Plus, the WHO recommended AstraZeneca’s COVID-19 vaccine for all adults over age 18, Target is giving employees incentives to get vaccinated, and GM said that a global chip shortage could cut its earnings by up to $2 billion this year.
Stocks were higher to start Wednesday with the Dow adding 52 points, or 0.2%. The S&P 500 rose 0.2%, while the Nasdaq gained 0.6%.
Walmart and Oracle’s plan to buy TikTok’s U.S. operations has been called-off indefinitely as President Joe Biden reviews former president Donald Trump’s efforts to address potential security risks from the popular Beijing-based social media app. TikTok’s forced sale has been on hold due to successful legal appeals by its parent company ByteDance Ltd, and as the company has held discussions with U.S. national security officials about how to secure American users’ data form being obtained by the Chinese government, though no agreement has yet been reached. Sources told the Wall Street Journal that the ultimate deal with Walmart and Oracle for TikTok’s U.S. operations will likely be different from the one originally struck, and will still have to be approved by Chinese regulators.
A World Health Organization panel recommended AstraZeneca’s COVID-19 vaccine for all adults over age 18, paving the way to speed up inoculations in developing countries even despite data indicating the shot isn’t effective at preventing the South African strain of the deadly virus. Still, the recommendation is good news for developing countries, many of which are waiting to administer their first vaccinations as wealthier countries have already inoculated millions of residents. “We made the recommendation that even if there is a reduction in possibility of this vaccine having a full impact in its protection capacity, there’s no reason not to recommend its use, even in countries that have the circulation of variants,” said Alejandro Cravioto, chairman of the WHO panel.
Target has joined a growing list of companies that are offering extra pay and other incentives to urge employees to get a COVID-19 vaccine. The retailer will offer all hourly employees up to four hours of pay when they get the two shots, and will cover the cost of a Lyft ride, up to $15 each way, to get vaccinated. “Taking care of our team has been at the heart of every decision we’ve made since the coronavirus started, and this point in the pandemic is no different,” said Chief Human Resources Officer Melissa Kremer. “As more vaccines become available, especially for frontline and essential workers, we’ll help our team members across the country get the information and access they need. As we have for the past year, we’ll continue to invest in our team’s pay and benefits so they can take care of themselves, each other and our guests.”
General Motors shares are down more than 4% this morning after the company warned that a global semiconductor chip shortage could cut its earnings by up to $2 billion this year. Automakers and parts suppliers warned about the shortage starting late last year as demand for new vehicles rebounded more strongly than expected following a two-month shutdown of production plants due to the coronavirus pandemic. GM CEO Mary Barra said GM doesn’t expect to lose any production this year of its highly profitable full-size pickup trucks and SUVs due to the chip shortage. “It’s still a bit fluid, but our current outlook is that we’re going to be able to meet the production schedules we had for the year,” Barra said. GM also delivered an earnings beat, posting adjusted earnings per share of $1.93 on revenue of $37.5 billion, versus expectations for earnings of $1.64 per share on revenue of $36.12 billion.
In other earnings news, Under Armour shares are up 8% after it reported a surprise profit for the holiday quarter. The athletic apparel maker posted earnings of $0.12 per share on revenue of $1.4 billion, compared to Wall Street estimates for a loss of $0.07 per share on revenue of $1.27 billion. “There’s been a resurgence in terms of fitness… personal fitness, and general wellness,” said CEO Patrik Frisk on a conference call with analysts. “We’re an authentic athletic performance brand.” Coca-Cola also delivered a beat, reporting earnings per share of $0.47 on revenue of $8.6 billion, versus earnings of $0.42 per share on revenue of $8.63 billion expected. “The progress we made in 2020, including the actions taken to accelerate the transformation of our company, gives us confidence in returning to growth in the year ahead,” said CEO James Quincey in a statement. “While near-term uncertainty remains, we are well-positioned to emerge stronger from the crisis.”
Stocks We’re Watching
Glu Mobile (NASDAQ: GLUU): Glu Mobile shares rose as much as 36% yesterday after news broke that Electronic Arts would acquire it for $12.50 per share. “This transaction is the culmination of the tremendous work of the Glu team to deliver world-class interactive experiences for our players, while driving business momentum that has led to strong financial and operational results. It represents a terrific outcome for all of our stockholders and other key constituents,” said Nick Earl, CEO of Glu. “As part of Electronic Arts, we will continue capitalizing on the opportunities ahead in the expanding mobile gaming industry.”