Plus, Dogecoin is surging this morning after a tweet from Elon Musk, 23andMe is going public through a SPAC backed by Richard Branson, and Clover Health shares are down following a critical report from Hindenburg Research.
Stocks were higher to start Thursday with the Dow gaining 286 points, or 0.9%. The S&P 500 added 0.6%, while the Nasdaq rose 0.4%.
Jobless claims came in above expectations. The Labor Department reported initial claims totaled 779,000 last week—the lowest level since the end of November—while economists had expected a reading of 830,000. Continuing claims drifted lower to 4.6 million, while the total of those receiving benefits fell to 17.8 million. The figures indicate that layoffs related to the coronavirus pandemic are beginning to slow. Still, with unemployment elevated, the Biden administration is working to push through additional stimulus checks to many Americans and increased federal unemployment aid. As more Americans become inoculated to the potentially deadly virus and cases fall, economic activity is poised to resume and job cuts may decline further.
Dogecoin surged more than 50% this morning after Elon Musk tweeted his support for the cryptocurrency just two days after saying he would take a break from Twitter. Musk said “Dogecoin is the people’s crypto,” sending it as high as $0.05798. “No highs, no lows, only Doge,” Musk tweeted, while also posting a meme from The Lion King. Dogecoin was started as a joke in 2013, and Musk said on the social audio app Clubhouse earlier this week that “the most ironic outcome would be Dogecoin becomes the currency of Earth in the future.”
DNA-testing firm 23andMe is going public through a SPAC merger in a $3.5 billion deal. Once the deal is closed, the combined company will trader under the ticker ME on the NYSE. The SPAC, VG Acquisitions, is backed by Virgin Group founder Sir Richard Branson who is the latest celebrity to join the blank-check dealmaking frenzy. 23andMe, co-founded in 2006 by Anne Wojcicki, sells genetic testing kits directly to consumers. Wojicicki and Branson are each investing $25 million into a $250 million private investment in public equity offering as part of the deal, with other investors including Fidelity Management & Research Company, Altimeter Capital, Casdin Capital, and Foresite Capital. “COVID-19 has really opened up doors,” Wojicicki said in a joint interview with Branson. “I’ve had this dream since 2003 that genetics would revolutionize health care and that’s really the era I see we can now usher in.”
Tapestry shares are up more than 3% this morning after the Coach owner delivered an earnings beat. Tapestry reported earnings of $1.15 per share on revenue of $1.69 billion, compared to analysts’ estimates for earnings of $1.01 per share on revenue of $1.63 billion. While the company’s sales fell 7% during the holiday quarter, it said it sees shopper demand returning stronger throughout this year. Chief Executive Joanne Crevoiserat said the company sold more of its bags, including those under its Kate Spade brand, at full price during the holiday season as the company as a whole increasingly distances itself from relying on promotions to lure in shoppers. “As we enter the second half of our fiscal year,” Crevoiserat said, “we are optimistic for the future in spite of the uncertain backdrop.”
And Clover Health Investments is down nearly 10% today following a critical report from short-seller Hindenburg Research claiming the company is under an active investigation by the Department of Justice that it has not disclosed to investors. According to Hindenburg, the DOJ investigation involves at least 12 different issues relating to its business model and Clover Assistant software, and accused billionaire investor Chamath Palihapitiya of misleading investors when he took the company public through a special purpose acquisition company last month. While the report doesn’t make any claims that Palihapitiya knew about the DOJ investigation prior to taking Clover public, it does raise questions about his due diligence in doing so.
Stocks We’re Watching
Clean Energy Fuels (NASDAQ: CLNE): Clean Energy Fuels shares jumped as much as 25% yesterday and are up nearly 3% today following Credit Suisse initiating coverage in the stock with an Outperform rating and Street-high price target of $17. “No other company besides CLNE has the existing fueling infrastructure across the entire U.S. to support wider and growing adoption” of renewable natural gas, said Credit Suisse analyst Manav Gupta, adding that the company is “uniquely positioned to benefit from renewable natural gas supply growth and that i will attract incremental fund flows from both environmental, social and corporate governance and energy investors.”