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Wall Street Breakfast

Author: bmotrader   |   Latest post: Mon, 3 Aug 2020, 9:54 AM

 

Wall Street Breakfast: Social Media Meets Social Justice

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It's a big day in the social media sphere as Facebook's (NASDAQ:FB) Mark Zuckerberg, Sheryl Sandberg and Chris Cox meet the heads of the civil rights group leading the "Stop Hate for Profit" campaign against the company. The boycott, initiated in the aftermath of George Floyd's death, has so far elicited the support of more than 400 corporations, including Coca-Cola (NYSE:KO), Starbucks (NASDAQ:SBUX), Ford (NYSE:F), Microsoft (NASDAQ:MSFT) and Verizon (NYSE:VZ). Demands include Facebook submitting to independent audits and removing all hate speech and misinformation, refunding companies when ads appear next to hate speech and hiring a civil rights executive to scrutinize products and policies. While ads - which grew by 26% last year - accounted for almost all of Facebook's $70B of revenue in 2019, the top 100 brands likely represented only about 6% those sales, according to data from Pathmatics.

Clock is ticking for TikTok

"In light of recent events," TikTok (BDNCE) will exit the Hong Kong market within days as other tech giants like Facebook (FB) and Google (GOOG, GOOGL) suspend processing government requests for user data in the region. Last week, mainland Chinese authorities imposed a law on Hong Kong that includes provisions empowering police to order internet firms to take down content deemed threatening to national security. Meanwhile, Secretary of State Mike Pompeo said late Monday that the U.S. is "certainly looking at" banning Chinese social media apps, including TikTok, amid concerns that data could be accessed by Beijing.

Podcast plays

E.W. Scripps (NASDAQ:SSP) has been shopping Stitcher for several months, but is now close to selling the podcast platform to SiriusXM (NASDAQ:SIRI) for $300M, sources tell the WSJ. The jump into podcasting would follow similar moves by Spotify (NYSE:SPOT) and iHeartMedia (OTC:IHRT) and would broaden the reach of SiriusXM after its expansion into internet-radio streaming via the $3B purchase of Pandora Media. Nice return... Scripps bought Stitcher in 2016 for $4.5M in cash and then combined it with Midroll Media, the podcast-advertising company it had acquired the year before for $50M.
 

Taking a breather

Stocks were mixed in Asia overnight, while Europe is down 1.3% as the European Commission cut the region's economic forecasts for 2020 and 2021. Over in the U.S., S&P 500 futures have paused their strong rally, off 0.8% in early trade following a gain of 1.6% on Monday. Boosting the index were technology and consumer stocks, while the June ISM Non-Manufacturing Index not only jumped back into expansion territory, but the 57.1 print heavily beat the consensus forecast. The U.S. is "still knee deep in the first wave" of the coronavirus pandemic, warned Dr. Anthony Fauci, adding that immunity may be "finite" and a vaccine might require a booster to prolong protection.

Payment Protection Program

With some members of Congress pressing for greater transparency, the Small Business Administration has made public for the first time a large number of businesses and nonprofits that have received forgivable PPP loans. $521B in loans were granted to almost 4.9M small businesses as of June 30 - with an average loan size of $106,744 - though more than 80% of the transactions were below the "$150K transparency threshold." Top PPP lenders include JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Truist Bank (NYSE:TFC) and PNC Bank (NYSE:PNC).

Secretive data giant Palantir IPO

One of Silicon Valley's oldest private startups has filed confidentially to go public, and may follow Spotify (SPOT) and Slack (NYSE:WORK) in opting for direct listing. Co-founded in 2003 by famed investor Peter Thiel, Palantir Technologies (PALAN) conducts sensitive and extensive data-mining work for large companies and government agencies. Reports suggest that Palantir has yet to turn an annual profit, though it has been valued privately at as much as $20B and is in the midst of raising nearly $1B in new capital, separate from an IPO.

Ready to run

Sunrun (NASDAQ:RUN), the largest U.S. residential solar company, is acquiring a leading competitor, Vivint Solar (NYSE:VSLR), to form one of the world's largest providers of solar equipment with about 500K customers. The all-stock deal, unanimously approved by the companies' boards, is valued at $3.2B including debt, and is expected to deliver annual cost savings of about $90M. Vivint shareholders will get 0.55 shares of Sunrun for every share held, representing a premium of 10.4% to Vivint's close on Monday. VSLR +19.2% premarket.

Tesla keeps momentum going

Shares of the EV maker jumped for a fourth straight session on Monday, soaring another 13.5% to $1,371, following a price target boost from J.P. Morgan. "If the company can manage 90K units during an extraordinarily challenging quarter, there is no reason that TSLA cannot be shipping 130K to 140K units a quarter by the end of the year in our opinion," advised the firm, assigning a PT of $1,500. Looking further ahead, JPM thinks Tesla (NASDAQ:TSLA) is on track to record revenue of $100B by 2025, which is quite a step up from the last few years. TSLA +2.8% premarket.
 

Today's Markets

In Asia, Japan -0.4%. Hong Kong -1.4%. China +0.4%. India +0.5%.
In Europe, at midday, London -1.3%. Paris -1.1%. Frankfurt -1.3%.
Futures at 6:20, Dow -0.9%. S&P -0.8%. Nasdaq -0.4%. Crude -1.3% to $40.09. Gold -0.5% to $1783.90. Bitcoin +0.6% to $9248.
Ten-year Treasury Yield flat at 0.68%

Today's Economic Calendar
8:55 Redbook Chain Store Sales
9:00 Fed's Bostic Speech
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $46B, 3-Year Note Auction
1:00 PM Fed’s Quarles Speech
2:00 PM Fed's Barkin: "Perspectives on the Pandemic"
2:00 PM Fed's Daly: "Perspectives on the Pandemic"

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