Wednesday Jan.27, 2021

🎮 GameStop "cyberbulling"

_We're calling it "cyberbulling"_
_We're calling it "cyberbulling"_

Hey Snackers,

On this day in 1945: Soviet troops liberated Auschwitz, the largest Nazi concentration and extermination camp where 1M Jews were murdered. On Holocaust Remembrance Day, we're remembering the millions of lives taken by hate —  and our responsibility to oppose intolerance and genocide around the world today.

Stocks dipped yesterday, slipping from Monday's tech-driven record highs.

Stop

GameStop's insane stock surge, and the rise of "cyberbulling"

GameStop stock pop... Hard to say 5X fast, but even harder to explain. ICYMI: GameStop stock has been on a tear (yes, the same GameStop that you visited at the mall 15 years ago). Shares have surged over 1,000% since December, and nearly doubled in value just yesterday. And it's probably not driven by the fundamentals — aka: financial info like sales growth that you see in earnings.

  • The glory days: From August 2009 to October 2010, GameStop pulled in nearly ~$6B in sales and $170M in profit.
  • The present days: From August 2019 to October 2020, GameStop saw less than $3B in sales and lost nearly $300M.
  • The TLDR: A money-losing video game company with 5K physical stores is surging... during a deadly pandemic when we're downloading games online.

Why... The momentum started around the time that former Chewy CEO Ryan Cohen (and two of his Chewy pals) announced they were joining GameStop's board. Their ecommerce expertise could help make GameStop less mall-retailer, more digital shop. But the surge goes way beyond that...

  • "Cyberbulling": Being “bullish” on a stock = thinking it'll go up. Some "cyberbulls" on Reddit sparked massive GameStop buying campaigns. That drove up the price of shares, as well as call options — which give buyers the right to purchase stock at a set price up until a certain date.
  • Short squeezing: "Short" sellers, people who borrow stock betting it'll fall, started buying GameStop shares back sooner to reduce more losses as the stock soared.
  • Hedging: Institutional investors also started nabbing shares to hedge against the call options people were buying.

Cyberbulling is based on momentum... And while all investing carries risk, investments driven by cyberbulling can be dangerous. People riding the community-driven momentum could make significant gains, but as soon as the surge ends their investments could plunge very quickly. And unless the companies being "cyberbulled" eventually show strong fundamentals, it's likely that their shares will fall back down to earth.

Vax

Johnson & Johnson's vaccine could be a game-changer — but not a profit puppy

"Tortoise and the Hare" vibes... In the race for a Covid-19 vaccine, there are two winners (so far). First came Pfizer and BioNTech's vaccine: the first to gain emergency use authorization in the US — and the first mRNA vaccine ever green-lit for human use. Four days later, Moderna's mRNA vax crossed the authorization finish line. Johnson & Johnson lagged behind, still in trials with its OG vaccine (read: not mRNA). But that could change...

  • News: J&J expects to share final vax testing results by next week. This 45K-person trial is key to getting authorized (or not). J&J is optimistic.
  • Bigger News: J&J plans to deliver 100M doses in the US by the end of June if its vaccine gets the FDA's green light.

Slow and steady wins the race?... If J&J's vax moves forward, it could have an outsize impact on the overall US rollout — which (so far) has been slow. Just over 44M doses have been distributed, and barely 1% of Americans have been fully vaccinated. Here's why J&J could speed things up:

  • Single shot: Unlike Pfizer and Moderna's vaccines, which require two doses weeks apart, J&J's is just one shot. 100M of J&J's doses could vax 100M Americans — Moderna/Pfizer's can do half that.
  • Less high-maintenance: Moderna/Pfizer's vaccines need to be kept at sub-zero temperatures in fancy containers, then thawed before usage (read: logistical headache). J&J's can be stored at fridge temp.

The prize might not be financial... The J&J vaccine could be a game-changer for the world, but it probably won't be one for J&J's wallet (or its stock). Unlike Moderna and Pfizer, which are selling their vaccines for profit, J&J has pledged to sell the vaccine "at cost" (no profit). Also: J&J is already a massive company that brought in ~$83B in sales and ~$15B in profit last year — a Covid vaccine might not make a huge difference. Meanwhile, it's Moderna's first (and only) product. That could be why Moderna's stock is up ~570% over the past year, while J&J's is up just 15%.

What else we’re Snackin’

  • Cloudy: Microsoft's sales soared 17% last quarter thanks to the cloud boom (and Xbox).
  • Yello: Janet Yellen was approved as Treasury Secretary, making her the first woman to hold the job in the department’s 232-year history.
  • High: Tilray shares jumped 11% after the French government tapped it to provide cannabis for medical experiments.
  • Grande: Starbucks sales dipped 5% last quarter, but turned positive in China for the first time since the pandemic began.
  • Swiped: Payments giant Stripe is leading a $102M funding round in online checkout company Fast.
  • Glossy: Powered Brands, a rare female-backed SPAC, is aiming to acquire $800M to $1.5B worth of assets to create a global beauty conglomerate.

Wednesday

Authors of this Snacks own shares of: Moderna, Microsoft, and Starbucks

ID: 1497983

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