[ad_1]
The U.S. Federal Trade Commission’s defeat as it sought to block Microsoft Corp.’s acquisition of videogame maker Activision Blizzard is yet another setback for an increasingly toothless regulator that needs to pick better battles with Big Tech.
On Tuesday morning, a federal judge denied the FTC’s injunction that was seeking to block the software giant’s proposed $69 billion acquisition of Activision
ATVI,
best known for its hit videogame “Call of Duty.” The FTC argued that Microsoft
MSFT,
could withhold “Call of Duty” and other Activision games from rival console platforms such as Sony’s PlayStation, and keep the games on its Xbox only.
Microsoft, in a show of faith, committed in writing to keep “Call of Duty” on PlayStation on parity with Xbox for 10 years, agreed with Nintendo
7974,
to bring “Call of Duty” to Switch and entered into several pacts to bring Activision content to several cloud gaming services, U.S. District Court Judge Jacqueline Scott Corley noted in her decision.
“With these 10-year contracts that Microsoft made across the board with so many vendors, Nvidia
NVDA,
Nintendo and others, 10 years is a really long time, in my opinion,” said Sarah Hindlian-Bowler, an analyst at Macquarie Equity Research, in an interview Tuesday. “It is long enough to cover the arrival and maturity of the cloud gaming market….She understands that 10 years is a very long long time to make a guarantee of this kind.”
Also read: Regulators face an antitrust dilemma after Meta launches Threads
Hindlian-Bowler said that she had been in the minority of Wall Street analysts in not believing the U.S. government would be able to block this deal.
“The assumption that this somehow decreases the market is going to prove to be wildly incorrect,” she said, adding that she does not believe that the U.K.’s Competition and Markets Authority will be able to block the deal either.
The latest upset at the FTC was also not too surprising to other Capitol Hill watchers, especially in the light of other high-profile setbacks by the agency and its once-heralded commissioner, Lina Khan. When she was sworn in as chair of the FTC in mid-2021, Khan was hailed as the sheriff who would rein in Big Tech.
“It’s hard to say I am surprised by the ruling because Khan has had a fairly unsuccessful track record,” said Owen Tedford, a senior research analyst at Beacon Policy Advisors. “The regulators are pushing the boundaries, deals that previously would have gone unchallenged have now gone challenged. And they are breaking precedent because Khan and company have expressed a dislike of settlements.”
The FTC’s attempts to sue Meta Platforms Inc.
META,
have had some defeats so far. In February, a California judge denied the FTC’s attempts to block Meta from buying a virtual-reality startup called Within Unlimited. The FTC’s suit to reverse Meta’s acquisitions of WhatsApp and Instagram, filed in 2021, is still plodding along.
Additionally, the FTC recently filed a suit against Amazon.com Inc.
AMZN,
alleging that it is too difficult for consumers to cancel their Prime accounts, and the agency is reportedly also mulling another far-reaching suit against Amazon alleging that the e-commerce giant punishes merchants who do not use its logistics services. One analyst has already made a case that the FTC will lose that fight too.
“I think that the FTC is in need of some change, in need of some refreshing and in need of doing a much better job of picking their battles,” said Hindlian-Bowler. “This does feel toothless, a lot of the fights they are picking are toothless. And unfortunately, they are missing the real battle. They are missing TikTok, they are missing the real fights where we actually have national security at risk.”
In February, one of the Republican commissioners on the FTC resigned, and wrote an op-ed in the Wall Street Journal accusing Khan of disregarding the rule of law and due process.
Compared to the European Union, which has had far more success implementing regulation to rein in Big Tech, the U.S. is still much weaker. “The EU seems to be having somewhat more success, levying big fines, getting these companies to change,” said Beacon’s Tedford. “The EU has passed these bills, but the U.S., despite these efforts, has not gotten there and is not going to get there for the next two years.”
Money spent by Big Tech to lobby Congress in a huge part of the problem, whereas in Europe, “those lawmakers feel less beholden,” he added.
More than a century ago, President Teddy Roosevelt, known for his “speak softly and carry a big stick” foreign policy, also used his bully pulpit to bust industrial monopolies.
If Khan and her staff want to follow his lead and rein in Big Tech, they need to start picking their future battles more carefully — and carry bigger sticks.
[ad_2]
[ad_1]
FTC Loses First Bid to Block Microsoft’s Acquisition of Activision Blizzard. The Focus Turns to U.K. Regulators.
[ad_2]
[ad_1]
Writ large, corporate America had a pretty profitable pandemic.
Lockdowns left shoppers burning stimulus cash on AirPods and Nintendo Switches to dilute boredom and anxiety. Supply convulsions from the war in Ukraine rerouted spending from things to pass the time to things, like groceries, that were needed to survive.
One way or another, demand for things overwhelmed the ability of workers, factories, boats and trucks to supply and ship them. And the biggest sellers of those goods—to cover their own costs, take advantage of the dislocation or both—hiked prices, leading to profit margins in 2021 and 2022 that were higher than anything seen before the pandemic.
But in 2023, the trend reversed. Margins are falling, putting pressure on executives to keep prices elevated while cutting costs, and potentially staff, to stave off investor tantrums. And as higher prices exhaust consumers, more bearish economists insist that a recession is set to start at some point between now and the end of the year.
So when companies report second-quarter earnings this week, it’ll be something of a moment of truth for the economy. Markets will get more detail on what decisions business leaders are making to replicate two years of near-fantasyland profit, amid differing views on how much more room they have to lean on further price increases. And they’ll get the first glimpse of what executives think about the prospect of a downturn.
“It keeps getting disproved by the actual numbers,” Sheraz Mian, director of research at Zacks, said of the recession forecasts. “The bears keep pushing it out to the next quarter and the next quarter. “So the biggest thing I’ll be watching out for is whether we are in the same kind of trend line we’ve been seeing the last few quarters or if things really are weakening.”
He added later: “The second half has kind of become the proving point for the bearish narrative.”
For companies in the S&P 500 index overall, FactSet forecasts a 7.2% drop in per-share profit for the second quarter, according to a report from the firm on Friday. That would still be pretty bad—the biggest percentage drop since the second quarter of 2020, when the pandemic strangled the economy and sent earnings 31.6% lower.
But for the rest of the year, for now, Wall Street expects a comeback. They see profit inching 0.3% higher in the third quarter. And for the fourth, earnings are expected to be even better, with gains of 7.8%.
The first big companies to report second-quarter results this week, among them JPMorgan Chase & Co. and Delta Air Lines, will set the tone.
See also: Megabank profits on tap after eventful Q2 of bank failures and climbing interest rates
Related: Jefferies upgrades JPMorgan Chase to buy from hold ahead of Q2 profit update
Results from Delta
DAL,
which arrive on Thursday, will be a window into whether customers feel good enough about their savings and job security to still take vacations, and whether the business backdrop is solid enough to justify more corporate travel. And as fuel costs fall, Morgan Stanley analysts said the quarter would be the first since the pandemic “with no asterisks from costs and capacity.”
“While the Airlines have sounded extremely confident on demand all year, their visibility / confidence has only extended as far as the summer,” the analysts said in a research note. “However, we will now start to get our first glimpses into what the fall booking curve looks like, which is important to fend off the (second-half) demand bear case.”
As a one-stop shop for financial matters, JPMorgan’s
JPM,
results, due Friday, will offer an outline for the economy as a whole for that second half. Markets have rebounded. But higher interest rates have made it more difficult for customers to borrow money, the landscape for dealmaking remains cloudy, and worries have endured following the failure of a handful of banks earlier this year.
Mian said that he didn’t personally buy into the case that the economy was headed for a bigger turn south, citing strength in the labor market and household finances. But he said that the pessimists still had plenty of reasons to stay pessimistic—amid weakness in manufacturing—and that they could push their forecasts for a recession out to next year even if the earnings for 2023’s second half aren’t that bad.
Within the tech industry, large companies like Amazon.com Inc.
AMZN,
have helped lead a broader rebound this year, after pandemic-era digital demand dried up last year. Ivana Delevska, founder and chief investment officer of Spear Invest, said she expected that rebound to continue this year, as tech companies lap weaker trends in 2022 and businesses shake off their hesitation to spend on IT and cloud services and stampede toward AI.
“The main driver on top of easy comparisons will be AI,” she said. “This is really the biggest theme in our portfolio right now.”
The results for the second quarter will come as more economists point to efforts by corporations to pad or protect profit margins—largely through price increases—as one of the primary drivers of inflation over the past year. Some economists worry that executives’ efforts to keep up with investors’ higher profit expectations will come at the expense of workers.
“Firms will offset margin pressure in the usual way, by firing people,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a report in April.
“The idea that margins have to fall, because they rose to unsustainable heights during the pandemic, likely will cut little ice with markets, which will reward firms taking the most aggressive action to limit the (per-share profit) hit,” he continued.
See also: More than 216,000 global tech employees have lost their jobs since the start of 2023
Within the S&P 500 index, last year’s overall profit margin—or the percentage of sales that end up as profit—came in at 12.12%, according to Dow Jones Market Data, in line with the record 12.19% recorded in 2021. Before those two years, the index had never produced a profit margin higher than 10.75%, records dating back to 1999 show.
Put another way, of the $15.45 trillion in sales that those 500 companies put up last year, $1.87 trillion went straight to profits. Every 0.1% of the S&P 500’s margins in 2023 added $1.87 billion to those businesses’ bank accounts.
Suspicions have grown over the past year that companies were using the convulsions to the economy—like 2021’s supply-chain fiasco and the war in Ukraine—to ram through price increases and keep prices higher. Costs for things like oil, crops and shipping have fallen since. Wage growth, one of the biggest costs that businesses have passed onto consumers, has slowed, and hasn’t caught up with inflation.
UBS analyst Paul Donovan, in February, noted that real wage growth—or wage growth that factors in the impacts from inflation—had been negative for 22 straight months. And he said on Friday that that growth had been “catastrophically bad.”
“Despite low unemployment, workers have not been able (to) achieve their most basic aim—maintaining living standards,” he said on Friday. “While real wage growth should turn positive as inflation falls, this argues against a structural shift of power from employers to workers.”
Efforts by executives to repeat the abnormal gains for investors through a formula of price hikes and layoffs represent a multi-pronged threat for already-struggling consumers: The prospect of losing a job, yet still having to pay up at checkout, even if weaker demand overall nudges the nation into a downturn. Some analysts also worry that the Federal Reserve’s current prescription to bring down higher prices—raising borrowing costs and engineering a slowdown in the job market, thereby weakening demand and lowering prices—will inadvertently widen economic inequality.
But industry bellwethers have plenty of sway to prop up prices and margins. Businesses, to some extent, have trained customers to expect higher prices. Industry consolidation has also allowed larger companies to bend some of the most basic laws of economics.
Isabella Weber, an economics professor at the University of Massachusetts Amherst, told MarketWatch in April that while mainstream theory dictates that prices reflect the laws of supply and demand, that theory doesn’t always gibe with an economy where corporate concentration has increased.
Weber said that while recessions can pull prices lower, firms that are so-called “price makers” tend not to lower their prices as much as others. Sometimes, they may even raise prices even as demand falls, she said.
“In our exploration of earnings calls we find that large firms with market power set their prices focusing on target returns with a careful eye on the price movements of their competitors,” she said over email. “Thus, prices are largely the outcomes of strategic interactions between firms.”
Weber said that for decades, economists in wealthy nations hadn’t thought much about inflation, and that when it returned last year, it was thought about only in basic terms. That is, there was too much demand, or workers had too much money, or central banks were dumping too much money into the economy. Rate hikes from the Fed, the thinking went, would raise borrowing costs, cool off investment and reverse those trends.
“Within this interpretation of inflation, there is no room for a connection between rising profits and rising prices,” she told MarketWatch. “Given this dominant mindset, pointing to the role of profits was heretic, since it implied a fundamentally different understanding of inflation.”
“Furthermore,” she continued, “it meant questioning the policies maintained by central banks around the world, most notably austerity that causes harm to working people who are already most harmed by inflation itself. So this is as much about economics as it is about politics.”
[ad_2]
[ad_1]
Some time ago, I was standing in the vitamin aisle of my local pharmacy, struggling to locate a specific bottle of pills that my doctor had recommended. It was seemingly nowhere to be found. And based on my experience at this particular store, I knew that even if I was able to track down an employee for help, I wasn’t likely to receive much in the way of assistance.
Then, a solution to my dilemma suddenly dawned on me: Amazon
AMZN,
! I looked up said bottle, found it within almost no time and ordered it. By the next day, it had arrived. And it probably cost me a couple of dollars less than what I would have spent at the pharmacy — if I had ever located it there.
Of course, you don’t need to be in search of a hard-to-find item to appreciate the wonders of the online retail giant that Jeff Bezos founded from his garage in 1994. Millions of us are likely to be on the site this week for Amazon’s annual Prime Day event running July 11 and 12 this year, which is a sales extravaganza that one bargain-mad colleague likened to “basically my Super Bowl.” To take advantage of the deals, you’ll naturally have to be an Amazon Prime member, which carries an annual fee of $139. But it’s not like that’s a small number of folks: Amazon says there are now more than 200 million such members worldwide.
Read more: 5 hacks to get the best deals on Amazon Prime Day — and other summer sales
And: What not to buy on Amazon Prime Day — and why discounts may be even bigger this year
I’ve been one of those Prime people for years — if nothing else, for the free two-day shipping it offers. But even before I signed on for Prime, I ordered plenty from Amazon. My purchases over the past decade have ranged from a super-hot horseradish to a pair of armrest slipcovers to a folding exercise bike. Actually, I ordered the three items I just mentioned during the first couple of months of the pandemic, when Amazon became a kind of lifeline given the health risks of shopping in person. But if I go back in time, I find countless purchases for books (Amazon’s original specialty), clothes and margarita mix (there’s a brand I like that I often can’t find at the supermarket).
“At this point, Amazon isn’t just a company. It’s an institution woven into the fabric of our lives.”
And yet, I know there are plenty of people, including some of my friends and relatives, who boycott Amazon. They point to the oft-cited criticisms of the company, such as the treatment of its workers (in 2019, the company’s employees were injured on the job far more than the national average in the warehousing and storage sector) to the broader notion that online retailers hurt the brick-and-mortar stores that have been a traditional bedrock of our communities.
Criticizing Amazon has become almost a sport unto itself. There are books devoted to the subject, such as Alex MacGillis’ “Fulfillment: Winning and Losing in One-Click America” (ironically, I purchased my copy of it on Amazon). Heck, there’s even a whole Wikipedia page detailing the criticisms.
I get the issues that many people have. And it’s not like Amazon doesn’t recognize them, either: The company has acknowledged the injury situation, for example, but has also pledged to cut incidents in half by 2025, according to The Wall Street Journal.
When I reached out to Amazon for this column and cited the various criticisms made of the company, Amazon responded with a statement that, among other things, said it works “hard to be a good neighbor…with communities across the country” and that it creates “good jobs with competitive pay and benefits, including health care from the first day, up to 20 weeks paid parental leave, and full college tuition.” Amazon also cited some of its philanthropic initiatives, including its Amazon Housing Equity Fund, a $2 billion program to build or preserve affordable homes.
All of this is what you expect from a giant corporation trying to defend itself. I’m not going to get into the weeds about the particular criticisms and whether Amazon makes a successful case for itself or not. But I will say that people vote with their wallets. And they’re reelecting Amazon on a daily, if not hourly, basis with all their purchases.
“People vote with their wallets. And they’re reelecting Amazon on a daily, if not hourly, basis with all their purchases.”
Ultimately, Amazon is about convenience combined with competitive pricing — a formula that’s hard to beat. It launched the era of online retailing, and it has mastered the art of it to this day. When I hear people bemoan the fates of all those brick-and-mortar stores, I admit to thinking to myself, “OK, but do you still want your mail delivered by the Pony Express?” Or, “Do you still want to do your shopping at ye olde general store?”
The point is that we evolve as a society and new forms of commerce and communication take over. Yes, there are prices to be paid for that. I admit to missing some of the brick-and-mortar stores and chains that were part of my youth — I’m 59 years old, and remember spending practically entire days in neighborhood bookshops long gone. For that matter, I don’t condone bad behavior by large multinational companies; though, like I said, I’ll let others debate some of the specifics regarding Amazon.
But let’s face it: At this point, Amazon isn’t just a company. It’s an institution woven into the fabric of our lives — and for good reason, I’d argue. I don’t care about shopping on Prime Day, though I know there are a few deals to be had. Mostly, I just increasingly rely on Amazon to make my life easier by selling me any number of things I need on a daily basis, including household staples (yes, you can buy toilet paper on Amazon — the company even sells its own brand). And that’s to say nothing of the services the company offers, including its Prime Video streaming (you can thank Amazon for the truly marvelous — and Emmy-winning — “The Marvelous Mrs. Maisel” series, for example).
Could someone come along and invent a better version of Amazon, one that might not be as widely criticized? Perhaps, but that’s probably years, if not centuries, down the road. In the meanwhile, we have the Amazon that we have. Now, let me see if I’m out of toilet paper…
[ad_2]
[ad_1]
The stock of Mediterranean-style fast-casual restaurant chain Cava Group Inc. soared 11% Monday, after analysts initiated coverage on the stock which made its debut on public markets in mid-June with a flurry of buy ratings.
At least four of the banks that were underwriters on the initial public offering — JP Morgan, Stifel, William Blair and Jefferies — assigned the stock a buy rating or the equivalent.
FactSet shows one bank has a hold rating but it’s a restricted listing so it’s not clear who it’s from.
The company
CAVA,
raised $317 million in its initial public offering, which priced above its proposed range at $22 a share and immediately rallied on opening. The company issued 14.4 million shares at a valuation of $2.45 billion. The stock was last trading at $43.83.
The company is not profitable and has high cash burn and just $23 million in cash and cash equivalents on its balance sheet, according to its IPO filing documents.
But analysts were unfazed, with William Blair analysts calling it a clear leader in a fast-growing category with proven geographic appeal.
“CAVA has hit upon a winning formula with its customizable menu of bowls and pitas featuring bold Mediterranean flavors that can fit in any dietary preference,” wrote analysts led by Sharon Zackfia.
“CAVA’s customer appeal is evident in average unit volumes (AUVs) of roughly $2.5 million and a 44% five-year revenue CAGR through 2022.”
The company accelerated its growth with the 2018 acquisition of Zoës Kitchen, “which provided immediate access to attractive real estate in new markets while enabling capital-efficient densification in top-tier trade areas (Zoës conversions roughly half the cost of a typical greenfield CAVA),” they wrote.
That has set the company up to end 2023 with roughly triple the number of locations as it had in 2020.
William Blair estimates that there’s room for at least 1,200 domestic Cava restaurants based on the population per restaurant already achieved in Virginia, where it’s still adding locations.
That supports management’s target of 1,000-plus locations by 2032.
“We also see the potential for digital drive-thrus to further lengthen CAVA’s growth runway while lifting AUVs (and potentially returns), with about one-third of this year’s new units having drive-thrus, ramping up to about half in 2024 (versus roughly 20 drive-thrus today),” they wrote. William Blair initiated coverage with an outperform rating.
JP Morgan launched coverage with an overweight rating and a December 2024 $45 stock price target. Analysts cheered the entrepreneurial sprit of Founder and CEO Brett Schulman with help from Chairman Ron Shaich, the founder of Panera Bread.
“In-store design/operational procedures and back-end support for the network allows CAVA to be efficient, safe and consistent as the brand leverages these systems for its goal national brand penetration,” they wrote in a note to clients.
Mediterranean cuisine covers many types of food and occasions, so the end-market is large, topping out at more than $1 trillion in U.S. sales.
While bowl builds priced at $10.95 to $16.95 will likely limit a high frequency of lower-income consumers, “we believe the brand has an enduring appeal to a very broad customer base for at least occasional usage.”
And suburbs are 82% of the site mix and are expected to remain a key location base, they added.
Stifel and Jefferies analysts initiated coverage with a buy rating and $48 price target. Stifel analysts led by Chris O’Cull also cheered the wide appeal of the food and compelling unit-level returns and highlighted the company’s healthy balance sheet.
“The company is in strong financial condition with no funded debt and roughly $340M in cash on hand following the company’s IPO,” they wrote in a note to clients. “We project the company’s average quarterly cash balance will remain above $200M with no funded debt for the foreseeable future. We project positive annual free cash flow starting in 2026.”
Still, not everyone is convinced the company is a buy. David Trainer, chief executive of New Constructs, an independent equity research firm that uses machine learning and natural-language processing to parse corporate filings and model economic earnings, published a series of critical reports before the IPO.
Trainer questioned Cava’s ability to reach profitability and its high valuation. He even compared it to WeWork
WE,
the infamous startup created by Israeli entrepreneur Adam Neumann, that at its peak was valued at $47 billion, but is now trading at just 26 cents a share, or a market cap of $521 million.
The Renaissance IPO ETF
IPO,
has gained 32% in the year to date, while the S&P 500
SPX,
has gained 15%.
For more, see: Fast-casual restaurant chain Cava Group’s IPO documents raise some red flags: analyst
Read now: Cava Group CFO is confident restaurant chain will be profitable—but she won’t say when
Related: 5 things to know about the fast-casual Mediterranean restaurant chain Cava
[ad_2]
[ad_1]
This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.
https://www.barrons.com/articles/rivian-stock-price-ev-production-7ca9a498
Rivian Automotive
gained again on Friday after an analyst raised the electric-vehicle maker‘s price target, saying the company was “making a major turn
towards executing on its longer-term business model.”
[ad_2]
[ad_1]
The Financial Times has reported that Tesla Inc.
TSLA,
and other auto makers in China have pledged to “enhance ‘core socialist values’” after the Chinese government directed the makers to curb “reckless” price wars. Chinese rival BYD was also among the 16 auto makers to make the commitment in a letter signed at a auto industry conference in Shanghai on Thursday, the newspaper reported. Tesla has cut prices on its EVs, mostly the cheaper Model 3 and Model Y vehicles, several times since late last year, in China and elsewhere, as competition in the EV space heats up. Tesla shares on Friday are poised to end the week up more than 6% and have gained 127% so far this year, compared with gains of around 15% for the S&P 500 index. Earlier this week, Tesla reported second-quarter sales that were well above Wall Street expectations.
[ad_2]
[ad_1]
China Controls Minerals That Run the World—and It Just Fired a Warning Shot at U.S.
[ad_2]
[ad_1]
Shares of Rivian Automotive Inc. rallied Friday for an eighth-straight session after Wedbush analyst Dan Ives boosted his stock-price target by 20%, saying he believes the electric-vehicle maker is “finally making a major turn” toward its longer-term business model.
Ives reiterated the outperform rating he’s had on the stock
RIVN,
since it went public, while raising his price target to $30 from $25.
“We believe [that] after a number of ‘one step forward, two steps back’ excuses for Rivian and supply-chain headaches, the company is finally making a major turn towards executing on its longer-term business model,” Ives wrote in a note to clients. “Demand remains firm for the company’s unique EV model lineup while production appears to now be on the road to success as seen with stronger deliveries in [the second quarter].”
Rivian’s stock powered up 14.3% to $24.70, the highest close since Dec. 13, 2022. It has rocketed 83.6% over the past eight days, to match the record eight-day win streak that ended Sept. 14, 2022.
Ives’s raised price target comes after Rivian’s largest shareholder, Amazon.com Inc.
AMZN,
announced earlier this week that it was taking delivery of the first of Rivian’s new electric delivery vans in Europe.
Rivian had also this week reported record second-quarter deliveries that nearly tripled from a year before, with production more than tripling.
“After quarters of disappointing production speed bumps, supplier issues, and what felt like an ongoing agita situation, Rivian now appears to have its production and supply-chain issues well under control with the laser focus on getting deliveries in the hands of eagerly awaiting customers,” Ives wrote.
Ives’s new price target, which implies 21.5% upside from Friday’s closing price, made him the third most bullish on Rivian among the 24 analysts surveyed by FactSet who cover the company.
The most bullish were Wolfe Research’s Rod Lache and Canaccord Genuity’s George Gianarikas, who both had $40 price targets on the stock.
Fourteen analysts were bullish on Rivian, eight were neutral, and two were bearish, according to FactSet. The average stock-price target was $23.55.
Rivian’s stock has run up 70.7% over the past three months, while the Global X Autonomous and Electric Vehicles exchange-traded fund
DRIV,
has advanced 15.1% and the S&P 500 index
SPX,
has gained 7.2%.
[ad_2]
[ad_1]
Shares of Mullen Automotive Inc. rocketed on massive volume for a second-straight day, after the electric vehicle maker announced plans to buy back a chunk of its shares.
The company
MULN,
said it believes its stock is “significantly undervalued,” given its current cash position of about $235 million. Therefore, the board of directors have authorized the repurchase of up to $25 million worth of its outstanding shares through the end of this year.
The buyback amount represents 17.1% of Mullen’s current market capitalization of about $145.8 million.
“We are initiating this buyback program as an attractive opportunity to deploy capital and return value to our shareholders,” said Chief Executive Officer David Michery.
The stock soared as much as 88.2% intraday, before paring gains to be up 32.8% in afternoon trading. Trading volume swelled to an already record 1.78 billion shares, compared with the full-day average over the past 30 days of about 205.0 million shares.
On Wednesday, the stock blasted 69.4% higher, the biggest one-day gain since it ran up 145.6% on Feb. 28, 2022, on then-record volume of 1.39 billion shares. That followed the company’s announcement that it retained a law firm to combat illegal naked short selling.
A short sale is a way for investors to bet that prices will fall. The short seller must pay to borrow stock owned by another investor so they can sell it with the hope of buying the stock back at a lower price. If the investor who originally owned the stock sells their stock, the borrower must cover their short so they can return the stock.
“Naked” short selling refers to the illegal act of shorting a stock without borrowing it first. While that is often blamed for what companies believe are unwarranted declines in their stock, market structure experts have often refuted those claims.
Read: Short sellers are not evil, but they are misunderstood.
Before the stock’s two-day bounce, it had closed Monday at a record low of 10.1 cents, even after the company reported last week that it recorded revenue for the first time, and that it received additional financing that put it in the “best financial position” in its history.
Mullen had said on Wednesday that it “believes it may have been” targeted by naked short sellers, and therefore decided to investigate any “potential wrongdoing.”
The latest exchange data showed that the percent of Mullen’s public float, or shares freely available to trade, that have been shorted was 16.2%, according to FactSet data. That’s less than half what the percentage was a month ago.
In comparison, fellow “meme” stock AMC Entertainment Holdings Inc.
AMC,
has 23.6% of its float shorted and 20.8% of GameStop Corp.’s
GME,
float is shorted.
[ad_2]
[ad_1]
The U.S. Food and Drug Administration on Thursday granted full approval to the Biogen BIIB and Eisai Co. Ltd. ESALF Alzheimer’s treatment Leqembi, a step that secures Medicare reimbursement for the first drug shown to slow the progress of the disease, rather than just treating its symptoms.
Leqembi, also known as lecanemab, is a monoclonal antibody designed to reduce the buildup of amyloid beta plaque in the brain, a marker of Alzheimer’s disease.
The…
[ad_2]
[ad_1]
Threads, the Twitter rival launched by Mark Zuckerberg’s Meta Platforms Inc. META on Wednesday evening, now has 30 million users, Zuckerberg announced Thursday. The app garnered 2 million users in the first two hours after launch, according to Zuckerberg’s first post on the platform. Within seven hours, that number had grown to 10 million. Shortly after 11 a.m. Eastern time, the Facebook founder again posted to say the number had tripled. “Wow, 30 million sign-ups as of this morning. Feels like the beginning of something special, but we’ve got a lot of work ahead to build out the app.” Meta’s stock, meanwhile, was slightly…
[ad_2]
[ad_1]
As the 2024 race for the White House gathers steam, one topic that just won’t go away is President Joe Biden’s age.
It comes up whenever the 80-year-old president makes a mistake such as saying “Iraq” when he means to say “Ukraine,” as occurred twice last week, or when he takes a tumble, such as his trip over a sandbag at the Air Force Academy’s commencement on June 1. Biden later joked that he “got sandbagged.”
The…
[ad_2]
[ad_1]
This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.
https://www.barrons.com/articles/stock-market-movers-3beb512f
[ad_1]
Technology stocks reigned supreme in the first half of the year, far outperforming the wider market. But sustaining that rally will be tough, and investors need to look now for tech stocks that are ready to benefit from the growth of artificial intelligence.
[ad_2]
[ad_1]
Meta Platforms Inc. launched Threads, its rival to Twitter, a day early Wednesday.
“Let’s do this. Welcome to Threads,” Meta Chief Executive Mark Zuckerberg posted on the new app.
The text-based app, a spinoff of Meta’s META Instagram, had been set to launch Thursday morning, but instead went live for users in the U.S. and more than 100 other…
[ad_2]
