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The Week's Top Stories: September Slump, Merck Pill & Lucid EV Production

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.

SEPTEMBER SLUMP

September was the worst month for the stock market since March 2020, when the seriousness of the pandemic sent a shockwave down Wall Street. The S&P lost 5 percent last month, though the index still managed to eke out a gain for the third quarter. Stocks have been buffeted by a cascade of negative factors, from the continuing — and in some cases, worsening — supply chain issues and material/labor shortages, to stubbornly high inflation, to political headwinds as Congress remains at an impasse over the impending debt ceiling. The Q3 earnings season could change the dynamic when the banks start reporting results on Oct. 13. Total earnings for the S&P 500 index are expected to be up 26 percent from the same period last year, according to Zacks Investment Research.

COVID GAME CHANGER

Shares of Merck jumped more than 8 percent on Friday after the pharma giant announced positive data in its trials of an antiviral pill to treat Covid. That oral drug, molnupiravir, cuts the risk of hospitalization or death for high-risk patients by half when taken soon after infection, twice a day for five days according to the company. Merck plans to ask the FDA for an emergency use authorization soon. If granted, molnupiravir could become the "Tamiflu for Covid." The news sent shares of vaccine makers lower, with Novavax and Moderna hit especially hard. 

EYES ON THE PRIZE

Warby Parker went public through a direct listing on the NYSE this week, with shares popping more than 60 percent in the debut to give the direct-to-consumer eyewear company a market value of about $6 billion. The stock, trading under the ticker WRBY, joins a crowded field of recent direct listings — but unlike tech companies like Squarespace, CoinBase, and Roblox, Warby is still a retailer at heart. The company started as an e-commerce play in 2010 to disrupt the staid prescription eyeglass market but has since evolved into an omnichannel empire with a marketing strategy that paved the way for other DTC brands like Allbirds and Smile Direct Club. While Warby is still unprofitable, according to SEC filings, revenue was up more than 50 percent in the first half of 2021 over the same period last year. 

AURORA POPS

Aurora Cannabis popped almost 19 percent this week after quarterly sales missed estimates but the company said it now sees a path to profitability. The Canadian cannabis company expects cost savings to help it become profitable on an adjusted EBITDA basis by the first half of 2023. Shares soared on that announcement even as several analysts noted that Aurora faces continued weakness in the recreational marijuana space. Three years after Canada legalized cannabis, its major producers have struggled with the slow rollout of retail stores and a resilient black market that's able to undercut on price. Aurora has been trying to manage that by doubling down on its medical marijuana exposure, where margins are higher and legality is more widespread. 

WATCH OUT, ELON

The luxury electric-car startup Lucid Motors started production of its highly anticipated Lucid Air sedan at its manufacturing facilities in Arizona, a milestone for the automaker that some have referred to as the "Tesla killer." The first Lucid Air Dream Edition models headed for showrooms rolled off the assembly line before customer deliveries are set for October. (Cheddar got a first look at the Air Dream). The $169,000 top-end model recently received an astounding 520-mile range estimate from the EPA — more than 100 miles longer than its closest competitor. Lucid has a goal of delivering 20,000 vehicles in 2022. The stock had a bumpy week — jumping after investors saw that Lucid made good on its promise of delivering its first vehicles this year — then falling amid the broader market decline to end the week down almost 5 percent.  
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