Before the Bell: Successful stocks fall 22% and 90%

Warren Buffett Buys Into Alphabet, Netflix Splits Its Stock, and Zeekr Boosts Deliveries

U.S. markets were barely able to benefit last week from the end of the government shutdown. On a weekly basis, the S&P 500 gained just 0,1%, while the tech-heavy Nasdaq even shed 0,5%. In contrast, European markets did push higher. The Euro Stoxx 50 climbed 2,3%, and Brussels’ Bel20 outperformed with a 2,4% rise. British investor 3i Group lost nearly 22% of its market value in just five days. The private-equity specialist had achieved near-mythical status thanks to its wildly successful investment in discount retailer Action. But after a 267% surge in just three years, investors decided it was time to step on the brakes and take profits—even though Action continues to grow. Analysts at Kepler Cheuvreux responded to the share price drop by slapping a sell rating on the stock.

This morning, Japan’s Topix slipped 0,5% and Hong Kong’s Hang Seng retreated 1%. Chinese EV maker Zeekr reported a quarterly loss of 307 million renminbi (43 million dollar), an 85% improvement compared to the same quarter last year. Zeekr delivered 52.860 vehicles in the third quarter—up 7,1% from the previous quarter and 12,5% year-on-year. Later today, we’ll see results from Trip.com, Israeli robotics and radar specialist Arbe, and solar-panel giant Jinko Solar. Meanwhile, Netflix shareholders will see their stock price plunge roughly 90% today—but there’s no need to panic. The drop is the mechanical result of a 10-for-1 stock split. Anyone who held one Netflix share on Friday now owns ten.

Found on the Second-Hand Market

Second-hand fashion platform Vinted will once again organise a sale of existing shares early next year. Based on initial indications, the company is being valued at around 8 billion euro. In October, a similar secondary sale valued the company at 5 billion euro. In both cases, new investors were allowed to buy shares while existing shareholders could cash in part of their investment. Vinted is not publicly listed, so it periodically organises such liquidity events for shareholders. For publicly traded companies—and their investors—this is of course far simpler. In a way, the stock market itself is just a giant second-hand market, but for shares, providing investors with instant liquidity. The new valuation is good news for the Wittouck and Boël (Sofina) families, both of whom are shareholders in the platform.

Disney and YouTube Friends Again

Last month, Disney pulled all of its content from YouTube TV after negotiations on a new distribution agreement broke down. Disney even accused Alphabet, YouTube’s parent company, of abusing its market power. But now there’s white smoke: all Disney content—including ABC channels with “Dancing with the Stars” and ESPN sports broadcasts—will return to YouTube TV. The service is YouTube’s TV streaming platform in the United States. Going forward, bundle deals combining YouTube TV with Disney’s streaming services (Disney+ and Hulu) will also become possible. Disney’s share price took a hit last week after disappointing quarterly results. We expect this positive development could help the stock make at least a modest recovery.

Did You Know…

Berkshire Hathaway revealed after market close on Friday that it bought 17,8 million shares of Alphabet last quarter? Following the announcement from Warren Buffett’s holding company, Alphabet shares jumped 4% in after-hours trading—suggesting the stock may start the week on a positive note.

This article was translated from Dutch and was originally published on Spaarvarkens.be.