Week In Review: 7/20/20-7/24/20

Tesla, NC Universities, Bitcoin Banks, SpaceX

Tesla:

On Wednesday July 22, 2020, Tesla reported a fourth straight quarter with profits. This is a big deal for many reasons, but primarily because they were able to pull through and deliver 90,650 vehicles in Q2 with their California factory shutdown for seven weeks due to COVID19. Now that Tesla has reported its first full year of profitability on a GAAP basis (a type of accounting), it is now eligible to be considered for inclusion in the S&P 500. Tesla joining the S&P is controversial as they are the most shorted stock of any U.S equity and have been known to be volatile. This time last year, Tesla’s stock was hovering in the mid $200s, and has soared to $1,600+, rewarding shareholders with 8 times return in just a year and crushing short sellers. On the earnings call they also announced they will be building their next factory near Austin, Texas, which is expected to produce the Model Y, Tesla Semi, and Cybertruck. Elon also stated the factory will be open to the public and that there will be a boardwalk, hiking and biking trails. He also stated that “It’s going to basically be an ecological paradise. Birds in the trees, butterflies, fish in the stream.” This is personally exciting news for myself as I have a CyberTruck pre-ordered and am ready to have it in my driveway.

NC University Apocalypse:

As with any business or industry, universities and colleges across America have had to face tough decisions when it comes to COVID19 and opening in the Fall of 2020. This had led to many students across America opting for cheaper online alternatives or defer going to school all together. Specifically, in North Carolina, the UNC Board of Governors has told chancellors on all 17 campuses to submit plans for cutting their budgets by up to 50% as COVID-19 cases soar. In an email sent to leaders of Universities, it indicated they had approximately a week to submit their budget changes. Even with these budget cuts, the UNC system is preparing to open this fall with a combination of virtual and face-to-face instruction. Although this situation is not ideal for new and returning students, it does however beg the question: If universities can in fact provide educational services to their students on a 50% budget, then why wouldn’t they do that every year? Its because they have a stronghold on the perceptions of upward mobility and know we are suckers enough to pay for their branded paper. If there was any one good thing to come out of this pandemic, it will hopefully be the epiphany of young adults opting out of going into severe debt to obtain an education that can be trivial in some respects. Education is what you make of it. I have employees who have degrees and some who do not, my best workers are the ones who apply themselves and care, it has nothing to do with their educational background. Does it make sense for you to pay your full $49,653 a year tuition for Harvard online? Probably, as the name holds weight, but what about the other thousands of schools across America, I am not so sure.

Bitcoin Banks:

For the longest time now, there has been a strange relationship between Bitcoin/cryptocurrencies and banks in the U.S. The Office of the Comptroller of the Currency (OCC) who is responsible for regulating and supervising national banks sent out a letter on Wednesday, stating: national banks have the authority to provide both FIAT (government issued money) bank accounts and cryptocurrency custodial services. This is a huge win for Bitcoin and other cryptocurrencies as previously they have been disregarded by the traditional banking system. Only time will tell how this will play out but it does appear to be another huge step for Bitcoin moving into the mainstream banking system. Bitcoin’s price was around $9,300 at the time of announcement and is now hovering around $9,600 (Coinbase, Thursday, July, 23rd, 9PM EST).

SpaceX:

There are reports that Elon Musk's SpaceX is looking to raise $500 million to $1 Billion in series N funding at a valuation of $44 Billion. This funding would be focused on helping SpaceX begin commercial operations of its Starlink satellite broadband service. Starlink is the name of a satellite network that SpaceX is developing to provide low-cost/fast internet to remote locations all across the world. SpaceX will be aiming to send 60 satellites at a time and aiming to deploy a total of 1,584 by late 2020 . The goal of this project is to be able to provide internet services all across the globe, even in areas that don't already have the infrastructure in place. If they are successful, this can and will be one of the most important project/services ever created, as it will provide internet access to hundreds of millions, if not billions of people. So if you have an extra $100 million sitting around and are looking to invest, this seems like a promising project!