Text size
Last week, two bearish analysts finally threw in the towel on Tesla, and the stock hasn’t stopped running. The shares have tacked on another $381, or 24%, this week, extending their 2020 gains to about 380%.
Shares cracked the $2,000 barrier Thursday and, of course, are rising again on Friday—up another $38, or 1.9% in premarket trading.
What’s going on? We’ll admit it: We don’t know.
There is the stock split that has excited investors, and helped push shares up 45% since the announcement. There is inclusion in the S&P 500, which looks likely since Tesla reported the quarterly profit that qualified the company stock for inclusion.
Still, Tesla shares are overbought, and due for at least consolidation, if not a pullback. It’s trading well above its 50-day moving average, and looks very, very expensive.
Still, we wouldn’t bet against Tesla stock. That’s been a widow-making trade, one that can end careers. We’d refrain from shorting it, at least not until a better reason comes along.
—Al Root
***
Biden Accepts Democratic Nomination for President
Joe Biden formally accepted the Democratic Party’s presidential nomination, saying on the final night of his party’s virtual convention that he would provide new leadership and bring together a divided nation. “I’ll draw on the best of us, not the worst,” he said. “I will be an ally of the light, not the darkness.”
- Biden spoke from the Chase Center in Wilmington, Del., with a backdrop of American flags while supporters were parked in vehicles outside watching on large screens.
- Emcee and actress Julia Louis-Dreyfus of Veep and Seinfeld fame gave the convention a dose of humor. “If we all vote, there is nothing Facebook, Fox News and Vladimir Putin can do to stop us,” she said.
- Biden and many of his allies criticized President Donald Trump for his lack of leadership and his handling of the coronavirus pandemic and the economic fallout. Sen. Tammy Duckworth of Illinois, a combat veteran, called Trump a “coward in chief” who doesn’t stand up to tyrants.
- After Biden’s speech, Trump tweeted, “In 47 years, Joe did none of the things of which he now speaks. He will never change, just words!”
What’s Next: The Republican National Convention starts Aug. 24, with portions held virtually, and on location in Charlotte, North Carolina. Delegates are expected to formally nominate Trump and Vice President Mike Pence, with Trump’s acceptance speech set for Aug. 27.
—Mary Romano
***
A Former Top Advisor to President Trump Faces Fraud Charges
Steven Bannon, a former top advisor to President Donald Trump, was arrested and indicted on a charge of fraud for allegedly using hundreds of thousands of dollars raised by a GoFundMe meant to pay for a new section of border wall to cover his personal expenses.
- The U.S. attorney’s office for the Southern District of New York said Bannon and three other associates allegedly defrauded donors to the We Build the Wall crowdfunding campaign that brought in $25 million by promising to build a portion of the wall on the southern border.
- As part of its appeal to donors, We Build the Wall said that its founder, Brian Kolfage, an Air Force veteran, would not be paid. Bannon said, “We’re a volunteer organization,” according to a SDNY statement.
- Kolfage, prosecutors allege, used more than $350,000 in donations to pay for home renovations, a golf cart, boat payments, a car, and cosmetic surgery.
- Bannon entered a not guilty plea on charges of conspiracy to launder money and conspiracy to commit wire fraud. “This entire fiasco is to stop people who want to build the wall,” Bannon said after exiting a Federal courthouse in Manhattan Thursday. Kolfage has not responded publicly to the charges.
- “I feel very badly,” President Trump said about the news. “I haven’t been dealing with him for a very long period of time,” he added. Bannon joined Trump’s campaign in August 2016 and was appointed chief strategist following the election. He was forced out of the administration in August 2017.
What’s Next: Bannon, Kolfage, and two others arrested each face one charge of wire fraud and one charge of money laundering. Each charge carries a maximum of 20 years in prison.
—Ben Walsh
***
J&J to Launch Largest Human Vaccine Trial
After a lull in developments on potential Covid-19 vaccines, Johnson & Johnson is planning to launch the largest human trial ever for its candidate by September. The news comes as several economic warning signs flashed that the country’s nascent recovery is stalling.
- With up to 60,000 participants, J&J’s final Phase 3 trial would be twice as big as those by other drugmakers. In contrast, Pfizer’s and Moderna’s Phase 3 trials are each aiming to enroll 30,000 people.
- In a call with reporters Thursday, a Food and Drug Administration official said that the agency’s external vaccine-advisory panel might meet on Oct. 22 to discuss a Covid-19 vaccine, according to Bloomberg. The official did not say which vaccine the panel would discuss.
- The Trump administration on Thursday returned responsibility for hospitals’ Covid-19 data reporting to the Centers for Disease Control and Prevention, which in July had lost that duty to a Department of Health and Human Services contractor.
- On the economic front, 1.1 million Americans filed for unemployment benefits for the first time last week. That’s more than the 923,000 initial claims that economists were expecting and up from the previous week’s reading of 965,000.
- The Federal Reserve Bank of New York and Philadelphia reported that manufacturing activity in their areas had not grown as much as anticipated.
What’s Next: With the economic outlook closely tied to progress on the virus front, positive results from vaccine trials could help accelerate the recovery. Preliminary findings on J&J’s candidate are expected by the end of 2020, which means it could be approved for emergency use by regulators in early 2021.
—Ben Walsh
***
Uber and Lyft Win Emergency Order After Lyft Shuts Down
Ride-sharing rivals Uber and Lyft won an emergency stay from a California appeals court on Thursday, halting for now a ruling that would have forced the companies to classify their drivers as employees by today.
- On Aug. 10, a state court issued a preliminary injunction requiring Uber and Lyft to follow a California state law known as AB5 and reclassify their drivers as employees instead of independent contractors. AB5 passed last fall, but Uber and Lyft haven’t complied with it.
- Before the stay was granted Thursday afternoon, Lyft said it would shut down its operations in California, starting at 11:59 p.m. PDT on Thursday. Last week, Uber CEO Dara Khosrowshahi said that unless a stay was issued, his company would likely have to temporarily shut down its California operations.
- Both Uber and Lyft can now continue operations, with their drivers still classified as contractors, while their appeal is weighed. Shares of both companies rose on the news.
What’s Next: Preliminary oral arguments on the injunction are set for Oct. 13. And on Nov. 3, Californians will vote on Proposition 22, which would exempt ride-sharing and food delivery companies from AB5.
—Ben Walsh
***
U.K. Retail Sales Back to Their Pre-Virus Level
British consumers flocked to reopened shops and kept spending online in July, the first month of full activity for retail businesses since a general lockdown was decreed in March. Retail sales jumped 3.6% in volume over June, and were 1.4% above their July, 2019 level, the Office for National Statistics said Friday.
- The overall level hides persistently wide differences between sectors. Household goods were in high demand because of pent-up demand after months of forced savings, while supermarkets and food stores kept benefiting from the reduced activity of restaurants and pubs.
- Many retailers have announced plans for thousands of job cuts— Marks & Spencer, for example, will shed 7,000 jobs in the next few weeks. And clothing and footwear sales are still down 25% over their level last year.
- According to the latest purchasing managers index, the British economy is rebounding strongly in August, both the manufacturing and services sectors. This contrasts with weaker similar data published Friday for the rest of Europe.
What’s Next: After a bright summer, retail could be hit further in the fall, as government schemes to support jobs are being phased out, and unemployment rises to levels commensurate with the continuing recession. Unless the government agrees on more fiscal stimulus, and the Bank of England loosens its monetary policy further.
—Pierre Briançon
***
Do you remember this week’s news? Take our quiz below and tell us how you did by emailing thebarronsdaily@barrons.com.
1. On the 100th anniversary of women gaining the right to vote, who received a posthumous presidential pardon for illegally voting?
a. Elizabeth Cady Stanton
b. Harriet Tubman
c. Susan B. Anthony
d. Sojourner Truth
2. Which country’s president resigned after being detained by soldiers, along with the prime minister and dozens of senior officials, in an apparent coup following months of protests?
a. Chad
b. Mali
c. Algeria
d. Libya
3. The world’s largest hydroelectric dam is approaching maximum water levels due to the worst flooding in four decades, which has already affected 63 million people this year. What is the name of the dam?
a. Xiluodu Dam
b. Three Gorges Dam
c. Xiangjiaba Dam
d. Itaipu Dam
4. After securing $2 billion in debt due to Covid-19, which company announced plans for an IPO?
a. Palantir
b. Instacart
c. Asana
d. Airbnb
5. Which company is creating 3,500 corporate jobs across six cities, including 2,000 in the former Lord & Taylor building on Fifth Avenue that it recently purchased for more than $1 billion?
a. CVS
b. Facebook
c. Walmart
d. Amazon
Answers:1(c); 2(b); 3(b); 4(d); 5(d)
—Bonnie Bennett Slater
***
—Newsletter edited by Stacy Ozol, Anita Hamilton, Mary Romano, Matt Bemer, Benjamin Levisohn