Weekly Market Recap

Published Feb. 13, 2022
Weekly Market Recap


Dow Jones S&P 500 Nasdaq
34,738 (-1.05%)
4,418 (-1.93%)
13,791 (-2.32%)

Low-cost carriers Frontier and Spirit have agreed to merge in a $6 billion deal.

The country’s two major low-cost carriers, Frontier Airlines and Spirit Airlines, have agreed to merge, creating the country’s fifth-largest airline. Prior to the announcement of the agreement by the CEOs of both airlines in New York City on Monday, the boards of both companies approved the deal over the weekend. Frontier Airlines, which is owned by private equity firm Indigo Partners, will own 51.5 percent of the combined airline, with Spirit owning the remaining 48.5 percent. The transaction is worth $6.6 billion. The offer estimates a value of $25.83 per Spirit share, a 19% premium over the stock’s closing price last week. Spirit’s stock was up more than 12% in the premarket on Monday, while Frontier Group’s stock was down 3%.

Peloton plummets when co-founder John Foley is ousted as CEO.

Peloton shares plummeted more than 2% in premarket trade Tuesday, but they were still well above their previous lows, after the struggling connected fitness startup revealed that co-founder John Foley would be replaced as CEO by former Spotify and Netflix CFO Barry McCarthy. Foley will become the company’s executive chairman. Peloton also plans to lay off 2,800 people, or around 20% of the staff.

Furthermore, the company reduced its full-year revenue and connected fitness subscriber estimates. Peloton’s stock climbed 20% on Monday amid rumors that it could be bought out by companies such as Amazon and Nike. Despite Monday’s increase, the price remained still down 80% from its all-time high of $155.52 in February 2021.

Pfizer anticipates $54 billion in Covid vaccination and therapy tablet sales in 2022.

Pfizer said on Tuesday that it expects to sell $32 billion in Covid injections and $22 billion in Paxlovid, an antiviral coronavirus treatment pill, this year, a new high for the business. Pfizer’s fourth-quarter revenues, however, fell short of estimates, and the stock sank 3.5 percent in premarket trade. Earnings per share beat estimates.

Pfizer initiated a clinical trial of a Covid immunization targeting the omicron type in adults aged 18 to 55 earlier this month. According to CEO Albert Bourla, the vaccine should be ready by March. Pfizer is also making efforts to increase Paxlovid production and delivery. According to Bourla, Pfizer plans to create 6 million to 7 million courses in the first quarter and 120 million by the end of the year.

SoftBank intends to take Arm public if Nvidia’s deal fails.

According to a joint statement published by the two firms on Tuesday, the proposed acquisition of Arm by Nvidia from SoftBank has fallen through due to “serious regulatory problems.” The agreement was first announced in 2020, with a $40 billion valuation in Nvidia shares and cash at the time.

According to SoftBank, Arm will now prepare for a public offering within the fiscal year ending March 31, 2023. Arm creates the technology that powers every smartphone processor, including those used in Apple’s iPhones and Qualcomm-powered Android devices. Almost every major semiconductor company is one of its customers. In premarket trade, Nvidia’s stock fell 1%.

With Peter Thiel’s departure from the board, Facebook’s presence in Europe is in jeopardy.

Meta Platforms, Facebook’s parent company, fell 1.4 percent in premarket trading on Tuesday, continuing a post-earnings slump that has seen the stock fall 30 percent since quarterly data were released last Wednesday. On Monday, Meta announced that billionaire internet investor and early Facebook supporter Peter Thiel will step out from the company’s board of directors.

According to Meta’s annual report, which was released last Thursday, the corporation is considering shutting down Facebook and Instagram in Europe if it cannot continue to transmit user data back to the US. European regulators are already developing new guidelines to govern how user data from European Union citizens is moved across the Atlantic.

Consumer prices increased in January, remaining at 40-year highs.

In January, the consumer price index jumped 7.5 percent year on year, exceeding expectations and representing the highest increase since February 1982. In January, the core CPI, which excludes food and energy, grew by 6% year on year, which was somewhat more than projected and the largest increase since August 1982. The CPI is significant for markets because inflation is regarded as a direct signal for the Fed’s first interest rate hikes in the Covid era, which are set to begin in March. Initial claims for unemployment benefits, which were also announced before the bell, fell to 223,000 for the week ending February 5, which was lower than expected.

Coca-Cola and PepsiCo both exceeded earnings and revenue projections.

On Thursday, Coca-Cola reported earnings and revenue that exceeded expectations, and the Dow stock rose more than 1% in premarket trading. The fourth quarter profit was 45 cents per share on $9.46 billion in revenue. Coca-Cola, on the other hand, issued a weaker-than-expected outlook, stating that rising inflation will eat into its profits through 2022.

PepsiCo shares were virtually steady in the premarket after the soda and snack company surpassed expectations with fourth-quarter profits and revenue on Thursday, but warned of inflationary pressures ahead, similar to Coca-Cola, due to higher shipping and packaging costs. The profit for the quarter was $1.53 billion on sales of $25.25 billion. This year, PepsiCo expects to pay $6.2 billion in dividends and $1.5 billion in stock buybacks.

Following the release of quarterly earnings, Twitter and Uber’s stock prices have risen.

Twitter’s stock rose 4% in premarket trading after the company announced a new $4 billion share repurchase programme. In its first earnings report under new CEO Parag Agrawal, who took over from co-founder Jack Dorsey in November, the company missed profit estimates of 33 cents per share, revenue of $1.57 billion, and monetizable daily active users of 217 million.

In premarket trading on Thursday, Uber’s stock climbed 5.5 percent, a day after the company reported higher-than-expected quarterly revenue. Uber’s ride-hailing business has improved, and demand for Uber Eats food delivery has remained strong. The corporation reported a net income of $892 million in the fourth quarter, which included a $1.4 billion pretax net benefit related to its equity investments. Uber’s EPS of 44 cents reflects the investment gain. Without it, Uber’s loss was lower than expected, coming in at 26 cents per share.

At August 2019 highs, the 10-year yield remains above 2%.

The 10-year Treasury yield decreased marginally on Friday, although it remained above 2%, which it had reached for the first time since August 2019 on Thursday. The 2-year Treasury yield, which is the most sensitive to policy interest rates, was trading near 1.6 percent on Friday, up 26 basis points from the previous session, the highest one-day increase since 2009. The release of the producer pricing index on Tuesday will be closely watched by Wall Street to determine if wholesale inflation was as strong as the consumer price report showed last month.

Rising Battery Prices Increase Uncertainty in Electric-Vehicle Prices

The cost of the metals used to create electric-vehicle batteries has climbed dramatically, bringing EVs within spitting distance of gasoline-powered vehicles for the first time in a decade. With electric car sales on the rise and a host of new models on the way this year, price increases could hamper growth.

Since 2010, the average price of a lithium-ion battery has fallen by 90% to roughly $130 per kilowatt-hour. The magic number for making electric vehicles competitive with internal-combustion engines is around $100 per kilowatt-hour. Many expected the battery industry to reach that milestone in 2024, but that goal is becoming increasingly elusive.

Lower costs helped boost EV sales by 112 percent in 2021 to more than 6.3 million units worldwide, according to Benchmark Mineral Intelligence, which tracks the global battery supply chain.

The cost of the primary components in batteries is suddenly soaring. According to Benchmark, the cost of battery-grade cobalt climbed by 119% between January 1, 2020, and mid-January 2022, while nickel sulphate prices increased by 55% and lithium carbonate prices increased by 569%.

Apollo is closing on a $2.3 billion deal for Worldline’s terminal business.

According to sources familiar with the matter, Apollo Global Management Inc. is close to reaching an agreement to purchase Worldline SA WLN 5.78 percent’s point-of-sale terminal business for approximately $2.3 billion.

The planned deal is the latest bet on the long-term expansion of digital payments. The New York-based buyout business would acquire equipment that would enable clients to make transactions using their mobile phones and credit cards. As a result of the pandemic, both individuals and companies have accelerated their embrace of digital payments over cash.

According to individuals acquainted with the issue, the agreement, which is expected to be valued close to €2 billion ($2.3 billion), might be revealed in the coming days if the talks do not break apart at the last minute.

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