A drumline performs at the Electronic Arts EA Play event at E3 in Los Angeles, California.
Getty Images
Here’s a look at some of the companies making headlines after the bell.
Take-Two Interactive — The video game stock slipped 3% in extended trading even after the company reported higher-than-expected revenue for its fiscal third quarter. Take-Two posted $814 million in sales for the period, while analysts surveyed by Refinitiv were expecting revenue of $747 million. Take-Two’s earnings-per-share number was not comparable to Wall Street estimates.
Electronic Arts — The video-game giant announced Monday it will acquire mobile-games developer Glu Mobile for $2.1 billion, or $12.50 per share in cash. That price represents a 36% premium to Glu’s closing price on Friday of $9.19 per share. EA shares rose more than 1% on the news. Glu shares were halted in after-hours trading before jumping toward the offer price. “Mobile continues to grow as the biggest gaming platform in the world, and with the addition of Glu’s games and talent, we’re doubling the size of our mobile business,” Electronic Arts CEO Andrew Wilson wrote in a statement. The deal is expected to close in the second quarter of 2021.
Chegg — Chegg shares rose 4.6% on the back of stronger-than-expected fourth-quarter results for the education company. Chegg earned an adjusted 55 cents per share on $205.7 million in revenue. Analysts surveyed by Refinitiv were looking for 49 cents per share and $189.6 million in revenue.
Cleveland-Cliffs — The steel stock shed 3% in extended trading after the company announced it was holding a secondary stock offering of 60 million shares. The offering includes 20 million shares from the company and 40 million shares from shareholder ArcelorMittal.
The author of the Cracked Market blog, Jani Ziedins, last week warned the traders piling into the videogames retailer GameStop not to get greedy — or more specifically, not to be a pig.
Well.
As the chart shows, that short squeeze worked until it didn’t. Momentum fizzled after Robinhood and other brokerages limited access to trading in GameStop
GME,
-42.11%
and other securities that were surging in popularity. As to why, there will be Congressional hearings to find out the culprit — hedge funds or good-old-fashioned margin requirements — but the end result is the same.
GameStop may still have its moments. “As for what comes next, GME will be insanely volatile for weeks and even months. That means 50% and 100% moves in both directions. But at this point, a 50% bounce only gets us back to $75. Maybe we get back to $100 or even $125, but waiting for anything higher is just wishful thinking,” Ziedins says.
Here’s Ziedins’ advice now. “For those that still have money left in the market, there is no reason to ride this all the way into the dirt. Cash in what you have left, learn from this lesson, and come back to the market better prepared next time,” says the Cracked Market blogger.
Cue, Frank Sinatra.
And those traders are inexperienced. Cardify, a consumer-data firm, did a survey of 1,600 self-directed investors in GameStop and cinema chain AMC Entertainment
AMC,
-20.96%
and found that most were inexperienced investors — 44% having less than 12 months of experience, and another quarter with one to two years’ experience. Nearly half made their biggest-ever do-it-yourself trading investment in the last four weeks, according to the survey that ended on Monday.
Why? Of these overwhelmingly young and male investors, 45% said for quick financial profits. Nearly 20% said it was part of a long-term investing strategy, and 16% said to spite big hedge funds and institutional investors, according to Cardify.
The buzz
The U.S. added 49,000 nonfarm payrolls jobs in January while the unemployment rate fell to 6.3%, according to the Labor Department.
The U.S. Senate in the early hours of the morning approved a budget resolution that will allow for a fast tracking of the $1.9 trillion coronavirus relief plan proposed by the Biden administration to be approved without Republican support. Vice President Kamala Harris cast the tiebreaking vote. Johnson & Johnson
JNJ,
+0.93%
meanwhile submitted its coronavirus vaccine for Food and Drug Administration approval.
Pinterest
PINS,
+0.91%
shares jumped 11% in premarket trade, as the art-sharing social-media service reported forecast-beating earnings on a 76% jump in revenue during the fourth quarter. Another social-media service, Snap
SNAP,
-1.60%,
also beat expectations. Besides using social media, people stuck at home were playing videogames, as Activision Blizzard
ATVI,
-0.10%
gained 8% after it reported stronger earnings and bookings than expected, increased its dividend by 15%, and authorized a $4 billion share buyback plan.
Ford Motor Co.
F,
+1.52%
reported a surprise profit and topped expectations.
Exercise-bike maker Peloton Interactive
PTON,
+7.04%
slumped 7% as it did beat on earnings but flagged a rise in shipping and other costs. T-Mobile US
TMUS,
+0.95%,
the mobile service operator, also beat earnings expectations but guided to a softer 2021 than expected.
Luckin Coffee, the U.S.-listed Chinese coffee retailer, filed for bankruptcy protection, less than a year after an accounting scandal.
The market
After the S&P 500
SPX,
+1.09%
ended Thursday at a record for the sixth time in 2021, U.S. stock futures
ES00,
+0.37%
NQ00,
+0.20%
pointed to another day of gains.
The yield on the 10-year Treasury
TMUBMUSD10Y,
1.158%
moved up to 1.16%, after ending Thursday at its highest in 11 months.
The chart
The more things change, the more they stay the same. Today’s technology giants are following a similar trajectory to the radio makers of the 1920s, as well as the dot-com era around the turn of the century. “So the point is that you can be a firm believer in tech’s ability to transform our lives but still think valuations might be in a bubble,” said Jim Reid, strategist at Deutsche Bank.
Random reads
This local government meeting over Zoom
ZM,
+2.50%
turned into a chaotic, internet sensation.
Chocolate sales were 40% to 50% higher in areas with an increased number of COVID-19 cases, according to confectioner Hershey
HSY,
+0.44%.
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Shares of AMC Entertainment Holdings Inc. Cl A
AMC,
+53.65%
rocketed 53.65% to $13.26 Friday, on what proved to be an all-around dismal trading session for the stock market, with the NASDAQ Composite Index
COMP,
-2.00%
falling 2.00% to 13,070.69 and Dow Jones Industrial Average
DJIA,
-2.03%
falling 2.03% to 29,982.62. AMC Entertainment Holdings Inc. Cl A closed $7.10 short of its 52-week high ($20.36), which the company achieved on January 27th.
Trading volume (590.8 M) eclipsed its 50-day average volume of 97.8 M.
Editor’s Note: This story was auto-generated by Automated Insights using data from Dow Jones and FactSet. See our market data terms of use.
U.S. stock futures dropped, putting Wall Street on course to extend losses amid investor concerns about a slowing economic rebound and froth in markets, exemplified by the wild trading in retailer
GameStop.
Futures tied to the S&P 500 fell 0.2% after the benchmark stocks gauge posted its biggest two-day decline since October. Contracts for the Nasdaq-100 declined 0.8%, after earnings from several technology giants including
Apple
underwhelmed investors late Wednesday. Futures tied to the Dow Jones Industrial Average, which has fallen for five-consecutive days in its longest losing streak since February, were roughly flat.
The stumble in stocks follows a strong start to the year that some investors say had pushed share prices beyond levels justified by corporate fundamentals. The selloff has taken place amid wild swings in individual stocks including GameStop and
AMC Entertainment,
fueled by a battle between day traders and hedge-fund professionals.
“There is some over-excitement in the market,” said
Olaf van den Heuvel,
chief investment officer for
Aegon
Asset Management in the Netherlands, pointing to the surge in GameStop shares as one example. “It was bubble territory.”
Individual stocks remained volatile ahead of the bell in New York. GameStop shares jumped 28%, having rocketed 135% Wednesday. AMC clawed back earlier losses to climb 6.1%, extending Wednesday’s gains of more than 300%.
The stumble in stocks has taken place amid wild swings in individual shares, including GameStop and AMC Entertainment.
Photo:
Courtney Crow/Associated Press
The slow vaccine rollout and Covid-19 restrictions in major economies have prompted investors to take some money off the table, Mr. van den Heuvel added. He said Aegon would likely view the selloff as a chance to buy risky assets when markets settle down.
Technology stocks dropped ahead of the bell in New York. Shares of Apple fell 2.9% after the iPhone maker reported its most profitable three months on record but didn’t provide specific revenue guidance for the current quarter.
Tesla dropped 6.1% after the electric-vehicle maker—whose shares have soared in recent months—posted its first full-year profit but missed Wall Street’s expectations.
Facebook,
which posted record net income but warned that uncertainty from regulatory probes and ad-targeting limits could create headwinds, fell 0.8% in premarket trading.
In one sign of rising risk aversion, the yield on the benchmark 10-year U.S. Treasury note dropped below 1% for the first time since Jan. 6, before climbing back to 1.008%, according to
Tradeweb.
Bond yields fall as prices rise. Falling yields are often an indicator that investors see the economic outlook weakening.
The dollar strengthened against various currencies including the Australian dollar and the Korean won. The WSJ Dollar Index, which measures the greenback against a basket of other currencies, rose 0.2%.
Comcast,
American Airlines
and
Mastercard
are scheduled to publish results before markets open. Investors will also parse data on jobless claims—due to be published at 8:30 a.m. ET and expected to show that the number of workers seeking benefits declined last week—for fresh clues about how the economy is weathering the pandemic.
The Federal Reserve maintained its easy money policies Wednesday, saying that business activity has softened with the resurgence of Covid-19 cases.
“Any removal of fiscal stimulus any time soon could lead to a falter in the recovery,” said
Mary Nicola,
a portfolio manager for PineBridge Investments.
The selloff in U.S. stocks extended overseas. The pan-continental Stoxx Europe 600 fell 0.7%, led lower by shares of oil-and-gas and financial companies.
Shares in several heavily-shorted European stocks that shot up Wednesday, when the short squeeze spread beyond the U.S., came under pressure. Commercial real-estate firm
Unibail-Rodamco-Westfield
lost 2.4% and German drugmaker
Evotec
fell 4%.
“It is nerve-racking,” said
Remi Olu-Pitan,
a fund manager at Schroders, referring to the big moves in stock prices fueled by day traders swapping tips online. She said the volatility likely induced some professional investors, including those caught with loss-making short positions, to take money off the table, weighing on broader markets.
“You will see more violent pullbacks,” Ms. Olu-Pitan said. “There are parts of the market that are in a bubble.”
Among other individual movers,
Prudential
dropped 7.5% after the insurer said it was weighing an equity offering and would separate off its Jackson National arm in the U.S. Diageo gained 4.8%, as analysts cheered strong first-half sales in North America by the alcohol producer.
Markets broadly retreated in Asia. Hong Kong’s Hang Seng dropped 2.6%, the Shanghai Composite Index fell 1.9% and Japan’s Nikkei 225 declined 1.5%. Container-shipping giant Cosco Shipping led losses in mainland China, sliding 10%.
In a sign of jitters in Chinese markets, money-market rates continued to rise. The one-week Shanghai interbank offered rate rose 0.012 percentage point to 2.981%, its highest since 2015, according to FactSet.
Short-term borrowing costs have risen in recent days as the People’s Bank of China unexpectedly drained funds from the financial system. Earlier this week, a major business newspaper also published remarks by
Ma Jun,
an adviser to the central bank, who warned of asset bubbles emerging due to loose monetary policy.
Tai Hui,
chief Asia market strategist at J.P. Morgan Asset Management, said new pockets of coronavirus outbreaks in China had also dented investor sentiment.
Write to Joe Wallace at Joe.Wallace@wsj.com and Chong Koh Ping at chong.kohping@wsj.com
AT&T Inc. booked a $15.5 billion charge on its pay-television business, reflecting the damage cord-cutting has taken on its DirecTV satellite unit even as the company’s HBO Max streaming service’s growth ramped up.
The write-down created a fourth-quarter loss as the media-and-telecommunications giant weighs the potential sale of its pay-TV assets and executives focus their investments on newer technologies. The company reported quarterly revenue declines in its legacy-video and WarnerMedia units, offsetting gains in its core wireless-phone division.
Executives called the noncash accounting charge a sign of the pay-TV unit’s aging status as the Dallas company promotes an internet-streaming model that gives its content-production business a direct line to viewers.
“Our biggest and single-most important bet is HBO Max,” Chief Executive John Stankey said on a conference call Wednesday. Executives plan to expand the service’s footprint in other countries this year and launch an advertising-supported version in the second quarter.
Overall, AT&T reported a fourth-quarter loss of $13.89 billion, or $1.95 a share, compared with a profit of $2.39 billion, or 33 cents a share, a year earlier. Revenue fell 2.4% to $45.7 billion.
NBCUniversal is shutting down its sports cable channel NBCSN at the end of the year and migrating much of its programming to its sister general entertainment network USA, the company said.
The premium properties on NBCSN are the National Hockey League and Nascar auto racing, both of which will start to transition to USA Network this year. Some content will remain on both channels until NBCSN officially turns off the lights. NBCUniversal informed staffers of the plan Friday afternoon in a company memo.
“We’re absolutely committed more than ever to live sports as a company, and having such a huge platform like USA Network airing some of our key sports content is great for our partners, distributors, viewers and advertisers alike,” said NBC Sports Group Chairman Pete Bevacqua.
By putting high-profile sports on USA Network, NBCUniversal—a unit of Comcast Corp. —is hoping to solve two problems with one move: Get rid of an underperforming asset and boost an already powerful one. The Premier Soccer League will also have matches on USA.
NBCSN has struggled to compete against bigger rivals such as Walt Disney Co. ’s ESPN and Fox Corp.’s Fox Sports cable network. While it has a large national reach, its ratings pale in comparison to its competition. Fox Corp. and Wall Street Journal parent News Corp share common ownership.
