Tesla’s China Numbers Might Be Worse Than First Blush
After a day of confusion saw the company’s stock fall.
After a day of confusion saw the company’s stock fall.
Confusion has reigned in recent Tesla trading. There has been confusion about Tesla driving features and a fatal Texas crash; the true impact of zero-emission credit sales; and now over Tesla’s April sales figures in China. One thing is certain: Investors hate confusion.
Tesla stock fell 1.9% Tuesday, but started out the day significantly lower, making the drop actually a small win for Tesla investors. The S&P 500 and Dow Jones Industrial Average fell 0.9% and 1.4%, respectively.
Even though the stock rallied through the day, Tesla’s China sales numbers might be worse than investors initially assumed. Chinese auto industry data show Tesla sold roughly 26,000 EVs in April, down from about 35,000 in March. It’s a decline amid growth for Tesla’s Chinese EV competitors.
The confusion is over exports. Tesla also exported about 14,000 cars from China in April, according to the same industry association. So the question investors started asking analysts is: Did Tesla produce 40,000 cars in China in April, meaning the company sold 26,000 in China and exported an additional 14,000? Or did Tesla make 26,000 cars overall in China, selling 12,000 of those in China and exporting the rest?
Tesla isn’t helping untangle the numbers. The company didn’t respond to a request for comment.
“We’ve been exchanging emails with confused clients all morning,” wrote Piper Sandler Alex Potter in a Tuesday report. His original interpretation of the numbers was that Tesla sold about 26,000 vehicles in China and exported an additional 14,000, but acknowledged the possibility that Tesla only sold about 12,000 in the country and exported the rest of the 26,000.
That would mean Tesla sales declined by nearly two-thirds month to month. But even if the answer is only 12,000 Chinese sales in April, Potter isn’t worried.
“Don’t stare too closely at these monthly numbers,” wrote the analyst. “We prefer to examine Tesla’s market share on a trailing [three-]month basis.”
He also points out that the Tesla plant in Shanghai was closed for two weeks in the first quarter, which might have sacrificed 10,000 or so vehicles. What’s more, Tesla tends to ship most of its units in the final month of the quarter.
GLJ analyst Gordon Johnson isn’t as sanguine and believes the 14,000 deliveries are part of the 26,000 figure. For him, that means Tesla has a market share problem in the world’s largest market for EVs.
Potter and Johnson’s take on the April data aligns with their ratings. Potter rates shares Buy and has $1,200 price target for the stock, the highest on Wall Street. His target price values the company at more than $1 trillion. Johnson rates shares Sell and has the lowest target price on the Street at $67 a share. His target values the company at about $80 billion, or roughly what General Motors (GM) stock is worth.
The entire April report is, frankly, confusing, adding to existing uncertainty surrounding Tesla stock.
Tesla’s driver-assistance function was initially implicated in a deadly Texas crash in April, but it looks as if the system wasn’t turned on, according to preliminary findings by the National Transportation Safety Board. In other words, that would mean the human driver crashed the car, although investors will have to wait to see the NTSB’s final report.
Tesla also reported better-than-expected first-quarter numbers in late April. The numbers, however, were boosted by Bitcoin trading profits and bigger-than-expected zero-emission credit sales—which Tesla earns for producing more than its fair share of no-emission cars and then sells to other auto makers that don’t meet zero-emission quotas.
All the confusion has weighed on shares. Tesla stock is down about 9% over the past month. The Nasdaq Composite is off 4% over the same span.
Regardless of the final interpretation, Tesla’s April sales in China dropped sequentially, while other EV makers’ deliveries rose. That isn’t what Tesla bulls want to see, and it’s another thing to worry about in coming months.
Reprinted by permission of Barron’s. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: May 11, 2021.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Investors are taming impulsive money moves by adding a little friction to financial transactions
To break the day-trading habit that cost him friendships and sleep, crypto fund manager Thomas Meenink first tried meditation and cycling. They proved no substitute for the high he got scrolling through investing forums, he said.
Instead, he took a digital breath. He installed software that imposed a 20-second delay whenever he tried to open CoinStats or Coinbase.
Twenty seconds might not seem like much, but feels excruciating in smartphone time, he said. As a result, he checks his accounts 60% less.
“I have to consciously make an effort to go look at stuff that I actually want to know instead of scrolling through feeds and endless conversations about stuff that is actually not very useful,” he said.
More people are adding friction to curb all types of impulsive behaviour. App-limiting services such as One Sec and Opal were originally designed to help users cut back on social-media scrolling.
Now, they are being put to personal-finance use by individuals and some banking and investing platforms. On One Sec, the number of customers using the app to add a delay to trading or banking apps more than quintupled between 2021 and 2022. Opal says roughly 5% of its 100,000 active users rely on the app to help spend less time on finance apps, and 22% use it to block shopping apps such as Amazon.com Inc.
Economic researchers and psychologists say introducing friction into more apps can help people act in their own best interests. Whether we are trading or scrolling social media, the impulsive, automatic decision-making parts of our brains tend to win out over our more measured critical thinking when we use our smartphones, said Ankit Kalda, a finance professor at Indiana University who has studied the impact of mobile trading apps on investor behaviour.
His 2021 study tracked the behaviour of investors on different platforms over seven years and found that experienced day traders made more frequent, riskier bets and generated worse returns when using a smartphone than when using a desktop trading tool.
Most financial-technology innovation over the past decade focused on reducing the friction of moving money around to enable faster and more seamless transactions. Apps such as Venmo made it easier to pay the babysitter or split a bill with friends, and digital brokerages such as Robinhood streamlined mobile trading of stocks and crypto.
These innovations often lead customers to trade or buy more to the benefit of investing and finance platforms. But now, some customers are finding ways to slow the process. Meanwhile, some companies are experimenting with ways to create speed bumps to protect users from their own worst instincts.
When investing app Stash launched retirement accounts for customers in 2017, its customer-service representatives were flooded with calls from panicked customers who moved quickly to open up IRAs without understanding there would be penalties for early withdrawals. Stash funded the accounts in milliseconds once a customer opted in, said co-founder Ed Robinson.
So to reduce the number of IRAs funded on impulse, the company added a fake loading page with additional education screens to extend the product’s onboarding process to about 20 seconds. The change led to lower call-centre volume and a higher rate of customers deciding to keep the accounts funded.
“It’s still relatively quick,” Mr. Robinson said, but those extra steps “allow your brain to catch up.”
Some big financial decisions such as applying for a mortgage or saving for retirement can benefit from these speed bumps, according to ReD Associates, a consulting firm that specialises in using anthropological research to inform design of financial products and other services. More companies are starting to realise they can actually improve customer experiences by slowing things down, said Mikkel Krenchel, a partner at the firm.
“This idea of looking for sustainable behaviour, as opposed to just maximal behaviour is probably the mind-set that firms will try to adopt,” he said.
Slowing down processing times can help build trust, said Chianoo Adrian, a managing director at Teachers Insurance and Annuity Association of America. When the money manager launched its online retirement checkup tool last year, customers were initially unsettled by how fast the website estimated their projected lifetime incomes.
“We got some feedback during our testing that individuals would say ‘Well, how did you know that already? Are you sure you took in all my responses?’ ” she said. The company found that the delay increased credibility with customers, she added.
For others, a delay might not be enough to break undesirable habits.
More people have been seeking treatment for day-trading addictions in recent years, said Lin Sternlicht, co-founder of Family Addiction Specialist, who has seen an increase in cases since the start of the pandemic.
“By the time individuals seek out professional help they are usually experiencing a crisis, and there is often pressure to seek help from a loved one,” she said.
She recommends people who believe they might have a day-trading problem unsubscribe from notifications and emails from related companies and change the color scheme on the trading apps to grayscale, which has been found to make devices less addictive. In extreme cases, people might want to consider deleting apps entirely.
For Perjan Duro, an app developer in Berlin, a 20-second delay wasn’t enough. A few months after he installed One Sec, he went a step further and deleted the app for his retirement account.
“If you don’t have it on your phone, [that] helps you avoid that bad decision,” he said.
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