Tag Archives: Corporate/Industrial News

Business

Norwegian Cruise Line Holdings Ltd. stock outperforms market on strong trading day

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Shares of Norwegian Cruise Line Holdings Ltd.
NCLH,
+0.25%
inched 0.25% higher to $24.14 Wednesday, on what proved to be an all-around mixed trading session for the stock market, with the Dow Jones Industrial Average
DJIA,
+0.20%
rising 0.20% to 31,437.80 and the S&P 500 Index
SPX,
-0.03%
falling 0.03% to 3,909.88. Norwegian Cruise Line Holdings Ltd. closed $30.14 short of its 52-week high ($54.28), which the company achieved on February 12th.

The stock outperformed some of its competitors Wednesday, as Royal Caribbean Group
RCL,
-0.17%
fell 0.17% to $68.77, Carnival PLC ADR
CUK,
-1.95%
fell 1.95% to $18.11, and Carnival Corp.
CCL,
-0.57%
fell 0.57% to $20.93. Trading volume (13.7 M) remained 4.9 million below its 50-day average volume of 18.5 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.

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Business

Stock Futures Rise Ahead of Inflation Data

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U.S. stock futures climbed Wednesday ahead of U.S. inflation data, suggesting that the major indexes will resume this month’s rally.

Futures tied to the S&P 500 and the Dow Jones Industrial Average gained 0.3%. Contracts on the technology-heavy Nasdaq-100 also advanced 0.3%. Both the S&P 500 and the Dow closed lower on Tuesday after notching record highs earlier in the week.

Stocks have pushed higher this month, with the benchmark S&P 500 notching its eighth record close of the year on Monday. Investors are betting that President Biden’s $1.9 trillion stimulus package will help bolster the economy while vaccinations help reduce Covid-19 fatalities. Investor sentiment has also been buoyed by companies’ quarterly results that have largely proved to be better than expected.

“As long as earnings estimates are going up, stocks are going up,” said Andrew Slimmon, a managing director and portfolio manager at Morgan Stanley Investment Management. “The magnitude of the earnings beats we have seen are so great because earnings have been way underestimated.”

Ahead of the opening bell, ride-hailing firm Lyft rose over 12% after posting a narrower annual loss, suggesting the company is moving toward profitability. Rival Uber Technologies is among the companies scheduled to release its results after the market closes. Uber rose more than 6% premarket.

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Business

Bitcoin blows past $45,000 and reaches as high as $48,000, driven by Tesla’s investment

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The price of bitcoin reached as high as $48,000 on Tuesday, building on gains following news that electric-car maker Tesla has invested $1.5 billion in the cryptocurrency and may accept it as future payment for products.

After reaching a record of near $44,000 on Monday, bitcoin prices
BTCUSD,
+2.48%
hit $45,000, $46,000 and $47,000 later that evening, according to CoinDesk. Prices reached a high of $48,226 early Tuesday and have since pulled back to $46,450, according to CoinDesk.

Sparking the fresh surge for bitcoin was a Tesla
TSLA,
+1.31%
regulatory filing with the Securities and Exchange Commission on Monday. It revealed Tesla acquired $1.5 billion in bitcoins in January and plans to accept it “as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.” 

Read: Musk’s Tesla says it invested $1.5 billion in bitcoin, sending the cryptocurrency to record levels near $44,000

That’s as Musk has been recently voicing support for cryptocurrencies on his Twitter account.

For the bitcoin faithful, it was a monumental move by a big company to invest in the digital currency and allow payments. But on the other side, some analysts questioned Tesla’s move, given the volatility of the cryptocurrency, as well as share prices of the electric car maker.

Even if bitcoin’s price multiplied by five over the past year, it could still come crashing down, Ipek Ozkardeskaya, senior analyst at Swissquote, told clients in a note. “The high volatility in Bitcoin’s value will therefore inevitably inject a certain volatility in Tesla’s revenue, and decrease the predictability of the company’s performance.”

Bitcoin’s year-to-date gain is up more than 60% in 2021. That’s against a 4% rise for the S&P 500
SPX,
+0.74%
and an 8.5% gain for the Nasdaq Composite Index
COMP,
+0.95%,
while gold
GC00,
+0.47%
is down around 3% and crude oil prices
CL.1,
+0.17%
are up 20%.

Read: Should I buy dogecoin? Why prices of the cryptocurrency are surging — but risky

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Business

AstraZeneca Covid-19 Vaccine Effective Against U.K. Variant in Trial

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LONDON—A Covid-19 vaccine developed by the University of Oxford and

AstraZeneca

PLC is effective against a variant of coronavirus that is spreading rapidly in the U.S. and around the world, according to a new study, a reassuring sign for governments banking on mass vaccination to bring the pandemic to an end.

The preliminary findings, published in a study online Friday that hasn’t yet been formally reviewed by other scientists, follow similarly positive results from other manufacturers.

Preliminary studies from

Pfizer Inc.

and

Moderna Inc.

found their Covid-19 shots continued to offer protection against new virus variants that have contributed to a fresh surge in cases in the U.K., Europe, South Africa and elsewhere.

Vaccine makers are nevertheless readying new shots that zero in on the new variants more precisely, underlining how mutations in the virus risk morphing the year-old pandemic into a long-running cat-and-mouse game between scientists and a shifting enemy. The virus behind Covid-19 has so far been linked to almost 2.3 million deaths worldwide and more than 100 million cases.

The study published Friday looked at the AstraZeneca vaccine’s effectiveness against a new variant of coronavirus first identified in the U.K. last year.

As new coronavirus variants sweep across the world, scientists are racing to understand how dangerous they could be. WSJ explains. Illustration: Alex Kuzoian/WSJ

The variant has now displaced older strains to become the dominant version of the coronavirus in Britain and is spreading in many other countries, including the U.S., where public-health officials have said it could become the dominant version of the virus.

Preliminary estimates suggest the variant from the U.K. is 50%–70% more transmissible than earlier versions of the virus. U.K. scientists said recently that early data suggested it could also be deadlier.

Researchers examined blood samples from around 256 participants in an ongoing clinical trial of the vaccine in the U.K. who tested positive for Covid-19.

Genetic sequencing allowed them to identify which participants were infected with the new variant and which had an older version. A little under a third had the new variant.

By testing antibody levels and other markers of immune system activity against the virus, the researchers found the vaccine triggered an effective immune response against the new variant in 75% of cases that showed symptoms of infection, and in around two-thirds of cases if those that didn’t show symptoms were also included.

The U.K. Coronavirus Variant

The small-scale study showed the vaccine works slightly better against older, more established versions of the virus. For those with the older strain, the vaccine was effective in 84% of symptomatic cases and 81% of all cases.

The researchers reported sharply differing antibody responses among the two groups, saying certain types of antibodies induced by the vaccine were up to nine times less effective at neutralizing the new variant than the old. Overall protection was similar, however, suggesting other parts of the immune system are playing a key role.

Andrew Pollard,

director of the Oxford Vaccine Group at the University of Oxford, said it isn’t entirely clear which biological mechanisms are most important. It might be infection-fighting T-cells or other types of antibodies, he said.

“We don’t know the answer,” he said.

Almost 120 million doses of vaccine have been administered worldwide, according to figures compiled by the University of Oxford’s Our World in Data project. Roll-outs have been patchy, with some countries such as Israel and the U.K. moving rapidly to inoculate their most at-risk citizens and others, including in Europe, lagging behind due to supply and other issues. The U.S. has so far given at least one dose of vaccine to 35 million people, around 10% of its population.

Vaccine makers say the technology behind Covid-19 vaccines should allow them to swiftly retool their production lines to produce shots targeted more precisely at new and emerging variants.

Some studies have suggested a variant first identified in South Africa might be less susceptible to existing vaccines than the U.K. variant. Companies including Moderna, Pfizer and its partner

BioNTech

SE,

Johnson & Johnson

and

Novavax Inc.

are designing new vaccines to specifically target the South African variant.

Babak Javid,

associate professor of infectious diseases at the University of California, San Francisco, said small differences in how vaccines perform against new variants compared with established versions isn’t a major concern provided those vaccinated are protected against severe illness and hospitalization. That will be critical to determining when countries relax lockdowns and other public health restrictions, he said.

Write to Jason Douglas at jason.douglas@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

McKinsey Agrees to $573 Million Settlement Over Opioid Advice

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Consulting giant McKinsey & Co. has reached a $573 million settlement with states over its work advising OxyContin maker Purdue Pharma LP and other drug manufacturers to aggressively market opioid painkillers, according to people familiar with the matter.

The deal, reached with 47 states and the District of Columbia and expected to be publicly announced Thursday, would avert civil lawsuits that attorneys general could bring against McKinsey, the people said. The majority of the money will be paid upfront, with the rest dispensed in four yearly payments starting in 2022.

McKinsey said last week it is cooperating with government agencies on matters related to its past work with opioid manufacturers, as state and local governments sue companies up and down the opioid supply chain. At least 400,000 people have died in the U.S. from overdoses of legal and illegal opioids since 1999, according to federal data.

The consulting firm stopped doing opioid-related work in 2019 and said in December its work for Purdue was intended to support the legal use of opioids and help patients with legitimate medical needs.

While some companies have reached deals with individual states to avoid trials, the McKinsey settlement marks the first nationwide opioid pact to come from the flood of litigation that began in 2017. A much larger, $26 billion deal with three drug distributors and Johnson & Johnson has been in the works for more than a year but is still being negotiated.

The Wall Street Journal reported last week that McKinsey was close to a settlement with states and that a deal could be worth hundreds of millions of dollars. The negotiations occurred as hundreds of exhibits describing McKinsey’s work to boost OxyContin sales were made public in recent months during Purdue’s chapter 11 bankruptcy case in White Plains, N.Y.

Memos McKinsey sent Purdue executives in 2013 that have been made public in bankruptcy court filings included recommendations that the company’s sales team target health care providers it knew wrote the highest volumes of OxyContin prescriptions and shift away from lower-volume prescribers. McKinsey’s work became a Purdue initiative called “Evolve to Excellence,” which the U.S. Justice Department described in papers released last year in connection with a plea agreement with Purdue as an aggressive OxyContin marketing and sales campaign.

According to bankruptcy court records, McKinsey sent recommendations to Purdue in 2013 that consultants said would boost its annual sales by more than $100 million. McKinsey recommended ways Purdue could better target what it described as “higher value” prescribers and take other steps to “Turbocharge Purdue’s Sales Engine.”

Stamford, Conn.-based Purdue pleaded guilty in November to three felonies, including paying illegal kickbacks and deceiving drug-enforcement officials. The drugmaker filed for chapter 11 protection in 2019 to address thousands of opioid-related lawsuits brought against it. Purdue said in a lawsuit filed last week against its insurers that creditors have asserted hundreds of thousands of claims in the bankruptcy case and collectively seek trillions of dollars in damages.

McKinsey also advised other opioid makers on sales initiatives. The firm’s work for

Johnson & Johnson

came up in a 2019 trial in a case brought by Oklahoma against the drug company for contributing to the opioid crisis in the state through aggressive marketing of prescription painkillers. The trial ended with a $572 million verdict against Johnson & Johnson, which was later reduced to $465 million and is still on appeal.

The vast majority of the money McKinsey will pay in the settlement will be divided among the participating states, with $15 million going to the National Association of Attorneys General to reimburse it for costs incurred in the investigation, one of the people familiar with the deal said.

The settlement also includes some nonmonetary provisions, like requiring McKinsey to create a repository of documents related to its work for opioid makers, the person said.

The holdout states include Nevada, which said Wednesday night that its investigation into the consulting giant continues “and we are conversing with McKinsey about our concerns.”

Purdue has been negotiating with creditors, which include states, since filing for bankruptcy, but finalizing a deal has been slowed by demands from some states that the company’s owners, members of the Sackler family, contribute more than the $3 billion they have agreed to.

States have been keenly focused on ensuring any settlement money from the opioid litigation goes toward helping alleviate the impact of the crisis, including through beefing up treatment programs and helping overstretched law enforcement. The states are looking to avoid the outcome of the 1990s tobacco litigation, when a $206 billion settlement was often spent to fill state budget holes. The McKinsey settlement documents say the money is intended for abatement, the person familiar with the deal said, though state laws differ widely on how settlement funds can be earmarked.

Write to Sara Randazzo at sara.randazzo@wsj.com and Jonathan Randles at Jonathan.Randles@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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World

Russian Covid-19 Vaccine Was Highly Effective in Trial, Study Finds, Boosting Moscow’s Rollout Ambitions

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MOSCOW—Russia’s homegrown Sputnik V vaccine showed high levels of efficacy and safety in a peer-reviewed study released Tuesday, a potential boost for the Kremlin’s aim to promote the Covid-19 shot abroad and curb the pandemic at home.

The findings, from a preliminary analysis of a large-scale clinical trial published in the British medical journal the Lancet, demonstrated that the two-shot vaccine was 91.6% effective against symptomatic Covid-19 and offered complete protection against severe cases. There were no serious side effects, the paper said. The vaccine was also found to be similarly safe and effective in elderly people.

The study could be a significant milestone for Moscow in the global vaccination race, potentially offering President

Vladimir Putin’s

government geopolitical clout in the developing world and the chance to tap into the lucrative global vaccine market. Russia—the world’s fourth worst-hit country with nearly four million cases—has also banked on Sputnik V to avoid new costly lockdowns as authorities plan to vaccinate 60% of the domestic population by the end of the year.

The shot, which was approved by Russian authorities in August before undergoing large-scale clinical trials, has stirred questions in light of its fast-tracked development and lack of published trial data. So far, Sputnik V has been administered to more than two million people world-wide, including in Argentina, Serbia and Algeria, according to Russian authorities.

The Sputnik V Vaccine

Type: Two-dose viral vector vaccine

Efficacy: 91.6% (91.8% among people older than 60 years)

Price: Less than $10 a shot

Storage and transportation temperature: 36º-46ºF

Approved for use in: Russia, Belarus, Serbia, Argentina, Bolivia, Algeria, Palestine, Venezuela, Paraguay, Turkmenistan, Hungary, UAE, Iran, Guinea, Tunisia and Armenia

Administered in: Russia, Argentina, Bolivia, Belarus, Serbia, Algeria, Kazakhstan

Sources: The Lancet, Russian Direct Investment Fund

Tuesday’s results could help clear doubts surrounding the Russian shot.

“The development of the Sputnik V vaccine has been criticized for unseemly haste, corner cutting, and an absence of transparency,” virology professors Ian Jones at the U.K.’s University of Reading and Polly Roy at the London School of Hygiene & Tropical Medicine wrote in the Lancet. “But the outcome reported here is clear and the scientific principle of vaccination demonstrated, which means another vaccine can now join the fight to reduce the incidence of Covid-19.”

Alexander Gintsburg,

the head of the vaccine’s developer, the Moscow-based Gamaleya Institute, said that the data demonstrates Sputnik V’s safety and high efficacy against the virus.

This “is a great success in the global battle against the Covid-19 pandemic,” he said.

Sputnik V’s efficacy rate compares to vaccines developed by

Moderna Inc.

and

Pfizer Inc.

and its German partner

BioNTech SE,

which are around 95% effective.

The Lancet study didn’t address the shot’s usefulness against new variants of the virus, amid some early evidence suggesting strains may prove resistant to current vaccines. Russian officials said on Tuesday that they are continuously testing Sputnik V against new variants and they expect the shot to achieve the same level of efficacy. They also expect it to provide long-term immunity of as long as two years, based on early experimental evidence.

The results published on Tuesday were based on an interim analysis of a Phase 3 trial of nearly 20,000 participants, three-quarters of whom received the vaccine while the rest received a placebo. The analysis was based on a total of 78 confirmed Covid-19 cases, 62 of which were identified in the placebo group and 16 in the vaccine group. The clinical trial, totaling 40,000 volunteers, is ongoing.

Researchers found that the Covid-19 vaccine didn’t produce serious adverse reactions, the Lancet paper said. Most side effects included flulike symptoms, pain at the injection site and headaches.

Among the elderly, the vaccine was well tolerated and demonstrated an efficacy of 91.8%, based on a group of 2,144 volunteers older than 60, the paper said.

Like other Covid-19 vaccines, including ones developed by

Johnson & Johnson

and

AstraZeneca

PLC and Oxford University, Sputnik V uses a so-called viral vector approach. It introduces a genetically altered form of a harmless virus, known as the adenovirus, to serve as a vehicle—or vector—for a fragment of genetic material from the coronavirus.

As wealthier countries buy up supplies of Western drugmakers’ Covid-19 vaccines that are still in development, China and Russia are offering their fast-tracked shots to poorer nations. Here’s what they’re hoping to get in return. Illustration: Ksenia Shaikhutdinova

Each of the vaccine’s two shots is based on a different adenovirus vector, which Russian scientists say achieves a stronger immune response. Sputnik V has simpler logistics requirements compared with some of its peers, with a storage and transportation temperature of between 36 and 46 degrees Fahrenheit. The Pfizer vaccine must be kept at minus 94 degrees Fahrenheit before thawing.

With Sputnik V—a reference to the satellite the Soviet Union launched into orbit ahead of the U.S. in the Cold War space race—Russia could gain clout with some countries, analysts say, as well as participate in a global coronavirus vaccine market estimated by Russian officials at $100 billion annually.

Competing on price, Russia is selling the vaccine at less than $10 a dose, lower than Pfizer and Moderna, and is targeting up to 30% market share among Covid-19 shots in the countries buying Sputnik, according to Russian officials.

AstraZeneca has said that it would test whether a combination of its Covid-19 vaccine, which has shown to be between 62% and 90% effective depending on dosage, and Sputnik V can boost efficacy. Clinical trials for a combined shot are expected to start soon in Azerbaijan, the United Arab Emirates and other countries.

Some 15 countries outside Russia have already authorized Sputnik V, and Moscow has received orders or expressions of interest for 2.4 billion doses, including from Brazil, Mexico and India. In a bid to accelerate the global rollout, Russia will also offer a one-dose vaccine, dubbed Sputnik Light, which Russian authorities say would be between 73% and 85% effective.

To produce its vaccine, Russia relies on a global supply chain, including manufacturing hubs in Brazil, South Korea, India and China. Russia has also mounted an aggressive public-relations campaign abroad, including posting weekly video updates in English and maintaining a Twitter account for Sputnik V.

Sputnik V hasn’t been approved by Western health authorities or received authorization from the World Health Organization, which many developing countries rely on for vetting vaccines. Russia is in talks with the European Medicines Agency about approving the shot in the European Union and has applied for WHO authorization.

In Iran, health-care professionals and lawmakers criticized the government’s announcement that it would import Sputnik V, saying that the vaccine had not been approved by international bodies and that the purchase was politically motivated. Government officials said on Tuesday that Tehran would buy up to 1.5 million doses, with the first batch arriving as early as Saturday.

The domestic rollout has also faced challenges, including production delays and a skeptical populace.

Authorities have recently said that manufacturing is now being ramped up following initial equipment problems. They now expect to produce 11 million doses this month, up from seven million in January.

Around 46% of Russians said they would get a vaccine in a January survey by British polling firm Ipsos MORI, up 5 percentage points compared with December. Still, Russians were among the most reluctant to get inoculated globally, compared with 55% in France, 63% in the U.S. and 86% in the U.K.

Russia doesn’t publish daily vaccination rates, but regional data shows that at least 1.3 million Russians have received a dose so far.

Irina Levashova, a kindergarten teacher in Romodanovo, a small town some 400 miles southeast of Moscow, received her second shot last month along with her husband.

“I have many acquaintances who have been ill or even died from this disease, so I wanted to protect myself and my family,” Ms. Levashova, 58, said, adding that she didn’t experience any major side effects. “As soon as they started talking about vaccinations, I immediately told myself that me and my family would do it.”

—Valentina Ochirova contributed to this article

Write to Georgi Kantchev at georgi.kantchev@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Tesla is in decline, SUVs are king, and more insights from the world’s largest electric-vehicle market

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Europe overtook China in 2020 to become the world’s largest market for electric vehicles, amid a pedal-to-the-metal push to increase EV adoption from governments and supercharged demand from consumers.

The registrations of new electric vehicles topped 1.33 million in the key European markets last year, compared with 1.25 million in China, according to a report based on public data by automotive analyst Matthias Schmidt.

The 18 markets include the European Union states — minus 13 countries in Central and Eastern Europe — as well as the U.K., Norway, Iceland, and Switzerland.

And growth will only continue, according to Schmidt, who publishes the European Electric Car Report. He projects that electric vehicles’ share of the European car market will rise from 12.4% in 2020 to 15.5% in 2021 — that is 1.91 million vehicles out of a total of 12.3 million, and an increase of 572,000 from 2020.

Key trends have emerged as Europe races to become the most important region for EVs, highlighted in the report that Schmidt shared with MarketWatch.

Among them are that the Renault Zoe is now the most popular electric vehicle in Europe, overtaking Tesla’s Model 3, which took the top spot in 2019. In fact, Tesla’s success in Europe has declined across the board over the last year, with the U.S. company delivering 97,791 cars across the continent in 2020, down from 109,467 in 2019.

Here’s what you should know:

SUVs are leading the growth

When you think of environmentally-friendly vehicles, sport-utility vehicles and crossovers probably don’t spring to mind. But this class is by far the most popular type of battery-electric vehicle in Europe, representing 27% of all registrations in 2020 and 29% in December alone.

Hyundai
005380,
+0.42%
and Kia
000270,
-1.22%
led the pack, making up 39% of battery-electric SUV and crossover volumes in 2020.

SUVs and crossovers are even more popular with hybrid buyers — accounting for 53% of plug-in hybrid electric-vehicle volumes last year.

Luxury buyers prefer hybrids

When it comes to hybrids, better is best. Premium brands made up 58% of all plug-in hybrid electric-vehicles in 2020.

Many of those cars were supplied by the German automotive giants: Volkswagen Group
VOW,
-0.40%,
which owns Audi and Porsche, Mercedes-Benz owner Daimler
DAI,
+0.46%,
and BMW
BMW,
-0.19%.

There is a coming wave from China

As Chinese car makers increase efforts to meet market demand at home and abroad, they are looking at Europe.

The volume of electric vehicles in Europe that were made by Chinese companies grew 1290% from 2019 to 2020, to 23,800 units. Much of that momentum came only recently — half of those cars arrived in the final three months of the year.

As Europeans scrambled to buy electric vehicles, the flow of cars from China also included Teslas. In December, 20% of all Tesla
TSLA,
+5.83%
models registered in Austria were manufactured in China.

Also read: Audi is betting on the luxury market in a new electric-vehicle venture with China’s oldest car maker

Government action is speeding up EV adoption

European car makers are being pushed to manufacture more electric vehicles by the threat of hundreds of millions of euros in fines from the European Union over binding emissions targets. 

Phased in through 2020, and continuing into 2021, the fleetwide average emission target for new cars must be 95 grams carbon dioxide per kilometer, which is around 4.1 liters of gasoline per 100 kilometers.

In the wake of the post-Brexit trading agreement, the U.K. government said that the country’s car makers face emissions targets “at least as ambitious” as in the EU.

EV adoption is being pushed on both sides of the market, with governments stimulating demand by providing generous incentives for buyers to trade in their gas guzzlers.

In Germany, buyers can save up to €9,000 ($10,940) on purchases of new electric vehicles. France offered incentives of up to €7,000 in 2020, but will trim that down to €6,000 in 2021. 

Regulation could hurt some bottom lines in the short-term

Volkswagen Group confirmed last week that it had not met the EU’s emissions targets for 2020, meaning that the company is on the hook for more than €100 million in fines.

Others could face the same fate, though rivals Daimler, BMW, Renault
RNO,
-0.58%,
and Peugeot (now part of Stellantis
STLA,
+1.05%
) all say they met their targets.

“Despite very ambitious efforts in electrification, it has not been possible to meet the set fleet target in full. But Volkswagen is clearly well on its way,” said Rebecca Harms, a member of the independent Volkswagen Sustainability Council.

“The key to success will be to give a greater role to smaller, efficient and affordable models in the electrification rollout.”

It is unclear how easy that will be in 2021. The COVID-19 pandemic contributed to the fewest passenger-car registrations in Europe since 1985 and, according to Schmidt, this allowed a number of car makers to meet emissions targets.

Also read: Car makers put the pedal to the metal on electric vehicles in 2020, with sales surging in one key region where Tesla lost market share

Tesla is losing dominance

Tesla comfortably topped the European EV charts in 2019. It delivered more than 109,000 vehicles that year, making up 31% of the region’s battery electric-vehicle market. 

But the tide turned in 2020, with Tesla dropping behind both the brands of Volkswagen Group, which had 24% market share, and the Renault–Nissan–Mitsubishi Alliance, with 19% market share. Last year, Tesla delivered nearly 98,000 vehicles and made up just 13% of the European market.

According to Schmidt, it was the introduction of emissions targets, and the specter of massive fines, that has accelerated European car makers’ battle against Tesla for dominance.

See also: Electric-car sales jump to record 54% market share in Norway in 2020 but Tesla loses top spot

“With 2021 getting even tougher — thanks to the phase-in year ending — Tesla will come under even more intense competition,” Schmidt said. “Come 2025 when the targets increase again, Tesla will certainly be playing against fully-fit opponents and will potentially struggle.”

However, Schmidt does note in his market outlook for 2021 that the opening of Tesla’s factory in Germany, expected to start production in the second half, is likely to double regional volumes next year.



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Business

GameStop Day Traders Are Moving Into SPACs

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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

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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Business

Exxon, Chevron CEOs Discussed Merger

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The chief executives of

Exxon Mobil Corp.

XOM -2.65%

and

Chevron Corp.

CVX -4.29%

spoke about combining the oil giants after the pandemic shook the world last year, according to people familiar with the talks, testing the waters for what could be one of the largest corporate mergers ever.

Chevron Chief Executive

Mike Wirth

and Exxon CEO

Darren Woods

discussed a merger following the outbreak of the new coronavirus, which decimated oil and gas demand and put enormous financial strain on both companies, the people said. The discussions were described as preliminary and aren’t ongoing but could come back in the future, the people said.

Such a deal would reunite the two largest descendants of

John D. Rockefeller’s

Standard Oil monopoly, which was broken up by U.S. regulators in 1911, and reshape the oil industry.

A combined company’s market value could top $350 billion. Exxon has a market value of $190 billion, while Chevron’s is $164 billion. Together, they would likely form the world’s second largest oil company by market capitalization and production, producing about 7 million barrels of oil and gas a day, based on pre-pandemic levels, second only in both measures to Saudi Aramco.

But a merger of the two largest American oil companies could encounter regulatory and antitrust challenges under the Biden administration. President Biden has said climate change is one of the biggest crises the country faces. In October, he said he would push the country to “transition away from the oil industry.” He hasn’t been as vocal about antitrust matters, and the administration has yet to nominate the Justice Department’s head of that division.

One of the people familiar with the talks said the sides may have missed an opportunity to consummate the deal under former President

Donald Trump,

whose administration was seen as more friendly to the industry.

Darren Woods, CEO Exxon Mobil Corp., at an industry conference in 2018



Photo:

Andrew Harrer/Bloomberg News

A handful of sizable oil and gas deals were completed last year, including Chevron’s $5 billion takeover of Noble Energy Inc. and

ConocoPhillips

COP -2.63%

’ roughly $10 billion takeover of Concho Resources Inc., but nothing close to the scale of combining San Ramon, Calif.-based Chevron and Irving, Texas-based Exxon.

Such a deal would significantly surpass in size the mega-oil-mergers of the late 1990s and early 2000s, which included the combination of Exxon and Mobil and Chevron and Texaco Inc.

It also could be the largest corporate tie-up ever, depending on its structure. That distinction currently belongs to the roughly $181 billion purchase of German conglomerate Mannesmann AG by Vodafone AirTouch Plc in 2000, according to Dealogic.

Many investors, analysts and energy executives have called for consolidation in the beleaguered oil-and-gas industry, arguing that cutting costs and improving operational efficiencies would help companies weather the pandemic-induced downturn and prepare for an uncertain future as many countries seek to reduce their dependence on fossil fuels to combat climate change.

In an interview discussing Chevron’s earnings Friday, Mr. Wirth, who like Mr. Woods also serves as his company’s board chairman, said that consolidation could make the industry more efficient. He was speaking generally and not about a possible Exxon-Chevron merger.

“As for larger scale things, it’s happened before,” Mr. Wirth said, referring to the 1990s and early-2000s megamergers. “Time will tell.”

Paul Sankey,

an independent analyst who hypothesized a merger of Chevron and Exxon in October, estimated at the time that the combined company would have a market capitalization of about $300 billion and $100 billion in debt. A merger would allow them to cut a combined $15 billion in administrative expenses and $10 billion in annual capital expenditures, he wrote.

An abundance of fossil fuels combined with advances in technology to harness wind and solar power has sent energy prices crashing around the world. WSJ explains how it all happened at once. Photo illustration: Carlos Waters/WSJ

Exxon was America’s most valuable company seven years ago, with a market value of more than $400 billion, nearly double Chevron’s. But Exxon has fallen from its heights following a series of strategic missteps, which were further exacerbated by the pandemic. It has been eclipsed as a profit engine by tech giants such as

Apple Inc.

AAPL -3.74%

and

Amazon.com Inc.,

AMZN -0.97%

in recent years and was removed from the Dow Jones Industrial Average last year for the first time since it was added as Standard Oil of New Jersey in 1928.

Exxon’s shares have fallen nearly 29% over the last year, while Chevron’s are down about 20%. Chevron briefly topped Exxon in market capitalization in the fall.

Exxon endured one of its worst financial performances ever in 2020. It is expected to report a fourth consecutive quarterly loss for the first time in modern history on Tuesday and already has posted more than $2 billion in losses through the first three quarters of 2020.

Chevron also has struggled, reporting nearly $5.5 billion in 2020 losses Friday. But investors have expressed more faith in Chevron because it entered the downturn with a stronger balance sheet—in part because it walked away from its $33 billion bid to buy Anadarko Petroleum Corp. before the pandemic, having been outbid by

Occidental Petroleum Corp.

OXY -4.25%

in 2019.

Exxon has about $69 billion in debt as of September, while Chevron has around $35 billion, according to S&P Global Market Intelligence.

Some investors have grown increasingly concerned about Exxon’s direction under Mr. Woods as the company faces a rapidly changing energy industry and growing global consciousness about climate change. Some are also worried that Exxon may have to cut its hefty dividend, which costs it about $15 billion annually, due to its high debt levels. Many individual investors count on the payments as a source of income.

Mr. Woods embarked on an ambitious plan in 2018 to spend $230 billion to pump an additional one million barrels of oil and gas a day by 2025. But before the pandemic, production was up only slightly and Exxon’s financial flexibility was diminished. In November, Exxon retreated from the plan and said it would cut billions of dollars from its capital spending every year through 2025 and focus on investing in only the most promising assets.

Meanwhile, the company’s woes have helped draw the attention of activist investors. One of them, Engine No. 1 LLC, has argued that the company should focus more on investments in clean energy while cutting costs elsewhere to preserve its dividend. The firm nominated four directors to Exxon’s board Wednesday and called for it to make strategic changes to its business plan.

Exxon also has been in talks with another activist, D.E. Shaw Group, and is preparing to announce one or more new board members, additional spending cuts and investments in new technologies to help it reduce its carbon emissions.

Rivals such as

BP

BP -2.80%

PLC and

Royal Dutch Shell

RDS.A -3.53%

PLC have embarked on bold strategies to remake their business as regulatory and investor pressure to reduce carbon emissions mounts. Both have said they will invest heavily in renewable energy—a strategy that their investors so far haven’t rewarded.

Exxon and Chevron haven’t invested substantially in renewables, instead choosing to double down on oil and gas. Both companies have argued that the world will need vast amounts of fossil fuels for decades to come, and that they can capitalize on current underinvestment in oil production.

Write to Christopher M. Matthews at christopher.matthews@wsj.com, Emily Glazer at emily.glazer@wsj.com and Cara Lombardo at cara.lombardo@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

AMC Entertainment Holdings Inc. Cl A stock rises Friday, outperforms market

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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.

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