Thursday's Headlines: GameStop Makes Some Noise

Thursday's Headlines: GameStop Makes Some Noise

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Coupa Software (COUP) +17.9%

2U (TWOU) +8.7%

Upstart Holdings (UPST) +8.6%

Trupanion (TRUP) +7.4%

Match Group (MTCH) +6.9%

Moving Down ⬇️

Duluth Trading (DLTH) -2.1%

ShotSpotter (SSTI) -1.6%

FedEx (FDX) -1.2%

Calavo Growers (CVGW) -0.5%

Zendesk (ZEN) -0.1%

Here are the stories that you need to know ahead of market-open today, Thursday the 8th of September.

The Original Meme Makes Some Noise 🚀

Not to be left out of all the recent meme-stock fun, shares of GameStop are up 9% in pre-market trading at time of writing after the company announced a narrower loss than expected. However, financials haven’t really played a factor in GameStop’s investment thesis for a while, so the real reason for the boost may be its partnership with cryptocurrency marketplace FTX.

GameStop will start selling FTX gift cards in a number of its stores as part of the new partnership. Wedbush analyst Michael Pachter captures the nature of the deal succinctly:

"The FTX partnership is unlikely to yield meaningful revenue or profit, but it sounds good, so that's a positive".

The FTX dalliance is not GameStop’s first foray into crypto in an effort to stay relevant to its ardent following of retail investors, with the launch of its NFT marketplace expected to come soon. Other non-crypto hype efforts include the company’s recent 4-1 stock split.

While you may roll your eyes at the lengths Ryan Cohen and his management team are taking to appease a certain swath of investors, the simple fact of the matter is that these stunts are keeping GameStop going.

While the stock is obviously down significantly from its post-squeeze-highs, it is still a $7 billion dollar business, trading at least five times the levels it was at before all of this meme-stock business kicked off. Its cultural relevance and cult status is the only thing stopping it from returning to the failing mall retailer on the brink of bankruptcy that it was two years ago.

Judge Rules in Favor of Musk, Also Doesn’t 👩‍⚖️

Elon Musk’s countersuit against Twitter (TWTR), in which the world’s richest man is attempting to back out of the merger agreement to acquire the social media platform, took a turn yesterday. Chancellor Kathaleen McCormick, the judge presiding over the case, ruled in favor of including allegations from Twitter’s former head of security Peter “Mudge” Zatko’s whistleblower report. The report, which we dissected on last week’s Stock Club, alleges severe vulnerabilities in Twitter’s security infrastructure.

However, while this may sound like good news for Musk, McCormick rejected his bid to postpone the trial, stating “I am convinced that even four weeks’ delay would risk further harm to Twitter too great to justify”. The market has taken this as a win for Twitter, with the stock up more than 6% yesterday on the news.

If we were to speculate on the implications of these two decisions, it would seem that while Chancellor McCormick must allow Musk and his lawyers to argue the potential impact of the whistleblower report, her choice not to delay may be the more pertinent of the two. If she truly believed that Twitter had taken part in a widescale fraud, I would imagine she would allow for more than four weeks to prepare for that trial.

For Twitter shareholders, Musk fanboys, and beleaguered writers covering the story, it looks like we will have finally some closure on October 17 when this trial commences, and hopefully, we can put this saga to bed, whatever the outcome.

Asana Soars Higher After Hours 🤩

Asana has seen its stock skyrocket pre-market following its second-quarter earnings report yesterday evening. The work management platform beat analyst expectations for both revenue and earnings, while also outpacing estimates for its third-quarter guidance in a truly solid showing. The firm’s stock is up close to 18% in pre-market trading at time of writing.

Asana posted an adjusted loss per share of $0.34 on revenue of $134.9 million — outpacing the respective marks of a $0.39 loss and $127.2 million in revenue touted by analysts prior to the call. While this does indicate a wider net-loss year-on-year, investors seemed to be more impressed by revenue growing by a whopping 51% in the same period.

A further reason that likely inspired confidence in shareholders was the separate announcement that CEO and founder Dustin Moskovitz has acquired a further $350 million worth of shares in the company. Moskovitz outlined that, “with the additional $350 million in capital announced today, we believe we are fully funded to execute on our current strategies and well-positioned to reach free cash flow positive before the end of calendar 2024.”

Asana is a work management platform that enables effective communication between teams through a centralized dashboard. It’s one of a host of companies competing in quite a saturated market, as it attempts to beat out rivals such as Atlassian and Founded in 2008 by Dustin Moskovitz — a co-founder of Facebook — and Justin Rosenstein, Asana has grown to incorporate over 2.5 million paid seats across 131,000 paying customers.

While its stock is down over 73% year-to-date before this morning's boost, yesterday’s earnings will certainly come as a welcome pick-me-up to shareholders and prospective investors alike.

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