What Happened This Week: Musk Braces For Fight, Disney And Coinbase

  • Stock Market Analysis

For the consumer, inflation losing its sharp edge was the story this week. It was a move fuelled mostly by a welcomed drop in gas prices.

But for the investor, the positive economic indicators – lower-than-expected CPI and PPI reports – provided a backdrop of optimism.

But let’s dig down on three events of the past week that sparked interest.

Musk Makes A Move – And Everyone Is A Twitter 

Tesla (NASDAQ: TSLA ) CEO Elon Musk sold $6.9 billion in shares of the electric car-maker, highlighting once again that billionaires are not like regular people.

But back to the selloff. Before speculation about the move could even stand up and head for the door, Musk admitted on Twitter (NYSE: TWTR ) that it was made in anticipation of being forced to buy the social media platform and unable to secure funding for the deal.

To recap: Earlier this year Musk set out to buy Twitter in a $44-billion deal. Then, he backed away from the offer, claiming Twitter was not forthcoming on information involving bots, or fake accounts. Twitter sued. And last month, a judge ruled the case could proceed to trial in October.

Twitter stock jumped in response this past week, gaining more than 3%, closing Friday at $44.21, still considerably below the $54.20-a-share mark Musk had pegged his original offer on.

Twitter Weekly Chart.

Source: Investing.com

Meanwhile, Tesla stock regained its footing during the week, closing Friday just over $900, at about where it started the week. Of course, the stock took a dip on the news that Musk was selling off shares, losing just over 4.5%. But Tesla rallied in the latter half of the week. It did not hurt that Musk had tweeted that he would buy back his stake in the company if it turns out he is not forced to buy Twitter.

So the battle lines are being drawn in the Twitter takeover case. The stage is being set. Let the courtroom drama begin. And there will be drama. On Thursday, Bloomberg news published the list of who Twitter has subpoenaed to help it make its case. And what a list. Described as a “Who’s Who of Wall Street,” it goes on for pages: Everyone from venture capitalists to tech firm CEOs, hedge firm executives to investment management officials, and banks, and banks and more banks. An array of Musk advisers are also included for good measure.

This will be worth watching. And for stockholders: Hold on with both hands.

Disney Did Not Disappoint

Disney (NYSE: DIS ) stock gained about 12% after unveiling a solid earnings report on Wednesday. The big story here was a nice hike in the number of subscribers to its streaming service, Disney+. Streamers hit 152.1 million in the third quarter, better than what analysts had been predicting.

The first thing this news generated was a comparison with other streaming services. Hulu had 46.2 million subscribers, while Netflix (NASDAQ: NFLX ), the king of the streamers, claimed 220 million in its last report. But lining up those yardsticks only tells part of the story. The fact that Disney+ was able to add more subscribers than was expected points to the fact that the space may not be stagnating as some had started to speculate, given that Netflix growth appeared to be stalling.

Disney+ is proving that growth is still possible. And it might be on the cusp of expanding on that, as it also introducing a new pricing structure that will allow subscribers to opt for a higher-priced monthly service without ads and a lower-priced version that features advertising. All of this is to push its streaming service past the magic threshold of achieving profitability. This initiative will be closely watched.

Overall, the other big news out of the Disney earnings’ report was how revenues hit $21.5 billion, about half-a-billion more than what had been expected.

Share of Disney have gained since the earnings’ report and maintained the momentum to close yesterday up about 12% on the week.

Disney Weekly Chart.

Source: Investing.com

Coinbase And Its ‘Complex Quarter’

The cryptocurrency exchange platform Coinbase (NASDAQ: COIN ) focused attention this week on the ongoing conversation about the challenges the crypto space faces. The talk was sparked by the company’s latest earnings that headlined with a staggering $1.1-billion loss.

In a somewhat of an understatement, the company claimed:

“Q2 was a test of durability for crypto companies and a complex quarter overall.”

Revenues for the three-month period came in at $808.3 million, short of what analysts were predicting.

Again, drilling down on the headline numbers, revenues from retail transactions fell through floor, dropping 66% to $616.2 million. The main reason was a drop in monthly users and lower trading volumes as cryptos lost value and struggled in a tough overall economic climate, which saw Coinbase stock drop about 75% in the second quarter all the while the price of Bitcoin , the world’s leading cryptocurrency, sunk almost 60%.

These realities translated into assets on the Coinbase platform slipped from $256 billion to less than half, at $96 billion, in the last quarter compared with the previous three-month period. Not surprisingly Coinbase announce it would restructure its workforce, and cut about 18% of staff.

Coinbase shares closed Friday at $9.46, ending the week down slightly more than 9.5%.

Coinbase Weekly Chart.

Source: Investing.com

Top Winners And Losers Of The Week

And for all those out there who are keeping score, here are the top gainers of the past week:

On the S&P 500

  • Nielsen Holdings (NYSE: NLSN ): +19.7%
  • Albemarle (NYSE: ALB ) Corp: +18.32%
  • Principal Financial Group (NASDAQ: PFG ): +16.55%
  • Devon Energy Corp (NYSE: DVN ): +15.71%
  • Viatris Inc (NASDAQ: VTRS ): +14.39%

On the NASDAQ Composite

  • Amyris (NASDAQ: AMRS ): +98.42%
  • Bed Bath & Beyond (NASDAQ: BBBY ): +58.7%
  • Veru (NASDAQ: VERU ): +51.31%
  • Nymox Pharmaceutical (NASDAQ: NYMX ): +48.33%
  • BBQ Holdings (NASDAQ: BBQ ): +47.63%

And the biggest losers:

On the S&P 500

  • Moderna (NASDAQ: MRNA ): -8.38%
  • Illumina (NASDAQ: ILMN ): -6.9%
  • Tyson Foods (NYSE: TSN ): -6.47%
  • Warner Bros Discover: -6.24%
  • Klan-Tencor: -3.67%

On the NASDAQ Composite

  • Endo International (NASDAQ: ENDP ): -48.74%
  • Novavax (NASDAQ: NVAX ): -31.19%
  • Innodata (NASDAQ: INOD ): -28.16%
  • Qurate Retail(NASDAQ: QRTEA ): -27.54%
  • RCM Technologies Inc (NASDAQ: RCMT ): -26.35%

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