Thursday Morning Reads
- Till Inflation Do Us Part
- Illegally Crushed Competition
- How Facebook Tried to Make Itself Antitrust-Proof
- Airbnb Reaches $47 Billion Value
- Turbocharge Streaming Offerings
- How Nine Traders Hit a Gusher With Negative Oil
- Corporations and Civil Disobedience
- It’s A Party
- How America Invests
DoorDash (NYSE:DASH) had a stellar day on the public market on Wednesday, with shares closing at $189, nearly 86% higher than its IPO price and giving the food delivery service a market value of nearly $60B. The performance is an indication that investors haven't lost their appetite for fast-growing tech stocks, and is a good sign for Airbnb (ABNB), which debuts today on the Nasdaq. The home rental business priced its IPO at $68 per share, above its marketed range of $56-$60, valuing the company at $47B on a fully diluted basis. It comes after Airbnb turned a surprise $219M profit last quarter as people resumed traveling - but to different destinations (rentals surged in rural areas as cities faced lockdowns and extensive coronavirus restrictions). (71 comments)
Facebook (NASDAQ:FB) got nailed with two lawsuits yesterday, one from the Federal Trade Commission and another from a group of 46 U.S. states, which both accused the company of abusing its monopoly power in social networking. The FTC suit focused on Facebook's acquisition of Instagram in 2012 and WhatsApp two years later, describing the deals as a way to stifle competition, while state attorneys general said its actions were a "buy or bury" approach toward its rivals. Is a divestment in the cards? Facebook denied the anti-competive practices, calling it "revisionist history" of two major acquisitions the government had approved several years ago, but said it would review recent complaints and provide further updates shortly. (132 comments)
The pandemic has knocked billions of dollars from Disney's (NYSE:DIS) operating profit (think closed theaters and theme parks) and the company is facing some important strategic decisions with less cash to pad its mistakes. Its shift toward streaming is set to come up at today's Investor Day and positivity is coming out of Wall Street ahead of the event. Among them: Wells Fargo upgraded the stock to Overweight, saying Disney is "set to complete its transformation into a global streaming content company" and pointed to deep brands from Disney+ to general entertainment (including Star and Hulu) and "eventually global sports" via ESPN Plus. Streaming has also helped Disney's stock price stay stable, and even go up, because the market sees it as the future and a great platform for growth.
There's not much movement from U.S. stock index futures after the Nasdaq snapped a four-day win streak with its biggest drop since October. Investors also lost some hope in risk assets as Democratic and Republican lawmakers still haven't resolved divisions over coronavirus stimulus, including the business liability shield and aid to state and local governments. "The idea here is that you're not going to see a huge stimulus package," said Matt Brill, senior portfolio manager at Invesco. "You are probably going to get something done, but it's probably not going to be enough to put a lot of pressure on rates overall." On the economic calendar, initial claims for state unemployment benefits are likely to have increased to 725K in the week ended Dec. 5 (from 712K), while Oracle (NYSE:ORCL), Adobe (NASDAQ:ADBE) and Costco (NASDAQ:COST) are set to report quarterly results.
Tesla (NASDAQ:TSLA) continues to sell off following a blistering rally that's pushed shares up nearly 60% since the announcement in mid-November of its inclusion in the S&P 500. The stock dropped 7% on Wednesday, marking the biggest decline since Sept. 23, when it slumped 10.3% after the EV maker was hit with a network outage. Dramatically overvalued? JPMorgan thinks so. Analyst Ryan Brinkman cited a stock price that trades at 1,325 times its long-term PE multiple and 291 times its 2020 estimate, and lifted its price target to just $90 (shares are currently trading around $600). TSLA -1.5% premarket. (435 comments)
The two anaphylactic allergic reactions reported by U.K. healthcare workers vaccinated against COVID-19 will likely be scrutinized by the FDA as it decides today whether to authorize Pfizer (NYSE:PFE) and BioNTech's (NASDAQ:BNTX) vaccine in the U.S., though the incident shouldn't hold up an approval. It's the sort of issue that the committee "deals with routinely because lots of vaccines are associated with allergic reactions in some small percentage of the population," said Dr. William Schaffner, a professor of infectious diseases at Vanderbilt University Medical Center, adding that people with underlying health conditions aren't commonly included in clinical trials. Both NHS workers carried an EpiPen, and are recovering well, but the U.K's Medicines and Healthcare products Regulatory Agency updated its guidance to advise people who have a history of "significant" allergies to forgo the vaccine.
As companies keenly await COVID-19 vaccines that promise to return staff to the office, a new survey from the Pew Research Center suggests that won't be so easy. More than half of U.S. employees currently working from home say they'd like to keep their remote arrangements beyond the pandemic and one-third of those surveyed said they want the option to telework at least sometimes (only 11% said they rarely or never want to work from home). There's also a clear educational divide. 62% of workers with a bachelor's degree or more education say their work can be done from home, compared with only 23% of those without a four-year college degree. Will the data weigh on office real estate?
This time they're serious about a deadline, or so they say... Meeting after meeting, extension after extension, the U.K. has announced that Sunday will be a "point of finality" for Brexit trade talks if the EU does not "move substantially" in negotiations. It follows a three-hour dinner in Brussels, where British Prime Minister Boris Johnson met with European Commission President Ursula von der Leyen in the hope of breaking months of deadlock. Scallops and turbot were on the menu, in some irony surrounding disagreements over fishing rights in EU and British waters.
Fresh Brexit talks aren't the only thing happening in Europe. It's a big day for the continent as a whole in terms of economics. The ECB is poised to deliver another blast of monetary stimulus to carry the eurozone out of the pandemic, adding €500B to the Pandemic Emergency Purchase Program (PEPP) and extending it by at least six months to the end of 2021. That'll keep financing conditions loose through the crisis and complement fiscal aid, like the EU's €1.8T joint spending program. Leaders hope to finalize that package later today in Brussels, along with issues including climate change and security, after Poland and Hungary agreed on a budget compromise with Germany.
What else is happening...
New EPA rule makes it harder to toughen air pollution standards.
In Asia, Japan -0.2%. Hong Kong -0.4%. China flat. India -0.3%.
In Europe, at midday, London +0.5%. Paris +0.2%. Frankfurt +0.1%.
Futures at 6:20, Dow +0.2%. S&P +0.1%. Nasdaq -0.1%. Crude +1.7% to $46.31. Gold +0.1% at $1839.50. Bitcoin -0.6% to $18202.
Ten-year Treasury Yield -2 bps to 0.92%
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Consumer Price Index
10:00 Quarterly Services Report
10:30 EIA Natural Gas Inventory
1:00 PM Results of $24B, 30-Year Note Auction
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet