Profit Pregame

How a $1 Billion Fine Could Help Advance the EV Revolution

Gas powered engines – while being perhaps the most important invention in modern history – come with the drawback of emitting an array of gases and particles that can be harmful to both humans and the environment. The effect these emissions have has been exacerbated by the widespread use of automobiles over the last 70+ years.

To combat the issue, governments of some of the largest economies in the world have been putting an emphasis on limiting the emissions of vehicles, the largest source of such emissions.

The United States, China, and several European countries have led the charge in recent years to curb vehicle emissions with new laws and regulations that hold automakers to a higher standard.

Last week, several prominent vehicle manufacturers found out the hard way just how serious running afoul of those laws can be.

And it may just give one of the biggest shifts the auto market has seen since the invention of the internal combustion engine the push it needs.

On Thursday, news broke that the European Union had fined four German car makers – namely Volkswagen, BMW, Audi, and Porsche – a total of $1 billion.

The settlement comes after EU regulators alleged that the four automakers colluded for more than five years in an effort to avoid competing to advance cleaner emissions technology in diesel engines, despite the technology being available to do so.

The law sets minimum standards for diesel emissions, but the expectation is that automakers would look to advance the technology to compete with one another. Instead, the four companies worked together to stifle competition.

All four of the automakers admitted to their role in the scheme and agreed to settle with the case.

This marks the first time that the EU has levied a fine over technical elements, as opposed to price fixing or market sharing. And it sets a precedent that automakers are sure to be wary of.

As the U.S. government considers further measures to curb vehicle emissions, it’s clear that governments around the world are getting tougher regarding pollution.

I’ve been saying for months now that the electric vehicle industry is on the verge of a massive period of growth – and the latest moves to restrict vehicle emissions is just another catalyst that will push automakers to apply more funding to the space.

My favorite name in EV right now is NIO Inc. (NIO) – an EV manufacturer based in China that currently sells its vehicles domestically, as well as in the U.S., Germany, the U.K, and Hong Kong.

Much of the growth in the EV space will be overseas in the next few years, and NIO is well positioned to meet that demand.

But there will be plenty more opportunities to come, and I’ll be sure to cover them here at Profit Pregame.

Trading tip of the week

In the long run, nothing really matters because the market will always go up.

The S&P 500 Futures are up 10.5% per year since the Great Depression, and every pullback has been bought.

So, if you are a long-term trader, do not focus on how much money you have made in a day or week, focus on months or years.

Earnings report to watch

There’s going to be a lot of eyes on the earnings report of Delta Air Lines, Inc. (DAL) when it is released on Wednesday.

Airlines stocks are going to be a great barometer for the recovery of not just the travel industry, but the broader economy here in the U.S.

After more than a year of being cooped up, there’s sure to be a ton of pent up travel demand as the weather heats up.

I’m expecting some big beats from the second largest airliner in the U.S. as more and more Americans return to the skies amid easing pandemic restrictions.

In the Spotlight: This stock is getting back in shape fast

On Friday morning, I wrote to you about the incredible boom in IPOs that we’ve seen thus far in 2021, and the opportunity they present for investors.

I also detailed my favorite strategy for trading around IPOs, and gave a recommendation on a new stock with a great setup.

Well, I hope you took my advice, because if you did, you’re already sitting on a fantastic profit.

That’s because The Beachbody Company, Inc. (BODY) did exactly what I thought it would.

So many IPOs that boom on their first day have trouble maintaining the buying momentum that comes with the new offering, and so they slouch in the days after.

I love to pick up these stocks at a discount when they do.

After falling more than 36% from it’s first day high, shares of BODY rallied by as much as 12.75% on Friday.

Congratulations to anyone who scooped up shares Friday morning before the jump.

If you didn’t, don’t worry. I’ll be keeping my eye out for more IPO opportunities like this to share with you. Stay tuned.

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