Connect with us

Business

Tesla shares gain after Musk sheds $5 billion in equity

Published

on

November 11, 2021

By Tom Westbrook and Medha Singh

(Reuters) – Tesla shares rose in early trading on Thursday after filings revealed Chief Executive Officer Elon Musk had sold about $5 billion of the stock over the past few days, following his much-hyped Twitter poll.

The electric-car maker’s shares climbed 3% to $1,096.13, recouping some of the heavy losses suffered earlier in the week.

Advertisement

The share sale was his first since 2016 and comes after his weekend poll of Twitter users about offloading 10% of his Tesla stake, which comprises most of his estimated $281 billion fortune.

“The reason that we’re seeing stock rebound is because there does seem to be a method in his madness,” AJ Bell analyst Danni Hewson said.

“It’s about making sure that the market understands this isn’t something done on a whim, or because his Twitter followers told him he should. He’s had his decision already made, rubber stamped.”

Filings showed Musk’s trust sold nearly 3.6 million shares in Tesla, worth around $4 billion, while he also sold another 934,000 shares for $1.1 billion to cover tax obligations after exercising options to acquire nearly 2.2 million shares.

The sale equates to about 3% of Musk’s total holdings. The options-related part of the sale was put in place in September, much before his Twitter poll.

Advertisement

Before the sale, Musk owned a 23% stake in Tesla, including stock options. He also owns other companies including SpaceX.

Musk’s move to sell his Tesla shares comes at a time when Washington proposes to tax the stockholdings of billionaires to help finance President Joe Biden’s social spending plan.

“Elon Musk doesn’t take a salary, he’s paid in big chunks of stock. At some point in time you have to take some of that concentration down,” said Art Hogan, chief market strategist at National Securities in New York.

“This is not novel. It just gets more attention because it’s such a high market-cap type, attention grabbing kind of company.”

Tesla did not respond to a request for comment.

Advertisement

RETAIL MANIA

While Tesla has lost more in market value than the combined market capitalisation of Ford Motor Co and General Motors this week, retail investors have been net buyers, making net purchases of $157 million on Monday and Tuesday, according to Vanda Research.

Underscoring the interest of retail investors in EV stocks, Fidelity’s brokerage website showed Rivian Automotive Inc, Tesla and Lucid Group were the most traded shares on Wednesday, with buy orders outnumbering sell.

Shares of Rivian jumped about 11%, a day after a stellar market debut that sent the company’s valuation over $100 billion. Lucid Group advanced 4%.

“Now that Tesla has got a first mover advantage, the EV neighborhood is going to get very crowded in the coming quarters,” Hogan said.

Advertisement

Four former and current Tesla board members, including Musk’s brother Kimbal Musk, have filed to sell nearly $1 billion worth of shares since Tesla’s market value surpassed $1 trillion late last month, according to filings and market data.

The company’s share price has made staggering gains over recent years and has epitomized the ebullient mood in U.S. markets and the optimism of small-time traders who have helped drive it up 51% this year and 1,300% from 2020 lows.

Amazon.com Inc founder Jeff Bezos has also been routinely cashing in on his huge stockholding in the online retailer, raising nearly $1 billion each year to fund his rocket company, Blue Origin.

(Reporting by Tanvi Mehta, Medha Singh, Bansari Mayur Kamdar, Anisha Sircar and Devik Jain in Bengaluru and Tom Westbrook in Sydney; Editing by Subhranshu Sahu, Lincoln Feast and Anil D’Silva)

Advertisement
Continue Reading
Advertisement

Business

Delta flight from South Africa to Atlanta diverted to Boston for “technical specifications”

Published

on

November 28, 2021

(Reuters) -Delta Air Lines said a flight from South Africa to the United States was temporarily diverted from Atlanta to Boston on Sunday for technical reasons.

Flight 201, an Airbus A350, from Johannesburg was initially set to arrive at Hartsfield–Jackson Atlanta International Airport on Sunday but was instead routed to Boston’s Logan International Airport, Delta said.

The diversion “has to do with technical specifications of our A350 aircraft and the payload of this particular flight,” the company said in an email.

Advertisement

“This can happen on ultra-long-haul flights when optimal operating conditions can’t be met,” it said.

The Federal Aviation Administration told Reuters it would investigate the situation.

The flight, which was initially scheduled to land in Atlanta at 8:15 EST (1215 GMT), was rescheduled to land at in Boston at 9:27 a.m. before departing for Atlanta at 10:40 a.m., it said.

The company did not cite the newly discovered Omicron variant of the coronavirus, which has been detected in South Africa, as a reason for the temporary diversion.

More than a dozen passengers on a flight from Johannesburg to Schiphol that landed Friday tested positive https://www.reuters.com/world/europe/dutch-set-announce-findings-omicron-cases-among-safrica-travellers-2021-11-28 for the new variant, Dutch authorities said on Sunday.

Advertisement

(Reporting by Peter Szekely in New York and David Shepardson in Washington; Editing by Heather Timmons and Mark Porter)

Continue Reading

Business

Chip shortage to cost Daimler Truck billions in revenues – Automobilwoche

Published

on

November 28, 2021

BERLIN (Reuters) – Daimler Truck Chief Martin Daum expects the global chip shortage to hit revenues by several billion euros this year and sees the problem continuing into next year, Automobilwoche reported on Sunday.

The world’s largest commercial vehicle maker, to be spun off from Daimler on Dec. 10, has outlined cost-cutting measure aimed at boosting profit margins as it struggles with chip shortages hurting the entire sector.

Daum said there would be a significant financial hit.

Advertisement

“It is a huge sum,” Daum told Automobilwoche, saying the company would sell a “mid five-digit number” fewer vehicles than it could have.

With an average price of 100,000 euros ($113,170) per vehicle, this means several billion euros in lost revenues, reported Automobilwoche.

“We also have many vehicles sitting in the factory where just one part is missing. These deliveries are a priority because they are already sold,” said Daum.

He also told Automobilwoche that supply problems are likely to continue in 2022.

($1 = 0.8836 euros)

Advertisement

(Reporting by Madeline Chambers, Editing by Louise Heavens)

Continue Reading

Business

It’s raining dividends, hallelujah! Canadian banks set to post strong results

Published

on

November 28, 2021

By Nichola Saminather

TORONTO (Reuters) – Canada’s top six banks are expected to resume raising dividends and share buybacks after nearly a two-year hiatus and report strong quarterly earnings this week, which could boost the sector’s appeal to yield-hungry investors even as stocks trade close to all-time highs.

The market will also be looking for clues on the banks’ expected expense growth into next year as wage pressures intensify, and long-awaited improvements in net interest margins as interest rates rise.

Advertisement

The “big six” Canadian banks – Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia (Scotiabank), Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada – on average have a dividend yield of 3.3%, according to Reuters calculations.

That compares with the global sector median of 2.5%, according to Refinitiv data.

The dividend increases, which would be the first since the country’s financial regulator imposed a moratorium in March 2020 that was lifted earlier this month, could range from 10% for Scotiabank at the lower end to 34% at National Bank, Gabriel Dechaine, an analyst at National Bank Financial, wrote in a Nov. 22 note describing the coming hikes as a “dividend growth tsunami.”

The banks are also expected to announce repurchases of about 2% of their outstanding shares on average.

“It’s going to be a significant (dividend) increase, and will help them reduce excess capital on their balance sheets,” said Steve Belisle, portfolio manager at Manulife Investment Management. “That flows through to better ROE (return on equity).”

Advertisement

Even without the higher dividends or buybacks, Canadian bank shares have rallied to record highs, driven in part by better-than-expected earnings due to the release of reserves set aside to cover loan losses that haven’t materialized.

LOAN GROWTH ACCELERATION

The Canadian banks will be reporting their fourth-quarter earnings, with Scotiabank kicking off the results on Tuesday.

Analysts expect adjusted earnings for the top six lenders to jump about 37% from the year-earlier period, helped by a pick-up in business and credit card lending, strong mortgage growth and continued reserve releases.

An acceleration in loan growth is expected, as savings built up during the COVID-19 pandemic have lifted consumers’ and businesses’ purchasing power even at higher prices, with the broader economic recovery adding fuel to the fire, said Philip Petursson, chief investment strategist at IG Wealth Management.

Advertisement

The one blot on the horizon may come in the form of non-interest expenses. They could be 1% higher than in the third quarter, with much of the anticipated rise driven by variable compensation, and up 4% in fiscal 2022 on rising labor costs and continued investments in technology, CIBC Capital Markets analysts wrote in a note.

Earnings from capital markets earnings could also decline, although higher-than-expected trading revenues could help offset lower investment banking fees, some analysts said.

Profits are expected to be 6.6% lower than in the third quarter, largely due to releases of reserves, which are difficult to estimate and have driven better-than-expected results in past periods, and could again lead to positive surprises, analysts said.

The banks’ improving revenue growth, strong capital positions and expectations for returns on equity to remain in the mid-teens for longer than expected are positives, National Bank’s Dechaine said.

Wealth and asset management units are also likely to have seen further growth, as consumers continued to deploy cash piles they’ve amassed during the pandemic, Petursson said.

Advertisement

“It’s really hard to see where the warts would be on the banks’ earnings,” he added.

(Reporting by Nichola Saminather; Editing by Denny Thomas and Paul Simao)

Continue Reading
Advertisement

Trending