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Covid-19 Vaccines, Trump, Microsoft, TikTok and Sony’s Video Game Boom

Investors consider whether Covid-19 vaccine companies are overvalued, Trump says the U.S. should get a chunk of TikTok’s sale price and Sony leads a pandemic-induced video game boom.
(By Morakot Kawinchan)
(By Morakot Kawinchan)
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Good morning! Today’s word count is 1,364 words, or a 9-minute read. Let’s get to it:

“U.S. stocks showed slight gains as a slew of major companies reported earnings, some of them beating already low expectations from coronavirus economic troubles,” The Wall Street Journal writes.

  • S&P 500: $3,289.92
  • Nasdaq: $10,897.90
  • Bitcoin: $11,244.38
  • U.S. 10-Year: 0.522%

Covid-19 Vaccine Front-Runners Impress Investors, but Concerns Exist

Investors are growing more confident that Covid-19 vaccines will work, and at least one could reach regulatory authorization by the fall. But as stock prices tied to the companies producing candidates soar, there’s growing concerns about whether these firms can justify the positive swings of the last few months.

Why It Matters

The technology is new, and some of the companies lack a track record.

  • mRNA, the cutting-edge tech powering several candidates, has never yielded an approved vaccine before (though, data from early trials is inspiring confidence mRNA vaccines will roll out in the months ahead).
  • Neither Moderna nor BioNTech, two leaders in the race, has ever produced an approved drug or vaccine.

It’s hard to judge a vaccine in a short period.

  • Preliminary data doesn’t show much about experimental vaccines – early-stage studies aren’t designed to prove whether vaccines truly protect people, but rather only test safety and immune responses.
  • It isn’t easy to compare results across studies, as immune responses are measured differently.
  • Large, pivotal studies don’t function the same way, and success in earlier phases doesn’t guarantee vaccine candidates will pass broader tests.
  • And even if vaccines pass large-scale trials, it’s still going to take some time to figure out how long the shot would provide protection or whether it just reduces symptoms.

Publicly traded vaccine companies have gained around $120 billion in market value since late January, according to SVB Leerink biotech analyst Geoffrey Porges.

  • “It is very hard to see how there will be sufficient, sustainable cash flow to justify that value,” Porges said.

Numbers to Consider

  • 300 Percent – Moderna’s stock price growth since the start of the year.
  • 152 Percent – The growth of BioNTech’s shares since the year started.

Read More: (WALL STREET JOURNAL)

Trump Says U.S. Should Get Slice of TikTok Sale Price

TikTok is saved…kind of? President Trump told reporters he was ready to approve a purchase of the U.S. operations of the Chinese short-form video app, but only if the government receives “a lot of money” in exchange, a move that appears to lack presidential precedent.

Why It Matters

The clock is ticking.

  • Trump set a deadline of Sept. 15 for Microsoft and ByteDance to work out a deal to offload TikTok’s operations in the U.S. (and possibly three other countries).

Is it even legal for the U.S. government to take a cut?

  • Dartmouth College economic historian said advisers to Franklin Roosevelt in his first term debated whether the U.S. should cut barter deals with other governments. The president ultimately rejected the idea and negotiated trade agreements instead.
  • “It is completely unorthodox for a president to propose that the U.S. take a cut of a business deal, especially a deal that he has orchestrated. The idea also is probably illegal and unethical,” said University of Richmond law professor Carl Tobias.
  • “This is an extension of Trump’s generalized view that he can micromanage the industrial sphere,” said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics.

It’s unclear how payment from the deal to the Treasury Department would work.

  • Still, Microsoft has stated it is “committed to acquiring TikTok,” even if that means a security review and providing “proper economic benefits to the United States.”
  • Overall, the strong-arming of one of China’s most valuable tech assets is a harsh blow to the already souring situation between the U.S. and China.

Numbers to Consider

  • $6 Billion – ByteDance’s 2021 projection for TikTok’s revenue.
  • 100 Million – TikTok’s estimated U.S. users.

Read More: (WALL STREET JOURNAL)

A Quick Look

Sony’s Results Get Boost from Videogame Boom

  1. People are staying home and playing video games thanks to the pandemic, and Sony is reaping the benefits. The company said it expected the Playstation 5 console, set to release later year, will offset losses and help Sony record slight growth in the fiscal year.
  2. Sony’s April-June revenue rose 2 percent to ¥1.97 trillion ($18.6 billion) while operating income dropped 1 percent to ¥228 billion. Add-on content such as in-game currency or new features from existing games accounted for $2.3 billion in revenue. The company said it expected videogame segment sales to increase to ¥2.5 trillion ($24 billion) by March 2021, about a quarter up from the year earlier.
  3. Sony wasn’t the only company to profit from the increased time at home. Nintendo’s release of “Animal Crossing: New Horizons” exploded in popularity, selling 13.4 million copies in its first six weeks after going on sale on March 20.

Read More: (WALL STREET JOURNAL)

Worth Your Time

Flip Reverse: Google’s $2.1 billion acquisition of Fitbit is in jeopardy. The deal had already been delayed for months after the European Union’s antitrust enforcer launched an in-depth probe. Many privacy and consumer protection groups raised concerns over the prospect of Google acquiring sensitive health data when the deal broke. Google has pledged to refrain from using any Fitbit data for advertising purposes, but that promise may seem insufficient to the European Commission. (WALL STREET JOURNAL)

Trouble In Mind: The FTC has Twitter in its sights as the social media platform allegedly used phone numbers and email addresses given to the company for safety and security purposes for targeted advertising between 2013 and 2019. The matter could cost Twitter between $150 million and $250 million though it currently is unresolved. “Under terms of the FTC agreement finalized in 2011, Twitter isn’t allowed to mislead consumers about how it ‘protects the security, privacy and confidentiality of nonpublic consumer information,’” The Wall Street Journal writes. (WALL STREET JOURNAL)

Brand New Day: Capping one of its worst quarters ever, BP reported a $17.7 billion loss and cut its dividend for the first time in a decade. In one of the “most dramatic energy-transition plans,” the British energy giant is now shifting its focus to increasing low-carbon investments to $5 billion a year by 2030, from around $500 million. Oil and gas production has dropped 40 percent from 2019 levels. (WALL STREET JOURNAL)

Tidbits

“Chinese state media accused the U.S. of trying to steal Chinese tech by forcing the sale of TikTok to Microsoft, raising the specter that Beijing may block or retaliate for a proposed deal,” The Information writes.

Ford announced Jim Farley will take over as CEO, replacing Jim Hackett when the incumbent departs for retirement on Oct. 1.

Alibaba is pouring more money into Chinese electric car maker Xpeng Motors ahead of the startup’s New York IPO.

While talks have restarted on a new coronavirus aid bill, neither side is budging on stances for boosting households’ incomes during the pandemic.

WATCH: What’s it going to take to reach heard immunity for Covid-19?

WATCH: Tesla is now eligible for the S&P 500 after its fourth-consecutive quarterly profit.

A Couple Cents Content

We’re giving away $1,500 and a bunch of prizes for our Stock Pitch Contest! Take a look: (POST)

Justin Oh takes a look at how much Microsoft stock could benefit from buying TikTok.

Is using ETFs as a savings account a good thing? Justin Oh breaks it down. (TIKTOK)

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