Welcome to the Weekly Scan. Here’s what we’re following for the week of February 1, 2021.
GameStop can’t stop. Retail investors flooded stocks such as GameStop, AMC Theaters, BlackBerry, and more last week, driving the price up and causing what’s known as a short squeeze. The share price of GameStop, a brick-and-mortar video game retailer, increased 1,700% and movie theater chain AMC saw its share price increase 840%. These retail investors were reportedly motivated by a Reddit thread known as Wall Street Bets. Some institutional investors were attempting to short these stocks, betting that the price would decrease. By driving up the price of the shares, retail investors forced some of these firms to sell their shares, increasing the share price even more.
- The takeaway: The squeeze on these stocks has been described by some analysts as a “David-versus-Goliath” scenario, in which smaller, individual investors moved the market and put pressure on big hedge funds betting against struggling companies. Additionally, the squeeze demonstrates the emergence of groups of investors collaborating on social media forums such as Reddit. Stash recommends following the Stash Way when you’re investing. Investing regularly in a diversified portfolio over the long-term can minimize your risk.
One-dose wonder. Johnson & Johnson announced last week that its single-shot Covid-19 vaccine demonstrated 66% efficacy against moderate and severe cases of the virus in a Phase III trial across the globe. The company’s vaccine also proved to be 85% effective against severe cases of the virus. Additionally, the candidate looks to be effective at varying levels in different countries. It demonstrated 72% efficacy in the U.S., 66% efficacy in Latin America, and 57% efficacy in South Africa. The Johnson & Johnson vaccine doesn’t use the mRNA technology used by Moderna and Pfizer, but rather a weakened common cold virus, to carry genetic information that generates an immune response. Johnson & Johnson could receive approval for emergency use in the U.S. by the end of February.
- The takeaway: While Johnson & Johnson’s trial results might seem less impressive than Moderna’s and Pfizer’s (which both delivered 95% efficacy in trials), experts reportedly say that Johnson & Johnson’s vaccine is still a viable option, especially since it showed high efficacy against severe cases. Johnson & Johnson’s candidate also requires only one dose instead of the two required by Moderna and Pfizer. Also, the Johnson & Johnson vaccine can be kept in normal refrigerators, as opposed to the freezers needed for the Moderna and Pfizer doses. Covid-19 has infected 26 million and killed 434,000 people in the U.S.
Zeroing in. Auto manufacturer General Motors said that it would sell only zero-emissions vehicles by 2035 and that its global operations would be carbon-neutral by 2040. The objective is reportedly a response to California’s goal to eliminate sales of gasoline-powered vehicles by 2035. California’s car market is one of the largest in the U.S. General Motors will replace the engines in its current models with ones powered by battery or hydrogen. Previously, General Motors said that it would spend $27 billion on the creation of 30 electric vehicles by 2025.
- The takeaway: The number of electric vehicles sold in the U.S. since Tesla first started making electric cars for consumers has steadily risen in recent years. Other car manufacturers, including Ford and Fiat Chrysler have made plans to shift their focus to the development of electric vehicles, especially as countries move to reduce their carbon emissions. General Motors’ latest plan is reportedly 10 years ahead of Ford’s.
WeWork’s latest plan. Office-sharing company WeWork could potentially make another attempt at going public after a failed attempt in 2019. WeWork is reportedly in talks with two different special-purpose acquisition companies (SPACs) to take the company public. SPACS are essentially shell companies that go public and later merge with another company, in this case WeWork, with the specific aim of taking the second company public. WeWork might also potentially stay private, with reported offers of new investor capital.
- The takeaway: In August, 2019, WeWork’s first attempt at an IPO floundered after its S-1 filing with the Securities and Exchanges Commission (SEC) showed that the company had hundreds of millions of dollars in debt, causing investors to question its $47 billion valuation. In response, the company’s founder Adam Neumann resigned as chairman and CEO of the company.
Find out what we covered in last week’s Scan.