$81 Billion Mistake
By Tue, May 25, 2021
Hey Scoopers,
Although inflation concerns persisted, the stock market started the week with signs of recovery. — More on that in the “Overall Market” section.
Beyond the overall market, an agreement to research autonomous driving equipment turned investors’ sentiment bullish toward an EV maker. Meanwhile, an eCommerce platform is looking for fresh capital to stay operational. — More on that in the “What’s Up?” and “What’s Down?” sections.
By the way, have you heard of AT&T’s $81 billion mistake? — More on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
Market Recap
- U.S. markets: The stock market ended in the green zone on Monday. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: After dropping under $31K per coin on the weekend, Bitcoin‘s price rebounded to $38K per coin.
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Recovery Signs
The stock market ended in the green zone on Monday.
Although investors’ concerns about higher-than-expected inflation stayed around, the stock market recovered from last week’s losses. Despite the concerns hitting hard on growth stocks last week, the Nasdaq index outperformed the markets to increase by 1.41%. However, analysts are concerned that the April Price Consumption Expenditures (PCE) report could lead to another tech stock selloff later this week.
Never Too Late
So, what happened?
Shares of Tesla (Ticker: TSLA) were up by more than 4% on Monday. Along with a bullish day in the stock market, the EV maker reportedly reached an agreement with Luminar Technologies (Ticker: LAZR). According to the agreement, the two companies would co-work to develop and test laser-sensor technologies for Tesla’s autonomous driving feature. Although investors criticized Tesla’s CEO Elon Musk for delays in the technology, it seems that their sentiments turned bullish toward the company’s long-term self-driving technology development.
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Uncontrollable Expenditures
So what happened?
Shares of Shift Technologies (Ticker: SFT) were down by more than 11% on Monday. The plunge came after the used-car eCommerce platform announced a convertible debt offering. According to the official press release, the company wants to raise $75 million in fresh capital. Although notes are typical to obtain capital, the value corresponds to almost 50% of the company’s cash flow. After spending twice as much on marketing as its gross profit, it seems that Shift is trying to use the notes to cover its runaway expenditures.
$81 Billion Mistake
So what happened?
AT&T (Ticker: T) is leaving the entertainment industry.
After acquiring WarnerMedia in 2018 for $81 billion, the telecom giant failed to establish a successful streaming business. Not confident in its media sector’s future, the company entered an agreement with Discovery (Ticker: DISCA) to merge its entertainment sector with Discovery’s broadcasting business. According to the telecom, the deal would combine both companies’ assets into a new publicly traded company. Along with the merger, AT&T would receive only half of what it paid for Warner. Although analysts believe that AT&T would employ the money in its 5G business development, it is clear the company lost the timing due to its attempt to score in the content business. When questioned about the decision, AT&T CEO John Stankey affirmed the merger would allow its media assets to reach global markets with a more profound content library.
Although failing to profit from the media business, it seems that AT&T doesn’t want to let it go without any returns.
If you have any questions, or suggestions let us know by emailing us at members@tradestocks.com. We look forward to hearing from you.
About the Author
Felipe Nebesnyj is an Economics student who is passionate about the stock market and investing in the market. Originally from Brazil, he is working and studying in the U.S. and started learning about and researching the stock market at 16. Before joining Stock Card, Felipe worked on multiple stock market research projects that gave him the necessary knowledge and confidence to put into his stock market analyst career at Stock Card. Last but not least, he is an excellent violinist and enjoys video games.
