Ups and Downs; Electric Vehicle Batteries; Houston, We Have Lyft-off!

Q1 | April 2019

stack of old newspapers, pile of old newspapers

Topic: Pearls of Wisdom

Devin Crago CFA

April 8, 2019

Image used with permission: iStock/hanohiki


Print & Share

Print

Ups and Downs; Electric Vehicle Batteries; Houston, We Have Lyft-off!

Q1 | April 2019

Reading is one of the principal occupations in our profession. As we digest a wide range of material, interesting ideas and surprising facts – some serious and some light-hearted – rise to the surface. We attempt to share a few of those with you in each of our issues of Nexus Notes.

Ups and downs

At Nexus, part of our investment philosophy is to maintain a steadfast focus on the long term. However, tuning out the near-term market noise is not easy, particularly when markets are as volatile as they have been recently. We find it instructive to look back at market history to put the recent volatility in context. As an example of downside volatility, last year saw the worst December performance since 1931, with the S&P 500 dropping 9.2%. But the subsequent upside swing was equally impressive: the S&P delivered its best January performance since 1987, rising 7.9%. Despite these remarkable ups-and-downs, we try to keep in mind that short-term volatility is a normal characteristic of markets. And although the short-term volatility may capture all the attention, our view remains that successful investing requires a long-term perspective. (Raymond James Weekly Market Guide, January 3, 2019.)

Houston, we have Lyft-off!

Ride-share firm Lyft is in the news as it prepares for its initial public offering (IPO). The company’s service is popular with its customers, as demonstrated by its rapid revenue growth. Revenue doubled last year to US$2.2 billion. However, profitability has not yet arrived, with the company posting a loss of $911 million last year. This has not stopped pre-IPO investors from assigning an impressive valuation of $15.1 billion in the most recent round of funding. Investors who buy shares in the public debut will be betting that Lyft is able to translate its revenue growth into profit. But that’s not a sure thing, as Lyft will undoubtedly face stiff competition from Uber, the larger of the two companies, which was most recently valued at $76 billion. Uber will likely file its own IPO in April, in what is anticipated to be the biggest public offering of 2019. (“Lyft Leading Wave of Startups That Will Make Debuts With Giant Losses”, The Wall Street Journal, March 25, 2019.)

Electric vehicle batteries

One consequence of the rise of Lyft and Uber is that there will likely be more electric vehicles on the road in future. Both companies anticipate that electric vehicles will be an important and growing part of their vehicle fleets over time. These electric vehicles will require batteries, and lots of them. Herein lies the opportunity for the world’s battery innovators who have been hard at work building better batteries at lower cost. According to a recent survey of battery prices, the price of an average battery pack fell 85% between 2010 and 2018. While lower prices will spur greater adoption and demand, these transitions take time. New, “solid-state” batteries are likely to revolutionize electric vehicles but, according to the authors of the survey at Bloomberg New Energy Finance, “We don’t expect solid-state batteries to make a meaningful contribution to the global EV [electric vehicle] market until the late 2020s at the earliest.” …Who said technology changes quickly? (“A Behind the Scenes Take on Lithium-ion Battery Prices”, Bloomberg New Energy Finance, March 5, 2019.)

More Like This...

See another CRM2 blog post that may be of interest to you.

CRM2: The Nexus Approach to our CRM2 Reports

Topic:
CRM2
Excerpt:
With changing securities regulations coming into effect, investment firms are now required to provide individual investors with specific additional in

More Like This...

See another Foundations & Endowments blog post that may be of interest to you.

Charitable Giving Made Easier

Topic:
Foundations & Endowments
Excerpt:
Giving to charities and supporting our community are important to us at Nexus. We donate a portion of our management fees back to the charities and

More Like This...

See another Human Interest blog post that may be of interest to you.

To Insure Promptitude

Topic:
Human Interest
Excerpt:
Historically, tips were a monetary translation of either “thank you” or “sorry”.

More Like This...

See another Inside Nexus blog post that may be of interest to you.

Understanding Pride: A Timeless Celebration

Topic:
Inside Nexus
Excerpt:
In today’s world, the concept of Pride has become a celebration embraced by people of all ages and backgrounds.

More Like This...

See another Investments blog post that may be of interest to you.

Snakes and Ladders

Topic:
Investments
Excerpt:
…. as the newest member of the Nexus investment team, I would like to introduce myself.

More Like This...

See another Pearls of Wisdom blog post that may be of interest to you.

The Joy of Doing Nothing Together!

Topic:
Pearls of Wisdom
Excerpt:
Life seems to be a never-ending balancing act, doesn't it?

More Like This...

See another Tax Planning blog post that may be of interest to you.

You May Have a Trust and Not Even Know It

Topic:
Tax Planning
Excerpt:
There is a significant change this tax season as additional reporting requirements have been introduced for trusts and bare trusts.

More Like This...

See another Wealth Planning blog post that may be of interest to you.

The Case for An Annual Family Roundtable

Topic:
Wealth Planning
Excerpt:
Not long after I joined Nexus, Bill Berghuis imparted some good advice that has stuck with me

On a Side Note…

See another CRM2 Nexus Notes Quarterly article that may be of interest to you.

No posts found.

On a Side Note…

See another Foundations & Endowments Nexus Notes Quarterly article that may be of interest to you.

Charitable Giving Made Easier

Topic:
Foundations & Endowments
Excerpt:
Giving to charities and supporting our community are important to us at Nexus. We donate a portion of our management fees back to the charities and

On a Side Note…

See another Human Interest Nexus Notes Quarterly article that may be of interest to you.

Worth a Thousand Words… J24

Topic:
Human Interest
Excerpt:
A little humour makes the world a better place.

On a Side Note…

See another Inside Nexus Nexus Notes Quarterly article that may be of interest to you.

Understanding Pride: A Timeless Celebration

Topic:
Inside Nexus
Excerpt:
In today’s world, the concept of Pride has become a celebration embraced by people of all ages and backgrounds.

On a Side Note…

See another Investments Nexus Notes Quarterly article that may be of interest to you.

Snakes and Ladders

Topic:
Investments
Excerpt:
…. as the newest member of the Nexus investment team, I would like to introduce myself.

On a Side Note…

See another Pearls of Wisdom Nexus Notes Quarterly article that may be of interest to you.

Pearls of Wisdom

Topic:
Pearls of Wisdom
Excerpt:
Reading is one of the principal occupations in our profession..

On a Side Note…

See another Tax Planning Nexus Notes Quarterly article that may be of interest to you.

You May Have a Trust and Not Even Know It

Topic:
Tax Planning
Excerpt:
There is a significant change this tax season as additional reporting requirements have been introduced for trusts and bare trusts.

On a Side Note…

See another Wealth Planning Nexus Notes Quarterly article that may be of interest to you.

The Case for An Annual Family Roundtable

Topic:
Wealth Planning
Excerpt:
Not long after I joined Nexus, Bill Berghuis imparted some good advice that has stuck with me