according to people familiar with the matter, as the drugstore and insurance giant looks to expand in home-health services.
Signify Health is exploring strategic alternatives including a sale, The Wall Street Journal reported this past week. Initial bids are due this coming week and CVS is planning to enter one, some of the people said. Others also are in the mix, they said, and CVS could face competition from other managed-care providers and private-equity firms.
There is no guarantee any of them will reach a deal for Signify, which has a market value of around $4.7 billion after its shares rose on the news of a potential sale.
For Woonsocket, R.I.-based CVS, which has a market value of $134 billion, a deal would help fulfill its stated ambition to become an even bigger provider of medical services. The company has indicated it hopes to have a deal in place to help it do so by year-end. Wall Street has largely focused on CVS’s efforts to add primary-care practices and doctors to its payroll, though executives have also discussed their ambitions to expand its in-home health presence.
CVS, parent of the eponymous drugstores and the Aetna health-insurance operation, had eyed a deal for the parent of One Medical, people familiar with the matter said, before
Amazon.com Inc.
agreed to buy the primary-care clinic operator for about $3.9 billion last month.
Signify uses analytics and technology to help health plans, employers, physician groups and health systems with in-home care. It also offers in-home health evaluations for Medicare Advantage and other government-run managed-care plans. At the close of its deal this year to buy Caravan Health Inc., Signify said it supported roughly $10 billion in total medical spending.
Signify went public in February 2021. Even after rallying recently, the shares, which closed Friday at $19.87, are below their $24 IPO price. In July, the company said it planned to wind down one of its units after changes to a government-payment model and focus on more-profitable businesses.
New York-based private-equity firm New Mountain Capital is an investor in Signify after first backing it in 2017. The firm is well-versed in the sector, having sold healthcare payments firm Equian LLC to
UnitedHealth Group Inc.
for about $3.2 billion in 2019.
Write to Cara Lombardo at cara.lombardo@wsj.com, Laura Cooper at laura.cooper@wsj.com and Sharon Terlep at sharon.terlep@wsj.com
Technology stocks have taken a beating this year. Many individual investors have used it as an opportunity to double down.
The Nasdaq Composite Index—home to the big tech stocks that propelled the market’s decadelong rally—has fallen 21% in 2022. Shares of
Amazon.com Inc.
AMZN 10.36%
and the parents of Google and
Facebook
META -1.01%
have suffered double-digit declines as well, stung by higher interest rates and souring attitudes about their growth prospects.
Yet many of those stocks remain the most popular among individual investors who say they are confident in a rebound and expect the companies to continue powering the economy.
In late July, purchases by individual investors of a basket of popular tech stocks hit the highest level since at least 2014, according to data from Vanda Research. The basket includes the FAANG stocks—Facebook parent Meta Platforms Inc., Amazon,
Apple Inc.
AAPL 3.28%
,
Netflix Inc.
and Google parent
Alphabet Inc.
GOOG 1.79%
—along with a handful of others like
Tesla Inc.
and
Microsoft Corp.
Meanwhile, Apple, chip company
Advanced Micro Devices Inc.
and the tech-heavy Invesco QQQ Trust exchange-traded fund have remained among the most popular individual bets since 2020.
Interest in risky and leveraged funds tied to tech and stocks like
Nvidia Corp.
has also swelled, a sign that investors have stepped in to play the wild swings in the shares.
It has been a fruitful bet for many. Tech stocks have been on the rebound of late, partly on investor hopes for a slower path of interest-rate increases in the months ahead. The Nasdaq gained 12% in July, its best month since April 2020, outperforming the broader S&P 500, which rose 9.1%.
Individual investor Jerry Lee says: ‘The market is severely undervaluing how much tech can actually play into our lives.’
Photo:
Peggy Chen
“I’m extremely bullish on tech,” said Jerry Lee, a 27-year-old investor in New York who co-founded a startup that helps people find jobs. “The market is severely undervaluing how much tech can actually play into our lives.”
In coming days, investors will be parsing earnings reports from companies such as AMD and
PayPal Holdings Inc.
for more clues about the market’s trajectory. Data on manufacturing and the jobs market are also on tap.
Mr. Lee said he recently stashed cash into a technology-focused fund that counts Apple and Nvidia among its biggest holdings, after years of pouring money into broad-based index funds. His experience working at firms such as Google has made him optimistic about the sector’s future, he said.
Gabe Fisher holds stock in Meta Platforms, Amazon and Alphabet.
Photo:
Ethan Kaplan
Even last week when many of the industry’s leaders, including Apple, Amazon and Alphabet, warned their growth is slowing, investors pushed the stocks higher and expressed confidence in the ability of the companies to withstand an uncertain economy. Apple logged its best month since August 2020, while Amazon finished its best month since October 2009, helped by a 10% jump in its shares on Friday alone.
Many investors also pounced on the tumble in shares of Facebook parent Meta Platforms. The stock was the top buy among individual investors on the Fidelity brokerage Thursday when it fell 5.2% in the wake of the social-media giant’s first-ever revenue drop. Tesla,
Ford Motor Co.
and leveraged exchange-traded funds tracking the tech-heavy Nasdaq-100 index were also widely traded that day.
Gabe Fisher, a 23-year-old investor near San Francisco, said he is holding on to stocks like Meta, Amazon and Alphabet.
“Even if these companies never grow at as fast of a pace, they’re still companies that are so relevant and so prevalent that I’m going to hold on to them,” Mr. Fisher said.
He said he also has a small position in
Cathie Wood’s
ARK Innovation Exchange-Traded Fund that he doesn’t plan to sell soon, even though the fund has lost more than half of its value this year.
Other investors have been turning to riskier corners of the market. Leveraged exchange-traded funds tracking tech have been the third- and fourth-most-popular ETFs for individual investors to buy this year, behind funds tracking the S&P 500 and Nasdaq-100 indexes. These funds allow investors to make turbocharged bets on the market and can double or triple the daily return of a stock or index.
Many individual investors have also turned to the options market to bet on tech. Bullish bets that would pay out if Tesla shares rose have been among the most widely traded in the options market, according to Vanda. Individual traders have spent more on Tesla call options on an average day this year than on Amazon, Nvidia and options tied to the Invesco QQQ Trust combined, according to Vanda. The firm analyzed the average premium spent on options that are out-of-the-money, or far from where the shares are currently trading.
Jeff Durbin, a 59-year-old investor based in Naples, Fla., said he regrets missing out on buying big tech stocks decades ago.
He has scooped up shares of companies like artificial intelligence firm
Upstart Holdings Inc.
and
Shopify Inc.
SHOP -3.01%
—and hung on despite their sharp swings. Shopify, for example, dropped 14% in a single session last week as it said it would cut about 10% of its global workforce. “It’s painful, but I missed out on things like Amazon and Netflix when they were cheap,” Mr. Durbin said. “Who is going to be the Amazon and Apple 20 years from now?”
Amazon shares climbed more than 11% in extended trading on Thursday after the company reported better-than-expected second-quarter revenue and gave an optimistic outlook.
EPS: Loss of 20 cents
Revenue: $121.23 billion vs. $119.09 billion expected, according to Refinitiv
Here’s how other key Amazon segments did during the quarter:
Amazon Web Services: $19.7 billion vs. $19.56 billion expected, according to StreetAccount
Advertising: $8.76 billion vs. $8.65 billion expected, according to StreetAccount
Revenue growth of 7% in the second quarter topped estimates, bucking the trend among its tech peers, which have all reported disappointing results.
Amazon said it expects to post third-quarter revenue between $125 billion and $130 billion, representing growth of 13% to 17%. Analysts were expecting sales of $126.4 billion, according to Refinitiv.
Amazon recorded a $3.9 billion loss on its Rivian investment after shares of the electric vehicle maker plunged 49% in the second quarter ended June 30. That resulted in a total net loss of $2 billion, and brings its loss for the year to $11.5 billion on the Rivian investment.
Because of the Rivian writedown, analyst estimates varied dramatically, making it difficult to compare actual results to a consensus number.
Amazon’s ad business is a bright spot in an otherwise gloomy quarter for online advertising, and shows the company is picking up share in one of its fastest-growing businesses.
Ad revenue climbed 18% in the period. Facebook, meanwhile, recorded its first ever drop in revenue this week, and forecast another decline for the third quarter. At Alphabet, advertising growth slowed to 12%, and YouTube showed a dramatic deceleration to 4.8% from 84% a year earlier.
Amazon on Thursday said it is paying $18 a share in cash for San Francisco-based 1Life Healthcare. Based on a recently disclosed share count, the deal would be worth about $3.5 billion excluding debt.
One Medical is a membership-based primary-care practice with offices in 12 major U.S. markets, according to its website. It offers healthcare service in person and provides access to virtual care as well. It works with more than 8,000 companies to provide One Medical health benefits to their employees.
The deal price marks a roughly 77% premium, based on where shares of 1Life Healthcare closed on Wednesday.
Shares of 1Life Healthcare rose 68% to $17.10 on Thursday. Amazon shares fell slightly to $122.37.
Amazon has significant ambitions in healthcare, and CEO
Andy Jassy
has made expansion in the space a priority.
“We think healthcare is high on the list of experiences that need reinvention,” said
Neil Lindsay,
senior vice president of Amazon Health Services.
Once the deal closes, One Medical’s chief executive officer,
Amir Dan Rubin,
will remain as CEO of the business.
Launched in 2019, Amazon Care expanded from a service offered to employees in Washington state to a health service with telemedicine components that the company is seeking to provide throughout the U.S. Amazon has said it has signed several agreements with companies to offer the service to their employees, in addition to its own workers.
Amazon’s goal is to be capable of providing a service that can begin with a chat in an app, continue with a virtual visit with a healthcare professional and even include a home visit within an hour after a user connects with the service. It could end with the delivery of prescription medication to a patient’s home, Amazon executives have said.
Amazon has also launched its own pharmacy business after buying online pharmacy PillPack Inc. about two years ago.
The most expansive version of Amazon Care isn’t yet available over all the U.S. The company said the telehealth component would be available nationwide last summer, and in-person care would be available in cities such as Washington, D.C., and Baltimore.
One Medical, a tech-based primary-care company, has sought to position itself as a convenient and flexible option for patients and for employers who offer healthcare benefits to workers.
Its concierge-like model offers members virtual medical visits, wellness coaching apps and in-person visits. One Medical ended last year with 182 medical offices in 25 U.S. markets and plans to expand its geographic reach this year, according to its Securities and Exchange Commission filings.
The company faced a Congressional investigation last year into its handling of Covid-19 vaccine distribution. The investigation concluded the company used “its access to scarce coronavirus vaccines to promote the company’s business interests and push vaccine seekers toward paying for One Medical memberships,” and that One Medical employees prioritized immunization for relatives and friends.
As part of the deal, the private-equity firm
Carlyle Group Inc.,
which made a minority investment of up to $350 million in One Medical in 2018, would exit its position in the company, according to a person familiar with the investment. The investment was made before 1Life Healthcare’s 2020 initial public offering.
has started drastically reducing the number of items it sells under its own brands, and the company has discussed the possibility of exiting the private-label business entirely to alleviate regulatory pressure, according to people familiar with the matter.
Amazon’s private-label business, with 243,000 products across 45 different house brands as of 2020, has been a source of controversy because it competes with other sellers on its platform. The decision to scale back the house brands resulted partly from disappointing sales for many of the items, the people said. It also came as the retail-and-technology giant has faced criticism in recent years from lawmakers and others that it sometimes gives advantages to its own brands at the expense of products sold by other vendors on its site.
Over the past six months, Amazon leadership instructed its private-label team to slash the list of items and not to reorder many of them, the people said. Executives discussed reducing its private-label assortment in the U.S. by well over half, one of them said.
Dave Clark initiated a review of Amazon’s private-label business.
Photo:
LINDSEY WASSON/REUTERS
The move was initiated after a review of the business by
Dave Clark,
a longtime Amazon executive who took over as head of its global consumer business in January 2021, the people said. Mr. Clark left the company last month. As a result of that review, Mr. Clark pushed the team to focus on bestselling commodity goods, along the lines of
Target Corp.’s
“Up & Up” or
Walmart Inc.’s
“Great Value” brands, rather than offer the extensive range of items Amazon currently does, the people said.
Amazon’s private-label business started in 2009 with consumer electronics products such as cables and expanded into other categories. It now encompasses everything from vitamins and coffee to clothing and furniture, with brand names such as Amazon Basics, Goodthreads and Solimo. However, Amazon has said that its house brands only account for about 1% of its retail sales. Amazon’s revenue last year, including other businesses such as its cloud-computing operation, totaled $469.8 billion.
The growing scale of its own offerings increasingly put Amazon in competition with other sellers on its platform, angering those sellers and resulting in antitrust scrutiny.
In 2020, The Wall Street Journal detailed how Amazon employees used data from its platform on individual third-party sellers to develop Amazon-branded products that compete with those sellers. The Journal also reported that year how some major brands were angered by products Amazon developed for its own labels that closely resembled their items, claiming the tech company copied their designs.
Amazon at the time said it was opening an internal investigation into how its private-label employees use seller data and if they were violating a company policy not to use such data. In testimony to Congress, then-CEO
Jeff Bezos
said “I can’t guarantee you that policy has never been violated.”
Amazon’s handling of such competition issues has been under scrutiny from a congressional committee investigating big tech companies and from regulators including the Securities and Exchange Commission, which the Journal reported in April was examining how the company disclosed some details of its business practices. The Federal Trade Commission has been investigating Amazon’s competitive practices.
Amazon Basics products on display at an Amazon 4-star store in Berkeley, Calif., in 2019.
Photo:
Cayce Clifford/Bloomberg News
Amazon has said its platform provides opportunity for nearly two million small- and medium-size businesses that sell there, and that it competes fairly and in a way that benefits its customers.
The scrutiny has prompted Amazon executives over the past year to consider fully exiting private brands, and how the company might go about that, the people said. The executives decided not to take any action until necessary, potentially as a concession they could offer if the FTC or another regulatory agency were to threaten or file litigation, some of the people said.
After a version of this article published online, Amazon said in a statement that: “We never seriously considered closing our private label business and we continue to invest in this area, just as our many retail competitors have done for decades and continue to do today.”
A spokeswoman declined to comment on whether it has discussed the possibility, or to say how many private label items it is cutting.
U.S. lawmakers have proposed legislation aimed at big tech companies including Amazon that would bar dominant tech platforms from favoring their own products and services. On Thursday, Amazon proposed concessions to settle two antitrust cases against it in the European Union. Amazon promised not to use nonpublic data about sellers on its marketplace, after the EU accused Amazon of violating competition law by using nonpublic information from merchants to compete against them.
Mr. Bezos, who stepped down as CEO last year to be executive chairman, has long been a backer of the private-label business. In the past he has bristled at its relatively small sales, said some of the people.
A few years ago, Mr. Bezos gave the private-label team a goal to reach 10% of Amazon sales by 2022, the Journal has reported. The team responded by rapidly adding thousands of items to try to juice sales, said the people involved.
Many items ended up sitting in warehouses or needing to be marked down.
Under Mr. Clark, private-label teams did a profitability review of each private-label item, determining which ones didn’t sell enough to hit their profit threshold and targeting them to be phased out. The strategy now is to make fast-selling private-brand items, such as Amazon’s phone-charging cables, that it can place at warehouses all over the country to deliver quickly, some of the people said, instead of tens of thousands of items that sell in low quantities.
is exchanging its top finance executive about four months after it named a new chief executive, a move that comes as the fitness-equipment maker navigates persistent losses.
The New York-based at-home exercise equipment company on Monday said
Liz Coddington
will serve as its chief financial officer, effective June 13. Peloton said its current CFO,
Jill Woodworth,
decided to leave after more than four years with the company.
Peloton said Ms. Woodworth will remain with the company as a consultant on an interim basis to help prepare the fiscal year 2022 financial results.
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Ms. Coddington most recently served as vice president of finance for Amazon Web Services, an
Amazon.com Inc.
subsidiary that provides on-demand cloud computing platforms. Before that, she held CFO and leadership finance roles at companies including retailer
Walmart Inc.
and streaming business
Netflix Inc.
Ms. Coddington joins Peloton as the company is dealing with waning demand from consumers after facing issues around its ability to meet orders, which soared during the early stages of the pandemic. The surge in demand for Peloton bikes led the company to break ground on a million-square-foot factory in Wood County, Ohio, last year.
Peloton is now looking to sell the factory that it will never use. The company also slashed prices for its equipment, projected slower growth and had to borrow $750 million to fund its operations.
Peloton in May reported its largest quarterly loss since the company went public in 2019, reporting a net loss of $757.1 million for the quarter ended March 31, compared with a loss of $8.6 million in the prior-year period.
In February, Peloton replaced Chief Executive
John Foley
with
Barry McCarthy,
who previously led the finances of digital music service
Spotify Technology SA
and Netflix. The company also cut 2,800 jobs amid reduced demand for its exercise equipment. Mr. Foley was closely associated with the company’s growth phase after its public offering and the revenue surge early in the pandemic.
The change in the CFO-seat makes sense given the continuing restructuring under Mr. McCarthy, said
Rohit Kulkarni,
managing director at equity trading and research firm MKM Partners LLC.
“As the new CEO puts his mark on the organization’s structure and aligns it with where he wants the company to go, these changes are not completely surprising,” he said.
With Peloton’s fiscal year ending June 30, Ms. Coddington will very quickly be “under a bigger investor microscope,” as the expectation is that the company will release fiscal year guidance soon after she joins, Mr. Kulkarni said. “It will be a challenging task to provide that new guidance.”
Write to Jennifer Williams-Alvarez at jennifer.williams-alvarez@wsj.com and Mark Maurer at Mark.Maurer@wsj.com
will slow hiring, reduce the budgets of some of its departments and grant new stock options to some employees to make up for its eroding share price, joining rival
Uber Technologies Inc.
UBER -9.38%
in outlining cuts as investor optimism cools on tech stocks.
President
John Zimmer
announced the measures Tuesday in a memo to staff.
“It’s clear from our discussions with other business leaders that every company is taking a hard look at how they respond to concerns about an economic slowdown and the dramatic change in investor sentiment,” Mr. Zimmer wrote in an internal memo viewed by The Wall Street Journal.
“Given the slower than expected recovery and need to accelerate leverage in the business, we’ve made the difficult but important decision to significantly slow hiring in the US,” he said.
That includes the company giving priority to fewer initiatives, not filling many of the current open roles and focusing hiring on roles deemed critical, such as those that support its core rides business, Mr. Zimmer said. He said there are no layoffs planned.
Lyft’s board met on Friday to discuss the cuts, said a person familiar with the meeting. Lyft began signaling to some employees recently that there would be a hiring slowdown and cutting of budgets, another person familiar said.
Lyft shares have lost more than 60% since the start of the year, more than double the decline of the Nasdaq Composite Index. After declining more than 15% Tuesday, Lyft shares were up less than 1.5% in after-hours trading after the Journal reported about the plans.
Uber Technologies also has outlined budget cuts. An Uber driver in Paris.
Photo:
Nathan Laine/Bloomberg News
Tech companies that powered the U.S. economy during the pandemic are suffering through a punishing stretch. Concerns about rising interest rates and the reversal of some pandemic trends that bolstered tech revenues have hit the share prices of
Peloton Interactive Inc.,
PTON -8.08%
Netflix Inc.,
Amazon.com Inc.
AMZN -3.21%
and others.
Last month Amazon reported the slowest quarterly revenue growth in about two decades. Netflix lost subscribers during its first quarter for the first time in more than a decade and signaled that losses are set to continue.
Apple Inc.
AAPL -1.92%
cautioned that the resurgence of Covid-19 in China could hinder sales.
The shares of
Snap Inc.
SNAP -43.08%
tumbled 43% Tuesday after it said in a Monday filing that revenue and adjusted pretax earnings for the second quarter will come in below the range the company projected barely a month ago due to weak advertising revenues. Other tech stocks that rely on digital advertising, including Google parent
Alphabet Inc.
GOOG -5.14%
and
Facebook
parent
Meta Platforms Inc.,
FB -7.62%
also fell.
After years of adding jobs at a rapid pace, some tech companies have been broadcasting that they think it is time to take a more cautious approach. The pullback by tech giants raises questions about the direction of the overall U.S. job market and economy.
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Major news in the technology sector.
Meta, Peloton and Uber are among the tech companies that have announced they will slow hiring or re-evaluate their head count in recent weeks.
Among the other issues cooling the long-hot sector: inflation, labor shortages and supply-chain issues.
Uber and Lyft are struggling with a year-long driver shortage that has pushed fares to record highs. The elevated fares have partly resulted in fewer Lyft riders and fewer Uber trips compared with before the health crisis, though both companies’ first-quarter revenue outpaced prepandemic levels on the back of higher prices.
Lyft’s first-quarter results were overshadowed by a weaker-than-expected earnings outlook as the company said it would need to spend more money to incentivize drivers to return. Its stock tumbled more than 35% after the announcement, marking the biggest percentage drop in a single day since the company went public in 2019.
Earlier this month, Uber said it would cut spending on marketing and scale back on hiring as it focuses on turning a profit.
Both companies spent big for years to gain customers and market share. But their 2019 public offerings disappointed, with Wall Street increasingly wanting to see money-losing companies turn a profit.
“As we’ve seen and discussed, public market investors have continued to sharply shift their focus onto a potential recession and a company’s ability to deliver near-term profits,” Mr. Zimmer wrote in Tuesday’s memo.
He went on to write that “our near-term action plan will be focused on accelerating profits—whether we like it or not, that’s the ticket of entry in today’s market.”
Uber and Lyft have trimmed their losses, unloading costly divisions such as their self-driving units and cutting staff during the health crisis. Both companies turned a quarterly adjusted profit before certain expenses like interest, taxes and depreciation last year.
Uber said it expects to be cash-flow positive on a full-year basis this year. If it meets that goal, it would mark the first time the underlying operations of the ride-share and food-delivery giant generate more money than it spends.
Write to Preetika Rana at preetika.rana@wsj.com and Emily Glazer at emily.glazer@wsj.com
TOKYO—After a deal that could have been worth $80 billion to his company fell apart,
SoftBank Group Corp.
9984 5.85%
Chief Executive
Masayoshi Son
is playing salesman for Plan B—an initial public offering of chip designer Arm.
Mr. Son sounded as if he were on a roadshow for investors at a news conference in Tokyo on Tuesday. He said Arm is entering a “golden period” of high demand for the chips it helps create in smartphones, electric vehicles and computer-server farms operated by the likes of
Amazon.com Inc.
The pitch came hours after the Japanese investment and technology conglomerate said it was abandoning plans to sell Arm to Nvidia Corp.—in what would have been the largest semiconductor deal on record—because antitrust concerns stood in the way.
Mr. Son said he was surprised to see the backlash not only from U.S. regulators who sued to block the deal in December but also big tech companies that rely on Arm’s chip designs.
“We saw strong opposition because Arm is one of the most important and essential companies that most companies in the IT industry or in Silicon Valley rely on, either directly or indirectly,” he said.
SoftBank paid $32 billion when it acquired the U.K.-based chip business in 2016. Mr. Son said the sale to Nvidia, under which SoftBank would have received both cash and Nvidia shares, could have been worth $80 billion because of a rise in Nvidia’s share price.
SoftBank now plans to pursue a public listing of Arm by March 2023. Arm shares will most likely be listed on the tech-heavy
Nasdaq Stock Market
in the U.S. because many of Arm’s clients are based in Silicon Valley, Mr. Son said.
He said SoftBank didn’t intend to keep Arm for itself because he wanted outside investors in the SoftBank-led Vision Fund, which owns a quarter of Arm, to be able to cash in through an IPO and because he wanted to give stock options as incentives to Arm employees.
Uncertainties linger around an Arm IPO, including whether the volatile semiconductor business will stay hot through this year.
Chinese tech stocks popular among U.S. investors have tumbled amid the country’s regulatory crackdown on technology firms. WSJ explains some of the new risks investors face when buying shares of companies like Didi or Tencent. Photo Composite: Michelle Inez Simon
Tech shares have fallen recently because of tightening by the Federal Reserve. Fumio Matsumoto, chief strategist at
Okasan Securities,
said that made the timing for a big IPO less than ideal, and he also observed that a strategic buyer in the chip industry might pay more for Arm because of the potential synergy effects.
Still, Mr. Matsumoto said the downturn in Silicon Valley also offered opportunities for Mr. Son, and it made sense to raise cash for his war chest from an Arm IPO. “Because technology share prices have gone through a sharp correction over the past year, we are seeing a good cycle to consider preparing” for new investments, Mr. Matsumoto said.
After a rough patch a few years ago, Arm is on track for $2.5 billion in revenue this fiscal year, which ends in March, up from $1.98 billion the previous year, SoftBank said. Arm’s operating profit, according to one type of calculation used by SoftBank, more than doubled over the past two years to a projected $900 million this fiscal year.
An array of consumer electronics companies as well as semiconductor companies, including
Apple Inc.,
Samsung Electronics Co.
and
Qualcomm Inc.,
use Arm’s designs in at least some of their chips. The designs are known for their low power consumption, making them nearly ubiquitous in mobile devices.
The collapse of the Arm deal is just one of the challenges Mr. Son is tackling in his globe-spanning investment portfolio. He said “we are in pain” over China’s crackdown on its big tech companies, which hit SoftBank investments including its most valuable one, e-commerce giant Alibaba Group Holding Ltd.
The past two years have seen some of the wildest swings in the four decades since Mr. Son started SoftBank. The pandemic, initially seen as a blow, soon emerged as a boon for many technology businesses including those in which SoftBank has invested. SoftBank shares surged, only to fall by half from their recent peak when the China troubles hit and the Arm deal ran aground.
SoftBank’s net asset value, Mr. Son’s preferred measure of the company’s finances, fell by ¥1.6 trillion, equivalent to about $14 billion, in the October-December quarter to ¥19.3 trillion. That is a fall of 30% from the peak in September 2020 and the lowest level since 2017.
Mr. Son blamed the sharp fall in Alibaba shares. The Chinese company, which once made up the majority of SoftBank’s net assets, now accounts for less than a quarter of the total.
SoftBank said it unloaded a small number of Alibaba shares to settle contracts with its lenders, but Mr. Son said SoftBank’s stake in the Chinese company remained close to a quarter.
Mr. Son, who turns 65 this year, has lost a number of top lieutenants in recent years, including Chief Operating Officer
Marcelo Claure,
who stepped down in January after a pay dispute. Mr. Son said that while he was grooming successors, he didn’t intend to step down soon.
“If I stop, I’d become an old grandpa very quickly,” he said. He boasted that when he went bowling recently, he topped 200 points in two different rounds—a fine score for an amateur. “I thought, ‘Hey, I’m still pretty young,’ ” he said.
—Sam Schechner in Paris contributed to this article.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com and Peter Landers at peter.landers@wsj.com
Investors in big technology stocks have a serious case of whiplash.
Amazon.com Inc.
AMZN 13.54%
on Friday notched the largest-ever one-day gain in market value for a U.S. company—just a day after Facebook parent
Meta Platforms Inc.
suffered the largest-ever loss.
The dramatic moves suggest investors are moving quickly to draw distinctions among the growth prospects of some of the biggest U.S. companies as they reassess their valuations in anticipation of higher interest rates.
Both stocks have surged so far, so fast in recent years that any big move can rattle the broader market and set various records. Amazon is the fourth-biggest company in the U.S. by market value, behind
Apple Inc.
AAPL -0.17%
,
Microsoft Corp.
and
Alphabet Inc.,
with a market capitalization of about $1.6 trillion, while Meta is No. 7, even after Thursday’s declines.
In recent days, investors have shown more faith in the tech companies whose services are seen as staples than in those whose offerings are more elective, said
John Lynch,
chief investment officer at Comerica Wealth Management, which manages $175 billion.
“Within tech we’re starting to see a delineation between necessities and wants,” he said. “In a rising rate environment, you’re going to have noncorrelated moves in the market.”
Amazon relieved investors with a near doubling in profit in the holiday period and said it is raising the price of its Prime membership in the U.S. to $139 a year from $119. The results showed Amazon was able to control labor and supply costs better than had been expected. The company also saw growth in its cloud-computing and advertising businesses.
“The big thing was more of a sigh of relief with Amazon because there’s been so many worries in regards to that stock in terms of the comparisons after the pandemic being much more difficult,” said
Daniel Morgan,
senior portfolio manager at Synovus Trust Co.
Shares surged 14% Friday, their biggest one-day jump in almost seven years. The added $191 billion to Amazon’s market value, eclipsing the record
Apple
set just last week when it added $181 billion after posting quarterly results that shattered previous records.
Amazon’s rally helped the broader market stabilize Friday, as did a stronger-than-expected monthly jobs report. The S&P 500 added 0.5%, and the tech-focused Nasdaq Composite rose 1.6%.
Meta, meanwhile, warned it expects revenue growth to slow because users are spending less time on more lucrative services. The 26% drop in its shares Thursday erased $232 billion in market value.
Investors are grappling with the question of whether the company’s bet on the metaverse as its future growth engine will work out, Mr. Morgan said.
“That’s what the mystery behind Facebook (is) right now,” he said. “A lot of people can see their core business is really maturing.”
Investors are intensely focused on the Federal Reserve’s plans to begin raising interest rates in mid-March, ratcheting back the monetary stimulus that has helped power stocks since early in the Covid-19 pandemic. Near-zero rates pushed investors into risky assets like stocks and particularly into corners of the market that are valued based on growth far into the future.
The pace and scale of rate increases will depend in part on incoming data on inflation and the jobs market, leaving investors without a clear sight into the ultimate environment for stocks. Friday’s employment report showed the U.S. economy added more jobs in January than had been expected, a development that some investors said could support a more hawkish attitude from the Fed.
“The uncertainty created by the mere possibility of rate hikes contributes to the large moves that we’re seeing from stocks,” said Andy Kern, senior portfolio manager at asset management firm New Age Alpha.
In another outsize move,
Snap Inc.
shares leapt 59%, more than unwinding Thursday’s 24% slide, when Meta’s report prompted investors to dump shares of social-media companies.
Prompting the turnaround: Snap posted its first quarterly profit. The image-sharing firm also signaled it is adjusting to disruptions in the digital-advertising market caused by Apple privacy-policy changes that are affecting Meta.
Pinterest Inc.
reversed course, too, climbing 11% following a 10% skid in Thursday’s session. After markets closed Thursday, Pinterest reported a 20% rise in sales in the fourth quarter from a year earlier.
Companies such as Apple, Microsoft, Amazon,
Alphabet Inc.
GOOG 0.26%
and Meta have powered the stock market higher in recent years. They have become so big that their moves can cause swings in the S&P 500 index, whose members are weighted by market capitalization. As of Thursday, Apple, Microsoft, Amazon, Alphabet, Meta,
Tesla Inc.
and
Nvidia Corp.
accounted for more than 25% of the weighting of the index, according to S&P Global.
Write to Karen Langley at karen.langley@wsj.com and Joe Wallace at joe.wallace@wsj.com
is drawing interest from potential suitors including
Amazon.com Inc.,
AMZN 13.54%
according to people familiar with the matter, as the stationary-bike maker’s stock slumps and an activist urges it to explore a sale.
Amazon has been speaking to advisers about a potential deal, some of the people said. There’s no guarantee the e-commerce giant will follow through with an offer or that Peloton, which is working with its own advisers, would be receptive.
Other potential suitors are circling, these people said, but no deal is imminent and there may not be one at all.
Should there be a transaction, it could be significant, given Peloton’s market value of around $8 billion—down sharply from its high around a year ago of some $50 billion.
While Peloton was once a pandemic darling as homebound customers ordered its pricey exercise equipment that pairs with virtual classes, its stock closed Friday at $24.60, below its September 2019 IPO price of $29, following a slowdown in its once-torrid growth.
Its shares jumped around 30% in after-hours trading Friday, after The Wall Street Journal reported on the interest from Amazon and others.
Despite its woes, linking up with Peloton would give Amazon or another party access to its millions of well-heeled users and their data, and a big boost in the burgeoning market for health and wellness technology. A desire for positioning in that market helped drive
Oracle Corp.’s
$28.3 billion deal to buy electronic-medical-records company
Cerner Corp.
, announced in December.
There are several potential ties between Peloton and Amazon’s existing businesses, such as its fleet-and-logistics arm, which could help the bike company address supply-chain issues it and others are grappling with as a result of the pandemic. A Peloton subscription could also theoretically be bundled with Amazon Prime, which offers users waived shipping costs, a streaming service and more for a monthly or annual fee. Amazon has bundled the services of other companies it has acquired as an added incentive for shoppers to sign up for the program, for which it is charging $139 a year starting this month.
Amazon has been pushing into connected health in recent years, launching its Halo Health and Wellness tracker. Data from Peloton riders, who have the option to track their heart rate and energy consumption during a ride, could help underpin other Amazon products.
Should Amazon decide to pursue Peloton, it certainly has the wherewithal. On Thursday, the company reported more than $14 billion in quarterly profit, nearly double the year-earlier haul. Its shares rose 13.5% Friday, giving the company a market value of around $1.6 trillion.
Amazon’s approach to deal making spans its businesses, which range from e-commerce to groceries and streaming, and the cloud. Amazon’s biggest deal to date is its purchase of Whole Foods Market Inc. for $13.7 billion in 2017. Like Peloton, Whole Foods was the target of an activist shareholder who was pressuring the company to sell itself.
In May, Amazon agreed to buy movie studio MGM for around $6.5 billion. The deal is being scrutinized by antitrust regulators as Amazon and other technology giants face intensifying attention from U.S. regulators and lawmakers related in part to their past acquisitions.
Blackwells Capital LLC is pushing Peloton’s board to fire Chief Executive
John Foley
and pursue a sale. Blackwells argues that the company is weaker today than before the pandemic and believes Peloton would be better off as part of a larger company. The investment firm said in a letter it made public last week that Peloton could be an attractive acquisition target for larger technology or fitness-oriented companies.
Peloton hasn’t publicly responded to Blackwells’s call for it to explore a sale.
Mr. Foley has said that Peloton is reviewing the size of its workforce and resetting production levels to improve profitability as the company adapts to more seasonal demand for its equipment.
It may be difficult to engineer any deal if Mr. Foley isn’t supportive, as he and other insiders have shares that gave them control of over 80% of Peloton’s voting power as of Sept. 30, according to a company proxy filing.
Mr. Foley, a former Barnes & Noble Inc. executive, co-founded the company in 2012.
After a rapid ascent, Peloton has been grappling with slowing demand for its products. Mr. Foley has said that the company is “taking significant corrective actions to improve our profitability outlook and optimize our costs.”
Peloton recently disclosed that it would start charging customers hundreds of dollars in delivery fees and setup charges for its bikes and treadmills. In August, Peloton cut the list price of its original bike by 20%.
Peloton is set to announce results Tuesday. The company reported preliminary fiscal second-quarter revenue of $1.14 billion and said it ended the quarter with 2.77 million subscribers.
—Dana Mattioli contributed to this article.
Write to Cara Lombardo at cara.lombardo@wsj.com, Miriam Gottfried at Miriam.Gottfried@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com
