Tesla, Apple and the new China syndrome – Yahoo Finance

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Tuesday, January 4, 2021

On Monday, during a session that by all rights should have been dominated by Apple (AAPL) becoming the first company ever to hit $3 trillion market capitalization, Tesla (TSLA) did what it normally does which is steal the spotlight.

As the iPhone maker set its intraday high-water mark, buzz surrounding the electric vehicle makers blockbuster fourth quarter deliveries hit a crescendo with the stock seeing its best day in nearly a year. Effusive praise from Wall Street included the estimable Dan Ives, who called it a trophy case quarter, and predicted Tesla could see a $2 trillion market cap in less than two years, Yahoo Finances Ines Ferre reported.

The markets rapturous response to Teslas big Q4 coinciding with Apples big milestone is an irony best captured by Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management.

The investor was more complementary of Teslas software capabilities than its car manufacturing, something that came under scrutiny last week after it issued a massive recall of nearly half a million vehicles. It also underscored how two of the biggest names in technology remain intertwined years after Apple reportedly approached Tesla about a potential merger, which Elon Musk summarily denied.

Tesla is a better AI technology company than a car company, as we've all learned over the last 10 years, Gerber told Yahoo Finance Live last week, adding that the EV maker will be the most consequential company in the history of business within the next decade.

They build cars, but they're basically building an iPhone on wheels. And so the entire infrastructure that they've been building around service, for example, has been a big challenge for them. They've innovated some amazing things like mobile service.

In fact, very little has materially slowed Teslas ascent not even Elon Musks tax-related stock sale that temporarily put downward pressure on the shares.

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In a note to clients on Monday, Garrett Nelson, senior equity analyst at CFRA Research, boosted Teslas stock to a Buy from a Hold and hiked the 12-month price target to $1,250/share.

He pointed out that Teslas 2021 gains underperformed competitors like Lucid's (LCID) 280% boom and Ford's (F) 136% surge, but the completion of new factories in Texas and Germany sets the stage for further growth in 2022 and beyond.

The EV maker is increasingly popular in Europe, with Electrek reporting Norwegians have adopted its cars at a breathtaking pace. But Chinas vast market is where Teslas present and future lie as does a potential stumbling block for its ambitions.

In a report published on Monday, The Wall Street Journal underscored how the companys opening of a new showroom in Xinjiang, a region at the center of genocide allegations against the Chinese government, militates against Musks image as an iconoclastic rule breaker who frequently tangles with U.S. elected officials on Twitter.

The Xinjiang quandary is one Tesla also shares with a growing number of corporate American powerhouses like Nike (NKE), Walmart (WMT), Intel (INTC) and yes, Apple. The Morning Brief has previously covered the multitude of ways in which Beijings domestic woes, and its unique brand of geopolitical hardball, have ensnared the Sino-American bilateral relationship in a thicket of recriminations and tensions.

While China is a huge part of Teslas success, it also has the potential to inflict reputational damage on its brand as international furor toward Beijing grows more acute.

It also exposes the growing contradiction of American companies forced into a game of "go along to get along" with the Chinese government, even as they take increasingly polarizing social stances at home while paying virtually no political penalty for doing so.

By Javier E. David, editor at Yahoo Finance. Follow him at @Teflongeek

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Tesla, Apple and the new China syndrome - Yahoo Finance