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.
S&P MAKES ROOM FOR TESLA
U.S. markets closed out Friday with a flurry of activity, all thanks to Tesla. The electric vehicle maker that’s been having a better 2020 than just about anyone will be added to the S&P 500 effective Monday morning in the largest rebalancing ever of that index. Ahead of the move, some 130 million shares of Tesla had to be purchased at the market close, making for an active end to a week that still saw markets slide from their record highs. Aside from Tesla, investors were hopeful that a new stimulus deal would be reached in Congress over the weekend or soon thereafter — for real this time. A fiscal rescue package cannot come soon enough for the 10 million-plus Americans currently out of work, nearly another 900,000 of whom were added to the unemployment rolls in the prior week, not to mention small businesses facing an extremely perilous winter. Retail sales declined sharply in November, a worrisome sign for the crucial holiday shopping season that’s coming as coronavirus cases, hospitalizations, and death are peaking.
GOOGLE’S LEGAL WOES
Google was served with two more major antitrust lawsuits this week, following last month’s landmark suit from the Justice Dept. The most recent suit, filed by a group of state prosecutors, accuses Google of using its dominance in search to muscle out smaller competitors. The one before that focused on Google’s dominance in digital advertising, and the one before that — the big suit filed by the feds — was a broader matter accusing Google of acting as an illegal monopoly. Taken together, the lawsuits represent a potentially existential threat to Google’s business model and show that the backlash against Big Tech is still in its early days when it comes to the courts. Shares of Google have been struggling as its regulatory troubles become more apparent.
IPO BOOM FIZZLES
The IPO euphoria that defined much of the market this year took a breather this week, with the public debut of ContextLogic, the parent company of online discount retailer Wish. The company did not enjoy the first-day pop that defined the previous week’s IPOs from DoorDash and Airbnb. After pricing at the top of the range, Wish sank 16 percent in its first day of trading. Another company that was planning to go public this month, the online gaming company Roblox, decided to punt its IPO until next year following the price action in Airbnb and DoorDash. Those companies saw first-day demand much higher than what was reflected in their pricing, suggesting that their underwriters did not anticipate the rush and left potentially billions of dollars on the table for the founders, early investors, and employees. Roblox cited that exact reason for why it wants to rethink its own stock pricing.
BITCOIN BULLS
Bitcoin crossed $20,000 for the first time this week, hitting new all-time highs at the end of a year that saw its price go up more than 400 percent from it's lows right at the beginning of COVID-related shutdowns. The famously volatile asset has been on fire since hitting a bottom in March, benefiting from more Wall Street firms taking positions in the digital coin as a hedge against inflation. Bitcoin ended the week shy of $23,000.
STREAMING WARS
HBO Max has arrived on Roku, at long last. WarnerMedia and Roku finally reached an agreement to bring the streaming service to Roku’s 46 million active users ahead of an onslaught of new Warner Bros. movies that will debut directly on the platform. That begins next week with Wonder Woman 1984, which will drop on the app on Christmas Day. Warner continues to see more fallout from that decision to smash the theatrical window, with much of Hollywood in open revolt against the studio, and its parent company AT&T working overtime on damage control. As for Roku, shares had been surprisingly weak in the first half of 2020 only to soar in the back half of the year as a beneficiary of the streaming wars. The stock hit a fresh all-time high on the HBO Max distribution deal.
