MOrning Bell - Stock Trading LIVE! Tuesday November 2nd

TL;DR

A discussion covering various topics, including Zillow's struggle, Rivian's IPO, NIO's performance, Tesla's valuation, China's lockdown at Shanghai Disneyland, the Fed meeting, and stock recommendations.

Transcript

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Key Insights

• 🏘️ Zillow is struggling with its house flipping operations, potentially overextending itself in a volatile housing market.
• 🥺 Rivian's IPO is a significant fundraising event led by Amazon's involvement, positioning the startup as a major player in the EV market.
• 😘 NIO's lower delivery numbers in October do not pose a significant threat to Tesla's market dominance.
• 🤘 Tesla's valuation increase is partly driven by speculation of a deal with Hertz, although no contract has been signed yet.
• 🎮 China's lockdown of visitors at Shanghai Disneyland reflects limited control for Western firms operating in the country.

Questions & Answers

Q: What challenges is Zillow facing, and how are they trying to overcome them?

Zillow has been struggling with its house flipping operations, leading to a need to sell off 7,000 homes. They have been buying houses aggressively but are now facing listing homes for more than they can afford to pay. This move is an attempt to recover from operational setbacks and financial strain.

Q: How significant is Rivian's IPO, and what are their plans for the future?

Rivian's IPO aims to raise $8.4 billion, making it the third-largest offering in the past decade. The startup, backed by Amazon, is pursuing a two-track strategy: building electric delivery vans for Amazon and developing electric pickup trucks and SUVs targeting affluent individuals.

Q: How does NIO's performance compare to Tesla's dominance in the EV market?

NIO reported low delivery numbers in October, delivering less than 3,700 cars. However, NIO is considered a minor player compared to Tesla, which has delivered over 240,000 cars in 2021 so far. NIO's performance does not pose a significant threat to Tesla's market dominance.

Q: Why did Tesla's valuation increase, and what is the role of the potential deal with Hertz?

Tesla's valuation increase is partly driven by speculation regarding a potential deal with Hertz, where Hertz would purchase Tesla vehicles for their rental fleet. However, it should be noted that no contract has been signed yet, and Tesla's economics are largely unaffected by Hertz. Tesla's demand outpaces its production capability, making Hertz just one of many customers.

Q: What led to the lockdown of visitors at Shanghai Disneyland, and what does it reflect about Western firms' control in China?

Shanghai Disneyland locked in over 30,000 visitors after a single individual tested positive for COVID-19. This incident highlights the lack of control that Western companies, like Disney, have in China. Despite the park returning to pre-pandemic attendance levels, the government's control over operations and actions like forced testing demonstrate limited autonomy for Western firms.

Q: What is expected from the Federal Reserve's meeting, and what impact does it have on investors?

Economists expect a $15 billion reduction in treasury and mortgage-backed security purchases at the Federal Reserve's meeting. This reduction in asset purchases is seen as a step towards tapering the stimulus measures. Investors are keen to see whether the Fed maintains their "transitory" language regarding inflation, as employment costs rise and labor shortages persist.

Summary & Key Takeaways

• Zillow is looking to sell 7,000 homes for $2.8 billion after experiencing operational difficulties and an overvalued housing market.

• Rivian, backed by Amazon, is going public and aiming for an $8.4 billion fundraising, which would make it the third-largest offering in the past decade.

• NIO reported a decline in deliveries in October, but it is not considered to be a significant threat to Tesla's dominance in the EV market.

• Tesla's valuation increase is partly attributed to the potential deal with Hertz, although no contract has been signed yet.

• Shanghai Disneyland recently locked in 30,000 visitors and conducted COVID testing after a guest tested positive.

• The Federal Reserve's meeting is anticipated to include a $15 billion reduction in treasury and mortgage-backed security purchases.