MELBOURNE (Reuters Breakingviews) - Bitcoin has just lost one of its most high-profile cheerleaders. Tesla Chief Executive Elon Musk on Wednesday tweeted that the electric-car maker is suspending taking the cryptocurrency as payment for its vehicles, citing the “rapidly increasing use of fossil fuels, especially coal” to mine it and pay with it. Musk is right. But his decision reveals more about his company than it does about bitcoin.
MELBOURNE (Reuters Breakingviews) - Time was when poor sales of Tesla’s high-margin vehicles prompted fears of a big loss. Not so on Monday, when Elon Musk’ electric-car maker unveiled record first-quarter earnings of $1.1 billion, excluding stock-compensation costs. That’s despite problems upgrading its S and X models resulting in just 2,000 of them being delivered, 89% fewer than the previous quarter. Tesla’s decent showing puts in the position of finally justifying its stock-market valuation – for a year ago, that is.
MELBOURNE (Reuters Breakingviews) - What’s the similarity between an iconic Australian wealth manager and the country’s largest producer and seller of electricity? That is not the opening line to a bad joke but it could be. AMP and AGL Energy both want to split themselves in two. Usually companies do it to unearth value buried thanks to badly fitting businesses or management distraction. As a last resort of sorts when other strategies fail, though, it looks desperate.
MELBOURNE (Reuters Breakingviews) - Climate-change initiatives are heating up again. U.S. President Joe Biden is hosting a virtual summit on global warming for up to 40 world leaders this week, fresh on the heels of China vowing to work together with the United States on decarbonisation. JPMorgan and Citigroup just raised their sustainable-finance goals to a combined $3.5 trillion by 2030, as investors including Pimco push lenders to set tougher emissions targets. And new legislation from New Zealand could neatly tie it all together.
MELBOURNE (Reuters Breakingviews) - Error-prone Toshiba has yet another chance to get things right. Chief Executive Nobuaki Kurumatani resigned on Wednesday after a series of controversial missteps cost him the support of investors and staff. His ties to buyout bidder CVC Capital Partners may have caused problems in the boardroom, too. There’s a chance now to get the corporate governance right.
MELBOURNE (Reuters Breakingviews) - The woes originating from Archegos Capital Management support the idea that there’s more to beware on Wall Street than leverage. Sun Kook “Bill” Hwang’s investment firm, forced into a $20 billion-plus fire-sale of stocks that started rippling across markets last week, did not borrow excessively, according to media reports. It’s just that plenty of other warning signs were missed.
MELBOURNE (Reuters Breakingviews) - World Water Day on Monday should be right up the finance industry’s canal. This year’s theme dives into how to value the resource, from equality of access to cultural issues. But the opportunity to address water’s financial worth is one Wall Street and its brethren ought not to let float by.
MELBOURNE (Reuters Breakingviews) - A trans-Tasman Sea M&A deal puts a high price on clean energy assets. On Monday New Zealand-based Tilt Renewables agreed to sell itself to two companies, one in its home market and one in Australia, which will then break it up. At almost NZ$3 billion ($2.1 billion), the buyers are paying a 99% premium to its undisturbed trading level in December, and 96 times next year’s estimated earnings for the coming financial year, using Refinitiv data. As puffed up as that sounds, the sale harnesses three viable power sources.
MELBOURNE (Reuters Breakingviews) - Toyota, Ford and GM are all trading at their highest level in years as investors start to pick some winners among traditional automakers. Fear of missing the next Tesla, though, means shareholders are keeping the heady valuations for upstarts like latest SPAC target Lucid Motors.
MELBOURNE (Reuters Breakingviews) - Trust one of Wall Street’s best-known dealmakers to strike the biggest blank-cheque merger in history. Former Citigroup executive Michael Klein on Monday used one of his special-purpose acquisition companies, Churchill Capital IV, to snap up electric-car maker Lucid Motors. It takes the hype for both trends to a new level.