Markets Defused gives an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.
- Tesla shareholders approve Musk pay deal
- Royal Mail: Labour manifesto promises scrutiny
- Tesla trades higher ahead of Musk pay vote
- Adobe shares soar on AI-boosted revenue and profits
- Netflix seeks broadcast partner for NFL games
- Virgin Galactic to reprice stock
- GameStop meme-traders eye Roaring Kitty options
Tesla shareholders say ‘Yes’ to Elon Musk’s $56bn pay deal
“… hot damn, I love you guys,” was the message from Tesla Inc (NASDAQ:TSLA) chief executive Elon Musk as the company’s shareholder agreed to reinstate is $56 billion pay package.
Tesla shares traded slightly higher in afterhours dealing immediately after the vote was confirmed in Musk’s favour.
Robyn Denholm, Tesla’s chair, meanwhile described it as “a matter of fundamental fairness and respect”.
“No other shareholder base understands the company as you do. You are the owners of the company,” she told shareholders.
At the same time, shareholders also approved the relocation of the electric vehicle company’s headquarters to Texas from Delaware (it was a Delaware judge that previously voided Musk’s bumper pay packet).
Musk, meanwhile, added that: “We are not just opening a new chapter for Tesla, we are starting a new book.”
Not all shareholders supported the reinstatement of Musk’s pay, as some high profile minority shareholders voiced their disapproval ahead of the AGM, and proxy advisors in recent weeks had recommended a ‘no’ vote.
As such, the victory for Musk will likely be seen as a ringing endorsement of the often polarising tech and engineering entrepreneur.
Tesla shares edged 37 cents or 0.20% higher to trade just below $183 per share – it followed a 2.9% gain in regular trading which closed at $182.47.
Royal Mail takeover uncertain as Kier Starmer’s Labour manifesto promise scrutiny
Kier Starmer’s Labour government, if elected, plans to ‘robustly scrutinise’ the proposed takeover of Royal Mail.
Moreover, Starmer’s manifesto claims a Labour government would seek additional governance for the national post service.
“Royal Mail remains a key part of the UK’s infrastructure. Labour will ensure that any proposed takeover is robustly scrutinised and that appropriate guarantees are forthcoming that protect the interests of the workforce, customers and the United Kingdom, including the need to maintain a comprehensive universal service obligation,” the manifesto reads.
“Labour will also explore new business and governance models for Royal Mail so that workers and customers who rely on Royal Mail services can have a stronger voice in the governance and strategic direction of the company.”
The share price of Royal Mail parent International Distributions Services PLC (LSE:IDS) remains at a substantial discount to the 360p per share takeover offer pitched by Czech billionaire Daniel Křetínský.
On Thursday afternoon, after the release of Labour’s election manifesto IDS shares were priced at 331.8p each.
Stockbroker AJ Bell in a note, meanwhile, reacted by saying the takeover is ‘far from a done deal’.
“Labour doesn’t seem keen to let Royal Mail slide into foreign ownership without guarantees that protect workers and the people who rely on the postal service, namely the whole of the country,” AJ Bell investment analyst Dan Coatsworth said in a note.
“While Czech bidder Daniel Křetínský has already pledged a series of undertakings to whoever is in government, Labour explicitly referencing the company in its election manifesto implies it will not be a pushover if elected to Number 10 on 4 July.
“Labour’s intention to let workers and customers have a ‘stronger voice’ in how the company is run would give them nearly the same rights as a shareholder. Křetínský might think that is a step too close to nationalisation.”
He added: “Royal Mail is so engrained in the UK’s infrastructure system that any foreign bidder would find it hard to take the business private and do what they want behind closed doors.
“Investors seem to share that view judging by the share price reaction since the formal bid on 29 May.”
Adobe shares soars on AI-boosted revenue and profits
Adobe Inc (NASDAQ:ADBE) saw its shares soar in Thursday’s afterhours dealing, rising 15%, after reporting strong quarterly revenue and income, thanks to AI-driven demand.
“Our highly differentiated approach to AI and innovative product delivery are attracting an expanding universe of customers and providing more value to existing users,” chief executive Shantanu Narayen said in a statement.
Revenue increased to $5.31 billion for the quarter, from $4.82 billion in the same period last year, and higher than the $5.29 billion estimated by Wall Street analysts.
Net income for the quarter, meanwhile, came in at $1.57 billion equating to $3.49 per share.
Earnings (adjusted) per share was reported at $4.48, ahead of consensus analyst forecasts pitched at $4.39.
Adobe's digital media segment, which includes Creative Cloud and Document Cloud, saw an 11% increase in revenue to $3.91 billion, versus analysts' projections of $3.89 billion, whilst the digital experience segment's revenue grew 9%, to $1.33 billion versus an estimate of $1.32 billion.
Looking ahead, Adobe expects full fiscal year revenue to be between $21.40 billion and $21.50 billion, in line with the current market consensus forecast of $21.47 billion, whilst it guides for earnings per share between $18.00 to $18.20.
"Our market-leading products, strong execution and world-class financial discipline position us well for the second half of 2024 and beyond," Adobe chief financial officer Dan Durn added.
In New York, Adobe stock was up $70.27 or 15% changing hands at $529.39.
Netflix reportedly seeking broadcast partner for NFL games
Netflix Inc (NASDAQ:NFLX, ETR:NFC) is reportedly looking for a partner to produce the NFL Christmas games it has secured for streaming.
The streaming company is in talks with current NFL broadcasters ESPN, NBCUniversal, and CBS Sports, CNBC has reported citing people familiar with the matter.
Disney is ruled out as a potential broadcast partner as it has producing college football obligations on the same day.
Netflix's deal with the NFL has two games in 2024, and at least one game each in 2025 and 2026.
It is among a number of live broadcast projects Netflix is working on either directly in sports, or sports-related comedy in the case of the Tom Brady Roast, which was highly ranked and heavily viewed last month.
Later this year, now in November after a delay, Netflix will broadcast the exhibition boxing match between Mike Tyson and Jake Paul.
Next year, Netflix will begin broadcast’s weekly live episodes of WWE’s Raw.
Live sports and events are intended to drive revenues in Netlix’s relatively new advertising model.
Amazon has been streaming live NFL games since 2017.
Tesla trades higher ahead of Musk pay vote
Tesla Inc (NASDAQ:TSLA) moved positively on Thursday, ahead of this afternoon’s AGM – where shareholders will complete the voting over Elon Musk’s controversial $56 billion pay deal.
Musk’s remuneration, largely comprising stock options, was previously in place until a Delaware judge effectively voided the package in January, triggering the need for fresh shareholder approval.
Today’s shareholders’ votes also include a resolution to move the company's incorporation to Texas.
Musk’s pay package, originally approved in 2018, has faced significant criticism and in recent days a number of significant shareholders have publicly stated that they would vote against it.
However, a very substantial portion of Tesla stock is held by so-called retail investor, many of which are seen to be supportive of Musk.
Musk, meanwhile, in an X post in the early hours of Thursday morning claimed that both key votes “are currently passing by wide margins!”.
According to his critics, Musk is distracted by his ventures like X (formerly Twitter), brain-computer interface firm Neuralink, SpaceX and his artificial intelligence venture X.ai.
Tesla’s AGM kick off at 4:30pm Eastern time – which is 9:30pm in London, and 1:30pm in California.
Daniel Ives, analyst at West coast stockbroker Wedbush, expects the pair of votes to pass and, in a note, described today’s meeting as a “pop the champagne moment”.
“This removes a $20-$25 overhang on the stock in our opinion that has weighed on shares since the head scratching Delaware ruling set this Twilight Zone soap opera on earlier this year,”
In New York, Tesla shares were up $6.73 or 3.8% changing hands at around $184.
Virgin Galactic to reprice stock with 1-for-20 ‘reverse split’
Virgin Galactic Holdings Inc (NYSE:SPCE) is repricing its shares, with a 1-for-20 reverse stock split intended to bring the stock into alignment with Wall Street listing rules.
The stock, down 14% today at 73 cents per share, will need to meet the New York Stock Exchange’s minimum bid price requirement for continued listing.
Despite recent successful launches the ‘space tourism’ company sees it shares some 69% lower in 2024 to date.
The reverse stock split will see every 20 shares of Virgin Galactic’s stock exchanged for one new share. No fractional shares will be issued, instead shareholders will receive cash payments in lieu of fractional shares.
GameStop stays volatile as meme-traders eye Roaring Kitty options
GameStop Corp (NYSE:GME) shares stayed volatile on Thursday, a week out from option expiry for Roaring Kitty, aka Keith Gill, as stock trading notching the price up around 7%.
It comes amid reports of “a surge in volume” for the call option that Gill previously disclosed he held in a social media post earlier this month.
Gill via Reddit (NYSE:RDDT), where he goes by the DeepFuckingValue pseudonym, posted a screenshot that revealed a ‘$115 million bet’ on the price of GameStop via these call options (which allow him to buy a set number of share at a price of $20).
The post by Gill revealed that he held 120,000 of the call options as well as 5 million GameStop shares.
Analysis of the posts made by Gill suggest he doesn’t have sufficient funds to exercise all this options (which would cost $240 million dollars, versus his purported $30 million cash position).
As is customary with many options trades, it would therefore be expected that Gill would trade out of the position – either by selling them, or by ‘rolling them over’ into a new option position with another expiry date.
The price of the option series that Gill holds dropped 40% yesterday at the same time as the trading volume in the derivative line was up 9 times its prior average, media reports highlighted.
Eagle-eyed and speculative market watchers keenly watch on, awaiting further social media posts from the high-profile ‘meme trader’.
In the meantime, it continues to be a volatile time in the market for GameStop, which this week closed out a $2 billion ‘at the market’ share sale to investors – in which it offloaded 75 million new shares.
On Thursday, GameStop shares were up $1.82 or 7.15% each changing hands above $27 each.