Take-Two, TSMC, Virgin Galactic, and US Indices: Weekly News Digest (10-14.01)
How did the shares of Take-Two Interactive Software and Zynga react to the news about a merger? What was going on with US stock indices after the US Fed published the PPI and inflation info for December? Why did TSMC shares grow while Virgin Galactic shares fell? Here are the results of the week.
Take-Two Interactive is buying Zynga
On Monday, 10 January 2022 Take-Two Interactive Software, the developer of such popular video games as Grand Theft Auto and Civilization, was buying a mobile game developer Zynga for $12.7 billion.
The two representatives of the gaming sector are planning to close the trade this summer. In Take-Two Interactive Software, they are sure that the purchase of Zynga will help the company secure its position in the market and get ahead of such rivals as Electronic Arts and Activision Blizzard.
How did Take-Two Interactive Software and Zynga shares react to the news?
On the very day that the news appeared, the share price of Take-Two Interactive Software Inc. (NASDAQ: TTWO) dropped by 13.13% to $142.99. It seems that investors got disappointed by the fact that the company was planning to buy all Zynga shares in circulation, paying 64% over the Friday price.
On the contrary, the quotations of Zynga Inc. (NASDAQ: ZNGA) on January 10th sky-rocketed by 40.67% from $6 to $8.44. On Tuesday and Wednesday, they kept growing.
How the speech of the head of the Fed influenced US stock indices
On Tuesday, 11 January 2022, Jerome Powell, the head of the US Federal Reserve System delivered a speech to the Senate Banking Committee.
Jerome Powell noted that the speed of the economic recovery was satisfactory yet warned that the growth of inflation could slow the process down. Moreover, the head of the Fed stated that the economy of the country was ready for toughening of the credit and monetary policy.
After the speech, NASDAQ Composite (NAS100) closed the trading session with growth by 1.41%, S&P 500 (US500) — by 0.92%, and Dow Jones Industrial Average (US30) — by 0.51%.
On Wednesday, 12 January 2022, the US Ministry of Labor announced that in December inflation in the country grew to 7% compared to the statistics of December 2020. This is the highest level since 1982.
On Thursday, 13 January 2022, the Producer Price Index for last month was published. It grew by 9.7% compared to the statistics of December 2020. Analysts had forecast growth by 9.8%.
After the minor growth provoked by the inflation publications, US stock indices noticeably dropped after the PPI results were published.
On 13 January 2022, NASDAQ Composite closed the trading session by a decline by 2.51%, S&P 500 — by 1.42%, and Dow Jones Industrial Average — by 0.48%.
TSMC report for Q4, 2021: growth of revenue by 24%
On Thursday, 13 January 2022, one of the global largest manufacturers of chips — TSMC — reported its progress in Q4, 2021. Thanks to the high demand for semiconductors, the revenue of the company reached its all-time high.
The shares of Taiwan Semiconductor Manufacturing Company (NYSE: TSM) grew by 5.26% to $139.19 after the report was published. The shares have been growing for four sessions in a row, by 12.7% totally.
- Revenue — $15.74 billion, +24.1%
- EPS — $0.23, +16.4%.
- Net profit — $6.01 billion +16.4%
Virgin Galactic will issue convertible bonds
On 13 January 2022, Virgin Galactic on its website announced that, as a private offer, the company would place some convertible bonds for $425, expiring 2027.
The money will be allocated for financing the working capital and expanding the spaceship park. The information had a bad influence on the shares of Virgin Galactic Holdings Inc. (NYSE: SPCE) and sent them down by 18.92%, to $10.03.
Take-Two Interactive is buying Zynga at an inflate d price. The shares of the first company dropped by 13% and the shares of the second one — grew by 40%.
The growth of US stock indices that started after Jerome Powell's speech, changed for a decline after the inflation data and PPI were published.
TSMC, a chip manufacturer, filed a report for Q4, 2021. Because the statistics were good, the shares of the company grew by 5%.
Virgin Galactic announced that it planned to issue convertible bonds. Tye shares of the company dropped by 19%.