Tesla stock is back—or at least it’s starting to look that way.
The stock, which has dropped more than 7% in 2021, is having a good morning after a spate of weekend news. For starters, Elon Musk said that Tesla won’t share data with any government, a response to China’s decision to ban the electric-vehicle maker’s cars from military bases due to security concerns. Then ARK Invest’s Cathie Wood slapped a $3,000 price target on the shares. In premarket trading Monday, Tesla stock had gained 4.3% to $683.13.
It’s not just the news that is helping Tesla. The stock’s weakness has coincided with a spike in interest rates that has pulled down many richly valued tech stocks. Bond yields, however, are trading lower this morning—the 10-year has fallen about 0.04 percentage point to 1.68%—helping to give the Nasdaq a boost. Futures on tech-heavy index have gained 1.1%, while Dow Jones Industrial Average futures are nearly flat.
Still, Tesla stock will need more than a 4% gain to prove that it’s back. Shares have faced resistance every time they’ve traded near $720. Trading above that level will likely have everything to do with the direction of rates and little to do with stock-specific news.
Tesla’s cars might be self-driving. Its stock, right now, is most certainly not.
—Ben Levisohn
*** Barron’s is honoring women across the industry for their leadership, accomplishments, and contributions. The 2021 list includes Sonal Desai, Suzanne Donohoe, Jane Fraser, and more. New profiles will be published weekly—see the full list and read the newest profiles here.
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AstraZeneca Covid Vaccine Trial Shows Strong U.S. Efficacy
The Covid vaccine of U.K.-Swedish pharma group AstraZeneca developed with Oxford University has shown strong results in its U.S. trial, the company said Monday, with 79% efficacy at preventing symptoms and 100% efficacy against severe or critical disease and hospitalization.
- The vaccine, currently the cheapest and most used in the world, was authorized three months ago by British and EU medicines watchdogs, but had not submitted its data to the U.S. regulator. The news paves the way for the vaccine to be submitted.
- U.S. facilities have already made or are in the process of manufacturing an estimated 30 to 40 million doses of the jab. Washington agreed last week to send some 4 million to Canada and Mexico.
- The AstraZeneca jab was briefly suspended last week in most of Europe over safety concerns. That suspension was lifted when U.K. and EU regulators insisted after new reviews that the shot was safe.
What’s Next: The U.S. has begun a historic vaccination campaign using other jabs, so the AstraZeneca will not play the same role there that it already does in the rest of the world. But the results of the trial may help to further restore its reputation.
—Pierre Briançon
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U.S. Consults With NATO Allies on Afghanistan Peace Process
After Defense Secretary Lloyd Austin made an unannounced trip to Kabul Sunday to meet Afghan President Ashraf Ghani, Secretary of State Antony Blinken is traveling to Europe this week to consult with allies from the North Atlantic Treaty Organization on ending the 30-year war in Afghanistan.
- The U.S. government is currently reviewing the peace process before a May 1 deadline for the withdrawal of U.S. troops agreed to by the Trump administration with the Taliban.
- Austin tweeted that he had come to “listen and learn,” and that his visit would “inform the review” under way. President Joseph Biden told ABC news on Sunday that the deadline would be tough to meet.
- There are currently about 2,500 U.S. troops and 6,500 troops from other NATO countries in Afghanistan.
What’s Next: Washington fears that a rushed withdrawal would lead to rising violence in Afghanistan and a takeover by the Taliban. Along with other NATO allies—but also China, Russia and Pakistan—it is urging the insurgent forces to engage in power-sharing talks with the U.S.-backed Ghani government in Kabul.
—Pierre Briançon
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Railroad Merger Will Link Canada, the U.S. and Mexico for the First Time
Canadian Pacific Railway has agreed to acquire Kansas City Southern in a $29 billion deal. Announced nearly one year into the new trade alliance among the three North American countries, the merger will connect farms and plants in the Midwest to factories and ports in Mexico and Canada.
- “The deal is a bet on an escalation in North American trade,” Barron’s Al Root writes. It’s the largest rail deal since Warren Buffett’s Berkshire Hathaway bought Burlington Northern Santa Fe in 2010. If approved, the combined company would operate 20,000 miles of rail and generate roughly $8.7 billion in annual revenue.
- Kansas City Southern is the smallest major U.S. rail operator with a network running from Mexico through Texas to the Midwest. Canadian Pacific’s network spans Canada plus parts of the northern U.S., including Chicago.
- “This company is going to have a North America rail footprint that is truly unmatched,” Patrick Ottensmeyer, chief executive of Kansas City Southern, told The Wall Street Journal.
- Kansas City Southern shareholders will get $90 plus 0.489 share of Canadian Pacific for each Kansas City share—working out to about 23% above Kansas City’s Friday’s $224 closing price. Canadian Pacific CEO Keith Creel will lead the combined company based in Canada, which will be called Canadian Pacific Kansas City.
What’s Next: The deal could take until 2022 to complete and will face regulatory scrutiny in a consolidated industry already facing antitrust concerns. The rail companies say the merger will “spur greater rail-to-rail competition” while reducing highway congestion and pollution.
—Janet H. Cho
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This Beauty Stock Looks Like a Reopening Winner
Reopenings are brightening the picture for cosmetic companies. Oakland, Calif.-based e.l.f. Beauty, a value-priced brand sold at stores such as Target and Ulta Beauty, is particularly well positioned to benefit from the return to work and play, and the next round of stimulus checks hitting bank accounts.
- “There’s a big beauty-counter awakening,” says Piper Sandler analyst Erinn Murphy, who upgraded her rating on the stock this month. “E.l.f. has been leading the charge, despite a challenging environment, adding little moments of joy within their collection.”
- E.l.f. is known primarily for inexpensive but stylish products. About half its sales, which totaled $283 million in the fiscal year ended March 2020, came from basic offerings, like makeup sponges and brushes. It also launched a higher-end line with performer Alicia Keys, under the brand Keys Soulcare, in January.
- Stay-at-home orders gutted demand for makeup during the pandemic, with sales down by roughly half from peak levels by the fall of 2020, according to McKinsey. E.l.f. stock took a beating early on, trading as low as $8 a share, before reaching its recent peak of $28.
What’s Next: The company expects sales to grow 7% to 9%, to $304 million to $308 million for fiscal year 2021, which ends this month, and as high as 10% in fiscal year 2022.
—Teresa Rivas and Anita Hamilton
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Donald Trump Is Launching His Own Social Network
More than two months after being banned from Twitter and Facebook following the Jan. 6 Capitol riot, former President Donald Trump is planning to launch his own social network in the next few months, Trump senior adviser Jason Miller told Fox News on Sunday.
- “I do think that we’re going to see President Trump returning to social media in probably about two or three months here, with his own platform,” Miller said. He added that Trump has held “high-powered meetings” about it at Mar-a-Lago, with “numerous companies” approaching the ex-president.
- Trump was banned from Facebook, Twitter, YouTube, Instagram, Snapchat and Twitch after the deadly Capitol riot protesting the election results on Jan 6. Twitter said Trump’s tweets after the attacks violated its “Glorification of Violence Policy,” while Facebook CEO Mark Zuckerberg said his posts would likely “provoke further violence.”
- Parler, a social network popular with the far right, offered the former president a 40% share in the service if he agreed to post exclusively to it, BuzzFeed reported in February. The deal was never completed and Parler went dark for a month after Amazon stopped hosting it in January.
What’s Next: After booting Trump, who had more than 88 million followers, Twitter has flourished, with shares hitting a high of $77.63 earlier this month.
—Janet H. Cho
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MarketWatch Wants to Hear From You
A timely question after the GameStop saga: What are the tax advantages of qualifying for “trader status” with the IRS?
A MarketWatch correspondent will answer this question soon. In the meantime, send any questions you would like answered to [email protected].
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—Newsletter edited by Anita Hamilton, Stacy Ozol, Matt Bemer
