Markets Defused aims to give an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.
- GameStop stock steady after shorter quit
- GameStop raised $2bn in share sale
- Nelson Peltz: from Mickey Mouse to ratcatcher
- Chinese EVs hit as Europe puts up import tariffs
- Jake Paul to launch ‘W’ men’s personal care brand
- Microsoft-backed Mistral AI sets $6bn valuation
GameStop stock steady after short seller quit
GameStop Corp (NYSE:GME) shares steadied above $30 on Wednesday, following confirmation of its $2bn share sale and after short-seller Citron Research exited its position.
Citron reportedly claimed it was abandoning its position because it “respected the market’s irrationality”.
Changing hands at $30.97, GameStop was up 48 cents or 1.57% in Wednesday’s dealing.
It means that despite all the wild swings and volatility of recent weeks, the GameStop price is now a meagre 1.8% from where it was this time a month ago.
GameStop late on Tuesday confirmed it closed its ‘at the market’ (ATM) share sale, amidst softening share prices, to raise over $2.1 billion of new proceeds.
The game retail sold 75 million new shares at an average share price of $28.50.
GameStop’s brokers were selling the shares against a volatile market backdrop, and the circus of ‘meme trading’, social media and the Roaring Kitty livestream.
“Given that GameStop’s share price closed at $46 on June 6, we had assumed it would complete the sale at an average price of $40,” Wedbush analyst Michael Pachter said in a note.
“Instead, the shares declined precipitously on June 7, reflecting news from Reddit (NYSE:RDDT) following a rambling presentation by Roaring Kitty (Keith Gill), closing that day at $28.
“We are lowering our price target to $11.00 from $13.50 to reflect lower-than-expected proceeds from the share offering. Our revised price target reflects roughly $9.50 per share of net cash, plus a going concern value of roughly $1.50 per share.”
Wedbush has an ‘underperform’ rating for GameStop.
GameStop previously said it intended to use the proceeds for general corporate purposes, potentially including acquisitions and investments.
Nelson Peltz: from Mickey Mouse to ratcatcher
After failing to snare the world’s most famous mouse, Nelson Peltz now has his sights on a ratcatcher.
The activist investor has taken a ‘significant’ position in pest-control firm Rentokil Initial PLC (LSE:RTO).
Through his vehicle Trian Partners, he now ranks among Rentokil’s ‘top ten’ shareholders albeit the precise amount of shares or percentage stake in the company has yet to be disclosed.
The activist, that sought to steer Disney earlier this year, said it had “reached out” to Rentokil to “discuss ideas and initiatives to improve shareholder value”.
Rentokil shares traded up 14% to close Wednesday’s session at around 475p.
Even after today’s rally, the share is down close to 27% for the past 12 months amid uncertainties over its North American business.
Chinese EVs hit as Europe puts up import tariffs
New York-listed Chinese electric vehicle stocks took a hit on Wednesday after the European Union announced new import tariffs to protect European car makers.
Tesla, BYD, and NIO shares fell in early trading but stabilised as the day progressed – with Tesla, in particular, rallying close to 5% higher to reach $178.92.
The EU claims Chinese vehicles benefited from unfair subsidies that distort competition.
It now intends to impose a 38% tax on non-cooperative companies and a 21% fee on other Chinese car makers. Meanwhile other EV firms will be given specified rates with BYD due to incur 17%, Geely’s will be 20%, and for SAIC it would be 38%.
Tesla’s import tax rate is still to be decided – whilst it is an American company and has a factory in Germany, Tesla also exports vehicles into Europe from a plant in Shanghai.
Initial reaction from market analysts suggests Chinese EV firms can still sell profitably in Europe even with a 30% tariff, through they would squeeze margins and drive prices higher.
Europe isn’t acting alone. Turkey is imposing a 40% tariff, whilst US President Joe Biden last month took an aggressive stance proposing a tariff on Chinese car imports of 100% (and, currently, no Chinese-branded vehicles are currently sold in the US).
GameStop raised $2bn in share sale
GameStop Corp (NYSE:GME) late on Tuesday confirmed it closed its ‘at the market’ (ATM) share sale, amidst softening share prices, to raise over $2.1 billion of new proceeds.
The game retail sold 75 million new shares at an average share price of $28.50.
GameStop’s brokers were selling the shares against a volatile market backdrop, and the circus of ‘meme trading’, social media and the Roaring Kitty livestream.
“Given that GameStop’s share price closed at $46 on June 6, we had assumed it would complete the sale at an average price of $40,” Wedbush analyst Michael Pachter said in a note.
“Instead, the shares declined precipitously on June 7, reflecting news from Reddit following a rambling presentation by Roaring Kitty (Keith Gill), closing that day at $28.
“We are lowering our price target to $11.00 from $13.50 to reflect lower-than-expected proceeds from the share offering. Our revised price target reflects roughly $9.50 per share of net cash, plus a going concern value of roughly $1.50 per share.”
Wedbush has an ‘underperform’ rating for GameStop.
GameStop previously said it intended to use the proceeds for general corporate purposes, potentially including acquisitions and investments.
Jake Paul to launch ‘W’ men’s personal care brand
Jake Paul is launching a personal skin-care brand for men, starting with an initial roll-out to Walmart stores.
Later, the product lines are due to also be sold on Amazon.
It promises to be a new commercial avenue for the Jake Paul whose brother is Prime co-founder Logan Paul.
The ‘youtuber’, influencer and boxer is labelling the brand “W”. Its initial product line comprising a body wash, body spray, and antiperspirant deodorant, to be followed in the future by shampoo, conditioner, face wash, and hair gel in the coming months.
The launch comes as Paul is scheduled boxing exhibition with Mike Tyson, which is due to be streamed on Netflix in November.
Research highlighted today suggested the male personal care market is growing at nearly 10% per year, and predicted it will exceed $100 billion within the next four years – albeit in previous years, 2018 to 2023, it was growing half as fast at 5% CAGR.
In comments to the media, Jake Paul described it as a “super underserved market”.
“We saw this old and outdated category where the competitors have been on the shelves in the exact same way for the past 20 years,” he said whilst being interviewed on CNBC.
“We just believed we had a better vision, better product and could disrupt this entire space.”
Microsoft-backed Mistral AI sets $6bn valuation in new funding round
Mistral AI, a Microsoft-backed French tech startup that’s developing new large-language models (LLM), has raised 600 million euros ($645 million) in a new funding round that has valued the company in excess of $6 billion.
The funding round was led by venture capital firm General Catalyst and included contributions from existing investors.
Mistral was founded just over a year ago, and it is moving rapidly to make new AI systems to rival OpenAI’s ChatGPT, Google Gemini and other leading AI platforms.
In its Mistral’s initial seed round last year the company raised €105 million euros.