The SEC ordered a trading halt in SpectraScience stock because of a coordinated attempt to manipulate stock prices on social media. (Photo by SAUL LOEB / AFP)
AFP via Getty Images
The Securities and Exchange Commission finally ordered a trading halt in a stock because of a coordinated attempt to manipulate stock prices on social media. Sound familiar? It should to anyone that followed the GameStop saga. But this time the social-media mob wasn’t targeting a dying company—it was touting a dead one.
That company is SpectraScience, which hasn’t filed annual or quarterly reports for years. The company’s market capitalization is about $11 million and its stock trades at a fraction of a penny, but it was up about 450% over the past month.
Then the SEC halted trading, on what looked to be a good, old-fashioned pump-and-dump scheme.
It goes like this: A position is built slowly in a small, thinly traded stock. The stock starts to rise, the gains are touted, and new investors drive prices even higher. The original buyers sell into the strength—and new investors are left holding the bag. If that is what happened here, it would be considered a crime.
The SEC’s action is also a warning to all investors that chasing stocks based on nothing more than a social-media post is a risky trading strategy. Remember the adage from experienced poker players: If you can’t identify the sucker at the table, it’s you.
—Al Root
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Pot Stocks Surged; Then They Plunged
For months, pot stocks have rallied as investors bet on the chances of changing U.S. federal cannabis laws. On Thursday, shares in cannabis companies fell back to earth.
- Canadian marijuana stocks Tilray, Aphria, Aurora Cannabis and Canopy Growth all saw double-digit drops, with Tilray shaving nearly 50% off its value and erasing all its gains from the previous day.
- ETFMG Alternative Harvest, an exchange-traded fund with exposure to the pot business, dipped nearly 25% Thursday, but is still up almost 75% year-to-date.
- It’s hard to pinpoint a reason for Thursday’s drop. Some analysts note that Reddit traders who caused huge fluctuations in so-called meme stocks moved on to pot stocks. That could be the case: Shares of Canadian-based growers hyped on social media have soared while U.S.-based stocks that weren’t have been calm.
- Democrats’ commitment to using their new Senate majority to overhaul U.S. marijuana laws has been the key driver of the pot-stock rally in recent weeks. A raft of state-level measures allowing or expanding pot legalization passed last fall. While President Joe Biden doesn’t support federal legalization, he supports decriminalization.
What’s Next: One of the top posts on Reddit’s WallStreetBets forum on Thursday morning likened the recent action in Canadian pot stocks to a casino. Given GameStop’s trajectory, that attention “should be cautionary,” Cantor Fitzgerald analyst Pablo Zuanic told Barron’s.
—Ben Walsh
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Fauci Estimates That All Americans Will Be Eligible for Coronavirus Vaccinations in April
As the U.S. vaccination effort continues to ramp up, Dr. Anthony Fauci said Thursday that by April it would be “open season” on Covid-19 vaccine eligibility in the U.S.
- “Virtually everybody and anybody in any category could start to get vaccinated” by April, Dr. Fauci, the nation’s top infectious disease expert, said on NBC’s Today Show.
- Vaccine eligibility varies by state but is currently largely restricted to certain occupations, like healthcare workers and essential workers, people 65 or older, and others with health conditions that put them at increased risk for severe outcomes.
- While shortages remain a problem, the Biden administration said Thursday that it had secured enough doses to vaccinate 300 million Americans by the end of July. Currently, 10.5% of the U.S. population has received at least one dose.
- U.S. Covid-19 hospitalizations have fallen 40% in the past month, while the seven-day average of Covid-19 deaths, a lagging indicator, has fallen to its lowest level in a month.
What’s Next: Even as conditions improve, the prevalence of more transmissible variants concerns health officials. In Florida, for instance, the B-117 mutation first found in the U.K. is causing cases to spike.
—Ben Walsh
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Disney Posts a Surprise Profit as Disney+ Keeps Racking Up Subscribers
Media and entertainment giant Walt Disney’s latest quarterly results showed that its legacy businesses are recovering ahead of schedule, while growth at Disney+ continues to accelerate.
- Disney managed to turn a profit of 2 cents per share, compared with the 71-cent loss Wall Street analysts had forecast. Revenue also beat estimates at $16.3 billion versus the $15.9 billion expected.
- Disney+ added 21 million paid subscribers in the quarter, to start 2021 with almost 95 million subscribers worldwide—up from 26.5 million a year ago. Revenue for Disney’s streaming business overall rose 73% year over year, to $3.5 billion.
- The pandemic is still weighing heavily on Disney’s theme parks and cruises, where revenues fell 53% for the quarter, to $3.6 billion. That’s better than earlier in 2020, an improvement CEO Bob Chapek credits to the company’s Covid-19 protocols that have allowed it to boost attendance safely.
- Disney stock rose 1.4% in premarket trading Friday, to about $193.50. The stock is up about 36% over the past year.
What’s Next: The price of Disney+ in the U.S. will increase by $1 a month, to $7.99, starting in March, while other countries will see similar increases in their local currencies.
—Nicholas Jasinski
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Trump’s Defense Is Up Next in Impeachment Trial
House Democrats wrapped up their case on the third day of former President Donald Trump’s impeachment trial. The defense team will respond Friday afternoon.
- Pointing to comments from rioters, the prosecutors sought to demonstrate that the storming of the Capitol was done at Trump’s instruction.
- Rep. Jamie Raskin (D-Md.) argued that if Trump isn’t held accountable for a high crime and misdemeanor it would set a “new terrible standard for presidential misconduct.”
- “Let’s not get caught up in a lot of outlandish lawyers’ theories here,” Raskin said. “Exercise your common sense about what just took place in our country.”
What’s Next: Trump’s defense team will make their case Friday. Multiple outlets reported the former president’s lawyers anticipate wrapping up their arguments in one day.
—Connor Smith
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Amsterdam Overtakes London as Europe’s Top Stock-Trading Venue
The Dutch capital is displacing London as the exchange of choice to trade European shares and derivatives, in one of the first major financial consequences of Britain leaving Europe’s single market at the beginning of the year.
- Amsterdam stock exchanges have seen more than €9 billion ($11 billion) worth of shares traded a day during January, up from a daily €2.6 billion in 2020, according to data released this week. That compares with €8.6 billion of trades in London last month, down from €17.5 billion last year.
- Meanwhile the trading of euro-denominated swaps—a key derivative—dropped from 40% of the market last year to 10% in January, according to an IHS Markit survey.
- The trading of carbon emission permit is also gradually moving away from London, according to industry professionals.
- The changes have been triggered by the absence of dispositions for financial services in the EU-UK trade deal signed late last year, with the EU now insisting that euro-denominated trades have to be supervised and regulated by European bodies.
What’s Next: After a major shift in January, the outflows will slow in the coming months but the trend is unlikely to reverse. And Brussels, playing for time, will wait until more business has moved to the continent before it starts granting U.K. financial players the regulatory equivalence authorizations to do business in the EU.
—Pierre Briançon
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Do you remember this week’s news? How well do you know your Wall Street history? Take our quiz below about this week’s news and an additional question to commemorate Barron’s turning 100 this year. Tell us how you did in an email to [email protected].
1. Tom Brady, at 43, led the Tampa Bay Bucs to a Super Bowl win during his first year with the team. How many times has Brady won a Super Bowl during his career?
a. 5 times
b. 6 times
c. 7 times
d. 8 times
2. Tesla just bought $1.5 billion in Bitcoin and the electric-vehicle company expects to start accepting Bitcoin as payment for its products soon. Bitcoin prices jumped on the news. Which company currently accepts Bitcoin for payment?
a. Overstock.com
b. Dell Technologies
c. Macy’s
d. None of the above
3. Which San Francisco-based company and tenant of the city’s tallest building announced that more than half of its 50,000-plus global employees will work remotely at least part-time?
a. Wells Fargo
b. Salesforce.com
c. Gap
d. Prologis
4. Which company got FDA clearance this week for a combination of two of its antibody-based drugs to treat recently diagnosed Covid-19 in high risk patients?
a. Regeneron
b. Merck
c. Eli Lilly
d. Pfizer
5. Which airline announced this week that it plans to buy up to 200 flying taxis valued at $1 billion from an electric aircraft start-up, Archer, which itself announced plans to become a public company via a combination with a SPAC?
a. United Airlines
b. American Airlines Group
c. Southwest Airlines
d. Delta Air Lines
100 Years of Barron’s
6. Which electric-powered passenger car did General Motors introduce, and kill off, in the 1990s?
a. The Bolt
b. The CitiCar
c. The EV1
d. The Starlite
Answers: 1(c); 2(a); 3(b); 4(c); 5(a); 6(c)
—Pauline Yuelys and Kenneth G. Pringle
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—Newsletter edited by Matt Bemer, Anita Hamilton, Ben Levisohn, Stacy Ozol, Mary Romano
