Pipeline Shutdown Continues As Gas Stations Run Dry Along U.S. East Coast

Plus, Tesla announced it has halted plans to buy land to expand its Shanghai plant, L Brands is spinning off its Victoria’s Secret brand, and Ginkgo Bioworks is going public via a SPAC merger.

Stocks were lower at the open on Tuesday with the Dow falling by 170 points, or 0.5%. The S&P 500 slid 0.9% lower, while the Nasdaq dropped 2.1%.

Running dry. Drivers along the U.S. East Coast and South are struggling to find gasoline and diesel as filling stations run out as one of the nation’s largest pipelines remains largely offline following a ransomware attack over the weekend. Colonial Pipeline has reopened a small section of the paralyzed pipeline “for a limited period of time while existing inventory is available,” it said in a statement. The ongoing shutdown is “going to be catastrophic,” said John Patrick, chief operating officer of Liberty Petroleum LLC. “Governors should declare a state of emergency and ask people chasing tanker trucks to gas stations to stay home. School buses stay put.” 

Tesla shares are down more than 2% this morning amid a broader sell-off in tech. The electric carmaker also announced that it has halted plans to buy land to expand its Shanghai plant and make it a global export hub due to uncertainty created by U.S.-China tensions. U.S. tariffs of 25% on electric cars imported from China imposed under the Trump administration are still in place, and as such, Tesla now plans to restrict the proportion of its global production that’s made in China. Also on Tuesday, China’s Passenger Car Association said that Tesla sold 25,845 locally made vehicles in April, down 27% from March.

L Brands announced today that it will spin off its Victoria’s Secret brand rather than sell it. While the company said it received interest from several potential buyers, its board concluded that separating Victoria’s Secret and Bath & Body Works into two separate publicly traded companies would be a better option. “We have made significant progress in the turnaround of the Victoria’s Secret business, implementing merchandise and marketing initiatives to drive top line growth, as well as executing on a series of cost reduction actions,” L Brands Chair Sarah Nash said in a statement. “Victoria’s Secret is now well-positioned to operate as a stand-alone, public company.” The spinoffs should be completed by August. 

Virgin Galactic shares dropped as much as 20% amid heavy volume this morning after the space tourism company said it encountered another technical problem that could force a second postponement of a planned test flight. While the company said a repair has been made to the VSS Unity, it added that an unexpected possible maintenance issue with carrier aircraft VMS Eve was identified after test flights last week. Given the maintenance issue, Virgin Galactic said the timing of its next spaceflight—which was supposed to happen in May—is “currently being evaluated.” “We will report back to the market next week with an update on schedule implications to our next flight,” Mike Moses, Virgin Galactic president of space missions and safety, said on a conference call. 

And the Bill Gates-backed biotech Ginkgo Bioworks has agreed to go public in a $17.5 billion merger with blank-check firm Soaring Eagle Acquisition Corp. The deal values Ginkgo at $15 billion, before adding the proceeds raised by the special purpose acquisition company and other investors, and the transaction is expected to close in the third quarter. “The magic of biology is that cells run on digital code similar to a computer, except that instead of 0s and 1s it’s As, Ts, Cs, and Gs,” Jason Kelly, co-founder and CEO of Ginkgo Bioworks, said in a statement. “Ginkgo’s platform makes it easier to program this code, and we are making this platform available to organizations working to solve our most pressing problems. From mRNA vaccines reaching people’s arms to combating climate change, the opportunity to work with programmed cells has never been more apparent. We are thrilled to partner with Arie as well as the team at Soaring Eagle to bring this vision to life.”

Stocks We’re Watching

Soliton Inc (NASDAQ: SOLY): Soliton shares surged 25% yesterday after the company announced that it has agreed to be acquired by Allergan Aesthetics, an AbbVie company. “Allergan Aesthetics’ brand recognition, global footprint, track record and commitment to developing best-in-class aesthetic treatments makes the Company ideally suited to maximize the commercial potential of the RESONICTM rapid acoustic pulse technology,” said Walter Klemp, Executive Chairman, Soliton. “I am proud of the passion and accomplishments of the Soliton team and thankful for the ongoing support of our investors which have culminated in this transaction. We look forward to working with Allergan Aesthetics to ensure a successful completion of this transaction.”