Welcome to The Fly's latest edition of "Charged," where we look back at some recent analysts' notes, news and activity in the electric vehicle and clean energy space.
TWITTER POLL SAYS SELL: Twitter users overwhelmingly voted in favor of Tesla (TSLA) CEO Elon Musk selling 10% of his shares in the electric car maker. Musk said he would follow the poll's results as he posted it. With 3.52M votes counted, Twitter users voted 58% in support of Musk selling 10% of his holdings. "Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?," Musk asked Twitter users. "I will abide by the results of this poll, whichever way it goes," he added.
Meanwhile, Wedbush analyst Daniel Ives raised his bull case for Tesla to $1,800 from $1,500 in light of the EV demand trajectory into 2022, while keeping an Outperform rating and a price target of $1,100 on the shares. The analyst noted that the stock continues to see a major re-rating over the last few weeks as two fundamental changes have occurred to the Tesla story, namely the margin story coming out of the third quarter earnings speaking to the massive leverage taking hold into 2022/2023, and the Hertz (HTZZ)/Uber (UBER) deal that was a tipping point highlighting more mainstream adoption of EVs and a rental market that could be another 200k-300k cars delivered annually for Tesla as others follow Hertz's lead.
In a separate research note, Ives commented on Elon Musk's Twitter poll to see if he should sell 10% of his Tesla stock. With a tax bill that the analyst calculates at north of $10 billion, he believes selling stock over the coming months is not a surprise, although holding a Twitter poll to sell 10% of his stock is "another bizarre soap opera that can only happen to one company and one CEO in the world, Musk."
HERTZ, TESLA DEAL: Shares of Hertz fell into negative territory early on Tuesday after Tesla's Musk said a deal had not been signed yet with Hertz for the previously announced 10,000 vehicle order. However, it didn't take long for the stock to bounce back and rally as much as 10% as the rental car company said deliveries of the Tesla vehicles had already started.
DOJ PROBING WORKHORSE: The Justice Department has opened an investigation into Workhorse (WKHS), according to The Wall Street Journal's Ben Foldy, who said that the focus of the inquiry being conducted by the U.S. attorney's office in Manhattan wasn't revealed in the documents he reviewed related to the probe. It was previously reported by the Journal in September that the U.S. Securities and Exchange Commission is also investigating Workhorse, Foldy noted. In morning trading following the report of the DOJ probe, Workhorse shares are down 11% to $6.45.
RIVIAN IPO: Rivian Automotive (RIVN), whose shares are scheduled to start trading on the Nasdaq Stock Market next week under the symbol "RIVN," is seeking a valuation in the low-$60B range in its initial public offering, The Wall Street Journal's Corrie Driebusch and Mike Colias reported, citing people familiar with the matter who reference an updated regulatory filing expected to come later on Monday. Amazon.com (AMZN) disclosed in its quarterly filing last week that its preferred stock of Rivian Automotive represents an approximately 20% ownership interest. Ford (F) also holds a stake in Rivian.
EV CHARGING STATIONS: The roughly $1 trillion infrastructure package passed by Congress on Friday provides a spark to efforts to build a national network of electric-vehicle charging stations, The Wall Street Journal's Jennifer Hiller wrote over the weekend. The bipartisan measure touches on nearly every aspect of the electric-vehicle industry and eclipses previous efforts in the U.S. It also includes funding to help transform the nation's aging electric grid by upgrading high-voltage transmission lines and other infrastructure set to become even more crucial as the country electrifies more of its transportation system, the author noted. It directs $5 billion to expanding electric-vehicle highway charging, which once in place would let drivers take longer road trips without the fear of running out of power. Publicly traded companies in the space include ChargePoint (CHPT), Blink (BLNK), EVgo (EVGO), Volta (VLTA), and Pioneer Power (PPSI).
MOVING TO THE SIDELINES ON NIKOLA: BTIG analyst Gregory Lewis downgraded Nikola (NKLA) to Neutral from Buy without a price target following the company's third quarter results. The quarter helped push the stock up 21% and to its highest level since July, Lewis noted. While the analyst likes Nikola's long-term story, with the stock up 50% over the last month he is moving to sidelines on valuation. Lewis sees the potential for the hydrogen side of the business to be worth upwards of $30 per share as a standalone business, but is "waiting for more tangible signs of execution."
PRICING POWER POTENTIAL: On November 4, SMBC Nikko analyst David Havens initiated coverage of Plug Power (PLUG) with an Outperform rating and $50 price target in the context of an Equal Weight rating on the hydrogen fuel cell manufacturer industry. The primary addressable markets for hydrogen fuel cells are in transportation and power generation, and the "high-growth opportunities" in medium and heavy-duty motive applications, distributed power and backup power are "all long-dated opportunities," Havens contended, adding that a market approach that addresses customer constraints is important in an industry that relies so heavily on cost compression. While Plug's turnkey model "is conducive to near-term profitability," it provides a path to scaling up manufacturing and achieving pricing power to become the lowest-cost provider, he argued.
The same morning, Havens initiated coverage of Ballard Power (BLDP) with a Neutral rating and $20 price target in the context of an Equal Weight rating on the hydrogen fuel cell manufacturer industry. Ballard has "an early dominance in the global bus market" and he expects that market will continue to be the driver of growth for Ballard over the next few years, but he expects near-term earnings volatility "before the more substantial pivot in growth in 2023/24," Havens said.
Tesla
-37.35 (-3.06%)
Hertz
+1.77 (+5.43%)
Uber
-0.03 (-0.06%)
Workhorse Group
+0.25 (+3.82%)
Rivian Automotive
+
Ford
+1.1 (+5.70%)
Amazon.com
-1.15 (-0.03%)
ChargePoint
+1.98 (+8.02%)
Blink Charging
+2.81 (+8.95%)
EVgo
+1.3 (+13.07%)
Volta
+0.99 (+10.54%)
Pioneer Power
+3.14 (+96.91%)
Nikola
+0.84 (+6.40%)
Plug Power
+2.62 (+6.83%)
Ballard Power
+0.94 (+5.30%)