TOP STORY
🚘️ What’s going on with Tesla?! (down 34% YTD)

Once the darling of tech, Tesla has been facing rocky waters, with the stock down 34% this year. This makes Tesla the worst performer in the S&P 500 (even below Boeing which literally had a plane fall apart mid-air).

So, what’s happening to Tesla? 🤔 

🔋 EV Sales slowing across the world:

• Global sales of EVs increased by over 100% in 2021, 62% in 2022, and slowed to 31% in 2023. Growth is projected to slow again to 21% this year.

• Tesla abandoned its 50% annual growth target in January

🇨🇳 Fierce Competition in China:

• Tesla faces increasing competition in China (the largest EV market) from BYD, which sells a <$10,000 model and recently surpassed Tesla as the top seller of EVs

• Tesla's Shanghai factory sales have dropped by 6% year over year.

🤑 The most expensive of the “Magnificent 7”

The Magnificent 7 refers to the seven stocks that have outpaced the market for the past years - including Amazon, Apple, Nvidia, Meta Platforms, Microsoft, Alphabet, and Tesla - but with Tesla’s downward trend, many are questioning whether it fits with the other giants.

Despite its position as this year's lowest performer and the only one projected to experience a decline in earnings over the next 12 months, it remains the most expensive of the seven, double the P/E ratio of even Nvidia 🤯

Price earnings (which is a simple ratio dividing the stock price by the company’s earnings per share) is a common measure of how ‘expensive’ or ‘cheap’ a stock is.

Tesla’s high PE ratio was long justified by growth potential and higher margins, but these arguments are increasingly looking shaky when you compare Tesla’s margins to other automakers.

Tesla, which has a higher market cap than Toyota, Mercedes-Benz, and BMW combined, has lower margins than all of them with 9.2% compared to Toyota at 11.1%, Mercedes at 11.5%, and BMW at 11.6%.

🫣 Elon - More Hurt than Help?

While Elon Musk has certainly been instrumental in the success of Tesla, he seems to be responsible for some of the recent demise:

• Investors are frustrated with Elon’s many distractions including X, formerly known as Twitter

• Elon’s controversial posts on X are likely hurting demand for Tesla cars

🤔 Community Thoughts

Tesla was also a hot topic on Blossom becoming the most talked about stock this week. Here’s what some of the community had to say:

🐂 Cathie Wood - Once a Bull, Always a Bull

In addition to many in the Blossom community, one other notable investor holding tight to their bull thesis is Cathie Wood - who runs Ark Invest, an investment fund with ~$7B assets under management.

In January, Wood’s ETF bought about $141 million worth of Tesla stock, and picked up another $35 million this week.

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🤖 You Have More AI in Your Portfolio Than You Realize

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This Enhanced Equity Income ETF allows you to tap into top Harvest Equity Income ETFs like the Harvest Tech Achievers Growth & Income ETF (HTA:TSX), the Harvest Healthcare Leaders Income ETF (HHL:TSX), and the Harvest US Bank Leaders Income ETF (HUBL).

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TECHNOLOGY
📲 U.S. House Votes to Require TikTok Sale or Implement Ban

TikTok had a rough week as the House of Representatives just passed a bill that could lead to TikTok’s ban in the U.S. unless ByteDance, its Chinese parent company, sells its American assets.

Despite being used by 170 million Americans and 7 million small businesses who rely on the platform for growth and exposure, the bill passed with a resounding vote of 352 to 65.

Critics argue that TikTok poses a national security threat due to potential influence from the Chinese government with FBI Director Christopher Wray saying there were “significant” national security concerns associated with TikTok.

🤔 What Happens Next?

The bill will now head to the Senate, where its future is less certain. President Joe Biden has said he’s prepared to sign the TikTok bill, even if it might upset young voters before his upcoming election rematch against Donald Trump.

China’s leaders came out against a sale, so it’s unclear whether ByteDance would be willing to sell if the bill becomes law.

If enacted, the bill would prohibit the App Store and Google Play from offering the platform unless ByteDance sells it within 180 days.

👀 Trump’s Hot Take

Under Trump, a similar agreement was explored where ByteDance would sell its US assets to a group led by Oracle, but after this deal collapsed TikTok agreed to ‘Project Texas’ - a plan where Oracle would host US user data and review TikTok software.

Love him or hate him, Trump summed up the drama nicely:

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IPO WATCH
📆 Reddit to IPO this Thursday, March 21

Over the last month, we’ve been covering Reddit’s unique IPO, and this week, Reddit has officially disclosed details of what is set to be one of the year’s biggest initial public offerings.

🍵 So, What’s the Tea?

• 🤑 Reddit plans to raise $748 million through its IPO

• 📆 The IPO is planned for Thursday, March 21, with Reddit shares to be listed on the New York Stock Exchange under the ticker symbol $RDDT.

• 🤝 Reddit intends to offer 22 million shares, priced between $31 and $34, potentially valuing Reddit at up to $6.4 billion, fully diluted.

• 💙 In an unprecedented move, Reddit reserved 8% of its IPO shares for its moderators and users.

• 🏦 The IPO is led by Morgan Stanley, Goldman Sachs, JPMorgan Chase, and Bank of America.

🎢 Bullish or Bearish?

While Reddit is still unprofitable, its financials have been improving, with revenue increasing 21% to $804 million in 2023.

Additionally, Reddit's recent $60M deal with Google to license its data to power AI models positions the company as an AI contender, which may attract investors.

That said, others caution against the IPO, and IPOs in general:

👇 What are your thoughts on the Reddit IPO? Join the discussion on @bradleytalksmoney’s post on Blossom:

FROM THE BLOSSOM COMMUNITY
🎙️ Top Discussions this Week

🗞️ What else you might’ve missed:

• 🪙 Coinbase (COIN) to offer $1B in convertible notes

• 🚘️ Hertz (HTZ) replaces CEO after big bet on EVs fizzles

• 📱 Apple (APPL) buys Canada's DarwinAI in a race to add features

• 🤖 Microsoft (MSFT) announces release of a security AI to help clients track hackers

• 💊 Eli Lilly (LLY) partners with Amazon (AMZN) to deliver its new drugs