Plus, Microsoft said its Windows 11 operating system will begin rolling out on October 5, Zoom shares are down after the company’s growth shows signs of slowing, and sustainable shoe brand Allbirds said it has filed to go public.
Stocks were little changed at the open on Tuesday with the Dow trading just below the flatline. The S&P 500 traded just above the flatline, while the Nasdaq dropped less than 0.1%.
South Korea’s parliament approved a bill to make the country the first to impose curbs on Apple and Google’s app store payment policies that force developers to use only the tech giants’ proprietary billing systems. Once signed by President Moon Jae-in, the bill will enable developers to avoid paying commission to major app store operators by directing users to pay via alternate platforms. “It’s a potential watershed moment,” Wedbush Securities managing director of equity research, Daniel Ives, said. “Not necessarily for what this means in itself, but for the ripple effect as it shoes that they’re not just words, but actually actions. The question is what will consumers ultimately do? Because the path of least resistance is to go through Apple and go through Google – and that’s what consumers have gotten used to.”
Microsoft said today that it will begin offering free upgrades to its new Windows 11 operating system to eligible PCs beginning on October 5. Windows 11 has a more modern look, redesigned Start menu, app store, and Settings app, and has new sounds that are designed to be less jarring. “The free upgrade to Windows 11 starts on October 5 and will be phased and measured with a focus on quality,” Aaron Woodman, general manager for Windows marketing, said in a blog post. “Following the tremendous learnings from Windows 10, we want to make sure we’re providing you with the best possible experience. That means new eligible devices will be offered the upgrade first. The upgrade will then roll out over time to in-market devices based on intelligence models that consider hardware eligibility, reliability metrics, age of device and other factors that impact the upgrade experience. We expect all eligible devices to be offered the free upgrade to Windows 11 by mid-2022.”
Zoom shares are down more than 15% at the time of writing after the video-calling software maker’s earnings showed slowing growth. The company reported earnings per share of $1.36 on revenue of $1.02 billion, beating estimates for earnings per share of $1.16 on revenue of $991 million. Revenue rose 54% in the quarter, but the previous quarter showed revenue growth of 191%. Zoom also forecast revenue growth of just 31% for the current quarter. “What we’re seeing… is headwinds in our mass markets, so these are individual consumers and small businesses. And, as you say, they are now moving around the world. People are taking vacations again, they’re going to happy hours in person,” CFO Kelly Steckelberg said to CNBC. “As we came through the back half of Q2, we started to see some additional churn there and that’s what’s evidenced in our guidance for the rest of the year and that’s what I think you’re seeing in the reaction to the stock.”
Robinhood opened lower this morning after SEC Chairman Gary Gensler told Barron’s that banning the practice of payment for order flow—the back-end payment brokerages receive for directing clients’ trades to market makers—is “on the table” as it has “an inherent conflict of interest.” Payment for order flow is one of Robinhood’s largest revenue sources, and is the reason the app is able to provide zero-commission trading. Gensler’s comments come after the SEC said it is stepping up its inquiry into the gamification and behavioral prompts used by online brokerages, like Robinhood, to encourage people to trade more stocks and other securities. “While new technologies can bring us greater access and product choice, they also raise questions as to whether we as investors are appropriately protected when we trade and get financial advice,” Gensler said in a statement. “In many cases, these features may encourage investors to trade more often, invest in different products, or change their investment strategy.”
And sustainable shoe maker Allbirds said today that it has filed for an IPO. The company, which used the word “sustainability” 107 times in its regulatory filing, said it hopes to “help pioneer” a framework for companies to conduct a sustainable public equity offering, or SPO, in which a company must meet certain criteria, including a minimum environmental, social, and governance (ESG) rating and best practices on climate response. “We believe the SPO designation will help to identify leading ESG companies as they enter the public equity markets,” the company said. Allbirds will trade on the Nasdaq under the ticker symbol “BIRD” when it has its public debut.
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Build-A-Bear Workshop (NYSE: BBW): Build-A-Bear shares are up more than 22% over the last week after the company reported second quarter earnings results. “Our positive trend continued in the second quarter as we once again delivered record-breaking profit as well as strong growth in total revenues over both the fiscal 2020 and 2019 second quarters,” Build-A-Bear President and CEO Sharon Price John said in the earnings release. “We believe these results reflect momentum that has been building from the execution of our stated strategy, agility to adapt to a rapidly evolving environment, and ability to accelerate key initiatives to drive sustained profitable growth, while recognizing that the business is also benefiting from pandemic-related factors such as pent-up demand and stimulus funds.”