Plus, DraftKings delivered an earnings beat, AT&T is selling off its DirecTV unit, and an internal review found that Nikola’s founder and former CEO made inaccurate statements following accusations by a short seller in September 2020.
Stocks were mixed at the open with the Dow dipping 1 point, or less than 0.1%. The S&P 500 rose nearly 0.3%, while the Nasdaq gained 0.9%.
The House is expected to pass President Joe Biden’s $1.9 trillion coronavirus relief package today. Once passed, the bill will head to the Senate where a single Democratic vote against would sink the plan. Still, both chambers are pushing to pass the bill and send it to Biden’s desk before March 14, when key programs supporting jobless Americans are set to expire. One thing that likely won’t be included in the final package is increasing the federal minimum wage to $15 per hour. Senate parliamentarian Elizabeth MacDonough found that the wage increase provision did not qualify for action under budget reconciliation, the fast-track procedure Democrats plan to use to pass the stimulus bill with only a simple majority. “We are deeply disappointed in this decision,” said Senate Majority Leader Chuck Schumer. “We are not going to give up the fight to raise the minimum wage to $15 to help millions of struggling American workers and their families. The American people deserve it, and we are committed to making it a reality.”
DraftKings shares are up more than 5% this morning after the online betting company delivered a big fiscal fourth quarter beat. The company reported a loss of $0.24 per share on revenue of $322 million, versus analysts’ expectations for a loss of $0.47 per share on revenue of $232.6 million. DraftKings said it now has 1.5 million monthly unique paying customers, up from 1 million in its third quarter, with average revenue per monthly unique payer coming in at $65 in the quarter. The online gambling company expects $900 million to $1 billion in revenue for 2021, up from $750 million to $850 million. “This guidance also assumes that all professional and college sports calendars that have been announced come to fruition and that we continue to operate in states in which we are live today,” the company said.
AT&T is spinning off its DirecTV, AT&T TV Now, and U-Verse unit. The telecommunications giant has entered into a deal with private equity firm TPG on the spin-off into a new entity called DirecTV with Bill Morrow, CEO of AT&T’s U.S. video unit, named as the new company’s CEO. The transaction implies an enterprise value for the new company of $16.25 billion. AT&T acquired DirecTV for $48.5 billion ($67 billion with debt) in 2015, hoping to pair the cable company with its wireless service to offer a discounted bundle to customers. But since 2015, cable has fallen in stature, causing DirecTV’s value to plummet as it loses millions of satellite TV customers each year. AT&T is now repositioning its entertainment strategy around its HBO Max streaming service.
Beyond Meat shares are up 2% at the time of writing as details emerge from its pact with McDonald’s after more than three months. McDonald’s, which had previously said simply that it “co-created” its new plant-based burger with Beyond Meat, clarified late Thursday that faux-meat maker would be the preferred global supplier for the McPlant patty as part of a three-year deal. The Big Mac maker said the deal applies to its restaurants in the U.S. and its international operated markets segment, which represents countries like Australia, Canada, and the U.K. If locations in these markets opt to introduce the new McPlant burger, they will source the patty through Beyond Meat. Piper Sandler analyst Michael Lavery said that while the clarification formalizes Beyond Meat’s status as McDonald’s preferred supplier, “we do not believe the relationship between the two companies has meaningfully changed.”
And Nikola shares are down nearly 7% this morning after an internal review of claims about its technology concluded the embattled startup and its founder who was ousted last year made several inaccurate statements, marking a break with previous denials of misleading communications. Nikola commissioned the law firm Kirkland & Ellis to conduct the review following short seller Hindenburg Research’s report from September that accused the company and its founder, Trevor Milton, of misleading investors, prompting inquiries by the SEC and Justice Department. Nikola said the internal investigation has been “substantially completed,” though no conclusion has yet been made by Kirkland & Ellis as to whether any statements that may have been inaccurate when made violated any statute.
Stocks We’re Watching
St. Joe Company (NYSE: JOE): St. Joe shares popped 11.5% on Thursday after the company reported net income rose 128% to $19.8 million in the fourth quarter. “We sold 206 homesites in the fourth quarter of 2020 compared to 103 homesites in the fourth quarter of 2019, an increase of 100%. We sold 509 homesites for the full year of 2020 as compared to 379 homesites in 2019, with higher prices and higher margins,” said Jorge Gonzalez, the company’s President and CEO. “The Clubs by JOE membership grew by 115 in the fourth quarter and 289 for the full year of 2020, bringing the total to 1,563 members as of December 31, 2020. Club membership sales in 2020 were the highest in any single year in the Company’s history. In the fourth quarter, we executed eight new commercial leases. This brings the 2020 total of new commercial leases to 31, the highest number of new leases in over a decade. As of December 31, 2020, we had 1,269 residential homesites under contract with ten different builders and plans for additional residential communities in Bay County.”