Wednesday Feb.03, 2021

📦 Bezos is out

_The king of ecommerce yields his throne_
_The king of ecommerce yields his throne_

Hey Snackers,

First, there was toilet paper and Clorox wipes. Then, there was baking yeast. The latest impossible-to-find product: Grape-Nuts cereal.

Stocks jumped yesterday ahead of earnings from Amazon and Google (spoiler: blowout numbers). Meme stocks like GameStop and AMC suffered major drops from last week's highs, but are still significantly up for the year. Speaking of...

Halt

The NYSE halts trading on some meme stocks — so we're breaking down trading halts

OG Wall Street... Yesterday, the New York Stock Exchange temporarily halted trading on GameStop (five times) and Koss (twice). Investors across brokerages couldn't buy or sell those stocks for around five minutes (each time). The 230-year-old NYSE is one of the two major stock exchanges in the US, along with the much younger Nasdaq.

  • Despite the halts, GameStop shares plunged 60% yesterday, and Koss dropped 43%. These companies have been in the limelight, but the NYSE actually halts trading on individual stocks nearly every day.
  • BTW: Exchange halts are different from trading restrictions by brokerages, which can also pause trading of certain securities. Viral stocks like GME are still being restricted by some brokerages.

Why so halty?... There are three major reasons that exchanges press "Ctrl + halt + F" on trading.

  • Stock swings: Sudden price swings can trigger halts for single stocks, or for the entire market. In March 2020, we had the first market-wide trading halt since 1997. "Circuit breakers" kick in when the S&P 500 plunges a certain percentage from the previous day. Depending on how bad it is, trading can be paused for 15 minutes or the entire day. GME and KOSS were halted yesterday because they quickly moved outside their "price bands."
  • News event: Exchanges also halt single-stock trading in anticipation of major announcements (like a scandal or merger). That prevents insiders from trading on privileged info before everyone else finds out.
  • Regulatory reasons: The SEC can make exchanges suspend trading of a stock if they suspect something fishy — think: Luckin Coffee accounting fraud.

Trading halts are there to protect investors... They act as a check on impulsive emotional reactions. Selloffs can result in panic, which can cause a cascade effect that could lead to a stock (or the entire market) crashing. Since new circuit breaker guidelines were implemented in 2013, the market hasn't plunged more than 13% in a day — a hopeful sign of halts' effectiveness. Halts also level the playing field between reactive investors and those who aren't up to date on the news. They can prevent insider trading and other illegal transactions at the expense of other investors.

CEO

Bezos steps down after Amazon's biggest quarter in history

Way too lit for a Tuesday... Amazon dropped two major bombshells in its 2020 fourth quarter earnings yesterday. First, the numbers: the Zon brought in a record-smashing $125.6B in sales, up from $87.4B in the same quarter of 2019. That's even more than Apple (aka: the most valuable company on Earth) did in sales last quarter. Profit more than doubled from a year earlier to $7.2B (smaller than Apple's — but still massive).

The bigger story... While Amazon's numbers are eye-popping, we're not shocked that Earth's biggest online retailer had a blowout holiday quarter... during a deadly pandemic. The real surprise: Jeff Bezos is stepping down as CEO.

  • C.E.Out: This year, AWS CEO Andy Jassy will be taking Bezos' place as Amazon's leader. Bezos will become exec chairman, focusing on “new products and early initiatives" — like his space baby Blue Origin and The Washington Post.
  • Part hero: In his 27 years leading Amazon, Bezos revolutionized the way we shop, made convenience a standard, and created jobs for 1M+ people.
  • Part villain: Thanks to him, purchasing with the click of a button is a lifestyle. But that has also hurt Main Street, killing brick-and-mortar mom & pop shops who can't compete.

"A yawn is the greatest compliment"... that an inventor can receive. That was Bezos' mic drop blurb post-announcement. From 1-Click ordering, to two-day shipping — 20 years ago, we couldn't have imagined these being a norm for us. Bezos’ point: if you do innovation right, then the extraordinary becomes the ordinary. Investors also yawned at Bezos leaving, with the stock barely budging after-hours. It's a vote of confidence that the empire he built is strong enough to stand without him front-and-center.

What else we’re Snackin’

  • Addict: Alphabet's quarterly sales jumped a smashing 23% from a year earlier, driven by strong ad growth from YouTube and Google.
  • Vax: Pfizer speeds up its delivery schedule to provide 200M Covid vaccine doses by May instead of July (thank you).
  • Spacey: Rocket startup Astra is going public via a SPAC merger at a $2.1B valuation, after a successful space launch in December.
  • Gassy: Exxon lost a whopping $20B last quarter. But the stock jumped since investors think the WOAT is over.
  • Packing: UPS delivered a record $24.9B in quarterly sales thanks to higher shipping fees and extra-high holiday volumes.
  • Buddy: Ford and Google partner on a six-year deal that's not as random as it sounds. Google will provide in-car connectivity services.

Wednesday

  • Earnings expected from Spotify, PayPal, and Sony

Authors of this Snacks own shares of: Amazon, Uber, and Google

ID: 1508667

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