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SIMULATIONS

SunCar

SunCar

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Anticipate today the business of tomorrow

Simulation SunCar   ASMB_SUN1_US_V6

Simulation scenario

The SunCar simulation enables you to experience a day of trading in financial markets.

During the simulation you will learn about news concerning the SunCar company. You will be able to buy and sell shares of the company via the SimTrade trading platform. In this simulation, you can send two types of order to the market : market orders (MAR) and limit orders (LIM).

Your goal is to maximize your trading gain.

At the start of the simulation, you own an account worth €30,000 in cash and 300 SunCar shares.

The duration of the simulation is initially set to 12 minutes (which corresponds to a 24-hour day). Using the TimeLine, you can increase or decrease the simulation speed at any time.

You must perform the simulation up to 100% for it to be considered as valid. You can restart the simulation as many times as you wish.

Notation

Your grade for this simulation (100 points) takes into account the following elements:

  • Your trading performance (40 points): your relative performance, that is to say the difference between your gain/loss on your position with your intervention during the simulation aand the gain/loss without your intervention (as if you hadn't sent orders)

  • Your trading activity (20 points) : the launch of the simulation (5 points), your determination to go to the end of the simulation (5 points) and the sending of at least one order to the market (10 points)

  • Your participation to the survey at the end of the simulation (40 points): the answsers to this survey (not graded) will be used for a research on the behavior of individuals about the analysis of information.

The Suncar company

Suncar designs, produces and sells low-speed electric vehicles for city use. The batteries of these solar powered cars (roof equiped with photovoltaic panels) can, if need be, be refilled at public charging points.

SunCar headquarters and manufacturing plant are located in Cergy-Pontoise, Ile-de-France. The company was founded by Jacques Dallara in 2001. Its team of designers, engineers and specialists in renewable energy create innovative vehicles that meet the regulatory requirements of the European market. The first prototype came out less than a year after the company’s launch and the production of the first vehicle - Suneo - started a few months later. The company’s high growth rate has been boosted by generous public policies and funding, and by consumers’ increasing demand for this type of vehicles.

Due to a severe illness, Jacques Dallara, the CEO, will be relinquishing his operational duties in the near future. At midday, SunCar is expected to announce the name of Jacques Dallara’ successor as head of the group. The two candidates for his replacement are: Anna Farrell and Henri Villa.

Evolution of the stock price

The stock price of SunCar (ticker symbol: SUN) has steadily increased since the initial public offering (IPO) in 2005. Its price has nearly tripled from its introductory price of €35. Stock price fluctuations have been associated with changes in governmental policy, especially those related to environmental issues, such as the development of electric supply infrastructure throughout France.

The stock price trend is bullish, reflecting changes in consumers’ preferences and changes in individuals' behavior as well as the expectation of more taxes on gas and diesel (vote of a new tax in the near future).

The SUN stock is currently priced around €100.

What will happen today...

Two major events are scheduled to take place today regarding the Suncar company: first, the choice of the person who will succeed Jacques Dallara as head of the group will be made public; second, the government will announce the results of the public tender for the purchase of electric cars by the French state.

At midday, the company will disclose the name of the successor of Jacques Dallara, Chairman and CEO of the company. He is suffering from a serious illness and is therefore forced to leave his operational duties of CEO. The recruitment process by a headhunter came to an end and the two candidates are: Anna Farrell and Henri Villa.

Depending on the result of the public tender, the price of SunCar shares should fluctuate strongly upwards or downwards. According to the market consensus, if SunCar wins the bid, this will result in substantial profits and the stock price will then stand at around €120. If SunCar loses the bid, the company will remain subject to the evolution of the business cycle and its stock price is expected to fluctuate around €80.

During the trading day you will therefore learn important news regarding the future of the company. You should be able to anticipate the impact of these news for the evolution of the company and its stock price.

What you will learn...

Teaching objectives: the SunCar simulation will enable you to become familiar with the key concept of market efficiency and how the news flow impacts the evolution of financial assets market prices. You will also discover key determinants of success for electric vehicle manufacturers.

Learning goals : the SunCar simulation will also allow you to learn the following skills:

  • Passing orders on the market

  • Analysing relevant information about the firm business (news flow)

Research in behavioral finance

The data regarding your trading activity during the SunCar simulation will be used as part of a behavioral finance research project developed by Prof. Longin and Prof. Santacreu-Vasut, at ESSEC Business School. The goal of this research project is to investigate the behavior of individuals in response to information flows.

This project has benefited from the support of Virginie Descoutures via the Center for Innovation and Pedagogy Research Paris (CIRPP).

The data of the simulation and the survey will be used anonymously.

About the authors of the simulation

Professor Estefania Santacreu-Vasut
ESSEC Business School


« The bottom line is processing information. The market anticipates what will happen, but things never go as planned. The market reacts to rumors and adjusts to the news. How will you react? What are you going to do? »

 

Professor François Longin
ESSEC Business School


« Before launching the SunCar simulation, remember that the market is always right; and that the market is always right, even when it is wrong ... »