The king of ecommerce yields his throne
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...
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.
Why so halty?... There are three major reasons that exchanges press "Ctrl + halt + F" on trading.
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.
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.
"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.
Authors of this Snacks own shares of: Amazon, Uber, and Google