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Buy the Tesla Dip? This 5-Star Investing Guru Just Did

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Shares of Tesla (NASDAQ:TSLA) climbed more than 700% in 2020. However, that has some people wondering whether the stock isn’t due for a downturn. Indeed, those concerns took shape last week, as Tesla’s stock fell steadily to drop below the $800 per share level by Friday.

For many who have a big profit on a stock position, a decline might prompt some modest profit-taking or even a full-scale liquidation of their holdings. But for ace investor Cathie Wood at ARK Invest, the dip in Tesla was an opportunity to buy — and buy she did, without hesitation.

Image source: Tesla.

Sell high, buy low

Wood has been a big fan of Tesla for a long time. Several of her active exchange-traded funds  have substantial holdings in the stock. Specifically, the ARK Innovation ETF (NYSEMKT:ARKK) and the ARK Next Generation Internet (NYSEMKT:ARKW) both have almost 10% of their assets invested in the electric automaker.

Last week, the two ARK ETFs trimmed their positions in Tesla. Some might have concluded from just watching that single week of activity that Wood might be losing her confidence in the stock.

But Wood reversed course on Jan. 29, taking advantage of the share price decline to buy back some of the shares she had sold the previous week. ARK Innovation bought more than 85,500 shares of Tesla on Friday, representing about 0.3% of the fund’s total assets. ARK Next Generation Internet made a similarly sized buy in proportion to the smaller size of the fund, picking up almost 23,500 shares.

How much money did ARK Invest make?

With active ETFs, we don’t get real-time information about the purchases and sales that fund managers make. However, the funds are required to give their positions each day, and ARK Invest reveals the exact number of shares involved in each purchase or sale.

However, you can estimate the amount of the benefit to the fund that Wood’s transactions produced. Tesla traded at $845 on Jan. 19 and $850 on Jan. 20, the days on which the ETFs sold Tesla shares. With Tesla closing Jan. 29 at $794, the fund could have saved $51 per share on the 85,500 shares ARK Innovation bought. ARK Next Generation Internet sold only 10,500 shares last week, but it could’ve saved $56 per share on the rebuy. Do the math and that adds up to $4.36 million for ARK Innovation and $588,000 for ARK Next Generation Internet.

The benefits of rebalancing

Interestingly, what Wood did is very similar to what most financial advisors recommend that people do with their overall investing portfolios. Essentially, Wood did a short-term rebalance. She sold Tesla shares when the percentage of the ETF portfolio got higher than she wanted. But when that percentage subsequently got too low, the funds bought shares to get back into balance.

You can see the same kinds of gains with broader rebalancing of your stock, bond, and cash positions. In years when stocks rise, selling a small portion at high prices to shift into lower-price assets reduces your risk level and cashes in on some profits. If the stock market goes down in a subsequent year, then rebalancing has you buy shares on the cheap.

What’s next for Tesla?

Tesla inspires a lot of controversy, and there’s no end in sight for that. Some still argue that Tesla’s profits are artificially inflated by regulatory credits, masking the inherent weakness in its business. Others point to the immense optionality in Tesla’s business, as well as the strong demand for its vehicles.

As for Wood, her prowess is in large part due to her investments in Tesla, but the automaker isn’t the only stock that’s performed well for her. Both ARK Innovator and ARK Next Generation Internet have earned five-star ratings from Morningstar, and the list of other holdings looks like a who’s-who among rising giants of their respective fields.

Tesla shares have risen so much that shareholders need to expect pullbacks, and they could be much larger than what we saw last week. Yet for long-term investors who see value in the vision of CEO Elon Musk and the technology that Tesla has produced, those short-term fluctuations are primarily an opportunity to pick up shares slightly more cheaply.



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Business

Dogecoin soars 370% as Reddit group works to pump up the cryptocurrency

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The virtual currency, which originally started as an internet parody based on a viral dog meme, has skyrocketed 373% in the last 24 hours, according to Coinbase. At one point, it was up 613%.

One dogecoin is now worth a mere $0.0469, but that’s still easily at record levels.

It’s the latest bizarre twist in the retail investing revolt making front pages all over the world. The surge came after a popular Reddit forum — not unlike the WallStreetBets group behind GameStop’s rally — set its sights on pumping up the digital currency.
The forum SatoshiStreetBets has featured scores of users calling for a dogecoin rally over the past day. Satoshi refers to Satoshi Nakamoto, the screen name of the self-proclaimed inventor of bitcoin.

Users are urging others to buy in, declaring they could propel the cryptocurrency’s value “to the moon.”

For hours, the page was flooded with memes and images of a shiba inu, the dog breed at the center of the internet meme that inspired dogecoin.

One user called for a “coordinated” buy-in at 9 p.m. US Central time. Others called on investors in India and Europe to help prop up the virtual currency during US overnight hours.

Even Elon Musk got in on the action, on Thursday tweeting a photo of a fake magazine cover titled “Dogue” instead of “Vogue.”

The Tesla CEO has engaged in similar banter before. Last month, he spread the word about the cryptocurrency, tweeting: “One word: Doge.” He even temporarily updated his Twitter bio to read: “Former CEO of Dogecoin.”
Months before, Musk tweeted another image of dogecoin, sending the price up 14%.
The excitement this week has been palpable. Dogecoin’s market cap has soared 380% over the past 24 hours, and currently stands at $6.9 billion, according to cryptocurrency tracker CoinMarketCap. Its trading volume has surged 2,200% in the same time period.

“Let’s get Elon to shill for us,” one Reddit user wrote.

“It’s up to us to decide what DOGE is worth,” said another user. “And I’m not selling for pennies.”

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Business

Amid the GameStop-led frenzy, Jefferies says ‘plenty of air’ to come out of riskier assets. Another strategist says wait to buy the dip

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Markets are buckled into the fighting chair as another day of the retail-led feeding frenzy on shorted stocks is about to come online.

In case you thought the trading mania was a limited battle between internet day traders and Wall Street hedge funds: videogame retailer GameStop was one of the most traded stocks by value in the U.S. on Wednesday. 

Amateur investors, many based on the Reddit group WallStreetBets, are jumping into heavily-shorted stocks, driving prices to astronomical levels and forcing hedge funds to sell bigger, safer bets to cover losses.

Selloff is creeping to other investments and spooking sentiment. Major indexes took a 2% to 3% ride down on Wednesday and are set to continue surfing.

A must-read: Tendies? Diamond hands? Your guide to the lingo on WallStreetBets, the Reddit forum fueling Gamestop’s wild rise

Our call of the day comes from the U.S. equity researchers at Jefferies, led by global equity strategist Sean Darby, with a bonus call from Sébastien Galy, a strategist at Nordea Asset Management.

The team at Jefferies is clear that the correction in share prices has little to do with fundamentals. Rather, what’s happening is a reflection of a “sentiment shift within some of the more overbought and speculative parts of the market.”

The group’s retail speculative index, measuring the deviation from trend of assets where value is hard to determine, is high at 4 standard deviations. “Hence, there is plenty of air to come out of the riskier financial assets,” the team said.

Darby’s team noted that the short-term worry is whether the “popping” of riskier parts of the market will create a domino effect, as mainstream equities are liquidated to stem losses.

Galy, of the Nordic asset manager Nordea, echoes Jefferies’ caution about a wider selloff. He also says it’s too early to buy the dip, because there’s more to come.

The big moves to cover shorts at a time of high leverage typically forces more deleveraging, Galy said. This is because the constraint on capital from the risk of losses on investments is ratcheting up.

“As a consequence, the cost of hedging downside risk has sharply increased,” Galy said. “This risk reduction could last a few days followed by a sharp liquidity driven rebound in U.S. and to a lesser extent European stocks.”

Galy said that even a dovish Federal Reserve meeting on Wednesday couldn’t turn around this market, which is another signal that it may last.

The buzz

Shares in GameStop
GME,
+134.84%
touched the $500 level in the premarket before pulling back. The stock was just $19 heading into 2021. Fashion brand Nakd
NAKD,
+252.31%
is another stock making a big leap in the premarket, up 130%.

In a Securities and Exchange Commission filing this morning, cinema-theater chain AMC
AMC,
+301.21%
revealed that holders of the company’s convertible bonds have chosen to convert the notes into stock, as shares in the company have rallied around 330% since Tuesday. 

Apple
AAPL,
-0.77%,
Facebook
FB,
-3.51%,
and Tesla
TSLA,
-2.14%
posted earnings after the close yesterday. Technology giant Apple topped $100 billion in quarterly revenue for the first time, crushing expectations, as social-media company Facebook also beat estimates, with sales soaring 156% from “other revenue” — like virtual-reality headsets and video-chat devices. Electric-car maker Tesla reported its sixth straight quarter of profit, but it was a miss on expectations.

But if you can peel your eyes away from the stock market, it is a big day on the economic front. Initial and continuing jobless claims are due at 8:30 a.m. EST, with around 875,000 people expected to have filed for unemployment last week. Gross domestic product figures for the fourth quarter of 2020 will come at the same time, before new home-sales figures for December are reported at 10 a.m.

After the Federal Open Market Committee decided to hold monetary policy steady yesterday, Fed Chair Jerome Powell gave dovish signals that the central bank wasn’t done restoring the COVID-19 pandemic-ravaged economy to health. “We have not won this yet,” he said.

The markets

It looks like another wild day on Wall Street. Yesterday’s tumult saw the Dow Jones Industrial Average
DJIA,
-2.05%
tumble more than 630 points, and stock market futures
YM00,
-0.07%

ES00,
-0.31%

NQ00,
-0.90%
are pointing down, set to continue the selloff. Asian markets
NIK,
-1.53%

HSI,
-2.55%

HSI,
-2.55%
fell across the board and European indexes
SXXP,
-0.76%

UKX,
-1.13%

DAX,
-0.86%

PX1,
-0.17%
are firmly in the red.

The chart

Our chart of the day, from Marshall Gittler at BDSwiss, shows how the S&P 500
SPX,
-2.57%
dropped by the most since October 2020, and the VIX index of expected volatility saw its biggest one-day rise since the COVID-19 pandemic hit in March 2020. 

The tweet

When the sharks root for the fish. Billionaire entrepreneur and investor Mark Cuban — of “Shark Tank” fame — is rooting for Reddit’s WallStreetBets traders.

Random reads

An Oklahoma lawmaker has proposed a ‘Bigfoot’ hunting season with a new bill.

Key West wants to ban people from feeding fat, feral, free-roaming chickens.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Want more for the day ahead? Sign up for The Barron’s Daily, a morning briefing for investors, including exclusive commentary from Barron’s and MarketWatch writers.

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Business

The stock market is at peak dumb: Etsy soars because Elon Musk tweets about it

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“I kinda love Etsy,” Musk tweeted, adding in a follow up tweet that he bought a wool Marvin the Martian helmet (the alien from the Bugs Bunny cartoons) for his dog — fitting as Musk, of course, wants to one day go to Mars with his other company, SpaceX.

The stock pulled back later in the day though. It opened 8% higher but was down 2% by afternoon.

Still, given there was no other company news from Etsy Tuesday morning, it seems safe to say that Musk’s tweet was the primary catalyst for the stock’s premarket surge.

That, of course, is ridiculous. It’s also yet another example of the increasingly short-term nature of the stock market, one where algorithms can drive prices and individual investors using services like Robinhood are eager to make a quick buck.

Recently, shares of companies that many professional investors are shorting — because they expect the stocks to go down since the companies are struggling or overvalued — are instead surging thanks to support from traders on a popular Reddit board. GameStop (GME), BlackBerry (BB), Bed Bath & Beyond (BBBY), Macy’s (M) and AMC (AMC) are just a few examples.
But Etsy is nothing like these companies in that it’s thriving, in part due to strong demand for masks during the Covid-19 pandemic. Analysts are forecasting that Etsy’s sales nearly doubled in 2020 and that earnings per share soared more than 175%.
Musk’s tweet put a bigger spotlight on Etsy, though, and it isn’t the first time he’s sparked a big move in an asset that isn’t Tesla. The price of digital currency dogecoin popped late last month when he touted it on Twitter.
Still, it’s a bit ironic that Etsy is benefiting from Musk’s endorsement. Although Tesla was finally added to the S&P 500 in December, many on Wall Street were surprised when Tesla was snubbed for the index in September. The company that was added back then instead of Tesla? Etsy.



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Business

Beyond Meat Agrees Joint Venture With PepsiCo, Shares Surge

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Beyond Meat  (BYND) – Get Report shares surged to a six-month high Tuesday after the plant-based food group reached a partnership deal with PepsiCo.  (PEP) – Get Report to produce and market a new line of snacks.

The two companies agreed to form the PLANeT Partnership LLC, a joint venture that will leverage PepsiCo’s marketing with Beyond Meat’s plant-based food production technology. Financial terms for the arrangement were not disclosed.

“We are thrilled to formally join forces with PepsiCo in The PLANeT Partnership, a joint venture that unites the tremendous depth and breadth of their distribution and marketing capabilities with our leading innovation in plant-based protein. We look forward to together unlocking new categories and product lines that will inspire positive choices for both people and planet,” said Beyond Meat CEO Ethan Brown. “PepsiCo represents the ideal partner for us in this exciting endeavor, one of global reach and importance.”  

Beyond Meat shares were marked 30.3% higher in early trading Tuesday to change hands at $207.65 each, the highest since July 31. PepsiCo shares, meanwhile, rose 0.2% to $140.45 each.

Earlier this month, Yum! Brands  (YUM) – Get Report said its Taco Bell division is exploring a partnership with Beyond Meat for a new plant-based product that will be tested next year. Late last year, Pizza Hut said it partnered with Beyond Meat to offer two plant-based-meat pizzas for a limited time.

“Plant-based proteins represent an exciting growth opportunity for us, a new frontier in our efforts to build a more sustainable food system and be a positive force for people and the planet, while meeting consumer demand for an expanded portfolio of more nutritious products,” said PepsiCo’s chief commercial officer Ram Krishnan. 

“Beyond Meat is a cutting-edge innovator in this rapidly growing category, and we look forward to combining their unparalleled expertise with our world-class capabilities in brand-building, consumer insights and distribution to deliver exciting new options,” he added.  



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Business

Microsoft, BlackBerry, GE, Leon Black – 5 Things You Must Know

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Here are five things you must know for Tuesday, Jan. 26:

1. — Stock Futures Move Higher on Solid Earnings

Stock futures moved mostly higher Tuesday following solid earnings reports from Johnson & Johnson  (JNJ) – Get Report, 3M  (MMM) – Get Report and General Electric  (GE) – Get Report.

Equities had wavered for most of the premarket session on the possibility that a U.S. coronavirus relief package could be delayed. 

Contracts linked to the Dow Jones Industrial Average rose 56 points, S&P 500 futures rose 2 points and Nasdaq futures were down 7 points ahead of earnings reports from some of the biggest tech companies.

Senate Majority Leader Chuck Schumer said Monday an aid package was unlikely before mid-March. That is when federal unemployment benefits authorized by last $900 billion package will expire.

President Joe Biden said he was open to negotiations on his proposed $1.9 trillion plan to send $1,400 to most Americans and deliver other support for the economy, including funds for vaccine distribution.

A bipartisan group of senators already have voiced opposition to the size of Biden’s plan.

The coronavirus pandemic, meanwhile, has killed more than 421,000 in the U.S. and concerns have been growing about the bumpy rollout of vaccines in the country. Biden said he anticipates vaccines will be available to anyone in the U.S. by spring, but to meet that projection vaccine makers will have to sharply increase production.

Stocks finished mixed on Monday amid questions about whether the Biden White House will be able to deliver another round of stimulus. The S&P 500 and Nasdaq, however, did manage to close at record highs.

2. — Tuesday’s Calendar: Microsoft and AMD Earnings, Federal Reserve Meeting

General Electric  (GE) – Get Report reported fourth-quarter adjusted earnings of 8 cents a share, 1 cent below analysts’ estimates. Total revenue of $21.93 billion topped forecasts.

Johnson & Johnson  (JNJ) – Get Report posted stronger-than-expected fourth- quarter earnings and said Tuesday it would provide an update on its vaccine development progress “soon.”

“We continue to progress our Covid-19 vaccine candidate and look forward to sharing details from our Phase 3 study soon. Johnson & Johnson was built for times like these, and I am extremely confident in our ability to deliver lasting value and continued innovation in 2021 and for years to come,” said CEO Alex Gorsky.

Earnings reports are also expected Tuesday from Microsoft  (MSFT) – Get Report, Advanced Micro Devices  (AMD) – Get Report, Starbucks  (SBUX) – Get Report, Verizon  (VZ) – Get Report, Lockheed Martin  (LMT) – Get Report, American Express  (AXP) – Get Report, 3M  (MMM) – Get Report, Xilinx  (XLNX) – Get Report, Raytheon Technologies  (RTX) – Get Report and Texas Instruments  (TXN) – Get Report.

Microsoft, Advanced Micro Devices and Starbucks are holdings in Jim Cramer’s Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stocks? Learn more now.

The U.S. economic calendar on Tuesday includes the first day of a two-day meeting of the Federal Reserve. The central bank isn’t expected to move on interest rates and has signaled it will keep them near zero through 2023.

Mark Heppenstall, chief investment officer at Penn Mutual Asset Management, said the central bank likely will reiterate its “commitment to prolonged monetary accommodation” at the meeting.

“Uncertainty surrounding the pandemic’s near-term course and signs of weakening labor markets suggest recent taper talk by Fed officials is still premature,” Heppenstall added, referring to when the Fed might  begin tapering asset purchases.

The calendar also includes the Case-Shiller Home Price Index for November at 9 a.m. ET and Consumer Confidence for January at 10 a.m.

3. — Leon Black Will Step Down as CEO of Private-Equity Giant Apollo

Leon Black, the founder and CEO of private-equity giant Apollo Global Management  (APO) – Get Report, will step down as chief executive after it was revealed he made larger-than-expected payments to Jeffrey Epstein, the disgraced financier.

Black paid Epstein $158 million in fees for trust- and estate-tax planning in the five years to 2017, far more than was previously known, according to a report from law firm Dechert. 

The review by Dechert found no evidence that Black was involved in the criminal activities of the late Epstein, who was indicted in 2019 on federal sex-trafficking charges involving underage girls. Epstein committed suicide in prison while awaiting child sex charges.

Apollo also never retained Epstein for any services, the report concluded. 

Black wrote in a letter to Apollo’s fund investors that he would cede the role of CEO to co-founder Marc Rowan on or before his 70th birthday on July 31, while retaining the role of chairman. 

The Wall Street Journal was first to report on the contents of the report and letter.

Shares of Apollo Global rose 3.86% to $47.65 in after-hours trading on Monday.

4. — BlackBerry Shares Surge Again

BlackBerry  (BB) – Get Report was jumping more than 11% in premarket trading Tuesday, following the stock’s more than 28% gain in the previous session as it received a boost from retail traders and was being heavily mentioned on online message boards such as Reddit.

BlackBerry, the security software and services company, said in a statement that it was unaware of reasons for the stock move.

Shares of BlackBerry rose 11.87% to $20.17 in premarket trading Tuesday. The stock has gained 172% so far in 2021.

BlackBerry Rises Again, Gets Lift From Expanded Baidu Partnership

Analysts at RBC cut the stock to underperform from sector perform, citing valuation and saying there has been no change to the company’s fundamental outlook. Analyst Paul Treiber maintained his price target at $7.50.

BlackBerry has become a favorite on the Reddit message board, much like GameStop  (GME) – Get Report and Express  (EXPR) – Get Report.

What Is Happening to GameStop Stock? Jim Cramer Explains

5. — Apple Lead Hardware Engineer Shifting to ‘New Project’

Apple  (AAPL) – Get Report said its leading hardware engineer, Dan Riccio, was moving to a new project and will be replaced by John Ternus, currently a vice president of hardware engineering.

Riccio has been with Apple since 1998 and has worked on most of the company’s major products over that time, from the first iMac computers to the latest 5G phones.

Apple didn’t specify what project Riccio will lead. But recent speculation has focused on efforts by the company to develop a high-end virtual reality headset, or augmented reality glasses.

Apple is a holding in Jim Cramer’s Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.



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Business

Apollo CEO Leon Black to Step Down Following Review of Jeffrey Epstein Ties

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Leon Black plans to step down as chief executive of Apollo Global Management Inc. after an independent review revealed larger-than-expected payments to disgraced financier Jeffrey Epstein that it nevertheless deemed justified.

The monthslong review by Dechert LLP found no evidence that Mr. Black was involved in the criminal activities of the late Epstein, who was indicted in 2019 on federal sex-trafficking charges involving underage girls, according to a copy of the law firm’s report that was viewed by The Wall Street Journal.

In its report, Dechert found the fees that the billionaire had paid Epstein were for legitimate advice on trust- and estate-tax planning that proved to be of significant value to Mr. Black and his family. Mr. Black paid Epstein a total of $148 million, plus a $10 million donation to his charity—far more than was previously known.

Mr. Black wrote in a letter to Apollo’s fund investors that he would cede the role of CEO to co-founder Marc Rowan on or before his 70th birthday on July 31 while retaining the role of chairman. In the letter, a copy of which was viewed by the Journal, Mr. Black detailed other governance changes he is recommending to the board, including the appointment of more independent directors and the elimination of Apollo’s dual-class share structure.

Mr. Black also pledged to donate $200 million of his family’s money to women’s initiatives.

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Business

China’s Love of TikTok-Style Apps Powers $5 Billion IPO

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Kuaishou Technology has its eyes on the world’s biggest initial public offering in more than a year, seeking to raise about $5 billion from a Hong Kong share sale as short-video and live-streaming apps surge in popularity in China.

Kuaishou—which competes with ByteDance Ltd., the rival Chinese company behind TikTok and its sister app Douyin—started taking investor orders Monday. With the offering, which could value it at more than $60 billion, Kuaishou is joining a string of tech companies from China that have listed in Hong Kong.

Kuaishou, which means “fast hand” in Chinese, is backed by Tencent Holdings Ltd. It was co-founded by Su Hua and Cheng Yixiao, software engineers who previously worked for Google China and Hewlett Packard , respectively.

Both Kuaishou and ByteDance have capitalized on growing demand from younger Chinese people to watch and record short videos on their smartphones. Its namesake short-video platform is the world’s second-largest, according to data cited in its prospectus, and there were 305 million average daily active users of its apps and mini-programs in China for the nine months as of September.

With a minimum deal size of $4.95 billion, the IPO would be the largest in the world since late 2019, when state-controlled Saudi Arabian Oil Co., commonly known as Aramco, raised $29.4 billion, Dealogic figures show.

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Business

Companies are giving up on the United States and betting big on China

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Direct investment in the US by foreign companies plummeted 49% to $134 billion last year, according to a report released Sunday by the United Nations Conference on Trade and Development. By contrast, foreign direct investment in China grew by 4% to $163 billion in 2020.

2020 marked the first year in history that foreign direct investment in China overtook that of the US, according to the UN. China is now the world’s largest recipient of foreign companies’ investments.

Although Covid-19 was a large factor in foreign direct investment tumbling in the US — and most places around the world — the drop-off in foreign companies’ American investments began well before the pandemic.

After hitting a high of $440 billion in 2015, according to the US Commerce Department, foreign investment in the US has been on a sharp downward slide. Former President Donald Trump’s go-it-alone trade policies hurt foreign investment — particularly from China, which represented the sharpest drop in US investment over the past several years. Growing economic uncertainty around the globe also contributed to the decline.

Last year, decline in foreign direct investment into the US was most prominent in wholesale trade, financial services and manufacturing, the report said. International mergers and acquisitions, as well as sales of US assets to foreign investors, fell by 41%.

Meanwhile, China’s explosive economic growth — and quick recovery from the pandemic — helped foreign investment there soar. China’s economy grew 2.3% last year, when most of the world’s major economies shrank. The country enforced stringent lockdown and population tracking policies intended to contain the virus, and set aside hundreds of billions of dollars for major infrastructure projects to fuel economic growth.
China’s ability to control the spread of the virus “helped stabilize investment after the early lockdown,” the report noted.
Foreign direct investment to India has similarly skyrocketed, from less than $25 billion in 2014 — before Prime Minister Narendra Modi took power — to $57 billion last year, according to the UN report. Much of that growth was brought about by policies that enabled global brands like Ikea and Uniqlo to open up stores, as well as Modi’s signature “Make in India” campaign to grow the country’s manufacturing base.

That helped India’s foreign direct investment soar 13% last year.

Most economies weren’t so lucky. Foreign direct investment in the United Kingdom and Italy fell by almost 100%. Russia’s foreign direct investment fell 96%, Germany’s sank 61% and Brazil’s plunged by 50%. Australia, France, Canada and Indonesia — all among the top foreign direct investment recipients in 2019 — also fell by double digits.

Overall, foreign direct investment tumbled 42% last year to the lowest level since the 1990s — and 30% below the lowest level reached during the 2008-2009 global financial crisis.

The attractiveness of the US as a safe and robust place for foreign companies to invest has been one of the more powerful driving forces behind America’s economic growth over the past several decades. But the UN said the circumstances stopping the flow of foreign direct investment to the US and other countries will remain in place this year.

“The effects of the pandemic on investment will linger,” James Zhan, director of UNCTAD’s investment division, said in a statement. “Investors are likely to remain cautious in committing capital to new overseas productive assets.”

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Business

Apple, Tesla and Facebook ready to report record sales in busiest week of earnings

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U.S. companies have barely managed to eke out positive earnings growth so far in this quarterly results season, but the big test arrives in the week ahead.

Nearly a quarter of the S&P 500
SPX,
-0.30%
is set to report results, with those companies representing 39% of the index by market value, according to calculations based on FactSet data. Given that the S&P 500 is weighted by market capitalization, this roster of companies will have an outsize impact on the profit trajectory for the index.

Earnings are expected to decline for the fourth consecutive quarter once all results are in for the latest period, but those companies that have reported thus far have been beating expectations in aggregate.

The FactSet consensus now models a 5% earnings decline for the index, compared with the 6.3% drop projected a week ago. If profit growth for the S&P 500 ultimately ends up positive, it would mark an end to the current earnings recession, which takes place when corporate profits drop for two or more consecutive quarters.

Apple Inc.
AAPL,
+1.61%
and Facebook Inc.
FB,
+0.60%
are among the highlights of next week’s slate, along with Tesla Inc.
TSLA,
+0.20%,
which will deliver results for the first time since it became a member of the S&P 500. All three high-profile companies are scheduled to report Wednesday afternoon and expected to have produced record revenue in the holiday quarter.

The holiday quarter is always crucial for Apple, which releases new iPhones in the fall. With a slightly later launch than usual this year due to the pandemic pushing sales into the period, Apple is widely expected to post its largest quarterly revenue total ever and its first ever total above $100 billion. The technology giant likely also continued to see benefits from remote-work and remote-schooling trends, which have driven strong iPad and Mac sales throughout the COVID-19 crisis.

Full preview: Get ready for Apple’s first $100 billion quarter in history

Facebook is also expected to post what should easily be a record quarter given strong digital advertising trends during the holiday period. Still, the company will face questions about user engagement and a decision to ban Donald Trump from the platform indefinitely over his role in inciting the violent riot at the U.S. Capitol. Bernstein analyst Mark Shmulik points to “continued usage fatigue” across social media as well as a “conversation skewed towards unmonetizable political events.”

Full preview: Facebook earnings still flourishing amid pandemic, economic slowdown and antitrust scrutiny

Tesla already disclosed delivery numbers for the full year that came in ahead of analyst expectations, and all eyes will be on the company’s outlook for 2021. RBC Capital Markets analyst Joseph Spak anticipates a delivery forecast of 825,000 to 875,000 million units for the full year, even though Chief Executive Elon Musk said on Tesla’s last earnings call that an analyst was “not far off” for expecting 840,000 to a million deliveries during 2021.

Full preview: Can Tesla’s sales growth match stock’s rise?

Here’s what else to watch for in the week ahead, which brings reports from 117 members of the S&P 500 and 13 Dow Jones Industrial Average
DJIA,
-0.57%
components.

Up in the air

Boeing Co.’s
BA,
-0.76%
journey remains turbulent even as the company’s 737-MAX jets were recertified after being grounded for almost two years. Though the company began deliveries of these aircraft, “the pace of delivering all 450 parked 737-MAX will be dictated by airline customers ability to absorb aircraft as well as air traffic demand,” according to Benchmark Company analyst Josh Sullivan.

Boeing’s Wednesday morning report will offer perspective on the company’s recovery expectations amid the pandemic, though Sullivan sees volatility ahead stemming from a recent equity offering and the impact of the COVID-19 crisis on airlines.

The fourth-quarter reports from U.S. airlines have been bleak so far, and American Airlines Group Inc.
AAL,
-0.06%
and Southwest Airlines Co.
LUV,
-0.80%
offer more on Thursday morning.

Can you hear me now?

Verizon Communications Inc.
VZ,
+0.35%
leads off a busy week of telecommunications earnings Tuesday morning, followed by AT&T Inc.
T,
+0.35%
Wednesday morning and Comcast Corp.
CMCSA,
-0.92%
Thursday morning.

For the wireless carriers, a key issue will be the impact of iPhone 12 promotions on recent results. Investors will also be looking for information about a recent wireless auction offering spectrum that will be crucial for 5G network deployments. Though the bids haven’t been made public yet, the auction drove record spending and AT&T and Verizon are both expected to have paid up handsomely to assert their standing. The question for investors is what impact these bids will have on the companies’ financial positioning.

Full preview: AT&T earnings to kick off a defining year for telecom giant

AT&T and Comcast have more media exposure than Verizon, and those two companies have been trying to contend with the new realities brought on by the pandemic. Both companies have made moves to emphasize streaming more with their film slates given theater closures, and the financial implications of these moves will be worth watching.

Paying up

The evolving situation with the pandemic is reflected perhaps no more clearly than in the results of Visa Inc.
V,
-1.52%,
Mastercard Inc.
MA,
-1.63%,
and American Express Co.
AXP,
-1.01%,
which have a pulse on the global consumer spending landscape. The companies should provide insight on a travel recovery toward the end of the year, as well as the impact of recent lockdowns.

Susquehanna analyst James Friedman wrote recently that his Mastercard revenue projection of $3.97 billion is slightly below the consensus view, though he also asked: “does anyone really care about Q4 2020?” Friedman is upbeat about mobile-payments and online-shopping dynamics that suggest “positive trends ahead” for Mastercard, which reports Thursday morning. Visa follows that afternoon, while American Express kicks of the week with its Tuesday morning report.

The chip saga continues

Advanced Micro Devices Inc.
AMD,
+1.38%
is poised to keep benefiting from Intel Corp.’s
INTC,
-9.29%
stumbles, which analysts expect to last for some time even as Intel prepares for a new, technology-oriented chief executive to take the helm.

“We have low confidence that Intel will be able to close that transistor gap quickly, and therefore expect it to continue to lose share for the foreseeable future,” Jefferies analyst Mark Lipacis wrote after Intel’s latest earnings report. AMD will show how that dynamic has played out on its side of the equation when it posts numbers Tuesday afternoon.

Full preview: If Intel gets its act together, can AMD maintain swollen valuation?

Other chip makers reporting in the week ahead include Texas Instruments Inc.
TXN,
-1.31%
on Tuesday afternoon; Xilinx Inc.
XLNX,
+1.26%,
which is in line to be acquired by AMD, on Wednesday afternoon report, when it will be joined by chip-equipment maker Lam Research Corp.
LRCX,
-0.06%
; and Western Digital Corp.
WDC,
-5.23%
on Thursday afternoon.

Busy week for the Dow

Among the 13 members of the Dow Jones Industrial Average
DJIA,
-0.57%
set to report this week are 3M Co
MMM,
-0.96%.
, Johnson & Johnson
JNJ,
+1.13%,
American Express, Verizon, and Microsoft Corp.
MSFT,
+0.44%,
all of which report Tuesday.

“Near term, we see the company’s COVID-19 vaccine readout as a key upcoming catalyst and believe efficacy in the 80%+ range would suggest a clear role for the product in the market,” J.P. Morgan analyst Chris Schott wrote of Johnson & Johnson.

Cowen & Co. analyst J. Derrick Wood sees tough comparisons for Microsoft especially in its Azure and server businesses, though he expects a more favorable situation going forward.

Full preview: SolarWinds hack may actually be a good thing for Microsoft

Wednesday brings results from Boeing and Apple, while Thursday features McDonald’s Corp.
MCD,
-0.07%,
Dow Inc.
DOW,
-0.10%,
and Visa. Honeywell International Inc.
HON,
-1.45%,
Chevron Corp.
CVX,
-0.30%,
and Caterpillar Inc.
CAT,
-0.13%
round out the week Friday morning.

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