- Power to the… players? Yesterday brought an interesting cast of characters together for some time in the Congressional spotlight. Executives from Reddit, Robinhood, Citadel and Melvin Capital all had a chance to explain to lawmakers what went right, and wrong, during a market-moving rally in equities like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC). So what comes next? Robinhood CEO Vlad Tenev angered many investors with his continued support of a decision to halt trading. Citadel CEO Ken Griffin similarly defended practices at play, such as payment for order flow, in which a brokerage receives payment from a market maker for directing the order to them. One promise of change comes from Melvin Capital founder Gabe Plotkin, who said his firm will switch up its strategy for shorting stocks. Essentially, he promises to be more careful when selecting stocks to sell short, and said he believes GameStop brought about a market correction. Moving forward, he predicts we will stop seeing equities with such high short interest.
- Are you ready for life on Mars? Elon Musk is, and so is the Perseverance rover from NASA. In fact, the rover successfully landed on the planet yesterday, finding a new home in the Jezero Crater. From there, it will work with NASA in the Mars 2020 mission, looking for signs of ancient life like microfossils. Perhaps most importantly, this historic landing sets the stage for more innovation and advancement in space to come. In other words, it is time to buy up space stocks. We started to see a few equities perk up on the Mars landing, like Holicity (NASDAQ:HOL). Ahead of its Astra SPAC merger, the blank-check company rallied to close out Thursday. Investors should keep an eye on the small-rocket launcher and other names in the Space Race 2.0.
- Room for optimism? Investors are stuck in a weird loop. We get bad news, but at the same time, all signs point to the fact optimism is rising. The vaccine rollout is underway, economists are calling for recovery throughout 2021 and retail sales are climbing. However, as Dion Rabouin wrote for Axios, not everything is crystal clear beneath the surface of that optimism. In fact, other studies show that the majority of small businesses are still struggling. In on survey, 25% report ongoing shutdowns, down from 31% in April. More than 50% also reported they had lower sales in the last 30 days than during this time last year. What does this mean for investors? Consider it an explanation for so much of the back-and-forth movement. For each piece of good news, there is still a fear holding it back. As those positive catalysts continue to take force, and if that $1.9 trillion stimulus comes to fruition, those fears could start to subside.
Uber Stock Dips on U.K. Ruling
[Friday, February 19, 8:49 am]
Contributed by Sarah Smith
Uber (NYSE:UBER) got a blow from the United Kingdom, where a Supreme Court ruling struck down a decision by the ride-hailing leader to classify its drivers as independent contractors. As lawmakers and regulators in the country tackle employment rights issues, Uber is caught in the crosshairs. And after back-and-forth legal battles, Uber may have to live with the decision. Moving forward, the company will have to classify its drivers in the U.K. as employees. This comes as the Supreme Court highlights the necessity of drivers and subcontractors to the business model, and hones in on gig-employee treatment.
Where do things stand? This decision in the U.K. is unfortunate for UBER stock, as London is one of the top markets for the company. Plus, many experts see it likely that other European regulators will look to do the same.
UBER shares are down roughly 2% in pre-market trading, after closing out Thursday down by 3%.
According to Wedbush analyst Dan Ives, however, there is still reason to be bullish on UBER. In a client note, he wrote that the risk for Uber is “contained.” His reasoning? Uber and its ride-hailing peers came out on the other side of gig economy battles in the United States. After the passage of Proposition 22 in California, it should have room to win similar challenges in the U.S. This reality, coupled with its experiences in the U.K., should position Uber for success. Wedbush maintains its outperform rating and $76 price target.
Stock Market Futures Point to Higher Open
[Friday, February 19, 8:28 am]
Contributed by Sarah Smith
- S&P 500 futures are up 0.42%
- Dow Jones Industrial Average futures are up 0.28%
- Nasdaq Composite futures are up 0.58%
- Russell 2000 futures are up 1.15%