The S&P 500’s (SPY) approach back to new highs is hiding the market losers. Electric vehicles and airlines are the losing investments when markets re-open for Tuesday’s trade.
Hertz Global’s (HTZ) unexpected decision to dump 20,000 of the best-branded EVs – Tesla – is shaking up the sector. Investors who bet that new EV players Fisker (FSR) and Lucid (LCID) would squeeze short-sellers have significant losses. Markets are anticipating that neither firm has enough mass production to achieve economies of scale. The more units they sell, the more they lose.
TSLA stock peaked at over $260 in Dec. to fall below its 50-day simple moving average, to $218.89.
Airline Stocks
The markets will try to shake off the heavy sell-off last Friday in the airline industry. Delta Airlines (DAL) warned markets that its Q4 revenue will rise by a decisive 5.8%. Operating margin will fall from 11.6% to 9.7%. For the current first quarter, Delta said that it expects strong air travel. In addition, its customer base has a healthy financial position.
The drop in DAL stock hurt United Airlines (UAL), American Airlines (AAL), and Southwest Airlines (LUV).
Expect the market to re-evaluate Delta’s strong outlook for the airline industry. The rise in oil prices last week may reverse this week. This lowers the operating costs for airlines.
Exxon (XOM) and ConocoPhillips (COP) are the potential winners in the markets if oil prices rally today.
