Weekly Brief #58
Honda-Nissan: A potential merger... Plus, Google fined $75 million by Turkey, FedEx spins off freight business, U.S. Supreme Court hears TikTok ban, Waymo expands internationally, and more.
Good morning investors 👋,
Welcome back to the 58th Weekly Brief.
Merry Christmas 2024, everyone! By the time Weekly Brief #59 is out, Christmas will have passed. Meaning today is my only chance to give you all a gift this holiday season. My gift of choice? A 45% discount on my annual paid membership. Now, I don’t usually offer discounts on this membership, as I find them to undermine the value it provides—which is why I only offer my membership at full price or for free—but for some reason, I believe this Christmas is special, and I decided to make an exception.
You can claim this discount for yourself, or you can—what I think is an even better idea—gift paid subscriptions to your friends, colleagues, and/or family members at nearly half the usual cost. This discount represents a technical cost per in-depth stock analysis of roughly $1.80, which, even assuming just 1 analysis out of the 24 in a given year is implemented into a working investment, will pay for itself. I am most likely never releasing this type of offer again, so consider looking into it before the offer expires on December 26, 2024. Thank you all, and a very Merry Christmas!
Let’s get into it. (10 min read)
In this issue:
🚙 Honda-Nissan: A potential merger
📱 U.S. Supreme Court hears TikTok ban
🇨🇦 Chrystia Freeland resigns
FEATURED STORY
🚙 Honda-Nissan: A potential merger
Honda and Nissan are reportedly considering a merger to compete with the growing Chinese electric vehicle manufacturers like BYD and Li Auto. If merged, the new company would become the world’s third-largest automaker by sales. As of the time of writing, both companies have denied the reports, but talks, if any, could begin this upcoming Monday.
This is big news if true, so here are my thoughts:
What this means
As the world becomes ever so green, EVs are the future—whether we like it or not. It will take a while for us to completely adopt EVs, but they’re coming nonetheless. And China, of all places, has been the leader of this adoption—giving its carmakers large subsidies and squeezing Western, Japanese, and Korean automakers’ market share on a global scale. This problem is becoming much worse as Chinese automakers look to expand beyond the Chinese market.
Governments across the West have been placing large tariffs on Chinese automakers to stifle this growth, among other things, but it’s not working well, at least not for legacy automakers like Nissan and Honda, which they reportedly believe they can change by joining forces. And I agree.
By coming together, Honda and Nissan could pool their resources—combining their massive distribution networks, manufacturing capabilities, and advanced technologies—to fight off the looming Chinese EV dominance. In fact, this merger would fuel high costs of research and development into building cutting-edge EV technology at low enough prices to compete with these Chinese automakers. Yes, this means prices will remain relatively high in the short term until this research and development, along with the release of better models, comes to fruition. However, over the long term, a Honda-Nissan merger could potentially lead to the development of cheaper, better, more advanced vehicles because of these pooled resources—not only monetarily but also in terms of product offerings and advancements. Here’s what I mean by that:
Example A: Nissan is much further ahead of Honda in terms of autonomous driving, with many of their current models being sold with Nissan’s self-driving technology/cruise autopilot feature, ProPILOT. Nissan also has a larger presence in the European market.
Example B: Honda, on the other hand, is much further ahead of Nissan in engineering technology and robotics and has a bigger presence in the North American market.
… and I could go on and on. These two companies would complement each other impeccably well.
Imagine a car with Honda’s engine reliability and Nissan’s technology, all for less than $20,000. This is an example of what could eventually come if this merger were to go through. We need auto companies that can provide massive scale and add another option for consumers in the EV space. A Honda-Nissan merger is a great concept. For consumers, this could mean access to more diverse and higher-quality EV options in the future, which is undoubtedly something good for the world if we want people to shift to sustainable sources of transportation.
Consumers need high-quality EV options at relatively low prices that are reliable, last long on a charge, and have the latest technology that actually works. No one wants to give up their Ford F-150 that drives 888 km on a fill-up that takes ~5 minutes, for an electric Ford Lightning that only goes 386 km on a charge that takes anywhere from 40 minutes to 10 hours before you can drive1. It’s not a good trade-off at all. This merger would be a step closer to fixing these gaps in consumer doubts by pooling together engineering expertise, technology, supply chains, scale, and brand recognition to advance EV development. It’s a win-win.
This merger would be a much-needed score for consumers. It would provide a pathway for cheaper but much better EVs over the long term, with great reliability, excellent mileage, and advanced technology.
I’m not sure how likely this merger is to go through, but I hope it does. And I hope (and very much expect) other automakers to follow suit either with partnerships or more mergers. We need better, cheaper EVs with much improved aspects. Consumers need this, and automakers need a way to compete with China and win the race for EV adoption. Partnerships and mergers seem like the best way to solve both of these problems.
FINANCE
a. 💰 Google fined $75 million by Turkey
Turkey’s competition authority fined Alphabet (Google) 2.61 billion lira ($75 million) over the past week, for (and I quote) “taking advantage of its dominant position in ad server services market” by favouring its own ad platform service over rivals. And that by doing so, made its competitors’ operations difficult.
As part of this fine, Google must ensure within six months that competitors are not disadvantaged on Google’s platform, and Google provides third-party supply-side platforms (SSP) (aka, advertising analytics platforms) with alike conditions that are applied to its own services.
b. 🚚 FedEx spins off freight business
FedEx announced the spinoff of its freight trucking division to focus on its core delivery business this week, a move that could unlock up to $20 billion in shareholder value and help FedEx streamline its Express and Ground units for higher earnings. FedEx Freight is the largest U.S. less-than-truckload service provider and reported an 11% revenue drop in Q2 of fiscal-year 2025 due to the loss of cost-sensitive customers after Yellow Corp’s bankruptcy.
Even before this drop, shareholders have been asking the company to spin off this business, and thankfully company has listened. FedEx currently trades at a sizeable discount compared to other trucking companies like XPO and Old Dominion, but this is expected to change upon the spin-off (since the market will now value each separate company in a much fairer and more appropriate manner).
Related articles:
BUSINESS
c. 📱 U.S. Supreme Court hears TikTok ban
The U.S. Supreme Court has officially agreed to hear TikTok and ByteDance’s final rebuttal to a law signed at the beginning of summer, forcing the sale of TikTok by Jan 19, 2025 or facing a ban over national security concerns. TikTok argues that the law violates free speech under the First Amendment.
The U.S. Justice Department has claimed, and continues to claim, that TikTok poses a significant threat to U.S. security due to its large data access and content control capabilities in front of Americans (importantly, young Americans). The court is scheduled to hear arguments on Jan 10 but hasn’t yet acted on the ban itself. Even a temporary ban could cause large user and advertiser losses, TikTok says. TikTok denies sharing any U.S. user data.
Related articles:
d. 🚘 Waymo expands internationally
Google’s self-driving business is now going global. This Tuesday, Waymo announced a partnership with Japanese taxi service Nihon Kotsu and taxi app Go to bring its autonomous Jaguar I-Pace vehicles to Tokyo in early 2025. Human drivers will first map out areas so the Waymo system can continue learning and adapting to the new traffic environment of Tokyo.
While the autonomous vehicle industry faces high costs, technical challenges, and major regulatory hurdles, Waymo leads the pack, and it’s not even close. It continues to grow, expand its reach, and refine its technology, while being the only current company on the market with a fleet generating daily rides and actual revenue (unlike Tesla, although they’ll catch up eventually).
POLITICS
e. 🇨🇦 Chrystia Freeland resigns
Finance Minister and Deputy Prime Minister of Canada, Chrystia Freeland, one of Prime Minister Justin Trudeau’s most powerful allies (and the expected best option for Trudeau's replacement as leader of the Liberals), resigned on Monday, leaving Trudeau in the worst political position of the Western world after nearly 10 years of working alongside each other. When the leader of economic policy in your country resigns because of concerns over its own government’s economic policy… that’s a sign for the worst.
Freeland released her resignation letter to the Prime Minister shared with a post on Twitter, a few days after the two politicians had “irreconcilable” differences over economic policies, particularly with Trudeau’s tax holiday and $250 cash payments to Canadians, which she herself called “costly political gimmicks.” Freeland planned to try and reverse this policy but resigned before doing so, ahead of releasing Canada’s annual economic and fiscal report, which showed a national deficit of nearly $62 billion2.
Related articles:
📚 Book of the Week
For every book purchased using the links below, 100% of affiliate commissions are donated to charity. (Amount donated so far: $31.11.)
My full bookshelf: Here.
Influence - Robert B. Cialdini, Ph.D.
Book Description:
In the new edition of this highly acclaimed bestseller, Robert Cialdini—New York Times bestselling author of Pre-Suasion and the seminal expert in the fields of influence and persuasion—explains the psychology of why people say yes and how to apply these insights ethically in business and everyday settings. Using memorable stories and relatable examples, Cialdini makes this crucially important subject surprisingly easy. With Cialdini as a guide, you don’t have to be a scientist to learn how to use this science.
You’ll learn Cialdini’s Universal Principles of Influence, including new research and new uses so you can become an even more skilled persuader—and just as importantly, you’ll learn how to defend yourself against unethical influence attempts. You may think you know these principles, but without understanding their intricacies, you may be ceding their power to someone else.
Cialdini’s Principles of Persuasion:
Reciprocation
Commitment and Consistency
Social Proof
Liking
Authority
Scarcity
Unity, the newest principle for this edition
Understanding and applying the principles ethically is cost-free and deceptively easy. Backed by Dr. Cialdini’s 35 years of evidence-based, peer-reviewed scientific research—including a three-year field study on what leads people to change—Influence is a comprehensive guide to using these principles to move others in your direction.
Thanks for reading. Feel free to reply to this email or comment on the web if you need anything—I always reply. If you enjoyed today’s issue, feel free to share it with friends and family.
All the best,
Jacob
All my links here.
Completely accurate statistics used in this example. Some sources.
I should mention: This number is $20 billion, or 55% more than what the incumbent government promised to keep the deficit within range of.