Snapchat Launches ‘Spotlight’ to Compete with TikTok and Facebook | Merck To Buy Oncolmmune for $425M

MarketBites Investment Newsletter for 11/24/2020

Your daily dose of stock market commentary and most important investment and business news. written by investment professionals at Taylor Hoffman Capital Management.

Today’s Top Investment Stories
  1. Snapchat Launches ‘Spotlight’ to Compete with TikTok and Facebook
  2. Merck To Buy Oncolmmune for $425M
What is driving the stock market today? – November 24th, 2020

– U.S. stocks closed in the green, as investors paid into companies that will benefit from a return to a normal economy. Shares of cruise lines and airlines jumped, with Carnival and United Airlines adding 4.8% and 2.6%. Many technology companies that have been benefiting from lockdowns, lagged. Apple dropped nearly 3%, and Netflix slid 2.4%. Facebook, Amazon, Alphabet, and Microsoft all posted slight losses.

– Markets got a lift in mid-day trading, on news that Biden will nominate former Federal Reserve Chair Janet Yellen to be Treasury Secretary. Yellen is viewed as a respectable and safe choice to lead the Treasury. At the very least, Yellen will work well with Fed Chair Powell, and seems to favor government spending to help consumers and businesses. – (read more on Janet Yellen here)

Coronavirus tracker: Per Johns Hopkins, the U.S. reported 138,780 new cases yesterday and hospitalizations reached 83,779. AstraZeneca became the latest firm to deliver positive vaccine news. The company’s vaccine shows 90% effectiveness. U.S. vaccinations are poised to begin in less than 3-weeks, according to the head of ‘Operation Warp Speed,’  Moncef Slaouim.

– By Raymond Kanyo

Top Story 1: Snapchat Imitates TikTok

What is Happening?
Snapchat launched a video-sharing feature called ‘Spotlight,’ that is similar to TikTok’s core offering and Instagram Reels. Snapchat closed the day up 2.19%.

Why does this Matter?
The new feature is a departure from a long-held focus on engaging communication between friends. Snapchat will now allow users to produce and share content on the platform, in hopes of becoming viral. Snap executives dismissed the idea of allowing users to generate public content for years, in order to avoid the spread of hate speech and misinformation. It seems strange that Snapchat is comfortable entering this space now, as other content platforms such as  Facebook, Twitter, and Google are under harsh political scrutiny.

Snapchat hopes that their AI and army of human content moderators, along with a $1 million a day content creator reward, will help incentivize the creation of fun and quality content. Spotlight will also disable public comments on videos, unlike TikTok.

The Takeaway:
Spotlight gives Snapchat’s 249 million daily active users a way to finally become viral on the messaging platform. Facebook, Instagram, and Google continue to generate massive ad revenues, by engaging their users with user-generated content. Snapchat seeks to cash in on the craze with Spotlight. Only time will tell if the potential increase in ad revenue will offset the political scrutiny this feature brings.

– By Raymond Kanyo

Top Story 2: Merck Joins The Race

What is Happening?

Merck is hoping to join the race to find Covid-19 treatments and vaccines, by purchasing Oncolmmune for $425M. Merck will also be a minority shareholder in Oncolmmune’s spin-off company.

Why does this Matter?

Merck has been relatively unsuccessful at developing an in-house vaccine or preliminary medications for Covid-19. The addition of Oncolmmune gives Merck potential access to the enormous market of coronavirus treatments. Both a limited vaccine supply, as well as distrust for such rapidly produced immunizations, will be catalysts for the sustained demand for effective treatment options.

Those dosed with Oncolmmune’s CD24Fc had a 60% higher chance of recovery. The drug also reduced the risk of respiratory failure by more than 50%. Although vaccine development is considered pivotal to controlling the virus long term, treatments serve a vital need for minimalizing the death count, as well as permanent damage caused by the virus.
The Takeaway:
Merck is behind on the Covid-19 race for treatments and vaccines. They’re hoping to change that with Oncolmmune. Merck will be able to serve hundreds of thousands of patrons, in effort to help control Covid-19.

– By Jack Dunne

Earnings Calendar:
Best Buy Co. ($BBY), Dollar Tree Stores ($DLTR), Dick’s Sporting Goods ($DKS), J.M. Smucker ($SJM), Burlington Stores ($BURL), Hormel Foods Inc. ($HRL), Tiffany & Co. ($TIF)
Deere & Co. ($DE), Frontline ($FRO)
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