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The $5 billion South Korean start-up that’s an Amazon killer

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Coupang’s obsessive focus on customer service has helped make it the dominant online retailer in South Korea. More than half of all Koreans have downloaded Coupang’s app. The company is consistently voted the best online retailer by Koreans in their 20s in a survey conducted by Daehak Naeil, a college magazine. Coupang has drawn more than $1.4 billion in venture capital funding, including an investment of $1 billion in 2015 by Softbank, the Japanese conglomerate known for its big bets. At the time, Coupang’s valuation was $5 billion dollars. Other investors include Sequoia Capital and BlackRock.

Eric J. Kim (no relation to Bom Kim), a managing partner with Goodwater Capital, was an early investor in Coupang. He said the conditions in Korea are perfect for companies like Coupang. “Korea is a great market in itself because of its scale and strong GDP and strong economy and its infrastructure.” Eric Kim sees Bom Kim’s singular focus on customers as an essential asset. “They have one of the best e-commerce examples in the world right now. Some of the most interesting internet companies are being built at a global scale in South Korea right now.”

Bom Kim insists he is completely focused on the Korean market. But he concedes that some of the trends driving Coupang could have application elsewhere. He notes that cities around the world are growing or making a comeback, presenting the customer densities that have helped make Coupang so efficient. In Korea 80 percent of orders are placed via a mobile app, 90 percent on weekends. That, too, is a global trend.

“I don’t think it’s just Korean customers who will delight in being able to buy or return something so easily and quickly.”

— By Joel Dreyfuss, special to CNBC.com

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Dow futures jump 200 points continuing rebound from September sell-off; Nike shares rise

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U.S. stock futures were solidly higher again early Wednesday after the S&P 500 experienced its first positive day in five trading sessions. Dow Jones Industrial Average futures received a boost from a blowout earnings report from component Nike.

Dow futures rose 201 points, or 0.7%. The move pointed to a gain of more than 150 points at the open. S&P 500 futures added 0.4%. Nasdaq-100 futures gained 0.4%. 

Here’s what traders were watching:

  • Nike’s stock jumped 13% in premarket trading as the company said digital sales surged more than 80% last quarter. Earnings and sales blew past analysts expectations last quarter and the company gave a forecast for growth in the new fiscal year.
  • Airlines and cruise lines gained in premarket trading after President Donald Trump said the U.S. would not be implementing a second round of lockdowns as the U.K. began imposing stricter measures. “The U.K. just shut down again. They just announced that they’re going to do a shutdown, and we’re not going to be doing that,” Trump said. United Airlines and Delta were up more than 2%. Carnival gained 2.7%.
  • Johnson & Johnson started a phase 3 trial of its coronavirus vaccine.
  • The House passed a bill avoiding a government shutdown.
  • Key tech stocks Amazon, Apple and Microsoft were slightly higher in premarket trading. Tech stocks have been the center of the September sell-off.
  • Shares of Tesla fell 4% in premarket trading after Elon Musk offered new delivery predictions for 2020 and detailed a new battery design that it claims will make its cars cheaper to produce.

On Tuesday, the major averages snapped multi-day losing streaks, all closing in the green. The Dow Jones Industrial Average climbed 140 points and the S&P 500 climbed 1.1%. The technology-heavy Nasdaq Composite was the relative outperformer, popping 1.7% as Amazon surged 5.7%. 

“As soon as the S&P 500 reached the official correction zone near a 10% decline… ‘dip buyers’ emerged and have been evident ever since,” Jim Paulsen, chief investment strategist at The Leuthold Group, told CNBC. “These buyers, armed with cash holdings, may be driven less by the ‘fear of missing out’ than they are by the ‘opportunity to finally get in.'”

Shares of megacap technology stocks — which have suffered in September — all closed in positive territory on Tuesday. 

“Optimism broadened as the day progressed lifting not only technology and communications stocks for the second day, but ending with eight of the 11 sectors within the S&P 500 Index in the green,” added Paulsen. 

Stock gains were capped by concerns about an uptick in coronavirus cases in the U.K. paired with bleaker outlook for a second stimulus bill from the United States Congress. U.K. Prime Minister Boris Johnson announced Tuesday a tightening of economic restrictions and public health measures to slow the spread of Covid-19. Johnson said that the country was at a “perilous turning point.” 

U.S. coronavirus deaths topped 200,000 on Tuesday, according to data compiled by Johns Hopkins University.

With stimulus plans at a stalemate in Washington, Federal Reserve Chairman Jerome Powell on Tuesday reiterated to lawmakers that the U.S. economy could begin to decelerate in the months ahead without further fiscal stimulus from Congress. Powell told the House Financial Services Committee that many economic forecasts underlies fiscal action. Powell also reassured investors that the central bank will support the economy “for as long as it takes.”

Powell will testify again on Wednesday to Congress’s Select Subcommittee on the Coronavirus Crisis. 

September continues to be a weak month for stocks with all three averages posting three straight weeks of losses. The Dow is down more than 4% in September and the S&P 500 and Nasdaq Composite have lost 5.3% and 6.9% this month, respectively. 

“We think equities will move higher over the medium term, thanks to the likely development of a successful vaccine, an end to election uncertainty, the passage of new US fiscal stimulus, and continued extraordinary global monetary support,” said Mark Haefele, UBS Global Wealth Management chief investment officer. “However, the path to ‘more normal’ is likely to be bumpy amid uncertainty over the coronavirus, the U.S. political environment, and U.S.-China tensions. We therefore expect volatility to persist over the balance of the year.”

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Airlines aren’t raising prices amid Covid-19 pandemic

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Tesla deliveries to rise 30% to 40% in 2020

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SpaceX founder Elon Musk looks on at a post-launch news conference after the SpaceX Falcon 9 rocket, carrying the Crew Dragon spacecraft, lifted off on an uncrewed test flight to the International Space Station from the Kennedy Space Center in Cape Canaveral, Florida, March 2, 2019.

Mike Blake | Reuters

Tesla CEO Elon Musk offered new delivery predictions for 2020 at the company’s shareholder’s meeting on Tuesday, where the company also detailed a new battery design that it claims will make its cars cheaper to produce.

Musk said he expects vehicle deliveries to increase by 30 to 40 percent over last year, when the company reported deliveries of 367,500 vehicles. The new guidance from Musk implies deliveries of between 477,750 and 514,500 cars, a range that encompasses the company’s previously stated goal to deliver half a million cars in 2020.

“In 2019, we had 50% growth. And I think we’ll do really pretty well in 2020, probably somewhere between 30 to 40 percent growth, despite a lot of very difficult circumstances.”

Musk also said the battery and manufacturing advances Tesla is working on will soon lead to lower prices, which will be vital for getting more electric vehicles on the road. “About 3 years from now, we’re confident we can make a very compelling $25,000 electric vehicle that’s also fully autonomous,” he claimed. Musk is notorious, however, for being overly optimistic with his predictions.

In response to one shareholder’s follow-up question about lowering pricing, Musk acknowledged, “It’s not like Tesla’s profitability is crazy high. Our average profitability for the last four quarters was maybe 1%. It’s not like we’re minting money. Our valuation makes it seem like we are, but we’re not.”

He continued, “We do want to make the price as competitive as we can without losing money. If you keep losing money, you’ll die.”

The company’s shares dropped as much as 7% during the presentation, which took place after normal trading hours.

Battery improvements promised

During the “battery day” portion of the presentation, Tesla confirmed that it has designed and is producing its own battery cells at a facility in Fremont, as part of its quest to make its cars affordable to a mainstream buyer.

In general, the batteries of a Tesla — which contain thousands of cells — are the most expensive part of the car.

Tesla’s senior vice president of powertrain and energy engineering, Drew Baglino, described how the company’s new cells, dubbed “4680,” are larger and simpler to make than the “2470” cylindrical battery cells it purchases from Panasonic and other suppliers today. A Tesla battery pack would require fewer cells with the new shape and design.

Baglino said the larger cells, along with other manufacturing and design changes underway at Tesla, would eventually improve the range of its cars by more than 50%.

Near-term, Tesla says it aims to produce 10 gigawatt hours worth of the new battery cells at its pilot plant within a year. Musk noted that whatever cells it produces in Fremont would be supplemental to 100 gigawatt hours worth of cells it buys from suppliers, and said “To be clear, it will take about a year to reach the 10 gigawatt hour capacity.” 

With its new cells, Tesla is also seeking to reduce or completely avoid the use of some expensive materials used in lithium-ion battery production today, including cobalt. 

Associate Professor in Civil and Environmental Engineering at Carnegie Mellon University, Costa Samaras, said: “If Tesla can make a cheap, reliable battery with little or no cobalt, it will really improve the ability of EVs to scale up. Most cobalt is from the Democratic Republic of Congo and the mining has long generated human rights and child labor concerns.”

On Monday, Musk warned that the advances announced at battery day won’t find their way into mass production until 2021, sending the company’s stock down about 6% ahead of the event on Tuesday.

Due partly to Covid-19 health orders that limit the size of in-person gatherings, Tesla postponed its annual meeting from July this year to Sept. 22, 2020. The company previously held its shareholder meetings at the Computer History Museum in Mountain View, California but moved the event to the parking lot of its U.S. vehicle assembly plant in Fremont. Shareholders parked and sat in their cars at the meeting, which Musk characterized as a “drive-in.” They honked in lieu of applause.

Al Prescott, Tesla’s VP of legal, at the company’s socially distanced 2020 shareholders meeting, as attendees listen in their cars.

Those who wanted to attend had to obtain a winning lottery-style ticket (or other special access) to the meeting. Otherwise, shareholders could log into a website to ask questions to be answered during the live-streamed event.

Cannacord Genuity analyst Jed Dorsheimer wrote in a note to investors before the meeting:

“The big question will be on follow through. It’s one thing to announce all these breakthroughs, which might be great for momentum algorithms, but like most things TSLA, the devil will be in the details, which sadly will take some time to play out.”

Cannacord maintains a “Hold” rating and a price target of $442 on shares of Tesla currently.

Shares of the electric car maker are up more than 400% year-to-date.

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