From Wall Street to Silicon Valley, these are the top stories that moved markets and had investors, business leaders, and entrepreneurs talking this week on Cheddar.
IS TECH WRECKED?
A disappointing fourth-quarter earnings report from OG streamer Netflix helped fuel a general sell-off in tech stocks on Friday, which some are interpreting as a shift away from pandemic-era investment trends and perhaps the end of a historic bubble in assets. The report showed lower than projected paid subscriptions and forecasted even slower growth for Q1 2022. The miss spooked investors, spurring a 20 percent drop in price. Notably, CEO Reed Hastings attributed the slowdown to increasing competition from other streaming services. But business fundamentals aside, many are blaming looming rate hikes for the sell-off in tech stocks. The tech-heavy Nasdaq ended the week with its steepest drop since 2020's brief market crash.
PELOTON GETS A WORKOUT
Peloton was another tech stock on a downhill course this week following reports that it was cutting its output of workout bikes and treadmills due to waning demand. Plagued by shipping delays, lawsuits, and that unfortunate appearance on the Sex and the City reboot, the at-home fitness company has struggled to recapture its early pandemic magic and is now planning to "right-size" its operations. As its price fell 23 percent on Thursday, Peloton came clean that it was temporarily halting production of connected fitness products. Making the news official seemed to calm investors, as Peloton's stock bounced back nearly 12 percent on Friday.
MICROSOFT + ACTIVISION
Microsoft, the owner of Skype and LinkedIn and software provider for all things work-related, is making another major investment in video games. The tech giant announced a $68.7 billion deal to acquire Activision Blizzard, the company behind triple-A games such as Call of Duty and ubiquitous mobile games such as Candy Crush. The acquisition, the largest ever of a gaming company, touches on multiple buzzy trends playing out in the tech sector, including efforts by major firms to make inroads into the metaverse. It also places Microsoft in the middle of Activision's ongoing internal struggles over accusations of maintaining a toxic work environment.
Ford is down over 15 percent this week despite recently hitting a $100 billion market cap and announcing plans to double production of its electric F-150 Lightning. The company on Tuesday previewed its fourth-quarter earnings, which reminded investors that the large investment gains it made on its stake in EV maker Rivian won't count toward its full-year earnings. This simple accounting change shouldn't impact the long-term investment case for the legacy carmaker, and investors will likely get further clarity when its actual earnings report comes out on February 3.
BETTER BANK EARNINGS
One sector that pulled through this week is the same one that got battered last week: banking. Morgan Stanley saw profits climb 9 percent in the fourth quarter, while Bank of America reported a whopping 28 percent jump in profits. The companies benefited from the ongoing boom in the financial sector, including a record number of IPOs and mergers and acquisitions, even as employee compensation took out a bigger chunk than usual amid a tightening labor market.
United Airlines' stock was down almost 12 percent over the week as the company noted scaled-back schedules going into 2022 and low capacity in the first quarter. While the company does not anticipate returning to pre-pandemic capacity this year, the plan is to gradually ramp up as business returns to normal. The airline industry also faced issues this week with Verizon and AT&T's 5G rollout, which led some companies to ground planes.
MERCEDES-BENZ BOOSTS LUMINAR
The automobile sector, meanwhile, saw another strategic partnership as firms prepare for heavy competition in the coming years in new types of vehicles. Mercedes-Benz struck a deal with Luminar to buy 1.5 million shares over time. The German automaker plans to employ the tech company's lidar technology in its next generation of cars. Lidar is a system for sensing movement through light, which helps autonomous or semi-autonomous vehicles better navigate obstacles. Luminar's stock popped on the news, but the gains tapered off throughout the week.