Hey Snackers,
We know you love Snack Facts. So in honor of Black History Month, we'll be featuring facts and stories covering the intersection of race, finance, and the economy. Have a fact to share? Submit here.
Stocks rebounded yesterday after their worst week since October – and one of the wildest investing weeks in recent history. About that...
Don't knock the disposable earbuds... American Airlines has two major things not going for it. One: it's an airline during a deadly pandemic. Two: it lost a record $8.9B last year, and doesn't expect a rebound any time soon. That's partly why American has been the most-shorted US airline. Coincidentally (but not at all), American stock soared 17% from Monday to Thursday. And that's likely partly thanks to Reddit.
The DL on short sells... So how exactly are they "getting back" at Wall Street? It all goes back to short selling: Basically, some professional investors borrow shares of a company whose stock they think will fall. Then they sell those shares, hoping to buy them back later at a lower price and return them to the broker. If the shares fall, their profit = the difference between the price when they sold the shares and the price when they bought them back (minus interest on the loaned stock, and any transaction costs).
Retail investors turned the tables... on professional investors like hedge funds. Like Matt Damon in Good Will Hunting standing up to the snooty Harvard student, retail investors said: "How do you like them shorts?” It’s not clear how much we’ll see this trend in the future. And it’s possible that professionals are getting in on the Reddit buying, too. After last week, it's likely that hedge funds will reevaluate their positions in heavily shorted stocks.
The Bank of Nook gets paid... Nintendo just dropped its best quarterly earnings in 13 years. The 131-year-old gaming legend brought in an expectation-crushing $2.2B in profit last quarter, and raised its annual forecast for the second time (#MarioFlex). Nintendo shares jumped 7% on the holiday Switch-mania:
Sweats. Mask. Switch... In 2020, the Switch wasn't just a gaming console... it was a lifestyle product. There were three strong winds at Nintendo's back positioning it for a blowout year:
Nintendo should pull a Disney... because it might have just hit peak console (Switch saturation is real). That's why Nintendo wants to monetize its characters outside of hardware/software. Disney is a master at this: it makes money off its characters in movies, sequels, and spin-offs — but also through theme parks, cruises, toys, and merch (Elsa-themed everything). Nintendo could benefit from a similarly self-reinforcing ecosystem. Unlike other major console-makers, it designs most of its own games (85% of them). Nintendo could cash in on that precious IP in a number of ways, including the upcoming Super Nintendo World theme park in Japan.
Authors of this Snacks own shares of: Microsoft
ID: 1506574