Stock Market News

Draftkings (NASDAQ: DKNG) is now making a name for itself in the sports it represents. Especially as NBA legend Michael Jordan just became a special advisor to the DNKG board, in exchange for an equity stake. Jordan will significantly bolster the Draftkings brand in the sports and betting industry. The announcement should sustain the DKNG bull run for two reasons. 

First, with Jordan being an icon in society, the sports betting industry will likely gravitate towards Draftkings. In turn, customers from competitors such as FanDuel are likely to jump ship in Jordan’s name. Second, Jordan’s basketball knowledge and investing experience should see DKNG craft a basketball campaign that captures most of the market. Ultimately allowing Draftkings to widen its profit margins in their sports segment, which took a hit back between March-June. 

However, YIG would like to point out that riding the Jordan-DKNG hype does hold risk. Because the euphoria surrounding the event can wear off without warning. Especially as investors already triggered a 10% rally at the bell. Not to mention that investors only propped up the GAP-Kayne West hype for a few days.

Kodak (NYSE:KODK) have seen an incredible turn of events over the past few days as the company disclosed D.E. Shaw & CO acquired 3.94 million shares in the company. This disclosure has spurred an uptrend in the stock price, seeing a 70% increase this morning according to pre-market movements.

The stock has remained one of the most volatile currently trading on the NASDAQ, as investors tend to trade the stock on momentum. The Government loan for Kodak to produce drug ingredients has been put on hold, after the method of disclosure is currently under investigation. Investors see the 5% acquisition of shares by D.E. Shaw as smart money seeing value in the stock at its current price (before pre-market).

Zoom is set to open 30% higher this morning according to pre-market as Zoom announced its sublime Q2 Earnings. ZM posted a 355% increase in revenue YOY, assisted by the movement of businesses into the working from home sphere. Zoom recorded 370,200 active clients with 10 or more employees using Zoom to connect. This is a 458% increase YOY, concreting in investors minds this is a company that will continue to thrive. Zoom recorded a current Cash balance of $1.5 Billion, with their net Cash Flows significantly improving – one of Warren Buffets favourite company indicators. Another interesting find is that Zooms assets on their balance sheet doubled YOY.

The movement to working from home forced businesses to restructure and adapt. Zoom has aided hundreds of thousands of organisations in this process. Businesses are finding they are cutting a lot of cost in certain fields by employees working from home. This is likely to shift a new paradigm in the way businesses operate, and Zoom have positioned themselves  effectively. 

The 30% surge this morning is likely to decelerate as investors begin to offload profits. As mentioned in our recent article on Zoom, the long term opportunities for investors looks very positive (opinion not advice). As many business executives continue to change structure to adapt to the virus, Zoom has directly benefited from the drastic change in business environments. 

YIG’s Takeaway

When you first think of Nestle, you might think of an irresistible chocolate sensation. However, Nestle stole the spotlight today after acquiring Aimmune
Therapeutics (NASDAQ: AIMT)
for $2 billion. Aimmune is a peanut allergy treatment
company.

Today’s acquisition is the golden parachute for Aimmune investors. Because the AIMT was suffering a bearish decline ever since their peanut
allergy drug, Palforzia, received FDA approval in January. Nestle’s buying price of $34.50 offers an eye-watering premium of 174%. Today’s acquisition signifies a significant leap for the Nestle Health Science (NHS) for two reasons. First, analysts
forecast that Palforzia could generate $1 billion in revenue for Nestle. Second, Palforzia has nine years of exclusivity, allowing Nestle to bolster its health science reputation. 

Overall, the merger is great news for Nestle and Aimmune Therapeutic holders. However, YIG would like to use the Nestle-AIMT buyout to point out the downside to shorting stocks. Because AIMT shorters that did not cover their positions would’ve woken up and seen an unpalatable loss. The Nestle-Aimmune
story’s moral is to always cover your position because breaking news can send a bearish stock bullish overnight.

If you would like to read the full PR announcement, click here

Disclaimer: We are obliged to remind our viewers that this is not advice, only general commentary from Youth Investment Groups extensive research in this area.