Special purpose acquisition companies (SPACs) are at the front of investors’ minds as Bill Ackman takes another stab at a big merger. Meanwhile, the coronavirus pandemic is complicating things in Tokyo. So what will the stock market do today?
- The S&P 500 is down 1.22%
- The Dow Jones Industrial Average is down 1.33%
- The Nasdaq Composite is down 1.28%
So what else will the stock market do today? Here are some of the top stories.
What Will the Stock Market Do Today? Bill Ackman Goes Back to the Drawing Board.
SPACs are one of the favorite vehicles for a company to come public in 2021. These companies are courting all sorts of still-private players, and with the advantages that come with a SPAC-merger, it’s easy to understand why. SPAC mergers allow for a speedier listing, increased cash-raising and the benefit of price negotiation before listing.
Bill Ackman’s Pershing Square Tontine Holdings (NYSE:PSTH) is one of the most popular SPAC plays. However, it came under criticism from its shareholders back in June when it announced its big “unicorn” acquisition: a minority stake in Universal Music Group. It’s not that UMG is an unimpressive company; rather, investors were likely upset that the merger announcement had been a very long time coming, and a minority stake was not worth all the waiting.
Today, Ackman’s going to have another chance to get it right and knock an announcement out of the park. That’s because PSTH is choosing not to proceed with the UMG deal, as announced in a letter to shareholders this morning. The company suggests not just shareholder reaction, but also regulatory fog was complicating the likelihood of the deal pushing through smoothly. Rather, Ackman’s Pershing Square Holdings (OTCMKTS:PSHZF) will be assuming PSTH’s role in the deal.
Overall, this is probably welcome news to PSTH shareholders. If you were upset with the UMG announcement, you likely want the company to go back and get it right. And if you’re a holder in PSTH stock, chances are you’re familiar with Ackman’s track record of successful investing and have faith in PSTH to pick a really great unicorn.
Covid Fears Rock Rapidly Approaching Olympic Games
The International Olympic Committee might soon find out the coronavirus doesn’t take days off to watch the Olympic Games. The opening ceremony will be here this Friday, and the Covid pandemic is already crushing the dreams of athletes ahead of what will be one of the least satisfying set of Games in recent memory.
The first major setback for Team U.S.A. we know of is tennis star Coco Gauff. Gauff, 17, was forced to pull out of her first Olympic Games after testing positive for the virus. Additionally, an alternate for the U.S. women’s gymnastics team has tested positive just outside of the host city. Other countries are also dealing with the wildfire-like spread of the virus among athletes; the South African men’s soccer team is seeing an outbreak that forced dozens of players and affiliates into quarantine, and a beach volleyball player representing the Czech Republic has also tested positive.
One of the most crushing blows to the Olympics is Toyota’s (NYSE:TM) decision to pull Olympic ads. A senior executive is quoted saying the Games have failed to gain “the public’s understanding.” CEO Akio Toyoda is also declining to attend the opening ceremony. As one of the largest corporate sponsors of the Tokyo Games, this PR is salt in the wound.
And with fans being barred from attending the events, Toyota isn’t the only company disenchanted with the whole sponsorship experience. Japanese beer brewer Asahi paid upward of $135 million to be the beer sponsor of the Olympic Games, and they will have little-to-no customers. Telecommunications player Nippon Telegraph will lose out on customers to demonstrate its augmented reality products. Travel agency KNT-CT Holdings is expressing disappointment at its sponsorship deal, as it will have no tourists to satisfy on their trips to the Games.
What Else We’re Watching
- Zoom Communications (NASDAQ:ZM) is acquiring cloud contact center Five9 (NASDAQ:FIVN) for $14.7 billion. The deal sees Zoom expanding offerings for business clients and easing the load of taking work from home, back to the office.
- Jeff Bezos’ Blue Origin will be taking the billionaire to the edge of space tomorrow. On board will be both the youngest astronaut in history, as well as the oldest astronaut in history.
- Robinhood is swinging for the fences with its upcoming initial public offering (IPO). Sources suggest the e-trading platform is seeking a market valuation of up to $35 billion. Its September 2020 market value placed the company at $11.7 billion; it remains to be seen how 2021’s retail trading madness might have shifted this valuation.
On the date of publication, Brenden Rearick 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.
