The drop in markets due to the US inflation data at 8.2% was followed by a rebound that, however, hardly displaces what was previously happening to major US stock market stocks such as Tesla and Amazon.
US stocks, such as Tesla and Amazon, are in the red
The new data on US inflation threw the markets into a panic, ever since the announcement that the figure was 8.2% the stock exchanges and in particular Wall Street registered huge losses due to the failure to hit the target which was set at 8.1%.
The new cost-of-living data spooked investors, both institutional and non-institutional, but throughout the session they recovered a lot of ground until they moved back into the green zone following a closer look at the big picture.
On the one hand, although it is true that the figure turns out to be above expectations despite a progressive series of unprecedented rate hikes (to the tune of increases of 75 basis points for a total of 325) it is also true that in absolute numbers inflation continues its inexorable descent, only last June (the previous quarter) the figure was 9.1%, this means a drop of more than 10% in a single quarter.
The progression of the CPI decline is steady and specifically 8.5% in July, 8.3% in August and now 8.2% signifying that the trend shows continuity and strength, this likely underlying the overall recovery on Wall Street which saw the Dow Jones touch +2.8% despite an inflation not seen since 1982.
If we take the S&P 500 sector or the Nasdaq (NDSQ) we will see the repetition of the same V-shaped movement and stocks such as Tesla, Virgin Galactic and Amazon losing a lot at the opening and then recovering, some more some less.
Looking to analyze in detail, it is clear that while the CPI and US data issue remains present each company has been influenced by specific motivations at least in the trend that characterizes them.
Virgin Galactic’s performance
Virgin Galactic ($4.72 US per share today) founded by Richard Branson suffers from what in motorcycle jargon has come to be known as “Hayden’s Arm,” that is, the tendency to be able to get people to perceive their potential and create hype without, however, then materializing immense talent.
Evidence of this characteristic is the company’s promise that in 2020 (the year of founder Richard Branson‘s 70th birthday) it would take space tourists from the earth to the upper atmosphere on a regular basis, despite some successes and a recent plane crash the company has made it clear that it has the means to succeed but this apparently cannot materialize until next year. According to some analysts, this delay is behind the 7% drop in the company’s stock.
The company’s declines are so worrisome that one New York analyst initiated coverage on Virgin Galactic Holdings (SPCE -1.46%) with an underperform rating, and on Tuesday many industry players were seen copying the move just as the company’s shares fell due to concerns about how long it will take the space tourism start-up to realize its potential.
The company’s bearish trend has been in full swing since the beginning of the year, and according to the most capable observers it does not seem to stem from the bear market but precisely from the company’s internal problems mainly concentrated in project delays that have caused the stock to lose 80% in value over the past year.
Elon Musk’s Tesla stock
Tesla (+4.48% today at $221.72) compared to Virgin seems to be experiencing a new momentum, at least in sentiment. There are news related to Musk, like the return of fire with the promised Twitter: a Delaware judge, following a notice of intent from the histrionic entrepreneur regarding a renewed willingness to proceed with the purchase, postponed the battle, which in the meantime had become legal and no longer based on proposals and raises, and sanctioned a truce by giving until 28 of October for an agreement to be reached between the Tesla founder and the canary social.
Former head of Twitter’s operations for Europe, the Middle East and Africa Bruce Daisley said he sensed a low mood among the ranks of the social network’s employees toward Elon Musk‘s swinging ideas and undermining the respectability of the social’s operations.
Even on the Starlink side, the good Elon Musk can smile given the excellent sales figures that have nearly doubled and the spread across the globe of the new satellite connection system aimed at bringing people closer together even in the most inaccessible parts of the planet.
Amazon, on the other hand, stands at $112.53 per share, equaling the company’s April 2020 value a full two years ago. The world’s largest internet company founded in 1994 by Jeff Bezos and now led by CEO Andy Jassy, is not having an easy time.
At the last Prime Day, the company did not even manage to increase the sales of its subscriptions on the very day dedicated to promoting them globally by bringing home results quite similar to a normal day.
A sigh of relief comes from the approval for the construction of the new mega Logistics Hub for Southern Europe and North Africa that will be based in Jesi (AN), Italy, 67000 square meters of area that will supply half of Europe with the products of the world’s most popular sales site and cut the company’s costs by a total of 2%.
The European banking industry landscape.
On the other side of the Atlantic, it is interesting what is happening in the banking sector, at a time of sharply rising interest rates aimed at combating the atavistic problem of inflation European banks permeated by variable-rate mortgages now see themselves in a position of distinct advantage.
The transaction of the investment bank UniCredit to buy back 11,094,000 of its own shares from 3 to 7 October, at a weighted average price of 10.70 euros each, announced on 21 September 2022 following the authorization given by the shareholders’ meeting on 8 April 2022, went smoothly and strengthened a company that was already enjoying good health unlike its cousin Intesa Sanpaolo, which is navigating more uncertain waters.
Indeed, Intesa Sanpaolo, along with the Bundesbank and Credit Suisse, are the pool of banks that have come back into the limelight negatively recently as a result of their balance sheets and danger of systemic contagion following any Lehman Brothers-style debacle of these.