Top US stocks: GameStop, PayPal and Coinbase

GameStop reports earnings after the closing bell, PayPal acquires buy now, pay later firm Paidy, the SEC threatens to sue Coinbase, Tesla’s sales in China rise, Boeing faces shareholder action over fatal crashes, Citrix attracts an activist investor, and NIO prepares to sell shares.

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GameStop

GameStop will publish second quarter earnings after US markets close today, marking the first update since management was overhauled earlier this year.

The new board is charged with turning GameStop from a loss-making retailer geared toward bricks-and-mortar into a leading one-stop-shop for video games online. Investors are hoping to learn more details about the strategy going forward and that the new management have already started delivering results.

Analysts are expecting revenue to rise to $1.12 billion from $942 million while its adjusted Ebitda loss is forecast to narrow to $34.0 million from the $62.4 million loss booked the year before. The net loss at the bottom line is expected to narrow to $42.6 million from $111.3 million. It is worth noting that GameStop has suffered heavy losses the day after posting earnings for the last four consecutive quarters, even after beating expectations. 

PayPal

PayPal has agreed to buy Japanese buy now, pay later firm firm Paidy for $2.7 billion in cash, as consolidation in the sector ramps up following Square’s deal to buy Afterpay in a $29 billion deal earlier this year.

PayPal said Paidy had pioneered the BNPL service in Japan and will bolster its service in the country, which is the third largest ecommerce market in the world. Paidy has around 6 million registered users. The deal is expected to close in the final quarter of 2021 and be ‘minimally dilutive’ to adjusted EPS in 2022.

Notably, BNPL rival Affirm Holdings will release fourth quarter earnings tomorrow.

Coinbase

Coinbase has said the US Securities Exchange Commission has threatened to sue the company if it goes ahead with plans to launch Lend, a service that would allow its users to earn interest by lending out crypto assets.

The company said it has been engaged with the SEC about its plans for six months, but has been notified about the potential action with no reason as to why. ‘As surprised as we were at the SEC’s threat to sue without ever telling us why, we want to be transparent with you about the course of events leading up to it,’ Coinbase said in a statement. Coinbase said the SEC has also previously asked for the names and contact information of every person on the waitlist for Lend, which Coinbase has refused to do.

‘The net result of all this is that we will not be launching Lend until at least October. Coinbase continues to welcome additional regulatory clarity; mystery and ambiguity only serve to unnecessarily stifle new products that customers want and that Coinbase and others can safely deliver,’ the company said.

Tesla

Tesla sold 44,264 cars that were made in its Chinese factory during August, according to the latest figures out from the China Passenger Car Association.

That was up from the 32,968 China-made cars sold in July and the 33,155 units sold in June. Production tends to ramp-up throughout each quarter, but the decision to introduce a cheaper version of the Model Y in China will have also helped demand. Of the cars produced last month, 12,885 were sold locally, up from 8,621 the month before – with the rest being exported.

A total of 1.5 million passenger cars were sold in China in August, which was down 14.7% from the year before. China’s BYD remained one of the largest sellers of electric vehicles.

Boeing

A judge in Delaware has ruled that shareholders can file a lawsuit against the company’s directors over the two fatal crashes involving its 737 MAX planes that killed over 340 people.

Morgan Zurn ruled that some claims can be pursued but also dismissed others. He said the first fatal crash should have flagged potential problems with safety system at the heart of the problem, but said this was ignored. He also said Boeing ‘publicly lied about if and how it monitored the 737 MAX’s safety’.

Boeing said it was ‘disappointed’ in the decision and said it would review it over the coming days as it decides its next step of action.

JPMorgan Chase

JPMorgan Chase has agreed to buy a majority stake in Volkswagen’s payments business as it looks to gain an edge as in-car technology progresses, according to Reuters.

The report said the bank has agreed to buy close to 75% of Volkswagen Payments for an undisclosed sum. Currently, the business handles car purchases and leasing, in-vehicle payments, fuelling and recharging costs and subscriptions such as insurance. JPMorgan said the connected car marketplace, which sees people use their cars like a wallet to buy goods and services, was one of the fastest-growing arms of the industry.

Volkswagen will retain around a 25.1% stake and the deal should close in the first half of 2022.

ICU Medical

ICU Medical has agreed to buy Smiths Medical from London-listed Smiths Group, outbidding TA Associates.

Smiths Group struck a deal in early August to sell its medical division to TA Associates for $2.3 billion, with the ability to earn a further $200 million depending on the performance of the business. It was also set to take a 30% stake in the company set to buy the medical business that would have been worth another $200 million and allowed the firm to retain some exposure. At the time, Smiths Group said the offer was ‘superior to all other proposals received during the separation process’.

However, ICU Medical has now won the Smiths Group board over with a superior offer. ICU Medical has offered $2.7 billion in cash with the ability for Smiths Group to earn a $100 million earnout. Plus, Smiths Group would receive 2.5 million new shares in ICU Medical, equal to around a 10% stake that is worth around $500 million, to allow Smiths Group to retain exposure to its medical arm.

Smiths Medical includes syringe and ambulatory infusion devices, vascular access, and vital care products and will be combined with ICU Medical’s existing business to form a new leading infusion therapy company with annual revenues of over $2.5 billion.

Citrix Systems

Activist investor Elliott Management Corp has built more than a $1 billion stake in Citrix Systems in an effort to pressure the board into taking action to address its lagging stock price, according to reports from the Wall Street Journal.

Elliott has informed Citrix that it now owns over a 10% stake in the business and wants to work with management to help improve its valuation, according to unnamed sources. Citrix shares have slumped over 25% over the last year.

NIO

Chinese electric carmaker NIO has said it plans to sell up to $2 billion worth of American Depository Shares (ADSs) in a stock offering designed to raise money to help strengthen its balance sheet.

Each ADS is equal to one Class A ordinary share in the company. The at-the-market offering will be conducted over time and at the company’s discretion.

Coupa Software

Coupa Software shares are in play after the company reported record quarterly revenue when it released second quarter results late yesterday.

Coupa, which provides a platform to help unify supply chains and handle areas like procurement and payments, said revenue rose 42% in the second quarter to a record $179 million. That came as calculated billings improved 49% to $195 million. Still, its net loss widened to $91.5 million from $43.1 million the year before.

Coupa said it is targeting revenue of $177 to $178 million in the third quarter and said it expects to post a net profit of between $6 to $7 million. For the full year, the company is targeting revenue of $706 to $708 million and net profit of $40 to $41 million.

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