UBS Downgrades Tesla’s Shares After Recent 11-Day Rally
On 12 July, Swiss-based investment bank UBS downgraded Tesla’s shares to a “Sell” rating after it dipped 8.4%. This broke an 11-day winning streak for the Elon Musk-owned automotive company where its stock price gained a whopping 44%. UBS expressed its concerns about Tesla’s stock price rising “too much, too soon”.
It added that should the enthusiasm for AI technologies wane, Tesla would suffer greatly. Furthermore, the company has delayed the launch of its self-driving robotaxi from 8 August to October. In 2022, Musk first mentioned Tesla’s aim to mass produce a fully automated robotaxi. Until today, not much has been revealed about the vehicle.
Tesla is facing stiff competition from other automobile manufacturers too, whether it’s new firms or just industry stalwarts including electric vehicles in their lineups. These include Shenzhen-based BYD (especially in Asia), German conglomerate Volkswagen, and US-based General Motors.
Before Tesla’ 8.4% drop on 11 July, it was trading at 90 times its forward earnings. This made Tesla one of the S&P 500’s most expensive stocks. According to UBS, “one would need to see an even larger opportunity to justify a buy rating”. It appears that the robotaxi announcement would be Tesla’s next big break.
What This May Mean For You
Tesla is feeling the heat from all corners. Its gross profit for the first quarter of 2024 has dropped below the US$4 billion mark. The company’s total liabilities have been steadily increasing as well, up by almost US$7 billion when compared against the first quarter of 2023. Likewise for its debt, which now sits close to US$10 billion.
As for Tesla’s stock price, the past year hasn’t been kind. It’s down by approximately 10% from late-July 2024, fluctuating fairly wildly after its August 2022 stock split. If you’ve been investing in Tesla, pay attention to the development of its robotaxi and a more affordable electric vehicle. If these come to fruition, they’ll be a nice shot in the arm for the company.
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Temasek’s Net Portfolio Value Rises to S$389 Billion
On 9 July, government-owned investment firm Temasek Holdings announced its net portfolio value had reached S$389 billion as of 31 March. This is S$7 billion higher than its portfolio at the same time last year. Temasek Holdings’ US and India returns helped shore up its underperforming Chinese assets.
As a result, the company’s annual shareholder return – at 1.6% – was positive once again, after dropping to -5.07% last year. Other years in the past decade where Temasek Holdings’ portfolio took a hit were 2016 and 2020. This stability meant that its 10-year shareholder return is 6% while its 20-year return is 7%.
Temasek Holdings’ portfolio hasn’t changed much in the past three years either, comprising shares of listed and unlisted companies for the most part. It has a balanced allocation across sectors too, with Transportation & Industrials leading the way at 22%, Financial Services at 21%, and Telecommunications, Media & Technology at 18%.
Surprisingly, the company does divulge its major investments. One non-Singapore highlight is Element, a Testing Inspection and Certification company which Temasek Holdings owns 88% of. Another is Global Healthcare Exchange, a healthcare-focused software-as-a-service company. Temasek Holdings owns 71% of its shares.
What This May Mean For You
Because Temasek Holdings is one of the three organisations whose investment returns contribute to Singapore’s annual Budget, its portfolio has to be resilient while growing steadily. Retail investors would do well to adopt the company’s principles when creating and growing a longer-term portfolio, such as a retirement one for example.
2024 may be a return to form for the investment firm, but like many others, it’s keeping a close eye on inflationary pressures, central bank decisions, and geopolitical factors. You should be doing the same whenever you review your portfolio and decide what to invest in as well.
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Revolut’s 2023 Revenue Hits £1.8 Billion
UK-based fintech firm Revolut reported that its revenue for 2023 clocked in at £1.8 billion. This is almost double its annual revenue for 2022, where the company earned £0.92 billion. Perhaps the more impressive achievement would be its £344 million net profit in 2023, coming in close to 60 times higher than 2022’s figures.
Revolut’s retail customer base experienced a sharp increase as well, rising by 45% to 38 million. Ditto for its monthly transaction volume, which at 590 million, is 73% higher than 2022. The company’s efforts to become an all-in-one financial service appear to be paying off, with users being able to send, spend, and invest with a single app.
Furthermore, Revolut has taken a huge step towards finally securing a banking licence in its home country. BDO has given the fintech firm an unqualified opinion in its auditor report, which will help bolster its application. In Europe, Revolut already acquired licences across 30 countries, including France, Germany, and Spain.
In Singapore, Revolut has Major Payment Institution and Capital Markets Services licences after the company set up shop here in 2019. Both its consumer-level and enterprise services are available in the Lion City. These include remittance, multi-currency accounts, and a children’s account.
What This May Mean For You
Revolut’s stellar results are one thing, but keep your eyes on its UK banking licence application. The company appears to be putting the pieces in place for an IPO, and finally acquiring the licence might speed things up. It already resolved its financial reporting issues and claims it’s back on track to consistently adhering to the auditor’s guidelines.
If you’re a Revolut user, it’s business as usual. Revolut’s multi-currency prepaid card and international fund transfer service would be the most common features folks use. However, given that there are so many options available, do your research and decide if its competitors offer better exchange rates, lower fees, or more currency options.
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Coffee Exports From Vietnam to Remain Low Until End-2024
Due to drought causing coffee production woes in Vietnam, exports from the country are set to remain low until the end of 2024 at least. Elevated rainfall levels from the upcoming La Nina climate pattern has the potential to affect harvests as well, with farmers being rendered unable to collect the ripe fruits from their coffee plants for processing.
Because Vietnam is the world’s largest producer of robusta coffee, its supply issues have and will continue to result in the varietal’s price rising. Case in point: Vietnam’s coffee exports from January to June 2024 was 8% lower than the same period in 2023. However, the value of these exports shot up by 38%.
Also, according to the International Coffee Organization’s June 2024 Coffee Market Report, Vietnam’s export numbers in May marked four consecutive drops. More alarmingly, it noted that the nation’s coffee stocks are now “near depleted”. Additionally, the 2024/2025 harvest season is still three months away.
The International Coffee Organization also recorded a monthly increase in daily indicator prices and futures prices not only for robusta beans, but all other types too. If you were to zoom out a little, the daily indicator price for a one-pound bag of robusta beans almost doubled from US$1.27 in July 2023 to US$2.04 in June 2024.
What This May Mean For You
Coffee lovers have been feeling the pinches of rising inflation and increasing prices for a cuppa. Although production for arabica and robusta beans increased, demand exceeded supply in four of the last six coffee years. Even when there were surpluses in 2019/2020 and 2023/2024 (so far), they couldn’t make up for the deficit in the other years.
On the bright side, coffee futures, especially robusta ones, were largely bullish ever since March 2021. Traders who consistently speculated on the price of coffee to rise across the past three years would’ve been handsomely rewarded. The London Robusta Coffee Futures contract set to expire in September 2024 is trading around US$4,600 at the time of writing.
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