Tesla's market cap passes Berkshire Hathaway's; Nikola-GM deal falls apart; Pushed by Pandemic, Amazon Goes on a Hiring Spree Without Equal; Amazon Wants to Get Even Closer. Skintight; McKinsey Proposed Paying Pharmacy Companies Rebates for OxyContin Overdoses; NYT Best Black Friday Deals
1) Shares of Tesla (TSLA) surged to an all-time high on Friday, closing at $585.76 – giving the electric-vehicle maker a market cap of $555 billion.
For the first time, it's now valued higher than Berkshire Hathaway (BRK-B), which "only" has a market cap of $543 billion.
This is despite Berkshire generating $27 billion in free cash flow (operating cash flow less capital expenditures) over the past 12 months versus $1.8 billion for Tesla.
Exactly a year ago, Berkshire's $540 billion market cap was nine times Tesla's $61 billion.
If you had asked me for odds on Tesla surpassing Berkshire within a year, I would have said 1,000 to 1.
It's a good lesson on how literally anything is possible in the stock markets – and why shorting is so dangerous...
I continue to like Berkshire's stock a lot more than Tesla's – but I also continue to think that Tesla is a bad short.
2) As I predicted in my November 10 e-mail, electric-truck developer Nikola (NKLA) announced this morning that its deal with General Motors (GM) fell apart, sending its shares tumbling today. Here's what short seller Nate Anderson of Hindenburg Research tweeted:
I agree with my friend, who closely follows the auto sector and e-mailed me this morning:
GM stuck the knife into Nikola this morning, so that story is now over. What a total joke. The September 8 deal is cancelled, and replaced by a deal where they will discuss the possibility of GM becoming a supplier for Nikola's class 7/8 semitrucks *if* Nikola pays for all capex up-front. No more Badger pickup truck. This is the end for Nikola. You can set the timer to the bankruptcy at an hour ago.
3) One could make arguments for Tesla, Apple (AAPL), Facebook (FB), and Alphabet (GOOGL), but I think Amazon (AMZN) is the most important company in the world.
This is why I follow it closely and recommend it to my readers and subscribers (it was among the first stocks we recommended when we launched the Empire Investment Report on April 17, 2019, and since then it's up 71% – more than double the return of the S&P 500 Index).
Here's an article about Amazon's growth from the front page of Saturday's New York Times: Pushed by Pandemic, Amazon Goes on a Hiring Spree Without Equal. Excerpt:
Amazon has embarked on an extraordinary hiring binge this year, vacuuming up an average of 1,400 new workers a day and solidifying its power as online shopping becomes more entrenched in the coronavirus pandemic.
The hiring has taken place at Amazon's headquarters in Seattle, at its hundreds of warehouses in rural communities and suburbs, and in countries such as India and Italy. Amazon added 427,300 employees between January and October, pushing its work force to more than 1.2 million people globally, up more than 50 percent from a year ago. Its number of workers now approaches the entire population of Dallas.
The spree has accelerated since the onset of the pandemic, which has turbocharged Amazon's business and made it a winner of the crisis. Starting in July, the company brought on about 350,000 employees, or 2,800 a day. Most have been warehouse workers, but Amazon has also hired software engineers and hardware specialists to power enterprises such as cloud computing, streaming entertainment and devices, which have boomed in the pandemic.
The scale of hiring is even larger than it may seem because the numbers do not account for employee churn, nor do they include the 100,000 temporary workers who have been recruited for the holiday shopping season. They also do not include what internal documents show as roughly 500,000 delivery drivers, who are contractors and not direct Amazon employees.
4) However, my favorite tech columnist, Kara Swisher of the New York Times, is worried about how much of our personal data Amazon is collecting via its new Halo fitness tracker: Amazon Wants to Get Even Closer. Skintight. Excerpt:
The company has been on an endless quest for information about me (and you, too). The device widens the reach of the company's personal-data grab, adding a user's body tone and a body-fat analysis to the information it vacuums up, which required photos of me in as pared down a state of dress as possible...
In the last few weeks of using Halo, it finally clicked with me as to why Amazon needs a device that tracks sleep and movement and body fat and even body tone: An Echo is too far away from our bodies, and the consumer goods we order give the company much information about us but not enough.
Amazon needs even more, and to be even closer – skintight – to understand the state of me at all times. Then the company can begin to really determine what I might need or want at any moment.
This enormous idea has been at the heart of Mr. Bezos's dream for a long time: to suck up the data from willing participants and give them back exactly what they want, for a price. This may be perhaps the most perfect signal-to-noise ratio ever collected. Health info, entertainment likes and dislikes, and purchase data offer a panoply of insights.
Am I upset? Send the ice cream and antidepressants! Happy? Send the champagne and music! Am I sleepless? Perhaps some warm milk and a weighted blanket – only $39.99 on Amazon and delivered today.
Helpful, for sure, but the underlying concept – surveillance as a service – gets exponentially more problematic and seems even more sinister when we consider recent reports such as the one that Amazon is monitoring the labor organizing activities of its own employees.
5) It's yet another black eye for the world's most prestigious consulting firm, McKinsey. What a total disgrace! McKinsey Proposed Paying Pharmacy Companies Rebates for OxyContin Overdoses. Excerpt:
Documents released last week in a federal bankruptcy court in New York show that the adviser was McKinsey & Company, the world's most prestigious consulting firm. The 160 pages include emails and slides revealing new details about McKinsey's advice to the Sackler family, Purdue's billionaire owners, and the firm's now notorious plan to "turbocharge" OxyContin sales at a time when opioid abuse had already killed hundreds of thousands of Americans.
In a 2017 presentation, according to the records, which were filed in court on behalf of multiple state attorneys general, McKinsey laid out several options to shore up sales. One was to give Purdue's distributors a rebate for every OxyContin overdose attributable to pills they sold.
The presentation estimated how many customers of companies including CVS and Anthem might overdose. It projected that in 2019, for example, 2,484 CVS customers would either have an overdose or develop an opioid use disorder. A rebate of $14,810 per "event" meant that Purdue would pay CVS $36.8 million that year...
"This is the banality of evil, M.B.A. edition," Anand Giridharadas, a former McKinsey consultant who reviewed the documents, said of the firm's work with Purdue. "They knew what was going on. And they found a way to look past it, through it, around it, so as to answer the only questions they cared about: how to make the client money and, when the walls closed in, how to protect themselves."
6) Speaking of both Amazon and the New York Times, the latter has released its Best Black Friday 2020 Deals Available Now.
I skimmed through all 25 categories, with products ranging from every type of electronic gadget to kitchen and outdoor items. For everything I checked, Amazon set or matched the lowest price.
As for what to buy, I own and highly recommend the top-rated (see: Best Workout Headphones) Jabra Elite Active 75t Wireless Earbuds – I paid $200 for them, but they're now on sale for $149.99 on Amazon here.
They're perfect for phone calls and listening to music, YouTube, podcasts, and Audible books whether I'm home, walking outside, or exercising. I like them a lot better than the far more expensive Apple Airpods Pro. The only thing I don't use them for is jogging because they can fall out, so instead I use my AfterShokz AS800 Wireless Headphones ($124.95).
Here are the four things on the New York Times list I ended up buying:
- Sonos Beam Soundbar
- HeatMax Hot Hands Handwarmers
- Exploding Kittens Card Game
- Three colors of this J.Crew T-shirt (use code FRIDAY to cut the price in half to $17)
Best regards,
Whitney