Stock Market Commentary for 5/12/2021:
- +Volatility: Big Tech started the day plunging from rising inflation and valuation concerns, but by the end of the day they staged a miraculous comeback. The wild swings in the market signal that investors are a bit divided on what may happen next.
- – Inflation: Inflation remains the top issue on investors’ minds. Today, hedge fund mogul Ray Dalio, chimed in on inflation and stated that “the government is risking creating a bubble with all the money that’s floating around.”– Supply Chain: Companies ranging from automakers to semiconductor giants, keep warning about supply chain setbacks and rising commodity prices that could derail the global recovery.
- Stock Talk:
|The Winner of the Day: Roblox|
|Roblox’s massive day came on the news of a few key metrics from the firm’s earnings report. Roblox announced a 140% revenue increase, a 79% gain in active daily users, and a 98% rise in total hours played, in comparison to this time last year.|
|What’s Moving Pre-Market: Hershey ($HSY) ↑ | Array Tech. ($ARRY) ↓|
|The Loser of the Day: Novavax|
|Novavax has been surrounded by bad news. On Tuesday the firm reported that its loss widened, despite increasing orders for their Covid-19 vaccine. Beyond that, the pressure from India’s Covid outbreak, and unfulfilled EU orders, weigh on the firm.|
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Top Investment Story #1: Roblox Earnings
What is Happening?
Roblox stock surged 21.33% on Tuesday, after the company reported blowout earnings. CEO David Baszucki, sees a “massive opportunity” ahead for Roblox.
Why Does This Matter?:
The last time we wrote about Roblox, our biggest takeaway was that the company had to justify its valuation by maintaining momentum- even after kids return to schools. Roblox’s first earnings report as a public company was a step in the right direction. Even as some kids went back to school, Roblox still saw surging engagement growth on its platform!
Roblox is a platform that allows players to interact with friends in user-created, 3D digital worlds. It gives teens the tools to create their own games, which they can then make money from on the Roblox platform. The company went public on March 10, when it closed up 54% from its reference price.
Roblox by the numbers:
- Average daily active users for the quarter hit 42.1 million, up 79% year over year.
- Hours engaged hit 9.7 billion, up 98% year over year.
- The company’s bookings—a form of adjusted revenue watched by analysts covering videogame firms—jumped 161%, to $652.3 million.
CEO’s Promising Commentary:
CEO David Baszucki said in a news release that “The opportunity of what we’re building at Roblox is massive, and we will continue to make long-term investments as we build a human co-experience platform, that enables shared experiences among billions of users.”
Roblox will need to continue proving to investors that its “pandemic-winner” gaming platform can be a post-pandemic winner as well. The company’s first earnings report was a big step in achieving that goal.
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Top Investment Story #2: Virgin Galactic’s Crazy Day
What is Happening?
Trading on Virgin Galactic was halted briefly, at the beginning of Tuesday’s trading session. The stock dropped as low as 20% below the opening price, but recovered just under 1% higher.
Why Does This Matter?
Virgin Galactic experienced one of the craziest days we have seen from a stock lately. $SPCE fell a full 20% after the opening bell, due to an announcement late Monday. The announcement stated that the company would be pushing back its next test flight for its space tourism offering.
Virgin Galactic Executives told reporters that the firm would make its timeline more clear next week. Maintenance on the VSS Unity has been reported as complete. The roadblock stems from the firm’s carrier aircraft: the VMS Eve. Originally, maintenance on VMS Eve was scheduled for next October, but recent test flights have indicated that the issue may need to be addressed immediately. The company would like to avoid another aborted mission, such as the one in December of 2020.
The stock’s volatility was heavily impacted by trade volumes. Reports state that $SPCE reached its average daily trade volume within 30-minutes of the opening bell on Tuesday. The stock closed about 1% higher, at $18.21 per share, down significantly from its all-time high of $60 per share in February.
Virgin Galactic has hit bumps in the road recently. The stock once championed by Cathie Wood and Chamath Palihapitiya, risks losing its first-mover advantage in space tourism to Jeff Bezos’s Blue Origin, should it not recover soon.