Stocks on the three major indexes are mixed Wednesday morning, but the three biggest stories are coming out of Twitter, Target, and Peloton. Tesla CEO Elon Musk has been in talks with Twitter’s board of directors about buying the company but has started scrambling to find a way out of the deal after experiencing apparent buyer’s remorse. Target’s stock price has continued to dip as the company offers further guidance on its projected performance in the back half of 2022.
Elsewhere, Peloton has struggled to jump back to its earnings performance from 2020. As lockdowns have lifted and people have returned to their usual schedules, interest in home exercise equipment has waned significantly. Beyond this, the company has seemingly hit market saturation: everyone who wants a Peloton bike has one now.
The S&P 500, Dow Jones, and Nasdaq Composite are all down a few fractions of percentage points. All three indexes posted daily gains Monday and Tuesday, so experts predict this could just be some early-morning jitters. Stocks are finally rebounding after seven weeks of straight losses, the longest losing streak for the market since 2001.
Musk Gets Cold Feet
Elon Musk, the world’s wealthiest man and the CEO of Tesla, seems to have gotten cold feet in his bid to buy Twitter. He has publicly called on the social media company’s executives to make more transparent statements about how many “bot” accounts make up the site’s userbase. Musk’s critics say this is a manufactured issue that he never mentioned before initiating his attempt to buy the company for $54 billion.
Twitter CEO Parag Agrawal tweeted a response to Musk, explaining how the company determines which accounts are fake. Musk replied with a poop emoji, a move that critics say underscores a childish attitude that worries investors. Indeed, shares of both Twitter and Tesla have dropped on the news that Musk is interested in buying the social media platform.
Musk’s council recently filed a complaint regarding the bot issue with the SEC. Some analysts think that Twitter’s board is now losing patience. “The board of Twitter is going to get tired of this and file a lawsuit in Delaware and say, ‘I want a declaratory judgment saying that I am not in violation of the agreement and that Musk has to complete the deal,’” suggests Boston College Law School professor Brian Quin. “That’ll be Twitter’s next step.”
Target Struggles Amid Bizarre Economy
American retailer Target is struggling to keep up in 2022. The company has issued two warnings in quick succession, both times dropping its stock value in the process. The company is reportedly struggling to offload overstock as customers slow their spending due to soaring inflation. Target now says it’ll begin instituting discounts to move excess stock, as well as reducing its orders and finding other ways to “examine expenses”. That last point could be bad news for some Target employees.
Target, as well as competitors like Walmart, have felt the sting of inflation finally come around. Consumers are being bled dry at the gas pump and grocery store, so they’re running out of money before they get to go buy the “fun” stuff at Target. If the company doesn’t find another way to appeal to customers, it’s going to be a tough year.
“We actually do see a continued strong sales environment, traffic, and the top line continue to be strong,” Michael Fiddelke, Target’s CFO, explained to reporters. “But over the past several weeks what we have been able to continue to assess is the broader retail environment — and I think as has been reported pretty widely at this point — the level of inventory in retail is high. And we also expect inflation and higher costs to be persistent.”
Peloton Tries to Meet the Moment
Peloton is in an unenviable position. The home exercise company exploded in popularity in 2020 due to global conditions making home gyms very attractive. However, since the lockdowns have lifted and life has returned to some semblance of “normal,” Peloton has struggled to turn a profit. The company recently announced that it will promote Liz Coddington to serve as its chief financial officer, only four months after selecting a new CEO.
The company’s previous CFO, Jill Woodworth, reportedly chose to leave the company voluntarily and will stay on for some time in a consulting position. This consulting period will help Woodworth prepare the company for its 2022 fiscal reports, alongside Coddington. Notably, the company has faced consistent losses for the past two years, which could explain Woodworth’s departure.
Back in February, Peloton swapped then-CEO John Foley with Barry McCarthy, who had previously helmed Spotify’s finances and worked as an executive at Netflix. “As the new CEO puts his mark on the organization’s structure and aligns it with where he wants the company to go, these changes are not completely surprising,” says MKM Partners LLC managing director Rohit Kulkarni.