Visitors at the 2019 Gamescom gaming trade fair in Cologne, Germany.
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It’s happened again. Chinese tech stocks are getting hammered after Beijing summoned a number of gaming companies, including Tencent and NetEase, over new rules on the sector.
The companies were told to put an end to the “solitary focus of pursuing profit” and understand the importance of preventing online gaming addiction among children, the state-run Xinhua News Agency reported. Last month regulators moved to limit videogame playing time to just three hours a week for under 18s.
It didn’t stop there. China has temporarily suspended approval of all new online games, the South China Morning Post reported. Separately, the Transport Ministry reiterated its crackdown on the ride-hailing industry.
Those developments served as a brutal reminder of Chinese regulators’ predilection to show their teeth and sent the sector and broader market tumbling. The Hang Seng Index closed 2.3% lower, its worst day in six weeks, while the Hang Seng Tech Index slumped 4.5%.
NetEase was among the worst hit, falling 11%, while Tencent Holdings slipped 8.5% and Kuaishou Technology was 7% lower.
Investors have been battling between China’s strong economic prospects and the looming threat of more regulatory risks for some time now. ARK Invest’s Cathie Wood decided to shine some light on her own strategy. She said her fund had “dramatically” cut its position in China, opting instead for companies “currying favor” with Beijing over its aim for common prosperity, according to the Financial Times.
That’s one option, another is to stay away altogether for now.
—Callum Keown
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Biden Will Unveil New Strategy to Fight Contagious Delta Variant
President Joe Biden on Thursday will unveil a new “six-pronged strategy” to fight the Delta variant of coronavirus, an approach that will involve both the public and private sectors and encourage more employer vaccine mandates and increased testing.
- Delta’s surge peaked in Florida but is still rising in states like Kentucky and North Carolina, The Wall Street Journal reported. U.S. coronavirus deaths have surpassed 650,000 and confirmed cases have topped 40 million, according to Johns Hopkins University.
- Covid-19 transmission rates are “High” in 95.2% of U.S. counties, as of Sept. 6, per the Centers for Disease Control and Prevention. That means at least 100 people out of 100,000 tested positive in those counties over seven days.
- The Federal Reserve’s latest Beige Book said a “deceleration” in economic activity in August, especially in dining out, travel and tourism, was linked to concerns over the spread of Delta, with events canceled throughout the U.S.
- In a positive sign, Macy’s said its 95th annual Thanksgiving Day Parade will return to Manhattan on Nov. 25. The department store company said all participants will be vaccinated and masked.
What’s Next: Later this month, the U.S. will offer booster shots for those who got their first doses eight months ago. Pfizer’s top scientist, Philip Dormitzer, dismissed criticism that the company is pushing its Covid-19 boosters too aggressively, telling the Financial Times every country will likely need booster shots.
—Janet H. Cho
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Trial of Theranos Founder Elizabeth Holmes Kicks Off
Lawyers made opening arguments in the trial of Theranos founder Elizabeth Holmes on Wednesday, in one of the year’s most anticipated courtroom dramas. Holmes faces 12 counts of wire fraud and conspiracy after the blood testing start up collapsed in 2018.
- Robert Leach, an assistant U.S. attorney in the Northern District of California, said “this is a case about fraud and about lying and cheating to get money.” Lance Wade, attorney for Holmes, said Theranos failed for “human” reasons not fraud.
- Wade described Theranos as a company with 176 patents valued at hundreds of millions of dollars and the employer of hundreds of people, with a goal of making lab testing cheaper and more available. “It was real. It was innovative.”
- Holmes had said Theranos’ machines could do a range of blood tests with just a drop of blood. Prosecutors said she knew the tests weren’t reliable, and overstated Theranos’ performance. Wade said only a tiny fraction of the tests were inaccurate and Theranos investors were savvy.
- The defense also said former Theranos president Ramesh Balwani (an ex-boyfriend of Holmes) had a temper and could lash out. Balwani faces trial next year. He, like Holmes, has pleaded not guilty.
What’s Next: The witness list includes a who’s who of former Theranos associates, including its former lawyer David Boies, and former directors and cabinet secretaries Henry Kissinger and Jim Mattis.
—Liz Moyer
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Hard Seltzer Slump Hits Boston Beer
Shares of the Samuel Adams maker Boston Beer fell 8% in after-hours trading after it pulled its financial guidance for the year, citing “continuing uncertainty about hard seltzer demand trends for the remainder of 2021.”
- The company had already warned in July that sales of the hard sparkling alcohol drink, which boomed during the Covid-19 pandemic, would fail to meet expectations.
- Shares of Budweiser owner AB InBev, the drinks giant that also entered the hard seltzer market, were down 1.6% Thursday in Brussels. It invested heavily with Bud Light Seltzer, Natural Light Seltzer, and hard seltzer cocktails.
- Canada’s Molson Coors recently announced that it would discontinue its Coors-branded hard seltzer in the U.S.
What’s Next: Boston Beer noted that, according to industry forecasts, demand for the drink would be more than 100 million cases below what was predicted in May.
—Pierre Briançon
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Solar Power Could Generate 44% of U.S. Electricity Needs by 2050
Solar power could generate 37% of the U.S.’s electricity by 2035, and 44% of its power by 2050, if the U.S. was willing to cut its dependence on fossil fuels and accelerate its use of solar power from the current 3%, the Energy Department said Wednesday.
- Getting to the 44% benchmark would require the government and industry to spend $562 billion between 2020 and 2050, including new solar power infrastructure. But it could generate as much as $1.7 trillion in savings from cleaner air and a healthier public.
- Solar “could produce enough electricity to power all of the homes in the U.S. by 2035 and employ as many as 1.5 million people,” said Energy Secretary Jennifer Granholm.
- The U.S. is expected to install 26 gigawatts of new solar this year, which could grow to 33 gigawatts by 2023. Some U.S. companies that could benefit include First Solar, SolarCity, and Sunrun.
- In a letter to Congress, 748 solar companies on Wednesday called for extending and increasing the solar investment tax credit and improving grid resilience.
What’s Next: One major obstacle is the solar power industry’s reliance on materials and panels from China, which has been accused of using forced labor in its solar supply chain, charges China denies. The Biden administration has retained Trump-era tariffs and imposed new penalties on importing Chinese solar materials.
—Janet H. Cho
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GameStop Stock Falls After Earnings Miss
GameStop missed earnings expectations and kept investors mostly in the dark on its transformation ambitions. The stock was down 8% in after-hours trading.
- The videogame retailer reported a wider net loss than analysts anticipated, while sales edged out consensus estimates. The earnings release didn’t include transformation targets that have been repeatedly requested by analysts looking for reasons to justify the stock’s surging valuation.
- The company’s first earnings call led by new CEO Matt Furlong lasted only eight minutes. Management didn’t take questions from analysts, nor provide earnings guidance.
- “We now have unified leadership fully focused on two long-term goals: delighting customers and delivering value for stockholders,” Furlong said about the new management team. “We are focused on positioning GameStop to scale while obsessing over competitive pricing, expansive selection and fast shipping.”
What’s Next: AMC Entertainment CEO Adam Aron perhaps provided a bigger update on the fellow meme stock when he told Fox Business that he has been in touch with GameStop about a potential collaboration with the movie-theater chain.
—Connor Smith
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How is the delta variant affecting business travel, and what does that mean for travelers booking vacations?
Nick Ewen, a senior editor at SmarterTravel.com, is traveling from Orlando to New York City this weekend—and he’s planning to do so in style.
At Orlando International Airport, he will visit the Delta Sky Club lounge to relax and take in the amenities. And he’s considering an upgrade to a first-class seat on his flight. After all, the change will cost him less than $200, or around 16,900 airlines miles.
“Airline clubs and first-class cabins are typically filled with business travelers, but for now, they may be a bit emptier compared to prepandemic levels,” he said.
Ewen’s upcoming trip is a prime example of the options leisure travelers and tourists have at their disposal as the travel sector continues to face setbacks as a result of the Covid-19 pandemic, and the highly contagious delta variant.
Read more here.
—Jacob Passy
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—Newsletter edited by Liz Moyer, Mary Romano, Camilla Imperiali, Steve Goldstein, Rupert Steiner
