July 22, 2020 – The Pfizer-BioNTech partnership gets a massive Covid-19 vaccine order from the U.S., Spotify deploys a new business model and what to expect with Tesla’s earnings report later today.
Today’s word count: 1,161 words (6 minutes)
Pfizer, BioNTech Get Massive Covid-19 Vaccine Order from U.S. Government
In the past few weeks, Moderna and the University of Oxford have released encouraging news about their Covid-19 vaccines. Now, Pfizer and BioNTech SE have entered the chat. The duo announced Wednesday they had signed a $1.95 billion deal with the U.S. Department of Health and Human Services and the Defense Department to provide hundreds of millions of doses of a Covid-19 vaccine.
Why It Matters
Competition is a crucial aspect of a healthy market, and in the case of the Covid-19 pandemic, the more legitimate players in the race to a vaccine, the better. And with the U.S. government subsidizing their efforts, the Pfizer-BioNTech partnership would deliver the agreed-upon number of doses to Americans “at no cost.”
With regulatory approval, Pfizer and BioNTech are headed to Phase 3 trials – they plan to launch a study with 30,000 participants this month. The companies are currently evaluating at least four experimental vaccines. If all goes well, the shot could be ready for emergency authorization as soon as October.
Numbers to Consider
- 100 Million – The number of doses the U.S. government secured in this deal.
- 500 Million – The additional doses the U.S. government can acquire.
- 1.3 Billion – The number of doses the Pfizer-BioNTech union could produce by the end of 2021.
Read More: (WALL STREET JOURNAL)
Spotify Strikes New Licensing Deal with Universal Music Group
Spotify has reached a potential industry-changing deal with Vivendi SA’s Universal Music Group, the world’s largest record company. In addition to providing the streaming platform access to Universal’s “massive catalog,” the label now joins Spotify’s “two-sided marketplace,” a strategy involving music companies paying for marketing, data and analytics.
Why It Matters
Spotify executives had discussed the idea of a “two-sided marketplace” since before the company went public two years ago. The streaming service pays out a large chunk of its revenue to recorded-music labels and publishers and has faced pressure to present sustained profitability. Spotify plans to prioritize investment growth over profitability, but the deal creates a new, a potentially replicable, revenue stream.
It also “signals a deeper relationship between the [Spotify and Universal]. The label giant, which holds some 40% market share in recorded music in the U.S., will serve as a testing and development partner for the tools, services and marketing products Spotify hopes artists and labels—including Universal—will pay for,” The Wall Street Journal writes.
How it plays out remains to be seen. But Spotify Chief Executive Daniel Ek says the early results of the “two-sided marketplace” show it’s more effective than many of the marketing dollars Universal spends on other channels.
Numbers to Consider
- $290.67 – Spotify’s share price Wednesday at open.
- $8.29 Billion – Universal Music Group’s estimated revenue from 2019, according to Statista.
- 286 Million – Spotify’s estimated userbase with 130 million subscribers across 92 markets.
Read More: (WALL STREET JOURNAL)
What To Expect As Tesla Reports Earnings Today
When the market closes Wednesday, Tesla will report its second-quarter earnings. Here’s what to expect:
- Tesla delivered more vehicles than expected in the second quarter, as well as its profitable first quarter.
- Another consecutive profitable quarter could prompt the stock’s inclusion in the S&P 500. Of course, to do so, Tesla’s profits will have to conform to generally accepted accounting principles.
- There’s going to be a swing, positive or negative. Barron’s estimated it could move somewhere between 15 and 20 percent, “implying a $300 price swing and up to $60 billion of market value.”
- Tesla joining the S&P 500 forces indexes to add the stock and rebalance portfolios based on the change. Barron’s speculated this could amount to millions of shares being bought up. Shares being picked up en masse could drive up stock prices.
- Tesla’s become the world’s most valuable car company measured by stock market capitalization in the last year. It’s up around 290 percent year-to-date and 526 percent over the past year. Compared to the returns of the S&P and the Dow Jones Industrial Average, Tesla has crushed them over that same span.
- A considerable chunk of Tesla’s future relies on China. Wedbush analyst Dan Ives says he thinks electric-vehicle demand is accelerating in China.
Read More: (BARRON’S)
A Quick Look
Elon Musk Is One Board Approval Away from Another $2.1 Billion In Stock Options
- Once Tesla’s six-month average trailing market cap hit $150 billion, CEO Elon Musk became eligible to “access the second of 12 levels of options granted to him in an unprecedented pay package approved by shareholders in 2018.”
- Once the company’s board certifies the milestone, Musk can buy 1.69 million shares at a steeply discounted price of $350.02 per share. He theoretically could then turn and sell them for roughly $2.1 billion. However, Musk has to hold them for five years and has yet to exercise the first bonus he reached back in May.
Read More: (TECH CRUNCH)
Worth Your Time
Eternal Ban: On Tuesday, Twitter permanently suspended thousands of accounts promoting “QAnon,” a loose network of conspiracy theories. The company said the group’s messages could lead to harm a violated Twitter policy. It was the first time the social media platform took “sweeping action” to remove content affiliated with the group, which has become increasingly popular on Twitter, Facebook and YouTube. Facebook is reportedly preparing to take similar steps. (NEW YORK TIMES)
The Sporting Life: Natalie Portman grabbed headlines last week as part of a star-studded group investing in alternative foods company Oatly, and now, she’s taking her financial prowess to professional sports. The National Women’s Soccer League, the top women’s league in the world, announced it would add an 11th franchise based in Los Angeles. Portman has been a guiding force in bringing women’s soccer to L.A. and is joined by other celebrity investors such as Serena Williams, Alexis Ohanian, Jessica Chastain, Eva Longoria, Jennifer Garner and more than a dozen U.S. Women’s National Team icons. (INSIDER)
In The End: Do 401(k) plans even make sense anymore? Changes to tax laws and high fees have eliminated the inherent extra return investors have enjoyed for many years. Unless things are tweaked, the once favored retirement tool of the middle class may fall into obscurity. (BLOOMBERG)
Boeing’s quest to get the 737 MAX back in the air hit another regulatory delay, and the line of planes isn’t expected to carry passengers before 2021.
Slack filed an antitrust complaint against Microsoft with the European Union, alleging the company has engaged in “illegal and anti-competitive” behavior by building the Teams platform into its Office suite.
A Couple Cents Content
Catch up on Monday’s Live Show where Justin Oh talks growth stocks, Microsoft, Walmart and gets some input from Hedge Fund Henry. (YOUTUBE)
Depending on how interested you are in Spartan Energy’s acquisition of Fisker:
- Check out a brief overview. (TIKTOK)
- Dive deeper on the topic. (YOUTUBE)
- Evaluate for yourself using Justin Oh’s $SPAQ versus $TSLA excel model (DOWNLOAD)
Watch Justin Oh’s breakdown of Peloton’s stock. (YOUTUBE)