Microsoft Mayhem Can't Derail Stocks

The stock market began a shortened holiday week with a rally, continuing its streak of gains ahead of Nvidia’s earnings tomorrow after the bell. Let’s see what else you missed. 👀

Today’s issue covers the Bayer of bad news, Zoom avoiding doom (for now), and Microsoft hitting all-time highs despite the OpenAI chaos. 📰

Here’s today’s heat map:

9 of 11 sectors closed green. Technology (+1.45%) led, & utilities (-0.31%) lagged. 💚

The conference board’s leading economic index (LEI) fell for the nineteenth consecutive month in October, marking its lowest level since May 2020. The indicator continues to signal a recession is ahead. However, skeptics quickly point out that a recession typically begins 10.6 months after the indicator peaked, and we’re currently 22 months from the 2021 peak. 👎

After telling investors its delivery pace had accelerated in October, electric vehicle startup Fisker popped. However, it quickly gave back its gains to close at a new all-time low on news that it’s lost another chief accounting officer. 📉

And Paramount Global jumped 6% after completing the sale of its mixed martial arts brand, Bellator, to the Professional Fighters League. 📺

Other symbols active on the streams: $PLTR (+4.15%), $AI (-4.33%), $JAGX (+13.65%), $AVXL (+11.64%), $CDIO (+123.23%), $BRSH (+74.56%), $GOEV (+20.66%), & $SHOT (+34.91%). 🔥

Here are the closing prices:

S&P 500	4,547	+0.74%
Nasdaq	14,285	+1.13%
Russell 2000	1,807	+0.52%
Dow Jones	35,151	+0.58%

Earnings

The Bayer Of Bad News

Germany’s Bayer was the bearer of bad news for investors today, with shares experiencing their largest one-day decline in over three years. 📉

The pharma and biotech company aborted a large late-stage trial testing a new anti-clotting drug due to a lack of efficacy. While failures are common in this field, this was the company’s most promising development project. Its statement says that the experimental anticoagulant asundexian was shown to be inferior to Bristol-Myers Squibb and Pfizer’s established treatments. ❌

And if that wasn’t bad enough, regulators also ordered the company to pay $1.56 billion in the latest U.S. lawsuit over its commonly-used Roundup weedkiller. A Missouri jury ordered the payout to four plaintiffs who claimed the product caused injuries, including cancer. Ultimately, it found that Bayer’s Monsanto business was liable for claims of negligence, design defects, and failing to warn plaintiffs of the potential dangers of using Roundup.

As a result of the many setbacks, new Bayer CEO Bill Anderson is reportedly weighing options to break up the company. Splitting the business into three parts: prescription drugs, consumer health products, crop chemicals and seeds, along with cost-cutting, could help revive its share price. ✂️

$BAYRY shares fell over 17% to 17-year lows as investors assess the company’s future. 🙃

Company News

OpenAI May Be ClosedAI Shortly

It’s been a crazy weekend for ChatGPT-maker OpenAI and its largest shareholder, Microsoft. TechCrunch has a solid recap of the timeline and events, but it can be summarized like this. 📝

OpenAI’s board fires CEO Sam Altman unexpectedly.
Other OpenAI executives and employees begin to quit.
Investors and other stakeholders push back.
OpenAI board starts talks with Altman to return.
The two sides are unable to reach an agreement.
Altman & others join Microsoft to lead a new AI research team.
The vast majority of OpenAI’s 770 employees threaten to resign.

It’s reported that Sam Altman could still return to OpenAI if the board resigns, among other things. That said, the situation is developing quickly as everyone chases the next headline. 😵‍💫

Despite the chaos, Microsoft’s stock hit a new all-time high today. As did Nvidia, ahead of its earnings report after the bell tomorrow.

As for Microsoft investors, they’re trying to understand whether the company’s AI ambitions are better off if Sam Altman and his colleagues join Microsoft or if they go back to OpenAI with a new board. 🤔

As always, we’ll keep you updated as the story develops. For now, mega-cap tech stocks continue to party on. 🤷

Earnings

Zoom Avoids Doom (For Now)

Pandemic-era darling Zoom Video Communications reported results tonight after hitting all-time lows late last month. And for once, it didn’t disappoint. 👍

The company’s adjusted earnings per share of $1.29 beat expectations of $1.10. Analysts quickly pointed out that the beat was primarily driven by the company cutting sales/marketing and general/administrative expenses. But for Zoom, a win is a win…

Meanwhile, it reported a 3.2% YoY revenue increase, with $1.136 billion topping analyst expectations of $1.12 billion. Strength in its enterprise segment drove the beat, with revenues rising 7.5% YoY to $661 million. It also said 3,731 of its 219,700 enterprise customers contributed more than $100,000 in trialing 12-month revenue. That represents a 14% YoY rise. 📈

As for its retail “online” business, its average monthly churn was down ten bps YoY to 3.00%. Additionally, it’s seeing a larger percentage of its online customers stick around for at least 16 months, rising 250 bps YoY to 73.2%. Retaining and monetizing that pandemic-driven audience is a big part of its growth plan. 💻

Zoom also continues to generate cash from its operations, sitting on roughly $6.5 billion in total cash, cash equivalents, and marketable securities at the end of the quarter. So, while revenue growth is slow, its stabilized earnings and cash pile give it the flexibility to make strategic moves like acquisitions. 💰

Overall, investors remain concerned about its ability to drive results in a highly competitive market. This quarter’s progress shows that revenue growth may have stabilized, but investors want to see it accelerate from current levels.

$ZM shares were up marginally as the market digested the news. 🤔

Bullets

Bullets From The Day:

🧑‍⚕️ AstraZeneca creates a digital health tech company. The pharmaceutical giant’s new health-tech business, Evinova, launched this week with the goal of “better meeting the needs of healthcare professionals, regulators, and patients.” Its primary focus will be helping optimize clinical trials for biotechnology companies and others to reduce the time and costs associated with developing new medicines. Yahoo Finance has more.

₿ New crypto exchange, Bullish, buys CoinDesk from DCG. The exchange has bought the media company in an all-cash deal, saying that its current management team will stay in place. However, an independent Editorial Committee will be created to “ensure journalistic independence” from the crypto exchange. Bullish plans to inject capital into several of CoinDesk’s most exciting growth initiatives. Digital Currency Group bought CoinDesk in 2016 for about $500,000, leading many to believe it’s sustained a significant profit on the sale. More from Blockworks.

📚 Amazon offers free generative artificial intelligence (AI) courses to boost its talent pool and tech adoption. After much success with its Amazon Web Services (AWS) certification, the company is expanding its education efforts with a new ‘AI Ready’ track to help train aspiring professionals on its AI tech. Amazon says 21 million people have already trained on AWS cloud computing skills through its programs, with hopes that 2 million will use its AI courses by 2025. Additionally, it plans to offer “nontechnical” learning to introduce people to the foundations of generative AI, among other topics. The Verge has more.

🤖 Founder and CEO GM’s Cruise resigned this weekend amid recent turmoil. Kyle Vogt resigned from his CEO post on Sunday, a day after he apologized to the company’s employees for problems that led to action from state and federal regulators. The rapid turn of events halted its plans to expand to additional U.S. cities and team with Honda to bring robotaxis to Japan. Despite the uncertain future, General Motors says it’s sticking with Cruise and its efforts to develop self-driving cars. However, it has cost the company nearly $6 billion since the start of 2020, with minimal results. More from CNN Business.

🔮 FINRA is trying to allow “predicted returns” in marketing to sophisticated investors. The regulator has submitted a new 230-page proposal to the Securities and Exchange Commission (SEC) for review. It would allow the use of predicted returns in marketing and would apply to brokers dealing with institutions and investors possessing assets over $5 million. As for its reasoning, it believes that a member’s views regarding the projected performance of a strategy or single security may be helpful for clients in making decisions about their options. InvestmentNews.com has more.