Volkswagen, Nova Pacific Metals, D-Wave Quantum – Is a trade war about to break out?

Volkswagen – Electric mobility will no longer be subsidized in the US

While former President Biden promoted electric mobility and wanted to increase sales of electric vehicles to at least half by 2030, the new president has abandoned these goals. In the process, government funding for the development of a charging infrastructure was also terminated. This could slow down the growth of electric mobility. This is not good news for Volkswagen, which has not seen any tariff problems at its production sites in the US. The Wolfsburg-based company wants to switch its production completely to electric vehicles.

The Company also has to replan in Europe. Plant closures in Dresden, Osnabrück and Brussels are on the agenda. Costs are too high and are putting pressure on profitability. These restructuring measures are expected to lead to significant savings and a renewed increase in margins. While Volkswagen may want to give up production facilities, Chinese manufacturers see this as an opportunity. Taking over a plant in Germany would make it possible to circumvent European import tariffs of over 30%. In addition, it would increase market presence. Experts see possible selling prices between EUR 100 and 300 million per plant.

Despite the challenges, the fundamental data of the share are favorable. The price-to-book ratio is just 0.31, and the price-to-earnings ratio is 3.33. This makes the discrepancies to the intrinsic value of the share quite obvious. Once the restructuring is complete, the Company should have higher margins, and as a result, profits should climb significantly. So far in January, a total of six analysts have commented on the situation. Two recommend buying, three recommend holding, and UBS recommends selling. The target prices are between EUR 98 and 115. The share is currently available for purchase at EUR 96.52.

Nova Pacific Metals – A beacon of hope for strategic raw material projects

Electrification and other technological advances are fueling demand for critical raw materials. China has already shut down some raw material exports, and if Western countries want to ensure their independence, they need alternatives. One could be Nova Pacific Metals, which offers several critical raw materials and precious metals with its flagship Lara-VMS project. These include zinc, lead, copper, gold, and silver. The first three metals are key components for electric vehicles. Since the 1980s, more than 220 holes with over 60,000 meters have been drilled. Based on these results, the new but experienced management has started its exploration work.

On December 19, the Company published the results of a backpack drilling program on the Lara property. 21.7 g/t gold, 418 g/t silver, 48.12 g/t zinc, 4.59 % lead, 2.67 % copper, and 1,425 g/t antimony were discovered. These high grades are consistent with the high-grade historical findings. In the second quarter, the Company plans to drill 49 holes totaling 10,000 meters. These results will be used to prepare a new mineral resource estimate to replace the 2007 estimate. At the same time, work is being done to create a basis for a future production decision. Once production begins, the Company can finance further exploration work from the revenues, which should further enhance the project.

The work is being paid for from the private placement in December, which brought in around CAD 2.64 million. On January 22, the Company announced the formation of an advisory board to further enhance management expertise. In addition to Scott Young, Dr. Tom Setterfield, a specialist in volcanogenic massive sulfide deposits, was appointed. Mr. Young contributes his experience in the areas of corporate development and finance. In addition, the Company works closely with local communities and stakeholders to meet social and environmental standards. The stock is currently trading at CAD 0.425, resulting in a low market capitalization of around CAD 16 million. This is likely to change quickly if the drill results are positive.

D-Wave Quantum – Is it too early for a new hype?

Copper is essential for quantum computing, and scientists in this field are researching materials based on it. After the introduction of the Willow processor, several stocks in this area jumped. One is D-Wave Quantum, which has already made a name for itself with annealing-based and gate-model quantum computers. This is demonstrated by its partnerships with Google and NASA. More than 5,000 qubits, a bit that, unlike a classical bit, can assume more states than just 0 and 1, run on the D-Wave Advantage quantum computer. In the long term, the potential for this advanced technology is high.

The Company was able to capitalize on the strong price increase and secured USD 150 million through a capital increase. This significantly improves the financial situation because, after the placement of the shares, the Company currently has about USD 320 million. These funds are to be invested in research and development and thus sustainably strengthen the business model in the long term. Analysts assume that the Company could significantly increase its revenues in the near future due to increasing market demands.

Despite these promising prospects, investors need to be aware of the risks. Quantum computing for the masses is still a long way off. NVIDIA CEO Jensen Huang recently caused a crash in this stock sector with his concerns about short-term applicability. D-Wave Quantum's revenues are also not covering costs, although this is often the case at the beginning of a growth market. In the long term, D-Wave could offer high return potential for investors willing to take risks. Currently, the stock seems to be under pressure. A share certificate currently costs USD 6.09.

Since the exact amount of the tariffs and the further course of action by the US is not yet certain, it remains difficult to assess whether there is a threat of a trade war. However, tensions between the US and China have been around for some time. Volkswagen is struggling with the transformation to electromobility and at the same time has to compensate for weaker demand. Nevertheless, the stock is favorably valued. Nova Pacific Metals could benefit from the growing demand for critical raw materials. To this end, the Company wants to update its resource estimate as quickly as possible and go into production. D-Wave Quantum has prestigious partnerships, but to survive in the long term, it needs to increase its revenues to cover research and development costs.