaters, or restaurants — and allow patrons of those businesses to charge for free. A destination charger’s speed is significantly lower than a Supercharger, but drivers can easily reach half or full battery capacity for free while shopping or staying at a hotel.

Drivers’ final charging option is to use their at-home charger, which is included with every Tesla vehicle purchase. The added utility expense varies based on location, but the average U.S. electricity rate runs about 13.2 cents per kWh — less than half the price of using a Supercharger.  

With the ability to charge cheaply at home and free at over 4,500 destination chargers across the country, it’s perfectly logical in many cases for a Tesla driver to never use a Supercharger. Essentially, the only use case for a Supercharger is a road trip, and even in those cases many drivers would likely choose other food, coffee, or shopping options in the area over Tesla’s proposed retro diner while they wait.

Knowing this, it is difficult to argue that it would be worth it for Tesla to invest so heavily in enhancing user experience in the less-frequented Supercharger network. Plus, considering the business incentive for being a Tesla Charging Partner, it’s plausible to expect businesses to open destination chargers at a faster rate than Tesla launches new Supercharger stations.

Tesla, keep your eyes on the road

There is undoubtedly a lucrative captive market opportunity in electric vehicle charging in general. However, that opportunity will likely be more valuable for Tesla’s Charging Partners via destination chargers than for Tesla via its Supercharger network because of the frequency of their respective usage and driver options during their charge time.

Especially considering the restaurant industry’s infamously razor-thin margins, most investors would prefer to see Tesla stay focused on expanding production capacity, recovering its sales slump in China, and fixing the “significant mistakes” it made in rolling out its solar roof business. If not, the diversion of company resources to a restaurant venture will very likely hurt the stock.

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

The post Why Tesla’s restaurant plan is an unprofitable detour appeared first on The Motley Fool Australia.

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Taylor Weldon has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of 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 Bruce Jackson.

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

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