A recap of the past week in 3 short headlines
1. Back-and-Forth Week
Stocks had a back-and-forth week due mainly to hopes for new stimulus rising and fading with new headlines from DC. For the past week, the Dow fell 0.95%, the S&P 500 fell 0.53%, and the NASDAQ fell 1.06%. As investors bet more on a Biden win, their fears of a Democratic agenda’s impact on tech manifested with the tech sector falling 2%. Higher taxes and more regulation are specifically what investors are looking at when they believe the future looks dimmer for tech stocks.
Many high-flying tech stocks are going to report their earnings this next week, and so far, it hasn’t been looking too good for the larger tech companies. For example, Intel’s stock fell 10% after it reported earnings that fell year-over-year and did not meet analyst’s expectations. Netflix’s stock, which also was a high-flyer, fell 5% after they reported lower earnings and significantly fewer subscribers than Wall Street had expected. More and more people are beginning to think that the boost that staying at home brought is now finally wearing off.
We’re also just 9 days away from electing a new president, and with that will likely come more volatility as the presidential campaigns make their final pushes.
2. Winter is Coming
In typical Game of Thrones style, winter is coming, and it will be like no winter we’ve had before. Cases in the US recently reached a daily high of more than 85,000 on October 23rd. With winter comes the flu, and many are worried about not only the increase of COVID transmissions and fatalities that may come with that, but also more restrictions. Currently, we are at more than 8.6 million cases and more than 225,000 deaths. On September 7th, daily new COVID cases hit their low at about 25,000 cases. Since then, the daily number of new COVID cases has tripled. Experts are saying that the third wave has arrived and that it’s worse than the other two. One can take a look at the graph below from Time Magazine to see two distinct waves were completed and that a third one has started.
With temperatures dropping due to the coming season, restaurants and other places in states that were allowed to have only outdoor accommodations now can allow some portion of their customers inside. Europe, which is seeing a large second wave, has begun restricting travel and other activities again.
3. RIP Quibi
This past week saw yet another entry in the long list of companies whose products did not meet any existing market need and failed spectacularly. For those unaware, Quibi was a content streaming company with a streaming service that was meant just for mobile. It was meant for people who consumed entertainment mainly on their smartphones and so Quibi made content that was short and formatted for a smartphone. This meant that shows were 5-10 minute short clips. Quibi, headed by former Disney executive Jeffrey Katzenberg, launched this streaming service about 6 months ago. Because the pandemic forced people to stay indoors, they ended up consuming more entertainment on their TVs and laptops rather than on smartphones since they weren’t outside. This led to lower-than-expected viewership.
Additionally, what Quibi was building did not feel new to a lot of people. YouTube and other existing streaming services already were mobile-friendly and had plenty of content that people loved to consume and was for free. Quibi was planning to charge users for this service, and in doing so, put itself in competition with Disney+, Apple TV, HBO Max, and all the other big streaming services.
Quibi ultimately raised $1.75 billion from investors like WarnerMedia, Viacom, Disney, and Comcast and when they closed down, decided to return the capital they had left, about $350 million, to investors. Because of Katzenberg’s connections, Quibi was able to get many of Hollywood’s biggest names to star in its original shows. In the end, Quibi believed it could ride off the trend towards creating quickly consumable content but forgot about the consumer’s demand for it. They had the biggest stars, the biggest investors, and the biggest advertisers lined up but ultimately it was the lack of true interest that did them in.