Stock Market Commentary for 3/4/2021:
- The Big Picture:
+ Sectors tied to the economic recovery trade (Financials, Energy, Industrials) were the only bright spot in the market, as rising treasury yields continued to weigh on investors.
+ President Biden agreed to limit the number of people who will receive a new round of stimulus checks, which could accelerate the delivery of the $1.9 trillion relief package.
+ Vaccine rollout in America remains 2-months ahead of schedule, boosting the recovery trade.
– Rising bond yields continued to inject fear into the market on Wednesday. Technology stocks were the hardest hit, with the NASDAQ dropping 2.70%.
- Stock Talk:
The Winner of the Day: Lyft
Lyft continued Tuesday’s positive sentiment by rising another 8.24% on Wednesday. With single-dose vaccinations, dropping case numbers, and increased ride-hailing volumes, Lyft appears to be on an upward trajectory for the time being.What’s Moving Pre-Market: Splunk
After-hours movement suggests some much-needed good news for Splunk. The firm reported a narrower than expected net-loss, as well as a revenue beat on Wednesday. Shares were up 6% during the after-hours session; the stock is down 8% over the last 12 months, while the S&P is up 22% over the same period.The Loser of the Day: Rocket Companies
Rocket Companies appears to be on the $GME roller coaster of hyper volatility. Expect this stock to continue to be extremely volatile as retail investors and institutional shorts battle it out in the coming days. Rocket Companies founder Dan Gilbert, watched his net-worth (on paper) increase by $30B on Tuesday and fall $25B by Wednesday.
- The Data Room:
– Per Johns Hopkins, the U.S. reported 57,071 new Covid-19 cases yesterday. So far, 51.7 million Americans have received their first round of vaccinations.
– The U.S. economy decelerated in February. The ISM Nonmanufacturing Index showed a reading of 55.3 for last month, down 3.4 percentage points from January, and below the 58.7 Dow Jones estimate.
– By Raymond Kanyo
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Top Investment Story #1: Venetian Casino Sold
What is Happening?
“Las Vegas Sands” may need to consider a name change after the recent sale of all its Las Vegas assets, including the renowned Venetian Casino. Las Vegas Sands will use the $6.25 billion to bolster its Macau and Singapore operations. $LVS stock closed up 1.80% yesterday.
Why does this Matter?
This is a pivotal moment for the casino juggernaut, which was hard hit by the pandemic-induced lockdowns. In 2020, the company lost an adjusted $2.12 a share, versus a profit of $3.26 in 2019. Revenue plunged to $3.6 billion from $13.7 billion the previous year. While the $6.25 billion sale helps the company shore up its balance sheet, this strategic move has been in the making long before the pandemic.
Sheldon Adelson, the late founder of the company, had been repositioning the company toward overseas markets, notably Macau and Singapore. The company’s new CEO, Robert Goldstein, considers the Asian operations to be the backbone of the firm.
Analysts seemed to favor the sale. Jefferies analyst David Katz, wrote that the sale will help Las Vegas Sands expand more aggressively at their most profitable operations in Asia. He also speculated that the company can re-initiate its dividend policy, which was halted by the pandemic in early 2020.
If you would still like exposure to the Venetian Casino, fear not! Publicly traded Vici Properties (Ticker: VICI) acquired the iconic casino.
Las Vegas Sands got a great deal for exiting the Las Vegas casino scene. The cash infusion should help the casino operator double-down on Asian expansion while restoring its dividend.
– By Raymond Kanyo
Top Investment Story #2: Restoring Trust In Tech
What is Happening?
Google is moving towards a “privacy-first” world. Dropping technologies that track users from site to site, the search engine giant may turn digital advertising on its head in the coming years.
Why does this Matter?
Google’s departure from third-party cookies and user tracking technology is not particularly surprising. Regulators and the general public have become increasingly critical of tech giants and the lack of user privacy across the web within the last year. With this move, Google (and others) attempt to buy a little goodwill.
Apple was one of the first industry players to announce that they would drop such technologies in the name of user privacy. The firm stated that they would discontinue and disallow the following of users from site to site on iOS devices late last year.
Google is in a slightly different position to be doing this, however. Google accounts for 52% of all digital advertising spending across its suite of platforms, and such revenues are their lifeblood. Digital advertising currently accounts for a whopping 81% of the firm’s total revenues, propping up its expensive, and currently unprofitable, cloud ventures. While $GOOG only dropped 2.37% on the news, providers of user-tracking technologies did not fare as well ($TTD: 12.78%).
It is unclear how these changes will impact total digital advertising spending. Google’s initial plan is to develop a technology that lumps users into targeted, yet not-as-specific cohorts for advertisers. The idea is to restore faith in tech firms for taking user privacy more seriously.
Competitors refute these claims, as Facebook founder Mark Zuckerberg claims that dominant platforms such as Apple and Google have “every incentive” to use their market position to interfere with how other apps use data. Facebook has notably received harsh public criticism for intentionally using user-data to show users destructive content.
The shift towards pro-user privacy initiatives was an inevitable step for big tech, as they try to avoid regulators around the globe. It is hard to tell how such changes will benefit the general public, and/or potentially hurt Google’s income.
– Written By Jack Dunne