Good morning and welcome to the stock market today! As Wall Street recovers from the long weekend, there is a lot for investors to catch up on. Looking in the rear-view mirror, yesterday market Jeff Bezos’ last day as Amazon (NASDAQ:AMZN) CEO. Looking to the future, the next few weeks will bring key test flights for his Blue Origin and Richard Branson’s Virgin Galactic (NYSE:SPCE). These flights will mark a new decade for Bezos, and a turning point for commercial spaceflight. So, as you prep your space suits, what else will the stock market do today?
- The S&P 500 is down 0.25%
- The Dow Jones Industrial Average is down 0.59%
- The Nasdaq Composite is up 0.16%
So what else will the stock market do today? Here are some of the top stories.
What Will the Stock Market Do Today? Talk Didi.
One of the key stories this morning revolves around Didi (NYSE:DIDI), the newly public Chinese ride-hailing company. Unfortunately, after a high-profile debut, shares have found themselves plunging more than 20% on Tuesday morning.
So what exactly is happening? And what does this mean for investors in DIDI stock?
Less than a week out from its listing on the New York Stock Exchange, it seems Chinese officials are cracking down on the company. Citing concerns over how the ride-hailing service uses customer data, the Cyberspace Administrator of China had Didi removed from app stores. This comes just days after the internet regulator announced a temporary pause on new user sign-ups. Officials failed to share specifics, but did say they would conduct a cybersecurity review.
These new moves by officials are not the only headwinds Didi faces right now. The Wall Street Journal reported that the Chinese government actually asked Didi to delay its IPO to examine its network security. CNBC reported that officials are also concerned with its pricing mechanisms.
For DIDI stock, the immediate takeaway is that the ride-hailing company is bracing for a revenue hit in its home country of China. Investors piled into the IPO last week because of its growth-market offerings, and because of its star backing. Companies including Uber (NYSE:UBER) and Tencent (OTCMKTS:TCEHY) have thrown their weight behind Didi. Now though, Chinese regulations and the potential for lower-than-expected revenue could sink Didi.
The longer-term takeaway is that U.S. investors have a lot of digging to do with Didi, and with other U.S.-listed Chinese stocks. Chinese officials have caused chaos for Alibaba (NYSE:BABA), a tech favorite. Following the botched Ant Group IPO and now the Didi drama, investors are not sure what to expect next. That has other companies like Full Truck Alliance (NYSE:YMM) deep in the red this morning.
r/WallStreetBets Is on a Bumpy Journey to the Moon
If you were busy enjoying fireworks and hotdog-eating competitions this weekend, you may have missed a ripple in the stock market. Just like that, the moderators of r/WallStreetBets made the subreddit private. For those unfamiliar with the Reddit vernacular, this means that only users previously approved to view r/WSB content could see the message board.
This caused a sense of panic. Where would retail investors go next? What would happen to the world of meme stocks and short squeezes? Jay Rubin wrote for Benzinga that there was a real significance to the move by r/WSB mods. Reddit was the origin point for the GameStop (NYSE:GME) saga… and the resulting AMC Entertainment (NYSE:AMC) squeeze. There, retail investors have thrown their support behind Clover Health (NASDAQ:CLOV), ContextLogic (NASDAQ:WISH) and so many other names. Day traders — and investment banks — follow sentiment on the subreddit religiously.
But just as the panic started, r/WSB was back in action.
It seems, according to moderator u/zjz, that everything was the result of a joke. In a comment on the weekend discussion thread, u/zjz added context to the move. The comment explained that r/WallStreetBets went private with a “silly joke” about how “Japan’s yield curve looked like Japan.” Theories that followed included rumors that hedge funds were forcing r/WallStreetBets to shut down, and that Bank of America (NYSE:BAC) was somehow involved. The mod said that “it wasn’t some plan” and was intended to be a joke for community members.
So what does this all really mean for retail investors? Some have already shrugged off the temporary privacy as part of the Reddit thrill. Others see it as a risk for the investing camp, pointing to a history of going private and the potential for outsized stock market impacts. It would certainly send retail investors searching for a new home… which they could potentially find on Discord.
The bottom line as of right now is that r/WSB is headed to the moon, but the ride is sure to be bumpy. Moonshot bets come with not-safe-for-work jokes and the risk the subreddit could collapse at any moment. For investors seeking thrill, that could be the perfect recipe.
What Else We’re Watching
- GameStop (NYSE:GME) announced it would lease a new fulfillment facility in Reno, Nevada, as part of its North American network expansion plans. The new facility will be 530,000 square feet. According to the company, it will also help GameStop better ship to the west coast.
- On a similar note, AMC Entertainment (NYSE:AMC) is set to gain Tuesday morning. This comes as the company tabled a proposal that would allow it to issue 25 million more shares.
- Ocugen (NASDAQ:OCGN) is another winner this morning. On Friday, it shared that its Indian partner Bharat Biotech had Phase 3 data from its Covaxin trials. Those data showed that the vaccine has an overall efficacy rate of 77.8%. Against severe cases of Covid-19, that efficacy rate jumps to 93.4%. You can read more about the results and what they mean for OCGN stock here.
- A ransomware attack on information technology firm Kaseya has impacted as many as 1,500 businesses around the world. The hackers have demanded $70 million in Bitcoin (CCC:BTC-USD) to restore operations at these global businesses. Be on the watch for the implications this will have on cybersecurity conversations, and on the crypto-sphere.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Sarah Smith is the Editor of Today’s Market with InvestorPlace.com.