At the start of each week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Webjet Limited (ASX: WEB) continues to be the most shorted ASX share with short interest of 14.2%. This was down from 14.9% a week earlier. Short sellers have been targeting the online travel agent’s shares on the belief they are expensive given the challenging near term trading conditions.
• Tassal Group Limited (ASX: TGR) has seen its short interest ease week on week to 11.8%. Concerns that China could slap duties on Australian seafood has been weighing on this salmon producer’s shares.
• Mesoblast limited (ASX: MSB) has seen its short interest remain flat at 10.3%. This biotech company has gained the attention of short sellers after a series of very disappointing trial updates.
• Speedcast International Ltd (ASX: SDA) has short interest of 9.3%. The communications satellite technology provider’s shares remain suspended while it undertakes a recapitalisation.
• Inghams Group Ltd (ASX: ING) has 8.4% of its shares held short, which is flat week on week once again. Short sellers appear to expect an unfavourable sales mix caused by COVID-19 to weigh on this poultry producer’s performance in FY 2021.
• AVITA Medical Inc (ASX: AVH) has seen its short interest rise week on week to 8.3%. This appears to have been driven by concerns that COVID-19 headwinds will stifle the medical device company’s growth again in FY 2021 after a poor performance in FY 2020.
• InvoCare Limited (ASX: IVC) has short interest of 7.9%, which is down week on week again. This funerals company has been tipped to lose market share in FY 2021 due to increasing competition and COVID-19 headwinds.
• A2 Milk Company Ltd (ASX: A2M) has seen its short interest rise slightly to 7.9%. Concerns that weakness in the key daigou channel could persist for even longer than expected appears to be weighing heavily on sentiment.
• Metcash Limited (ASX: MTS) has short interest of 7.4%, which is up slightly week on week. Although the wholesale distributor has delivered strong growth so far in FY 2021, short sellers aren’t giving up on it.
• Service Stream Limited (ASX: SSM) has seen its short interest remain flat at 7.3%. Unfortunately for short sellers, this essential network services company’s shares surged higher last week after announcing a major contract win.

More reading

• Top brokers name 3 ASX shares to buy next week
• 2 beaten-up infant formula ASX shares to buy
• ASX 200 ends 0.6% down, Kogan falls 8.5%, Service Stream soars 10%
• GameStop frenzy: 3 shorted ASX shares that could shoot up
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400

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 Avita Medical Limited. The Motley Fool Australia owns shares of and has recommended A2 Milk and Webjet Ltd. The Motley Fool Australia has recommended Avita Medical Limited, InvoCare Limited, and Service Stream 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 Zip Co Ltd (ASX: Z1P) share price is on course to start the week with a disappointing decline.

In morning trade, the buy now pay later provider’s shares are down over 3% to $7.04.

Why is the Zip share price dropping lower?

There have been a couple of catalysts for the weakness in the Zip share price on Monday.

The first is general weakness in the tech sector following a poor end to the week on Wall Street’s technology-focused Nasdaq index. The world-famous index fell 2% on Friday, bringing its weekly decline to over 3%.

This is weighing on the local tech sector, leading to the S&P/ASX All Technology Index (ASX: XTX) falling 2.4% this morning.

In addition to this, this morning Zip announced that its Chair, Philip Crutchfield, will step down from the role after more than five years with the company. Mr Crutchfield is exiting the role with immediate effect but will remain on the board until the end of March in order to support an orderly transition.

New Zip Chair

Zip has announced the appointment of Ms Diane Smith-Gander AO as its next Chair.

According to the release, Ms Smith-Gander is a seasoned professional non-executive director with chair experience. The company believes she is ideally placed to lead Zip as it forges ahead as with its global expansion.

It notes that Ms Smith-Gander will bring her extensive governance and international experience to Zip, with the ambition of guiding the business in the coming years, as well as bringing to millions of new customers a fairer and more transparent way of managing their money.

Ms Smith-Gander had a long career in banking, technology, and strategic and management consulting. She spent time with Westpac Banking Corporation (ASX: WBC) as a Group Executive and McKinsey & Company as a US-based partner.

Zip’s Co-Founder and Chief Executive Officer, Larry Diamond, said: “I would like to thank Philip Crutchfield for his incredible service at Zip. When he joined us in December 2015, Zip had less than 30 staff and worked out of a tiny office with a ping pong table. From then to now, he has steered us with a steady hand on our journey to the place we are in today. Personally, he has been a wise mentor and a good friend. On behalf of Zip, I would like to thank Philip and wish him all the best for the future.”

“I would also like to welcome Diane Smith-Gander to Zip. Diane is an experienced leader with a diverse background across finance, technology and banking. She will be an important part of Zip’s future as we strive to become the first payment choice everywhere and every day,” he concluded.

More reading

• These were the best performing ASX 200 shares in January
• The Zip (ASX:Z1P) share price rocketed 37% higher in January
• 3 reasons to consider Sezzle (ASX:SZL) at this share price
• Zip and Vulcan were among the most traded ASX shares last week
• 2 ASX growth shares to buy in February

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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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Despite the stock market rally following the 2020 market crash, it is still possible to find top shares to buy right now. Over time, they could deliver higher returns than the stock market, which could boost an investor’s portfolio performance.

Through analysing company valuations on a relative basis, considering the capacity for a recovery within struggling sectors, and assessing the financial strength of businesses, it is possible to unearth the most appealing shares to buy right now.

Low valuations among top shares to buy today

Following the stock market recovery, a number of companies now trade on high valuations. While they could move higher if investor sentiment continues to improve, the top shares to buy today may be those companies with more modest valuations. After all, lower valuations may mean there is more scope for capital growth as the economic recovery takes hold.

As such, it may be prudent to search for companies that have low valuations. They may be lower than their sector peers, or below their historic averages. In either of these situations, there may be scope for them to enjoy upward reratings over the coming months and years, as improving investor sentiment and reduced disruption from lockdown measures allow businesses to return to improved operating conditions.

Focusing on recovery opportunities

Some companies have been hit harder than others in the present economic crises. In many cases, this is through no fault of their own. For example, they may have experienced weak operating conditions because of a challenging economic outlook.

History suggests that buying such companies could be a shrewd move. The performance of the economy, and most sectors, is very likely to improve significantly over the coming years. This may mean that the financial performance of businesses that experienced falling sales and profitability in 2020 improves. This process may or may not take place in 2021, but is likely to come into force in the long run.

Therefore, searching for top shares to buy now in sectors with recovery potential could be a shrewd move. It may enable an investor to buy turnaround opportunities that deliver market-beating returns.

Financial statement analysis

Even cheap shares with recovery potential are of little use if they cannot survive short-term economic challenges. After all, to benefit from an economic recovery through an upward rerating, a company must first overcome short-term difficulties that may remain present for much of the current year.

Therefore, analysing a stock’s financial statements could be a sound idea. It will enable an investor to judge whether the company in question has the financial means to survive the short run to benefit from an improving long-term outlook. Top shares to buy today are likely to have low debt, access to liquidity and the means to cut costs now to become leaner entities prior to an economic recovery.

More reading

• The Pro Medicus (ASX:PME) share price zoomed 25% higher in January
• Why the Vection (ASX:VR1) share price is lifting today
• Why the Coca-Cola Amatil (ASX:CCL) share price is pushing higher
• Here’s why the Creso Pharma (ASX:CPH) share price is rocketing 18% higher
• Woolworths (ASX:WOW) settles shareholders’ lawsuit for $44.5 million

Motley Fool contributor Peter Stephens 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 Pro Medicus Limited (ASX: PME) share price was an impressive performer in January.

It was among the best performers on the S&P/ASX 200 Index (ASX: XJO) with a 25.4% monthly gain.

This means the Pro Medicus share price is now up a massive 71% over the last 12 months.

Why did the Pro Medicus share price rocket higher in January?

The catalyst for the strong performance by the Pro Medicus share price in January was the announcement of another major contract win.

This was the sixth such an announcement in the space of eight months and follows previously announced deals with Ludwig-Maximilians University, MedStar Health, Northwestern Memorial Healthcare, and NYU Langone Health. It was also the fifth win in just six months.

The latest contract is with Salt Lake City-based Intermountain Healthcare and is the biggest of them all. Management revealed that it is worth a sizeable $40 million over a seven-year period.

According to the release, Intermountain Healthcare is the largest health system in the State of Utah. It also provides medical services in the states of Idaho and Nevada.

The contract, which is based on a transactional licensing model, will see the company’s Visage 7 Viewer and Visage 7 Open Archive products implemented across all of Intermountain’s radiology and subspecialty imaging departments.

The implementation will be fully deployed on Google Cloud Platform (GCP), leveraging Visage’s native, cloud-engineered enterprise imaging technology.

Pro Medicus’ CEO, Dr Sam Hupert, commented: “This is a very important deal for us, not only because of its size and scope, it will provide us with a material footprint in Intermountain West, previously an untapped region for us.”

“Prestigious deals”

In a separate Q&A release, Dr Hupert spoke in more detail about its recent contract wins.

Commenting on what the deal says about its technology, Dr Hupert said: “Firstly, these were arguably five of the largest, most prestigious deals in the market not to mention that these sorts of deals don’t come around often, so they were incredibly competitive. The fact that we won five out of five we feel validates our belief that we have a unique, highly differentiated offering.”

“Secondly, I think people are hearing about the ROI we deliver, both financially and clinically. This combined with our ability to rapidly and seamlessly implement is creating a strong network effect that has been instrumental in our spate of recent wins,” he added.

Looking ahead, the Chief Executive remains positive on its outlook thanks to its strong pipeline of opportunities.

He explained: “In terms of the pipeline, there have been a number of new opportunities, particularly over the past 6-8 months that supplement those already in the pipeline that are progressing through the cycle. So, whilst we have been very successful in converting end-stage opportunities such as Intermountain and the other deals we have announced over the past 6 months, our pipeline remains strong with a range of opportunities across various stages of the cycle and across multiple segments of the market.”

This may bode well for the Pro Medicus share price over the next 12 months.

More reading

• These were the best performing ASX 200 shares in January
• These ASX 200 shares are on fire in 2021
• Why Vulcan (ASX:VUL) and these ASX shares are smashing the market in 2021
• ASX 200 down 0.5%: JB Hi-Fi guidance impresses, Super Retail update, Ramsay surges
• ASX 200 Weekly Wrap: ASX drops despite promises of more US stimulus

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 recommends Pro Medicus Ltd. The Motley Fool Australia has recommended Pro Medicus 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 Vection Technologies Ltd (ASX: VR1) share price is up 4.17 at 12.5 cents in early trade today. This comes after the company announced that it will begin collaborating with global information technology company, HP Inc (HP).

The Vection share price closed last Friday at 12 cents in the weak sentiment of the ASX market. Previously, shares in the real-time software company were sitting at a 2-week high of 13.5 cents.

What did Vection announce?

In this morning’s release, Vection advised it has started an original equipment manufacturer (OEM) agreement with HP.

Under the deal, both companies will seek to create virtual reality (VR) integrated solutions to be delivered across 170 countries. The service agreement will be executed using Vection’s VR software and HP’s VR hardware expertise, while tapping into HP’s expansive global network.

While Vection did not reveal financial information on the OEM agreement, it expects revenue to be material. It noted that successful marketing and sales initiatives by both companies would lead to “positive revenue generation”.

What did management say?

HP’s United States business development manager Matt Gaiser welcomed the partnership, saying:

We are glad to welcome Vection Technologies and Mindesk in our OEM Program. Working together will help Vection to provide an integrated hardware and software service to enterprise customers. Vection’s products can leverage Z by HP workstations and VR devices to foster professional CAD development and accelerate go-to-market time across many industries.

Vection technologies director Gabriele Sorrento added:

Working with HP is another key step in the commercial network development strategy aimed at supporting Vection’s growth. Being HP OEM partners means for us being able to manage and deliver hardware and software bundles globally. This agreement represents a long step forward for our commercial operation structure.

About the Vection share price

The Vection share price has surged higher in the past 12 months, bringing gains of 380% for investors.

The company’s shares hit a low of 1.5 cents in last year’s March coronavirus meltdown, before gradually moving upwards in the months following. In September, its shares rocketed from 6 cents to reach a 52-week high of 24 cents in October.

The Vection share price has stabilised around the 12 to 13 cent mark. Based on the current share price, Vection has a market capitalisation of around $115 million.

More reading

• What happened to the Vection (ASX:VR1) share price today?

Motley Fool contributor Aaron Teboneras 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 Coca-Cola Amatil Ltd (ASX: CCL) share price is pushing higher on Monday.

In morning trade, the beverage company’s shares are up 0.5% to $13.15.

Why is the Coca-Cola Amatil share price pushing higher?

This morning Coca-Cola Amatil provided investors with an update on its takeover approach from Coca-Cola European Partners.

In November, the company revealed that it had entered into a scheme implementation deed with Coca-Cola European Partners for the acquisition of all of the issued shares held by independent shareholders via a scheme of arrangement.

This followed the receipt of an offer of $12.75 per share, less any final dividend paid before the date of implementation of any scheme. This represented a premium of 23% to the undisturbed one-week volume weighted average price at the time. It also valued the company at approximately $9.3 billion.

At the time, the implementation of the scheme remained subject to certain conditions. These include regulatory approvals, no material adverse changes in its performance, an independent expert report, shareholder approval, Australian court approval, and other customary conditions.

What’s the latest?

Today, the takeover approach moved closer to becoming a reality after Coca-Cola Amatil announced that the Foreign Investment Review Board (FIRB) has determined that the Commonwealth has no objection to a wholly owned subsidiary of CCEP acquiring up to a 100% interest in the company.

The receipt of FIRB approval satisfies one of the conditions precedent to the implementation of the scheme.

What’s left to do?

The implementation of the scheme remains subject to a few more conditions. This includes approval from the New Zealand Overseas Investment Office.

In respect to shareholder approval, no firm date has been set for the vote. However, Coca-Cola Amatil is expecting to hold a shareholder meeting early in 2021.

In the meantime, it has advised that shareholders do not need to take any action in relation to the scheme.

More reading

• These blue chip ASX shares just hit multi-year highs
• Why the Coca-Cola Amatil (ASX: CCL) share price is in focus today
• The ASX 200 stock facing a day of reckoning at the February reporting season
• Citi sees bigger takeover offer coming for Coca-Cola Amatil (ASX:CCL) share price

Motley Fool contributor James Mickleboro 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 Creso Pharma Ltd (ASX: CPH) share price has started the week with a bang.

At the time of writing, the cannabis company’s shares are up 18% to 23 cents.

Why is the Creso Pharma share price rocketing higher?

Investors have been buying Creso Pharma shares following the release of an announcement in relation to over-the-counter sales of low-dose cannabidiol (CBD) products in Australian pharmacies.

According to the release, Creso Pharma expects to benefit from changes in legislation that mean low-dose CBD products can be sold over-the-counter in Australian pharmacies from this morning.

This follows a decision by the Therapeutic Goods Administration (TGA) to down-schedule low dose CBD preparations from Schedule 4 (Prescription Medicine) to Schedule 3 (Pharmacist Only Medicine).

From today, TGA-approved CBD products containing up to a maximum of 150mg per day can be sold to adults by a pharmacist without a prescription.

Management believes this is a major development for the Australian medicinal cannabis industry and estimates that it provides the company with a market opportunity expected to exceed $200 million per annum.

“Very well placed to capitalise”

Furthermore, it feels the company is very well placed to capitalise on the growing market opportunity due to its existing portfolio of CBD products that are being actively sold in several countries globally. It notes that its flagship CannaQIX 50 product is already available in Australia via prescription, under the LozaCan brand.

The company also has an agreement with sustainable health and lifestyle brand supplier Martin & Pleasance to bring Creso’s suite of cannabis-based products to the Australian market.

Creso’s Non-Executive Chairman, Adam Blumenthal, commented: “Today is a major milestone for the Australian medicinal cannabis industry, which we anticipate will grow rapidly over the coming months. The TGA’s decision to allow the sale of low–dose CBD products to consumers without a prescription provides Creso Pharma with another exciting opportunity to grow in Australia and another potential revenue stream for the Company.”

“We will continue to work with Martin & Pleasance to define the specific regulatory pathway for our product in the Australian market and look forward to proving its superiority through the ARTG registration process. “Creso continues to progress a number of growth initiatives in Australia and internationally and looks forward to updating shareholders as developments materialise,” he concluded.

More reading

• Why Bingo, Creso Pharma, Domino’s, & Tyro shares are zooming higher today
• Why the Creso Pharma (ASX:CPH) share price is smoking the market today
• Afterpay and Creso Pharma were among the most traded shares on the ASX last week
• Here’s why the Creso Pharma (ASX:CPH) share price is jumping 13% higher today
• Why ASX cannabis shares are cheering the US elections

Motley Fool contributor James Mickleboro 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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Woolworths Group Ltd (ASX: WOW) has settled a $100 million class action case brought on from shareholders accusing it of misleading conduct.

The supermarket faced the wrath of investors back in 2015 when it provided shock downgrades to its profit guidance.

This was caused by Woolworths’ decision to spend $500 million cutting grocery prices to recover clientele given up to Coles Group Ltd (ASX: COL) and Aldi.

That sudden cost, plus losses mounting from its foray into the hardware sector, saw the Woolworths share price decline from more than $36 in August 2014 to below $23 in November 2015.

Law firm Maurice Blackburn launched the legal action back in September 2018. Woolworths quietly updated the market late on Friday afternoon about the settlement.

“The settlement, in the sum of $44.5 million inclusive of all costs… will not have any financial impact on Woolworths Group,” the company stated.

“The settlement is without admission of any liability.”

Woolworths share price has recovered nicely since 2015

The supermarket’s price-cutting drive did work. It regained market share back from Coles and Aldi, with Woolworths shares now trading at $40.86 (at the time of writing).

Last month Goldman Sachs had a “neutral” rating for Woolworths shares, with a price target of $39.90. Its analysts are forecasting a 10.1% lift in year-on-year revenue when Woolworths’ half year results come out this month.

That growth will be mostly driven by groceries and Big W, with the hotels business dragging it back due to the COVID-19 pandemic.

Goldman Sachs is predicting the supermarket giant will pay out 48.8 cents of dividend per share, compared to 54 cents forecast by other analysts.

More reading

• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• Here’s one party Woolies and Coles will not be attending
• What analysts expect from the Woolworths (ASX:WOW) first half result
• CV Check (ASX:CV1) share price flat on results update

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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.

Last May — when Tesla Inc (NASDAQ: TSLA) shares were trading for around $150 on a split-adjusted basis — CEO Elon Musk opined on Twitter that Tesla’s stock price was probably too high.

Tesla stock price is too high imo

— Elon Musk (@elonmusk) May 1, 2020

https://platform.twitter.com/widgets.js

As Tesla stock continued to rise during the remainder of 2020 and sustained its massive gains, Musk began to change his tune. By the time Tesla held its fourth-quarter earnings call last week, the stock had more than quintupled from the level that Musk had considered “too high” less than a year ago. Nevertheless, the Tesla CEO laid out a case for why the impending arrival of full self-driving technology would justify the company’s lofty valuation.

There’s just one problem: Musk’s entire argument is built upon a fallacy. Let’s take a look.

Elon Musk math

Last year, Tesla’s automotive revenue reached a record $27.2 billion, and the company earned a GAAP operating profit of $2 billion. Tesla expects to grow dramatically from that base. It projects that it will increase its vehicle deliveries about 50% annually on average in the near term, as it increases its battery and assembly capacity, localizes production, and introduces new models.

Still, based on Tesla’s Wednesday closing price of $864.16 and its diluted share count of 1.124 billion shares, the company had a fully diluted market capitalisation of nearly $1 trillion. Even if Tesla was able to grow its earnings tenfold, it wouldn’t justify the company’s recent valuation without aggressive expectations for continued growth.

During Tesla’s recent earnings call, Musk opined that the stock remains reasonably valued if one factors in the profit potential of the full self-driving capabilities Tesla is building.

… [I]f Tesla’s ships, let’s say, hypothetically, $50 billion or $60 billion worth of vehicles, and those vehicles become full self-driving and can be used … as robotaxis, the utility increases from an average of 12 hours a week to potentially an average of 60 hours a week. … [L]et’s just assume that the car becomes twice as useful … that would be a doubling again of the revenue of the company, which is almost entirely gross margin. … [I]t would be like … having $50 billion of incremental profit basically from that because it’s just software.

In short, Musk argues that FSD capability will make each car Tesla builds dramatically more valuable, because it can be used more than a personal vehicle. Musk believes that Tesla will capture that extra value as almost pure profit, driving a massive earnings inflection that would enable the company to earn tens of billions of dollars annually within a few years — with plenty of room to keep growing.

It’s a giant fallacy

Alas, this “plan” is built on a fallacy. First, while typical car owners may spend just 12 hours per week in their vehicles, actual taxis get used far more often. In New York City, for example, some taxis are used for double shifts and may operate 100 hours per week (or even more). Those vehicles aren’t more valuable just because they will be used more: Production costs determine the vehicle’s selling price more than intended usage.

Second, Statista estimates that the global market for taxis and ride-hailing will reach $260 billion this year. That represents a sizable opportunity, but getting to $50 billion of revenue or more won’t be easy. It will take time for robotaxis to disrupt the traditional ridesharing and taxi markets. And even when they do, Tesla will face lots of competition, as numerous other companies also hope to roll out robotaxi services.

Robotaxi services may earn higher margins than auto manufacturers in the long run. However, Musk’s implicit assumption that Tesla could double its revenue with minimal incremental costs — thus earning pre-tax margins of 50% or more — is clearly false. If Tesla were to set its robotaxi rates high enough that it could earn such lofty margins, competitors would undercut it on price and steal its market share. This competitive dynamic will sharply limit the incremental profit opportunity from using Teslas as robotaxis.

Look to the core business for Tesla’s value

Many Tesla bulls expect the company to become the largest automaker in the world within 10 or 15 years, delivering 10 million or more cars annually. If Tesla can pull that off while attaining double-digit automotive operating margins and building up lucrative side businesses in solar, batteries, and robotaxis, Tesla stock could certainly grow into its valuation over time.

However, investors shouldn’t count on robotaxis as a magic bullet that will make Tesla massively profitable overnight. Tesla may develop a nice robotaxi business on the side, but the core auto business’ growth will determine whether Tesla stock continues to soar or plunges back to earth in the decade ahead.

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

More reading

• Why Tesla stock fell on Thursday
• Gamestop on the ASX? Why GME Resources (ASX:GME) share price rocketed 28% today
• Tesla earnings: 5 must-see metrics highlight strong execution
• Here are the US shares ASX investors are buying
• Will the blue sweep boost Tesla? Don’t count on it

Adam Levine-Weinberg has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends 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 Bruce Jackson.

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ASX stocks are already facing a tough start this morning but the Crown Resorts Ltd (ASX: CWN) share price could be hit harder than most.

The futures market is pricing in a 0.5% drop in the S&P/ASX 200 Index (Index:^AXJO) when trade kicks off on the first day of the new month.

But the flash COVID-19 lockdown in Perth is claiming an early victim with Crown reporting that its Perth Casino will have to cease most operations.

CWN share price catching new WA COVID lockdown bug

Management said that from 31 January till 5 February, it will close all gaming activities as well as food outlets. This means banqueting and conference facilities will also be shuttered and Crown’s food venues will only serve takeaway.

Its hotel accommodation business can continue to operate, but at a reduced capacity.

Crown had been hit hard by the stage four lockdown in Victoria – regarded as the toughest in the Western world.

Why the COVID lockdown could get a lot worse

What might also worry Crown investors is speculation that the five-day lockdown imposed by the McGowan government may last a lot longer.

The warning comes from Australian Medical Association president Omar Khorshid that was reported on Nine News.

If the hotel quarantine security guard at the centre of the outbreak scare has already  passed on the infection, the state will need more than five days to get the situation under control.

“If it has already spread, it will be longer than five days. It will be significantly longer,” Dr Khorshid told Nine.

“You have to go to the people who test positives, to their contacts, to work out where they have been. As we have seen in every other state. The real test will be the five days. Does anybody test positive? If they do, we are in for a much longer battle here in West Australia.”

Impact on other ASX stocks

If the virus is out of control, CWN won’t be the only ASX stock to be impacted by the WA COVID lockdown. The Fortescue Metals Group Limited (ASX: FMG) share price and Rio Tinto Limited (ASX: RIO) share price are also likely to come under pressure if worksite restrictions are imposed.

We are still some ways from that and it’s hard to imagine we could become Brazil, but it’s a risk to be aware of.

COVID isn’t the biggest challenge for CWN shareholders

The outbreak in the “fortress state” of Western Australia is the latest challenge hitting the problem-laden CWN share price.

The highly anticipated report from New South Wales Inquiry is expected to be handed to authorities today, reported the West Australian.

The Inquiry was examining if Crown is fit to be holding a gaming license in the state and the revelations during the process is damning.

But the public may need to wait for another two weeks to find out the details of the investigation.

COVID isn’t the biggest threat facing CWN shareholders.

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Motley Fool contributor Brendon Lau owns shares of Fortescue Metals Group Limited  and Rio Tinto Ltd. Connect with me on Twitter @brenlau.

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

The post Why the Crown (ASX:CWN) share price could be hit harder than others today appeared first on The Motley Fool Australia.

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