Too Short
By Thu, Feb 6, 2020
Hey Scoopers,
We had one more green day in the stock market, with a twist that the Dow took the leading position, followed by the S&P 500 index. Quite, atypical, the Nasdaq followed suit and finished the day in the third-place — more on that in the “Overall Market” section.
Beyond the overall market, one pharmaceutical company won a patent battle, and several online advertising platforms blamed the shorter holiday season for their lower than expected performance in the latest quarter — more on that in the “What’s Up?” and “What’s Down?” sections.
Oh, and by the way, Tesla did what it does best and we all knew it was going to happen — 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: All three indices agreed on the direction and finished Wednesday in the green. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: Not sure what to tell you and how to explain it, but Bitcoin’s price is nearing the $10,000 mark.
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The Dow took the lead.
JTNDaW1nJTIwc3JjJTNEJTIyaHR0cHMlM0ElMkYlMkZtZWRpYS5naXBoeS5jb20lMkZtZWRpYSUyRkhtQ05iVjJldk5ra00lMkZnaXBoeS5naWYlMjIlM0U=For quite a few days, we noticed the Nasdaq leading the daily gains, outpacing its fellow indices. On Wednesday, it was finally the Dow’s turn to take the lead. Fueled by more than 3% gain in the Energy sector and more than 2% gain in the Financial Services sector, the Dow wrapped Wednesday more than 1.6% higher than where it started the day.
Why did this happen?
The energy stocks were among the losers of last week’s coronavirus hysteria. In the last few days, we discussed how coronavirus has slowed down travel demand, and when there is no travel demand, there won’t be much demand for fuel. That’s why oil prices fell and dragged energy stocks with it. But, of course, that was just a temporary market sentiment. The oil prices recovered, so did almost all oil and energy stocks and the Dow had those stocks to thank for its daily gain on Wednesday.
The patent battle won.
So, what happened?
Shares of Biogen (Ticker: BIIB) were up more than 17% on Wednesday. The company was on the verge of losing its patent in a patent battle with Mylan for its key drug and money-maker, Tecfidera. However, the U.S. patent officials agreed to allow the company to keep a key patent covering Tecfidera for several more years. There is nothing in this world that investors like more than legally protected competitive advantages such as patents. Hence, the stock’s surge to the sky on Wednesday.JTNDc2NyaXB0JTIwc3JjJTNEJTIyaHR0cHMlM0ElMkYlMkZ3aWRnZXQuc3RvY2tjYXJkLmlvJTJGanMlMkZzYy13aWRnZXQuanMlMjIlMjB0eXBlJTNEJTIydGV4dCUyRmphdmFzY3JpcHQlMjIlM0UlM0MlMkZzY3JpcHQlM0UlM0NkaXYlMjBjbGFzcyUzRCUyMnNjLXdpZGdldC1jb250YWluZXIlMjBzY19sYXJnZSUyMiUyMGRhdGEtdGlja2VyJTNEJTIyQklJQiUyMiUyMGRhdGEtdG9rZW4lM0QlMjJUTmNwcks3TjcxWGltUGpDSnFickQyNVhnV3YyJTIyJTNFJTNDJTJGZGl2JTNF
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The shorter holiday season is to blame.
So, what happened?
Shares of Snap (Ticker: SNAP) were down approximately 14% on Wednesday. The company had a lower than expected advertising revenue in the last quarter and blamed the shorter holiday seasons for its performance. The company may be onto something, and this may not be an excuse. Even Alphabet (Ticker: GOOG / GOOGL) had $1 billion lower revenue in its latest quarter.
Now all eyes are on Twitter (Ticker: TWTR) that is announcing its quarterly earnings this week, and maybe falling victim to the same shorter holiday season.JTNDc2NyaXB0JTIwc3JjJTNEJTIyaHR0cHMlM0ElMkYlMkZ3aWRnZXQuc3RvY2tjYXJkLmlvJTJGanMlMkZzYy13aWRnZXQuanMlMjIlMjB0eXBlJTNEJTIydGV4dCUyRmphdmFzY3JpcHQlMjIlM0UlM0MlMkZzY3JpcHQlM0UlM0NkaXYlMjBjbGFzcyUzRCUyMnNjLXdpZGdldC1jb250YWluZXIlMjBzY19sYXJnZSUyMiUyMGRhdGEtdGlja2VyJTNEJTIyU05BUCUyMiUyMGRhdGEtdG9rZW4lM0QlMjJUTmNwcks3TjcxWGltUGpDSnFickQyNVhnV3YyJTIyJTNFJTNDJTJGZGl2JTNF
We all knew it was coming.
JTNDaW1nJTIwc3JjJTNEJTIyaHR0cHMlM0ElMkYlMkZtZWRpYS5naXBoeS5jb20lMkZtZWRpYSUyRnhUMzlEaEJ2SzkyT0llRnNWRyUyRmdpcGh5LmdpZiUyMiUzRQ==So what happened?
What are we talking about? What was the thing we all knew was coming? Tesla Model 3 delays.
Did it happen then?
Share of Tesla (Ticker: TSLA) dropped 17% on Wednesday. And, even Elon’s Beautiful dance moves couldn’t convince investors that the stock should keep on soaring. What makes us wonder is what did the investor thinks would happen. Of course, Tesla will delay its production.
That’s what Tesla does; create excitement, make the news, add to the hype, rally the fans, and then underdeliver. But, don’t you worry. We are sure sooner or later the cycle renews. Something awesome happens, good news goes viral, some excitement and hype get spread over the market, and the stock price surges once more …
The moral of the story is that if you are an investor in Tesla, be clear about your intentions. It’s either because you are supporting Elon, or you are in it for the fun of it. This is not a stock that you can assess for the quality of its operations or the size of its opportunity. It’s just Tesla, and Tesla does what Tesla does best. Fluctuates …Disclosure: Authors of this Scoop own shares of Biogen (Ticker: BIIB), Alphabet (Ticker: GOOG / GOOGL), Twitter (Ticker: TWTR), and Tesla (Ticker: TSLA).
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
