Company News for Apr 30, 2021

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Why Merck Stock Dropped Today

Pharma giant Merck (NYSE: MRK) released a disappointing first-quarter 2021 earnings report on Thursday, and as a result, the company’s stock took a bit of a dive today. Merck’s results were unimpressive in more ways than one. Meanwhile, Merck’s adjusted earnings per share (EPS) was $1.40, representing a 7% decline compared to the year-ago period.


Tesla slips below 10% of Cathie Wood’s flagship fund

Cathie Wood’s flagship Ark Innovation fund has allowed its stake in Tesla Inc, its largest holding, to slip below 10% this week for the first time in over a month. Tesla made up 9.7% of the Ark Innovation ETF as of Thursday, down from 10.9% a month ago, with a net sale of about 252,000 shares over that period, according to portfolio listings on the website of fund manager Ark Invest. The fund’s remaining Tesla stake is worth $2.4 billion.


Wall Street Week Ahead: Blow-out U.S. earnings suggest market has room to run

U.S. companies are leaping above expectations on first-quarter earnings, giving investors stronger confirmation that profit growth will be able to support the market this year. A big piece of that growth is coming once again from technology and growth companies, which suggests greater durability in companies that underperformed more economically focused value names for months. With results in from more than half of the S&P 500 companies, earnings are now expected to have risen 46% in the first quarter from the previous year, compared with forecasts of 24% growth at the start of the month, according to IBES data from Refinitiv.


Buffett’s Berkshire rebounds from pandemic’s depths, buys back more stock

Warren Buffett’s Berkshire Hathaway Inc said on Saturday its earnings are rebounding from the worst effects of the COVID-19 pandemic and that it has extended its aggressive stock repurchases with $6.6 billion of new buybacks. Indeed, Berkshire said many businesses are enjoying “considerably higher” earnings and revenue, while others such as the Precision Castparts aircraft parts unit still struggle. “Results were really good,” said Jim Shanahan, a Edward Jones & Co analyst with a “buy” rating on Berkshire.


Novavax Vaccine Results Will Put 1,190% Stock Surge to Test

(Bloomberg) — The upcoming release of Novavax Inc.’s Covid-19 vaccine trial results may not only help provide additional pandemic relief across the globe, it could also validate investor support that buoyed the stock by 1,190% over the past year.The biotech firm said in March its shot could get cleared by the Food and Drug Administration for emergency use as early as May. To hit its May target, Novavax may need to submit data to the FDA within the next week or so. It may take regulators then several weeks to review the results and decide on whether to grant an authorization, based on timelines of previous U.S. Covid-19 vaccine clearances.If that materializes, the company will have the fourth Covid-19 vaccine in the U.S. in addition to shots from Pfizer Inc. with its German partner BioNTech SE, Moderna Inc. and Johnson & Johnson.Novavax representatives declined to comment on the upcoming results and timeline for the release of trial data.Novavax may have lost the race on vaccinating millions of Americans with more than 230 million doses administered stateside but a successful trial can still help developing nations like India and Brazil where shots are in high demand as infections hit record levels. U.S. President Joe Biden said Tuesday that upcoming vaccines, including one from Novavax, could be shared with other countries.Novavax’s shares skyrocketed last summer when it became one of the front-runners in the race to develop an inoculation against the coronavirus. But it has since trailed behind U.S. market leaders both on production and on a valuation standpoint.Moderna, which secured an emergency authorization in December, now trades at roughly four times Novavax’s market value of about $17.6 billion, while Germany’s BioNTech is worth $43 billion. CureVac N.V., another vaccine hopeful that’s also been buoyed by its ties to Tesla Inc., has a valuation of about $21 billion.Encouraging OutlookVaccine results outside of the U.S. have shown promise. In a 15,000 person U.K. trial, Novavax’s shot demonstrated 89.7% effectiveness in preventing symptoms of the disease. And with the rise of resistant variants, the bar for the upcoming North American trial has been set lower, where 80% effectiveness would be a “home run,” according to Sam Fazeli, a Bloomberg Intelligence analyst.“What’s very encouraging is the efficacy of 96.4% versus the previous versions of the virus and 86.3% against the U.K.-prevalent B.1.1.7 variant — 57% of infections in the trial. There were five cases of severe Covid-19 in the final analysis, suggesting the vaccine has 100% efficacy similar to other vaccines being rolled out, which is not surprising given its success against milder disease,” Fazeli said.Novavax fell 2.8% to $237.53 on Thursday, after closing at a high of $319.93 in early February. The shares had six buy ratings, one hold and zero sell recommendations among analysts tracked by Bloomberg.Expectations for further gains in the stock has added pressure on short sellers who have more than $1.1 billion worth of outstanding bets against the company as of April 29, according to S3 Partners data. So far this year Novavax short sellers have lost more than $800 million, according to Ihor Dusaniwsky, S3’s managing director of predictive analytics.“Price strength will probably force even more shorts out of their positions,” Dusaniwsky said in an interview.(Updates with closing share price moves throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.


Analysis: New meme stocks swing as shorts and retail investors face off again

Recent volatility in a handful of so-called meme stocks is putting the spotlight back on the tussle between individual investors and short sellers, months after a wild ride in GameStop captivated Wall Street’s attention. Stocks that have notched big swings this month include laser-manufacturer MicroVision Inc, a favorite on Reddit’s popular WallStreetBets forum, whose shares have risen as much as 170% since April 20 before tumbling in recent days. Those moves do not approach the stunning, nearly 1,700% gain in video game retailer GameStop Corp in January, which was fueled in part by a flurry of buying that forced hedge funds like Melvin Capital to unwind their bets against the stock, sending it higher.


Coinbase Backer Parlays ‘Fantasy’ Bet Into $4.6 Billion

(Bloomberg) — Before his bet on cryptocurrency exchange Coinbase Global Inc. became a multi-billion-dollar exit, Union Square Ventures co-founder Fred Wilson compared Bitcoin to science fiction.“We may be completely wrong, it may be a fantasy,” he said at a marketing conference in May 2013. That was shortly after he had invested $2.5 million in Coinbase, the U.S.’s biggest cryptocurrency exchange, where people can buy and sell Bitcoin and other digital tokens such as Ethereum and Litecoin. “It’s straight out of a sci-fi novel, but sci-fi novels are the best things you can read if you want to invest,” Wilson said. “It’s a gut bet.”Eight years later, Wilson’s wager became Union Square’s most profitable exit. Earlier this month, Coinbase listed on Nasdaq and soared to $328.28 a share, catapulting the company’s valuation on a fully diluted basis to about $86 billion. That’s a ten-fold increase from its last public funding round in 2018 and valued Union Square’s stake at $4.6 billion by the end of the first trading day.Wilson will have to listen carefully to his gut to navigate the volatile cryptocurrency market and Coinbase’s rocky debut. But the large volume of cryptocurrency trading is good for boosting Coinbase’s revenue, and Bitcoin has been rallying again after hitting its lowest level since early March. Wilson has said that “one of the hardest things in managing a venture capital portfolio is managing your big winners.” On the day of the Coinbase listing, Union Square Ventures sold 4.7 million shares for $1.8 billion, according to securities filings.Coinbase isn’t Wilson’s first foray into a nascent technology trend but it’s certainly the largest payout. His New York-based venture capital firm has invested in more than 100 businesses and has had 10 public exits since the firm’s inception in 2003. Nine of those have reaped billion-dollar valuations on the day of their stock market debut, according to data from PitchBook and Securities and Exchange Commission filings compiled by Bloomberg.Wilson was an early believer in the social networks that defined the 2010s and oversaw Union Square’s biggest successes, including Twitter Inc.’s $24 billion valuation after the company went public in 2013, boosting the value of the firm’s stake to $1.2 billion, online gaming company Zynga Inc.’s $7 billion IPO in 2011 and Tumblr’s $1.1 billion purchase by Yahoo!.“Fred is driven by intellectual curiosity,” said Zynga founder and chairman Mark Pincus. “He didn’t get involved for the money.”Wilson declined to be interviewed for this article saying he doesn’t “think investors should be the focus of attention when the entrepreneurs and management create all of the value.”Union Square’s latest iteration of its investment philosophy homes in on companies with strong communities that “broaden access to knowledge, capital and well-being,” according to the firm’s website. “Coinbase is at the center of this” said Angela Lee, chief innovation officer at Columbia Business School where she teaches venture capital and leadership courses. “Most venture capital firms deviate from their investment thesis. Union Square is very disciplined. They’re very smart about taking a trend and breaking it into components.”Wilson began investing in 1987 at Euclid Partners, a small venture capital firm in New York, recalling it “wasn’t a stellar start” to his career, he wrote in his blog in 2008. Then the internet came along. Wilson co-founded Flatiron Partners with Jerry Colonna in 1996 and together they invested $150 million into early stage internet deals that turned into $750 million in the span of three years, according to Wilson’s blog post. “We were undisciplined and not diversified,” Colonna said in an interview. “We were a little too enthusiastic.” Colonna is now the CEO of executive coaching firm, where his work was described in a Wired article as: “This man makes founders cry.”Flatiron folded in 2001 during the dot-com bust, but Wilson carried those lessons to Union Square, Colonna said. “Fred’s not a Vegas gambler. He doesn’t throw darts at the wall and doesn’t just tag along to other people’s investments.”Wilson’s belief in connecting ideas, people and experiences on the internet through networks was in motion even before social media startups made it into his portfolio. The native New Yorker’s networking ethos was born out of the post-dot-com bubble era that ushered in early social networking startups or “Web 2.0” companies like Friendster, Orkut and His views were first put into practice when he started his popular blog, AVC, in September 2003, shortly before he co-founded Union Square with Brad Burnham.Though his early posts revolved around family, hobbies and music, the blog expanded into tech, business and management and became a vehicle for sourcing investment ideas and connecting with entrepreneurs, he said in a March 2006 episode with Businessweek’s Cutting Edge podcast. “The process of writing helps me crystallize my thoughts about what’s interesting and what’s not interesting, what’s potentially strategic and what’s potentially risky about a particular sector.”One of Wilson’s earliest musings on cryptocurrency was in 2011, when he wrote that “an alternative currency with roots in peer to peer networks and based on an algorithm that is transparent to everyone is an idea whose time has come.” Union Square’s founding theory of seeking out emerging, fast-growing online communities has since evolved beyond original social media to include other blockchain and cryptocurrency startups like Stacks 2.0, an open network for decentralized apps and contracts on the blockchain, and even CryptoKitties, an Ethereum-based virtual game that allows players to adopt, raise, and trade virtual cats that kickstarted the craze for non-fungible tokens, or NFTs.Coinbase’s breakthrough listing was the buzziest investment in recent years for Wilson, whose enthusiasm has been more measured compared with crypto evangelists like investor Mike Novogratz or the Winklevoss brothers who started the Gemini digital asset exchange.In January 2018, Wilson wrote about locking in profits at a time when Bitcoin was taking off. “I know that many crypto holders think that selling anything is a mistake. And it might be. Or it might not be. You just don’t know,” he said. By the end of that year, Bitcoin had plunged over 70%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.


Colombia’s Debt Is Already Trading as Though it Were Junk

(Bloomberg) — Colombia’s dollar bonds are being priced as though they were already junk as investors bet that the government will fail to raise taxes enough for the country to cling onto its investment-grade credit rating.The nation’s international bonds are the worst performers in Latin America since a tax bill was introduced two weeks ago, to widespread opposition. Colombia’s borrowing costs are roughly in line with those of junk-rated nations such as Brazil, Guatemala, Uzbekistan and Azerbaijan, reflecting pessimism that the Andean nation will be able to slash its deficit.“What we have to show markets as a country is that we are capable of solving a situation all the world is facing,” President Ivan Duque said Friday in a radio interview on La FM. The nation needs to reach agreements that will “stabilize finances to guarantee its investment-grade rating.”The peso fell nearly 1% against the dollar Friday, adding to a sell-off that has made it the worst-performing currency in emerging markets this week. The benchmark Colcap stock index dropped for a third-straight trading session. With assets falling, the central bank is widely expected to keep its key rate at a record low of 1.75% when it meets Friday.The Colombian government had sought to raise as much as an average of 2.2% of gross domestic product per year over the next decade through tax rises and curbs on spending. But strong opposition to the bill in congress and from street protesters forced the government to cut many of the key measures to raise revenue.With investors pricing in a high likelihood of a ratings downgrade, the country’s average sovereign bond spread has widened by 20 basis points this month, to 2.31 percentage points over U.S. Treasuries, according to data compiled by JPMorgan. The average risk premium for investment-grade nations is 1.47 percentage points.“Market participants will be watching closely to gauge just how much dilution of the administration’s proposal takes place,” UBS Global Wealth Management economists Alejo Czerwonko and Brennan Azevedo wrote in a note this week. “Savings below 1% of GDP are widely considered to meaningfully increase the chances of rating agencies taking action.”The tax bill hasn’t faced a first debate in congress but it’s already on the ropes with virtually all political parties opposing it, including Duque’s own Democratic Center party. Its opponents object to increasing taxes on the middle class, and parties are disinclined to back painful and unpopular measures ahead of presidential and congressional elections next year.Thousands hit the streets on Wednesday protesting the plan with some demonstrations continuing Thursday, even as the country suffers record numbers of deaths related to the coronavirus.Many Latin American nations are also grappling with deficits that ballooned during the pandemic, but unlike Brazil, Mexico, Chile and Peru, Colombia’s deficit will widen rather than narrow this year, according to forecasts from the International Monetary Fund.Record DeficitThe economy suffered its biggest contraction in history last year, and the government estimates Colombia’s fiscal deficit will widen to more than 9% of GDP this year, from 2.5% in 2019, before the pandemic. Finance Minister Alberto Carrasquilla is talking with lawmakers to save the bill, but many are demanding that it be scrapped entirely.Colombia is currently rated one notch above junk by Fitch Ratings and S&P Global Ratings. Both agencies have said the bill is key for the country to guarantee fiscal sustainability, and S&P has warned that it could act on its negative outlook over the next 12 months if the deterioration of public finances is not reversed.(Adds president’s comment in 3rd paragraph, peso move in fourth)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.


Copper Extends Rally to Top $10,000 With All-Time High in Sight

(Bloomberg) — Copper topped $10,000 a metric ton for the first time since 2011, nearing the all-time high set that year as rebounding economies stoke demand and mines struggle to keep up.Prices rose as much as 1.3% to $10,008 a ton on the London Metal Exchange, before slipping back to trade near unchanged. The metal hit a record $10,190 in February 2011.Copper has been among the best performers in a month where metals ranging from aluminum to iron ore have surged to the highest in years. The rally is being fueled by stimulus measures, near-zero interest rates and signs that economies are recovering from the virus pandemic. A push toward cleaner energy sources is also seen boosting consumption of copper, used in everything from electric vehicles to solar power systems, further straining supplies.“This is a remarkable run for copper in terms of magnitude and consistency,” said Tai Wong, head of metals derivatives trading at BMO Capital Markets. “The all-time high at $10,190 is just around corner and now practically a foregone conclusion.”Investors have piled into copper, with aggregate open interest in Shanghai Futures Exchange copper contracts at the highest in more than a year and hedge fund managers boosting bullish Comex copper bets in the week ended April 20.With copper demand set to soar once more, there are mounting concerns that producers will struggle to plug the gap as they battle a host of technical and regulatory pressures. In the longer term, producers worry that plans to boost mining royalties could stifle investment.Prices have doubled from lows in March, along with a surge across raw materials from oil to agriculture. That’s spurring debate about whether the current boom may herald a so-called commodities supercycle.It has also helped push mining shares to multiyear highs.“The copper price has gone stratospheric and probably has further to go, which is a boon for miners who are currently making at least two dollars for every one they spend getting metal out of the ground,” said Robert Edwards, Principal Analyst, base metals at CRU Group.Copper pared earlier gains as the dollar advanced, reducing the appeal of the metal for investors holding other currencies. For the day, the metal rose 0.1% to settle at $9,885 a ton on the LME. Other metal were mixed in London, with aluminum climbing to a three-year high and nickel falling.“The copper rally still has legs to go,” said Wenyu Yao, senior commodities strategist at ING Bank. “The outlook for the U.S. economy keeps getting better. Economic reopening coupled with massive stimulus, faster-than-expected vaccine rollouts and supportive fundamentals all point to even higher prices.”With copper prices nearing record highs, Newmont Corp., the world’s largest gold producer, is looking to increase output of the metal through several “mega projects,” Chief Executive Officer Tom Palmer said on an earnings call Thursday. Even if just one materializes, copper will account for 15-20% of the company’s total output by the end of the decade, he said.“I’m pretty excited about having good exposure to copper at that time when the world is going through the energy transition,” Palmer said during an interview with Bloomberg TV after the earnings call. “I think copper’s got a pretty good story in front of it. I think its day in the sun is more toward the end of this decade.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.


AstraZeneca says on track to deliver on COVID shots as sales hit $275 million

AstraZeneca said its COVID-19 vaccine sales were $275 million in the first-quarter and it is on track to deliver 200 million doses a month from April, as better-than-expected results and a second half growth forecast boosted its shares. Chief Executive Pascal Soriot again defended the vaccine rollout on Friday, saying that Anglo-Swedish drugmaker had not overpromised on its ability to supply shots, as he defended big cuts in deliveries that prompted a European Union lawsuit. AstraZeneca, which has said it will not make a profit from the shot during the pandemic, was reporting financial details of distribution and sales of the vaccine it developed with Oxford University for the first time.


Barclays Shares Slump as Debt Trading and Expenses Disappoint

(Bloomberg) — Barclays Plc fell the most among European banks on Friday after the bank’s debt trading revenue and expense forecast disappointed investors.Revenue from fixed income, currency and commodities trading slumped 35% in a quarter that saw U.S. rivals post double-digit growth. Shares fell as much as 7.5% as the bank missed its target on a key expense ratio and warned costs will rise this year above 2020 levels. “The old problem of Barclays cost profligacy has clearly returned,” said Edward Firth, an analyst at Keefe, Bruyette & Woods.While the firm posted a 65% jump in equity trading and record investment banking fees, the debt trading slump meant corporate and investment bank income was broadly flat.“A mixed result,” Chief Executive Officer Jes Staley said of the investment bank’s performance in a Bloomberg Television interview Friday. “In our FICC business we were slightly off a very strong first quarter last year.”It follows a recent hot streak on Wall Street and at some European peers, who were boosted in the first quarter by securities trading, special purpose acquisition companies and tech-company stock offerings. French rival BNP Paribas SA also reported Friday, revealing it too missed out on the global fixed-income rally.“We thought the outperformance in corporate and investment bank relative to consensus could have been stronger following the U.S. banks,” said John Cronin, an analyst at Goodbody.Shares in Barclays were down 6.2% at 12:46 p.m. in London trading. The stock is still up 21% since the start of the year.Staley said the cost increase in the quarter was linked to compensating investment bank staff for their performance. “It’s a very controllable number so if our performance weakens we can take it right down again,” he said.A review of the bank’s real estate needs as more staff work from home is due within months and could lead to onetime charges in future, finance director Tushar Morzaria told reporters.More ProvisionsBarclays also took a further 55 million-pound charge for doubtful loans, departing from British rivals including Lloyds Banking Group Plc and NatWest Group Plc who released provisions this week, but said impairment charges this year will be “materially below” 2020 as the pandemic starts to abate. “We are trying to be prudent,” said Morzaria.Staley said the bank could release some provisions later in the year “if the economy continues in the current path.”However, the firm cautioned of “headwinds” persisting at Barclays UK, where income fell 8% in the first quarter. While Covid-19 cases in the U.K. are at the lowest level in months and half the population are at least partly vaccinated, officials have raised concerns that new variants might evade vaccines and jeopardize the return to normal life.“There is a lot of cautious commentary on the update in relation to the demand for unsecured lending, driving an uncertain income outlook,” according to Cronin.Staley has grown the corporate and investment bank as a hedge during times of economic crisis. He promoted C.S. Venkatakrishnan and Paul Compton last year to further develop the division and has reaped rewards from the past year of pandemic-driven volatility and a rush of companies tapping wide-open capital markets.Other highlights:Corporate and investment bank total income broadly flat at 3.6 billion poundsGroup pretax profit 2.40 billion pounds, up from 913 million pounds a year agoConsumer, cards and payments income was down 22%. “It will take time to get to pre-pandemic levels in credit cards,” said Staley.Barclays isn’t exposed to the Archegos Capital Management LP meltdown. “We are fortunate and avoided issues. Credit to our risk team,” Staley said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.


Donovan Larsen

Donovan is a columnist and associate editor at the Dark News. He has written on everything from the politics to diversity issues in the workplace.

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