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Shares of GameStop — the company at the center of an online buying binge that captured the imagination of the world last week — crashed another 42 percent on Thursday, leaving it at a small fraction of the value it held just a few days ago.
It was the third plunge in four trading sessions for the stock, which had become the symbolic heart of an online crusade against some of Wall Street’s most sophisticated investors.
Shares of GameStop closed at $53.50, almost 90 percent below their peak of $483 on Thursday morning last week.
The video game retailer’s stock is down 84 percent this week, and the rout has convinced many who favored the stock that the ride is over.
“GME is dead,” one user, BoBo_HUST, wrote on Reddit’s WallStreetBets forum, using GameStop’s ticker symbol. Then the commenter wondered allowed about the prospects of one of the other so-called meme stocks, BlackBerry. “Can BB save us?”
BlackBerry, the once-dominant maker of mobile devices, rose 1.3 percent, a dim bright spot for those caught up in a retail trading frenzy that had spread to other once-sleepy stocks. AMC Entertainment, the pandemic-challenged movie theater chain, which had also captured the attention of amateur investors, tumbled 21 percent on Thursday and is down roughly 47 percent for the week.
GameStop’s explosive rise — it was up over 600 percent in a matter of days — was powered by a remarkable online campaign. Retail investors gathering on Reddit and other social media sites sought to “squeeze” hedge funds that had been using short sales in a bet they could profit from a decline in the struggling retailer’s share price.
The plan worked, upending the longstanding balance of power on Wall Street as retail traders inflicted painful losses on hedge funds and piled up huge gains. But those winnings have mostly unwound this week.
“The incredible spike in volatility told you it wasn’t sustainable,” said Julian Emanuel, chief equity and derivatives strategist at the brokerage firm BTIG. “We’re back to your regularly scheduled bull market, already in progress.”
The broader market did return to climbing, a march that had stalled after investors were unnerved by last week’s surge in idiosyncratic stocks. The S&P 500 rose 1.1 percent to close at a new high.
When retail traders flooded into the shares of GameStop and other shorted stocks, the surge forced the hedge funds stuck in the squeeze to sell off stocks they would have otherwise kept in order to raise funds. That dynamic helped drive the broader stock market down last week and pushed the S&P 500 to a loss of 1.1 percent in January.
The short squeeze was highly profitable for some investors who were buying those once-beleaguered shares, if they sold early enough to lock in the gains. The collapse in prices of GameStop shares since their intraday peak on Thursday last week — shortly before brokerage firms began to curtail trading in some of the most heavily traded meme stocks — has destroyed roughly $30 billion in market value.
Any investors who got into the stock during the peak of the excitement are going to be carrying large losses.
“It was obvious to many market participants that this thing had run up so far and so fast it behooved people to take profits if they had them,” said Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, Conn. “If two-thirds of the market cap of a company evaporates in a couple of days, it’s not going to be pleasant for a lot of holders”
And now for something completely unexpected: The New York Post recorded a profit for the first time in decades.
The colorful, pun-happy tabloid made money in the most recent quarter, its parent company, News Corp, said Thursday as part of its earnings report.
The Post, which was remade by Rupert Murdoch into the sensationalist, Fleet Street form he preferred, was famous within media circles for being a money-losing enterprise. But it afforded Mr. Murdoch a significant voice in American media. Its aggressive coverage of boldfaced names and intense focus on Wall Street made it a must-read among the powerful. And its financial losses, which at one point reached more than $40 million annually, was considered well worth the cost.
But the irony in The Post’s new profit milestone is that it comes at a time when the paper has arguably lost much of its sensationalist charm and no longer enjoys its reputation as a potent tabloid teaser.
Losses at Mr. Murdoch’s papers in Australia and Britain have forced News Corp to tighten belts at every division in the last few years. The Post also underwent deep cost cuts, laying off more than 20 staff members last year and announcing a leadership change in January. In October, some of the paper’s reporters revolted when they were asked to put their names to a dubious report tying Joseph R. Biden Jr. to his son Hunter’s lobbying activities abroad.
News Corp didn’t say exactly how much profit the paper made, but Robert Thomson, the chief executive, touted the moment and added, “Our task now is to ensure its long-term profitability.”
Mr. Murdoch’s other U.S. paper, The Wall Street Journal, continued to see strong financial results. The broadsheet had 3.22 million print and digital subscribers as of the end of December, a 19 percent jump over the previous year. Of that number, about 2.46 million were for digital-only customers, a 28 percent increase over the previous year, amounting to a gain of about 106,000 new digital customers for the period.
Dow Jones, which includes The Journal, the sister publication Barron’s, and Risk and Compliance, an expensive subscription product targeted primarily to banks and other big businesses, saw a 4 percent increase in revenue, to $446 million. Profit before taxes rose 43 percent to $109 million, a portion of which was driven by Risk and Compliance.
As at other papers, advertising revenue at Dow Jones, which includes The Journal, continued to fall, with a 29 percent decrease in print ads, but digital advertising rebounded, growing 29 percent over the previous year. Advertising decreased overall by 4 percent, the company said.
News Corp reported a 3 percent decline in its overall revenue, to $2.41 billion, and a pretax profit of $497 million for the three months ending in December, the company’s second fiscal quarter.
But the company’s biggest bright spot was at the book publisher HarperCollins, where revenue jumped 23 percent, to $544 million, as the division saw higher sales in every book category. News Corp recently lost its bid to Penguin Random House to buy the rival publisher Simon & Schuster.
Ford Motor lost $1.3 billion in 2020 as car sales slumped during the coronavirus pandemic and the company ran up large restructuring costs for its overseas operations.
The automaker, which was forced to stop making cars for about 60 days last spring to prevent the spread of the virus, reported $127 billion in revenue for the year, down from $156 billion in 2019, when it made a small profit.
Ford is racing to develop electric cars and trucks in the hope they will juice its sales in the next several years and said it now plans to spend $22 billion on electric vehicles over the 10-year period ending in 2025. It previously planned to spend $11.5 billion through 2022.
But Ford’s chief executive, Jim Farley, said in a conference call with analysts that he isn’t ready to commit to a phaseout of gasoline-powered models. General Motors said last week that it aims to stop making internal combustion vehicles by 2035, replacing them with electric models.
“It’s stunning how fast the industry is changing,” Mr. Farley said. “I don’t think any of us really has an answer” to when electric cars will take over completely.
Ford’s 2020 earnings were hurt by $5 billion in restructuring charges in the fourth quarter. Last month the company said it would close its plants in Brazil in a bid to halt losses in South America. It is also losing money in China and trying to improve profitability in Europe.
The automaker said it expected business to improve this year as the economy recovers and the pandemic wanes.
But its recovery faces a big challenge. Ford said that a global shortage of computer chips that has forced it and other automakers to slow production around the world could depress this year’s pretax profit by $1 billion to $2.5 billion.
“The semiconductor situation is changing constantly, so it’s premature to try to size what availability will mean for our full-year performance,” Ford’s chief financial officer, John Lawler, said in a statement. “Right now, estimates from suppliers could suggest losing 10 percent to 20 percent of our planned first-quarter production.”
Earlier on Thursday, Ford said it would slow production of its best-selling F-150 pickup truck at two plants because of the shortage of semiconductors. The company will operate just one shift at a Dearborn, Mich., plant for one week beginning Feb. 8, instead of the usual three shifts. A plant near Kansas City, Mo., will go to two shifts instead of three.
Ford relies on the F-150 for a big chunk of its profits. Its F-series trucks are the top-selling vehicle line in the United States.
On Wednesday, G.M. said that it would idle three North American plants next week because of the chip shortage.
Peloton, the home fitness company, reported a jump in quarterly sales and profits on Thursday. But its stock price fell more than 8 percent in after-hours trading, as supply-chain issues continue to weigh on the company and as investors consider whether demand for its bikes and treadmills may fall as gyms reopen.
Peloton’s value has soared nearly sixfold to $46 billion over the past year as pandemic lockdowns made its internet-connected fitness equipment a hot commodity. But the company has struggled to get the bikes to customers because of supply-chain challenges and delivery delays.
Peloton reported $1.1 billion in revenue for the three months that ended in December, a 128 percent increase from a year earlier. It reported a net income of $64 million, compared with a net loss of $55 million a year earlier. Peloton now counts 4.4 million members, it said, including 1.67 million who own its fitness devices and subscribe to its streaming classes.
In a letter to shareholders, Peloton said port closures on the West Coast and other “Covid-related factors” continued to delay deliveries. In December, the company acquired Precor, a fitness company with factories in the United States. It has also begun production in a new factory in Taiwan.
Peloton also said it would invest $100 million to expedite deliveries and would ship equipment by air rather than sea, incurring costs that are 10 times higher than normal.
“These unprecedented measures are for these unprecedented times,” John Foley, Peloton’s chief executive, wrote in a letter to customers.
Snap, the maker of Snapchat, continued to show strong growth as its users have relied heavily on the service to communicate during the pandemic.
Snap said on Thursday that its revenue jumped 62 percent in its fourth quarter from a year prior, to $911 million. Losses declined 53 percent to $113 million. Daily active users increased 22 percent, to 265 million. The results exceeded analyst expectations.
In November, Snap launched Spotlight, a TikTok-like feature that allows users to publicly share videos and created a way for creators of viral content to be paid. By January, Spotlight was attracting 100 million monthly active users, Snap said. Other offerings have also proved popular. Snap said 200 million people used its augmented reality features each day, while 250 million users each month checked the Snap Map that showing their friends’ locations.
“Our team has worked tirelessly to help people stay close with their friends and family even while they are physically apart, and we’re proud of the strong results we delivered for our advertising partners this quarter and over the full year,” Evan Spiegel, Snap’s chief executive, said in a statement.
Senator Mitt Romney, Republican of Utah, unveiled a plan on Thursday to send payments of up to $1,250 per month to families with children, in an effort to encourage Americans to have more children while reducing child poverty rates.
Mr. Romney’s Family Security Act would provide $350 a month for each child up to 5 years old and $250 a month for children aged 6 to 17, via the Social Security Administration. The payments would be capped at $1,250 per family per month, and they would phase out for individual parents earning above $200,000 a year and couples earning more than $400,000.
“American families are facing greater financial strain, worsened by the Covid-19 pandemic, and marriage and birthrates are at an all-time low,” Mr. Romney said in a news release. “Our changing economy has left millions of families behind. Now is the time to renew our commitment to families to help them meet the challenges they face as they take on the most important work any of us will ever do — raising our society’s children.”
The plan would not increase the federal budget deficit, Mr. Romney projects. To offset the costs of the new benefit, Mr. Romney proposed eliminating other government safety net spending, including the Temporary Assistance for Needy Families program and the expanded “head of household” deduction for parents who do not itemize their income tax returns.
He would also eliminate the state and local tax deduction, known as S.A.L.T., which largely benefits higher-income taxpayers in high-tax states like Maryland and New Jersey — a move that is likely to antagonize Democrats who have fought to expand the deduction after Republicans limited it in 2017.
Still, Mr. Romney’s plan drew praise as an example of the possibilities of bipartisan action, with the White House chief of staff, Ron Klain, writing in a tweet that it was an “encouraging sign.”
President Biden’s $1.9 trillion American Rescue Plan includes a one-year expansion of the existing child tax credit and earned income tax credit, which analysts say could cut child poverty in half. Mr. Romney’s plan would streamline the earned income tax credit, while adding in the child allowance.
Analysis from the Niskanen Center, a middle-of-the-road think tank in Washington, finds that Mr. Romney’s proposal “would reduce U.S. child poverty by roughly one third, and deep child poverty by half.”
A regulator in Massachusetts wants to know if Keith Gill, an early endorser of GameStop also known as Roaring Kitty, broke any rules pertaining to his former day job when he promoted the video-game retailer on social media platforms.
Mr. Gill is a registered securities broker who worked for the insurer MassMutual as a financial wellness education director, and the company has told the state’s securities regulators that it was unaware that he had spent more than a year posting about GameStop on social media, online message boards and YouTube. The insurer also told regulators that had it known about Mr. Gill’s outside activities, it would have asked him to stop or possibly fired him, The New York Times’s Matt Goldstein reports.
Inspired in part by Mr. Gill’s cheerleading, thousands of small investors pushed stock in GameStop to as high as $483 a share and made Mr. Gill fabulously rich on paper. A picture he posted last week on the Reddit WallStreetBets forum showed his GameStop investment was worth $48 million, though his actual returns could not be independently verified.
Mr. Gill may also be summoned to testify before the House Financial Services Committee later this month, Representative Maxine Waters, the chairwoman of the committee, said on the Cheddar financial news channel on Wednesday.
Kenneth C. Frazier, the chief executive of Merck who has led the pharmaceutical company for a decade, will step down from that post later this year, the company said Thursday.
Mr. Frazier will stay on after June as executive chairman during a transition period as Robert M. Davis, Merck’s chief financial officer since 2014, takes over as chief executive.
Shares of Merck, which also reported earnings that fell slightly short of analysts expectations on Thursday, were up a little less than 1 percent in premarket trading. The company’s share price has more than doubled since Mr. Frazier took the reins in January 2011, but this has lagged the S&P 500 index, which tripled over the same period.
Mr. Frazier is an outspoken advocate of racial justice. As Merck’s chief executive, he drew headlines for standing up to President Donald Trump over the violent Charlottesville demonstrations in 2017. As a Harvard-educated lawyer before that, he spent a decade successfully pushing for the exoneration of a wrongfully accused man on death row.
“The most important role of a leader is to safeguard the heritage and values of the company,” he told The New York Times in 2018.
He is one of just four Black chief executives of Fortune 500 companies, including Marvin R. Ellison at Lowe’s, René F. Jones at M&T Bank and Rosalind Brewer, who will take over at Walgreens next month.
The company said in a release announcing the transition that Mr. Frazier’s “belief in the importance of a strong, values-based culture, and his ability to attract and retain the best talent, will stand as an enduring testament to his concern and care for the people whose skill and commitment will be critical to Merck’s continued success.”
23andMe, one of the most popular consumer-DNA testing providers, said on Thursday that it planned to become a publicly traded company by merging with an investment fund backed by the British entrepreneur Richard Branson.
The company, which helped popularize at-home DNA testing after it was founded in 2006, will join the ranks of businesses that have found new homes in the public markets by merging with so-called special purpose acquisition companies. The company will be valued at $3.5 billion, including debt.
Commonly known as SPACs or blank-check funds, these vehicles have become one of Wall Street’s biggest crazes. They raise money from public-market investors for the sole purpose of buying a privately held company and giving them their stock tickers, bypassing the traditional cumbersome process of an initial public offering.
Last year, 248 blank-check funds raised $80 billion, shattering records, according to SpacInsider. They have grown so popular that their backers now include an array of unconventional figures, like the former Oakland A’s manager Billy Beane and the former House speaker Paul Ryan.
Mr. Branson was an early participant in the trend: In 2019, he took his Virgin Galactic space tourism company public by merging it with a SPAC. The company is now valued at more than $13 billion.
Now he is turning his attention to one of the biggest names in consumer DNA testing. 23andMe pitched itself as a way for people to screen their genetic data for potential health issues, but was temporarily ordered to stop by the Food and Drug Administration. The agency has since allowed it to offer those services.
Under the terms of the deal announced Thursday, 23andMe will combine with VG Acquisition Corporation, which is backed by Mr. Branson and his Virgin Group. Also investing in the transaction are the mutual fund giant Fidelity and 23andMe’s chief executive, Anne Wojcicki.
Royal Dutch Shell, Europe’s largest oil company, joined other energy giants this week in reporting sharply lower earnings on Thursday as the pandemic weighed on oil and gas prices and consumption.
Shell said that its adjusted earnings, a metric followed by analysts, fell 87 percent in the 4th quarter compared with the same period a year earlier, to $393 million. By the same metric, Shell’s profit for all of 2020 fell by 71 percent to $4.8 billion.
When including enormous write-downs on oil and gas fields and other assets during the year, Shell reported a loss of $21.7 billion for 2020.
Despite the disappointing results, Shell said it would increase its dividend payout by 4 percent in the first quarter of 2021. It had already increased its dividend by a similar amount in the third quarter of 2020 after a two-thirds cut earlier in the year, the company’s first since World War II.
Shell says it is able to afford the dividend increases because it pulled in about $21 billion in cash over the year after expenditures.
Shell is one of the largest oil producers in the Gulf of Mexico, but Ben van Beurden, the chief executive, said he did not “see any economic impact” on the company from the Biden administration’s decision to pause the granting of new leases on federal property. Mr. van Beurden, on a call with reporters, said that Shell had some 300 lease positions in the Gulf, giving the company “enough running room for the rest of the decade.”.
He did suggest that the administration’s approach might be shortsighted because it could lead to the United States importing oil and gas produced with greater carbon emissions from elsewhere.
Andy Jassy, the Amazon executive who will take over the company as chief executive when its founder, Jeff Bezos, steps aside later this year, spent more than two decades learning from Mr. Bezos.
In 2002, as a young executive, he began following Mr. Bezos everywhere, including board meetings, and sat in on his phone calls, The New York Times’s Karen Weise and Daisuke Wakabayashi report.
The idea, said Ann Hiatt, who was Mr. Bezos’ executive assistant from 2002 to 2005, was for Mr. Jassy to be “a brain double” for Mr. Bezos so that he could challenge his boss’s thinking and anticipate his questions.
As Mr. Jassy followed Mr. Bezos, he also spearheaded Amazon’s move into a new field: cloud computing. That project became Amazon Web Services, now Amazon’s largest source of profit.
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