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The SEC Has No Chill

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Good evening, y’all! Welcome back to another week in the markets. 😁

All four major indexes bounced into green territory. ✅ The Russell 2K rallied 2.05%, the Dow rose 1.87%, and the S&P 500 spiked 1.17%.

Adicet Bio blasted 38.5% to six-month highs after releasing positive data from its Phase 1 study evaluating a therapy for treatment of Non-Hodgkin’s Lymphoma. 🧬 Here’s the daily chart:

All 11 sector ETFs traded higher. Consumer staples surged 1.76%, industrials increased 1.69%, and communications climbed 1.65%.

Bitcoin gained 2.66% and reclaimed $50K after getting smoked this weekend. 

Travel stocks bounced back as omicron fears dissipated. 🙏 $UAL launched 8.3%, $MAR marched 4.5%, and $RCL ripped 8.2%. 

Vaccine names got hit hard$BNTX retreated 18.7%, $MRNA flopped 13.5%, and $PFE dropped 5.15%. 

The SEC has no chill. 🙅 As we approach the holidays, the Securities and Exchange Commission has let up on the hot cocoa and doubled down on investigations. 🔍 More on this below. 

$RIVN rallied 11.57%, $ISIG flew 204.66%, and $BAT.X boosted 11.7%. 🚀 🚀

Here are the closing prices: 

S&P 500 4,591 +1.17%
Nasdaq 15,225 +0.93%
Russell 2000 2,203 +2.05%
Dow Jones 35,227 +1.87%

Policy

Somebody’s Watching Me 👀

Somebody’s Watching Me 👀 Featured Image

With the year coming to a close, people are swapping company time for quality time with family and friends — settling into a holidaze and reflecting on another long, Covid-infested year. 🙃 🎄 🎁 Everyone except… the Securities and Exchange Commission. Instead of snuggling up by the fire, the SEC spent today opening up new investigations.

In a span of mere hours, journos reported that the SEC was individually investigating Tesla, Lucid Motors, and Trump’s new SPAC. That’s a star-studded list of investigations, one that is certain to keep their employees filing casework through the holiday, new year, and beyond. 🌟 Here’s what the SEC (and other regulators) are searching for:

  • Tesla’s Hardware FUD: The SEC is reportedly probing Tesla over claims that its solar panel systems have dangerous defects which could cause fires. The investigation is a result of a whistleblower complaint. The company failed to disclose the risk and notify shareholders. To make matters worse, the report coincided with a release of internal documents which suggested that the company was replacing Autopilot cameras in some cars. Is there something functionally wrong with Tesla’s hardware? Probably not, but the hardware FUD is real today.
  • Trump Train Terms: FINRA and the SEC are investigating Digital World Acquisition Corp., the SPAC which is expected to merge with Trump Media & Technology Group (TMTG). TMTG is the holding company launching social media platform “TRUTH Social,” a right-leaning competitor to Twitter and Facebook. From what we can gather, FINRA might be looking for insider trading — as suggested by FINRA’s request for information pertaining to stock trading in advance of the merger agreement. The SEC sent its own request for information, too. Regulators’ asks don’t seem to concern the Trump Train, though. CA-22 Rep. Devin Nunes retired from Congress to become CEO of the venture today.
  • Lucid Gets Served: Lucid Motors was subpoenaed by the SEC today. The regulator is reportedly very interested in taking a look at the company’s SPAC deal and “certain projections and statements.” The mega-merger turned Lucid into a $20 billion company. The SEC has already investigated a number of EV SPAC mergers, including the ones that brought Lordstown, Canoo, and Nikola to market. However, this investigation is unique because Lucid was majority-owned by Saudi Arabia’s public investment fund before being taken public earlier this year. Lucid claims it’s cooperating with the SEC’s probe.

$TSLA fell just 59 bips, $DWAC dipped 2.6% before its 8% rally on the Nunes news, and $LCID lost 5.1% today.



Earnings

MongoDB’s Mega Gains

MongoDB’s Mega Gains Featured Image

The earnings calendar is winding down, but MongoDB got excited in extended trading. 🎉 🎉

The company reported Non-GAAP net loss of $0.11 per share, which comes out to a net loss of $7.2 million. The company’s total revenue was $227 million, +50% YoY. These figures topped analysts’ bets, which were ($0.37)/share on $205.2 million in revenue. 

$MDB soared 17.6% in after-hours trading thanks to Atlas revenue growing 84%, while customer count expanded to more than 31K. The software company also appointed Peder Ulander as Chief Marketing Officer (he previously worked at Amazon Web Services.)

$MDB is up 24% YTD as of Monday’s close, but looks to add to the gains on Tuesday. 💪


M&A

$TACO ‘Bout a Big Deal 💰

$TACO ‘Bout a Big Deal 💰 Featured Image

Jack in the Box just announced its $575 million deal to acquire Del Taco, the U.S.’s second-largest Mexican fast food chain. 🌮 😋

The two brands will host a combined 2,500 restaurant locations spanning 25 states. In 2003, Jack in the Box acquired Qdoba Mexican Eats, but announced a decision to sell the company in 2017 due to Odoba’s falling sales. Jack in the Box is assured that Del Taco’s higher number of drive-thru locations makes the company’s business model a better fit than Qdoba. Darin Harris, Jack in the Box’s CEO, shared:

“This is a natural combination of two like-minded, challenger brands with outstanding growth opportunities. Together, Jack in the Box and Del Taco will benefit from a stronger financial model, gaining greater scale to invest in digital and technology capabilities, and unit growth for both brands.”

Jack in the Box paid $12.51/share in cash for the acquisition, which helped $TACO pick up a 66.14% boost on the news. $JACK is up 2.16% after hours. 🚀 


Events

Kohl’s Pressured to Pivot

Kohl’s Pressured to Pivot Featured Image

Kohl’s might have its work cut out for them. 🙊 The department store chain is facing pressure from activist investor Engine Capital, who is encouraging the company to sell or spin off its e-commerce biz. The activist has accumulated a 1% stake in the company.

This situation echoes a similar one at Macy’s management involving Jana Partners back in October. 💡 Jana Partners suggested that spinning off Macy’s e-commerce business would help the company earn a more aggressive valuation, something we covered in the Oct. 14 edition of the Rip.

Similar to Jana’s suggestions, Engine Capital’s team argues that Kohl’s e-commerce business could be worth $12.4 billion as a stand-alone entity. Kohl’s currently has a market capitalization of $7.3 billion.

Engine Capital is not to be confused with Engine No. 1, an activist investor which famously took on Exxon Mobil with a scrappy stake and won three board seats. In fact, Engine Capital is actually suing Engine No. 1 over the name. The more you know. 🌈

$KSS gained 5.3% today.


Bullets

Bullets from the Day

Toyota plans U.S. battery plant. Toyota Motor is making a $1.3 billion investment in North Carolina to build Toyota Battery Manufacturing, a battery manufacturing plant. Production is expected to commence in 2025, offering manufacturing for up to 200,000 electric and hybrid vehicles per year at launch. The company hopes to expand that figure to up to 1.2 million vehicles per year. Read more about Toyota’s plans in TechCrunch.

AMC Offers NFTs to Shareholders. Following the positive public response to a movie-themed NFT offered a week ago exclusively to AMC ticket buyers, AMC will now provide second non-fungible tokens (NFTs) to all AMC Investor Connect members. These NFTs will be delivered by the Worldwide Asset eXchange (WAX). AMC hasn’t been a stranger to gambling on crypto before. As a Memestock, it gained hype at the beginning of this year, and that led to the rise of meme-based cryptocurrencies like Dogecoin. AMC now accepts payments in some cryptocurrencies as well.

Apollo seeks buyer for Direct ChassisLink. Apollo Global Management is hoping to offload a critical player in America’s supply chain: Direct Chassislink, the largest U.S. intermodal chassis provider. It’s an unexpected character in the supply chain’s cast, but it’s an important (and expensive) one. Read more about the sale in Axios.

Raven Software employees are protesting layoffs. It’s been quite the drama fest this year in the video game world. In keeping with that trend, the staff at Raven Software (makers of Call of Duty) is organizing a walkout to protest a series of layoffs scheduled to occur by Jan. 28. Workers have demanded that “every member of the QA team, including those terminated on Friday, must be offered full time positions.” Read more on The Verge.