Monday's Headlines: Is Amazon Going To Buy Electronic Arts?
Here were the biggest movers in the MyWallSt shortlist on Friday:
Moving Up ⬆️
Farfetch (FTCH) +26.1%
Workday (WDAY) +2.5%
Baozun (BZUN) +0.9%
Trip.com Group (TCOM) +0.7%
Moving Down ⬇️
Upstart Holdings (UPST) -10.3%
Hain Celestial (HAIN) -9.9%
Trupanion (TRUP) -9.8%
RH (RH) -9.4%
Wix (WIX) -8.5%
Here are the stories that you need to know ahead of market-open today, Monday the 29th of August.
Is Electronic Arts Being Eyed Up by Amazon? 👀
Another week, another rumor of a big Amazon (AMZN) takeover. This time around, it’s the world-renowned video game publisher Electronic Arts (EA) whose stock is up over murmurings of an impending deal.
On Friday, shares of EA shot up after a gaming and esports blog reported that Amazon was set to announce its acquisition of the company. However, other news sites were quick to refute these claims, citing sources within Amazon.
Nonetheless, EA stock remains up this morning, buoyed by optimism based on the recent spending spree that Amazon has embarked on.
In the past few months, the trillion-dollar company has snapped up the likes of iRobot, One Medical, and MGM. Though the company has always been highly-acquisitive, this recent spate of purchases is likely to stem from the prolonged market sell-off being experienced by tech stocks, which means that Amazon is getting them at a bargain price compared to the past couple of years. To find out more about this, check out the latest episode of the Stock Club podcast.
EA is one of the original video game publishers with a portfolio that includes some of the world’s biggest games and franchises, including FIFA, Madden NFL, Need for Speed, and Apex Legends.
Despite such an impressive stable, however, the company has suffered in recent years, with an ill-advised approach to microtransactions in its 2017 release of Star Wars Battlefront II prompting huge user backlash and even scrutiny at government level.
Meta Agrees to Settle Cambridge Analytica Lawsuit 🧑⚖️
Meta Platforms (META). has agreed to settle a lawsuit that accused the company of allowing third parties to access private user data. According to a court filing on Friday, Meta and a group of Facebook users suing the company have reached an agreement in principle. Details of the settlement were not made publicly available.
Both sides have now requested a 60-day stay of the lawsuit, which revolved around the Cambridge Analytica scandal that may have had a major impact on the 2016 US Presidential Election. Cambridge Analytica, a now-defunct consulting firm, was hired by several Republican candidates, including former President Donald Trump. It’s alleged that the company used private user data to help the campaigns influence voters with political messaging. Both Facebook and Cambridge Analytica have denied any wrongdoing.
The settlement comes just as lawyers for the Facebook users were set to question Meta CEO Mark Zuckerberg, as well as former COO Sheryl Sandberg, and current COO Javier Olivan.
In 2019, Meta (then known as Facebook) reached an agreement with the Federal Trade Commission (FTC) that saw it pay a $5 billion fine and restructure its board. The FTC then claimed that Facebook had violated a consent decree reached in 2012 to better protect user data.
Shares of Meta have taken a steep drop over the last year as investors question the company's pivot into virtual and augmented reality — what some have called the “metaverse”. The company’s advertising revenue has also come under pressure after Apple introduced new policies to limit third-party tracking on iOS.
3M’s Plan to Escape Military Lawsuits Collapses 👎
American manufacturer 3M's (NYSE:MMM) attempts to use a controversial bankruptcy rule to shield itself from more than 230,000 lawsuits has failed. This dealt a significant blow to CEO Mike Roman, who was appointed in 2019 to handle the onslaught.
3M, originally the Minnesota Mining and Manufacturing Company, has produced industry, worker safety, U.S. health care, and consumer goods for more than 100 years. It is one of the largest companies in the United States and employs more than 95,000 people.
In 2018, a whistleblower lawsuit emerged against the corporation, revealing that 3M and its subsidiary Aearo Technologies had knowingly sold defective dual-ended Combat Arms earplugs to the United States Military. The case resulted in a $9.1 million settlement with the Department of Justice. Subsequently, hundreds of thousands of soldiers came forward claiming hearing damage.
The collapse of Roman’s bankruptcy plan has thrown a considerable wrench in 3M’s future. Ten test trials have already taken place and resulted in ten losses and more than $300 million in damages awarded. It now looks like the company will be forced to pursue a settlement process that will likely cost 3M billions of dollars.
While some analysts expect the funds will be found in 3M’s $1 billion trust, Deane Dray from RBC Capital Markets says this will be insufficient, believing the payout will amount to more than $10 billion. It would appear the business is now looking for cash. 3M placed Aearo into bankruptcy last quarter and has announced plans to spin off its massive health-care products division.
On the news, 3M’s stock is down more than 9.5%.