Of Tesla and Covid-19

  • Corporate News
  • Sunday, 16 Feb 2020

For the last couple of weeks, Elon Musk’s electric vehicle manufacturer was at the centre of attention.

WHEN life gives you a chance, take it – and that is exactly what Tesla did.

For the last couple of weeks, Elon Musk’s electric vehicle manufacturer was at the centre of attention.

First, investors got the news that the company is finally becoming profitable, pushing stock prices up to record highs. Tesla’s share skyrocketed 50% then fell 23% in just one week.

It would be a crime not to take this opportunity, so the car company decided to take it announcing it would sell another US$2bil worth of shares. Against common sense, the price of its current stocks rose.

Tesla announced it would sell at least 2.65 million new shares for US$767 a share. Curiously, during the last conference call, Elon Musk said that the company is still generating positive cash.

Thus, it does not make sense to raise money because they expect to generate cash despite this growth level.

Probably this decision was due to the Covid-19 Coronavirus and construction costs from a new Berlin plant.

Either way, the positive response to the news of the second offering suggests that investor demand for the company’s shares remains strong.

On the other hand, maybe we are observing another bubble. Only time will tell, however.

Price/Earnings & PEG Ratios may help investors to evaluate growth prospects. Remember that in theory, the lower the PEG ratio the better - implying that you are paying less for future earnings growth.

However, Tesla was not the only company to show substantial growth. Some of the top gainers in the last three months were Genprex (increasing astonishing 887.77%), Bioxel Therapeutics (growing 707.21%), Pavmed (+183.42%) and Immunogen Inc (+107.95%).

On Jan 21, Genprex received US FDA fast track designation for Genprex’s Oncoprex immunogene therapy in combination with EGFR inhibitor osimertinib patients.

According to APnews, Genprex has treated more than 50 lung cancer patients with Oncoprex in Phase I and II clinical trials.

Bioxel Therapeutics, a clinical-stage biopharmaceutical company focused on drug development that utilises artificial intelligence to identify improved therapies in neuroscience and immuno-oncology, in turn, is expected to start a phase Ib/II trial of BXCL501 for the treatment of opioid withdrawal symptoms.

Two other companies are also related to the healthcare sector, suggesting its attractiveness. Nevertheless, Healthcare investing requires a multifaceted approach to understand the underlying driver.

Meanwhile, as the Covid-19 continues to impact both companies and investors, the dollar continues to show one of the best starts of the year.

It was mainly because of the demand for havens in the context of the Covid-19 fears and the rest of uncertainties.

The euro, meanwhile, has fallen to its lowest level against the dollar in almost three years due to moderating industrial production in and the German economy worsening. Europe’s economy grew only 0.1% in the fourth quarter of last year.

In this context, many expect the ECB will lower interest rates and buy up more government bonds.

On the positive side, oil prices finally rose this week: U.S. crude futures increased by 3.4% to US$52 a barrel this week. Brent gained 5.2% for the week, reaching US$57 a barrel.

Finally, we find important to highlight the following news of the past week:

1. The Fed left interest rates unchanged, as well as the Bank of England.

2. British Bank Barclays warned that low global interest rates would make it harder to achieve 2020 targets.

3. Coronavirus is still present.

4. Greek bonds yields hit new lows.

5. Mind Medicine, a Canadian company focused on clinical trials with psychedelics, intends to list in Canada in early March.

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Tesla , Elon Musk , Covid-19 , coronavirus , dollar , euro


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