Volvo announced plans to go all electric by 2030 on Tuesday.
Lintao Zhang/Getty ImagesThe ICE Age is over.
ICE, in this case, stands for internal combustion engine and, like the woolly mammoth of long ago, ICE-powered cars won’t make it to the next auto-industry epoch.
Tuesday, Volvo announced plans to go all electric by 2030, matching General Motors ’ goal articulated in January. All global auto makers have big electric vehicle plans which, if met, will drive new electric-vehicle sales higher and faster than Wall Street analysts currently project.
The biggest challenge for EV conversion now might not be cost, range anxiety, or even charging infrastructure. The barrier might be the automotive supply chain.
Getting enough batteries will be a challenge. Morgan Stanley analyst Adam Jonas, who came up with the ICE Age pun, calls battery supply his number one concern.
There is also a global chip shortage to contend with. Chinese EV maker NIO warned Monday night that the risk of production delays is still “quite high” even though it has enough chips for first- and second- quarter production.
NIO also talked about expanding sales into Europe and even the U.S. European sales aren’t that far off, but said a U.S. launch will require “lots of patience.”
The same might be said of the ICE Age’s end.
—Al Root
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Zoom Blows Past Earnings Expectations, While Signaling Slowing Growth Ahead
A prime beneficiary of the Covid-19 pandemic as many workers and students stayed home for the last year, videoconferencing company Zoom Video Communications posted better-than-expected results for its fiscal fourth quarter and brought in nearly $1 billion in profits for the year.
- Revenue for the quarter ending Jan. 31 was $883 million, up 369% from a year earlier and well above consensus estimates of $812 million. Adjusted profits, which exclude one-time transactions, were $365 million, or $1.22 a share, also well above expectations.
- For the full year, Zoom had revenue of $2.65 billion, up 326%, with non-GAAP profits of $996 million, or $3.34 a share. It finished the year with $4.2 billion in cash and short-term investments.
- The company said it had 467,000 customers with more than 10 employees, up 33,400 from a year ago.
What’s Next: While the company’s financial guidance was higher than Wall Street expected, it underlines the fact that growth will slow considerably from here as the world begins to get past the pandemic. Zoom is projecting revenue of $900 to $905 million next quarter.
—Eric J. Savitz
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Airline Stocks Are Rising, But Analysts Urge Caution
Investors appear increasingly optimistic that travel will make a monumental recovery as the pace of vaccinations accelerates.
- Domestic traffic, revenue, and bookings are all picking up on a week-to-week basis, according to UBS analyst Myles Walton. The NYSE Arca Airline Index is now up 27% year to date, with discount carriers Spirit and Allegiant up 48% and 33% respectively in 2021, and JetBlue rising about 27%.
- Some analysts are urging caution. Citigroup’s Stephen Trent notes that U.S. revenue passenger miles in January were still down 66% year-over-year, and the trends in February and March imply similar declines. While more people are flying, much of the demand is in the leisure market where fares remain relatively low.
- International travel remains depressed, which could make it tougher for full-service U.S. carriers to regain revenue. Vaccine rollouts remain slow and patchy in Europe as new strains of the virus pose a threat to a rapid reopening.
What’s Next: More good news is on the horizon: The airline industry is also lining up more cash from Washington, with $14 billion in aid likely coming as part of the stimulus package.
—Daren Fonda
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How Democrats Can Get Stimulus Signed Into Law by March 14
The Senate will introduce its version of President Joe Biden’s $1.9 trillion stimulus plan as soon as Wednesday, kicking off the final push to get the legislation signed into law before federal unemployment benefits expire for millions of Americans.
- Senate Majority Leader Chuck Schumer (D, N.Y.) will present the bill—which includes $1,400 direct payments to most Americans, aid to state and local governments, and other spending measures—on the Senate floor. That starts the clock on 20 hours of debate followed by time for senators to introduce amendments and challenges.
- “I expect a hearty debate and some late nights, but the American people sent us here with a job to do,” Sen. Schumer said Monday night. A floor vote could happen Friday morning, and is expected to fall along party lines with Vice President Kamala Harris casting the deciding vote in favor of the bill.
- Because the Senate bill will differ from the one passed by the House of Representatives, which included the $15 minimum wage provision, the House will have to vote on the Senate plan or a conference committee will work out the differences, with both chambers approving the changes.
What’s Next: Once the House and Senate have passed the same bill, the legislation goes to President Biden to sign into law.
—Janet H. Cho
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CDC Director Warns Against Easing Covid Restrictions
Dr. Rochelle Walensky, director of the Centers for Disease Control and Prevention, expressed ongoing concern about states easing restrictions as the decline in new coronavirus cases and deaths across the U.S. has plateaued.
- “I am really worried about more states rolling back the exact public health measures we have recommended to protect people from Covid-19,” Walensky said, adding, “at this level of cases with variants spreading, we stand to completely lose the hard-earned ground we have gained.”
- As cases recede, states have begun lifting restrictions. Pennsylvania lifted its out-of-state travel restrictions on Monday and New York City plans to reopen movie theaters on Friday. Some states have lifted all restrictions on masking, social distancing and gatherings.
- The 7-day average for new cases has hovered around 70,000 over the past week after steadily declining from around 250,000 in early January, according to data from Johns Hopkins University. Daily deaths have risen back above 2,000 on average for the past week, per the New York Times.
- Coronavirus testing has also fallen from 14 million a week in early January to less than 10 million for the week ending Feb. 24, according to the Covid Tracking Project. Reasons range from bad weather to pandemic fatigue, but that drop-off means more people could be infected without realizing it.
What’s Next: Dr. Anthony Fauci said at a White House briefing Monday that the administration is taking a new variant of the coronavirus first identified in New York “very seriously” because early research suggests that it can evade both vaccines and antibody treatments.
—Janet H. Cho
***
Chairman of Alibaba’s Ant Insists IPO Is Still In the Cards
The head of Chinese fintech company Ant Group, which was prevented from listing in November by the country’s central bank, said in a memo to employees seen by The Wall Street Journal that the company will “certainly” become public.
- “I’m fully confident in that,” Ant’s executive chairman Eric Jing wrote, adding that the company would first work to comply with authorities’ requirements.
- According to the Financial Times, Jack Ma, the founder and controlling owner of Ant’s parent company Alibaba, has been reluctant to share much of consumer data with the Chinese central bank as requested by authorities. Ant’s Alipay app is China’s largest payment platform.
- Chinese officials cited antitrust issues when they halted Ant’s IPO last year days before the planned $37 billion listing in Hong Kong and Shanghai. Ma had criticized the Chinese regulatory system a few days before.
- Ma and his family lost their standing as China’s wealthiest since his problem with the government started, according to a report published Tuesday. They are now trailing in fourth place with a fortune estimated at $55.6 billion.
What’s Next: Ma hasn’t been seen in public since the IPO’s cancellation, except for a brief video last month to praise Chinese teachers. Jing’s memo seems to suggest he is hopeful that the conflict with the central bank can be resolved.
—Pierre Briançon
***
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Each month, we’ll start a new challenge and invite newsletter readers—you!—to build a portfolio using virtual money and compete against the Barron’s and MarketWatch community.
Everyone will start with the same amount and can trade as often or as little as they choose. We’ll track the leaders and, at the end of the challenge, the winner whose portfolio has the most value will be announced in The Barron’s Daily newsletter.
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—Newsletter edited by Anita Hamilton, Ben Levisohn, Stacy Ozol, Matt Bemer
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