Tag Archives: Morgan Stanley

Business

Stock futures open mostly flat ahead of the kickoff of earnings season

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Traders work on the floor of the New York Stock Exchange.

NYSE

Stock futures opened mostly flat late Sunday as earnings season kicks off this week.

Futures on the Dow Jones Industrial Average added 25 points, or 0.07%. S&P 500 futures edged 0.08% higher and Nasdaq 100 futures rose 0.17%.

The three major indexes closed at record highs on Friday after a sell-off Thursday as investors worried about a potential slowdown in U.S. economic growth. Friday’s rally brought the averages into the green for the week; the Dow added 0.24% week-to-date, while the S&P 500 and Nasdaq each rose about 0.4% in the same period.

Stocks tied to the economic recovery that fell during Thursday’s session logged gains on Friday. Financial names rebounded, with Bank of America and Goldman Sachs both jumping more than 3%. Travel-related stocks also rose; Royal Caribbean popped 3.6%, Wynn Resorts gained close to 2%, and American Airlines and United Airlines both added more than 2%.

The major averages’ record highs come ahead of the start of quarterly earnings reports. S&P 500 companies’ profits are expected to be up 65% from the same quarter a year ago, according to Refinitiv, bouncing back from the worst of the pandemic. The expected surge in profits would be the strongest earnings growth since the fourth quarter of 2009, as stocks recovered from the financial crisis.

“The second quarter could be as good as it gets for economic growth,” Callie Bost, senior investment strategist at Ally Invest, said. “Earnings growth may slow, but analysts still expect S&P profits to grow by double digits in the next two quarters. It’s crucial not to lose faith in the market just because the economy’s strongest growth may be behind us.”

JPMorgan Chase, Goldman Sachs and PepsiCo kick off earnings season with results due out before the bell on Tuesday. Bank of America, Citigroup, Wells Fargo, Delta Air Lines and BlackRock report on Wednesday, and Morgan Stanley, Truist and UnitedHealth post results on Thursday.

Investors also anticipate important data to be released this week, including key readings on inflation on Tuesday and Wednesday, and June retail sales on Friday.

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Business

Didi Global Prices IPO at $14 a Share

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Chinese ride-hailing goliath Didi Global Inc. priced its IPO at $14 on Tuesday afternoon, according to people familiar with the matter, setting the stage for the company to begin trading Wednesday, after it made a lightning-fast pitch to potential investors.

The company sold more stock than it had planned, though the new deal size couldn’t immediately be learned. Given the upsizing, the pricing would give Didi a market capitalization of more than $67 billion, which would trail U.S. ride-hailing firm Uber Technologies Inc.’s roughly $95 billion but land well ahead of Lyft Inc., which sits at roughly $20 billion.

Didi’s fully diluted valuation, which typically includes restricted stock units, would easily eclipse $70 billion at the initial-public-offering price, confirming earlier reports by The Wall Street Journal.

Didi’s pricing comes just three business days after it launched its roadshow, making it one of the shortest investor pitches for an initial public offering in recent memory, according to bankers, investors and lawyers.

Didi ran its roadshow through round-the-clock virtual meetings because of time-zone differences, according to people who participated. Company executives focused on Didi’s scale and potential for continuing growth, the people said. The executives emphasized that 70% of China’s population will live in cities by 2030 and that few people own cars in those cities—and far fewer than in the U.S. Didi argues it is in position to capitalize on that, from shared mobility in general to its investments in electric vehicles and artificial intelligence.

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Cryptocurrency market cap tops $2 trillion for the first time

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In 2021, bitcoin and ether have seen huge rallies. In April 2021, the cryptocurrency market topped $2 trillion in value for the first time.

Jaap Arriens | NurPhoto | Getty Images

GUANGZHOU, China — The value of the cryptocurrency market topped $2 trillion for the first time on Monday driven by a rally in ether, the second-largest digital coin.

In just over two months, the market capitalization of the cryptocurrency market has doubled, according to price tracking website CoinGecko, as retail and institutional investors pile into the space.

Bitcoin, the biggest digital currency, accounts for over 50% of the entire cryptocurrency market capitalization. Bitcoin has rallied over 100% this year alone, and that has helped drive the cryptocurrency market higher.

Last month, bitcoin hit a record high of above $61,000. The digital coin was trading at about $58,800 on Tuesday, according to Coindesk data.

Ether rally

But the latest boost in the cryptocurrency market appears to have been driven by ether, the digital coin that powers the Ethereum blockchain.

Bitcoin also runs on a technology called blockchain which is a public ledger of activity and a way for transactions to take place using the cryptocurrency. In comparison, the Ethereum blockchain is more like a software platform that allows developers to build apps on top of it. Users can then spend ether on these apps.

So-called smart contracts are a key feature of Ethereum. These are contracts that can be automatically executed using code.

There is growing excitement about the use of Ethereum in so-called decentralized finance, or DeFi, applications. These are blockchain-based financial services, such as lending, which could in theory bypass banks and brokerages. Users of these apps may transact using cryptocurrency.

Ethereum also has the underlying technology behind the recent craze in non-fungible tokens, or NFTs — a new type of digital asset.

Bitcoin interest

Bitcoin still remains the powerhouse of the cryptocurrency market and over the last few months, saw a big increase in interest among companies and large institutional investors.

Tesla and Square are among a handful of companies that have purchased bitcoin.

Meanwhile, major investment banks are exploring ways to allow clients to get involved with digital asset investments. In March, CNBC reported that Morgan Stanley became the first major U.S. bank to offer its wealth management clients access to bitcoin funds. CNBC also reported last month that Goldman Sachs is gearing up to launch its first investment vehicles for bitcoin and other digital assets to clients of its private wealth management group.

There is also hope among investors for an expanding portfolio of investment products and many are watching Grayscale Investments, which runs one of the largest publicly traded bitcoin funds. It is known as the Grayscale Bitcoin Trust.

The company said on Monday that it is “100% committed” to converting that trust into an exchange-traded fund, or ETF. That would effectively track the price of bitcoin and allow traders to play the price movement without owning the cryptocurrency itself. It could be a way for more investors to be involved in the bitcoin market.

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Business

Tesla, GameStop, Roblox & more

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Take a look at some of the biggest movers in the premarket:

Tesla (TSLA) – Tesla delivered nearly 185,000 vehicles during the first quarter, a record for the company and more than 10,000 about consensus forecasts. The stock jumped 7.6% in the premarket.

GameStop (GME) – The video game retailer announced plans to sell up to 3.5 million shares in an “at-the-market” offering, with plans to use the proceeds to strengthen its balance sheet and accelerate its ongoing transformation. GameStop also said sales for the first nine weeks of its current quarter were up 11% from the same period a year ago. GameStop tumbled 15.1% in premarket trading.

Roblox (RBLX) – Shares of the video game development platform company’s stock jumped 3.5% in premarket action, as Goldman began coverage with a “buy” rating and Morgan Stanley initiated coverage with a rating of “overweight.” Both firms cite robust growth prospects, with Goldman noting that Roblox is able to outsource game development costs to creators.

Royal Caribbean (RCL), Norwegian Cruise Line (NCLH), Carnival (CCL) – The Centers for Disease Control and Prevention updated its guidance for resuming U.S. cruise ship sailings, although it did not set a specific date for resumption. Royal Caribbean gained 1.5% in the premarket, with Norwegian up 2.5% and Carnival higher by 2.2%.

Johnson & Johnson (JNJ) – J&J will take over manufacturing at a plant owned by contract manufacturer Emergent Biosolutions (EBS) after a quality control issue ruined a batch of J&J’s Covid-19 vaccine. The Wall Street Journal reports that in order to accommodate the switch, production of AstraZeneca’s (AZN) Covid-19 vaccine will be moved elsewhere. Separately, J&J expanded a trial of its Covid-19 vaccine to include 12- to 17-year-olds.

Tribune Co. (TPCO) – Tribune received a $680 million takeover bid – worth $16.50 per share – from Choice Hotels Chairman Stewart Bainum and Swiss billionaire Hansjorg Wyss. That tops a $635 million deal that the newspaper publisher had previously agreed to with hedge fund Alden Global Capital.

Pinterest (PINS) – The image-sharing website operator is in talks to buy photo app company VSCO, according to The New York Times. A potential deal price could not be determined, but VSCO was most recently valued at $550 million. Pinterest shares rose 1.6% in the premarket.

General Motors (GM), Ford Motor (F) – Wells Fargo began coverage of both automakers with ratings of “overweight,” pointing to Ford’s faster turnaround under new CEO Jim Farley and GM’s leading position in electric vehicles and connectivity. GM shares added 1.7% in premarket action, while Ford rose 1.5%.

Pioneer Natural (PXD) – Pioneer Natural struck a deal to buy privately held rival shale producer DoublePoint Energy for about $6.4 billion, continuing the consolidation trend in the shale industry. Pioneer shares fell 4.4% in premarket trading.

Moderna (MRNA) – Moderna received Food and Drug Administration approval to fill Covid-19 vaccine vials with up to 15 doses, up from the previous 10 doses. Moderna said it expects to begin shipping the 15-dose vials within a few weeks, and its stock rose 1.5% in premarket trading.

Morgan Stanley (MS) – Morgan Stanley said it would increase its dividend as soon as restrictions are lifted by the Federal Reserve. The Fed is scheduled to release the next round of bank stress test results in June. Morgan Stanley rose 1.4% in the premarket.

Planet Fitness (PLNT) – The fitness chain is planning to add up to 100 new locations in the coming fiscal year, adding to its current total of more than 2,100. CFO Tom Fitzgerald told The Wall Street Journal the company also wants to boost investment in its app.

Lamb Weston (LW) – Shares of the foodservice company gained 1.9% in the premarket after Bank of America Securities upgraded it to “buy” from “neutral” and raised the price target to $100 per share from $84 a share. BofA said the company is poised to approach pre-Covid business levels, with demand improving.

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Business

COUR begins trading on the NYSE

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The New York Stock Exchange welcomes Coursera, (NYSE: COUR), today, Wednesday, March 31, 2021, in celebration of its Initial Public Offering. To honor the occasion, Coursera Founders Andrew Ng and Daphne Koller and Coursera CEO Jeff Maggioncalda virtually ring The Opening Bell®.

NYSE

Shares of education tech company Coursera opened at $39 apiece in its market debut Wednesday on the New York Stock Exchange.

On Tuesday, Coursera priced its 15.73 million shares at $33 apiece — the high end of its initial $30 to $33 target range. In its offering, the company raised nearly $520 million at an implied $4.3 billion valuation.

Shares were up about 18% after it opened, giving the company a market cap of about $5.13 billion. Coursera was last valued in the private market at $3.6 billion, according to PitchBook.

Founded in 2012 by former Stanford University computer science professors Daphne Koller and Andrew Ng, the Mountain View, California-based company offers individuals access to online courses and degrees from top universities, a business that has boomed throughout the Covid-19 pandemic.

Revenue last year jumped 59% to $293 million. Still, Coursera’s net losses widened to $66.8 million from $46.7 million in 2019 as the company said it added over 12,000 new degrees for students over the last two years. Total registered users grew 65% year over year in 2020.

“[When] we started back in 2012 with Andrew and Daphne, it was sort of B2C — put some courses up and see who from around the world wants to come … [since then] 77 million individuals came to Coursera.org; 30 million during the pandemic,” CEO Jeff Maggioncalda said on CNBC’s “Squawk Alley” Wednesday morning before shares started trading.

“We do see a post-pandemic world that’s going to have a whole lot more online learning as part of it,” he added. “Almost every student was forced to learn online. Almost every teacher was forced to teach online. This huge forced experiment was tough in some regards, but it also introduced a new way of learning that’s being embraced for the affordability, the quality, and the convenience.”

Maggioncalda joined the company as CEO in 2017 after 18 years at Financial Engines, an investment advisory firm he founded and took public in 2010 before its 2018 merger with Edelman Financial Services.

“That institutional learning, where people are learning at work and even earning fully accredited bachelor’s and master’s degrees while they’re working … we think that’s what the future really looks like,” Maggioncalda said.

The New York Stock Exchange welcomes Coursera, (NYSE: COUR), today, Wednesday, March 31, 2021, in celebration of its Initial Public Offering. To honor the occasion, Coursera Founders Andrew Ng and Daphne Koller and Coursera CEO Jeff Maggioncalda virtually ring The Opening Bell®.

NYSE

According to the company’s IPO prospectus, as of December 31, 2020, more than 150 universities offered upwards of 4,000 courses through the Coursera platform, which features over two dozen degree programs.

A bachelor’s or master’s degree completed through Coursera can range in cost from $9,000 to $45,000. The company also offers a wide variety of education certificates and professional skills courses that range in price from as low as $9.99 to $99.

During the pandemic, Coursera has also partnered with more than 330 government agencies across 70 countries and 30 U.S. states and cities as part of the Coursera Workforce Recovery Initiative, which helps governments offer unemployed workers free access to thousands of courses for business, technology and data science skills from companies including Amazon and Google.

“We see education as a lifelong opportunity and a lifelong obligation for most people,” Maggioncalda said. “What has happened with industry after industry is now happening with education. Technology can lower cost and increase access and affordability, and that’s precisely what we see happening with degrees on Coursera.”

Coursera has made the CNBC Disruptor 50 list multiple times and most recently ranked No. 4 on the 2020 list.

Morgan Stanley and Goldman Sachs were the lead underwriters for Coursera’s offering. The stock trades under the ticker symbol “COUR.”

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Business

‘All the makings of a dangerous situation’

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Sen. Elizabeth Warren, D-Mass., conducts a news conference in the Capitol, March 1, 2021.

Tom Williams | CQ-Roll Call, Inc. | Getty Images

Sen. Elizabeth Warren is taking aim at Archegos Capital Management and the lightly regulated hedge-fund industry after their stock trades sent the market into a frenzy late last week.

“Archegos’ meltdown had all the makings of a dangerous situation — largely unregulated hedge fund, opaque derivatives, trading in private dark pools, high leverage, and a trader who wriggled out of the SEC’s enforcement,” Warren told CNBC in a statement Tuesday.

“Regulators need to rely on more than luck to fend off risks to the financial system: we need transparency and strong oversight to ensure that the next hedge fund blowup doesn’t take the economy down with it,” she added.

Warren, who is a member of the powerful Senate banking and finance committees, is one of the first lawmakers to respond to what turned out to be disastrous trades by Archegos, a family office founded by former Tiger Management analyst Bill Hwang.

The fund’s trades sent the stock of ViacomCBS into a tailspin.

CNBC Politics

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By the time Credit Suisse and Nomura, two prime brokers of Archegos, announced early Monday that they faced losses that could be “highly significant” to the banks, rival firms Goldman Sachs and Morgan Stanley had already finished unloading their positions, according to people with knowledge of the matter. They requested anonymity in order to speak about private negotiations.

Goldman managed to sell most of the stock related to its Archegos margin calls on Friday, helping the firm avoid any losses in the episode, according to one of the people. Morgan Stanley sold $15 billion in shares over a few days, avoiding significant losses, CNBC’s Leslie Picker reported.

— CNBC’s Hugh Son and Leslie Picker contributed to this report.

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Business

Goldman, Morgan Stanley Limit Losses With Fast Sale of Archegos Assets

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Goldman Sachs Group Inc. and Morgan Stanley were quick to move large blocks of assets before other large banks that traded with Archegos Capital Management, as the scale of the hedge fund’s losses became apparent, according to people with knowledge of the transactions. The strategy helped limit the U.S. firms’ losses in last week’s epic stock liquidation, they said.

Losses at Archegos, run by former Tiger Asia manager Bill Hwang, have triggered the liquidation in excess of $30 billion in value. Banks were continuing to sell blocks of stocks linked to Archegos Monday, traders said.

“This is a challenging time for the family office of Archegos Capital Management, our partners and employees. All plans are being discussed as Mr. Hwang and the team determine the best path forward,” a company spokeswoman said in a statement Monday evening.

Archegos took big, concentrated positions in companies and held some positions in a mix of stock and swaps. Swaps are a common arrangement in which a trader gets access to the returns generated by a portfolio of shares or other assets in exchange for a fee.

Losses threatened to spill over into the so-called prime brokerage businesses that have been handling the firm’s trading. The group of large Wall Street banks includes Goldman, Morgan, Credit Suisse Group AG, Nomura Holdings Inc., UBS Group AG and Deutsche Bank AG , said people familiar with the firm’s trading.

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Goldman Sold $10.5 Billion of Stocks in Block-Trade Spree

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Stock market movements on an electronic display in New York, U.S.

Goldman Sachs Group Inc. liquidated $10.5 billion worth of stocks in block trades on Friday, part of an extraordinary spree of selling that erased $35 billion from the values of bellwether stocks ranging from Chinese technology giants to U.S. media conglomerates.

The Wall Street bank sold $6.6 billion worth of shares of Baidu Inc., Tencent Music Entertainment Group and Vipshop Holdings Ltd. before the market opened in the U.S, according to an email to clients seen by Bloomberg News.

That move was followed by the sale of $3.9 billion of shares in ViacomCBS Inc., Discovery Inc., Farfetch Ltd., iQiyi Inc. and GSX Techedu Inc., the email said.

More of the unregistered stock offerings were said to be managed by Morgan Stanley, according to people familiar with the matter, on behalf of one or more undisclosed shareholders. Some of the trades exceeded $1 billion in individual companies, calculations based on Bloomberg data show.

Maeve DuVally, a Goldman Sachs spokeswoman, declined to comment. A spokesperson for Morgan Stanley declined to comment.

Price Swings

The liquidation triggered price swings for every stock involved in the high-volume transactions, while rattling some of their industry counterparts. It also spurred speculation among some traders of forced selling by a fund being liquidated.

Several major investment banks with ties to Tiger Cub hedge fund Archegos Capital Management LLC liquidated holdings, contributing to the slump in share prices of ViacomCBS and Discovery, IPO Edge reported, citing people it didn’t identify.

In block trades, large volumes of securities are privately negotiated between parties, usually outside of open market.

Friday’s selloff dragged companies including Alibaba Group Holding Ltd. and NetEase Inc. lower. The peers later recovered after traders said word of the offerings lessened fears that a broader trade was unfolding throughout the sector.

That late rebound pushed up an index of companies engaged in internet-related businesses in China and the U.S., with the measure halting a three-day selloff while still notching a slide of about 6.5% for the week.

Chinese stocks have been under pressure after a warning from the Securities and Exchange Commission that it’s taking steps to force accounting firms to let U.S. regulators review the financial audits of overseas companies — the penalty for non-compliance being ejection from exchanges. In addition to that, Bloomberg News reported that China’s government has proposed forming a joint venture with local technology giants that would oversee the lucrative data they collect.

Read more: ViacomCBS, Discovery Plunge on New Downgrade, Block Trades

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Business

Morgan Stanley May Bet on Bitcoin in $150 Billion Investment Arm

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A $150 billion Morgan Stanley investing arm known for its prowess in picking growth stocks is considering adding Bitcoin to its list of possible bets.

Counterpoint Global, a unit of Morgan Stanley Investment Management that’s racked up wins in mutual-fund rankings, is exploring whether the cryptocurrency would be a suitable option for its investors, according to people with knowledge of the matter. Moving ahead with investments would require approval by the firm and regulators.

Morgan Stanley’s affirmation would put the heft of an almost-century-old marquee Wall Street name behind a volatile asset class that’s still struggling to win acceptance in much of the traditional financial industry. But a four-fold jump in four months has stoked customers’ interest, making the digital asset even harder to ignore.

After catching the attention of hedge fund moguls including Alan Howard and Paul Tudor Jones, cryptocurrencies have recently made headway with more mainstay firms such as Mastercard Inc. and Bank of New York Mellon Corp. Just this week, Tesla Inc, the leading maker of electric cars, also got behind Bitcoin with a $1.5 billion investment and plans to start accepting the cryptocurrency as payment.

A spokeswoman for Morgan Stanley declined to comment. The review could ultimately result in Morgan Stanley opting to stay away from Bitcoin. Previous rallies in the cryptocurrency have also attracted flurries of Wall Street interest only to fizzle.

Read more: Mastercard to allow some crypto in digital asset boom

Much of the industry’s skepticism centers on Bitcoin’s unpredictable price swings and the lack of things it can buy more than a decade since its creation. But faithful followers have felt vindicated this year. Billions of dollars have been pouring into the cryptocurrency through vehicles including the Grayscale Bitcoin Trust.

Even institutional investors, barred by the rules of their funds from holding Bitcoin directly, have turned to such trusts. For Wall Street firms, an inability to offer Bitcoin to those clients raises the risk of losing them to other managers. That may spark fresh discussions in the industry about opening up to the asset.

Counterpoint Global, led by Dennis Lynch, has expanded with a simple-sounding mantra of betting on unique companies whose market value can increase significantly. Enthusiasts would argue that approach fits well with Bitcoin.

The group oversees about 19 funds, of which five delivered gains in excess of 100% in 2020. Its mutual funds have consistently made the top tier of rankings in recent years. Last year’s unusually high returns were aided by bets on companies benefiting from the pandemic, such as e-commerce and streaming entertainment. Prominent investments included Amazon.com Inc., Shopify Inc., Slack Technologies Inc., Zoom Video Communications Inc. and Moderna Inc.

Despite its size, the group relies on concentrated investments and has stakes in just about 200 companies.

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Ford won’t ‘cede the future to anyone’ on electric vehicles: CEO Farley

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Ford Motor CEO Jim Farley on Friday touted the automaker’s electric-vehicle strategy, telling CNBC the company intends to strongly compete in the growing market segment.

Farley’s comments on “Squawk on the Street” came one day after Ford reported better-than-expected fourth-quarter earnings. As part of that announcement, Ford said it’s increasing its electric-vehicle investment to $22 billion through 2025, almost double what it had previously pledged to spend.

Shares of Ford were higher by 2.7% during Friday’s session to roughly $11.70 apiece.

“We’re not going to cede the future to anyone,” Farley told CNBC’s Phil LeBeau. “Our electric strategy is very specific. We’re going to invest in segments where we’re the dominant player and we have scale, like the F-150, the Transit van, our Mustang.”

While Ford is committing new capital for the years ahead, Farley said the company’s EV transition is yielding results now and pointed to the fact its all-electric Mustang Mach-E crossover has hit showrooms. He said he considers the Mach-E a “credible competitor” to Tesla’s compact SUV known as the Model Y.

Ford’s all-electric Transit van is expected to arrive late this year, Farley noted, and the company’s work on a Michigan plant to build the electric version of its best-selling F-150 is ongoing. “This is the year. We’re not talking about aspirations,” said Farley, who took over as chief executive Oct. 1.

The charging port for the Ford E-Transit van is located in the vehicle’s grille.

Ford

Wall Street’s focus on electric vehicles has been increasing. A number of players in the space, including battery makers and charge-station companies, have gone public in recent months. Ford’s crosstown rival General Motors also has been catching the Street’s attention for its aggressive investments in electric vehicles. GM said last week it plans to end production of all diesel- and gasoline-powered cars, trucks and SUVs by 2035.

Even before that announcement, Morgan Stanley analyst Adam Jonas told CNBC that under the leadership of CEO Mary Barra, GM may be orchestrating “one of the most profound strategic turnarounds, not just in the auto industry, but in business.” GM shares are up more than 100% in the past six months, while Ford’s stock is up more than 65% in that same stretch.

As production and adoption of electric vehicles grows, some have raised concerns that there could be a battery shortage. Farley acknowledged that as Ford ramps up EV manufacturing, the company “has to secure [battery] supply so we don’t get into a situation like we are in chips.” Ford had to temporarily reduce F-150 production in response to an ongoing semiconductor shortage that’s hitting the global automotive industry.

“That’s going to come down to every manufacturer making the commitment,” Farley said. “We have our own decisions to make on vertical integration. Our $22 billion [EV investment] does not even include that. You could expect more news from us on that vertical integration.”

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