Biden reviewing Euro travel ban, Xiaomi dethrones Apple, Lordstown under investigation
Julie Hyman breaks down some of Friday’s top business stories, including: European travel stocks higher as President Joe Biden says the U.S. reviewing the European travel ban, Xiaomi overtaking Apple as the number two smartphone vendor for the first time ever, and Lordstown Motors under investigation by the U.S. Justice Department.
JULIE HYMAN: Some other business headlines that we are watching today– Los Angeles County residents will be required to wear masks indoors, regardless of their vaccination status, beginning again this weekend. The return of that public mask mandate follows six consecutive days of more than 1,000 new COVID-19 cases reported in LA County, including more than 1,500 yesterday.
Elsewhere on the reopening front, following his meeting with German Chancellor Angela Merkel, President Joe Biden said he may be moving toward removing the ban on travel from Europe. That sent shares of European airlines higher. Xiaomi has overtaken Apple as the world’s second largest smartphone maker by shipment, breaking into the top two for the first time.
The Chinese company saw shipments jump 83% last quarter, according to [INAUDIBLE]. That gave xiaomi a 17% market share, compared with Samsung at 19% and Apple at 14%. Xiaomi is known for selling much lower priced devices than its competitors, but it is trying to expand its higher priced offerings.
And Lordstown Motors is now under scrutiny by federal prosecutors in Manhattan. The electric truckmaker said its vehicle preorders and its combination with the SPAC Diamond Peak Holdings is under investigation. This probe follows an inquiry from the Securities and Exchange Commission, which had requested documents as well.
Guys, this is something, obviously, we have been focusing on for a bit here. Brian Sozzi, you’ve dug into Lordstown multiple times. And it seems like, you know, this is just– the troubles are piling up here.
BRIAN SOZZI: It really is a disaster. And it is amazing to see Lordstown continue to have a market cap pushing £1.6 billion. I mean, they have no– what appears to have no prospects of making any form of electric truck this year.
I know they still have that goal of putting out a few trucks later in the fall. But again, it does not look like that really is coming to fruition anyway like they thought, when they originally went public.
Also, too, really, this continues to be a black eye on General Motors. General Motors has a 4.3% stake inside of Lordstown. You really have to wonder what in the world were the folks at GM thinking here.
In addition to this investment in Lordstown, they almost have made that investment in Nikola. I mean, this is just– it’s embarrassing. If you’re GM, I understand you have that balance sheet.
You have a lot of cash. But this is really embarrassing that you’re even remotely tied to a company like Lordstown. And you’re still kind of loosely tied to a Nikola, even though they will probably argue that they’re not
MYLES UDLAND: Well, so the only thing– I mean, no one needs to defend General Motors. I would say that the plant used to be a Chevy Cruze plant. So I guess they had a relationship.
They used to own the building that Lordstown is now based out of. But, you know, “New York Times” had a story– I think it might have been over the weekend or Monday, Tuesday. You know, every day seems like a year.
So it was a little while back. And they talked about the process that the SPAC went through. You know, the folks who are leading this SPAC, real estate investors, right?
And they’ve used GM’s involvement with Lordstown as part of their stamp of approval. Oh, it must be legit. And their diligence was asking McKinsey to tell them if they thought the technology worked.
That was the diligence process. And look, that’s fine. I mean, that’s what McKinsey’s for.
They’re there to tell you that something is good or bad. But I think the kind of undertaking that building electric trucks is at the scale that former CEO Steve Burns claims to us they were able to get to in a brief amount of time, it’s just a far bigger undertaking than asking to some consultants to confirm the TAM for you, right? So I think that also is a challenge here for SPAC investors, where you’ve seen a lot of moonshots taking on a lot of businesses.
And I don’t think you can begrudge anyone for not being an expert on electric cars. But to your point, Sozz, taking an electric truckmaker public still worth £2 billion, and, as is obvious, there’s not £2 billion worth of anything happening there, right? And it’s not clear what the path would be to that.
So I think for a market that’s so hot on SPACs continue– will probably be, along with Nikola, one of the poster childs of where it can go wrong. BRIAN SOZZI: Well, yeah, I think what you’re seeing here is I think– you can have– one can have a greater appreciation for what Tesla has built here. Tesla is a lightning rod for criticism.
But what they have built here is pretty impressive, compared to what in the world Lordstown is going to. And really, the next company that is getting a lot of focus, it’s Lucid. Lucid is the next player up here to start actually making electric cars.
And it looks like they might do it. MYLES UDLAND: Yeah, that’s a very good point, Sozz. That is a very good point.
I think we take for granted what Tesla has produced and how much of it they do produce on a quarterly basis, mostly because, you know, Elon–
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