“America brings in July 4th With More Jobs”- Weekly Market Update July 3, 2020
There was some good news to end this week. First, there is a three day weekend coming up. Second, the June jobs report was released and showed that unemployment is steadily declining!
Let’s take a look at some of the biggest business updates from the past week.
Facebook protests get serious
Remember those Facebook protests that we mentioned last week? Brands like Patagonia, REI, and North Face decided to boycott using Facebook ads due to the company’s lax attitude towards letting hate speech on their platform.
Well, it’s starting to get pretty serious as more than 500 companies have joined the pledge since last week. Companies like Patagonia and REI are always joining boycotts and promoting issues so that wasn’t too shocking to see.
However, it’s interesting to see companies like Unilever and Coke (who rarely get political) are joining the boycott too. It will be interesting to see how Zuck & Co. respond and if this boycott puts a dent in Facebook’s $17 billion ad revenue.
These are other companies on the list.
Tesla becomes the worlds most valuable car company
This week, Tesla overtook Toyota to become the world’s most valuable car company. The milestone happened on Wednesday when Tesla stock jumped to a record high to bring the car manufacturer’s worth to $208 billion.
Despite the struggle presented by the coronavirus (which included a public threat to move factories out of California) Tesla stock has enjoyed a 180% surge so far this year. From this point last year, the stock is up 414% and Tesla is now worth more Fiat Chrysler, Ford, Ferrari, General Motors, BMW, Honda, and Volkswagon combined.
This valuation is interesting, especially when you consider that Tesla has only sold 103,000 vehicles in the first half of 2020 (versus 2.4 million for Toyota). Much of this valuation has been attributed to Tesla’s future potential. Tesla dominates electric cars while other companies are still playing catchup.
Netflix donates $100 million to end the black/white financial gap
On Tuesday, Netflix announced that they’ll be putting 2% of their cash holdings towards financial institutions and organizations to “directly support black communities in the United States.” At least $25 million of this will be going to a new fund called the Black Economic Development Initiative. This fund will invest in “Black financial institutions serving low and moderate-income communities and Black community development corporations in the U.S.,” the company said.
If you were wondering, Netflix currently has $5 billion in cash.
This initiative is in response to the outrage over George Floyd’s murder last month and is on top of the $100 million that they donated to a Coronavirus Relief Fund. Netflix has been feeling generous lately!
Lululemon makes their first acquisition ever
Athleisure brand Lululemon made their first-ever acquisition this week in the form of exercise hardware startup Mirror. Mirror creates hardware in the shape of a mirror (hence the name) that leads users through workouts while letting them watch themselves.
This is an interesting jump for the apparel company into the fitness hardware business and comes at a good time. COVID-19 is threatening traditional retailers (like Lululemon) so these companies need to find other ways to make money.
Lulu is hoping to do that with Mirror.
June jobs report
In most areas, businesses have been slowly but surely reopening their doors (generally with COVID-19 precautions). This positive momentum was reflected in the June jobs report.
1. The United States added 4.8 million jobs in June.
2. The unemployment rate fell to 11.1%
3. This is the second consecutive month of growth and beats economists’ expectations.
That being said, coronavirus cases have not slowed at all (in fact, just the opposite is happening). Additionally, 11.1% unemployment is still the highest rate of unemployment since the Great Depression. This means there is still a lot of work to be done.
That’s it for this week -- Join us next week for another market update.
Securities and investment advisory services offered through NEXT Financial Group Inc. Member FINRA/SIPC. Sierra Ridge Wealth Management is not an affiliate of NEXT Financial Group Inc.
This material is not intended as an offer or solicitation for the purchase or sale of a security or an other financial instrument. Past performance does not guarantee future performance.
All the views expressed are those of Chris Simpson and not those of Sierra Ridge Wealth Management or NEXT Financial Group Inc. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks.