May 27, 2021 Sign Up

By Overheard on Wall Street

“The difference between ordinary and extraordinary is that little extra.” – Jimmy Johnson.

Good morning! Meme stocks continued their pump on Wednesday, as GameStop was up another 16%, taking its weekly gain to 37%, while premium movie theater chain, AMC was up 20%, with a weekly gain of 60%. Blackberry (+10%) and Bed, Bath & Beyond (+12%) also got in on the action. In other news, Elizabeth Warren ripped into Jamie Dimon for collecting $1.5 billion in overdraft fees during the pandemic, watch at your own risk.

1. Story of the Day: James Bezos

Yesterday, Jeff Bezos went full James Bond and announced a deal to acquire MGM Studios, the Hollywood studio they had been eyeing since 2018. It's Amazon's 2nd largest transaction, after their $13.7 billion Whole Foods deal, and will cost them $6.5 billion, $8.5 billion including debt.

The strategic rationale here is to give Amazon Prime Video (2nd largest streaming service behind Netflix with 200+ million subs) a library of over 4,000 movies, including "James Bond," "Rocky" and "The Silence of the Lambs," and TV shows such as "Fargo" and "Vikings." The deal comes as streaming wars heat up and all the big boys (Netflix, Disney, ViacomCBS) battle for content, with both in-house production and M&A. Earlier this month, AT&T announced spinning of its media assets and merging them with Discovery. 

The deal was also a big win for some hedge funds like Anchorage Capital, who will make a $2 billion profit after their $500 million investment in 2010. That implies an IRR (annualized return) of 16% over the 11 years they held the investment. (really seems like an eternity in the pump & dump crypto world we live in)

Short Squeez Takeaway: Just because the deal was announced does not mean it will go through, as it will have to clear some intense regulatory hurdles. Amazon is the company all politicians love to hate on. Many have called for a break-up of its Whole Foods and AWS divisions. Sen. Amy Klobuchar, who was against Amazon's Whole Foods acquisition, is now head of the Senate’s antitrust subcommittee. (grab your popcorn)

2. Markets Rundown

• Stocks closed Wednesday with modest gains as recent comments from Fed officials helped lower concerns about inflation
• Bitcoin remained steady for once, as Ethereum made moves back to $2,800, after dipping to $1,800 over the weekend
  

Movers & Shakers

• (+) Peloton ($PTON) +10% on news of an endorsement from investment bank, J.P. Morgan.
• (+) Urban Outfitters ($URBN) +10% after blowout earnings as shoppers return after being vaccinated.
• (–) Nordstrom ($JWN) -6% after earnings fell short of expectations.

3. Top Reads

4. Book of the Day: The Price of Tomorrow: Why Deflation is the Key to an Abundant Future

When the prices of things we buy go down, that’s called deflation. Usually, deflation is caused when there is too much of something and not enough people wanting to buy it but in some cases, it’s simply caused by technology making things cheaper.

For example, this year Netflix will spend $17 billion on making content but the subscription is only $8.99 per month. Not long ago, the average price of a TV subscription was over $100 (and we had to watch cringey commercials). The author (Jeff Booth) gives us a glimpse of what the world could look like in the near future if the pace of technological change continues increasing at the current speed.

5. Daily Visual: Revenue Stream that Generates the Most Income for US Influencers' Business

Source: Insider

6. Tip of the Day: Don't be Passive Aggressive

Working from home has its benefits but as a result, employees are more frustrated than ever. The problem with communicating through Slack or email is that we don’t see each other’s expressions or body language. Below are some phrases we use that actually make us seem passive aggressive.

1) “Per my last email…” – Translation: “Next time, why don’t you take a second to actually read what I wrote!”

2) “Bumping this to the top of your inbox…” – Translation: “I’ve asked you 5 times to do this and you still haven’t done it.”

3) “Going forward…” – Translation: “Try not to ever do that again.”

A better way to be a good communicator is to remember not to be angry when answering messages, assume good intent, show empathy, and avoid ghosting people.

7. Memes of the Day