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VW LOOKS INTO THE VALLEY OF DEATH

The disruptive threats Herbert Diess saw coming for big, incumbent automakers soon after he took over the top job at Volkswagen Group are playing out as predicted -- only faster and in more dramatic fashion

 In an interview, Diess said additional cost reductions and a speedier overhaul of the German industrial giant are vital to withstand new rivals with superior financial firepower
He has been reflecting not only on trying to keep pace with Tesla but on the risk that Apple adds another mighty competitor with almost unlimited resources to the automotive arena
“Despite all efforts, we are currently in a rather more difficult situation than in 2018 when I took office," Diess said

"What really has changed -- and what I had not expected to this extent -- is the view of capital markets on our industry”
In the almost 2 1/2 years since Diess told investors VW needed to aim for valuation levels more in line with Apple, Amazon and Google to still be around for another two decades, the gap has only grown
Elon Musk has beaten him to the punch by fetching an almost $700 billion market capitalization with Tesla, making the company worth more than the next six most-valuable carmakers combined

This is more than just a matter of bragging rights
In a single week last month, Tesla and Chinese electric-vehicle makers Nio and XPeng raised $9.7 billion worth of capital by selling stock

The $5 billion that Tesla raised was equivalent to about half of VW's annual net cash flow
VW group sold 8.31 million vehicles through the end of November last year, dwarfing Tesla's full-year deliveries of almost 500,000 cars
But Tesla's ability to sustain profits for five straight quarters after years of losses ignited investor enthusiasm both about its business and those trying to replicate its success
China’s XPeng and Li Auto listed on U.S. exchanges last year along with several startups that merged with special-purpose acquisition companies, including Nikola Corp and Fisker

Some analysts are warning the trend is overdone
The combined roughly $1 trillion market cap of traditional global auto manufacturers remained largely unchanged over the past 12 months, while the value of new rivals went through the roof
“Valuations of and sentiment toward traditional vehicle manufacturers continue to be far too pessimistic," Sanford C. Bernstein analyst Arndt Ellinghorst said in a note last week
“We remain convinced that established companies with global reach, brand equity and strong balance sheets will play a dominant role in the future of mobility”
UBS Group analysts led by Patrick Hummel have made VW their top pick among European automakers, predicting that "winning EV strategies are likely to be rewarded with higher multiples”
VW Group aims to become a global EV force, with the industry's largest investment plan of almost $90 billion over five years
VW cautioned in November that ongoing fallout from COVID-19 will weigh on earnings this year but stuck to its mid-term financial targets, which include restoring net cash flow to more than 10 billion euros ($12.3 billion) as early as 2022
Delivering on these goals could go a long way to defy skeptical investors that remain unconvinced VW can become more nimble
“We haven't sufficiently proved yet that we can hold our ground in the new competitive environment -- our valuation is still located in 'old auto’” Diess said

“This leads to a grave disadvantage for us in terms of access to required resources”
Investments that VW and its peers are making in EVs, software operations, mobility platforms and self-driving technology will be enormous
Investors would face much higher dilution if the companies were to try raising funds by selling stock as Tesla has, and such a scenario is further complicated at VW by its complex shareholder structure
While profits from Porsche, Audi and its Chinese ventures have filled VW Group's coffers over the years, its high fixed costs were exposed when sales tanked during the pandemic

Earnings at several peers proved more resilient
"We must significantly improve our costs and work on efficiency, to gear the traditional auto business significantly more toward returns," Diess said
He sought to rally the troops last month by declaring VW would pit its largest factory in Wolfsburg, Germany, against Tesla’s plant still under construction near Berlin
VW also embarked on a plan to reduce material costs by -7% within two years and hammer out a deal with unions in the first quarter to lower fixed costs -5% by 2023
Diess, who ruffled feathers last year by trying to narrow the group’s focus on its main car operations, insists the company can ill-afford to waste time

"The overhaul is still progressing too slowly," he said
The former BMW executive received a fresh vote of confidence last month from VW's supervisory board to pursue his overhaul and trim costs
He warns there could be dire consequences if the company that employs 670,000 people worldwide does too little and too late to change

"Not everyone realizes the threat to our company to the same extent," Diess said

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JPR007
JPR007
@jpr007
@bburnworth Here’s some background

1. Global Vehicle Fleet


2. Natural Demand for new vehicles to support the evolution of the Global Vehicle Fleet


3. BEV Penetration S-Curve that you already alluded to


4. Evolution of BEV supply based on combining Natural Demand and the BEV Penetration S-Curve


5. Evolution of Tesla volume based on 20% Global Market Share of BEVs
BUSINESS
JPR007
JPR007
@jpr007
LEGACY AUTOMAKERS - 2020 NOVEMBER YTD

As we approach the close of the year, how do the legacy automakers see themselves in 2020 ?

Total global industry volume is down -16% so far, and the two largest players reflect that same reality


Renault is down -22%

Nissan is down nearly -30%

And Mitsubishi is down nearly -39%

Which has brought this unstable alliance down by -28.1% overall

Of course, these numbers only reflect the way the industry likes to present itself to you

And many things about them are not quite as robust as they would have you believe

Let’s touch upon a few :

1. A lot of the volume that VW likes to report does not actually belong to them


2. Instead it belongs to Chinese companies that they only have partial ownership stakes in

3. So when VW actually files its own financial statements, a large part of this volume does not get included

4. On this particular scorecard they are reporting production and not sales

5. This is important for investors to understand because you only earn profits on sales and not on production

6. Any reports of sales numbers from legacy automakers have proven to be unreliable, and are prone to “sales reporting abuses”
BUSINESS
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JPR007
JPR007
@jpr007
South Korean carmaker Hyundai on Wednesday presented the first 7 hydrogen-powered trucks to customers in Switzerland, out of 50 such vehicles scheduled this year to bring zero-emission commercial vehicles to European roads


For long haul, proponents say hydrogen-powered trucks have an advantage over electric rivals as they have a greater range and require less charging times but their uptake and mass production has been slow because they are expensive

However, a McKinsey study in January said that once relative efficiencies of the power sources and lifetime costs of a truck are factored in, green hydrogen could reach cost parity with diesel by 2030

PARITY WITH DIESEL ???

Hyundai has been partnering with Swiss companies to build a value chain covering the production of green hydrogen from hydropower, hydrogen charging stations and the service and maintenance of the trucks

The customers, which include supermarket chain Migros, will be leasing the trucks from Hyundai Hydrogen Mobility HHM to transport goods around the country, backed by the new hydrogen infrastructure
TECH
JPR007
JPR007
@jpr007
GLOBAL ENERGY CONSUMPTION - A PRIMER

We have hopefully all seen this wonderful diagram from LLNL showing the Flow Diagram of the world’s Energy Consumption in a very useful form full of diagnostic power

So how did we get to here ?

And where are we going from here ?


1. The recent history of Global Energy Consumption

Back in the 1800s the primary use of energy was to generate heat by cutting down trees and vegetation and burning them as fuel - referred to here as “Traditional Biomass”

- this was a defining feature of our World 2.0


2. And then with the advent of the Industrial Revolution fossil fuels like Coal, Oil and Gas became increasingly important

- and they started to define many of the characteristics of our World 3.0


3. Wood-burning Biomass has remained as a significant source of Energy even though its proportion has declined

4. Coal reached as high as 50% of our Energy supply and has continued to grow in absolute terms even though its proportion has shrunk to around 25%


5. Oil took over 40% of the Energy market until the Oil Shock of 1973 started changing our attitudes about the efficiency of its consumption

6. And Gas has been steadily growing its share of the market
WORLD
JPR007
JPR007
@jpr007
“Energy needed a digital revolution – and we are it”

Greg Jackson, boss of Octopus Energy, says the sector was ripe for an Amazon or Uber-style disruptor, but that his version will also boost the UK’s green revolution


Greg Jackson, chief executive of Octopus Energy, wears the unassuming combination of jeans and trainers one might expect from the founder of a wildly successful startup

There’s also a vast open-plan central London office, easy camaraderie with staff, lots of plants

He has the enthusiasm and world-changing idealism too

With all these markers of a tech unicorn – a deal last month with Tokyo Gas valued it at $2bn (£1.5bn) – it’s easy to forget that Octopus is an energy company

Jackson, 49, says the distinction is increasingly irrelevant

Octopus is a new breed of energy supplier, built on cutting-edge technology and unencumbered by the creaking billing systems and fossil-fuel plants that plague the UK’s “big six”

Set up just five years ago, it has been free to view the energy market as a tech startup would: ripe for disruption
BUSINESS

More from Finance

Trung Phan \U0001f1e8\U0001f1e6
Trung Phan 🇨🇦...
@TrungTPhan
Our intuitions often leads us astray. A good reminder: study counterintuitive math and economic results.

Here are 9 of them 🧵

The Birthday Paradox

In a room of 23 people, there's a >50% chance that 2 people share the same birthday.

This type of probabilistic thinking does *not* come naturally to many people.


The Coastline Paradox

Fractal geometry is also confounding:

The coastline of a landmass does not have a well-defined measurement. As the unit of measurement gets smaller (eg. from KMs to cm), the length increases without limit.


Winner's Curse

In an auction, the winning bid will usually exceed the intrinsic worth of an item leading to a significant overpay (and negative net profit for the winner).


Braess's Paradox

Removing an extra road can make everyone's commute time faster.

Why? The existence of a "fast" road leads to congestion because everyone uses it. If you remove the shortcut, traffic flows better.
FINANCE , COUNTERINTUITIVE
Shuchi Nahar
Shuchi Nahar
@shuchi_nahar
To understand Financial Shenanigans & detect accounting manipulations from Annual Reports with checklist
In detail and lucid terms

Financial Shenanigans
(Part-1)
https://t.co/wa6HSElug0

(Part-2)
https://t.co/Vrva17GvgP

(Part-3)
https://t.co/XuziOCDHL2

@dmuthuk @ms89_meet
FINANCE , ACCOUNTING AMP FINANCIAL STATEMENTS
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10-K Diver
10-K Diver
@10kdiver
1/

Get a cup of coffee.

In this thread, we'll cover *State Quantities* and *Flow Quantities*.

This mental model can help us analyze many different entities -- from complex engineering systems to publicly traded companies.


2/

A "State Quantity" is something that's associated with a *specific point in time*.

For example, the number of followers a Twitter account has is a state quantity. This number can go up and down over time. But at any one *specific* time point, it's fixed.

3/

Similarly, the amount of cash a company has is a state quantity.

This cash balance can also rise and fall over time.

But pick any one *specific* time point -- and the company can only have one *specific* cash balance at that time point.

4/

By contrast, a "Flow Quantity" is something that's associated with a time *interval* rather than a time *point*.

For example, the number of followers gained by a Twitter account is a flow quantity. It's meaningful only when we specify a time interval (eg, the last 30 days).

5/

A simple analogy is that a State Quantity is like a photo -- a snapshot at a particular *point* in time.

But a Flow Quantity is like a video -- a record of events that take place during a particular time *interval*.
SCIENCE , FINANCE
Aditya Todmal
Aditya Todmal
@AdityaTodmal
Here are all the threads posted by @AdityaTodmal and @niki_poojary in January: 🧵

• 8 powerful ways to use Twitter
• Power of Stocks
• 14 Trading Strategies
• Basics of Derivatives (3 parts)
• Technical Analysis for all sectors
• Tweets of the week
• Books on Futures

All the Top 10 tweets threads I have ever posted to date:


Basics of Derivatives Part 1:


8 powerful ways to use Twitter:


Basics of Derivatives Part 2:
SCREENERS , FINANCE
Ming Zhao
Ming Zhao
@FabiusMercurius
Day in the Life of a Hedge Fund Analyst

Few live to tell the tale.

"Was it like Billions?"
"Describe ur investment process?"
"What did u learn?"

I get these questions all the time, but for a while I was afraid of answering publicly. No more!

Hedge fund story time.
👇
🧵/

1/ ⏰ 6AM Pre-Market Review

Wake up thinking about ur overnight positions.
What happened during London/Asia trading?
Scan the major news on ur way to office.
🏢🚕🚶‍♀️

Think about how ur getting screwed by beta (general macro, FOMC, inflation, etc.) cuz ur net long (or net short).

2/ 7AM Portfolio Review

U'll typically have ~250 names in the portfolio "universe" (stocks w/ active positions & those on watchlist but already modeled).

Review each thesis vis-a-vis new market conditions. Anything changed?
Should u downside/upsize any?
New trade opportunities?

Here's a checklist of top items to check per company:

- Any earnings calls this week?
- Any product releases?
- Any new sell-side reports? Downgrades/Upgrades?
- Any M&A rumors in the space?
- Any management change announcements?
- Any guidance revisions?
- Any legal happenings?

3/ 8AM Plan out your daily/weekly agenda

Major types of events that'll populate ur calendar:
- Investor day at XYZ
- Q1-Q4 earnings call
- XYZ road show
- Dinner event w/ IR (investor relations) at XYZ
- Private buy-side bus trip (w/ mgmt @ XYZ) arranged by GS
- JPM conference
FINANCE , ALL

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FT Trading\u2503Stock Trader
FT Trading┃Stock Trade...
@FT__Trading
Ever wonder how traders get in stocks before they explode? 🧐

Or find options that move 1,000% in a single day/week?🤯

I made a thread going over exactly how I find these stocks BEFORE they take off 🚀
👇👇👇

So, let's start with the software I use…

Finviz!! Finviz is a free website that I use to scan for stocks.

They have a lot of other cool features as well, but I only use their scanner.
👇

Head on over to finviz and go to the screener

Click on the “All” tab on the top and put in the criteria in the next tweet
👇

This is the first scan that I use for bullish swing setups
✅Quarter +10%
✅Week Down
✅Vol over 400k
✅Optionable
✅Price > $20
👇


The next scan I use is the opposite of the first one.

Simply change:
✅Quarter +10% to -10%
✅Week Down to Week up

This is my bearish scan for swing setups. 👇
TRADINGTHREAD , OPTIONS
Roger Grosse
Roger Grosse
@RogerGrosse
Important paper from Google on large batch optimization. They do impressively careful experiments measuring # iterations needed to achieve target validation error at various batch sizes. The main "surprise" is the lack of surprises. [thread]

https://t.co/7QIx5CFdfJ


The paper is a good example of lots of elements of good experimental design. They validate their metric by showing lots of variants give consistent results. They tune hyperparamters separately for each condition, check that optimum isn't at the endpoints, and measure sensitivity.

They have separate experiments where the hold fixed # iterations and # epochs, which (as they explain) measure very different things. They avoid confounds, such as batch norm's artificial dependence between batch size and regularization strength.

When the experiments are done carefully enough, the results are remarkably consistent between different datasets and architectures. Qualitatively, MNIST behaves just like ImageNet.

Importantly, they don't find any evidence for a "sharp/flat optima" effect whereby better optimization leads to worse final results. They have a good discussion of experimental artifacts/confounds in past papers where such effects were reported.
MACHINE LEARNING
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Simon DeDeo
Simon DeDeo
@SimonDeDeo
"I lied about my basic beliefs in order to keep a prestigious job. Now that it will be zero-cost to me, I have a few things to say."


We know that elite institutions like the one Flier was in (partial) charge of rely on irrelevant status markers like private school education, whiteness, legacy, and ability to charm an old white guy at an interview.

Harvard's discriminatory policies are becoming increasingly well known, across the political spectrum (see, e.g., the recent lawsuit on discrimination against East Asian applications.)

It's refreshing to hear a senior administrator admits to personally opposing policies that attempt to remedy these basic flaws. These are flaws that harm his institution's ability to do cutting-edge research and to serve the public.

Harvard is being eclipsed by institutions that have different ideas about how to run a 21st Century institution. Stanford, for one; the UC system; the "public Ivys".
LIFE
Jaya_Upadhyaya
Jaya_Upadhyaya
@Jayalko1
ARULMIGU SRI PARTHASARATHY SWAMY KSHETRAM, CHENNAI (TN)

Divya Desha where Perumal appears with moustache of a Sarathi (charioteer) to conduct Arjun’s Rath in Kurukshetra war.
Here, Venkatkrishna-Parthasarthy is present with his entire family.


He is flanked by Sri Rukmini, Sri Balarama, Satyaki, son Pradyumn and grandson Anirudha.
It is said that on the request of Raja Sumathirajan, Sri Perumal appeared and stayed here as Arjun’s charioteer (Partha-sarathi).


He is without chakra as he had promised not to wield weapons in Mahabharata war.
The face has scars caused by Bhishma’s arrows on Arjun. Prabhu took the arrows on himself to protect Arjun.


The Naivedyam offered here does not have spices. Ghee is used in it to cure Prabhu’s wounds. Sarkarai Pongal is famous here.

It is said that Rishi Bhrigu found Devi Lakshmi (as Vedvalli) in Alli flower in the mandir pushkarini. Later, Sri Ranganatha came here to marry her.
ALL
Robin Berjon
Robin Berjon
@robinberjon
Recently, the @CNIL issued a decision regarding the GDPR compliance of an unknown French adtech company named "Vectaury". It may seem like small fry, but the decision has potential wide-ranging impacts for Google, the IAB framework, and today's adtech. It's thread time! 👇

It's all in French, but if you're up for it you can read:
• Their blog post (lacks the most interesting details): https://t.co/PHkDcOT1hy
• Their high-level legal decision: https://t.co/hwpiEvjodt
• The full notification: https://t.co/QQB7rfynha

I've read it so you needn't!

Vectaury was collecting geolocation data in order to create profiles (eg. people who often go to this or that type of shop) so as to power ad targeting. They operate through embedded SDKs and ad bidding, making them invisible to users.

The @CNIL notes that profiling based off of geolocation presents particular risks since it reveals people's movements and habits. As risky, the processing requires consent — this will be the heart of their assessment.

Interesting point: they justify the decision in part because of how many people COULD be targeted in this way (rather than how many have — though they note that too). Because it's on a phone, and many have phones, it is considered large-scale processing no matter what.
TECH