Tuesday's Headlines: CVS Beats Out Amazon to Buy Signify
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Smartsheet (SMAR) +10.8%
nCino (NCNO) +9.5%
Lululemon (LULU) +6.7%
Chegg (CHGG) +3.5%
Pure Storage (PSTG) +3.3%
Moving Down ⬇️
Calavo Growers (CVGW) -15.9%
Duluth Trading (DLTH) -8.2%
Upstart Holdings (UPST) -6.0%
Farfetch (FTCH) -5.1%
Here are the stories that you need to know ahead of market-open today, Tuesday the 6th of September.
CVS Beats Out Amazon to Buy Signify 🏆
American drug-store giant CVS announced yesterday that it is buying the home-healthcare company Signify Health in a deal worth about $8 billion. The stock market was closed yesterday in observance of Labor Day in the U.S., but shares in both companies are up in pre-market trading this morning.
The proposed deal will see CVS pay $30.50 for each share of Signify. This is just a 6% premium on the price of Signify shares at market close last Friday, but well more than double the share price of the company when it was first announced that management was considering a sale at the start of August.
Signify Health supplies technology that helps health plans and providers with in-home care. The company floated on the NYSE in February of last year but had a rough start to public life, with its stock falling more than 60% in its first year. This summer, the company had to wind down one of its units after changes to a government payment model, prompting management to explore a sale.
Of course, CVS wasn’t alone in its interest in Signify. A few weeks ago, Amazon (AMZN) also emerged as a strong contender to buy the company, which would have complemented its recent purchase of One Medical. You can listen to our analysts’ thoughts on why Amazon was interested in a healthcare company like this here.
Meta Fined Over $400 Million by Irish Regulators 💶
Ireland’s data privacy regulator has levied a record fine of €405 million ($403 million) on Instagram-parent Meta Platforms (META). The move comes after an investigation into the social media company’s handling of children’s data.
The investigation focused on users between the ages of 13 and 17 who were permitted to start business accounts on the platform. Those accounts allowed for the publishing of the users’ phone numbers and email addresses, breaking the European Union’s rules, according to the regulator.
Instagram said it has changed its policies to prevent such accounts being created and instigated new policies designed to protect children on their platform. The company said it would be appealing the decision, saying it disagrees with how the fine was calculated.
Ireland’s Data Protection Commissioner (DPC) regulates a host of internet companies who have their European headquarters located in the country. Those include Meta, Google (GOOG), and Apple (AAPL). Last year, WhatsApp, which is also owned by Meta Platforms, was fined a record €225 million for failing to comply with EU data rules.
Facebook changed its name to Meta Platforms in 2021 to reflect the company's new focus on augmented and virtual reality — commonly referred to as the Metaverse. However, the company has been faced with a number of challenges in recent years. Changes to Apple’s tracking policies on iOS have put a large dent in its core advertising business. Meanwhile, ambiguity over what the Metaverse actually means has dented investor confidence in Zuckerberg’s long-term vision.
Shares of Meta are down 58% from its highs set in August last year.
Smartsheet Soars After Strong Earnings 🚀
Smartsheet (SMAR) saw its shares jump by over 10% following the publication of its latest earnings report late last week. The workflow management software company beat analyst estimates for both the top and bottom line, while also announcing a savvy acquisition that seemed to please investors.
Smartsheet reported a loss per share of $0.10 on revenue of $186.7 million, beating the consensus analyst estimates of a loss of $0.20 on revenue of $180.3 million. This marked a significant year-over-year revenue boost of 42%, with subscription revenue and professional services revenue rising 43% and 24% respectively.
President and CEO Mark Mader emphasized that “our strong quarterly results demonstrate the value customers are seeing from our core platform and premium capabilities.” Smartsheet also went on to announce the acquisition of marketing automation firm Outfit. Terms weren’t disclosed, but it’s understood that Smartsheet will cover the purchase using cash currently on its balance sheet.
Smartsheet is a software-as-a-service (SAAS) application for collaboration and project management. Based on Microsoft Excel's spreadsheet layout, it allows teams to assign tasks, track progress, and manage calendars. It counts 80% of the Fortune 500 as clients, and currently boasts over 3.6 million users, many of whom consider the software as mission-critical to their work.
Its stock is currently down over 55% year-to-date as a result of the wider tech sell-off and generally gloomy macroeconomic outlook but is up over 20% from recent lows seen in June of this year.