Gapping down
In reaction to earnings/guidance:
- CVGW -14.4%, AIR -6%, WOR -3.5%, BB -2.4%
Other news:
- ICCM -14.6% (proposes public offering of its common stock; size not disclosed)
- NVX -10.4% (provides update on scaling U.S. production of synthetic graphite anode materials)
- TERN -4.7% (priced its underwritten public offering of 10,350,000 shares of its common stock at $7.25/share)
- GLDD -2.8% (provides an update on Q4, says revenue and gross profit margin are expected to be lower than previously anticipated)
- GMAB -1.9% (announces that the company has submitted a Japan New Drug Application to the Ministry of Health, Labor and Welfare of Japan for subcutaneous epcoritamab)
- AEL -1.1% (reviewed and rejected an acquisition offer of $45/share from Prosperity Group Holdings LP and its principal shareholder, Elliott Investment Management)
Analyst comments:
- DENN -2% (downgraded to Neutral from Outperform at Wedbush), RDFN -1.5% (downgraded to Hold from Buy at Truist)
Gapping up
In reaction to earnings/guidance:
- NKE +11.6%, FDX +5%, RAD +4.5%, CCL +2.8%, TTC +1.8%
Other news:
- ADCT +21.7% (and Sobi announce European Commission approval of ZYNLONTA for the treatment of relapsed or refractory diffuse large b-cell lymphoma)
- SIX +7.6% (shareholder Land & Buildings issues presentation highlighting opportunity to unlock substantial real estate)
- PHG +5.8% (provides update on completed set of test results for first-generation DreamStation sleep therapy devices)
- TTE +2.8% (announces a new gas discovery in offshore block 6)
- LCID +2.1% (begins deliveries of Lucid Air Dream Edition to customers in Europe, confirms official WLTP driving range of up to 883 km)
- ALDX +1.6% (announces new $15 mln share repurchase authorization)
- TCX +1.5% (Blacksheep Fund Management affirms 10.6% holding as active stake; anticipates having further conversations with board members and shareholders)
- PBR +1.4% (begins the non-binding phase for the sale of POSA; concludes the sale of E&P assets in Sergipe)
Analyst comments:
- ADPT +7.8% (upgraded to Overweight from Neutral at Piper Sandler)
- PAGS +2.3% (upgraded to Buy from Neutral at New Street)
WhatsApp lets you undo ‘Delete for Me’ in case you hit that button too quickly
WhatsApp has introduced a feature to undo the “Delete for Me” action to save you from being potentially embarrassed over accidentally deleting a message only for you that you wanted to pull for everyone on the app.
The new feature, called “accidental delete,” brings a five-second window to let users reverse the action of deleting messages for their own in an individual or group chat and delete them for everyone.
Users sometimes land in a situation when they accidentally tap the “Delete for Me” button instead of “Delete for Everyone” to delete a wrongly sent message. The new feature aims to help users overcome those situations by getting the small window to reverse their original action.
WhatsApp said its new offering would be available to all users on Android and iPhone. It was beta tested with some Android and iOS users in August, per a report by WhatsApp features tracker WABetaInfo.
In 2017, WhatsApp introduced the “Delete for Everyone” option to let users recall a message for all people in a conversation. The feature was designed to address the issue of sending messages mistakenly in individual and group chats. Although the initial rollout of the option was limited to seven minutes, WhatsApp eventually extended that time limit to up to two days and 12 hours — or 60 hours — in August this year.
Research Calls
- Upgrades:
- Adaptive Biotechnologies (ADPT) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $14
- Chefs' Warehouse (CHEF) upgraded to Buy from Hold at Jefferies; tgt $43
- Comerica (CMA) upgraded to Buy from Neutral at DA Davidson; tgt raised to $80
- IAMGOLD (IAG) upgraded to Hold from Sell at Stifel
- PagSeguro Digital (PAGS) upgraded to Buy from Neutral at New Street; tgt lowered to $17
- Zions Bancorp (ZION) upgraded to Buy from Neutral at DA Davidson; tgt $56
- Downgrades:
- Altra Industrial Motion (AIMC) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt raised to $62
- Brinker (EAT) downgraded to Hold from Buy at Jefferies; tgt lowered to $35
- Carvana (CVNA) downgraded to Hold from Buy at Truist; tgt lowered to $5
- Denny's (DENN) downgraded to Neutral from Outperform at Wedbush; tgt lowered to $10
- dLocal Limited (DLO) downgraded to Neutral from Buy at New Street; tgt $25
- Freshworks (FRSH) downgraded to Peer Perform from Outperform at Wolfe Research
- Jack In The Box (JACK) downgraded to Neutral from Outperform at Wedbush; tgt lowered to $75
- Opendoor Technologies (OPEN) downgraded to Hold from Buy at Truist
- RingCentral (RNG) downgraded to Peer Perform from Outperform at Wolfe Research
- Papa John's (PZZA) downgraded to Neutral from Outperform at Wedbush
- Red Robin Gourmet (RRGB) downgraded to Hold from Buy at Jefferies; tgt lowered to $7.50
- Redfin (RDFN) downgraded to Hold from Buy at Truist; tgt lowered to $5.50
- RingCentral (RNG) downgraded to Peer Perform from Outperform at Wolfe Research
- Shake Shack (SHAK) downgraded to Neutral from Outperform at Wedbush
- Starbucks (SBUX) downgraded to Hold from Buy at Jefferies; tgt $100
- Target (TGT) downgraded to Hold from Buy at Gordon Haskett; tgt $132
- Trane (TT) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt $180
- Others:
- Appian (APPN) initiated with a Neutral at SMBC Nikko; tgt $37
- Bank of Princeton (BPRN) initiated with a Mkt Perform at Raymond James
- Bausch + Lomb (BLCO) initiated with an Equal Weight at Barclays; tgt $17
- BJ's Wholesale (BJ) initiated with an In-line at Evercore ISI; tgt $70
- Brookline Bancorp (BRKL) initiated with a Mkt Perform at Raymond James
- Cambridge Bancorp (CATC) initiated with a Mkt Perform at Raymond James
- Camden National Corp. (CAC) initiated with a Mkt Perform at Raymond James
- Cardiovascular Systems (CSII) initiated with an Equal Weight at Barclays; tgt $15
- Citizens Financial Group (CFG) initiated with a Buy at DA Davidson; tgt $47
- Community Bank (CBU) initiated with a Mkt Perform at Raymond James
- Cullen/Frost (CFR) initiated with a Buy at DA Davidson; tgt $147
- Farmers and Merchants (FMAO) initiated with a Neutral at Janney; tgt $30
- Fifth Third (FITB) initiated with a Neutral at DA Davidson; tgt $36
- Halozyme Therapeutics (HALO) assumed with an Overweight at Morgan Stanley; tgt raised to $65
- Huntington Banc (HBAN) initiated with a Neutral at DA Davidson; tgt $15
- Independent Bank (INDB) initiated with a Mkt Perform at Raymond James
- InMode (INMD) initiated with an Overweight at Barclays; tgt $44
- Ionis Pharma (IONS) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $40
- KeyCorp (KEY) initiated with a Buy at DA Davidson; tgt $20
- LivaNova (LIVN) initiated with an Equal Weight at Barclays; tgt $62
- Middlefield Banc (MBCN) initiated with a Neutral at Janney; tgt $30
- NBT Bancorp (NBTB) initiated with a Strong Buy at Raymond James; tgt $49
- Phibro Animal Health (PAHC) initiated with a Buy at ROTH Capital; tgt $18
- ProKidney Corp. (PROK) initiated with a Buy at Jefferies; tgt $15
- Regions Fincl (RF) initiated with a Buy at DA Davidson; tgt $25
- Schneider National (SNDR) initiated with a Buy at The Benchmark Company; tgt $31
- The ONE Group (STKS) downgraded to Neutral from Outperform at Wedbush; tgt lowered to $6.50
- U.S. Bancorp (USB) initiated with a Neutral at DA Davidson; tgt $47
- Valley National (VLY) initiated with a Strong Buy at Raymond James; tgt $14
- Xilio Therapeutics (XLO) initiated with a Buy at Chardan Capital Markets; tgt $7
- ZimVie (ZIMV) initiated with an Underweight at Barclays; tgt $9
The ESG Hype Is Showing Signs Of Fatigue
- The Net Zero Asset Managers alliance, set up just two years ago, brought together asset managers worth a combined $66 trillion.
- In October, banks including JP Morgan, Morgan, Stanley, and Bank of America, threatened to leave the UN-backed group of ESG-conscious financial institutions.
- Texas has also threatened to pull out its investments from large asset managers if they continued to be antagonistic to the oil and gas industry.
Then, a week later, HSBC, the UK-based, developing world-focused lender, announced it would suspend direct financing and advisory services to new oil and gas projects, bowing under the pressure of shareholders and environmental activists.
The two events seem completely unrelated, but they are signs of things to come: fractures in the ESG investment movement are appearing--and they are likely to grow bigger at a time when consumption of fossil fuels is set to hit a new high.
The Net Zero Asset Managers alliance, set up just two years ago, brought together asset managers worth a combined $66 trillion. It later joined the UN-backed Glasgow Financial Alliance for Net Zero, led by former Bank of England governor Mark Carney.
In October, banks including JP Morgan, Morgan, Stanley, and Bank of America, threatened to leave the UN-backed group of ESG-conscious financial institutions on the concern of breaking U.S. antitrust legislation if they comply with the GFANZ guidelines for making investment decisions.
It is in legislation that the biggest cracks are appearing, after Republicans regained a majority of the lower house of the U.S. parliament and began a crackdown on ESG investments and the possibility of such investments violating antitrust law.
It is these same Republicans, both in Congress, and in states, that are mounting pressure on asset managers and banks with regard to their ESG commitments. And some are pulling out their investments from the majors: Florida recently pulled out $2 billion worth of investments from BlackRock because of its ESG agenda.
Texas has also threatened to pull out its investments from large asset managers if they continued to be antagonistic to the oil and gas industry. In a rare example of vulnerability, BlackRock had to assure the Lone Star State that it is not, in fact, against oil and gas, which in turn prompted a backlash from its more ESG-minded, climate-conscious investors.
But while pressure in the United States is growing from legislators interested in the legality of some ESG commitments, the HSBC case suggests that elsewhere it is still shareholders with a taste for ESG investing who are keeping the upper hand.
That’s despite the fact that doubts are beginning to appear around the actual profitability of such investing, which was supposed to be superior to traditional investment. The evidence of these higher returns seems to lack credibility and, perhaps more importantly, the actual benefits of ESG investing for the planet also seem to be not there.
Because of this pressure, HSBC had to quickly update its policies and commit to refusing financing to those prospective oil and gas clients who plan to allocate more than 10 percent of their capital spending on project exploration, which would be most of them.
Yet this commitment seems more symbolic than actual. Per the Financial Times, most of the financing HSBC has been providing to the oil and gas industry is financing not tied to specific projects and, by implication, it is financing that the bank could continue to provide even after this latest commitment.
So, the picture that emerges is one in which ESG supporters and climate-conscious investors continue to be loud in their criticisms and calls for action, but another reality is reasserting itself: a reality in which there are more important things than climate commitments. Things like law abiding and keeping investors on rather than seeing them go.
It is a tough position for asset managers to be in. On the one hand, conservative investors such as the states of Texas and Arizona, threaten—and make good on their threats—to pull out their money if the ESG push gets too strong. On the other, there are the climate-conscious investors that make similar threats.
With GFANZ, things came to a head earlier this year, when Race to Zero, the UN initiative that was setting standards for financial institutions with a view to net-zero commitments, threatened banks to expel them from the net-zero alliance unless they restricted “the development, financing and facilitation of new fossil fuel assets.”
Since this is nothing short of outside interference in corporate decision-making, it was only to be expected that banks would balk at it. The directive was later softened, language-wise but the fact remained that banks have limits to the ESG pressure they are willing to take.
In this context, what is happening now with Vanguard and HSBC could be seen as yet more signs of those limits, especially when compliance of antitrust legislation is on the line with some legislators suspecting the existence of “climate cartels” and eager to investigate them.
Meanwhile, cracks are beginning to appear in the investor push for Big Oil to become more climate-conscious, too. While the past couple of years saw many climate-related resolutions tabled by environmentalist shareholders pass in the most climate-unfriendly industry, this year everything changed.
Climate resolutions failed repeatedly at Big Oil general meetings because a new priority emerged, trumping environmental, social, and governance: energy security. And it’s not going away for a while.
Crypto Giant Binance Offers Little Transparency After FTX Collapse
Its outsize role and complex setup had already drawn scrutiny from regulators
The collapse of the crypto exchange FTX has triggered calls for transparency in the industry. To many investors, the industry’s biggest player, Binance, remains a black box.
Crypto exchange Binance processes more transactions than most of its rivals combined, accounting for roughly half of crypto spot trading and two-thirds of derivatives trading, according to the research firm CryptoCompare.
Its outsize role has come under greater scrutiny since the collapse in November of FTX. Last week, U.S. authorities accused FTX founder Sam Bankman-Fried of secretly diverting customer funds from the exchange to his affiliated trading firm, Alameda Research.
Like FTX, Binance discloses limited financial information. It doesn’t say where the company is based. And its founder, Changpeng Zhao, is affiliated with market makers providing liquidity on its own platform, an arrangement some market observers say leads to a potential conflict of interest.
“Does the exchange give preferential treatment to an affiliate? Is the exchange supporting an affiliate with customer money? These questions concern customers and the regulators who try to protect them,” said Larry Harris, a finance professor at the University of Southern California’s Marshall School of Business and former Securities and Exchange Commission chief economist.
“When a business is not transparent and not regulated, we have no true understanding of what is happening inside,” Prof. Harris said.
Adding to investor worries, an outside audit firm that Binance brought in to report on its reserves recently said it was suspending its work for crypto firms.
Patrick Hillmann, Binance’s chief strategy officer, said Binance has strict controls in place overseen by a global risk department. He said the exchange doesn’t trade against users. While private companies aren’t required to produce financial statements, Binance is embracing additional transparency by showing proof of its reserves, he added.
“We have already restarted the [process] and will make additional announcements in the coming weeks,” Mr. Hillmann added.
Binance has been shrouded in secrecy following its creation in 2017. In recent years, when cryptocurrencies were booming, investors paid scant attention to corporate structure and governance within the industry.
But Binance’s lack of transparency, and the structure of its operations, have raised concerns among regulators.
Long before FTX’s collapse, the U.S. Department of Justice was probing whether Binance had abetted money laundering, and the SEC asked for a list of information from Binance’s U.S. affiliate, including how it relates to the global organization.
Binance has said in the past that it collaborates with regulators around the world and takes compliance obligations seriously.
Mr. Zhao, born in China and raised in Canada, launched Binance out of Shanghai in 2017. After the Chinese government issued a ban on crypto exchanges, the team moved to Japan. In 2018, Japan’s financial regulator warned the company against conducting trades for residents without having a license to do so. After that, Binance stopped disclosing a specific location.
Binance denies it continued to conduct business out of China after the ban, but developers based in Shanghai were maintaining key software functions at its U.S. arm, Binance.US, as of summer last year, The Wall Street Journal previously reported. It made Binance.US executives worry that the U.S. government might take issue with customer data being potentially accessible by the Chinese government.
Binance.US told the Journal at the time that the exchange had robust data protection and that U.S. customer data was stored on servers in the U.S.
“Binance does not operate in China nor do we have any technology, including servers or data, based in China,” Mr. Hillmann said.
While FTX’s collapse has rippled across the crypto universe, creating losses for other companies and depressing values of tokens, Binance is far larger and more important to the industry. The exchange is a large partner for Western crypto traders and institutions, and it is a major platform for those in developing economies who want to store funds outside local-government currency.
“People all over the world have their savings on Binance,” said Noelle Acheson, a crypto macro strategist.
At the heart of FTX’s downfall was a liquidity provider and trading firm owned by Mr. Bankman-Fried, Alameda Research. That relationship gave Alameda trading privileges that ultimately allowed it to tap FTX customer funds for its own purposes, U.S. authorities have alleged.
The SEC was examining the relationship between Binance.US and two trading firms with ties to Mr. Zhao, the Journal previously reported. The firms serve as liquidity providers for the platform, and while Binance says on its U.S. website that affiliated market makers might trade on the exchange, it doesn’t name which firms might do so.
Mr. Zhao acknowledged that he is an investor and shareholder in one of Binance’s market makers. But he said that the sole purpose of that entity, which he didn’t name, is to provide liquidity and that it doesn’t make profits. “We are not trying to make money from trading ourselves,” Mr. Zhao said.
After FTX filed for bankruptcy protection, Binance vowed to show customers worried about their funds that their tokens were stored safely. While crypto transactions are public through the blockchain, they become private once they enter an exchange. Binance released figures for bitcoin, but before it could release for others, Mazars, the auditing firm it used, suspended the work for Binance and other exchanges.
Mr. Zhao said that unlike FTX, his exchange has taken no loans and incurred no debt. He also said it is profitable. But the company hasn’t released any financial statements. Last week Binance was hit by $6 billion in outflows as nervous customers moved their tokens elsewhere.
International regulators have issued a series of warnings about operating in countries without licenses. The warnings pushed Mr. Zhao, who once dismissed offices as obsolete, to set up some and register in some countries. The company also said it is going through a restructuring “to provide regulators with further clarity about our organization.”
Meanwhile, users can’t be sure who exactly they are conducting business with. While Binance at some point listed its parent company as Binance Holdings Ltd., incorporated in the Cayman Islands, Binance said it never operated an exchange from there. As of Monday, Binance’s Australian and New Zealand websites noted that “Binance is a registered trademark of Binance Holdings Ltd.”
“Having a trademark registered under a particular company does not mean that it’s a parent company or that it’s an exchange,” Mr. Hillmann said, adding that Binance operates through a number of entities incorporated in a range of jurisdictions.
Early premarket gappers
- Gapping up: ADCT +24.8%, NKE +12.4%, RAD +8.6%, FDX +4.2%, PHG +2.9%, LCID +2.1%, CCL +2.1%, TTE +1.9%, TCX +1.8%, PBR +1.4%,
- Gapping down: ICCM -14.6%, CVGW -14.4%, TERN -8%, AIR -6%, NVX -5.2%, WOR -3.5%, GLDD -2.8%, AEL -1.2%,
UK aviation regulator approves first satellite launch from British soil
Civil Aviation Authority issues final licences to Virgin Orbit for take off from Spaceport Cornwall in Newquay
The UK’s aviation regulator has given the green light for Virgin Orbit to send the first satellite into orbit from British soil, paving the way for a launch from Spaceport Cornwall in Newquay.
The Civil Aviation Authority on Wednesday said it had issued the final licences to Virgin Orbit after receiving consent from transport secretary Mark Harper.
“Today we are one step closer to opening the UK’s galactic gateway, with Virgin Orbit receiving a historic first licence to allow the UK’s first ever space flight launch,” Harper said in a statement.
The approvals were granted after Virgin Orbit demonstrated to the UK CAA that it had “taken all reasonable steps to ensure safety risks arising from launch activities are as low as reasonably practicable”.
Virgin met other security and environmental requirements, and also received a range control licence from the space regulator, which enables it to issue warning notices to keep people out of hazardous areas and monitor the rocket’s progress.
Dan Hart, Virgin Orbit chief executive, said the approvals “take us one step closer to the first satellite launch take-off from UK soil. This is a major milestone for the CAA and represents the successful completion of an enormous effort”.
Unlike traditional launchers that rise from a launch pad, Virgin Orbit’s converted Boeing 747 aircraft will take off from the runway with a rocket tucked under its left wing. The rocket will be released 35,000 feet above the ocean to the west of Britain to place the satellites into low earth orbit.
OpenAI releases Point-E, an AI that generates 3D models
The next breakthrough to take the AI world by storm might be 3D model generators. This week, OpenAI open sourced Point-E, a machine learning system that creates a 3D object given a text prompt. According to a paper published alongside the code base, Point-E can produce 3D models in one to two minutes on a single Nvidia V100 GPU.
Point-E doesn’t create 3D objects in the traditional sense. Rather, it generates point clouds, or discrete sets of data points in space that represent a 3D shape — hence the cheeky abbreviation. (The “E” in Point-E is short for “efficiency,” because it’s ostensibly faster than previous 3D object generation approaches.) Point clouds are easier to synthesize from a computational standpoint, but they don’t capture an object’s fine-grained shape or texture — a key limitation of Point-E currently.
To get around this limitation, the Point-E team trained an additional AI system to convert Point-E’s point clouds to meshes. (Meshes — the collections of vertices, edges and faces that define an object — are commonly used in 3D modeling and design.) But they note in the paper that the model can sometimes miss certain parts of objects, resulting in blocky or distorted shapes.
Outside of the mesh-generating model, which stands alone, Point-E consists of two models: a text-to-image model and an image-to-3D model. The text-to-image model, similar to generative art systems like OpenAI’s own DALL-E 2 and Stable Diffusion, was trained on labeled images to understand the associations between words and visual concepts. The image-to-3D model, on the other hand, was fed a set of images paired with 3D objects so that it learned to effectively translate between the two.
When given a text prompt — for example, “a 3D printable gear, a single gear 3 inches in diameter and half inch thick” — Point-E’s text-to-image model generates a synthetic rendered object that’s fed to the image-to-3D model, which then generates a point cloud.
After training the models on a dataset of “several million” 3D objects and associated metadata, Point-E could produce colored point clouds that frequently matched text prompts, the OpenAI researchers say. It’s not perfect — Point-E’s image-to-3D model sometimes fails to understand the image from the text-to-image model, resulting in a shape that doesn’t match the text prompt. Still, it’s orders of magnitude faster than the previous state-of-the-art — at least according to the OpenAI team.