History would suggest that a crash or correction is coming — and that’s great news if you have cash ready to invest. Skip to contentSkip to site index Dow theory indicates it may be time to buy into the major average, but this year’s market landscape could prevent that strategy from working, Chantico Global’s Gina Sanchez says. Tesla CEO Elon Musk has repeatedly said — including very emphatically on the last Tesla conference call — that consumer demand is not a problem at all for Tesla. It seems from his comments that there is far more consumer demand than production capacity. However, we don’t know how much more, and we don’t know how that demand is spread out geographically across the world.
This has been a year that investors will be talking about for decades to come. The coronavirus disease 2019 (COVID-19) pandemic has, in a matter of months, upended societal norms, sent the U.S. unemployment rate to levels not seen since the 1930s, and registered the highest volatility readings we’ve ever seen for equities.
During the first quarter, the benchmark S&P 500 lost over than a third of its value in less than five weeks. This was followed by one of the strongest bounce-back rallies in decades. But the thing is, bear market bounces have a history of hitting speed bumps. Though it’s impossible to predict when a stock market crash or correction will occur, historical data would suggest that one is coming relatively soon.
However, a stock market crash doesn’t have to be a bad thing for investors. If you have a long enough time horizon, corrections of all sizes are merely an opportunity to buy into great companies at a discount. Should a stock market crash indeed be in the offing, I’ll be looking to buy, or add to, the following three stocks.
Image source: Getty Images.
One company that I already own, but would prefer to own a lot more of, is social media giant Pinterest (NYSE:PINS). Though I was lucky enough to buy into Pinterest on multiple occasions during the coronavirus collapse in March, I’ve failed to add to my position in the following months. Since its March bottom, shares of Pinterest have delivered gains of more than 250%.
Getting things right in the social media space isn’t as easy as it might sound, but Pinterest is firing on all cylinders. As of June, monthly active user (MAU) count had grown to 416 million, which is 39% more MAUs than it had in the previous year. Pinterest have proved especially popular with international users, which accounted for approximately 106 million of the 116 million MAUs the company has added over the past year.
Here’s the interesting thing about international users: Though the average revenue per user (ARPU) in oversea markets tends to be only 5% of U.S. ARPU, there’s the potential to double overseas ARPU many times over this decade as the platform’s headcount grows.
Pinterest is also coming into its own as an e-commerce player. Since 416 million people are using Pinterest as a platform to share products and ideas that interest them, it only makes sense for Pinterest to connect these users with small businesses that may carry products they’ll want to buy. Pinterest has partnered with Shopify to create an e-commerce experience that empowers these small businesses to turn interests into actionable buying.
I truly believe Pinterest has the potential to reach $100 billion in market cap by the end of this decade.
Image source: Getty Images.
Another stock that’s tripled off of its March lows that I’d love to add to my portfolio during a stock market crash is cybersecurity company Ping Identity (NYSE:PING).
The beauty of all cybersecurity stocks is that they’ve become virtually recession-proof. Although new orders and add-on solutions may slow during periods of economic contraction, the fact is that hackers and robots don’t take time off just because the U.S. or global economy hits the skids. No matter the size of a business, in-house networks and clouds needs to be protected at all times. This provides a level of cash flow security that you simply won’t see in many tech stocks.
As the name suggests, Ping Identity specializes in securing networks and clouds by providing identity verification. This usually takes the form of two-factor authentication, but the company is also prepping for a bevy of future login options that may include passwordless authentication. For the time being, artificial intelligence and machine learning is what makes Ping’s solutions tick. Its identity verification solutions are constantly learning and adapting to identify suspected human and robotic threats.
To build on the cash flow security I mentioned, 93% of Ping’s first-quarter revenue was derived from subscription and support services. The thing about subscription services in the cybersecurity space is there’s often little client churn, and margins are usually robust. In Ping’s case, its Q1 subscription gross margin chimed in at 87%, with annual recurring revenue (ARR) of 21%. That’s six consecutive quarters with at least 21% year-over-year ARR growth, dating back to Q4 2018.
Ping Identity is a company I fully expect to grow by 15% to 20% annually throughout this decade.
Image source: Getty Images.
Finally, I’ve always used the excuse of the bulls running wild as reason to not buy Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), which is the parent company of online advertising behemoth Google and streaming site YouTube. If a stock market crash strikes, I’ll look to finally pull the trigger.
Like most advertisers (Pinterest included), Alphabet has faced monumental short-term challenges from the coronavirus pandemic. In fact, year-over-year revenue fell 2%, inclusive of currency movements, in the second quarter. This marked Alphabet’s first-ever reported year-on-year revenue decline since going public. But I wouldn’t let this scare investors away from putting their money to work in this dominant ad, streaming, and cloud-service provider.
According to GlobalStats, Google controlled 92.2% of all online search, as of July 2020. For context, Google’s share of worldwide search has stayed consistent between 91.9% and 93% over the trailing year. The ad business may not be booming at the moment, but Google is the clear-cut choice for businesses looking for a targeted audience.
Beyond ads, Google Cloud is becoming an increasingly important part of the company’s future. Cloud revenue surpassed $3 billion in the second quarter (a 43% improvement from Q2 2019), implying an annual run-rate of $12 billion. Since cloud-service margins are considerably more attractive than ad-based revenue, Alphabet should see its cash flow and profitability tick higher as Google Cloud grows into a larger percentage of total sales.
Among the FAANG stocks, the best value might just be Alphabet.
Author: Sean Williams
Kodak Shares Plunge After Federal Loan Paused: Live Updates
The Federal Reserve released detailed data on Monday on its first-ever attempt to get loans to midsize businesses, and the figures show that the program is reaching a diverse — if tiny — set of borrowers.
The numbers run through July 31 and account for $92.2 million in loans, which is about half of what the so-called Main Street program has backed so far, based on more recent data cited by a Fed official last week. The program’s 13 loans through July 31 went to a range of companies — including a dentist, a concrete company, a lighting company, a roofing company and a casino.
The smallest loan, for $1.5 million, went to Pablo Alfaro Group, a Florida real estate company. The largest, for $50 million, went to an entity associated with Mount Airy, the Pennsylvania casino.
The Main Street program is a new effort for the Fed, and it has gotten off to a rocky start. First announced in late March as part of the Fed’s broad pandemic response package, the program is meant to funnel loans to midsize businesses, especially those who are too big for government small-business loans but too small to tap stock and bond markets to raise money.
The Fed is protected against losses on the loans by funding from the Treasury Department, money Congress earmarked to support the Fed’s emergency lending push in its coronavirus response legislation.
Lawmakers have questioned why it took so long to get the program running — Main Street did not purchase its first loan until July 15 — and why so little of its $600 billion capacity is being used. One member of the congressional commission that is overseeing the program called it a “failure” at a hearing last week.
But the president of the Federal Reserve Bank of Boston, Eric Rosengren, said at the oversight hearing that he expects program activity to pick up with time.
Commercial banks originate the midsize business loans, and the Fed buys 95 percent of them. According to the data released Monday, the majority of the loans through July 31 were made through the City National Bank of Florida.
Mr. Rosengren, whose central bank branch runs the effort, said last week that more than $600 million in loans were in some stage of approval. He also indicated that Main Street could be used more often if virus conditions worsen in the fall, causing a tightening of private credit.
The Fed’s disclosures also showed that it had purchased about $12 billion in already-issued corporate bonds and corporate bond exchange-traded funds through July 29, part of another first-time program that it unveiled earlier to keep the market for big-company debt functioning.
The Fed has been shifting away from exchange-traded fund purchases and toward individual bond buying, guided by a broad market index of its own design.
Households became more pessimistic about their employment prospects in July after months of gradual improvement, a Federal Reserve Bank of New York survey showed.
Unemployment expectations — measured as the average chance that the U.S. unemployment rate will be higher one year from now — increased in July after three months of decline, ticking up to 39.3 percent from 35.1 percent the prior month, according to the monthly Survey of Consumer Expectations.
That prediction of higher joblessness ahead is notable, because the unemployment rate is already elevated and stood at 10.2 percent in July, higher than at any point in the 2007 to 2009 recession. The souring outlook came as coronavirus cases ticked up across much of the nation, causing some places to hit pause on reopening plans. Real-time trackers suggest the rebound in consumer spending may have stalled against that backdrop.
People also perceived a higher chance of losing work over the coming year, based on the survey, an internet-based panel of 1,300 households. They put the average probability at 16 percent in July, up from 15 percent in June.
The survey wasn’t all bad news. Households judged their chances of finding a job in the case of unemployment to have improved slightly, and their expectation for income growth held steady, albeit well below 2019 levels.
Barry Diller’s media and technology company IAC announced on Monday that it had acquired a 12 percent stake of MGM Resorts International for $1 billion, betting on the value of building out MGM’s online gaming infrastructure at a time when the coronavirus is keeping many gamblers stuck at home.
“What initially attracted us to MGM, besides its leadership in leisure, hospitality and gaming, was an area that currently comprises a tiny portion of its revenue — online gaming,” Mr. Diller, the chairman and senior executive of IAC, said in a statement.
Mr. Diller added that the move, in the midst of the global pandemic that has dealt a devastating blow to the gambling industry, might surprise some investors, but it represents the “opportunistic zeal” of the company. One billion dollars would have bought about six percent of MGM’s shares at the start of this year.
“We believe MGM presented a ‘once in a decade’ opportunity for IAC to own a meaningful piece of a pre-eminent brand in a large category with great potential to move online,” the company said in a letter to shareholders. “IAC has always been opportunistic with its capital, and if ever there was a time, this moment is unique.”
The move comes shortly after IAC’s separation from Match Group, the parent company of the dating site Match.com, which Mr. Diller said left IAC with $3.9 billion in cash and no debt. MGM’s stock was up 20 percent after the announcement Monday morning.
Beginning in March, casinos across the country were forced to close because of the pandemic, and though many opened back up over the summer, they did so with limited capacity. On July 30, MGM Resorts reported a net loss of $857 million for the second quarter, compared to a profit of $43 million during the same period last year.
— Gillian Friedman
Jet fuel is known as the steady eddy of the refinery business, a predictable profit maker that balances the seasonal gyrations of gasoline and diesel sales. But for airlines, it is a headache — a big and unpredictable expense that confounds managers.
So Delta Air Lines tried a bold experiment: It bought an oil refinery in 2012 outside Philadelphia, the first such purchase by a major U.S. airline. When jet fuel prices were high, as they were then, Delta figured the refinery, which turns crude oil into the stuff that planes, cars and trucks burn, could offset some of its expenses and perhaps even make money.
“A lot of energy guys hate it, and I can understand why, because we’re taking money out of their pockets,” Ed Bastian, the airline’s current chief executive and then president, said at an industry conference in 2012.
But the refinery made only modest profits some years and lost money in others. This year, as the coronavirus hammered demand for air travel, it has become a liability for Delta, widely considered by analysts as one of the best-run airlines in the country.
Executives at Delta and its refinery declined requests for comment.
The Eastman Kodak Company’s stock tumbled nearly 30 percent on Monday after a U.S. government agency said it would pause a potential $765 million loan to the company for the production of pharmaceutical ingredients in the United States.
The U.S. International Development Finance Corporation said in a tweet on Friday that “recent allegations of wrongdoing raise serious concerns” and it would not proceed with the deal until the allegations were cleared.
Kodak is facing allegations of insider trading after its chief executive, Jim Continenza, received 1.75 million stock options the day before the potential loan from the government was announced. The announcement of the deal caused Kodak’s shares to spike more than 1,000 percent.
On July 28, we signed a Letter of Interest with Eastman Kodak. Recent allegations of wrongdoing raise serious concerns. We will not proceed any further unless these allegations are cleared.
The potential loan, which was announced last month, was an effort by the Trump administration to start to chip away at the United States’ dependence on foreign countries for medicines. Under the project, Kodak would produce critical drug components from its headquarters in Rochester, N.Y.
On Friday, Kodak said it had created a special committee to review internal activity around the loan announcement, and said it would offer no further public comment during that review.
U.S. stock indexes wavered while technology stocks fell on Monday, as investors also faced continued uncertainty over Washington’s support for businesses and unemployed workers and continuing tension between the United States and China.
The S&P 500 was drifted between gains and losses. Large technology stocks fell, pulling the Nasdaq composite into negative territory. Microsoft, Alphabet and Facebook were all down.
The S&P 500 is about 1 percent below a high reached in late February, before the pandemic set off a shutdown of the American economy, leading to mass layoffs and business closures. Stocks went into a tailspin before a mix of government spending and central bank policy aimed at bolstering the economy helped reassure investors.
That spending is again a focus on Wall Street, after President Trump on Saturday signed a number of executive actions aimed at restoring unemployment benefits that had expired and providing relief for renters and student borrowers. But the moves are legally questionable, because they circumvent Congress, and are unlikely to have immediate, meaningful impact on the economy.
The strain between Washington and Beijing continued on Monday as the United States sent its highest-level delegation to visit Taiwan since severing official ties with the island in 1979. China, which claims the territory, said on Monday that it would impose sanctions on 11 Americans, including several senators — an apparent response to an announcement on Friday by the Trump administration of sanctions on Carrie Lam, Hong Kong’s chief executive, and 10 others for their roles in cracking down on political dissent.
🗣 It’s a relatively light week for earnings, with a majority of the S&P 500 having already reported their latest quarterly results. Notable releases include Simon Property Group on Monday; InterContinental Hotels and SoftBank on Tuesday; Cisco, Lyft and Tencent on Wednesday; and Applied Materials and Deutsche Telekom on Thursday.
🗳 Joe Biden is expected to announce his running mate for vice president. From a field of about a dozen likely choices, Senator Kamala Harris is the favorite in betting markets, followed by the former national security adviser Susan Rice.
🇬🇧 On Wednesday, Britain’s G.D.P. is forecast to have fallen by 20 percent in the second quarter, a far worse result for the period than in the U.S. or in the rest of Europe.
🛍 On Friday, U.S. retail sales data for July are expected to show a smaller gain than the previous two months, as activity remains well below pre-pandemic levels.
Saudi Aramco, the world’s largest oil company, said on Sunday that its quarterly earnings plunged more than 73 percent compared to a year ago, as lockdowns imposed to curb the coronavirus pandemic drastically cut the demand for oil and slammed prices.
Despite the steep fall in earnings, to $6.6 billion from $24.7 billion, the company said it would continue paying a quarterly dividend of $18.75 billion, almost three times its cash flow. Aramco is locked into paying such a large amount — $75 billion a year — because of commitments made in the run-up to its initial public offering last year.
Nearly all of the dividend money will go to the Saudi government, which owns more than 98 percent of the company.
Continuing to pay such a large dividend distinguishes Aramco from other oil giants, like BP and Royal Dutch Shell, which have recently cut their payouts to preserve capital in difficult times.
“While other oil companies are taking the opportunity to reset the dividend, Aramco are somewhat locked into the IPO commitments,” said Neil Beveridge, an analyst at Bernstein, a market research firm. Mr. Beveridge estimated that Aramco is likely borrowing around $12 billion to pay the dividend.
Recently, a surging Apple dethroned Saudi Aramco as the world’s most valuable company. Apple now has a market capitalization of about $1.9 trillion compared to about $1.76 trillion for the Saudi company.
President Trump, in announcing his executive measures on Saturday, said he was bypassing Congress to deliver emergency pandemic aid to needy Americans. But his directives are rife with so much complexity and legal murkiness that they’re unlikely, in most cases, to bring fast relief — if any.
Because Congress controls federal spending, at least some of Mr. Trump’s actions will almost certainly be challenged in court. They could also quickly become moot if congressional leaders reach an agreement and pass their own relief package. Speaker Nancy Pelosi of California on Sunday dismissed Mr. Trump’s actions as unconstitutional and said a compromise deal was still needed. Treasury Secretary Steven Mnuchin said he would be open to further talks with Democratic leaders: “Anytime they have a new proposal, I’m willing to listen.”
Mr. Trump’s executive steps on Saturday focused on four areas: extending supplemental unemployment benefits, suspending some payroll taxes, extending relief for student loan borrowers and offering eviction relief. Of the four, the student loan memorandum seems likely to be the least controversial and the easiest to carry out.
But his various executive actions did not include several forms of relief that have been part of recent negotiations, including lump-sum payments to citizens and additional relief for small businesses.
When the coronavirus pandemic first hit in March, many technology start-ups braced themselves for The End, as business dried up, venture capitalists warned of dark times ahead and restructuring experts predicted the beginning of a “great unwinding” after a decade-long boom.
Five months later, those doomsday warnings have not translated into the drastic shakeout that many had expected.
Funding for young companies has stayed robust, particularly for the larger start-ups. Some of them, like the stock trading app Robinhood and Discord, the social media site, have pulled in hundreds of millions of dollars in new capital in recent months, boosting their valuations. And initial public offerings of tech companies have come roaring back, alongside a surging stock market.
“Things generally are substantially better than our worst fears 90 days ago,” said Rich Wong, an investor at Accel, a Silicon Valley venture capital firm.
Still, it’s been a hectic period for some firms. Getaround, a car sharing start-up, started the year by laying off 150 employees and scaling back some operations. Two months later, with the spread of the coronavirus, business got even worse, with further layoffs.
But in May, business bounced back when people began using the start-up’s cars to get on the road again. Getaround’s revenue in the United States for the year is now 40 percent above where it was a year ago. Last month, it brought back all of its furloughed employees and started hiring again.
“We have seen a very, very fast recovery,” said Sam Zaid, Getaround’s chief executive, adding that he was now raising more cash. “It’s been a bit of a wild ride.”
Author: Jeanna Smialek
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One age-old indicator may be moot in this wild market, trader says
Dow theory … with a twist.
That’s what this year’s market uncertainty could bring, Chantico Global founder and CEO Gina Sanchez told CNBC’s “Trading Nation” on Friday as the Dow Jones Transportation Average overtook its June highs.
According to Dow theory, developed in the late 1800s by Charles Dow himself, when one of the Dow’s underlying averages — industrials or, in this case, transportation — breaks above a noteworthy previous high, the broader Dow is likely to follow.
But this year’s market layout could be a major obstacle for that usually reliable indicator, Sanchez said.
“It’s messy this year because the Dow theory assumes that those gains are going to be spread across the economy fairly equally and that isn’t the case,” she said.
While there’s a lot of talk out there about the potential for a V-shaped recovery in the stock market, Sanchez said a K-shaped recovery, in which only parts of the economy are able to recover successfully, is also in the cards.
“If that’s the case, the Dow theory is only going to help the parts of the economy that are still participating in the economy,” she said.
The very nature of the market’s major averages paints a fairly stark picture of likely winners and losers, especially considering their year-to-date performance, she added.
The Dow, for one, is “sort of old economy, more cyclical, more value names,” Sanchez said. “You look at the Nadsaq, which has had a roaring year — that’s very growthy names. I’m actually not sure that we’re going to rotate back into those kind of cyclical, underbought names until we see more signs of a solid recovery, which probably aren’t going to come until not just when we get a vaccine, but when that vaccine is broadly distributed, which is probably well into 2021.”
JC O’Hara, chief market technician at MKM Partners, offered a counterpoint on why Dow theory may hold up better than expected in this environment.
“Many investors watch the transportation averages, and that gives you a pretty good barometer into the state of the U.S. economy and, in today’s world, the global economy,” he said in the same “Trading Nation” interview.
When the Dow’s transportation and industrial averages were first created, the thought process was simple, O’Hara said: “The industrial sector makes stuff. The transportation sector is responsible for shipping that stuff to meet consumer demand.”
“In today’s world, we’re seeing that hold true as well,” he said. “We’re seeing the industrial sector acting well. We’re seeing the transportation sector actually beginning to outperform because they’re actually delivering the stuff to meet consumer demand.”
So far, that strength suggests Dow theory is still in play, O’Hara said, referencing a chart showing the Dow’s transportation and industrial stocks moving higher in tandem.
“We would become concerned if we started to see the industrial sector make new highs, but [the] transportation sector rolling over and making new lows,” he said. “That would be a divergence, and historically, that has been a sign of a top formation. But we are not seeing that now.”
The Dow and S&P 500 notched their sixth straight day of gains on Friday. The Dow Jones Transportation Average climbed more than 2%, helped by rises in the shares of FedEx and UPS, which closed up 6.5% and nearly 8%, respectively. UPS hit a new all-time high.
Analysts at Stephens named Fedex’s stock as their “best idea” in a Friday note and flagged 10 potential upside catalysts for the shares including the company’s pricing power, a pickup in business-to-business spending and the eventual launch of Walmart+.
O’Hara and Sanchez agreed that there was value in FedEx. O’Hara also noted the stock’s momentum — FedEx is up sharply from its mid-March lows.
“There’s a lot of value, actually, locked up in a lot of names,” Sanchez said of the overall market.
“The question is what catalyzes that value to be unlocked? And that’s really where I think the fly is in the ointment here,” she said. “You have to believe that you’re going to see a significant pickup in the fall, or even that we’re seeing it now and it’s going to translate to earnings fairly quickly. I’m not sure we’re there yet. I think there’s value, it’s just a matter of when.”
Author: Lizzy Gurdus
Tesla Model 3 Holds 17% of US Small + Midsize Luxury Car Market
August 10th, 2020 by
There is at least one major problem with regards to tracking Tesla sales — they tell us very little about Tesla demand. When we write about “Tesla sales” here on CleanTechnica (and everywhere else you see this topic discussed), we are writing about Tesla deliveries. An order is not counted as a sale until a vehicle is paid for and delivered. There are always numerous orders on the books, but we don’t actually know how many, so we don’t actually know the level of consumer demand for Tesla vehicles — in the USA or elsewhere.
Tesla CEO Elon Musk has repeatedly said — including very emphatically on the last Tesla conference call — that consumer demand is not a problem at all for Tesla. It seems from his comments that there is far more consumer demand than production capacity. However, we don’t know how much more, and we don’t know how that demand is spread out geographically across the world.
When it comes to simply tracking Tesla sales (deliveries), a separate problem is that Tesla reports only global sales and does so on a quarterly basis. It does not report country-by-country sales, and it doesn’t report monthly numbers. (Though, the latter problem is now the norm in the US auto industry.)
A third problem we now face when creating these reports is Tesla combines Model 3 and Model Y sales.
I think we do have solid methods for addressing the problems noted above in order to come up with estimates of quarterly Tesla Model 3 and Model Y deliveries in the US. Data from EV Volumes on Chinese and European Tesla sales, as well as data-backed estimates from “Troy Teslike” and a few other sources, help me to come up with US Model 3 estimates that I think are quite close to reality. This doesn’t solve the problem of estimating true demand for Tesla vehicles, but it does allow us to compare Model 3 sales to the sales of other cars on the US market.
Based on these informed estimates as well as official sales data from other automakers, the Tesla Model 3 took 17% of the US small and midsize luxury car market in first half of the year, and 11% in the second quarter.
I combine small and midsize luxury cars for this analysis because the Model 3, a midsizer, is the smallest car Tesla offers. I understand the critique that small luxury cars shouldn’t be put into the same category as the Model 3 (since they aren’t in the same category), but I think that until Tesla offers a smaller vehicle, people who would prefer a “Model 2” or “Model C” compact car from Tesla often buy a Model 3. So, I think it’s more appropriate to combine these market segments for sales reports than not combine then.
As you can see, Tesla’s delivery figure and ranking dropped in Q2 versus Q1 2020, leading to a lower market share than in the first half of the year as a whole. This is partly (or largely) due to Tesla shipping more cars abroad in the second quarter. It is also because of the Fremont factory shutdown, which went well into the second quarter. Additionally, Tesla is now producing the Model Y in decent volumes, but the Model Y shares production lines with the Model 3. The more the Model Y is produced, the less the Model 3 is produced. Could Tesla have sold 27,000 Model 3s in the US in the second quarter if it wasn’t producing the Model, or if it had enough production capacity? Could it have sold 40,000? Who knows?
For the umpteenth time: we actually have no idea how closely Tesla sales match Tesla vehicle demand.
Looking at the overall car market (only cars, not SUVs, trucks, and minivans), the Tesla Model 3 was the 16th best selling car in the USA in the second quarter and was the 12th best selling car in the country in the first half of the year as a whole. This is a drop from its longtime positioning in the top 10 of US car sales.
It seems we won’t actually know how high the Model 3 can go in the ranking until Tesla Giga Texas (or Tesla Tera Texas) is built and operational. Even then, Tesla may prioritize getting the Cybertruck and Semi to market. On the other hand, Tesla Giga Berlin should be producing vehicles for Europe by then, so perhaps we will finally get a glimpse of Tesla Model 3 production matching Tesla Model 3 consumer demand. Maybe. It’s hard to estimate anything when we don’t actually have any solid insight into how many people are prepared to buy a Tesla Model 3 in the US on a quarterly basis.
On the bearish side of things, perhaps Model 3 demand is not that far off of Model 3 production. Maybe that’s why Tesla is already ramping up production of the Model Y. It typically does not take as long for a buyer to get a Model 3 now as it did when the vehicle first came to market and had a long waiting list of reservation holders. If demand was very far beyond supply, the waiting list to get one would be much longer.
That said, I still think Model 3 demand grows strongly as more vehicles get into customer hands, since word of mouth and buyers giving test drives to their friends and family members are the top drivers (no pun intended) of new consumer demand. How far that goes, given the upfront price of the car as well as the availability of the Model Y, is anyone’s guess. However, one thing I think we can say with confidence: Model 3 demand in a year or two will probably be different from Model 3 demand right now. It’s too bad we don’t have any real insight into what today’s level of demand is and probably won’t have any better insight into this topic in a year or two.
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Author: Zachary Shahan