The Quick Fix
#TheNewColdWar — It feels like we’ve regressed 6 months as U.S.-China relations fall back to pre-trade war deal levels.
#TwitterGate — Jack Dorsey-owned Twitter (NYSE: TWTR) fell afoul of President Trump this week, who has set the social media industry firmly in his crosshairs.
#SeesawStockMarket — The travel sector received a much-needed boost this week, while stay-at-home stocks felt the pinch of a reopened economy.
#DontForgetAboutEarnings — Though the season is winding down, several important earnings reports took place this week.
#AndFinally — Several local TV stations ran an Amazon (NASDAQ: AMZN) PR piece this week that seemed to differ from the reality portrayed by workers.
Despite the market rising this week with fresh hopes of a vaccine and a reopened economy, tensions between the U.S. and China have started to rise again.
Is the trade war back on?
Back when a phase one deal was signed in December, we thought relations would improve, but one catastrophic pandemic later and things seem worse than ever between the U.S. and China. Both countries are trying to maintain control domestically as the coronavirus ravages both economies, which could prevent China from fulfilling its end of the deal to buy an additional $200 billion in U.S. goods and services by 2021. Add to this the dangerous blame game over the origins of the coronavirus as well as new legislation that could see U.S. markets delist uncooperative Chinese stocks altogether. Now the U.S.’s special relationship with Hong Kong is under threat too as Beijing’s influence over the city-state grows. China’s threat to Hong Kong’s autonomy could see the U.S. place tariffs on the all-important trading partner. As this relationship continues to worsen, we are headed for a lose-lose situation where any semblance of a trade deal is scrapped and the relationship becomes irreparable.
Bet you didn’t know
Chinese companies traded in the U.S. have a cumulative market cap in excess of $1 trillion, and about $8 billion of those stocks change hands every day on average.
President Trump signed an executive order against social media platforms on Thursday which could open them up to federal scrutiny.
Where did this order come from?
The move comes days after Twitter attached a warning to some of President Trump’s tweets for the first time, prompting readers to fact check his claims. The order seeks to amend Section 230 of the Communications Decency Act, which grants social media companies near-autonomous authority over policing their sites while protecting them from liability for damages caused by what users may post on these sites. Both Democrats and Republicans have sought to review this law in the past and it is unclear so far as to the limits of the President’s power in changing this law. Twitter CEO Jack Dorsey responded to the move, saying that he stands by the company’s decision to fact-check two tweets by President Trump, while Facebook (NASDAQ: FB) CEO Mark Zuckerberg criticized Dorsey’s stance, stating that social media “shouldn’t be the arbiter of truth of everything that people say online”. Whatever way this goes down, this issue could get dragged out, especially as Twitter decided on Thursday night to also censor some of the President’s tweets for ‘glorifying violence’.
Bet you didn’t know
There is actually a limit on the number of tweets you can send per day — 2,400. To reach this limit you’d have to write 1.6 tweets every minute for 24 hours straight.
As the economy begins to reopen across the U.S., travel stocks soared this week while at-home companies began to fall.
Which stocks bounced back?
People are going outside again and investors are loving it, with recent studies showing that consumer confidence is rising steadily. And despite posting record losses in recent months, it’s the travel stocks such as Delta Airlines (NYSE: DAL) and TripAdvisor (NASDAQ: TRIP) that are benefiting, as they made double-digit percentage gains earlier this week. Any gains must be taken with a pinch of salt, as we still have a long way to go before the travel sector can bounce back from the total global loss of 75 million jobs and $2.1 trillion in revenue that is estimated to occur because of the coronavirus. In truth, many of these stocks have hit rock bottom, and even this week’s gains, they’re still miles off their previous highs. What’s more, the stay-at-home stocks that have seen massive growth lately — the Zoom’s (NASDAQ: ZM) and Peloton’s (NASDAQ: PTON) — began to fall slightly this week as people return to the outdoors, as well as trade war fears. Despite what some investors might think, we’re not out of the woods yet, and I’m definitely not canceling my Netflix (NASDAQ: NFLX) subscription any time soon.
Earnings season is still underway here at MyWallSt, with the likes of Autodesk (NYSE: ADSK) and Costco (NYSE: COST) showing us their books this week.
How did these stocks perform in Q1?
Autodesk reported an earnings beat for Q1 which saw the software maker bring in net income of $66.5 million, or $0.30 a share, versus a net loss in the year-ago period. Shares of Autodesk have gained 8.9% this year, as the S&P 500 index fell 7.4%.
Known for its big savings, Costco reported a 7% decline in net income of $838 million, or $1.89 per share. Despite seeing an overall sales increase, the company spent $278 million on pre-tax expenses such as wages and sanitation costs.
Luxury retailer Nordstrom (NYSE: JWN) saw same-store sales fall 40% in Q1 to give it a net loss of $521 million, or $3.33 per share. There’s some hope though as the Seattle-based company reported that roughly 40% of its department stores are now back open for business.
Often dubbed ‘the Square (NYSE: SQ) of Brazil’, Warren Buffett backed StoneCo (NASDAQ: STNE) saw its stock soar on Wednesday, despite missing on earnings estimates. The rise came thanks to a total payments growth of 42%, which has helped the stock jump 15% in the past month.
Veeva Systems (NASDAQ: VEEV) easily topped first-quarter and 2020 guidance expectations, reporting adjusted earnings of $0.66 per share on a 38% revenue increase to $337.1 million. Veeva shares have gained 42% YTD versus the S&P’s 6% decline.
Cloud management group Workday (NASDAQ: WDAY) beat on earnings with a revenue increase of 23.4% to $1.02 billion. “Amidst the current environment, we are pleased with our strong results, which include several new Fortune 500 customers,” said CEO Aneel Bhusri
Bet you didn’t know
Autodesk is widely known for being a ‘Jack of all trades’ when it comes to software, and it played a huge role in creating the visual effects for James Cameron’s 2009 film, ‘Avatar’.
When Amazon held its annual meeting on Wednesday, it probably didn’t expect to get caught up in a PR war with its critics. Either that, or it just didn’t care — one of the perks of being among the biggest companies on the planet right now. Shareholders criticized the “vein of toxicity” that runs through the company, with proposals made to reform Amazon’s policies on everything from the environment to workplace discrimination. Amazon’s response? Run a baseless PR segment on local TV stations that depicts Amazon as a wonderland of joy and rainbows. Ok, there were no rainbows, but the segment did include pre-recorded footage of its fulfillment centers, interviews with workers, and a prewritten script for anchors to read on air. Needless to say, the company’s version of a “healthy and safe” work environment differed greatly from the reality reported by workers, but I guess we’re not supposed to argue with our soon-to-be Supreme Overlord Prime, Jeff Bezos.
How many stations showed the segment?
It’s unclear how many television stations ran the segment. At least two stations promoted the segment on social media, while other TV reporters on Twitter called out Amazon for sending them the pitch, one stating that “They are selling this as giving our viewers an “inside look” at the company’s response to COVID-19. No. Let us go inside a fulfillment centers with our own cameras…”
Bet you didn’t know
As of January 2020, Amazon has faced more than 60 federal lawsuits over product liability alone in the past decade. That’s a lot of legal fees.
The Week In Numbers
discounts have been placed on North American Tesla (NASDAQ: TSLA) sales in a bid to rejuvenate sales.
will be reimbursed to every Google (NASDAQ: GOOG) employee by the tech giant to buy work-from-home gear
is how much profit TikTok owner ByteDance reportedly made in 2019.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.