July’s nonfarm payroll (measure of the number of workers in the U.S. excluding farm workers) job report showed a 943,000 increase compared to the 845,000 Dow Jones Estimate. The unemployment rate was 5.4%, compared to the 5.7% expectations. July’s payroll report was the best since August 2020. The biggest job gains were in the leisure and hospitality sector, followed by education, and business services.
Average hourly earnings also increased a 0.4% increase for the month and up by 4% for the year. The rising demand for labor and consumer prices has continued to put a strong demand for increased wages, according to BLS (Bureau of Labor Statistics).
Square Acquires A erpay for $29 Billion in an All-Stock Transaction
The ﬁntech company Square Inc. announced Sunday that they were going to acquire Australian ﬁntech Afterpay for $29 billion dollars in an all-stock deal. This marks Square’s largest acquisition to date and the largest buyout of any Australian company. Afterpay shareholders are expected to receive around 0.375 shares of Square class A stock for every share of Afterpay they own, and they expect to close the deal in the ﬁrst quarter of 2022. The CEO of Square, Jack Dorsey, was quoted as saying, “Square and Afterpay have a shared purpose. We built our business to make the ﬁnancial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles.”
Square’s acquisition of Afterpay is placing a big bet on the BNPL or Buy Now, Pay Later model. This is essentially a model where consumers can pay a small upfront amount for their purchase and can ﬁnance the rest over the next few weeks. APT (traded on the Australian Securities Exchange) traded up 36.72% on Monday and Aﬃrm, a company that engages in a similar line of business, rose 14.90% on Monday as a sympathy play.
Novavax Delays U.S Approval for COVID-19 Vaccine
Novavax announced Thursday after-hours that it has delayed its submission for a Covid-19 vaccine to the Food and Drug Administration (FDA). The company was planning to submit an application for emergency use authorization but it has pushed its plans back towards the fourth quarter. Novavax has said that it has already ﬁled with regulators in India, Indonesia, as well as the Philippines as well as preparing to submit ﬁlings towards regulatory bodies in the United Kingdom, Canada, and Australia.
Although the company has already ﬁled to many foreign regulators, this will be the third time they have delayed submission to the FDA. CEO of Novavax Stanley Erck said in a statement, "It's a matter of getting validation work done" to demonstrate consistency in the vaccine's manufacturing process to the FDA. The delay combined with a larger than expected earnings per share loss on their earnings report sent shares tumbling, with NVAX ending the following trading day down 19.61%
Notable Earnings Reports This Week
BABA - The Chinese e-commerce giant reported their ﬁscal 1st quarter earnings on
Tuesday morning. The company reported an EPS beat of $0.35 and a revenue miss of $605 million dollars. Although Alibaba missed revenue expectations, they’re still reporting steady revenue growth despite the strict policies placed by the Chinese government. BABA traded 1.35% lower the same day they reported earnings.
ATVI - The video game publisher reported their ﬁscal 2nd quarter earnings after market close on Tuesday. The company reported an EPS beat of $0.15 and a revenue beat of $31.5 million dollars. Despite the recent allegations against the company, CEO Bobby Kotick assured that the company will look into taking measures to make sure Activision is a safe, diverse, and equal place to work. ATVI traded 2.12% higher the following day.
LYFT - The rideshare company reported their ﬁscal 2nd quarter earnings after market close on Tuesday. The company reported an EPS beat of $0.20 and a revenue beat of $64 million dollars. Lyft reported its ﬁrst quarterly proﬁt of $23.8 million dollars and also beat active rider expectations by 1.7 million users. LYFT traded 10.56% lower the following day.
ROKU - The television streaming company reported their ﬁscal 2nd quarter earnings after market close on Wednesday. The company reported an EPS beat of $0.40 and a revenue beat of $26.6 million dollars. Roku’s total net revenue grew 81% YoY for the quarter with $645 million. However, the company reported a decrease in TV streaming and tight hardware margins. ROKU traded 4% lower the following day.
WYNN - The hotel and casino operator reported their ﬁscal 2nd quarter earnings after market close on Wednesday. The company reported an EPS beat of $0.46 and a revenue beat of $74 million dollars. WYNN traded 8.33% higher the following day.
MRNA - The biotechnology company reported their ﬁscal 2nd quarter earnings on Thursday morning. Reporting an EPS beat of $0.60 and a revenue beat of $120 million dollars. CEO Stephane Bancel stated that the company won’t be taking anymore vaccine orders for 2021 since they don’t produce more than 800 million to 1 billion doses. MRNA traded 0.67 lower the same day they reported earnings.
DDOG - The cloud monitoring service reported their ﬁscal 2nd quarter earnings on Thursday morning. The company reported an EPS beat of $0.06 and a revenue beat of $21 million dollars. Analysts from Stifel believe the company should be able to sustain 40% growth as many continue to shift to cloudware. DDOG traded 15.26% higher the same day they reported earnings.
SQ - The digital payment company reported their ﬁscal 2nd quarter earnings after market close on Thursday. The company reported an EPS beat of $0.35, but missed revenue by $400 million dollars. However, the earnings report was leaked early. Square’s gross proﬁt is up 91% YoY. SQ traded 2.38% lower the following day.
BYND - The plant-based meat company reported their ﬁscal 2nd quarter earnings after market close on Thursday. The company reported an EPS miss of $0.08 and a revenue beat of $8 million dollars. The company reported that food service sales tripled as many diners returned to restaurants, but still issued a lower 3rd quarter forecast. BYND traded 1.69% higher the following day.
Ethereum Activates The London Hard Fork
Ethereum rises on Thursday as the “London” Hard Fork activation seeks to modify the underlying code of the second-largest cryptocurrency in the world. In this instance, a hard fork refers to a radical change in the protocol of the blockchain network. A big problem that this new hard fork wants to ﬁx is the long-standing scaling problems, as well as the
sporadic and often high transaction fees. The problem has only been exacerbated in recent months by NFTs, or Non-Fungible Tokens that are often built on Ethereum’s blockchain. The changes brought Thursday are going to help burn ether coins as well as change the way transaction fees work to make them more formulaic and predictable. Ethereum was up 16.28% on the week as of August 7th.
Video Games labeled “Spiritual Opium”
The Chinese state media labeled online gaming as “spiritual opium” which caused Tencent and NetEase shares to plummet. They also called for stronger restrictions on the gaming industry in order to prevent addictions and other negative impacts on children. According to the article published, more than half of China’s children were nearsighted and online games aﬀected their educational results.
This is not the ﬁrst time the Chinese state media has labeled gaming negatively. In 2018, Beijing halted new game approvals over concerns that gaming aﬀected eyesight. Furthermore, in 2019 China set a rule that banned those under 18 years old from playing online games between 10 p.m. and 8 a.m. Tencent introduced facial recognition on their smartphones last month in order to verify that the gamer is actually an adult.