Tesla’s moves in China, Amazon price target cut, Polestar to go public

Brian Sozzi, Julie Hyman, and Brian Cheung break down Monday’s trending tickers which include: Tesla shareholders receiving a recommendation to reject Kimbal Musk and Murdoch as board members, Morgan Stanley cutting Amazon’s price target as concerns over the company’s profitability take center stage, and Polestar partnering with Gores Guggenheim in a SPAC deal to go public.

Video transcript

BRIAN CHEUNG: Welcome back to "Yahoo Finance Live." Just a couple of minutes to the start of the opening session here on this Monday and the start of the trading week as well. You can see futures right now just a bit positive on the Dow. But you can see maybe the NASDAQ set for a little bit of a nasty open, down almost 1%. But we'll see again as we get closer to the opening bell.

But let's take a look at some Trending Tickers and some stocks that we're watching on the start of this week. First off, Tesla, there's a little bit of board drama as the Institutional Shareholder Services proxy advisory recommended that Tesla investors reject two board members standing for re-election, one of which is Elon's own brother Kimball Musk. The other is James Murdoch, the former CEO of 21st Century Fox.

And Julie, the ISS says that they were receiving, quote, outlier levels of pay without a compelling rationale, which I guess might not necessarily question necessarily just Tesla but maybe board members at large across all these large companies. But I mean, what's your take on whether or not this is going to impact Tesla, or if this is a really serious proxy fight here?

JULIE HYMAN: I mean, Tesla has sort of, from a governance perspective, mostly done what it wanted under Elon Musk, although he has gotten a little bit more oversight and, of course, had to agree to have more oversight in particular over his tweets. If you read his tweets, I don't know what kind of oversight they're getting half the time. But the point is, not clear that this will have much effect.

And there you see the opening bell there. A company called Jackson Financial celebrating its recent listing.

[BELL RINGS]

But when it comes to Tesla, this doesn't seem to be having any effect on the stock, as you can see there in terms of it having an effect on the operation of the board. However, Institutional Shareholder Services is a fairly influential organization. And I think if you get enough of these sorts of stories questioning Tesla's governance, it will potentially, down the line, have some kind of effect in terms of maybe changing the composition of the company's board.

It doesn't feel like that kind of action is imminent. And I know, Brian Cheung, you're also watching what's going on not just with the governance of the company but the company also rolling out its full self-driving beta software, which is controversial as well. So a couple of different things here when it comes to what to watch for Tesla.

BRIAN CHEUNG: Yeah, Sozzi, I don't know, if you had a thought there. I mean, yeah, the full self-driving beta apparently is going to allow access to autosteer on city streets, which these are not yet debugged features, which to me sounds a little risky. But a whole separate point for Tesla.

BRIAN SOZZI: Yeah, yeah, don't ride your electric bike in front of that one there, Brian Cheung. I'll just really quickly mention the Tesla board here. It really doesn't matter. It's Elon's company. We've learned this time and time again over the past five years. Elon is in firm control of the board. He's in firm control of the executive committee. It's his company.

I would be more concerned if you're trading Tesla, you're an investor in Tesla, why Kathy Wood, a longtime Tesla bull, has been selling stocks over the past few weeks into the company's earnings that are coming up.

BRIAN CHEUNG: Well, let's move on to Amazon. Morgan Stanley is out with a cut to its price target from 4,300 to 4,100, so just slightly less upside from where we are right now at almost 3,380. Morgan Stanley is citing rising headcount and higher wages leading to more cost pressures, which, guys, I mean that just seems to be a story for not just Amazon but maybe all companies in this type of labor market. So I know if you guys have any thoughts about whether or not this should be a broad downgrade, maybe not just for Amazon, maybe the whole S&P 500. I mean, what's the story here?

[INTERPOSING VOICES]

JULIE HYMAN: Sorry. Go ahead, Soz.

BRIAN SOZZI: Yeah. I was just going to say, look, this has been priced into Amazon's stock for really the entire year. Amazon shares are only up 4%. The NASDAQ is up about 17% year to date. The Street is growing concerned with the rising costs of Amazon doing business in this ever-faster world.

And you're seeing, obviously, them paying higher hourly wages to workers in warehouses. The compensation is going up for employees at their headquarters. It has to come out of somewhere. And keep in mind, this comes at the same time as Amazon is trying to push forward with, really, a faster same-day delivery service.

So of course, I think, guys, this could be a first in a series of price target reductions on Amazon as the Street realizes this company's profits are not going to be as strong as they think.

JULIE HYMAN: I would say a couple of things. First of all, as Brian pointed out, Cheung pointed out, we're talking about a 19% rally from Friday's close instead of a 25% rally. Big deal. It's not much of a price target haircut here.

The other thing I would say is, obviously, Amazon has a history of playing with its margins, right? This is a company that has a lot of margin levers it can pull. And I would say the Street has been quite patient with the company as it has pulled those levers.

Now sometimes when that has happened though, that has been Amazon's self-imposed, right? That's been Amazon saying, we're going to invest in this part and take a profit hit in the short term in order to grow the company over the longer term. And again, that has been greeted well by the Street.

We'll see what happens this time around when it's not necessarily self-imposed, although Amazon could still argue, we're making investments in wages, in benefits, for example, to have a more solid worker base over the longer term. So it'll be interesting to see how the market reads all of this. But a 19% rally from here, if that's indeed what happens, that ain't bad.

BRIAN SOZZI: I see your point, Julie, on the price target. I will just push back a little bit here. It's more about the signal that this sends to, I think, the rest of the analysts that cover Amazon on the Street. This could be the signal that other analysts now need to take down their estimates on Amazon. And it may not hit the stock today. I feel you. But it's something that could hit the stock moving forward as the Street takes down their profit forecasts on Amazon because of the higher cost of doing business.

JULIE HYMAN: Yeah, fair. Well, it is hitting it today. [CHUCKLES]

BRIAN CHEUNG: I mean, broadly speaking, I do think this brings up an interesting debate about which types of companies, whether or not they're more capital-exposed or more labor-exposed to these types of cost pressures, especially if these labor cost increases are going to be more permanent. We'll see if that's going to affect companies like Amazon more than, say, a Netflix or other types of companies that are a bit more capital-intensive. But we'll see. And we'll save that conversation for a later date.

But the last stock I want to watch here, or not stock maybe not necessarily rather, but one that could become a stock soon, Gores Guggenheim. It's a SPAC. And its target is Polestar, that's an electric vehicle maker backed by Volvo and Leonardo DiCaprio, for some reason. The agreement on the SPAC merger will value the company at roughly $20 billion.

So again, GGPI here on the rise on that news. But I don't know if you guys have thoughts on this. It seems like there's another EV that's making the news every single day, seemingly, through these types of SPAC deals. But Julie, obviously getting a lot of attention this morning.

JULIE HYMAN: Well, this one is a big one, right? This is not some experimental electric vehicle maker. This company sells cars. It's owned by Volvo or controlled by Volvo, which in turn is controlled by Geely, the Chinese company. Leonardo DiCaprio apparently is an investor in this thing also.

So this company already sells-- I think their deliveries this year, they're targeting something like 29,000. So this is a company that already is rolling cars off the production line. I think they're made in China. And the company, in a few years, is expecting to be, I believe again, EBITDA-positive.

So this one is a little bit different than some of the experimental ones that we tend to talk about. And on that point by the way, I just noticed Lordstown is being cut to sell over at Goldman. So just drawing a bit of a contrast there between Polestar, which is a little bit more of a mature company, and some of the experimental up-and-comers.

BRIAN SOZZI: Yeah, it's funny to watch. I've seen some of the reviews on the Polestar. And essentially, if you really look closely at, it it's just a Volvo with no Volvo branding and a real higher price tag. I mean, there it is. I mean, it's essentially a Volvo here, guys, with an electric motor in it.

But again, it'll be interesting to follow another electric vehicle maker here. And I am starting to wonder. I mean, there's going to be so much competition for shareholders in electric vehicles. You got Lucid. You have Tesla. You have the remnants of whatever Lordstown is here. I mean, there's a lot of here floating into the electric vehicle space. And if you're an investor, you don't have to own all these names.

BRIAN CHEUNG: Well, many of the traditional OEMs too. But I mean, personally, I think that car looks pretty good. Although, if you're going to buy a Volvo, I guess the selling point has always been the safety not necessarily anything about the engine or the way that the car itself on the inside is put together. But we'll see how that does. Again, Gores Guggenheim moving on that news.