Tuesday Morning Reads
- Freight ‘Silos’ to Unite in Crisis
- The Gig Economy Dipped Again
- Crisis Spurs Congress
- Bitcoin Powers Towards $50K
- Reddit’s Valuation Doubles
- Lost In the ‘Gamestonks’ Mania
- Apple Is the $2.3 Trillion Fortress
- Elon Musk’s Love-In With China
- Amazon to Buy Half of the Energy Produced by....
- The Catch-22 of Selling Your House Right Now
- Tiny Bubbles To Frothy McBubbles
In Asia, The Shanghai Composite Index rose 2.0% and Hong Kong's Hang Seng increased 0.5%, while the Nikkei 225 in Tokyo gained 0.4% to 29,418.23. European stocks are mixed with the Stoxx 600 off 0.3%. Oil markets continue to rally, with Brent crude futures up 0.5% and WTI Crude futures 0.3% higher. The yield on the 30-year U.S. Treasury bond is 1.93% after it briefly pushed past the 2% level for the first time since February of last year when the pandemic disrupted debt markets. In crypto world, Bitcoin (BTC-USD) blew past the $47K level as the Tesla (NASDAQ:TSLA) investment sparks broader interest.
U.S. stock futures are down slightly ahead of the open. Intriguing earnings reports due out today include updates from DuPont (NYSE:DD) on free cash flow, Twitter (NYSE:TWTR) on potential subscription offerings and Lyft (NASDAQ:LYFT) on efforts to set up a delivery business. (2 comments)
Electronic Arts (NASDAQ:EA) is set to buy Glu Mobile (NASDAQ:GLUU) in a deal that will offer a big expansion to EA's player network of half a billion-plus. The all-cash deal values Glu at $2.1B in enterprise value, with Glu shareholders catching a 36% premium to Friday's closing price. The merger means a mobile portfolio for the combined company of more than 15 top live services with $1.32B in bookings over the past 12 months. On closing, the deal will be immediately accretive to EA's net bookings and is expected to grow underlying profitability beginning in its first year.
What to watch: Electronic Arts said it struck the deal because it believes mobile is the fastest-growing platform on the planet for videogames. Of note, the Glu acquisition will add several popular franchises and instantly expand EA's audience. The early reaction from Wall Street is positive, with analysts noting EA poised to double its mobile game revenue, although some execution risk is cited. Within the gaming sector, Zynga (NASDAQ:ZNGA) is up 7% in premarket trading off the M&A buzz. Other public and private peers like Rovio (OTC:ROVVF), GungHo Online Entertainment (OTC:GUNGF), Nexon (OTCPK:NEXOF), Netmarble, and Gamevil could also attract interest if consolidation in the sector picks up. (45 comments)
Reddit doubled its valuation to $6B with a new $250M funding round led by venture-capital firm Vy Capital. The social media site was valued at $3B after a funding round in February of 2019. Current investors in Reddit also include venture-capital firm Andreessen Horowitz and Tencent Holdings Limited (OTCPK:TCEHY). Reddit Chief Executive Steve Huffman said the company plans to use the new funding to invest in areas like video, advertising and consumer products. An expansion into international markets is also being considered.
Next stage: Reddit was founded in 2005 and has its DNA in free speech message boards. The site relies on its own users to voluntarily police speech, in contrast to the larger social media platforms such as Facebook (NASDAQ:FB) and Twitter (TWTR) that rely mainly on algorithms and paid workers. User growth soared 44% over the last year to a daily average of 52M. That all leads up to the intriguing question of how Redditors would rate a Reddit IPO if the company ever decided to go public? (18 comments)
Bitcoin (BTC-USD) surged past $42K again after Tesla (TSLA) disclosed it invested $1.5B in the crypto and expects to begin accepting Bitcoin for payment "in the near future." The bitcoin investment will give Tesla liquidity in the cryptocurrency once it starts accepting payments and follows positive comments by Elon Musk last month on the cryptocurrency. Tesla ended 2020 with just over $19B in cash and cash equivalents on hand.
What they are saying: Wedbush Securities analyst Dan Ives says the Bitcoin play formalizes the strategy of Musk and Tesla to dive into the deep end of the pool of bitcoin and crypto and sees a positive impact for the stock. Meanwhile, RBC Capital wonders if Apple (NASDAQ:AAPL) may be the next big company to buy Bitcoin. Analyst Mitch Steves said the tech giant could unlock a multi-billion dollar opportunity with a few clicks while investing in next-generation chips as well. On CNBC, MicroStrategy (NASDAQ:MSTR) CEO Michael Saylor said he would rather have a volatile appreciating asset than a stable depreciating asset in pitching the case for corporate treasurers to swap out dollars for Bitcoin on company books. (333 comments)
What else is happening...
Take-Two Interactive (NASDAQ:TTWO) slips after earnings.
Pfizer (NYSE:PFE) / BioNTech (NASDAQ:BNTX) double the vaccine supply to EU.
Netflix (NASDAQ:NFLX) dominates again in streaming war.
Microsoft (NASDAQ:MSFT) VC fund's global head joining SoftBank (OTCPK:SFTBF) Vision Fund.
Super Bowl ratings delay has many expecting heavy viewer decline.
Monday's Key Earnings
In Asia, Japan +0.4%. Hong Kong +0.5%. China +2%. India +0.1%.
In Europe, at midday, London -0.1%. Paris -0.02%. Frankfurt -0.6%.
Futures at 6:20, Dow -0.1%. S&P -0.08%. Nasdaq -0.1%. Crude +0.3% to $58.22. Gold +0.7% at $1847.40. Bitcoin +19.3% to $46,520.
Ten-year Treasury Yield -1.2 bps to 1.148%
Today's Economic Calendar
6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
12:00 PM Fed's Bullard: “2021 Dow Lecture: U.S. Economy and Monetary Policy”
1:00 PM Results of $58B, 3-Year Note Auction