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.
INFLATION NATION
Stocks edged higher on Friday but ended the week on a down note, snapping a five-week winning streak thanks largely to an inflation print that came in even hotter than expected. The consumer price index surged in October at the fastest pace since 1990, according to data from the Labor Department that shows inflation approaching 7 percent in the U.S. CPI rose 6.2 percent last month from a year earlier, reflecting higher prices on everything from groceries to gas to cars. Inflation is also accelerating on a monthly basis well above economists' expectations — a fact that was underlined by Friday's consumer sentiment survey, which dropped to its lowest level in a decade. President Biden acknowledged that the situation was hurting regular Americans and called it a "top priority" of his administration to reverse the trend. Even with the dismal inflation report, the major indexes are within range of record highs.
MONSTER IPO
Shares of the electric-truck maker Rivian surged in their public debut, skyrocketing more than 50 percent above the offering price in the first two days of trading, for the biggest U.S. IPO in years. The company ended the week with a valuation of almost $105 billion — higher than both Ford and GM, even though it's only built a couple of hundred vehicles, has sold about 150 of them and is nowhere close to turning a profit. The blowout IPO suggests the intense investor interest in EV stocks is nowhere close to running out of steam.
STOCK SALE
The Rivian IPO was enough to get the attention of Elon Musk, who taunted the newly minted Tesla competitor in a tweet noting that "Tesla is only American carmaker to reach high volume production & positive cash flow in past 100 years." Musk, for his part, spent the week selling Tesla stock after he conducted a Twitter poll asking respondents what he should do with 10 percent of his stake. Musk's trust sold about $5 billion in shares — or about 3 percent of his stake in the company — then another $700 million on top of that. Some of the money raised will go to satisfy tax obligations on options that Musk was granted in September. The sale triggered a selloff in Tesla, with shares down 10 percent on the week.
CORPORATE SPLITSVILLE
It was a week of splits for some iconic conglomerates, starting with perhaps the most iconic of all: General Electric is breaking itself up into three distinct companies. GE says it will divide itself into separate units for its healthcare, energy, and aviation businesses, and then spin off the healthcare and energy companies. The GE name will live on with the aviation company that makes jet engines, essentially ending the conglomerate that was born out of Thomas Edison's invention of the lightbulb. Then came Johnson & Johnson and Toshiba, which both announced their own splits. J&J will break itself up into two companies — one for its consumer products (Band-Aids, Tylenol, Neutrogena) and another for its pharmaceutical and medical device division. Tokyo-based Toshiba will split into three parts over the coming years, one for infrastructure, another for electronic devices, and another for flash memory.
RESALE IS RESILIENT
Investors have found one of the few industries that hasn't been upended by the breakdown in the supply chain: the fashion resale business. ThredUP, The RealReal, and Poshmark all reported earnings this week showing revenue up double digits year-over-year. Shares of thredUP and TheRealReal gained on the week, while Poshmark took a dive after missing expectations (of the three, Poshmark is the most reliant on digital advertising, given that the company is primarily a social platform — and Apple's privacy changes are proving to be a headwind). ThredUP CEO James Reinhart joined Cheddar to explain how the resale business model is well poised ahead of what's expected to be a bumpy holiday shopping season: "In a world where most consumers are feeling squeezed by prices and seeing apparel shortages, everything we have on thredUP is 100 percent in stock and ready to ship."
