You'll be back

MARKETS

• Iowa caucuses:
• Energy: When oil consumption in China was reported to drop by 20% due to the coronavirus outbreak, traders took the hint. Oil prices dipped below $50 as they slog through their worst start to a year in nearly three decades.
• Economy: U.S. factories expanded last month for the first time in half a year.

AUTO

Nikola Would Be Proud

Tesla shares shot up 19.9% yesterday after an analyst said the company's stock was a Musk-have. Argus's Bill Selesky raised his price target to $808, citing revenue growth from the Model S and Model X and fierce demand for the Model 3.

The backstory: Tesla's on a run topped only by Jeremy Lin in February 2012. Its share price has skyrocketed over 80% since the beginning of the year and over 200% since October.

...why?

Financial markets are mysterious, but it's hard to ignore a wave of good vibes for the electric automaker:

• Yesterday, Panasonic said Tesla's production surge helped its battery business become profitable last quarter.
• Baillie Gifford & Co, Tesla's second-largest shareholder after CEO Elon Musk, upped its stake.
• Over the weekend, ARK Investment Management's CEO said Tesla's stock is "incredibly undervalued." How undervalued? She thinks the company will hit $7,000 in 2024.

An interesting subplot: Tesla is a popular stock to "short," or bet against. That's obviously been a losing bet, so some analysts have speculated that Tesla short traders are scrambling to cover (aka liquidate) their positions—a strategy that typically drives the stock price higher.

• Despite rumors, experts don't have clear data to show that a "short squeeze," as it’s known, is driving the rally.

Micro to macro

Whether you think Tesla's stock price will hit $7,000 or go to zero, the company is the clear leader in an increasingly competitive field for electric vehicles.

Note Sunday's Super Bowl ads, which treated us to an extra-creamy buffalo chicken dip of new electric vehicle models from legacy carmakers. The star power alone should tell you how seriously these companies view the threat posed by Tesla.

• Audi recruited Arya Stark to promote its e-tron Sportback.
• LeBron James lent his voice to GMC's revived electric Hummer truck.
• Ford enlisted Idris Elba (a former night shift worker at one of its plant) to drum up buzz for the electric Mustang SUV.

Bottom line: It's possible to go to "production hell" and back.

PHARMA

Pharma Does Its Best Work Under Pressure

Yesterday, shares in biotech Gilead Sciences rose 5% thanks to news it's running clinical trials with a Chinese medical team for a coronavirus treatment.

Gilead developed the drug, remdesivir, during the 2014 Ebola outbreak, though it was later sidelined and hasn’t yet received regulatory approval. But if tests go well, China could provide conditional approval.

The ugly truth

Global disease outbreaks are a huge business opportunity for Big Pharma. Drugmakers including GSK, Johnson & Johnson, Inovio, Moderna, and Novavax are all working on coronavirus treatments.

Whoever gets it right first will score a substantial short-term bump as governments pounce faster than a college freshman for Four Loko. Countries will also stockpile vaccines in case of future outbreaks.

Big picture: Even if they're put on the fast-track by pharma, governments, and global health organizations, treatments could spend months in development. Getting them to the public could take well over a year.

+ While we're here: The death toll from the virus reached 425. Here's a useful thread with lots of stats.

TECH

What Is YouTube's Annual Revenue?

Drawing a blank? You are in good company. Very few people outside of Mountain View, CA, knew the number before yesterday, when Google parent Alphabet made the surprising decision to disclose the video platform's revenue for the first time.

• Here's your answer: YouTube generated $15.1 billion in ad revenue in 2019 and $4.7 billion last quarter. Be honest—is that more or less than you expected?

There were more surprises: The company also gave numbers for its young but growing cloud business, which did $8.9 billion in revenue in 2019.

Google's total revenue last quarter was $46.1 billion, short of expectations. It's also missed on operating income ($9.3 billion in Q4) for nine of the last 10 quarters.

Zoom out: Because Google cofounders Sergey Brin and Larry Page stepped down in December, yesterday was Sundar Pichai's first earnings call as the CEO of both Google and Alphabet. It appears he has a few growth stains not even flashy YouTube numbers can cover up.

CONSUMER GOODS

FTC Gives Edgewell the Harry Eyeball

On Monday, the Federal Trade Commission (FTC) said it’s suing to block Edgewell Personal Care’s $1.4 billion acquisition of direct-to-consumer (D2C) razor brand Harry’s.

• Never heard of Edgewell? The consumer goods company spun out of Energizer Holdings in 2015 and owns Schick and Wilkinson Sword razors.

When your flagship product is nearly a century old and more readily associated with preteen razor burn than a smooth e-commerce shave, razor revenue and profit will fall five years running. Even Edgewell’s CEO acknowledges Schick has “gotten a little boring.”

So last May, Edgewell announced it was buying its disruptor to help take on the competition:

• Procter & Gamble owns almost every household razor brand, from upstarts like Bevel to heavyweights like Gillette, which dominates almost half the global men’s shaving market, per Euromonitor.
• Unilever bought Dollar Shave Club for $1 billion in 2016.
• And now the FTC thinks a Harry’s acquisition will send prices back up and competition back down.

Big picture: Emerging D2C brands are disrupting the old guard. But when the disrupted buy up the disruptors, it sometimes creates antitrust concerns.

ENTERTAINMENT

Which President Is on the $75 Million Bill?

While that's technically not true for several reasons, Disney did just put a price tag on America's most famous Treasury secretary. The company reportedly paid $75 million for the global theatrical release of Lin-Manuel Miranda's Broadway hit, Hamilton, recorded with the original cast.

All you have to do is wait 619 days to be satisfied.

WHAT ELSE IS BREWING

• Jeff Bezos is being sued for defamation by his girlfriend’s brother, Michael Sanchez.
• Rush Limbaugh, the conservative radio host, revealed he has advanced lung cancer.
• Citigroup has suspended a senior bond trader in London for allegedly stealing food from the office cafeteria.
• Forever 21 agreed to sell its business to a pair of mall owners and Authentic Brands for $81 million.

ZOOM IN

This is a very detailed image of an object you see most days. What's the object?

ZOOM IN ANSWER