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Part Shortages Make REE’s Electric Vehicle Revolution Harder

Parts shortages have delayed the electric vehicle revolution. REE Automotive (NASDAQ:REE) is one of many casualties, and REE stock is down 46% year-to-date.

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Parts shortages have delayed the electric vehicle revolution. REE Automotive (NASDAQ:REE) is one of many casualties, and REE stock is down 46% year-to-date.

Source: Shutterstock

REE doesn’t make cars. It offers two crucial design elements that act as a platform for electric car designers.

The REEBoard is a modular system for holding the battery and other key components. The REEcorner is a system for holding drivetrains, steering, and braking within a wheel well.

But you can’t sell a platform for electric cars if no one is making them. REE says it has $300 million in liquidity to wait that out. It recently got a small grant from the U.K. government to create a “center for excellence” there.

But until production contracts are signed, and production begins, this is a pre-revenue company.

A Bad Year for EV Stock

Wall Street no longer likes pre-revenue companies, especially when it comes to electric cars. The hope that surrounded the sector a year ago has dissipated, and with it the sector’s stock valuations.

Fisker (NYSE:FSR), whose contract manufacturer Magna International (NYSE:MGA) has a collaboration agreement with REE, is selling for less than half what it did at its peak in February. So are other pre-production electric car companies like Lucid Group (NASDAQ:LCID), Lordstown Motors (NASDAQ:RIDE), Workhorse Group (NASDAQ:WKHS) and Canoo (NASDAQ:GOEV). Technology outfits associated with the space, like Luminar Technologies (NASDAQ:LAZR), have also been cut in half.

Meanwhile, gas-powered companies like General Motors (NYSE:GM) are reporting huge profits. But even these stocks are having a tough time as the reality of long-term chip shortages bites. GM stock is down by 16% since mid-June.

You can’t have a revolution if you can’t get the parts.

Analyst Optimism for REE Stock

There remain analysts pounding the table for REE stock.

B Riley Securities launched coverage in August with a “buy” rating with a price target of $20/share. REE opened for trade Sept. 14 at under $6/share, a market cap of $1.7 billion.

Frost & Sullivan has called REE its “EV Platform Company of the Year” for the innovation behind the design of REEBoard and REEcorner. The technology can be used to create a wide variety of cars, from sports cars to SUVs to simple people movers. All manufacturers would have to create, and sell, would be the body and electronics.

But again, no parts, no revolution. REE came public in July through a Special Purpose Acquisition Company (SPAC) sponsored by 10X Capital, a venture company based in the new World Trade Center. Thus it has been lumped into the huge pile of SPAC failures. The CEO and COO of 10X recently gave support to the stock through the purchase of $2 million in additional shares. It hasn’t helped.

Four analysts at Tipranks covering REE, and three call it a buy. Their average price target is $13.75, more than twice where it’s now trading.

The Bottom Line on REE Stock

REE is a pure speculation. The company seems to have enough capital to get into 2023. But like everyone else in the industry it’s a prisoner of supply chain woes beyond its control.

While western companies remain moribund, meanwhile, China continues to build huge electric car factories. It could soon build more than the U.S. and Western Europe combined. That could make Chinese designs the world standard and knock companies like REE out of the game before they get started.

That’s the risk you take if you buy REE here. Until shortages like the one affecting chips abate, the stock is going nowhere. If management can hold things together, and backers don’t lose their nerve, however, you could have a winner two years from now.

On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.

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Precious Metals

Northern Vertex To Become Elevation Gold, Consolidate Shares As Of Friday

Northern Vertex Mining (TSXV: NEE) last night after the bell provided the effective date for its previously announced share consolidation
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Northern Vertex Mining (TSXV: NEE) last night after the bell provided the effective date for its previously announced share consolidation and name change. The firm has indicated that its name will change to that of “Elevation Gold Mining Corporation.”

The name change, which will also see its stock symbol change to “ELVT” is set to take effect on September 24, 2021. A reason for the change was not provided, however it is assumed that the company is looking for a fresh start within the investment community.

A planned share consolidation, or reverse split, is also set to take effect on Friday. The consolidation will see the firm issue one post-consolidation share for every six pre-consolidation shares held of the company. A total of 60.9 million common shares are expected to be outstanding after the consolidation occurs, with any warrants or options currently outstanding being reduced proportionally as well.

Northern Vertex Mining last traded at $0.275 on the TSX Venture.


Information for this briefing was found via Sedar, and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Northern Vertex To Become Elevation Gold, Consolidate Shares As Of Friday appeared first on the deep dive.

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Economics

Looking for the Next Big Crypto to Explode in 2021? Try These 5 Coins

Bitcoin (CCC:BTC-USD) launched on January 3, 2009. The oldest and largest cryptocurrency, prices of this coin have swung wildly since its inception. But…

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Bitcoin (CCC:BTC-USD) launched on January 3, 2009. The oldest and largest cryptocurrency, prices of this coin have swung wildly since its inception. But last year, Bitcoin experienced explosive institutional and retail interest in the space alongside the broader crypto world. Now thousands of altcoin investors are betting that they can pick the next crypto to explode.

Even though Bitcoin recently underwent a correction, trading volume remains strong between $42,000 and $50,000. Of course, that is very expensive, considering the median household income is $62,843 right now. Yes, you can invest in Bitcoin through PayPal (NASDAQ:PYPL) and Square (NYSE:SQ). But the crypto is still expensive when you compare it to several altcoins out there.

Plus, there are over 7,000 cryptocurrencies you can choose from for your portfolio. When it comes to making big gain, it’s easier for a coin to gain 100x if you’re starting from a smaller size, rather than chasing after a rocket that’s already taken off.

Here are 5 coins that could be the next big crypto to explode:

When investing in any crypto, remember to check if there is an inherent utility to the coin. Even cryptos meme coins need developers to crank out regular updates to stay relevant.

The Next Big Crypto to Explode: Ethereum (ETH-USD)

Source: shutterstock

Ethereum is a decentralized, blockchain-based software platform, and its cryptocurrency is called Ether or Ethereum. Ether is the world’s second-largest cryptocurrency and has held this position for a long time now. Recently, Ethereum has been in the news for its hard fork “London upgrade,” a major revamp for the platform. The hard fork comprises five Ethereum Improvement Proposals (EIPs). The upgrades are important, but the most notable is EIP 1559, which reduced Ether supply with every transaction.

In addition, the upgrade will lead to the Ethereum network handling more transactions per second, improving scalability, and bringing down transaction fees. Another major benefit is expected to decrease the total number of ether coins in circulation, making it a deflationary cryptocurrency. In the run-up to the upgrade, Ethereum did very well. However, considering the next upgrade will occur at the end of 2021, there is an upside here that you can exploit.

Binance Coin (BNB-USD)

A Binance Coin (BNB) sits in front of trading charts.Source: Shutterstock

Binance is one of the most successful crypto exchanges globally when ranked by trading volumes, which is why BNB, its native cryptocurrency, is soaring.

Much like Bitcoin, the thing to like about Binance Coin is the hard limit on the total number of tokens in circulation. It has a strict maximum limit of 200 million BNB tokens. As a result, the token price has risen exponentially for the year thus far.

Binance uses around one-fifth of its profits every quarter to eliminate or “burn” BNB tokens. The reason for destroying or “burning,” coins makes sense: it increases the worth of the remaining tokens.

One of the biggest reasons to be optimistic about Binance Coin is its many use cases. Initially, it was developed as a utility token for discounted trading fees in 2017. But now, you can use it to make travel payments, financial services, and entertainment, among others.

The driving force behind any token is its usability and that’s why BNB will be the next crypto to explode.

Tether (USDT-USD)

A concept token for the Tether (USDT) cryptocurrency.Source: DIAMOND VISUALS / Shutterstock.com

Stablecoins are a new breed of crypto gaining prominence. They are a less volatile alternative to Bitcoin because they are linked to an asset like the U.S. dollar, as is the case with Tether. The cryptocurrency allows you to transact in traditional currencies and avoid the complexities of digital currencies.

Tether is designed to bridge fiat currencies and cryptocurrencies, allowing users to transfer other cryptocurrencies back to U.S. dollars in a less complex, faster manner. Tether has a 1-to-1 ratio with the U.S. dollar for valuation.

Consequently, the altcoin is less speculative than popular cryptocurrencies like Bitcoin and Ethereum. For crypto investors who want to avoid the wild swings that are part and parcel of this space, Tether should be right up your alley as the next crypto to explode.

Monero (XMR)

XMR logoSource: Wit Olszewski / Shutterstock.com

Monero is very popular these days because it has the ability to anonymize users. Ring signatures and stealth addresses help in accomplishing this task. Due to the technology at its disposal, the privacy-focused Monero cab hides the identities of the sender and the receiver.

The only problem some might have with Monero’s approach is that privacy isn’t really an option. It enforces anonymity at a fundamental level. That may rub certain people the wrong way.

But there are several people out there who love this feature and want to protect their identity online since this was one of the main initial benefits of blockchain technology — to remain completely anonymous.

Algorand (ALGO-USD)

Algorand logo in light blue against a simple dark-colored, futuristic-looking backgroundSource: shutterstock.com/Shizume

Algorand investors have enjoyed blockbuster returns following an announcement that El Salvador would establish blockchain infrastructure using Algorand.

Italian computer scientist Silvio Micali is the man behind the platform. ALGO-USD has positioned itself as a competitor to Ethereum. One of the biggest things going for it is the proof-of-stake proofing algorithm, which is less energy-intensive to run. One of the main criticisms against Bitcoin is that it consumers a lot of energy. Through using a proof-of-stake mechanism, ALGO-USD sets itself apart from the rest of the altcoins out there.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

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Articles

Evergrande weighing on Asian markets

China equities bashed on return to work Wall Street had a very noisy and choppy session overnight, buffeted by an impending FOMC, Evergrande, slowing growth…

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China equities bashed on return to work

Wall Street had a very noisy and choppy session overnight, buffeted by an impending FOMC, Evergrande, slowing growth prospects, Covid-19, the US debt ceiling, and the future of the Democrat’s $3.5 trillion spending bill; chose your crisis. When the dust settled, a few day traders were probably licking wounds, but the main indexes closed not too far from where they finished the day before. The S&P 500 closed just 0.08% lower, the Nasdaq rose 0.22% in a tech-safety play, and the Dow Jones edged 0.14% lower. US futures are almost unchanged in Asia, erring to the heavy side.

 

The return of Mainland China markets hasn’t been a happy one. Despite a CNY 100 bio liquidity injection from the PBOC, and news that a local Evergrande unit will make a local bond coupon payment tomorrow, equity markets have headed south. Evergrande is due to also make an offshore coupon payment tomorrow and there has been no word on whether this will happen, and that could be keeping local equities subdued. The Shanghai Composite has fallen by 1.90% today as Evergrande contagion fears take centre stage. The CSI 300 is 1.10% lower while Hong Kong markets are closed for a public holiday.

The negative day for China has spilled over to regional markets. The Nikkei 225 is 0.50% lower after the BOJ left policy unchanged. After two days of holidays, South Korea remains closed, but Taipei is playing catchup after a return from holidays, the TAIEX slumping by 2.20%. Singapore is 0.60% lower while Kuala Lumpur is down 0.40% while Jakarta is bucking the trend, helped by rebounding commodity and energy prices, rising 0.90%.

Rebounds in iron ore and copper, along with surging energy prices has lifted Australian markets by mid-session, after a slow start. The Evergrande local unit coupon payment news has also lifted sentiment, although Australian markets, seizing on any snippet of good news could be getting ahead of themselves, as no news has emerged on whether an offshore coupon, also due tomorrow, will be paid. Nevertheless, Australian markets are now solidly in the green, the ASX 200 jumping higher by 0.70%, and the All Ordinaries rallying 0.90%.

Given the neutral finish by Wall Street, and the negative tone pervading Asia, and with the FOMC to come later today, European stocks are likely to adopt a cautious stance this afternoon, remaining vulnerable to negative headlines emanating from China. The increasing noise surrounding the gas price rally is also likely to dampen spirits in today’s session.

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