Eq: Tech

(Los Angeles)

Love Tesla cars but scared of their company’s cash burn and Elon Musk-related antics? There is a way to invest in the company without buying the stock. Tesla has issued automobile asset-backed securities, or bonds with coupon payments backed by lease payments from Tesla customers. Last year, the carmaker sold $1.5bn of such bonds, which are not backed by the company’s cash flow, but directly by lessee’s payments. One portfolio manager put it this way, “Oftentimes, investors get Tesla the company and Tesla the car confused, but in this case, you really get to separate the two out”. The bonds issued have various tranches divided up by credit quality.

FINSUM: This seems like a smart way to invest in Tesla without all the volatility related to Elon Musk and the company’s cash flow struggles.

(San Francisco)

It has been several years in the making, but drone delivery appears as though it is about to become a reality. Google has just had its drone delivery project approved by the FAA, the first such approval. The caveat is that the approval is only for an area in rural Virginia. But still, it is a breakthrough for the growing and fiercely competitive drone industry. Amazon and others are vying for FAA approval as companies want to be the go-to provider of nation-wide drone delivery. The division of Alphabet running the drone program is called Wing Aviation.

FINSUM: UPS, FedEx, and USPS drivers should be nervous about this, but it is a major breakthrough that has been a long-time coming.

(New York)

Netflix has been hammered recently by news that Disney is launching its own streaming service. The stock saw a major selloff on Friday (4%) because of the threat the Disney move theoretically poses to Netflix’s model. However, the fears seem overblown, providing a buying opportunity of Netflix. Analyst Scott Devitt from Stifel explains, “We see little risk to Netflix growth plans and pricing power against this new offering given Netflix’s most popular price point should remain lower than the Disney bundle while Netflix is on track to materially outspend Disney on content”.

FINSUM: Netflix seems likely to remain both cheaper and offer more content for the foreseeable future, so the fears do seem overdone to us.

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