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Buyers Pause Ahead Of Inflation Data

It was a turnaround Tuesday on Wall Street โ€” here’s what you missed.

The major indexes sank while buyers patiently await tomorrow and Thursday’s inflation data. Meanwhile, meme stocks gave back some of their gains as investors rethought their ‘magical moves’ to the upside. More on that in our first story. ๐Ÿ“ฐ

Earnings season continues with stocks like Coinbase and Workhorse reporting. We recap those and several M&A stories down below. ๐Ÿ‘‡

Here’s today’s heat map.

4 of 11 sectors closed green, with energy (+1.76%) leading and consumer discretionary (-1.61%) lagging. ๐Ÿ’š

In economic news, second-quarter U.S. worker productivity fell at its steepest YoY pace since 1948 (-4.60%). Meanwhile, second-quarter unit labor costs rose 10.8% YoY vs. 9.5% expected. Additionally, the new IBD/TIPP poll showed that 62% of Americans now believe we are in a recession despite slight improvements in overall confidence. Lastly, small business confidence ticked up for the first time since December. ๐Ÿ˜ฎ

In U.S. political news, Biden signed the CHIPS Act, and the Inflation Reduction Act is being sent to the House of Representatives, where it is expected to pass and be sent to Biden for signing shortly. ๐Ÿ“

Berkshire Hathaway continues to buy Occidental Petroleum shares on the dip, pushing its stake in the company above 20%. ๐Ÿ›ข๏ธ

In crypto news, ‘Selling Sunset’ star’s new brokerage debuted a new crypto credit scoring platform. Reddit has enlisted FTX and Arbitrum to launch crypto swaps on its platform. Lastly, SoFi has debuted an ETF focused on NFTs, Blockchain Tech, and the Metaverse. โ‚ฟ

Other symbols active on the streams included: $DWAC (-2.60%), $HLBZ (-10.56%), $FAZE (+42.21%), $VUZI (-7.67%), $AERC (+60.13%), and $MGNI (-0.86%). ๐Ÿ”ฅ

Here are the closing prices:ย 

S&P 500 4,122 -0.42%
Nasdaq 12,494 -1.19%
Russell 2000 1,913 -1.46%
Dow Jones 32,774 -0.18%

Traders Watch Their ‘Magical’ Gains Disappear Featured Image

It has been a wild few weeks for retail’s favorite stocks, ranging from AMTD Digital to Bed Bath & Beyond. ๐Ÿคช

Over the last few days, a new player emerged but has quickly fallen out of favor. That company is Magic Empire Global Ltd., which is a financial services provider in Hong Kong. ๐Ÿฆ

The firm operates in Hong Kong under Giraffe Capital Limited (“GCL”) but is listed in the U.S. under Magic Empire Global Ltd. ($MEGL), a British Virgin Islands-incorporated holding company.ย 

Its prospectus filed with the SEC showed that it intended to offer 5,000,000 ordinary shares (25% of its total) for $4.00 per share. But, despite its low IPO price, the stock actually opened for trading at around $50 before rocketing higher to $250 on Monday. ๐Ÿ™ƒ

Many have speculated that the stock’s run-up was due to coordinated buying from message board users, but nobody really knows what is happening here. ๐Ÿคทโ€โ™‚๏ธ

Today was the stock’s third day of trading, and it fell 89.47% as traders saw their magical gains disappear as fast as they appeared. ๐Ÿ“‰

While it’s been a relatively quiet August for the major indexes, animal spirits remain alive and well in the markets. Bulls, bears, and pigs โ€” the whole lot. ๐Ÿ–

Stay safe out there y’all. ๐Ÿง™โ€โ™‚๏ธ


Earnings Recap (8/9/22) Featured Image

Roblox is learning that investors don’t play games regarding earnings. ๐ŸŽฎ

$RBLX shares are down close to 17% after its earnings and revenue numbers were below expectations. The company also reported 52.2 million average daily active users, nearly one million under expectations. Additionally, average bookings per daily user were down 21% YoY to $12.25. ๐Ÿ“‰

The company says the drop-off is expected given its rapid growth during the pandemic and that its long-term investments will negatively impact earnings in the short term.

Coinbase investors are feeling the pain after the company reported earnings and revenue below expectations.

The company saw its revenues decline 64% YoY, lowered its full-year forecast for transacting users, and continues to make headcount and other expense cuts. It said that Q2 was a test of durability for crypto companies and a challenging quarter overall. ๐Ÿ˜ฎ

On the positive, the company focused on the strength of its risk management program during the market’s volatility and the investments it’s making for the future.

$COIN shares were already down 10% today ahead of the report, but fell another 5% after hours. ๐Ÿ”ป

On the positive side of things, The Trade Desk reported revenues that topped expectations and earnings in line with consensus. ๐Ÿ“ˆ

The company says internet TV ad revenue growth was a bright spot and expects its partnership with Walmart to boost its full-year growth. Additionally, Google has delayed phasing out internet cookies to 2024, which was a significant headwind for the company.ย 

$TTD shares were up 18% after hours following the news. ๐Ÿ‘

Check out the Stocktwits earnings calendar to keep track of all the info. ๐Ÿ—“๏ธ


Tuesday’s Deal Bonanza Featured Image

There were a couple of high-profile deals made (or proposed today), so let’s recap below. ๐Ÿ’ธ

In honor of summer barbequing, we’ll start with Famous Dave’s parent company BBQ Holdings Inc., which rallied 46.46% on news that Montreal-based MTY Food Group Inc. is buying it outย for $200 million. Shares of $MTY.CA were up 3.99% on the news. ๐Ÿ–

Next, the mobile-technology company AppLovin offered to buy gaming software maker Unity in a $17.54 billion all-stock deal. The deal is significant because it potentially screws up Unity’s announced plan to acquire one of AppLovin’s smaller competitors, ironSource.ย 

$APP shares fell 10.29%, $U gave back most of its gains (and more) in the after-hours session, and $IS fell 13% on the news. ๐Ÿ”ป

Thirdly, Zales owner Signet is buying online jewelry brand Blue Nile in hopes that it will help it appeal to younger consumers and grow its bridal business. ๐Ÿ’Ž

Signet also cut its financial forecast for the coming quarter and full year as macro headwinds put pressure on discretionary spending. However, despite weakness on the demand side, the company says its strong balance sheet allows it to be aggressive during the downturn to strengthen its business. $SIG shares were down 11.70% following this news. ๐Ÿ“‰

Another interesting aspect of this is that Blue Nile was taken private in 2016 by Bain Capital Private Equity and Bow Street for $500 million. Unfortunately, they were unable to offload the company via SPAC earlier this year, which would’ve valued it at $873 million. ๐Ÿ˜ฎ

The all-cash deal happening at $360 million shows how a softening private and public market environment is impacting more industries than just tech. ๐Ÿฅถ

And lastly, in late-day news, Shift and CarLotz have agreed to merge to form a leading omnichannel auto retailer. The combination will bring the best of both companies’ assets, and they anticipate having a cash position of ~$125 million after the merger.

So far, investors are cheering, with $SFT shares up 8.59% and $LOTZ shares up 28.98% after hours. ๐Ÿ“ˆ


Bullets

Bullets From The Day:

๐Ÿญ Micron to invest $40 billion in U.S. chip manufacturing. With the help of the CHIPS and Science Act, Micron will invest $40 billion in memory chip manufacturing between now and 2030, creating up to 40,000 U.S. jobs. The move comes as more public and private incentives are being put in place to ramp up U.S. production, which is only 10% of the world’s supply. Currently, East Asia produces about 75% of the world’s semiconductors. CNBC has more.

๐Ÿ˜๏ธ Home listings surge at a record rate for the third consecutive month. The number of active listings is up 30.7% YoY, but still far from its historical trend, as buyers pull back from the real estate market. Additionally, the average rate for a 30-year fixed mortgage dropped below 5% last week after climbing to nearly 6% in June. Despite price cuts and an increase in inventory from sellers, average and median selling prices remain near all-time highs. More from Fox Business.

โŒ Crypto troll puts several celebs on the U.S. sanctions list. Shortly after the Treasury Department’s Office of Foreign Asset Control (OFAC) sanctioned Tornado Cash, an anonymous person has been sending 0.1 ETH to the wallets of high-profile celebrities like Jimmy Fallon and Coinbase CEO Brian Armstrong. While it’s unlikely to land these folks in legal trouble, the troll points out the absurdity of sanctions for users receiving funds from blacklisted addresses when they have no power to decline the transaction. CoinDesk has more.

๐Ÿ“บ Walmart is considering adding streaming services to its membership. Walmart+ members may be gaining access to one (or several) streaming services in the months ahead. Rumors are that the company is in talks with Paramount, Disney, and Comcast to see if they can add content to their list of benefits as it tries to keep pace with Amazon’s prime service, which offers content among a whole host of other benefits. This is not Walmart’s first foray into the space, but their past deals involving Vudu and Roku had mixed results. More from TechCrunch.

๐Ÿ• Domino’s exits Italy after failing to gain traction. Whichever executive at Domino’s that thought selling their Pizza in Italy has clearly never been to the country. The company has been operating in the country since 2015 and planned to win customers over with “purely Italian” ingredients, but was hurt by the pandemic as local competitors began offering delivery. This week, the company is closing the last of its 29 stores after failing to gain traction over the past seven years. CNBC has more.


Credits & Feedback

Today’s Daily Rip was written by Tom Bruni. Let him know how he did: