From Wall Street to Silicon Valley, these are the top stories that moved markets and had investors, business leaders, and entrepreneurs talking this week on Cheddar.
WORST WEEK SINCE OCT.
U.S. markets had a downright awful week, with the Dow putting in its worst five-day stretch since October. The selloff started after the Federal Reserve moved up its forecast for interest rate hikes, saying it expects to do a pair in 2023 — an acknowledgment that the economy is recovering more quickly than the central bank predicted just a few months ago and that rising inflation threatens to slow that recovery down. Fed Chair Jerome Powell said the economy isn’t “out of the woods at this point” but that the labor market is looking strong. He also said inflation is rising faster than the Fed expected, and the Fed’s forecast now calls for 3.4 percent inflation in 2021, up from the prior estimate of 2.4 percent. That sent sectors like energy and industrials that had been leading the recovery lower, with the broader market following suit. Then St. Louis Federal Reserve President James Bullard remarked that he expects the first rate hike to come as early as 2022. The S&P lost more than 1.5 percent on the week.
VAX STOCKS SINK
The big COVID vaccine makers also had a miserable week, led by Novavax. The Maryland-based biotech fell 8 percent after reporting extremely positive results for its forthcoming vaccine, as investors looked to take profits on a stock that was at one point up close to 200 percent over the last year. BioNTech, Pfizer, and Moderna also fell on the Novavax news, given that they’re likely to face a new competitor in the market. Pfizer fell the least of the bunch; that stock has been remarkably steady despite being the first out of the gate with a life-saving vaccine that is helping to end a global pandemic. PFE shares are up just over 5 percent on the year while the S&P is up about 13 percent.
SPACS TAKE NASDAQ
It was a fairly busy week for IPOs with two big names joining the Nasdaq. The cannabis review site Weedmaps and the at-home, genetic-testing powerhouse 23andMe both debuted on the exchange via SPACs. Weedmaps CEO Chris Beals said the company chose the SPAC route, merging with Silver Spike Acquisition Corp, in order to better “curate” its investor base. Weedmaps, which runs a SaaS platform for users to rate and buy from cannabis dispensaries in states where it’s legal — think Yelp for pot — received $579 million in a cash infusion in the deal. Meanwhile, 23andMe also went the SPAC route in its debut, merging with Richard Branson’s VG Acquisition Corp. in a deal that values the company at $3.5 billion. The stock spiked 21 percent on its first day of trade.
HONEST EARNINGS
Jessica Alba’s Honest Co. announced its first quarterly earnings release since going public, beating expectations on a narrower-than-expected loss and higher revenues, but showing signs of stagnation in some key areas. Honest’s diaper and wipes segment fell 2 percent year-over-year while digital sales rose just 2 percent, compared to 23 percent in the prior period. (The disappointing diaper sales were in line with Procter & Gamble’s numbers for its Pampers brand, for what it’s worth.) Honest has been branching out into new categories, which appears to be working. Sales of skin and personal care products and household and wellness products were up 42 and 53 percent year-over-year, respectively. The stock is trading roughly where it priced its IPO last month.
BOTTLEGATE
The sponsors of the Euro 2020 soccer tournament are learning a valuable lesson about endorsements in the social media era. Shares of Coca-Cola slipped after Cristiano Ronaldo — one of the biggest soccer stars in the world with a social media following numbering half a billion — swapped two bottles of Coke for a bottle of water at his post-match press conference, urging people to drink “agua.” The clip immediately went viral online, wiping about $4 billion off Coke’s market cap and upsetting the delicate balance of power between superstars and brands in the online era. (Ronaldo started a bit of a trend at the Euro; Italian star Manuel Locatelli copied his move with the Coke bottles, and Manchester United’s Paul Pogba removed a strategically placed bottle of Heineken beer from his presser.) Coke, of course, is too big to feel much long-term pain from a fleeting viral video; the beverage giant said in April its global case volume is already back to pre-pandemic levels and the stock is up more than 15 percent in the last year.
Cheddar has been following all things innovative, fascinating, and downright cool from CES 2022. Watch the full episode, hosted by Cheddar's Ken Buffa and Michelle Castillo.
Stocks closed lower on Friday as investors continue to worry over rate hikes. John Lynch, CIO of Comerica Wealth Management, joins Cheddar News' Closing Bell, where he says value is back in play with investors. Lynch also believes the market has overreacted to the latest Fed minutes, suggesting a bounce-back at some point.
Private equity firms in 2021 spent $401.71 billion in U.S. tech investments — doubling 2020's level of $196.34 billion. As tech becomes increasingly interwoven into our lives amid the pandemic, investors grow bullish on the sector, especially software-as-a-service companies. How will 2022 stack up to 2021, and is there potential for parts of the tech sector to sink this year? John Jannarone, Editor in Chief at IPO-Edge, joins Cheddar News' Closing Bell to discuss 2021's record year of deals, how potential interest rate hikes will impact tech investments in 2022, the fastest-growing IPOs, and more.
Bed Bath & Beyond delivered disappointing fiscal third-quarter results for 2022. Shares initially dove more than 9% in premarket trading on the news but finished the day up nearly 8%. Bed Bath & Beyond has been a meme-stock target for online investors in the past -- so was meme-stock mania a factor in the recent stock movement for the company? Jaime Rogozinski, the founder of the subreddit WallStreetBets, joins Cheddar News' Closing Bell for more, as his forum helped spark the meme stock phenomena. He also discussed some decentralized finance services and trends for the retail investor to watch for in 2022.
College athletes scored big in 2021 when they were finally allowed to begin earning money based off of their name, image, and likeness, known as NIL. But how can young athletes best manage their money so they can set themselves up for years of success? Nicole Pullen Ross, Head of Goldman Sachs Sports and Entertainment Solutions, joins Cheddar News' Closing Bell to discuss why financial management for college athletes is important, common pitfalls they could run into, and more.
December's jobs report was weaker than expected: the economy only added 199,000 nonfarm payrolls compared to an estimate of 422,000. However, the unemployment rate hit a new pandemic-era low of 3.9%, beating expectations. One thing to consider is the fact that the impact of the COVID-19 omicron variant is not factored into these results as the read is taken around the middle of the month. So — how might the variant impact job reports over the next few months? Mark Zandi, Chief Economist at Moody's Analytics, joins Cheddar News' Closing Bell to discuss December's jobs numbers, his 2022 labor market outlook, how COVID-19 will continue to impact the labor market, and more.
Digital medical care provider Pear Therapeutics rang the closing bell on the Nasdaq Friday and President and CEO Dr. Corey McCann, joined Cheddar to talk about how the company plans to grow the business of software-based therapeutics and how the first FDA authorized prescription digital therapeutics company will go about treating illnesses like insomnia and addiction. "These really are pieces of software. In many cases, they're apps and in the cases of our addiction products, these are based on something called cognitive behavioral therapy or CBT," he said. "These products change the patient's brain circuitry to help them be abstinent, to help them stay in treatment, and that's exactly what we see in randomized clinical trials and that's what we see in the real world." He also addressed the ongoing mental health crises brought on by the pandemic. **copy updated to remove IPO information as Pear Therapeutics went public in December**
Gamestop shares were up on The Wall Street Journal report that the video game retail company plans to enter the NFT and crypto space. Adam Hollander, the founder of Hungry Wolves NFT, joined Cheddar to break down how it could be a lifeline for the struggling meme stock darling. "They're not resigning themselves to becoming the next Blockbuster story, and so while people may not be buying as many video games in a retail environment anymore, NFTs, in particular, people are starting to expect more gaming utility on the backend — at least for a variety of projects — and I personally think its a very smart move for them to do this," Hollander told Cheddar.
On Saturday, New York will join neighboring New Jersey and Connecticut in authorizing mobile sports betting. Matt Kalish, president and co-founder of Draftkings North America, joined Cheddar to talk about the landmark change that is estimated to rake in $500 million in annual tax revenue on a potential billion-dollar market. Kalish also addressed the possibility that legalized sports betting in the Empire State could cannibalize his company's revenues in the bordering states. "It's pretty inconvenient, you know, to go across the border to make a bet. And people were doing it, but I think it really stifled a lot of the opportunity," he said. "So while there's some of that going on, I think really a tremendous amount, like a giant percent, of New York will be very incremental."
