Discover more from Due Diligence
Market Movers (Issue #5)
Our coverage of major stock movements.
Welcome to the fifth edition of Market Movers, our coverage of companies making big splashes in the stock market.
“Uppers” represent stocks that recently experienced upward price momentum, while “downers” have faced downward price pressures.
Hertz Global Holdings, Inc.(was: HTZGQ; now: HTZZ), which is one of the largest vehicle rental companies in the world, was in an unenviable position last year.
No travel = no business trips or vacations = zero demand for car rentals.
In May 2020, the company filed for chapter 11 bankruptcy protection; shares of Hertz stock plummeted to $0.56 a pop.
However, that next month, shares of Hertz rebounded inexplicably. People were pouring money into a bankrupt company. If you’re unfamiliar with bankruptcy proceedings, common equity holders sit at the bottom of the totem pole — they’re paid out last. In other words, people were buying worthless shares.
One year later, travel is back, new car production is down (thanks to chip shortages), and Hertz has successfully exited bankruptcy. The company was sold to an investor group via bankruptcy court, the members of which put in about $4 billion of new equity in the now-resurgent rental car company.
Remarkably, shareholders muscled through the fray with something to show for it; pre-bankruptcy shareholders received $1.53 a share, 3% of the stock in the reorganized company, and 18% of the post-bankruptcy company in the form of warrants.
Shares of HTZZ closed at $26.99 on Thursday. What a world.
Marin Software Inc(MRIN) offers a unified SaaS advertising management platform for search, social, and eCommerce advertising. In other words, it provides enterprise marketing software to advertisers and agencies.
It’s a good time to be in the digital marketing space — it’s an even better time to catch the attention of Redditers.
On June 23, Marin announced an integration with Instacart Ads, enabling brands to more easily connect with customers at the point of sale. (Here’s an explanation of how it works.) One way or another, this announcement caught the attention of Reddit’s army of unified retail investors.
Since June 23 — in other words, a week ago — shares of MRIN are up 782%, closing at $15.08 on Thursday. For the record, it’s up nearly $10 a share since I started writing this report earlier this week. Again, what a world.
Bed Bath & Beyond Inc. (BBBY) is an American chain of retail stores that sells a wide assortment of merchandise in the Home, Baby, Beauty, and Wellness markets. I just bought pillows there, actually.
Bed Bath & Beyond is in the midst of executing a turnaround plan — and doing surprisingly well.
On Wednesday, the company announced its 1Q21 results, including a net sales increase of 49% year-over-year. Management also expects full-year sales to be higher than they initially anticipated.
The company’s fundamentals have improved, but that’s not the only catalyst supporting the recent share price surge. Yet again, Bed Bath & Beyond can also thank the Reddit army for buying up shares. This year alone, BBBY is up 81%.
Shares of BBBY closed at $32.64 on Thursday
TPG Pace Beneficial Finance Corp(TPGY) — which we covered earlier this year — is a special purpose acquisition company (SPAC) that entered an agreement to merge with EVBox, an electric vehicle charging infrastructure company based in Amsterdam.
That was December 2020. Seven months later, the deal still hasn’t closed.
In May, TPGY officially notified investors that EVBox is taking longer than expected to complete an audit of its FY20 financials. Who knows what the hold-up is, but a delay is not a good sign.
On June 1, TPGY released another official announcement, which stated that the companies had agreed to extend the original outside date from June 8, 2021 to August 6, 2021. If the deal still hasn’t closed by then, either company is free to terminate the agreement. In other words, the proposed business combination could fall apart.
In February, TPGY traded for over $30 a share. Yesterday, it closed at $13.00.
This is a prime example of “deal risk.”
Xometry Inc(XMTR) is an on-demand industrial parts marketplace based in Gaithersburg, Maryland. As a marketplace, Xometry connects buyers — such as engineers and procurement executives from automotive, robotics, aerospace, and defense firms — with over 200,000 manufacturers.
On Wednesday, the company debuted on the Nasdaq; it priced the initial share issuance at $44 a share. By the end of the day, XMTR was up 99% from its offer price, closing at $87.39. An incredible day for the company and its early investors.
However, if you invested at the peak, you’re in a sour mood this morning. XMTR came tumbling back down the mountain to close at $65.23 on Thursday — a healthy 25% fall.
This is a prime example of “IPO risk.”
Cel-Sci Corporation (CVM) is a biotechnology company that researches and develops immunotherapy products for the treatment of cancer, autoimmune and infectious diseases.
An admirable cause, indeed. But investors want results.
On Monday, Cel-Sci announced the results of its phase 3 clinical trial of an immunotherapy candidate. The goal was to improve the survival rates of head and neck cancer patients by including Cel-Sci’s Multikine treatment in the standard care process.
Per the company’s press release, “the study did not achieve its primary endpoint of a 10% improvement in overall survival.”
While Cel-Sci intended to seek FDA approval anyway, the market didn’t take too kindly to the news.
Shares of CVM fell from $26.90 at the day’s open to $11.00 after the news hit. On Thursday, shares closed at $8.65 — a 67.6% decline.