Look Out Tesla! Volvo Plans to Disrupt Electric Car Industry; Plus Tesla’s Major Q2 Miss; Losing My Religion: Denim Company Goes Bust

Tesla disrupt…

ID-100328080

Image courtesy of vectorolie/FreeDigitalPhotos.net

With all the attention Tesla has been getting – and seeking – lately, a major company just threw down the automotive gauntlet in the electric car arena. Enter Volvo, the perennial boxy but safe, Swedish import, which just announced that come 2019, it will only sell hybrid or electric vehicles. That’s right. The ultra-reliable, ever dependable Volvo will likely be giving Tesla a serious run for its money. The fact that its got a solid, dependable reputation to back it up only sweetens the pot. Lucky for Volvo, its parent company Geely Automobile Holdings of China has already sold tons of electric vehicles and now Volvo gets to tap into all those tech resources. And it’s not just Tesla that should be worried. Toyota, Honda and BMW, to name a few, should also look to up their game now that Volvo has entered the field. This announcement is epic since it means that Volvo becomes the very first major automobile manufacture to make the decision to completely kick internal combustion engines to the curb. Interestingly enough, hybrids accounted for only about 2% of auto sales in the U.S. last year, in part because gas prices have fallen so much, that people don’t mind getting cars with traditional gas-guzzling engines.

Speaking of which…

ID-100256388

Image courtesy of tiverylucky/FreeDigitalPhotos.net

Shares of Tesla took a nasty little drop today after the company reported that its second quarter sales were flat as a pancake. To add insult to fiscal injury, the company also reported that it delivered just 22,000 vehicles. That seems like a good thing except for the fact that Tesla had built over 25,000 cars. Demand is good. Oversupply is not so good. At all. And the fact that consumers have stopped demanding the Model S sedans and the Model X utility cars leaves Wall Street feeling less than stoked about Tesla. Especially Goldman Sachs, which just released a report documenting its concern over Tesla’s slow growth. It’s never good when Goldman Sachs is concerned about you. Naturally, Tesla pointed its finger at the ever-reliable and handy excuse of “production issues” to explain the shortfall of deliveries. Too bad Wall Street didn’t seem to care what excuse Tesla used.

Another one bites the dust…

ID-100332196

Image courtesy of Tuomas_Lehtinen/FreeDigitalPhotos.net

Today’s Chapter 11 bankruptcy filing is brought to us by True Religion, purveyor of super-pricey denim. True Religion brass is pointing the finger at e-commerce and the shift in consumer spending habits, since customers are choosing to purchase their goods from their devices instead of heading into actual stores where True Religion merchandise is typically sold. Fortunately, the company was able to come up with a restructuring agreement with several of its lenders that should get rid of approximately $350 million of its debt, while its creditors would get paid in full, at least the ones critical to the company’s operations. In the meantime, with 140 stores still under its belt, the company is going to explore ways to “reinvigorate the brand.” In other words, it is going to try to figure out how to get people to spend hundred of dollars on True Religion’s pricy merchandise once again.

Alphabet Soup: Google Parent Hits a Milestone; Premium Quality: Tesla Could Get Even Pricier; SEC Gets SCOTUS-Smacked

Whoa…

ID-100397075

Image courtesy of lekkyjustdoit/FreeDigitalPhotos.net

Google’s parent company, Alphabet, broke the $1000 per share ceiling and yes, that is a vey impressive feat. Even for Google. What’s more impressive, is that this milestone happened on the very same day that shares of Apple, the world’s most expensive company, was downgraded. Not that Google would be experiencing any schadenfreude, or anything of the sort. In any case, Alphabet can pat itself on the back for becoming the third S&P 500 company to break the $1000 barrier, following in the illustrious footsteps of Amazon – who achieved that milestone just last week – and Priceline. Yes, Priceline. Remember them? To be fair, Google had, once upon a time, hit $1,200 a share but then the stock split. And then it became Alphabet, and the rest is S&P history.  Of course Berkshire Hathaway also trades above $1000. Way above $1000. In fact, if you’re inclined to spending $250,156.00, you could pick up a single solitary share of Warren Buffett’s company. But then again, what’re you gonna do with just one share?

Cry me a river…

ID-100270088

Image courtesy of jesadaphorn/FreeDigitalPhotos.net

A new Tesla was sounding really good, at least up until the weekend when Automotive News reported that AAA is gearing up to raise its insurance rates on the super-shmancy electric automobiles. But that’s just AAA insurance. The verdict is still out on whether other insurers will follow suit. It’s all because of some very unflattering data detailing Tesla’s higher-than-usual and more expensive claims for both the Models S and Model X. In fact, those pricey claims could mean a 30% premium increase on Teslas, which makes you wonder if the fuel savings is even worth it. Tesla seems to be offended by the new data, calling it “severely flawed” and “not reflective of reality.” Apparently, the data had the audacity to compare a Tesla to a Volvo station wagon. I mean, c’mon? A Volvo station wagon? Not that I have anything against Volvo station wagons. Some of my best friends drive Volvos. And station wagons. It’s just that a station wagon is the last thing on my mind when fantasizing about being behind the wheel of a Tesla. Just saying.  In all fairness, however, Tesla boasts some of the most advanced safety features in their automobiles. Yet, none of that seems to help given the car’s expensive collision costs. In fact, claims for the Model S are 46% higher than other cars, and its losses come in at 315% higher. Yikes. Station wagons aside, those are some very un-sleek numbers. Ironically, Tesla’s medical payment claim frequency is below average while its personal injury protection losses are very low. So take that, Volvo!

Can’t touch this!

ID-100128578

Image courtesy of bluebay/FreeDigitalPhotos.net

Score one for Wall Street because it looks like the SEC won’t get to grab all those ill-gotten gains like it used to. At least according to the U.S. Supreme Court, which just ruled – in a 9-0 decision –  that the SEC’s use of “disgorgement” now has to face the wrong end of a five year statute-of-limitations. Disgorgment is the act of repaying money that was attained illegally, typically by people and firms in the financial industry.  For this latest Wall Street victory, the securities sector can thank Charles Kokesh, a New Mexico-based investment adviser. It all started back in 2009 when the SEC sued Kokesh for misappropriating funds from his investors. He may not be a saint, but he was ordered to pay $2.4 million in penalties plus another $35 million – which was for disgorgement purposes. The problem, Kokesh and his lawyers argued, was that much of that $35 million disgorgment figure had happened outside a five year statute of limitations. Instead of $35 million, the disgorgment should have been closer to $5 million, which is quite a substantial difference. As for the SEC, this new ruling is going to prove to be a real downer for the agency seeing as how it has since collected $3 billion for disgorgment claims.  Oh well. Maybe it’ll discover a new way around that minor, yet pesky obstacle.

 

Volvo’s Heads for U.S. Shores; Etsy’s Coming Unglued; Apple Looks for Greener Pastures…in China?

They’re boxy…but safe…

Image courtesy of  Vichaya Kiatying-Angsulee/FreeDigitalPhotos.net

Image courtesy of Vichaya Kiatying-Angsulee/FreeDigitalPhotos.net

Volvo’s got big news. Yes. Volvo. Big. News. The car once known for its safety record, not to mention, its boxy style, is setting up shop on American shores. The Swedish auto manufacturer, which is now owned by Chinese company Geely Holding Group, will be plunking down $500 million for a facility in South Carolina.  Apparently, the master plan to is to rekindle the love Americans once had for the car, which has seen its market share in the US dwindle steadily. In fact, the new American Volvo plant is expected to be able to roll out some 100,000 cars a year – which seems a bit high considering the car maker only managed to sell about 56,000 of them in the last year. The new plant is expected to create some 2,000 jobs and you can start driving your American-made Volvo by 2018. But the move has got a lot of people scratching their heads as to why Volvo opted to go to South Carolina as opposed to Mexico where it’s so much cheaper to produce…well, everything. But South Carolina doesn’t seem to be complaining about it and apparently it’s the place to be as the state is home to some 250 car makers. So welcome to America, Volvo.

Not so crafty after all…

Image courtesy of  franky242/FreeDigitalPhotos.net

Image courtesy of franky242/FreeDigitalPhotos.net

It made for a bedazzling IPO, but Etsy’s glitter is not gold as a Wall Street analyst said that as many as 5% of goods on the crafty website could be fakes. So just how many items is that exactly? About 5 million, give or take. Can you guess where the stock went after that damning little analysis? The stock made its much-heralded IPO opened last month at around $30. As I write this, the stock is hovering at $20.67, down about 9% just from today.  Researchers over at Wedbush say that NFL, Louis Vuitton, Disney and Chanel (to name, but a few) could theoretically make some very ugly copyright infringement cases against the online retailer. That’s more than enough to send investors running. Even though analysts say there’s a chance Etsy could avoid getting directly blamed, the issue of fakes could still make big, bad, fiscal problems by causing reduced fees, the big Etsy money generator. As for that stock price, which had many wondering if it wasn’t just a bit too high to begin with, well Wedbush seems to think that the stock is going to come down a lot and settle in to a more realistic price point of $14 per share.

Cupertino, it ain’t…

Image courtesy of foto76/FreeDigitalPhotos.net

Image courtesy of foto76/FreeDigitalPhotos.net

Apple is teaming up with the World Wildlife Fund and has plunked down an undisclosed amount of money for…forests…in China. As part of an environmental initiative on Apple’s part  – not necessarily China’s – the company behind the iPhone and iWatch wants to “power all its operations worldwide on 100 per cent renewable energy.” That is so friggin’ noble.  As you sit there playing Candy Crush on your iPad, the powerhouses behind that electronic marvel will be busy protecting about 1 million acres of forest in an effort to responsibly manage a geographical area that houses all kinds of useful natural materials that everyone needs.  And it’s all so ironic considering that China isn’t exactly a beacon of light for environmental causes. In fact, it holds the dubious distinction of being the number one environmental offender in the world. But since most of Apple’s products are manufactured there anyway, it made sense to take part in such an endeavor. Well, sort of.