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Daily Scoop

Movie Theaters’ Opportunity

By Tue, May 18, 2021

Hey Scoopers,

Concerns about higher-than-expected inflation returned to the market, and the stock market extended last week’s losses. — More on that in the “Overall Market” section.

Beyond the overall market, an EV maker started to see progress on its hydrogen fuel cars and truck orders. Meanwhile, a fintech giant’s senior notes announcement turned investors’ sentiment bearish toward the company. — More on that in the “What’s Up?” and “What’s Down?” sections.

By the way, streaming services’ movies are now on air in the closest movie theater to your house. — 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 red zone on Monday. Scroll down to the “Overall Market” section to read more.
  • Cryptocurrency: Bitcoin‘s price dropped to $44K per coin

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Extending Losses

The stock market started the week in the red zone.

After the rebound toward the end of the previous week, the concerns about rising inflation returned. The Nasdaq index started Monday on a four-week losing streak as the tech sector is still giving back gains. Furthermore, bottlenecks in the U.S. manufacturing supply helped to boost the markets’ higher inflation expectations.

Orders and Progress

So, what happened?

Shares of Nikola (Ticker: NKLA) were up by more than 6% on Monday. The rally came after the EV maker announced unexpected progress on its electric truck project. Its plans to make the hydrogen fuel breakthrough the mainstream revealed a letter of intent to purchase 100 trucks from interested buyers. Although losing more than 80% of its value since 2020 highs, it seems that the company is on the way to attract investors back.

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Increasing Debt

So what happened?

Shares of Square (Ticker: SQ) were down by more than 2% on Monday. The fintech giant announced it plans to offer $2 billion in senior notes. According to the company, it would deploy the money for general corporate purposes. However, investors didn’t like that the additional fresh capital would grow Square’s long-term debt to $5 billion. Furthermore, Bitcoin’s sharp drop over the weekend created additional pressure on Square’s stock.

Movie Theaters’ Opportunity

So what happened?

Netflix (Ticker: NFLX) announced it would allow its films to go on air in theaters.

Movie theaters believe blockbuster movies would have no problem drawing people back to the theaters. However, the pandemic caused delays in most Hollywood productions. Therefore, movie theater companies are looking at Netflix as an opportunity to eliminate the gap created by the pandemic until highly anticipated shows come back to big screens. Although the streaming service played a role as a competitor to movie theaters in the traditional film industry, Netflix now sees an opportunity to expand its revenue as the COVID-19 pandemic eases. The company announced it would display “Army of the dead” as its first production to appear in movie theaters.

Despite the rivalry between the two industries, both sides agreed the strategy is mutually beneficial. For movie theater companies, it is a strategy to encourage the public to go back to the movies. For Netflix, it is an opportunity to prove its movies’ quality is up to what the public expects from blockbuster movies.

Although unlikely to happen in the past, it seems that streaming services and movie theaters are finally partnering up.

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.