WASHINGTON—One of the largest makers of voting machines in the U.S. on Monday sued a prominent supporter of former President Donald Trump, alleging that the businessman had defamed the company with false accusations that it had rigged the 2020 election for Joe Biden.
Dominion Voting Systems sued Mike Lindell, chief executive of Minnesota-based MyPillow Inc., and his company in the U.S. District Court for the District of Columbia, seeking more than $1.3 billion in damages.
In its complaint, the company cites a number of statements made by Mr. Lindell, including in media appearances, social-media posts, and a two-hour film claiming to prove widespread election fraud. Mr. Lindell said he helped produce the film, which he released online in early February.
The complaint alleges that Mr. Lindell made false claims about the integrity of Dominion’s voting machines and that he knew no credible evidence supported his claims that the company had stolen the election from Mr. Trump—what Dominion has called the “Big Lie.”
“He is well aware of the independent audits and paper ballot recounts conclusively disproving the Big Lie,” the complaint states. “But Lindell…sells the lie to this day because the lie sells pillows.”
Apple has been secretive about its electric-vehicle ambitions.
Agence France-Presse/Getty Images
Apple’s search for an auto maker to join the tech giant’s project to build autonomous vehicles continues, following reports that discussions have dissolved with
Nissan.
Shares in the Japanese auto giant tumbled near 3% in Tokyo trading.
Apple
shares were not traded in the U.S. on Monday due to the Presidents Day holiday.
The back story. There has been speculation over Apple’s vehicle ambitions since 2015, when The Wall Street Journal reported that it was gearing up to take on Tesla. The iPhone maker has been highly secretive about its plans for “Project Titan,” confirmed in 2016, which has evolved to encompass self-driving, or autonomous, electric vehicles.
Analysts have suspected that the Silicon Valley giant would partner with an existing auto maker to break into the capital-intensive vehicle industry.
On Feb. 8, Korean auto makers
Hyundai
and
Kia
said they were no longer in talks with Apple over an autonomous electric-vehicle project, following widespread press and analyst speculation that a deal was near. That news had sent Hyundai stock down more than 6% and shares in Kia down 15%—eliminating a combined $8.5 billion in market value from the two companies.
The next day, Nissan’s chief executive Makoto Uchida was pressed in an earrings call on whether the company had been approached by Apple about a collaboration. Uchida avoided addressing Apple directly, but indicated that Nissan could partner with technology companies on building the next generation of cars.
Also read:An Apple Car Could Disrupt the Auto Industry as Much as the iPhone Upended Tech. Here’s What to Know.
What’s new. Nissan confirmed on Monday that it was not in talks with Apple, but said it was open to exploring collaborations and partnerships to accelerate the vehicle industry.
The Financial Times had reported earlier that there were discussions between the two groups over a partnership, but that talks had stalled over possible branding. According to the report, the discussions did not reach senior management levels.
A source close to Nissan told Agence France-Presse that “when you make a product under the Apple brand, you give your soul— and your profit margins— to Apple,” and that Nissan was “not interested in giving Apple the best that we offer.”
Plus:Apple iCar Is a Terrible Idea. Here’s Why.
Looking ahead. It makes sense that Apple would partner with a strong auto maker to realize its electric-vehicle dreams. With Nissan crossed off, following Hyundai and Kia, that list is narrowing.
On Feb. 7, just before Hyundai and Kia confirmed they were not involved with Apple, veteran technology analyst Daniel Ives of investment firm Wedbush, said it was a matter of “when not if” Apple entered the electric-vehicle race. Ives put the chances at 85% that the tech giant would announce a relevant partnership or collaboration within the next three to six months.
Ives singled out Hyundai as the most likely choice, with
Volkswagen Group
—which also makes Audi and
Porsche
—as the next best bet. With Hyundai out, investors should keep an eye on the German giant. The analyst also floated Tesla and
Ford
as possible candidates.
Barron’s has contacted Apple and Nissan for comment.
Here’s what we’re watching ahead of Friday’s trading action.
—U.S. stock futures edged lower Friday, putting the S&P 500 on track to end the week with muted gains after notching its ninth record closing high for 2021.
Futures tied to the S&P 500 slipped 0.3%, pointing to a drop after the opening bell. Contracts linked to the Nasdaq-100 Index edged down 0.3%, suggesting that technology stocks may also slip. Read our full market wrap.
What’s Coming Up
—The University of Michigan’s consumer sentiment index for the opening weeks of February, due at 10 a.m. ET, is expected to inch up to 80.8 from 79.0 at the end of January.
Market Movers to Watch
—All hail Baby Yoda. Walt Disney shares were up 0.9% ahead of the bell after the entertainment giant reported a first-quarter profit, as its flagship streaming service, Disney+, added more than 21 million new subscribers during the period. But the pandemic continued to zap results in the company’s movie-distribution and theme-park segments.
Special-purpose acquisition companies—shell companies planning to merge with private firms to take them public—are rising more than 6% on average on their first day of trading in 2021, up from last year’s figure of 1.6%, according to University of Florida finance professor
Jay Ritter.
Before 2020, trading in SPACs was muted when they made their debut on public markets.
Now, shares of blank-check companies almost always go up. The last 140 SPACs to go public have either logged gains or ended flat on their opening day of trading, per a Dow Jones Market Data analysis of trading in blank-check companies through Thursday. One hundred and seventeen in a row have risen in their first week. The gains tend to continue, on average generating bigger returns going out to a few months.
The gains in companies that don’t yet have any underlying business underscore the wave of speculation in today’s markets. Merging with a SPAC has become a popular way for startups in buzzy sectors to go public and take advantage of investor enthusiasm for futuristic themes.
But lately, day traders are even putting money into SPACs before they have revealed what company they are buying. At that stage, they are pools of cash, so investors are wagering that the company will eventually complete an attractive deal.
Despite the risks, many are embracing the trade, underscoring how online investing platforms and social-media groups now send individuals flocking to new corners of markets, including shares of unprofitable companies such as GameStop and
AMC Entertainment Holdings Inc.
AMC 53.65%
That trend also is playing out in everything from shares of silver miners to SPACs, which were relatively rare before last year but are suddenly ubiquitous in finance.
“I would just have a bad case of FOMO if I wasn’t in SPACs,” said
Marco Prieto,
a 23-year-old real-estate agent living in Tucson, Ariz., referring to the fear of missing out that is driving many individuals to put money into markets.
He has a roughly $50,000 portfolio and about 60% of his holdings tied to blank-check companies. Some of his positions are early on in shell firms such as
Social Capital Hedosophia Holdings Corp. VI,
while others are based on rumors tied to possible deals by companies including
Churchill Capital Corp. IV.
Share-price performance of existing SPACs without deals announced*
Amount of cash
held by SPAC:
Biotechnology/Life science/Health care
Share-price performance of existing SPACs without deals announced*
Amount of cash
held by SPAC:
Biotechnology/Life science/Health care
Share-price performance of existing SPACs without deals announced*
Amount of cash
held by SPAC:
Biotechnology/Life science/Health care
Share-price performance of existing SPACs without deals announced*
Amount of cash
held by SPAC:
Biotechnology/Life science/Health care
Shares of that company have more than doubled since Bloomberg News reported on Jan. 11 that it is in talks to combine with electric-car firm Lucid Motors Inc. Trading got so frenzied that the SPAC put out a statement a week later saying it wouldn’t comment on the report and that it is always evaluating a number of possible deals. The stock has still been gyrating in the days since.
Investors betting on SPACs even before such reports is extraordinary because the underlying value of a blank-check firm before it pursues a deal is the amount of money it raises for a public listing. That figure is typically pegged at $10 a share. Still, it has become common for investors to buy at higher prices such as $11 or $12 to back big-name SPAC founders such as venture capitalist
Chamath Palihapitiya
and former Citigroup Inc. deal maker
Michael Klein.
In another sign blank-check firms are now frequently traded by individuals, several SPACs and companies that have merged with them recently joined GameStop and AMC on a list of stocks that had position limits on Robinhood Markets Inc., a popular brokerage for day traders. Those restricted included Mr. Klein’s Churchill Capital IV and a few of Mr. Palihapitiya’s SPACs in the
Social Capital Hedosophia
SPCE 2.74%
franchise.
The flood of money pouring in is a concern for skeptics who worry that everyday investors don’t understand the dangers of the trade. Even recent losses in a few hot companies such as electric-truck startup
Nikola Corp.
NKLA -0.39%
and health-care firm MultiPlan Inc. that merged with blank-check firms aren’t deterring investors because of the gains in other SPACs.
“It’s a tremendous amount of speculation,” said
Matt Simpson,
managing partner at Wealthspring Capital and a SPAC investor. His firm invests when SPACs go public or right after, then takes advantage when shares rise and typically sells before a deal is completed. He advertised an expected return from the strategy of 6% to clients, but last year it returned 20%.
Ninety-one SPACs have raised $25 billion so far this year, putting the market on track to shatter last year’s record of more than $80 billion, according to data provider SPAC Research.
Fast gains in the shares can result in big payoffs for their founders and the first investors in blank-check firms like Mr. Simpson. These earliest investors always have the right to withdraw their money before a deal goes through. The traders who get in later don’t have those same privileges, but that hasn’t been a deterring factor.
“If you don’t take a risk, there’s really no opportunity at all,” said
Chris Copeland,
a 36-year-old in upstate New York who started day trading on the platform Robinhood with his girlfriend last month. Roughly three-quarters of his portfolio is tied to SPACs such as
GS Acquisition Holdings Corp. II.
Mr. Prieto checks SPACs on his phone. ‘I would just have a bad case of FOMO if I wasn’t in SPACs,’ he says.
Photo:
Cassidy Araiza for The Wall Street Journal
Trading volumes in many popular blank-check firms have increased lately, an indication of investors’ heightened activity. That trend is even drawing attention from some SPAC founders.
“It worries me,” said veteran investor and SPAC creator
Bill Foley.
Trading volumes have surged in one of the SPACs founded by the owner of the Vegas Golden Knights hockey team, especially since it announced a $7.3 billion deal to take
Blackstone Group Inc.
BX 0.21%
-backed benefits provider Alight Solutions public last week.
One reason traders are getting into blank-check firms when they are just pools of cash is that the time it takes for a SPAC to unveil a deal has dwindled. Blank-check firms normally give themselves two years to acquire a private company, but many these days need only a few months.
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It also doesn’t take long for investor speculation about a blank-check firm’s acquisition to build, particularly because SPACs can indicate the sector in which they hope to complete a deal.
Excitement can be triggered by a SPAC pioneer like Mr. Palihapitiya, who sometimes hints to his more than 1.2 million Twitter followers when activity is coming. The former Facebook Inc. executive took space-tourism firm
Virgin Galactic Holdings Inc.
public in 2019 and last month reached a deal with Social Finance Inc.
Even though he invests in a number of blank-check firms other than his own—often when SPACs need to raise more money to complete deals—shares of his own companies can climb following such tweets. One example came Jan. 21, when one of his blank-check firms rose about 4% after Mr. Palihapitiya started a tweet by saying “I’m finalizing an investment in ‘???.’”
The SPAC has since given back those gains after no news about an acquisition came out and it was revealed that Mr. Palihapitiya’s investments were in companies unrelated to his own. He declined to comment.
Mr. Palihapitiya also has thrown himself into the frenzy of activity around GameStop trading, publicizing an options trade last week in the stock and taking profits on it.
Reports about possible mergers like those surrounding the Churchill Capital IV SPAC and a possible combination with Lucid Motors also quickly attract hordes of buyers. That blank-check firm is now owned by many individuals, including Messrs. Prieto, Copeland and
Jack Oundjian,
a 40-year-old who lives in Montreal.
“I’m very excited that we have a chance to be able to participate in what could be future unicorn companies,” or startups valued at $1 billion or more, Mr. Oundjian said. He said he views SPACs as long-term investments rather than fast trades, and holdings tied to the sector make up about 30% of his roughly $1.2 million portfolio.
Private companies are flooding to special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and gain a public listing. WSJ explains why some critics say investing in these so-called blank-check companies isn’t worth the risk. Illustration: Zoë Soriano/WSJ
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
Here’s what we’re watching ahead of Wednesday’s opening bell.
—U.S. stock futures slipped, as investors awaited a bumper day of major earnings reports and a meeting of the Federal Reserve.
S&P 500 futures were down 1.1%, while futures tied to the technology-heavy Nasdaq-100 edged down 0.7%. Dow Jones Industrial Average futures fell 1.1%.
What’s Coming Up
—Earnings updates expected:
Tesla,
TSLA -0.71%
Apple
AAPL -0.22%
and
Facebook
FB -2.39%
are due after the close. The electric-car maker is expected to record its first full-year profit.
The Federal Reserve releases a policy statement at 2 p.m. and Chairman Jerome Powell holds a press conference at 2:30 p.m.
Market Movers to Watch
—And then there’s GameStop. Its stock popped again ahead of the bell, soaring 73% in wildly volatile trading. CNBC reported that Melvin Capital, a hedge fund that has posted big losses so far this year in part because of a wager against the videogame retailer’s stock, had closed out its short position on Tuesday afternoon. The report caused a stir on the online platform Reddit—popular among day traders waging a battle against hedge-fund short-sellers—where some members wrote that it was an attempt to pull
GameStop
GME 109.79%
‘s share price back down. And
Elon Musk
weighed in on the stock again last night with a tweet, “Gamestonk!!“
—The show must go on: Another heavily shorted stock, movie-theater operator
AMC Entertainment Holdings,
AMC 133.87%
saw its shares vault more than 350% higher premarket.
—Headphone maker
Koss
KOSS 72.20%
has also joined the party, and its shares jumped 109% premarket.
—
Bed Bath & Beyond
BBBY 28.21%
resumed its upward trajectory, up 20% ahead of the bell. Online traders point to an early 2020 change in management and the fact that the company is buying back shares as signs that the share price will continue to increase.
—
Microsoft
MSFT 1.44%
shares are up 2.1% premarket. The software giant’s profit and sales jumped, propelled by pandemic-fueled demand for videogaming and accelerated adoption of its cloud-computing services.
—
Boeing
BA -4.46%
shares fell 3.3% premarket after the plane maker reported its biggest-ever annual loss and took a huge financial hit on its new 777X jetliner, reflecting the pandemic’s worsening toll.
—
Abbott Laboratories
ABT 1.12%
shares added 1.5% premarket after it logged hearty profit growth in the latest quarter as a surge in demand for its Covid-19 diagnostics services contributed to higher revenue.
—
Starbucks
SBUX -5.30%
slipped 3% premarket after the coffee chain reported that sales fell during the holiday quarter but showed signs of recovery, particularly in China. Its operating chief
Roz Brewer
is leaving to become CEO of
Walgreens
WBA 6.21%
Boots Alliance, where she’ll be the only Black woman leading a Fortune 500 company. Walgreens shares climbed 5%.
A Walgreens store in Tomball, Texas, Jan. 16, 2021.
Photo:
Jeff Lautenberger for The Wall Street Journal
—
AT&T
T -1.11%
shares slipped 1.3% premarket after it reported a fourth-quarter loss as it booked a $15.5 billion charge on its pay-TV business.
—Chip maker
Texas Instruments
TXN -2.81%
‘s shares slipped 1.7% premarket even though quarterly results and outlook both topped Wall Street estimates after Tuesday’s close.
Market Fact
Retail order flows have reached 20% of the U.S. stock market’s total, according to
UBS
research, twice what they were in 2010.
Chart of the Day
GameStop shares have become a favorite of online traders who are seeking to make money from buying options.
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