Tag Archives: Breaking News: Markets

Business

Take-Two, Electronic Arts, Chegg and more

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A drumline performs at the Electronic Arts EA Play event at E3 in Los Angeles, California.

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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.

— CNBC’s Rich Mendez contributed to this story.

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US

Biden says $15 minimum wage won’t survive Covid relief talks

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President Joe Biden speaks delivers a foreign policy address during a visit to the State Department in Washington, February 4, 2021.

Tom Brenner | Reuters

President Joe Biden said this weekend that it is unlikely a $15 federal minimum wage provision makes it into the next Covid-19 relief package, hitting pause on a key campaign promise as Democrats in Congress press ahead to pass $1.9 trillion in stimulus without Republican support.

Biden said his administration would push for a stand-alone bill to raise the minimum wage.

“I put it in but I don’t think its going to survive,” Biden told CBS’ Norah O’Donnell in an interview scheduled to air in full on Sunday. “My guess is it will not be in [the stimulus bill].”

Democrats in Congress have moved to pass the $1.9 trillion stimulus package without Republican support in the Senate using a parliamentary procedure known as reconciliation. House Speaker Nancy Pelosi, D-Calif., said Friday that the lower chamber aims to pass the fiscal relief package within two weeks.

The budget resolution directs committees to write legislation reflecting Biden’s Covid relief package, while staying under the $1.9 trillion target. Democrats plan to pass provisions like $1,400 direct payments, a $400 per week jobless benefit through September, $350 billion in state, local and tribal government relief, a $20 billion national Covid vaccination program, and $50 billion for virus testing.

The bill is also likely to include $170 billion for K-12 schools and higher educations institutions and $30 billion for rent and utility assistance.

Republicans oppose including a wage hike in the Covid-19 relief package warning it could put added strain on businesses already grappling with the economic fallout of the pandemic. And West Virginia Democrat Sen. Joe Manchin also opposes the pay increase, meaning Democrats wouldn’t have the votes to pass it even with a simple majority under reconciliation.

While Biden said the $15 per hour wage provision would be unlikely to make it in the Covid relief bill, he promised to prioritize passing the wage hike in separate legislation.

“I’m prepared as the president of the United States on a separate negotiation on minimum wage to work my way up from what it is now,” Biden said. “No one should work 40 hours a week and live before the poverty wage and you’re making less than $15 an hour, you’re living below the poverty wage.”

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Business

Stock futures rise slightly as Reddit mania unravels, Amazon and Alphabet report strong earnings

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U.S. stock futures rose slightly in overnight trading on Tuesday, after a strong market rally as the Reddit trading mania continued to unwind.

Dow futures rose 60 points. S&P 500 futures gained 0.4% and Nasdaq 100 futures rose 0.4%.

Strong earnings from Amazon and Alphabet helped futures. Amazon reported earnings nearly double Wall Street estimates; however, the stock move was tempered by news that Jeff Bezos would step down as CEO.

Shares of Alphabet gained 6% in after hours trading after the technology giant reported 23% revenue growth and topped estimates for earnings.

Stocks rallied for the second day on Tuesday, with the Dow Jones Industrial Average gaining more than 475 points for its best day since November. Investors returned to buying equities after the Reddit-fueled action that shook markets last week. The Dow is up 2.35% this week.

The S&P 500 climbed 1.4% and the Nasdaq Composite jumped more than 1.5%.

After a meteoric, albeit seemingly synthetic rise in GameStop last week caused by a short squeeze, shares have cratered more than 70% this week. Other Reddit trades have also come back down to Earth amid trading restrictions from major brokers.

“The best way to describe today’s stock market action is ‘reversing the Reddit revolution,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “What went up with GameStop, came down with GameStop.”

“From mid-day Jan. 28 to the end of Jan. 29, cyclicals including technology got pounded while defensive sectors outpaced. Over the last two days, and particularly today, this was reversed,” added Paulsen.

Investors are also monitoring negotiations in Washington surrounding another stimulus package. President Joe Biden met with the 10 Republican senators on Monday to discuss an alternative, smaller aid proposal to his $1.9 trillion package.

Earnings season continues on Wednesday with AbbVie, Biogen, Boston Scientific, GlaxoSmithKline and Humana reporting before the opening bell.

Chipmaker Qualcomm, eBay, PayPal and Yum China report earnings after the market closes on Wednesday.

Private payroll data from January is released at 8:15 a.m. on Wednesday from ADP. Economists polled by Dow Jones are expecting private sector jobs grew by 50,000 in January, compared to the loss of 123,000 in December.

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Business

Jeff Bezos to step down as Amazon CEO, Andy Jassy to take over in Q3

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Rep. Ken Buck, R-Colo., a member of the House Judiciary Committee, said on Twitter shortly after the announcement that he has questions for Jassy, hinting at an early hurdle when Jassy is installed.

Bezos said he will stay engaged in important Amazon projects but will also have more time to focus on the Bezos Earth Fund, his Blue Origin spaceship company, The Washington Post and the Amazon Day 1 Fund.

“As much as I still tap dance into the office, I’m excited about this transition,” Bezos said in his internal announcement. “Millions of customers depend on us for our services, and more than a million employees depend on us for their livelihoods. Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention on anything else.”

Industry CEOs and Amazon competitors congratulated Bezos and Jassy on the coming transition, with Microsoft CEO Satya Nadella calling Jassy’s promotion “well-deserved.”

Alphabet CEO Sundar Pichai offered Bezos “best wishes” on his other projects.

Fellow Amazonians:

I’m excited to announce that this Q3 I’ll transition to Executive Chair of the Amazon Board and Andy Jassy will become CEO. In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives. Andy is well known inside the company and has been at Amazon almost as long as I have. He will be an outstanding leader, and he has my full confidence.

This journey began some 27 years ago. Amazon was only an idea, and it had no name. The question I was asked most frequently at that time was, “What’s the internet?” Blessedly, I haven’t had to explain that in a long while.

Today, we employ 1.3 million talented, dedicated people, serve hundreds of millions of customers and businesses, and are widely recognized as one of the most successful companies in the world.

How did that happen? Invention. Invention is the root of our success. We’ve done crazy things together, and then made them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more. If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive.

I don’t know of another company with an invention track record as good as Amazon’s, and I believe we are at our most inventive right now. I hope you are as proud of our inventiveness as I am. I think you should be.

As Amazon became large, we decided to use our scale and scope to lead on important social issues. Two high-impact examples: our $15 minimum wage and the Climate Pledge. In both cases, we staked out leadership positions and then asked others to come along with us. In both cases, it’s working. Other large companies are coming our way. I hope you’re proud of that as well.

I find my work meaningful and fun. I get to work with the smartest, most talented, most ingenious teammates. When times have been good, you’ve been humble. When times have been tough, you’ve been strong and supportive, and we’ve made each other laugh. It is a joy to work on this team.

As much as I still tap dance into the office, I’m excited about this transition. Millions of customers depend on us for our services, and more than a million employees depend on us for their livelihoods. Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention on anything else. As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions. I’ve never had more energy, and this isn’t about retiring. I’m super passionate about the impact I think these organizations can have.

Amazon couldn’t be better positioned for the future. We are firing on all cylinders, just as the world needs us to. We have things in the pipeline that will continue to astonish. We serve individuals and enterprises, and we’ve pioneered two complete industries and a whole new class of devices. We are leaders in areas as varied as machine learning and logistics, and if an Amazonian’s idea requires yet another new institutional skill, we’re flexible enough and patient enough to learn it.

Keep inventing, and don’t despair when at first the idea looks crazy. Remember to wander. Let curiosity be your compass. It remains Day 1.

Jeff



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Business

Dow futures drop 270 points, building on losses after worst week since October

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U.S. stock index futures declined in overnight trading as a surge in speculative trading by retail traders continued to cause hedge funds to take off risk and worried investors about a market bubble. The losses build on last week’s decline, which was the worst for the market since October.

Futures contracts tied to the Dow Jones Industrial Average declined 270 points, indicating a 271-point loss at the opening bell. S&P 500 futures slipped 1%, while Nasdaq 100 futures fell 1.2%.

The Dow dropped 620 points on Friday, or 2%, to close below the 30,000 level for the first time since December. The Nasdaq Composite also slipped 2%, while the S&P 500 fell 1.9%.

For the week, all three major averages slipped more than 3% for their worst weekly performance since October. The Dow and S&P also posted losses for January — the first negative month in four — although the Nasdaq did manage to post a gain for the month.

Friday’s dip came amid a frenzy of activity by retail investors in heavily-shorted stocks including GameStop and AMC Entertainment, which fueled concerns about the overall health of the market. Goldman Sachs noted that the current short squeeze is the worst in 25 years.

“This week’s events may have turned markets on their heads, but fear indicators imply that we may have seen the worst of the degrossing,” Jefferies wrote in a note to clients over the weekend. Barclays added that it’s unlikely that the impact of the short squeezes will ripple through the broader market.

“The ongoing short squeeze in a few stocks by retail investors has raised concerns of a broader contagion,” the firm wrote in a recent note to clients. “While we believe there is more pain to come we remain optimistic that it is likely to remain localized.”

Meanwhile, a group of 10 Republican senators sent President Joe Biden a letter on Sunday, urging him to consider a smaller, scaled down Covid-19 relief proposal. His current plans calls for $1.9 trillion in additional fiscal stimulus. The alternative proposal comes after House Speaker Nancy Pelosi said the chamber will move to pass a budget resolution, the first step toward approving legislation through reconciliation. The process would enable Senate Democrats to approve an aid measure without GOP votes.

Elsewhere, another busy week of earnings is coming up with 99 S&P companies set to report. Alphabet, Amazon, Alibaba, Snap, Exxon, Biogen, Pfizer and Chipotle are among the names set to report this coming week. Thursday is the busiest day of the earnings season.

“We believe the medium-term path for the market remains higher,” noted Mark Haefele, global CIO at UBS Wealth Management. “In a similar pattern to the previous two quarters, corporate earnings for 4Q20 are exceeding expectations by a significant margin.”

He added that a stimulus package as well as investors looking beyond delays to vaccine production and distribution should further boost stocks.

– CNBC’s Jacob Pramuk contributed reporting.

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Business

Stock futures dip after a steep sell-off on Wall Street, Apple and Tesla fall after earnings

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Stock futures tied to major U.S. equity indices were flat in overnight trading on Wednesday as the market is poised to extend a sharp sell-off amid concerns about heightened speculative trading.

Futures on the Dow Jones Industrial Average traded just 10 points lower. S&P 500 futures were little changed and Nasdaq 100 futures dipped 0.4%.

Apple turned in its largest revenue on record at $111.4 billion in its fiscal first-quarter earnings report for fiscal 2021. Sales for every product category rose by double-digit percentage points. Shares of the tech giant dipped 3%, however.

Tesla dropped more than 3% in extended trading after the electric car maker posted worse-than-expected earnings for the latest quarter. The company also said it expects annual average delivery growth of 50% going forward.

Wall Street suffered steep losses on Wednesday, with the S&P 500 and the Dow posting their worst day since October, as the speculative buying frenzy in heavily shorted stocks kept investors on edge. Some fear that hedge funds being squeezed could be forced to reduce their equity holdings to raise cash.

“Short squeezes causing implosions in some hedge funds are joining SPACs, IPOs, and bitcoin as data points supporting a market bubble thesis,” Scott Knapp, chief market strategist at CUNA Mutual Group, said in a email. “This is a time for caution for investors.”

Trading volume exploded in the previous session with 23.7 billion shares changing hands, marking the heaviest trading day since at least 2007.

Brick-and-mortar video game retailer GameStop, a target on the “wallstreetbets” Reddit chat room, soared another 134% Wednesday, pushing its January gains to a whopping 1,744%. AMC Entertainment surged over 300% Wednesday alone, experiencing its highest volume ever.

GameStop fell 23% in extended trading, while AMC Entertainment dropped 38%. Other highly shorted names that had rallied this week, including Bed Bath & Beyond and National Beverage, also fell after hours.

Facebook stock remained relatively flat in after-hours trading after the company warned that a reversal in pandemic trends could hurt its advertising business. The social media company beat on top and bottom line for the fourth quarter.

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Business

Melvin Capital, hedge fund targeted by Reddit board, closed out of GameStop short position Tuesday

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Melvin Capital closed out its short position in GameStop on Tuesday afternoon after taking a huge loss, manager of the fund Gabe Plotkin told CNBC’s Andrew Ross Sorkin.

The brick-and-mortar videogame retailer, hedge funds’ most-hated stock, was targeted by an army of retail investors who marshaled against short sellers in online chat rooms. In the Reddit forum “wallstreetbets” with more than two million subscribers, rookie investors encouraged each other to pile into GameStop’s equity and call options, creating massive short squeezes in the name.

CNBC could not confirm the amount of losses the firm took on the short position. Citadel and Point72 have infused close to $3 billion into Melvin Capital to shore up the fund’s finances. Plotkin told Sorkin that the speculation that the firm would file for bankruptcy is false.

GameStop shares have more than doubled this week alone to nearly $150 apiece, driving its January gains to 685%. The stock was worth just $6 four months ago.

GameStop shares gained about 60% in premarket trading Wednesday, after popping more than 100% earlier in the session.

Amid GameStop’s explosive rally, short sellers have accumulated losses of more than $5 billion year to date in the stock, including a loss of $917 million on Monday and $1.6 billion on Friday, according to data from S3 Partners.

Short seller Andrew Left of Citron Research said Wednesday that he has covered the majority of his short position in GameStop at a loss. He previously said GameStop will fall back to $20 a share “fast” and called out attacks from the “angry mob” that owns the stock.

Investor Michael Burry said in a now-deleted tweet Tuesday that trading in GameStop is “unnatural, insane, and dangerous” and there should be “legal and regulatory repercussions.” Burry shot to fame by betting against the housing bubble and was featured in Michael Lewis’ book “The Big Short.”

The U.S. Securities and Exchange Commission declined to comment.

Social Capital’s Chamath Palihapitiya jumped into the controversial name, saying in a Tuesday tweet that he bought GameStop call options betting the stock will go higher. His tweet seemed to intensify the rally in the previous session. The stock ended the day 92% higher at $147.98.

Elon Musk after the bell Tuesday commented on the mania on Twitter and linked to the “wallstreetbets” Reddit chat room. The Tesla CEO tweeted to his 42 million followers “Gamestonk!!” The comment appeared to help send GameStop shares soaring in extended trading Tuesday.

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