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Business

Why Did GameStop Stock Price Fall? Its Earnings Report Mattered After All.

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GameStop shares were down 20.2%, at $145.05, in midday trading.


Michael M. Santiago/Getty Images


GameStop

stock was falling fast on Wednesday after the company’s fiscal fourth-quarter results disappointed analysts. There’s also another elephant in the room: The company is considering selling more stock, which could dilute its shares.

GameStop stock (ticker: GME) closed down 33.8%, at $120.34. The S&P 500 index fell 0.6%, while the

Dow Jones Industrial Average

ended flat.

In a filing with the Securities and Exchange Commission, GameStop said it has been evaluating whether or not to increase the size of its previously announced $100 million at-the-market stock-sale program. The company had announced the ATM program in December, with Jefferies acting as the sales agent. The company said it didn’t sell stock as its valuation surged.

GameStop stock received a mix of downgrades, price target cuts, and raises from analysts following the report. “Many on Wall Street have wondered why GameStop has not done an ATM transaction to take advantage of the elevated share price,” Telsey Advisory Group analyst Joseph Feldman wrote. “The answer may be that its balance sheet is in great shape, with cash and cash equivalents of $635MM (incl. restricted cash of $110MM) and debt of $363MM at the end of 2020. The new commentary seems to be a signal that an ATM transaction could be on the way.”

Heading into Tuesday, Feldman had the highest price target listed by FactSet. He lowered his to $30 from $33, calling the event “anti-climactic.” On the flip side, Jefferies analyst Stephanie Wissink raised her target by 1,066% to $175. That’s the new Street-high, in case there was any doubt.

Wissink argued the moves by Chewy co-founder and GameStop board member Ryan Cohen to transform the company into more of a technology firm warrant a completely different valuation method. The company’s earnings release was paired with another trio of hires with e-commerce backgrounds, including

Amazon

alum Jenna Owens as its next chief operating officer.

Wissink wrote that she moved from basing her target on earnings before interest, taxes, depreciation, and amortization, or Ebitda, to a sales multiple that factors in a shift to e-commerce.

She also makes the point that GameStop has the potential to participate in the rise of non-fungible tokens, or NFTs, and the hosting of shoppable content streams.

“As a result, we expect store closures to persist & sales to transfer to dot com,” Wissink wrote. “Total revs may come down, but value per dollar of sales should increase if non-retail streams are realized.”

S&P Global Ratings analysts Mathew Christy and Andy Sookram wrote in a note on Wednesday that they believe the turnaround will involve sizable execution risks and possibly a material increase in its capital investment.”The recent increase and volatility in GameStop’s share price have not affected our fundamental view of its business or the risks the company faces,” they wrote. “However, we note the potential financial flexibility afforded by its improved equity market standing if it chose to raise additional capital to reposition its business or reduce its debt.”

BofA Global Research analyst Curtis Nagle maintained his $10 price objective and Underperform rating. He notes that while GameStop’s adjusted earnings per share of $1.34 beat his estimate for $1.22, he notes that the beat was driven by a large tax credit during the quarter. The company’s Ebitda came in short of his expectations by 66%.

“We continue to be very skeptical on GME’s efforts to address its long standing issue of digital disintermediation and the fact that its core market in new and pre-owned physical console gaming is shrinking at a rapid pace,” Nagle added. “GME also called out leveraging its existing digital assets like its PowerUp rewards program but this has seen declining engagement for years.”

Wedbush analyst Michael Pachter lowered his rating on GameStop to Underperform from Hold, but raised his price target to $29 from $16. While he still thinks GameStop is well-positioned to benefit from the new consoles from

Sony

and

Microsoft,

he says the short squeeze has spiked the stock to “levels that are completely disconnected from the fundamentals of the business.”

“Our downgrade isn’t a reflection of our opinion of company management, which remains very high; rather, it appears that the ‘real’ value of GameStop shares (the price willing buyers are prepared to pay in the open market) vastly exceeds the ‘fundamental’ value we believe investors expecting a financial return can reasonably expect,” he wrote.

Write to Connor Smith at connor.smith@barrons.com

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Business

GameStop stock bounces around after earnings

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GameStop Corp. stock was unsettled in the extended session Tuesday as the videogame retailer at the center of the so-called meme-stock phenomenon said it had laid the groundwork for its “transformation” and reported lower-than-expected adjusted fourth-quarter earnings and sales.

GameStop
GME,
-6.55%
shares initially rose by more than 8% after the report, but pared gains later on, and was last down 3%. The retailer said it earned $80.5 million, or $1.19 a share, in the quarter, compared with earnings of 32 cents a share in year-ago quarter.

Adjusted for one-time items, GameStop earned $90.7 million, or $1.34 a share, compared with $1.27 a share a year ago.

Sales fell to $2.12 billion, compared with $2.19 billion in the fiscal 2019 fourth quarter, reflecting store closures related to the pandemic, the company said.

Analysts polled by FactSet expected the videogame retailer to report adjusted earnings of $1.35 a share on sales of $2.21 billion.

GameStop said same-store sales rose 6.5% in the quarter, with online sales rising 175% for the quarter and 191% for fiscal 2020. The analysts surveyed by FactSet had expected same-store sales to rise 4.7% in the quarter.

The company said it “strengthened” its balance sheet and ended the year with $635 million in cash, “laying the foundation for transformation.”

In a separate press release, GameStop said it had appointed Jenna Owens as chief operating officer, with a start date of Monday, March 29. Owens was a director and distribution manager Amazon.com Inc.
AMZN,
+0.86%.

The company also named Neda Pacifico, who was an executive at Chewy Inc.
CHWY,
-1.39%,
as senior vice president of e-commerce. Pacifico also starts on Monday.

Chewy co-founder Ryan Cohen and two of his allies joined GameStop’s board earlier this year, leading to hopes he’d direct an overhaul.

GameStop’s stock is often cited as one of the meme stocks that have skyrocketed in recent months thanks to frenzied boosts from Reddit comments and social-media posts.

See also: GameStop: what’s the fun in fundamentals, ask Reddit traders on the rocket-emoji launchpad

Shares of GameStop have gained more than 800% in the past three months, compared with gains around 7% for the S&P 500 index
SPX,
-0.76%.

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Business

GameStop Earnings Are Coming. Nobody Knows What to Expect.

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GameStop stock has been on a wild ride for two months.


Justin Sullivan/Getty Images

After two months of wild trading,

GameStop

will report results for its January quarter on Tuesday. What that means for the stock is anyone’s guess.

In a note Thursday, Wedbush analyst Michael Pachter wrote that GameStop is “well-positioned to be a primary beneficiary of the new console launches.” But he thinks the stock is trading at levels that are disconnected from fundamentals. Though Pachter rates the stock at Neutral, he has a $16 price target. GameStop stock was down 0.7% to $200.27 on Friday.

By now, many Americans know why. GameStop stock was widely panned by Wall Street analysts, with the stock falling around the price of a Happy Meal a year ago. It garnered an obscene short interest, meaning hedge funds were lining up to bet on a price decline. But when short sellers get ahead of themselves, positive news can send stocks soaring as they rush to buy shares to close out their bets in the face of unlimited downside.

In the second half of last year, Chewy co-founder
Ryan Cohen
entered the mix. He revealed a stake and later called for major changes. He upped his stake in December and joined the board in January with two associates.

Keying in on the stock’s short interest, and the possibility that GameStop could find a second life as a gaming-focused e-commerce player, retail traders on Reddit’s WallStreetBets forum piled into GameStop stock. Technical quirks of options activity, the aforementioned short interest, and the newfound enthusiasm sent GameStop stock surging in January.

WallStreetBets made it to the front pages of national newspapers, and the bearish hedge funds got torched. It also kicked off a debate about short selling, as well as one about retail traders’ access to financial markets after Robinhood and other brokers temporarily limited buying of the stock due to financial requirements from their clearinghouses.

GameStop stock fell back around $40 but surged again in the past month. Though GameStop announced a hunt for a new chief financial officer, some promising e-commerce-focused hires, and a board committee chaired by Cohen to guide its transformation into a technology company, it hasn’t provided an update on sales or its prospects since its holiday sales release on Jan. 11, which signaled a disappointing December.

For the full fiscal fourth quarter, Pachter, the analyst at Wedbush, expects sales of $2.3 billion, comparable sales up 4.8% year-over-year, and adjusted earnings of $1.38 a share. He notes that GameStop’s holiday sales report indicated same-store sales were down year-over-year in December and lagged behind positive industrywide data from NPD. He notes the company has lost market share in recent periods to competitors amid a shift to internet spending.

BofA Global Research analyst Curtis Nagle wrote in a Friday note that he expects an underwhelming quarter, albeit a profitable one. He wrote that while the recent announcements related to Cohen and new hires are positive, in theory, there haven’t been actual details on cost, timeline, and impacts to earnings of a turnaround plan. He has a $10 price objective with an Underperform rating, noting that the stock’s current valuation and historic multiple would imply earnings before interest, taxes, depreciation, and amortization of $3.5 billion, about four times its peak Ebitda from 2015.

Nagle’s note included an analysis on the impact of $1,400 direct payments on the stock, the idea being that retail investors will use their latest windfall on GameStop stock. His takeaway is that the “stimmies,” as he calls them, will not impact GameStop stock going forward.

Of course, what analysts have said about GameStop stock hasn’t had much of an impact on its recent moves. A positive update on the turnaround plan could thwart the remaining bears in the near term. On the flip side, any commentary on possible stock sales could be negative. Pachter had expected short sellers to abandon their bets, with the stock returning to more fundamental-based levels. That hasn’t happened, he noted.

“Activists control the company’s board, and lead activist Ryan Cohen, founder of Chewy, intends to unveil a new strategy sometime soon,” Pachter added. “When the new strategy is revealed and we are able to evaluate it, we will revisit our estimates and PT.”

Write to Connor Smith at connor.smith@barrons.com

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Business

GameStop Stock Tumbles, but Analyst Still Sees Squeeze Potential

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GameStop shares fell mid-morning Tuesday.


Michael M. Santiago/Getty Images


GameStop

stock dropped again shortly after the market opened on Tuesday. While some short sellers appeared to cover their bearish bets in recent weeks, a short-selling expert says he still sees plenty of squeeze potential.

Shares were down 19% to $178.12 around 10:30 a.m. Such levels are still many multiples higher than the stock’s one-year low of $2.57.

Ihor Dusaniwsky, managing director at short-selling analytics firm S3 Partners, told Barron’s on Monday that his firm estimates about 8.98 million GameStop shares (ticker: GME) were recently sold short, about 16% of shares available for trading.

Dusaniwsky said over the last month, his firm has seen about 7.5 million shorts covered, meaning bearish investors bought shares to cover their bets. The bulk came over the past week, when 4.6 million shares were covered.

“GME shorts are going through a short squeeze, and the stock continues to be on of the top stocks in our short squeeze potential metric, which means the squeeze is probably going to continue if its stock price remains at these levels or higher,” Dusaniwsky added.

The company’s shares rocketed higher last week following a company announcement that Chewy co-founder Ryan Cohen has been chairing a board committee aimed at transforming the retailer into a technology business. Cohen joined the board with two associates in January, kicking off GameStop’s parabolic ascent.

GameStop said it will report fiscal fourth-quarter results on March 23. Analysts expect adjusted earnings of $1.35 a share, up from $1.27 a share in the prior fiscal fourth quarter, according to FactSet. Of course, analysts are far more bearish on GameStop than the retail investors posting on Reddit’s WallStreetBets forum. The highest price target listed by FactSet is $33, while the mean target is $14.64.

While near-term results could cool off the GameStop rally, those excited about the stock are looking far into the future. If the company provides upbeat color on its e-commerce efforts and the impact of the new gaming consoles, it could make a quarterly miss more palatable.

Write to Connor Smith at connor.smith@barrons.com

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Business

GameStop Stock Fell So Much It Had to be Halted. That Didn’t Stop the Selloff.

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GameStop’s stock is up an impressive $1,068% so far this year.


Justin Sullivan/Getty Images


GameStop

stock dropped suddenly Monday morning, prompting a brief halt due to volatility. The stock fell wider than 15% to as low as $223.00, bounced back, and then fell even lower.

Shares of videogame retailer GameStop (ticker: GME) this month have surged back near their late January levels this month. At the close, GameStop stock was down 17% to $220.13.

The company said last week that

Chewy

(CHWY) co-founder
Ryan Cohen
and former Chewy executive
Alan Attal
were joined by Kurt Wolf, managing member and chief investment officer of activist investor Hestia Capital Management, on a new board committee aimed at transforming GameStop into a technology business.

Cohen kicked off GameStop’s run by building a roughly 13% stake in 2020 and urged the company to pivot more toward e-commerce offerings. He joined the company’s board with two associates in January, sending GameStop shares parabolic in the weeks that followed. Analysts pointed to speculative options activity and the closing of some aggressive bearish bets from hedge funds.

Last month, GameStop announced the planned departure of Chief Financial Officer
Jim Bell.
A person familiar with the matter told Barron’s at the time that the company thought it was the right time and was looking for a new executive with a technology background.

GameStop’s latest run began following a Feb. 18 Congressional hearing on trading of its stock and Robinhood. The hearing included an appearance by Keith Gill, the YouTube personality known as RoaringKitty, who has developed a following for his successful long position in GameStop stock dating back to 2019; Gill revealed in a Feb. 19 post that he doubled his GameStop holdings.

While some analysts are upbeat about the company’s turnaround prospects, the highest price target listed by FactSet is $33. That analyst, Telsey Advisory Group’s Joseph Feldman, pointed to valuation concerns, despite his “high fundamental expectations and projected multiyear benefits from the transformation.”

The company said it will report fiscal-fourth-quarter results next week. Like other so-called meme stocks favored by retail traders, such results present a risk to the company’s sky-high run-up. That said, trying to call a near-term top for GameStop has been a fool’s errand, especially for short-sellers facing unlimited downside.

Write to Connor Smith at connor.smith@barrons.com

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Business

GameStop stock surges to highest point since January, market cap tops $17 billion

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Shares of GameStop Corp. shot higher again Tuesday, closing at its highest point since the end of January and pushing its market cap back above $17 billion.

After plunging about 90% from its highs of the meme-stock-buying frenzy in January, GameStop stock
GME,
+26.94%
has skyrocketed more than 108% in the past five trading sessions, including Tuesday’s 27% gain. Shares closed Tuesday’s regular session at $246.90, off from a record close of $347.51 on Jan. 27, and were up another 3% in after-hours trading.

GameStop shares are up more than 1,200% year to date, and more than 5,700% over the past 12 months.

Shares started spiking again Monday after GameStop announced a new  strategy committee to identify ways to accelerate its transformation, which will be led by activist investor and Chewy Inc.
CHWY,
+5.37%
co-founder Ryan Cohen.

Late Tuesday, GameStop said it will report fourth-quarter and fiscal-year earnings after the market closes March 23.

Earlier in the day, the Senate Banking Committee started hearings into financial speculation and the easy-trading practices of Robinhood and other zero-commission firms that, combined with chatter from Reddit forums, helped fuel the historic buying of heavily shorted stocks — such as GameStop and AMC Entertainment Holdings Inc.
AMC,
+13.02%
— earlier this year.

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Business

Tanger Shares Take a Wild Ride

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A worker carries a broom past closed stores at the Tanger Outlets center in Atlantic City, N.J. Shares of Tanger surged on Thursday.


Angus Mordant/Bloomberg


Tanger Factory Outlet Centers

took a wild ride on Thursday, the latest hot potato stock caught in a short squeeze.

The mall operator has a high amount of short interest, currently more than 33% of its shares, according to FactSet. That makes it among the most heavily shorted stocks along with

GameStop

(30.2%),

Rocket Cos.

(39.7%), and

GoodRx Holdings

(27.6%), according to MarketWatch data.

Shares of Tanger (ticker: SKT) jumped 22% Thursday morning to hit a 52-week high before settling down. By midafternoon, they had lost steam completely and were down 5.4%. The stock is up 38% over the last year, compared with a 20% one-year gain in the

S&P 500.

Malls have been among the most downtrodden stocks during the pandemic, forced to temporarily close locations and restrict the number of shoppers while also juggling budget-strapped tenants facing the same challenges. 

Tanger has been a topic on a Reddit forum called WallStreetBets. One post from Wednesday said “SKT is about to reach its highest point since may 2019 and it’s the second most shorted stock after GME. You know what to do!”

“Lets make this explode,” the post says. “Help bring this stock to the spotlight and make it the new GME.”

A spokesman for Tanger wasn’t immediately available on Thursday.

WSB on Reddit is the forum where stock trading enthusiasts share ideas. It’s also a big focus of those investigating the run-up in

GameStop

(GME),

AMC Entertainment Holdings

(AMC), and other stocks a few weeks ago in a trading frenzy described as retail investors going after professional short sellers.

The average rating of the six analysts who publish research on Tanger is Underweight, the equivalent of a Sell. Full-year 2020 revenue fell 10%, to $370 million, according to FactSet.

Write to liz.moyer@barrons.com

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US

Phoenix family discovers 5,000 fentanyl pills inside daughter’s thrift store toy

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A family in Arizona bought a toy worth far more than what they paid for when they discovered more than 5,000 pills believed to be fentanyl inside the doll.

Phoenix police said Saturday the child’s parents bought a Glo Worm from a thrift store in El Mirage, Arizona. The parents were cleaning the toy when they found a sandwich bag filled with the drugs, according to police.

Police said the family immediately reported their discovery and handed the drugs over to authorities.

Fentanyl is a synthetic opioid often mixed with other illicit drugs like heroin and cocaine that causes euphoric-like effects, according to the Centers for Disease Control and Prevention.

Overdose deaths involving synthetic opioids increased over 16 percent from 2018 to 2019, according to the CDC.

Law enforcement officials used the incident as a reminder for parents to inspect all open and used toys.

It wasn’t the first time illicit drugs were found stuffed inside children’s toys.

In 2015, a New Jersey mom bought a $500 “handmade” mermaid doll filled with cocaine from Etsy. Investigators later determined that the Etsy shop based in Alabama used mer-baby dolls as a front for smuggling drugs.

Wilson Wong

Wilson Wong is a breaking news reporter with NBC News. 



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Business

GameStop’s meteoric gains have almost entirely disappeared — here’s advice for those who didn’t get out in time

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The author of the Cracked Market blog, Jani Ziedins, last week warned the traders piling into the videogames retailer GameStop not to get greedy — or more specifically, not to be a pig.

Well.

As the chart shows, that short squeeze worked until it didn’t. Momentum fizzled after Robinhood and other brokerages limited access to trading in GameStop
GME,
-42.11%
and other securities that were surging in popularity. As to why, there will be Congressional hearings to find out the culprit — hedge funds or good-old-fashioned margin requirements — but the end result is the same.

GameStop may still have its moments. “As for what comes next, GME will be insanely volatile for weeks and even months. That means 50% and 100% moves in both directions. But at this point, a 50% bounce only gets us back to $75. Maybe we get back to $100 or even $125, but waiting for anything higher is just wishful thinking,” Ziedins says.

Here’s Ziedins’ advice now. “For those that still have money left in the market, there is no reason to ride this all the way into the dirt. Cash in what you have left, learn from this lesson, and come back to the market better prepared next time,” says the Cracked Market blogger.

Cue, Frank Sinatra.

And those traders are inexperienced. Cardify, a consumer-data firm, did a survey of 1,600 self-directed investors in GameStop and cinema chain AMC Entertainment
AMC,
-20.96%
and found that most were inexperienced investors — 44% having less than 12 months of experience, and another quarter with one to two years’ experience. Nearly half made their biggest-ever do-it-yourself trading investment in the last four weeks, according to the survey that ended on Monday.

Why? Of these overwhelmingly young and male investors, 45% said for quick financial profits. Nearly 20% said it was part of a long-term investing strategy, and 16% said to spite big hedge funds and institutional investors, according to Cardify.

The buzz

The U.S. added 49,000 nonfarm payrolls jobs in January while the unemployment rate fell to 6.3%, according to the Labor Department.

The U.S. Senate in the early hours of the morning approved a budget resolution that will allow for a fast tracking of the $1.9 trillion coronavirus relief plan proposed by the Biden administration to be approved without Republican support. Vice President Kamala Harris cast the tiebreaking vote. Johnson & Johnson
JNJ,
+0.93%
meanwhile submitted its coronavirus vaccine for Food and Drug Administration approval.

Pinterest
PINS,
+0.91%
shares jumped 11% in premarket trade, as the art-sharing social-media service reported forecast-beating earnings on a 76% jump in revenue during the fourth quarter. Another social-media service, Snap
SNAP,
-1.60%,
also beat expectations. Besides using social media, people stuck at home were playing videogames, as Activision Blizzard
ATVI,
-0.10%
gained 8% after it reported stronger earnings and bookings than expected, increased its dividend by 15%, and authorized a $4 billion share buyback plan.

Ford Motor Co.
F,
+1.52%
reported a surprise profit and topped expectations.

Exercise-bike maker Peloton Interactive
PTON,
+7.04%
slumped 7% as it did beat on earnings but flagged a rise in shipping and other costs. T-Mobile US
TMUS,
+0.95%,
the mobile service operator, also beat earnings expectations but guided to a softer 2021 than expected.

Luckin Coffee, the U.S.-listed Chinese coffee retailer, filed for bankruptcy protection, less than a year after an accounting scandal.

The market

After the S&P 500
SPX,
+1.09%
ended Thursday at a record for the sixth time in 2021, U.S. stock futures
ES00,
+0.37%

NQ00,
+0.20%
pointed to another day of gains.

The yield on the 10-year Treasury
TMUBMUSD10Y,
1.158%
moved up to 1.16%, after ending Thursday at its highest in 11 months.

The chart

The more things change, the more they stay the same. Today’s technology giants are following a similar trajectory to the radio makers of the 1920s, as well as the dot-com era around the turn of the century. “So the point is that you can be a firm believer in tech’s ability to transform our lives but still think valuations might be in a bubble,” said Jim Reid, strategist at Deutsche Bank.

Random reads

This local government meeting over Zoom
ZM,
+2.50%
turned into a chaotic, internet sensation.

Chocolate sales were 40% to 50% higher in areas with an increased number of COVID-19 cases, according to confectioner Hershey
HSY,
+0.44%.

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Business

Amid the GameStop-led frenzy, Jefferies says ‘plenty of air’ to come out of riskier assets. Another strategist says wait to buy the dip

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Markets are buckled into the fighting chair as another day of the retail-led feeding frenzy on shorted stocks is about to come online.

In case you thought the trading mania was a limited battle between internet day traders and Wall Street hedge funds: videogame retailer GameStop was one of the most traded stocks by value in the U.S. on Wednesday. 

Amateur investors, many based on the Reddit group WallStreetBets, are jumping into heavily-shorted stocks, driving prices to astronomical levels and forcing hedge funds to sell bigger, safer bets to cover losses.

Selloff is creeping to other investments and spooking sentiment. Major indexes took a 2% to 3% ride down on Wednesday and are set to continue surfing.

A must-read: Tendies? Diamond hands? Your guide to the lingo on WallStreetBets, the Reddit forum fueling Gamestop’s wild rise

Our call of the day comes from the U.S. equity researchers at Jefferies, led by global equity strategist Sean Darby, with a bonus call from Sébastien Galy, a strategist at Nordea Asset Management.

The team at Jefferies is clear that the correction in share prices has little to do with fundamentals. Rather, what’s happening is a reflection of a “sentiment shift within some of the more overbought and speculative parts of the market.”

The group’s retail speculative index, measuring the deviation from trend of assets where value is hard to determine, is high at 4 standard deviations. “Hence, there is plenty of air to come out of the riskier financial assets,” the team said.

Darby’s team noted that the short-term worry is whether the “popping” of riskier parts of the market will create a domino effect, as mainstream equities are liquidated to stem losses.

Galy, of the Nordic asset manager Nordea, echoes Jefferies’ caution about a wider selloff. He also says it’s too early to buy the dip, because there’s more to come.

The big moves to cover shorts at a time of high leverage typically forces more deleveraging, Galy said. This is because the constraint on capital from the risk of losses on investments is ratcheting up.

“As a consequence, the cost of hedging downside risk has sharply increased,” Galy said. “This risk reduction could last a few days followed by a sharp liquidity driven rebound in U.S. and to a lesser extent European stocks.”

Galy said that even a dovish Federal Reserve meeting on Wednesday couldn’t turn around this market, which is another signal that it may last.

The buzz

Shares in GameStop
GME,
+134.84%
touched the $500 level in the premarket before pulling back. The stock was just $19 heading into 2021. Fashion brand Nakd
NAKD,
+252.31%
is another stock making a big leap in the premarket, up 130%.

In a Securities and Exchange Commission filing this morning, cinema-theater chain AMC
AMC,
+301.21%
revealed that holders of the company’s convertible bonds have chosen to convert the notes into stock, as shares in the company have rallied around 330% since Tuesday. 

Apple
AAPL,
-0.77%,
Facebook
FB,
-3.51%,
and Tesla
TSLA,
-2.14%
posted earnings after the close yesterday. Technology giant Apple topped $100 billion in quarterly revenue for the first time, crushing expectations, as social-media company Facebook also beat estimates, with sales soaring 156% from “other revenue” — like virtual-reality headsets and video-chat devices. Electric-car maker Tesla reported its sixth straight quarter of profit, but it was a miss on expectations.

But if you can peel your eyes away from the stock market, it is a big day on the economic front. Initial and continuing jobless claims are due at 8:30 a.m. EST, with around 875,000 people expected to have filed for unemployment last week. Gross domestic product figures for the fourth quarter of 2020 will come at the same time, before new home-sales figures for December are reported at 10 a.m.

After the Federal Open Market Committee decided to hold monetary policy steady yesterday, Fed Chair Jerome Powell gave dovish signals that the central bank wasn’t done restoring the COVID-19 pandemic-ravaged economy to health. “We have not won this yet,” he said.

The markets

It looks like another wild day on Wall Street. Yesterday’s tumult saw the Dow Jones Industrial Average
DJIA,
-2.05%
tumble more than 630 points, and stock market futures
YM00,
-0.07%

ES00,
-0.31%

NQ00,
-0.90%
are pointing down, set to continue the selloff. Asian markets
NIK,
-1.53%

HSI,
-2.55%

HSI,
-2.55%
fell across the board and European indexes
SXXP,
-0.76%

UKX,
-1.13%

DAX,
-0.86%

PX1,
-0.17%
are firmly in the red.

The chart

Our chart of the day, from Marshall Gittler at BDSwiss, shows how the S&P 500
SPX,
-2.57%
dropped by the most since October 2020, and the VIX index of expected volatility saw its biggest one-day rise since the COVID-19 pandemic hit in March 2020. 

The tweet

When the sharks root for the fish. Billionaire entrepreneur and investor Mark Cuban — of “Shark Tank” fame — is rooting for Reddit’s WallStreetBets traders.

Random reads

An Oklahoma lawmaker has proposed a ‘Bigfoot’ hunting season with a new bill.

Key West wants to ban people from feeding fat, feral, free-roaming chickens.

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