Tesla Stock Is Dropping Ahead of Battery Day
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Tesla’s highly anticipated battery technology day is upon us.
Tuesday evening, after
Tesla
wraps up its annual shareholder meeting, Elon Musk & Company will talk about batteries. It’s a big deal for Tesla and a big deal for the trillion-dollar automotive industry.
Electric vehicles are the future, with even legacy auto makers trying to get in the game. That’s why Tesla is now the world’s most valuable automotive stock, by a wide margin. Shares are up 437% year to date and Tesla’s $420 billion market cap is larger than firms such as
Walmart,
Mastercard,
and
Verizon.
Tesla is expected to address new technologies that can drive the cost of EVs down, making upfront outlay more comparable to gasoline-powered vehicles. It’s all part of Tesla’s try to convince investors that its lead is large and sustainable.
Don’t be surprised if the stock remains volatile, however. When Elon Musk tweeted earlier this month that “many exciting things” were coming, the stock rose 12.6%. He played down the technology Monday might, and now Tesla stock is down about 4% in premarket trading.
More volatility doesn’t mean the stock will go down. It just means that the ride won’t be as smooth as driving a Tesla.
—Al Root
** Join economic experts, business leaders, and other influential figures to discuss how governments, companies, and individuals can combat economic inequality next Tuesday, Sept. 29 at 12 p.m. Sign up here.
***
Details of TikTok Deal Disputed as Chinese Rejection Looms
A state-run Chinese news outlet said Monday that the Chinese government would not approve the deal between
Oracle,
Walmart, and ByteDance, the parent company of popular video-sharing app TikTok.
- “Based on what I know, Beijing won’t approve current agreement [sic],” Hu Xijin, the editor in chief of the Global Times, the English-language outlet that operates under the People’s Daily, said Monday, “because the agreement would endanger China’s national security, interests and dignity.”
- ByteDance issued a statement earlier Monday dismissing reports that the deal to sell stakes in TikTok Global, the new entity for TikTok’s U.S. operations, to Oracle and Walmart would result in its majority investors being American and ByteDance losing control of TikTok.
- The deal under consideration would result in American investors owning 53% of TikTok Global, The Wall Street Journal reported. ByteDance, however, insists that it would retain about 80% ownership of the newly created company.
- Oracle disputed ByteDance’s statement. “Upon creation of TikTok Global, Oracle/Walmart will make their investment and the TikTok Global shares will be distributed to their owners, Americans will be the majority and ByteDance will have no ownership in TikTok Global,” Oracle Executive Vice President Ken Glueck said Monday.
- President Donald Trump told Fox News Monday, “if we find they [Oracle] don’t have total control, then we’re not going to approve the deal.”
What’s Next: ByteDance, Oracle, and Walmart are attempting to craft a deal that placates what look to be the incompatible goals of the Chinese and U.S. governments. If no deal is reached, TikTok could be pulled from app stores in the U.S.
—Ben Walsh
***
CDC Pulls Airborne Guidance
The Centers for Disease Control and Prevention on Monday surprisingly removed guidance that it had published on Friday acknowledging that Covid-19 can be transmitted through small particles that linger in the air.
- The CDC has said for months that coronavirus is largely transmitted via large respiratory droplets, but on Friday it added guidance saying that Covid-19 can be transmitted in tiny airborne particles known as aerosols, which can travel farther and remain suspended in the air longer.
- On Monday, as the U.S. was on the verge of surpassing 200,000 reported deaths from coronavirus, the agency said that the guidelines were removed because they were a draft version of proposed changes that had been accidentally made public.
- There is significant evidence that aerosols can spread Covid-19, which means in plain language that coronavirus is likely airborne.
- Precisely how Covid-19 is transmitted has huge implications for best practices for reopenings. Many of the most common recommendations to reduce the spread of the virus, such as remaining six feet apart, are based on limiting contact with large droplets, not the smaller and farther traveling aerosols.
What’s Next: If the coronavirus is airborne, more stringent social distancing could be mandated.
—Ben Walsh
***
Microsoft’s Latest Move Heats Up Videogame Console Wars
Microsoft
ponied up for ZeniMax, parent company of Bethesda Softworks and one of the biggest privately held game publishers. The move boosts Microsoft’s in-house offerings as its new Xbox Series X lines up against
Sony’s
PlayStation 5. Both consoles are due out in November.
- Microsoft said Monday it reached a $7.5 billion cash deal for ZeniMax. For comparison, Walt Disney paid $4.05 billion for Lucasfilm in 2014. At the center of Disney’s deal was a film franchise called Star Wars.
- The centerpiece of Microsoft’s deal is a number of blockbuster videogame franchises, including The Elder Scrolls, Fallout, and Doom.
- The move will help Microsoft gear up for the latest generation of videogame consoles. The company’s previous console, the Xbox One, lagged behind Sony’s PlayStation 4 in sales in part because Microsoft’s original game offerings couldn’t top Sony’s stable of in-house game developers.
What’s Next: The deal brings some major firepower to the fold for Microsoft’s Xbox Game Pass, which offers users a vast library of games for a monthly fee. It said Monday the service has hit 15 million subscribers, up from 10 million in April. Sony said in May its competing PlayStation Now service had 2.2 million subscribers.
—Connor Smith
***
Trump to Nominate Ginsburg’s Successor Friday or Saturday
President Donald Trump said Monday morning that he plans to announce his Supreme Court nominee to succeed Justice Ruth Bader Ginsburg on Friday or Saturday.
- “We won the election and elections have consequences,” he said on Fox News. “We have plenty of time.”
- President Trump has committed to picking a woman to replace Justice Ginsberg, who died from complications from pancreatic cancer at age 87. If a woman is confirmed, it would keep the number of female justices at three, including Justice Elena Kagan and Justice Sonia Sotomayor, both of whom were nominated by Barack Obama.
- Among the five women President Trump is reportedly considering are Judge Amy Coney Barrett and Judge Barbara Lagoa. Barrett, 48, and Lagoa, 52, are both conservatives and Roman Catholics. If either is confirmed, it would alter the court’s balance, which already has five justices nominated by a Republican president, for decades.
- The Supreme Court is scheduled to hear a case deciding the constitutionality of the Affordable Care Act just a week after the Nov. 3 election, and the appointment of a new justice before then would almost certainly impact that decision.
What’s Next: Four Republican senators would need to oppose the president’s nominee to keep that person from being confirmed. So far, two have said publicly that a replacement should not be chosen until after the election. At this point, it’s unclear how Democrats could block that vote.
—Ben Walsh
***
From Lockdown to Brexit, U.K. Economy Heading Toward Rough Winter
British Prime Minister Boris Johnson was due to announce Tuesday new nationwide restrictions to help control the aggressive rise of coronavirus infections throughout the country, as Bank of England Gov. Andrew Bailey warned that “the hard yards are ahead” for the economy.
- Johnson was scheduled to tell Parliament, then explain in a televised address Tuesday night, that all restaurants, bars and pubs will have to close at 10 p.m. and restrict themselves to table service. In a U-turn from his own previous recommendations, he will urge his countrymen to work from home if possible.
- Bailey said during a webinar for the British Chamber of Commerce that the economy would remain scarred for months by the impact of the coronavirus pandemic, and that the labor market would remain weak for some time.
- The Bank of England governor however said that the central bank was not ready yet to take its key interest rate below zero, as the ECB has done in the last six years, but just studying the option to explore what its practical consequences would be.
- A report by independent think tank U.K. in a Changing Europe found this week that the economic cost of Britain leaving the EU without a comprehensive trade deal would be two or three times bigger, over the long term, than the coronavirus crisis has been.
What’s Next: The new restrictions will have an adverse impact on the economy and would have been even more severe if Chancellor Rishi Sunak hadn’t lobbied Johnson arguing about the need to protect the hospitality sector. But the gloomy prospects mean that fiscal stimulus and monetary loosening are likely to continue for months.
—Pierre Briançon
***
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—Newsletter edited by Stacy Ozol, Anita Hamilton, Mary Romano, Matt Bemer, Ben Levisohn
