Dow tumbles 257 points as spike in COVID-19 cases spurs economic-recovery concern

wall street new york stock exchange
Traders work on the floor of the New York Stock Exchange.

  • The S&P 500 and the Dow Jones Industrial Average suffered their second straight losses on Tuesday.
  • COVID-19 cases worldwide have risen by more than 10% over the past week.
  • Nike dropped on the Dow but IBM was a winner.
  • See more stories on Insider’s business page.

US stocks dropped Tuesday, with their grip on record highs further loosening as investors worry about the prospects for global economic growth as COVID-19 cases worldwide increase.

The S&P 500 and Dow Jones Industrial Average each fell for a second consecutive session, pulling back from last week’s strongest finishes on record.

As “stocks fall on back-to-back days for the first time this month, you can probably blame an old culprit: COVID,” said JJ Kinahan, chief market strategist at TD Ameritrade, in comments sent to Insider.

Here’s where US indexes stood at 4 p.m. on Tuesday:

Cumulative coronavirus cases worldwide have risen by more than 10% over the past week, according to data from Johns Hopkins University, and cases topped 142.3 million on Tuesday. Officials in Japan were considering declaring a virus state of emergency, and the UK imposed a travel ban for visitors from India as that country becomes the new epicenter of the outbreak behind the US. Argentina, meanwhile, is battling another wave of cases.

“Higher-than-expected earnings might not be packing as big a punch as normal, partly because analysts had been raising their earnings estimates before earnings season began,” Kinahan said. “At this point, it’s really more about what companies forecast and less about what happened in Q1.”

IBM shares rose and performed the best among the Dow industrials after the technology company’s first-quarter earnings and revenue beat Wall Street’s targets. But fellow Dow component Nike dropped sharply following a Citi downgrade to neutral from buy on concerns that recent boycotts in China will hurt sales at the athletic wear maker.

Apple shares were lower. The company at its virtual event on Tuesday unveiled, among other products, its AirTags tracking accessory.

Around the markets, Johnson & Johnson shares rose after the company planned to resume COVID-19 vaccine shipments to the European Union.

GameStop stake held by Alaska’s revenue department soared by more than 700% last quarter. Alaska also said its Tesla bet had grown to $85 million in 18 months.

Bitfarms, a Canadian bitcoin-mining company, is planning a new mining site in Argentina that it said would be its largest yet.

Gold rose 0.3%, to $1,776 per ounce. Long-dated US Treasury yields fell, with the 10-year yield down to 1.56%.

Oil prices rose. West Texas Intermediate crude lost 1.2% to $62.61 per barrel. Brent crude, oil’s international benchmark, fell 1%, to $66.51 per barrel.

Bitcoin rose to $56,524.

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Treasury yields will likely climb to a 2-year high in 2021 despite recent stabilization, Bank of America says

GettyImages 52182315
The US bond market has experienced a big selloff during 2021.

The stunning rally in Treasury yields this year has stabilized for now but look for rates to resume their rise, says Bank of America, which foresees the 10-year Treasury marching up to a nearly two-year high of 2.5%. The 10-year yield hasn’t been above 2.1% since July 2019.

A spike in Treasury yields during 2021 has been a major focus for both bond and stock market investors. US debt has sold off massively this year in anticipation of hotter inflation rates that will likely accompany the US economy’s recovery from the COVID-19 pandemic.

Treasury yields rise as bond prices fall, with the march higher in yields implying more expensive borrowing costs for businesses and consumers.

The surge in long-dated yields, notably the 10-year yield’s rise to 14-month highs in mid-March, has largely cooled. The 10-year Treasury yield on Monday was around 1.587%, below the 1.76% level a month ago.

“We think technical factors combined with revised expectations on US growth are mostly responsible for the recent stabilization in US rates,” said Bank of America in a note Monday, saying the stabilization “subsequently justifies” a rally in emerging market and US equities and a selloff in the US dollar.

The 10-year yield, which is tied to a range of lending programs, during the first quarter scaled up quickly from about 1% at the start of 2021. Safe-haven bonds sold off as the US government rolled out more coronavirus vaccinations to millions of Americans and after lawmakers in March approved a $1.9 trillion fiscal stimulus program.

But now, “it should not be a surprise to anyone that the US economy will keep recovering at a fast pace. We started the year expecting 4.5% growth for 2021 and now we expect 7% and 5.5% for 2021 and 2022, respectively. The inability of US rates to selloff on the back of a strong March payroll number was the tipping point to stabilize the US rates market, the signal that most of the good news were priced in,” said Claudio Irigoyen, head of Latin America economics, equities, fixed income & FX strategy at Bank of America, in the note.

The US economy added 916,000 jobs in March, blowing past expectations of 660,000 jobs.

Irigoyen noted that there was a climb last week in yields in tandem with a rally in so-called risk assets. Last week, investors received a fresh round of strong US economic data including a nearly 10% jump in March retail sales and new unemployment filings hitting at a pandemic-era low.

“[Global] investors significantly reduced risk exposure on the back of the selloff in rates in 1Q21. Positioning clean up. Since asset managers didn’t observe redemptions, cash levels were abnormally high, in particular for EM dedicated investors. Investors with cash on the sidelines were waiting for US rates to stabilize to redeploy capital into risky assets,” he said, adding that “price action was dominated by short-term flow pressure.”

Investors, meanwhile, are still keeping tabs on communication from the Federal Reserve. The central bank has signaled that it plans to keep its benchmark interest rates near zero until at least 2024 but market participants have been questioning whether the Fed can stand still in the face of hotter inflation, which it aims to do to accommodate the economic recovery.

“Despite the recent stabilization in US rates, we keep our forecast of 2.15% and 1.5% for 10-year and 5-year Treasuries by year end,” said BofA. US economic growth “can surprise updated expectations to the upside during the summer, combined with positive (i.e. higher-than-expected) inflation surprises,” it said.

“In addition, fiscal policy in itself will continue pressuring on real rates as more infrastructure spending is still more likely than tax hikes, adding more to the already sizable fiscal deficit. Finally, the Fed in itself remains an important source of volatility,” wrote Irigoyen.

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Nearly half of Americans are too nervous to invest in stocks right now, new survey shows

investing app phone
  • An Allianz survey found that 48% of Americans do not want to take action in the equity market right now.
  • The survey showed nearly 75% of Americans foresee stock-market volatility picking up again in 2021.
  • Analysts say more volatility is likely in store as more strong economic data challenges the Fed’s signaling on interest rates.
  • See more stories on Insider’s business page.

Many Americans want to stay on the sidelines of the stock market this year as worries mount that volatility will accelerate and hurt their investments, according to a new survey from Allianz.

48% of the 1,005 respondents told the firm they want to stay neutral and not invest in the market right now, a rise from 43% over the final quarter of last year. That statistic runs parallel with findings that 74% of the group believes equity markets will continue to be very volatile this year.

The cautious tone comes as the US economy shows further signs of recovery from the coronavirus pandemic, with data this week showing a nearly 10% jump in March retail sales and new unemployment filings at a pandemic-era low.

“Investors seem to be in limbo right now, wavering between nervousness about the potential for volatility and hope for a better year, resulting in a lot of inaction that can be costly in the future,” said Kelly LaVigne, vice president of consumer insights at Allianz Life.

As the S&P 500 recently has climbed to all-time highs, Wall Street’s so-called fear gauge – the Cboe Volatility Index (VIX) – has slid back to its lowest level since before the start of the COVID-19 crisis. But volatility accelerated in the tech sector earlier this year as rising interest rates spurred concerns about the effect of higher borrowing costs on businesses. That prompted a sharp pullback in numerous high-flying tech stocks and knocked more speculative areas of the market like SPACs and green energy.

Another possible source of volatility involves the Federal Reserve, which has historically moved markets with rate-hike guidance. Inflation – which the central bank monitors closely when making decisions – is rising as the economy recovers, and although the Fed has said it will keep rates near zero until at least 2024, any deviation from that could jolt markets.

Talks over tax policy and infrastructure spending in Washington may also be a source of volatility for stocks moving forward this year.

Read more: Buy these 16 stocks with more than 10% upside that are set to increase dividend payments for years to come, UBS says

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AMD could rise 19% due to its durable technical advantage over Intel, Raymond James says

AMD CEO Lisa Su
AMD CEO Lisa Su

  • Raymond James initiated coverage on AMD Thursday with an “outperform” rating and a $100 price target.
  • Analysts led by Chris Caso said the company has a “durable technical advantage” over Intel.
  • The team used a 36x multiple on 2022 EPS estimates to arrive at their price target.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Raymond James initiated coverage on Advanced Micro Devices (AMD) with an “outperform” rating and a $100 price target on Thursday.

The price target represents a potential 19% jump from Thursday’s intraday highs.

In their note to clients, analysts led by Chris Caso cited AMD’s “durable technical advantage” over Intel and growing server business as key reasons for their bullish view.

The analysts said that Intel’s decision to stick with internal manufacturing has cemented AMD’s technology lead through 2024 and that the stock’s recent pullback is a buying opportunity.

“We think the stock’s pullback has been driven by improved sentiment that Intel will solve their manufacturing challenges, which will reverse AMD’s successes. We’re taking the other side of that view,” Caso and his team wrote.

“Now that Intel has committed to internal manufacturing, we think it’s unlikely that Intel ever regains a transistor advantage vs. AMD,” Caso added.

Intel announced last month it would double down on its in-house chip manufacturing business with plans to spend $20 billion on two new Arizona factories. The Santa Clara, California-based firm also plans on opening up its chip foundries to other companies so they can build their own designs.

The move came after VMWare’s Pat Gelsinger took over as CEO in January.

Raymond James analysts explained how Intel’s move to stick with its 7 nanometer(nm) process for internal manufacturing while AMD is moving to Taiwan Semiconductor’s 5nm process next year-and likely to 3nm by 2024-is a big problem for the firm.

According to the analysts, the decision means AMD will hold a transistor advantage over Intel for at least the next three years.

Caso and his team also discussed cloud market share growth in their note to clients, calling it an important driver for AMD moving forward.

The analysts said the launch of AMD’s ‘Milan’ chip for data centers represents the firm’s first move into the enterprise server market and that a number of server OEMs are launching AMD designs for the first time this year. The team of analysts expects 59% year-over-year growth in the segment.

As far as risks to AMD’s rise, Raymond James said a slowdown in PC sales could hurt revenue growth and that they “believe pandemic PC purchases pulled forward demand for several years.”

However, the investment bank’s analysts noted that AMD’s increasing market share of PC sales and enterprise servers will mitigate much of the demand drawdown.

Finally, Raymond James expects 2022 earnings per share to hit $2.81, 12% ahead of the Street’s consensus estimates. The analysts used a ~36x multiple on their 2022 EPS estimate to reach their $100 price target.

The team said they believe much of the bear case around AMD is due to fears of Intel’s resurgence, but they “don’t expect there to be much to catalyze those fears for a long while.”

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S&P 500 hits record amid higher-than-expected jobless claims and continued Fed support

Traders work on the floor of the New York Stock Exchange (NYSE) on December 07, 2018 in New York City
Traders work on the floor of the New York Stock Exchange .

  • The S&P 500 stretched further in record highs Thursday as the Federal Reserve signaled it will accommodate conditions for economic growth.
  • Technology stocks tracked on the Nasdaq Composite led gainers.
  • Jobless claims rose to 744,000, pointing to persistently high unemployment levels.
  • See more stories on Insider’s business page.

US stocks hung around record highs Thursday, with the S&P 500 hitting a new high after insight from the Federal Reserve indicated that monetary policy makers will maintain their stance in supporting growth in the world’s largest economy as it continues to recover from the COVID-19 pandemic.

The S&P 500 index pushed further into record-high territory after reaching a closing peak in the previous session. Technology stocks marched up but blue-chip stocks tracked on the Dow Jones Industrial Average tilted slightly lower.

Stock futures ahead of the open showed little reaction to the Labor Department’s report that weekly jobless claims rose to 744,000, higher than the 680,000 claims expected by economists surveyed by Bloomberg. The report indicated that unemployment remains at persistently high levels, with the previous week’s reading upwardly revised to 728,000 from 719,000.

Here’s where US indexes stood at 9:30 a.m. on Thursday:

Members of the Fed’s rate-setting board expect “it would likely be some time until substantial further progress” on reaching targets of maximum employment and above-2% inflation, according to the minutes from the Federal Reserve Open Market Committee’s mid-March meeting released Wednesday.

“FOMC members were quite positive on short-term growth prospects, but made quite clear that short-term acceleration only goes so far towards their long-term “full employment” goal, suggesting even if growth remains robust through 2Q 2021, we’ll still be in a waiting pattern for Fed policy,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, told Insider in emailed comments.

“On balance, there was nothing material in the minutes which changes my view of a reduction in [quantitative easing] beginning in early-2022 followed by a potential first rate hike in late-2022,” said LeBas. “I view a 2022 QE reduction as much more likely than a 2022 rate hike,” he said. “If anything, the first hike will be later and the path of hikes steeper than what the markets have currently priced.”

Around the markets, GameStop shares rose after the video game retailer said it plans to elect Reddit favorite Ryan Cohen as chairman.

Trading app Robinhood reportedly failed to disclose data on certain stock trades for more than a year.

Billionaire tech investor Peter Thiel warned bitcoin might serve as a Chinese financial weapon against the US – and says it threatens the dollar.

Gold rose 0.6% to $1,753.20 per ounce. Long-dated US Treasury yields fell, with the 10-year yield down at 1.647%.

Oil prices were mixed. West Texas Intermediate crude lost 1% to trade at $59.23 per barrel. Brent crude, oil’s international benchmark, dropped 0.6%, to $62.76 per barrel.

Bitcoin rose 2.1% to $57,546.

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Elon Musk asked Cathie Wood about the Buffett indicator flashing red. The Ark Invest chief explained why she isn’t worried.

Elon Musk SpaceX Tesla CEO holds hand to face thinking
Elon Musk.

  • Elon Musk asked Cathie Wood about the Buffett indicator’s record readings.
  • The Ark Invest CEO criticized GDP as a measure and trumpeted innovation.
  • Buffett’s favorite market gauge surged before the dot-com crash.
  • See more stories on Insider’s business page.

Elon Musk asked Cathie Wood this week what she thought about Warren Buffett’s favorite market indicator flashing red recently. The star stock-picker replied that the gauge is likely inaccurate, and argued the heady valuations of certain technology stocks are justified.

“What do you think of the unusually high ratio of S&P market cap to GDP?” the Tesla chief asked the Ark Invest boss. He was referring to a version of the Buffett indicator, which takes the combined market capitalization of a country’s publicly traded stocks and divides it by the latest quarterly GDP figure available.

The S&P 500 represents about 78% of the total market cap of US stocks, as measured by the Wilshire 5000 Total Market Index. The S&P 500’s combined market cap has surged past $33 trillion this year – more than 150% of the latest estimate for fourth-quarter US GDP of $21.5 trillion.

Wood replied to Musk’s question by suggesting that GDP understates economic growth because it doesn’t fully account for increased productivity. Technological innovations today are “dwarfing” those in previous eras, driving down prices and fueling demand, she continued.

The Ark founder also drew a line between the dot-com bubble and the current hype around tech stocks.

“Back then, investors chased the dream before the tech was ready and while costs were too high,” she said. “After gestating for 20-30 years, the dream has turned into reality.”

Moreover, Wood predicted that companies that have failed to innovate and instead have borrowed money to fund stock buybacks and dividends “will pay a steep price.” She expects them to be forced to cut prices to shift inventory and make debt repayments.

In short, Wood’s view is that the disconnect between the S&P 500’s market capitalization and national GDP isn’t worrying because GDP is a flawed measure, unprecedented innovation justifies higher company valuations, and technological advances are cutting costs so inflation won’t be a problem either.

Her stance clashes with Buffett’s praise of his namesake gauge as “probably the best single measure of where valuations stand at any given moment” in a Fortune article in 2001. When the indicator peaked during the dot-com boom, it should have been a “very strong warning signal” of an upcoming crash, the Berkshire Hathaway CEO wrote.

Musk might have to wait a few more months to find out which investor is right.

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Tesla stock is soaring on record quarterly deliveries, but the EV maker is ‘barely growing’, stock research chief says

esla head Elon Musk arrives to have a look at the construction site of the new Tesla Gigafactory near Berlin on September 03, 2020 near Gruenheide, Germany.
Tesla head Elon Musk arrives to have a look at the construction site of the new Tesla Gigafactory near Berlin on September 03, 2020 near Gruenheide, Germany.

Tesla stock is soaring after posting record quarterly delivery figures and landing continued support from analysts, but not everyone on the Street believes in the EV maker.

GLJ Research CEO Gordon Johnson told CNBC on Monday that he wasn’t impressed by Tesla’s recent delivery figures. The CEO holds a $67 price target on shares of the EV leader.

Johnson argued Tesla is “barely growing” despite “15 price cuts in the first quarter of this year” in his interview with CNBC’s Morgan Brennan and Loop Ventures’ Gene Munster.

The stock research chief said that “year-over-year growth is irrelevant” at Tesla due to changing sales patterns and a Chinese rollout and noted that the EV maker turned in just 2% sequential growth from the fourth quarter of last year to the first quarter of this year.

According to Johnson, Tesla “picked the low hanging fruit of entering the world’s largest three auto markets, US, China, Europe, and their sales grew just 2% quarter over quarter, despite 15 price cuts in the first quarter this year, 18 price cuts in total last year, and 52,500 more cars of capacity sold. “

Johnson also noted that Tesla sold “significantly less higher-margin S and X cars and significantly more lower margin model 3 and Y cars in the quarter.” According to the CEO, that could mean a $300 to $500 million hit to the company’s bottom line.

“So you’re looking at a company, a high growth company, that’s barely growing, is losing more money doing so, and is going to see all of its credit sales disappear next year,” Johnson said. “We see that as a big problem.”

Johnson was referring to tax credits that Tesla buyers receive for purchasing an electric, emissions-free vehicle. The credits are set to disappear in 2022, but some analysts believe President Joe Biden’s $2.3 trillion infrastructure plan will restore them before that happens.

Johnson also compared Tesla to Volkswagen in the interview, arguing Tesla’s current valuation doesn’t make any sense in relation to its peers.

Tesla is valued at close to $700 billion despite selling just 184,000 cars in the first quarter, while VW sells about 2.5 million cars a quarter and is valued at roughly $140 billion.

Some say Tesla’s valuation is based on its growth, but with the EV maker growing sales at just 2% sequentially, Johnson said he doesn’t “know what people are talking about when they say this is transformational growth.”

Read more: RBC says to buy these 30 high-conviction stocks that represent its analysts’ top global ideas for 2021 amid an economic reopening and rising inflation expectations

Gene Munster, Loup Ventures founder, commented after Johnson’s argument and said that he believes it’s unfair to look at sequential growth due to the first quarter being a “seasonally light quarter.”

Munster said he believes competition is the biggest risk to Tesla, but as long as the “value of car exceeds the competition” that Tesla will be able to “continue to have a measurable piece of a massive total addressable market.”

Dan Ives of Wedbush put out a note on Monday upgrading Tesla to an “outperform” rating and tagging a $1000 price target on the EV giant.

The analyst said he expects a roughly “$10,000 credit to catalyze EV consumer demand” moving forward.

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Micron Technology jumps 6.5% after beating top and bottom-line analyst estimates, posting positive outlook

Micron HQ
Micron Technology HQ in Boise, Idaho.

Micron Technology jumped as much as 6.5% on Thursday after beating top and bottom-line analyst estimates and posting a positive outlook in its fiscal second-quarter earnings release.

The Boise, Idaho-based memory and storage solutions provider posted non-GAAP net income of $1.13 billion which equates to earning per share of $0.98. The figure topped consensus estimates by $0.03.

Micron also saw revenues jump 30% from $4.8 billion for the same period last year to $6.24 billion in its fiscal second-quarter results, topping analysts’ consensus estimates of $6.21 billion.

Operating cash flow of $3.06 billion was strong in comparison to the $1.97 billion for the prior quarter and $2 billion for the same period last year as well.

Micron stock traded up 5% at $92.61 as of 11:33 a.m. ET on Thursday, having hit a session high at $94.38 earlier.

The company guided for revenue of between $6.9 billion and $7.3 billion in the upcoming fiscal third quarter. That’s compared to $5.44 billion from the same period a year ago. Gross margins are expected to be 41.5% with GAAP Diluted EPS hitting $1.52.

“Micron’s strong fiscal second-quarter performance reflects rapidly improving market conditions and continued solid execution,” said Micron Technology President and CEO Sanjay Mehrotra.

“Our technology leadership in both DRAM and NAND places Micron in an excellent position to capitalize on the secular demand driven by AI and 5G, and to deliver new levels of user experience and innovation across the data center and intelligent edge,” the CEO added.

Micron Technology has traded steadily between $90-$95 per share over the last month, but the stock is up roughly 93% in the past six months.

Ahead of earnings, Rosenblatt Securities analyst Hans Mosesmann reiterated his “buy” rating and price target of $150 on the firm.

Needham & Company also maintained its “buy” rating on shares of Micron with a price target of $120.

Rosenblatt’s price target represents a potential 61% surge from April 1 intraday highs, while Needham’s represents a potential 30% jump.

Overall analysts are bullish on shares of Micron. The company boasts 47 “buy” ratings, 10 “neutral” ratings, and just one “sell” ratings from analysts.

Micron traded up 3.75% as of 1:44 p.m. ET after paring gains on Thursday.

MU stock chart
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Chinese tech firms hammered by the Archegos blow-up announce share buybacks

Bill Hwang
  • Three Chinese tech firms will buyback $1.55 billion in shares after their stocks fell due to the Archegos’ blow-up.
  • Hedge fund Archegos Capital Management was forced to liquidate its positions due to margin calls from banks.
  • Vipshop, Tencent Music, and GSX Techedu all announced share buybacks in the past week.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The Chinese tech firms Vipshop, Tencent Music Entertainment, and GSX Techedu all announced share buybacks after getting hammered by the hedge fund Archegos’ blow-up at the end of last week.

Tencent Music Entertainment’s board approved a $1 billion buyback program of its class A shares over the next 12 months on Sunday.

Vipshop followed suit this week authorizing a $500 million share buyback program over the next 24 months on Tuesday. Both companies plan on using their existing cash balances for the repurchases.

Larry Xiangdong Chen, the founder, chairman and CEO of GSX Techedu, said he would use personal funds to buy back $50 million worth of his education technology company over the next 12 months in a Tuesday press release as well.

The three Chinese firms were hurt by the forced liquidation of Archegos’ Capital Management, a hedge fund that failed to meet margin calls from big banks including Goldman Sachs, Morgan Stanley, Credit Suisse, Nomura, UBS, and Deutsche Bank.

Archegos’ had placed leveraged bets on the Chinese tech firms, among others. When it was forced to rapidly liquidate its positions to pay back banks, shares of its holdings plummeted.

In the past week alone, as of Monday’s closing price, Vipshop fell over 37% while Tencent Music Entertainment and GSX Techedu fell 36% and 56%, respectively.

The Archegos blow-up didn’t just hurt the hedge fund’s holdings either. Banks like Credit Suisse and Nomura have said they are facing significant losses stemming from the event.

Archegos’ was run by Bill Hwang, a former protégé of the hedge-fund titan Julian Robertson, who founded Tiger Capital Management.

Hwang used “total return swaps” to borrow huge sums from banks in relative anonymity without having to put down as much collateral. “Total return swaps” allow users to take on the profits and losses of a portfolio in exchange for a fee.

The tactic has been widely criticized by economists and investors including Warren Buffett. The “oracle of Omaha” said in a 2002 letter to investors that these types of “derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

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Vuzix sinks 18.5% after pricing $85 million stock offering at a steep discount to previous close

Vuzix
Vuzix M400 Smart Glasses in use for field service operations.

  • Vuzix stock sank as much as 18.5% on Friday.
  • The fall came after the company priced a 4.15 million share stock offering at $20.50.
  • The offering price was well below Thursday’s closing price of $26.32 per share.

Vuzix stock sank as much as 18.5% on Friday after the company priced a 4.15 million share stock offering at $20.5 per share, well below the $26.32 closing price from Thursday.

Underwriters in the deal were granted a 30-day option to purchase up to an additional 621,951 shares. Vuzix is expected to raise roughly $85 million from the offering.

Net proceeds will be used for general corporate purposes including working capital, new technology and product development, purchases of technology, expansion of the company’s software offerings, and potential acquisitions.

Vuzix creates virtual and augmented reality (VR and AR) technologies for both the consumer and enterprise markets. The firm works with over 40 Fortune 100 companies offering VR and AR solutions for manufacturing, healthcare, logistics, and field service operations.

Vuzix reported strong earnings on March 15 in what Paul Travers, the President and CEO, called a “transformational year for both Vuzix and the AR smart glasses industry.” The company beat both top and bottom line analyst estimates and saw revenue rise 116% year-over-year in 2020.

However, Maxim Group analyst Jack Vander Aarde downgraded Vuzix from “buy” to “hold” based on valuation concerns after the report. Still, Aarde was mostly positive on VUZI’s long-term potential and said he expects “multi-year revenue growth of 100%+.”

Over the past year, shares of Vuzix rose over 2,000% from $1.15 per share. During the rise, Intel, who was once a big supporter and main investor in Vuzix, sold $57.1 million worth of stock at an average of $11.51 per share.

The company had invested $25 million in Vuzix in 2015 when its main competition was Google Glass.

2020 was a year of firsts for the AR market and Vuzix. Vuzix Blade Smart Glasses were used in the first AR total knee replacement surgery conducted in the United States. Vuzix M400 and M4000 glasses are now used by Microsoft, Rio Tinto, and more.

Shares of Vuzix traded down 15.27% as of 9:33 a.m ET on Friday.

Vuzi chart 2
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