Figuring out Who Benefits as the Landscape Changes
One of the fascinating and, at times, frustrating parts in analyzing an industry is how it evolves over time — new products, new services, new competitors and new technologies. All of these can have a profound effect on an industry. When more than one innovation is hitting at once, it can result in a sea change. In today’s society, you probably are thinking of the current go-to product — the smartphone — but there are a number of examples.
One high-flying stock up until recently was electric car manufacturer Tesla Motors (TSLA). Even though there were hybrid cars from the likes of Toyota (TM), Ford (F), General Motors (GM), Honda (HMC), Hyundai and others, Tesla’s all-electric offering stood out and garnered numerous fans. Led by colorful CEO Elon Musk, Tesla shares quickly became a cult stock, and they zoomed to a high of $194.50 from a low of $31.52 during the last year. In recent weeks, three incidences of fires in Tesla’s Model S have weighed on Tesla shares, and now the National Highway Traffic Safety Administration (NHTSA) is launching a preliminary investigation.
While they may have initially scoffed, the major car manufacturers are not ones to miss out. At last week’s Los Angeles Auto Show, BMW, General Motors (GM), Volkswagen and Audi all introduced new plug-in models aimed at affluent, eco-conscious Californians who make up the heart of Tesla’s buyers. Much like the smartphone market, new features, which in this case mean the all-electric aspect of the car, start out at the high end and over time trickle down to lower-tier models. When I was a boy, I remember that some of our early cars did not have power windows, air conditioning and several other features that all come standard today.
Read more about how to capitalize on the evolving technological landscape at Eagle Daily Investor.