December 22, 2022, 11:41 pm EST
Nightmare for Automakers
The holiday season may benefit retailers like Nike (NKE) gains of +12% yesterday. But, it is definitely a nightmare for automakers today: TSLA -9%, GM -7%, RIVN -6%, WKHS -6%, NIU, XPEV, LCID, F, BYDDF -4%. Most of these stocks locate around their 52-week low area.
There are two main problems for all automakers: a shortage of supply and a lack of demand. First, due to the shortage of computer chips, all automakers do not have enough cars in their inventory. Dealers do not have enough cars for customers to choose from. Ordering a desirable car may take months of the waiting period. Second, consumers face rising rates and tougher job markets for 2023. Therefore, buying a vehicle becomes a luxury need.
But, other retailers like shoes or clothing do not suffer much like these automakers. These consumer products neither require computer chips nor a pile of money to purchase.
We mentioned many times in our article since early 2022 to avoid a popular stock Tesla (TSLA). In addition to the problems above, its founder Elon Musk also created a lot of troubles like acquiring Twitter and dumping a significant amount of its TSLA shares. TSLA lost about -60% in the past three months. However, it could go much lower than the current level. Although some people keep buying TSLA all the way down, we think it is wiser to stay away from a loser.
It does not make sense to buy and hold a stock that shows a red color in the portfolio. Isn’t it?