Stock Notes for 1/30/21

Gamestop (GME)

This week, retail investors got a master’s class on the inner workings of Wall Street. In an attempt to create a short squeeze, retail investors purchased as many shares as possible to drive GME’s share price to the moon. And as they continued to purchase GME shares, investors found themselves in a predicament as brokers began to limit their purchases.

Chamath provides a good Twitter 🧵 on what happened with GME this week:

I believe this on-going saga will peel back the onion of Wall Street. As limits were placed on retail investors, lessons were learned about the hidden forces behind the curtain controlling the market. These hidden forces grew dis-trust among retail investors. And I believe Wall Street Bets and FintTwit will continue to have a strong voice among retail investors.

GME IBD Scores

Tesla (TSLA)

It was Q4/FY 2020 earnings week for Tesla.

Here’s a summary on what I found interesting:

  • FY 2020 GAAP net income of $721M
  • Free cash flow $1.9B in Q4
  • Half a million vehicles produced and delivered in 2020
  • Automotive margin 24.1%, down from 27.7% in Q3 2020
  • $4.9B increase in cash and cash equivalents in Q4 to $19.4B

It was a little disappointing to see automotive margin decrease from 27.7% in Q3 to 24.1% in Q4. All is forgiven as Tesla continues to scale up its manufacturing capabilities. As mentioned in my January 9 update, Tesla delivered ~500K vehicles in 2020. This year, Tesla aims to deliver between 840,000 to 1 million vehicles.

As far as Tesla’s 2021 look-ahead:

  • Roll-out of full self driving (FSD) with a licensing opportunity to legacy auto manufacturers. I believe this is potentially a huge opportunity for Telsa. Opening its platform/ecosystem to other auto manufacturers will create a network effect in Tesla’s future robo taxi service.
  • Opening of Berlin and Texas facilities to achieve 50% average annual growth in vehicle deliveries.
  • Tesla Semi deliveries will begin in 2021.

TSLA IBD Scores

Bitcoin (GBTC)

Bitcoin continues to gain traction among tech companies according to Cathie Wood. In an interview with Yahoo Finance, Cathie said she received a few inquiries from tech companies interested in adding Bitcoin to their balance sheet. Square is among the first companies to add Bitcoin to their balance sheet as a hedge to the US dollar.

In other news, Elon Musk added #Bitcoin to his Twitter profile:

Lastly, Wall Street continues to erode trust among retail investors, which is good for BTC. 😄