Volkswagen’s Big Day, Nikola Stock Off 7%

Stocks slipped on Tuesday, as sluggish U.S. retail sales and anxiety over a Wednesday update from the Federal Reserve slowed a hot streak in stocks. Two of the three major market indices ended the day lower.

U.S. retail sales fell 3% in February from the month before, a pullback following January’s robust 7.6% advance. Economists were expecting only a small decline.

The Federal Open Market Committee meets Wednesday, and despite the backdrop of disappointing retail sales in February, the rest of the economy is much improved since central bank officials last opined on U.S. growth estimates for 2021 in December.

The Dow Jones Industrial Average lost 127 points, or 0.4%, to finish at 32,825.

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Volks swaggin’. Volkswagen AG (ticker: VWAGY) shares jumped more than 10% on Tuesday following a second straight day of announcements outlining how it plans to supplant Tesla ( TSLA) as a worldwide leader in electric vehicles.

Volkswagen is targeting 1 million electric vehicle (EV) deliveries this year alone, the company says — a number which might already vault VWAGY ahead of Tesla in terms of 2021 deliveries — and aims to supplant Tesla’s battery lead by 2023.

Frankly, it’s about time Volkswagen pressed its advantage: It’s right up there with Toyota as one of the world’s top two automakers by production volume and revenue, dwarfing Tesla’s current manufacturing capabilities. It’s time for well-capitalized, experienced industrial giants like Volkswagen to press the advantages they built over decades before Tesla’s momentum.

Nikola is no Tesla. EV up-and-comer Nikola ( NKLA) filed to sell $100 million of new shares late Monday, an action that was booed by shareholders Tuesday, who sent NKLA stock down 7.1%. A new share issuance means dilution for existing shareholders, and although share issuances can be strategically savvy, Nikola’s decision to issue additional shares now looks desperate and certainly ill-timed, especially with the benefit of hindsight.

Far closer to its 52-week low of $10.42 than its 52-week high of $93.99, the stock currently trades for roughly $16 a share. Even if Nikola didn’t perfectly time a share issuance to coincide with 52-week highs, it had ample opportunities last year to raise money when the stock traded at three times its current value, meaning NKLA would only have to create one-third of the number of new shares to raise the same $100 million.

The lesson? When opportunity knocks, let her in.

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