This Week Market Recap 7/30
Fed Decides To Keep Interest Rates at 0.25%
On Wednesday, the Federal Reserve announced their decision to keep interest rates near a
target range between zero and 0.25%. Their decision was also influenced by the economic
recovery despite the pandemic concerns. Powell claims that each wave of COVID over the
past year the economic implications were decreasing each wave, as Powell stated “We’ve
kind of learned to live with it,”.
Although the interest rate remains unchanged, many still fear growing inflation as
consumer prices continue to rise. Officials claim it’s only temporary due to supply shortages
(chips), used car prices, surge in demand levels, and etc.
Nikola Founder Trevor Milton Indicted on 3 Counts
Fraud by Grand Jury
Founder and former CEO of Nikola Motors, Trevor Milton was indicted on three counts of
fraud early Thursday. The billionaire was charged with three counts of criminal fraud and
accused of lying about “nearly all aspects of the business” to boost his own company. The
U.S. Attorney’s Office officially accused him of two counts of security fraud as well as one
count of wire fraud in “connection with his scheme to defraud and mislead investors about
the development of products and technology by the company he found, Nikola
Corporation,” according to the U.S. Attorney’s Office.
These charges come after Nikola’s historic SPAC deal with VTIQ back in June of 2020, where
the ticker NKLA had skyrocketed as much as 103.70% in a single day. The company had
built much hype and was touted by many as a “Tesla Replacement.” However, much of the
hype was built on Nikola's prototype vehicle, the Nikola Badger, which investors quickly
realized wasn’t able to have its own propulsion mechanism. Along with General Motors
dropping their partnership and rumors of the company being a scam, the stock quickly fell
from highs and Milton resigned as CEO. NKLA traded down 15.22% on the news.
Uber Falls After SofBank Plans To Sell 45 Million
Shares
The Chinese government continues to tighten restrictions and delisting threats on tech
stocks such as DIDI, BABA, PDD, JD, FUTU, TME, and others. DIDI hit a low of $7.16 on July
26th as many investors sold their shares over fear that the Chinese government would
impose a fine on DIDI bigger than Alibaba’s record fine of $2.8 billion dollars.
Softbank, one of DIDI’s largest investors, sold 45 million shares of UBER (one-third of their
stake) to cover their losses on DIDI. UBER is down 8.43% for the week. UBER’s stake in DIDI
declined $2 billion dollars last week following the recent fines and policies the Chinese
government enforced. Softbank lost $4 billion on DIDI, as the Softbank Vision Fund owned
21.5% of DIDI shares following their IPO.
Notable Earnings Reports This Week
TSLA - The electric vehicle company reported their fiscal 2nd quarter earnings after market
close on Monday. Reporting an impressive earnings with an EPS beat of $0.47 and a
revenue beat of $560 million dollars. This was the first time the company passed $1 billion
in quarterly net income. Musk stated Tesla has reduced its production of powerwalls and
their megapack batteries due to supply shortages with chips. TSLA traded 1.95% lower the
following day.
AAPL - The electronic technology company reported their fiscal 3rd quarter earnings after
market close on Tuesday. Reporting an EPS beat of $0.29 and a huge revenue beat of $8
billion dollars. Every one of Apple’s major products grew 12% YoY and IPhone sales
increased 50% YoY. However, Apple executives warned that the chip shortage could affect
IPhone and IPad production. They also stated that their 4th quarter earnings won’t be as
strong as their 3rd quarter. AAPL traded 1.22% lower the following day.
AMD - The semiconductor company reported their fiscal 2nd quarter earnings after market
close on Tuesday. Reporting an EPS beat of $0.09 and a revenue beat of $237 million
dollars. The company reported significant growth on desktops, laptops, and processors.
Computing and Graphic revenue increased 65% YoY. AMD traded 7.58% higher the
following day.
MSFT - The software technology company reported their fiscal 4th quarter earnings after
market close on Tuesday. Reporting an EPS beat $0.25 and a revenue beat of $1.85 billion
dollars. Although revenue increased 20% from the previous quarter the company stated
that supply issues reduced the revenue they could’ve potentially earned. MSFT traded
0.11% lower the following day.
GOOGL - The multinational conglomerate company reported their fiscal 2nd quarter
earnings after market close on Tuesday. Reporting a huge EPS beat of $8.16 and a massive
revenue beat of $5.8 billion dollars. The company reported strong advertising growth, as
Youtube revenue topped over $7 billion (83% YoY increase). GOOGL traded 0.30% lower the
following day.
V - The digital payment company reported their fiscal 3rd quarter earnings after market
close on Tuesday. Reporting an EPS beat of $0.14 and a revenue beat of $272 million
dollars. The company benefitted as many resumed travel, spending, and entertainment. V
traded 1.59% lower the following day.
SHOP - The e-commerce giant reported their fiscal 2nd quarter earnings on Wednesday
morning. Reporting an EPS beat of $1.28 and a revenue beat of $69 million dollars. The
company claimed that revenue will continue to grow in 2021, but at a slower rate compared
to 2020. SHOP traded 1.10% lower the same day they reported earnings.
BA - The aerospace firm reported their fiscal 2nd quarter earnings on Wednesday morning.
After 6 quarterly losses, Boeing reported their first quarterly profit since 2019, with an EPS
beat of $1.13 and a revenue beat of $112 million dollars. Jetliner deliveries increased as
travel demand surged. Boeing CEO stated “We’re on a good path to recovery”. BA traded
4.18% higher the same day they reported earnings.
SPOT - The digital music streaming service reported their fiscal 2nd quarter earnings on
Wednesday morning. Reporting an EPS beat of $0.37 and a revenue beat of $63 million
6
dollars. Spotify missed the quarterly MAU with 366 million to 373 million expected users.
SPOT traded 5.74% lower the same day they reported earnings.
FB - The multiservice social media reported their fiscal 2nd quarter earnings after market
close on Wednesday. Reporting an EPS beat of $0.58 and a revenue beat of $1.2 billion
dollars. Although Facebook’s revenue increased 56% YoY, the company predicts revenue to
slow down in the upcoming quarters. FB traded 4% lower the following day.
AMZN - The online retailer reported their fiscal 2nd quarter earnings after market close on
Thursday. Reporting an EPS beat of $2.88 but a revenue miss of $2 billion dollars. Amazon
gave slower guidance for future quarters, as the pandemic shopping momentum is slowing
down and it would be tough to match YoY comparisons during COVID. AMZN traded 7.56%
lower the following day.
Cryptocurrencies
Amazon Denies Report of Accepting Bitcoin
On July 26th, a spokesperson from Amazon denied the report stating that the company
would begin taking Bitcoin as payment. According to a report from London’s City A.M.
Newspaper, an “unnamed” insider spread the false rumor, which caused BTC to jump
14.5% to $40,458.04 before news of this was reported to be false. The rumors started after
Amazon had posted a job offer on July 22nd relating to an opening for a digital currency
and blockchain product lead. The rumor in addition to investors covering and exiting
bearish bets pushed Bitcoin up nearly 17 percent to around $40,545. However, the
company’s denial of the rumor sent Bitcoin tumbling back down.
International
Spain Prime Minister Pedro Sanchez traveled to Silicon Valley to meet with executives and
CEOs from tech companies which included: Apple, Zoom, Intel, LinkedIn, Hewlett Packard,
PayPal, and Qualcomm. Sanchez’s main goals were two things: to expand advanced
technology in Spain and to attract foreign investors to the country. Sanchez also pointed to
a potential partnership with Apple on artificial intelligence. The meeting between the Prime
Minister and the companies could be summed up as positive, ” They see that Spain is a safe
country with a good quality of life and affordable and competitive prices.” Sanchez stated.