Producer Price Index Supports Inflation Fears as The Market Closes in the Red
Although the S&P 500 index nearly topped its all-time high at one point today, the three main indices finished in the red.
Reports are giving investors mixed signals. Inflation is still showing its face, while officials continue to claim that it is transitionary. The Producer Price Index shows the greatest increase we have ever seen since it began to be tracked in 2010. This is being mirrored by an increase in prices across the economy.
At the same time, things are looking up with the re-opening of the economy. Many are waiting to hear the Fed’s monetary policy statement for June. Fed's reaction to the economic indicators could be one of the main events that move the market in the next few days and weeks.
As I logged in to my Stock Card account, I noticed a portfolio update by Think Tank Trading portfolio. Not sure if you have seen that feature yet. We added it recently, giving you a quick update whenever any of the portfolios you are following take action. For example, today Think Tank Trading sold half of its Airbnb (ABNB) shares, and you can see his note as to why he did that.
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One Day After a 19% Drop, Lordstown Motors (RIDE) Stock Price Jump Was Short-Lived
Yesterday’s market recap covered the alarming 19% plunge in price for the automotive company Lordstown Motors (RIDE). This came off the back of dual CFO and CEO resignations. Today, the stock reversed its direction, up by 11% during the trading day and ultimately by 7% in the after-hours session.
The business saved face today as Angela Strand, the new chairwoman, reassured shareholders that the company is expecting to meet its electric truck production deadline. Previously, the start-up EV business had warned that it was not sure if it could stay afloat and fulfill the orders by September.
Although the announcement calmed investors, Lordstown confirmed it would have a limited pickup production, leaving more uncertainties for the future. No wonder why the 11% stock price jump during the normal trading hours gradually faded down to 7% in the after-hours trading.
Just Eat Takeaway.com (TKAYF) Creates a Global Food Delivery Giant with the Acquisition of GrubHub (GRUB)
If you recall the beginning of the food-delivery gig economy, Grubhub (GRUB) was among the leaders. Fast forward to today, the company caught my eye at the top of today's biggest losers on the winners and losers page. Shares were down more than 68%. However, this price drop doesn’t mean Grubhub is out of the game quite yet.
Across the pond, Grubhub's counterpart in Europe, Takeaway.com (TKAYF), has decided to creator a global food delivery giant by acquiring it. This expansion to a global giant started from the Netherlands, continued into a merger with Britain’s Just Eat service, and is now completed by the acquisition of GrubHub today.
With the combined forces of existing customer bases and great growth due to the pandemic, the new company is poised to become a serious contender for the top spot in the US food delivery market. Generally speaking, the food industry is a low-margin business. There is not much profit left to be made in the delivery side of the market. Therefore, operations scaling and sharing technology infrastructure are the main ways food delivery companies can grow their profits. It seems that's what the new merger is all about.
One last question before we wrap up is: What happens to the investors who were holding Gubhub shares? Shareholders were issued ADSs (foreign stock tradeable on US exchanges) for Takeaway Just Eat based on their holdings. Takeaway stock will begin trading under GRUB (which has been suspended) as of tomorrow. Don't be alarmed by the price drop. You still own shares of the combined company that is now one of the largest food delivery companies worldwide. They have a great shot at profitability and growth.
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