Sep 27 2021 (Mon)
Despite a rough start to the markets at the beginning of last week, the S&P 500 Index gained over 2% to end trading at record highs on September 23. Analysts expect market volatility to weigh on equities this week too as Federal Reserve Chairman Jerome Powell is all set to testify before Congress with respect to the policy response that relates to the pandemic. Similar to the last Mondy, the S&P 500 ended in the red on September 27 as well.
The disruption in the global supply chain amid COVID-19 continues to impact retail heavyweights such as Nike and Costco. During its recent earnings call, Costco’s CFO Richard Galanti claimed the company faced issues that included, “port delays, container shortages, Covid disruptions, shortages of various components, raw materials and ingredients, labor cost pressures, and truck and driver shortages.”
Its top-line is expected to be impacted as Costco has capped the amount of toilet paper and cleaning supplies a customer can buy. This is not due to high consumer demand but is attributed to the problem of having these products delivered to stores.
Nike on the other hand explained that 80% of its shoe factories, as well as 50% of its apparel factories, have been closed in Vietnam. Nike also cut its revenue forecast while warning of delays during the holiday season. The large-cap giant stated that a few products that took 40 days to ship are taking double the time right now.
Nike stock fell 6.26% on Friday while Costco gained over 3%.
While Apple has never officially revealed the number of subscribers on its streaming service, Apple TV+, it claimed the online platform had less than 20 million subscribers in the U.S. and Canada as of July 2021.
This allows the tech heavyweight to pay its employees involved in content production (read camera operators and set builders) lower rates than competitors such as Netflix and Disney+ that have 209 million subscribers and 116 million subscribers respectively.
Despite its $2.43 trillion valuation, Apple’s lower-than-market salaries for these behind-the-scenes employees might lead to a strike among union members for the want of better pay as well as improved working conditions.
According to the Utradea Reddit dashboard, stocks such as SmileDirectClub, Tesla, and Canoo Inc. are among the most popular companies on the social media platform, in the last 72 hours. While shares of SDC and Tesla rose over 4% and 2,2% respectively today, Canoo stock was down close to 8%.
However, all three stocks have underperformed the S&P 500 in the first nine months of 2021. The popular index has gained close to 20% year to date. Comparatively, Tesla stock is up 9.75% while SDC and Canoo have lost 35% and 52% respectively year to date.
Tesla remains one of the largest companies in the world and the market leader in the electric vehicle space. Alternatively, Canoo is a much smaller player in this nascent but highly disruptive vertical. The shift towards clean energy solutions in the upcoming decade might result in outsized gains for Tesla and Canoo investors. However, rising competition and the expertise of legacy auto manufacturers should not be discounted as potential long-term risk factors.