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Tuesday Ticker: November 9, 2021

Toronto, Ontario ⁠— In this weekly Tuesday Ticker, Magna reports its Q3 results⁠—and says it’s still tracking ADAS opportunities, despite the lost deal with tech firm Veoneer; Tesla marks another accolade and Rivian prepares to launch its US$60+ billion IPO.   

Looking meek at Magna

Magna International reported its third-quarter earnings last week, marking a double-digit decline in sales. 

The Aurora, Ontario-based global parts supplier posted revenues of US$7.9 billion for Q3 2021, compared to US$9.1 billion for the same period last year.

Company CEO Swamy Kotagiri said “industry pressures intensified” in 2021’s third quarter, and also sent automaker production schedules into shambles, causing labour and operational inefficiencies at Magna’s plants, he said. 

“On top of these factors, we have experienced inflationary cost increases in production inputs, including freight, commodities and, to a lesser degree, labour and energy costs.” 

Magna also warned in its recently released forecast that its sales for the year were likely to fall short of guidance, coming in between US$35.4 and US$36.4 billion, compared to between US$38 and US$39.5 billion previously.

The CEO also addressed Magna’s aborted acquisition of Veoneer, which was overthrown by Qualcomm Inc. in early October.

“Although this transaction was expected to accelerate our position in [advanced driver-assistance systems] and provide for the scale, we remained disciplined on price, based on our evaluation.”

Kotagiri said Magna will continue investing internally in ADAS technologies, as well as considering external acquisitions to complement its ADAS portfolio.

Another title for Tesla

Tesla recently marked the biggest 12-day gain in the history of capital markets by adding nearly US$400 billion to its market cap; something CEO Elon Musk says has no correlation with Hertz’s recent deal to pick up 100,000 vehicles from the electric automaker.

Tesla shares have been on a surge as of late, with the company going on a tear following its impressive Q3 2021 earnings results on Oct. 20. Just two days later, Tesla touched the US$1 trillion valuation mark for the first time.

News of car rental giant Hertz’s decision to purchase 100,000 Teslas in a US$4.2 billion deal then pushed TSLA shares to a one-day gain of 13 percent, ending the day at US$1,025 a share. 

Despite CEO Elon Musk later clarifying the Hertz deal has “zero effect” on Tesla’s economics since the car rental giant would be buying the vehicles at full price, momentum from the contract effectively boosted TSLA stock to an all-time record close of US$1,209 per share Nov. 1.

Tesla’s massive surge saw the company’s market cap grow from US$818 billion to US$1.2 trillion, an increase of about US$392 billion, in just 12 days. 

Revving up the Rivian IPO

Electric automaker Rivian is set to launch its initial public offering in the second week of November, with a proposed valuation of just over US$65 billion, according to a report from the Wall Street Journal.

Rivian disclosed its target valuation in an updated regulatory filing Nov. 1, said the WSJ. The automaker began pitching introductory shares to investors Nov. 2, while trading will begin on the Nasdaq Stock Market will start next week under the symbol RIVN. 

Rivian confidentially filed for its IPO in late Sept., aiming for a valuation of at least US$80 billion⁠—a sum that would have put Rivian above General Motors. It also sought a US$70 billion IPO in May.

Based in Irvine, California, Rivian is backed by many high-profile companies, including Amazon, which has a 20 percent stake in the automaker.

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