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.
RALLY PAUSES EVEN AS VACCINES MOVE FORWARD
U.S. markets ended the week with relatively minor losses, pressing pause on the relief rally that was fueled mainly by the hope that the end of the pandemic is in sight. Those hopes were solidified when, to kick off the week, Moderna said that the interim results of its Phase 3 vaccine trials were extremely promising - 95 percent efficacy in stopping the coronavirus from infecting patients - compared to Pfizer’s 90 percent efficacy. (Pfizer later revised its own interim results, saying its vaccine is actually 95 percent effective, too.) Both shots use groundbreaking mRNA technology that has never before been used in an approved vaccine. Pfizer submitted its vaccine candidate, which is being produced in collaboration with the German firm BioNTech, for an emergency use authorization to the FDA on Friday. That starts the clock on the review process that could result in the first doses being shipped by Christmas.
CLEARED FOR TAKEOFF
The FAA cleared Boeing to resume flying its 737 MAX jetliner, 20 months after the entire fleet was grounded following two fatal accidents that killed 346 people. It will probably take months for Boeing to get the planes back in the air, and other regulatory agencies around the world still need to give their own sign-offs, but the ruling from the FAA effectively put to bed the biggest corporate crisis in Boeing’s history -- one that led to a CEO replacement, congressional investigations, lawsuits, formal apologies to victims’ families, and a share price that has still not recovered. The head of the FAA said he was happy with the changes Boeing made to the 737 MAX software system known as MCAS that was behind the two crashes, adding: “I am 100 percent comfortable with my family flying on it.” Even once Boeing is able to retrofit its MAX fleet with the required changes and train pilots on new procedures, the airplane maker still faces the reality of an extremely soft market for air travel that is likely to continue until mass vaccinations have occurred, likely well into 2021.
TESLA INVITED TO THE ADULT TABLE
Tesla is ending the year as it began: on fire (in a good way). The stock was up another 20 percent in the past week, hitting a new all-time high on Thursday as investors prepared for the electric-vehicle company to be added to the S&P 500 next month. Tesla shares are up 500 percent in 2020, giving the company a market capitalization approaching $500 billion. Tesla is by far the most valuable carmaker in the world, despite producing a fraction of the product of competitors such as GM and Toyota. Tesla will officially join the S&P on Dec. 21, which could fuel a further rally based on demand from large-cap mutual funds that do not currently hold the stock. Meanwhile, in further evidence that the legacy automakers see a future that does not revolve around an internal-combustion engine, GM said it would increase its investments in electrifying its fleet by another $7 billion over the next five years and will bump up the release dates for new electric models from its Chevy and GMC brands.
MEDIA MACHINATIONS
WarnerMedia was the latest media conglomerate to fire a warning shot over the future of big-screen entertainment in a post-COVID world. The sequel to Wonder Woman will debut Christmas Day, simultaneously in theaters (where they are still open), and on HBO Max at no additional cost to subscribers. Wonder Woman 1984 will become among the highest-profile tentpole films of the year to premiere directly on a streaming service, and the biggest by far to be distributed to subscribers without an add-on fee. WarnerMedia is hoping that a bump in new subscribers for HBO Max will outweigh whatever revenue is lost from having a big theatrical run -- which would be all but impossible anyway, given the state of the pandemic. The success or failure of the DC superhero flick could help answer one of the biggest existential questions in Hollywood: will movie fans flock to the multiplex once this is all over, or is streaming the future of the blockbuster? On the other end of the media spectrum, Verizon and BuzzFeed entered into a tie-up that will see Verizon Media selling HuffPost to BuzzFeed. Verizon will also take a stake in BuzzFeed, and the two companies will use each other’s platforms to syndicate content in a bid to gain scale. Digital media brands, of which HuffPost and BuzzFeed are elder statesmen at this point, have been fighting against the increasingly unstoppable Google-Facebook duopoly when it comes to ad dollars.
BITCOIN BULL RUN
One bitcoin could now get you a small car. The price of the cryptocurrency crossed $18,000 this week, a level that hadn’t been seen since the crypto bubble burst in early 2018. The all-time high is just under $20,000, which is now in sight. Bitcoin is up more than 150 percent in 2020 as the digital coin has gained legitimacy as a hedge against inflation, as well as macro-political and economic risks. To wit, investment managers at BlackRock and Deutsche Bank came out this week and acknowledged that Bitcoin could eventually take the place of gold as an alternative global store of value, given that it’s just a whole lot easier to buy and sell the digital coin than it is to pass around a bar of gold.
