Jackson Hole-y Smokes | The Daily Peel | 8/29/22

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Market Snapshot

Markets opened higher and ended the day in a nosedive following Daddy JPow’s remarks about the Fed’s commitment to curb inflation. While it’s not the end of the world, Friday was one of the worst days for markets in recent history.

Crude was up around $93, BTC and ETH got crushed just like the Nasdaq, and yields rose into JPow’s comments.

At the closing bell, the Dow was down 3.03%. The Nasdaq lost 3.94%, and the S&P lost 3.37%.

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Let’s get into it.

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What's Ripe

Electronic Arts ($EA) — Shares of the maybe, maybe not meme stock $EA moved higher Friday.

The reason: big news! There’s a rumor out there that the brand is ripe for an acquisition.

Who could possibly want to buy this one? Well, your favorite tech company. I’m not talking Meta; I’m talking about Amazon.

The news sent shares higher, closing up 3.57%.

Micro Focus ($MFGP) — I’m a sucker for a good sh*tco every once in a while, and Friday’s big winner ticks two exciting boxes. It was up almost 100% in a day, and it still loses money.

Frankly, I have no f*cking idea what they really do, but this sh*t is funny, especially on a down day.

Their shares were up sharply at the open, and then they hovered at these levels of massive gainz until close.

Shares of $MFGP closed up 92.63%.

What's Rotten

Pfizer ($PFE) — Shares of the pharma giant retreated on Friday, although not as bad as the broader market. But this news is significant.

Moderna has filed suit against Pfizer, claiming that $PFE infringed on some of $MRNA’s mRNA technology.

On the news, shares of $PFE fell 2.25%.

But shouldn’t these patents be owned by the federal government? Their research was almost entirely funded by the taxpayer, and the government subsidized both production and distribution. What gives?

Affirm ($AFRM) — Shares of $AFRM closed way lower Friday after posting its earnings results from this most recent quarter.

While they did post a revenue beat, their earnings were disappointing. Last I checked, making money is what matters.

On a generally down day, investors punished the stock, sending shares lower by 21.33%.

Thought Banana

History Repeats Itself — With the return of the new Lord of the Rings series to streaming on Amazon, I just have to ask: wtf are producers smoking?

Maybe we didn’t learn any lessons when we watched Netflix shares crater earlier this year after posting a fat loss because of subscriber decline as well as losing money.

The story there is that $NFLX spent $30mn an episode on the production of Stranger Things. This has big blockbuster energy, but at the end of the day, it’s just a TV show that streams for free on the margin on Netflix.

Enter Amazon. Their response?

Hold my f*cking beer.

The new LOTR drama is officially the most expensive TV show in the history of television.

Did you enjoy the new Top Gun? Well, it was 3x as expensive to make compared to Tom Cruise’s newest ego booster that helps him feel taller than 5’6”.

Short king jokes aside, who in their right mind thinks that a $715mn price tag is acceptable for a season of a TV show?

The show was filmed in New Zealand, and this price tag is 20% of the island country's annual defense budget. That’s an interesting comparison for perspective’s sake.

The hope here is that more LOTR will spawn spinoffs and an increased interest in anything that comes out of the expensive IP rights that Amazon pursued in order to get approval to produce the show.

But to be honest, this is a tiny fraction of $AMZN’s annual revenue, so just call it a capex, right? It’s an investment in the future of Prime.

As a shareholder who has been bit by Amazon’s deal with Rivian, I hate to watch a potentially bad investment come after another bad one.

So are you tuning in on September 2nd?

Wise Investor Says