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.
RETAIL REBOUND: CAN IT HOLD?
The impact of the pandemic’s late summer resurgence started to manifest in the economic data this week. Retail sales dropped 1.1 percent in July, more than the expected 0.3 percent decline as Americans started to pump the brakes on spending in stores, restaurants, and online (car sales actually fared the worst, due to the ongoing chip shortage). The retail sales data is important because 70 percent of the U.S. economy is made up of consumer spending, but it also doesn’t include spending on many “services” that include things like airline tickets. Credit card data from JPMorgan shows those transactions are also down. At the same time, a slew of retail earnings showed that the sector has been holding up remarkably well, at least through Q2 — a reporting period that, notably, ended before the delta variant really took hold in the U.S. Brick-and-mortar retailers like Kohl’s, Target, Walmart, and Macy’s all topped their estimates. Walmart pointed to strong back-to-school and grocery sales, while Macy’s even hiked its profit and sales guidance for the year, saying its turnaround strategy is working and bringing in new customers online. The question going forward is whether the retail rebound can hold as the pandemic appears to once again be worsening heading into fall.
Shares of Pfizer got a boost and shares of Moderna slipped after the Biden administration gave the OK for COVID vaccine booster shots for the general population, starting in a month. Pfizer ended up 1 percent on the week, and midweek, when it was even higher, eclipsed its 52-week high after trading in a relatively tight range ever since its vaccine was approved on an emergency basis last December. Pfizer missed out on the triple-digit gains that fellow vaccine makers Moderna and BioNTech (Pfizer’s partner) have amassed this year — though shares of both those companies have fallen some 20 percent since peaking earlier this month. Movements in Pfizer, Moderna, and BioNTech were fairly muted on the news of the booster shots because the U.S. government has already bought up more than enough doses needed to give third shots to the entire population, meaning short-term revenues won’t be affected by the booster recommendation.
Shares of T-Mobile fell 3 percent to a three-month low after hackers claimed to be holding the data of 100 million of the company’s users. The total number of accounts compromised ended up being far lower, but in some ways the security breach is even worse from a public relations standpoint given that the vast majority of people impacted — about 40 million out of 48 million total — are not even T-Mobile customers. The carrier says a database of first and last names, socials, DOBs, and driver license numbers of current, former, and prospective customers was hacked — no financial information was compromised, but the sensitive data stolen is plenty for hackers to engage in identity theft. The company is planning to proactively reach out to those affected, and the stock has since rebounded for the week.
TESLA UNDER INVESTIGATION
Tesla shares took a dive after federal safety regulators announced a formal investigation into the automaker’s self-driving system, known as Autopilot, after a series of crashes. The National Highway Traffic Safety Administration is investigating at least 11 instances of Teslas crashing when emergency vehicles with flashing or bright lights were stopped on the side of the road. In all of those accidents, the Tesla drivers had Autopilot or other autonomous-driving features engaged. The investigation covers Tesla’s entire lineup for model years 2014 through 2021. The stock rebounded later in the week after the company’s A.I. Day — in which Elon Musk revealed plans for a “Tesla Bot” humanoid robot — but ended the week down more than 3.5 percent.
SEX DOESN’T SELL
OnlyFans, the adult-oriented subscription platform that upended the pornography industry during the pandemic, will start banning sexually explicit content in October. OnlyFans creators will still be allowed to post nude imagery consistent with the site’s terms of service but nothing more graphic. The hammer comes down as OnlyFans is reportedly struggling to raise money from VC firms at a valuation of more than $1 billion. The site Is expected to hit $1.2 billion in revenue this year, according to an investor deck seen by Axios. But deep-pocketed investors have been steering clear due to its adult content. OnlyFans claims to have 130 million users, many of whom are drawn by the sex workers the site is now shutting out.
Updated August 21, 2021 at 6:15 pm ET to reflect this article was written by Carlo Versano