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Morgan Stanley estimates that retail day traders who jumped into markets during last year's meme stock frenzy have lost all the gains they made. “A lot of these guys started trading right around Covid so their only investing experience was the wacked-out, Fed-fueled market,” Tuttle Capital CEO Matthew Tuttle told Bloomberg about the poor souls.
A Goldman Sachs-tracked basket of stocks favored by retail traders has sagged by 32% in 2022 — more than double the S&P 500’s loss. In Wall Street parlance, it might be an epic fall, but on Reddit you know it will be described as none other than an epic fail. | | | • | | Pfizer helped fight the major headache that was Covid; now it’s taking on migraines. | | • | | Peloton can’t seem to stop spinning its wheels. | | • | | The Dr. Seuss rights holders want to hop on popping IP valuations. | | | | |  | Pharma | Pfizer is Acquiring a Migraine Fixer for $11.6 Billion |  | | With the pandemic giving way to a wave of stressful economic news, Covid vaccine maker Pfizer is turning to the business of eliminating headaches.
The biotech giant announced plans on Tuesday to buy migraine drugmaker Biohaven in an $11.6 billion all-cash deal. It’s the kind of mammoth transaction investors have been waiting for as Pfizer piled up mountains of cash on the back of sales of its highly lucrative jabs. | Fortune Favors the Sold | | Pfizer’s pandemic fortunes are still rolling in. Driven by the global uptake of vaccines for children over five, as well as booster campaigns, the company bested Wall Street’s expectations and sold $13.2 billion in Covid vaccines and $1.5 billion worth of antiviral treatment Paxlovid in the first quarter.
But Pfizer still has to contend with the two banes of every pharma firm’s existence: R&D costs and patent cliffs. Last week, the company lowered its earnings guidance for 2022, citing high research and development costs. Meanwhile, several key patents are due to expire in the next few years. Luckily, the pandemic windfall left Pfizer with $32 billion in cash on hand, and buying Biohaven could ease the pain: | • | | Biohaven’s Nurtec was the top prescribed migraine medicine in its class in America last year, earning $462 million in revenue. A glitzy ad campaign fronted by Khloé Kardashian helped, but the reality star also earned a reprimand from the FDA for being a tad too effusive about the drug during an appearance on The View. | | • | | Biohaven has a second migraine drug at the pre-approval stage with the FDA, as well as five preclinical drugs in the pipeline. That could help Pfizer replace the $20 billion in annual sales it could lose beginning in 2026 due to patent expirations on treatments, including anti-blood-clot medicine Eliquis and prostate-cancer drug Xtandi. | | | | Cash to Burn: “Investors we have spoken with have said that they want Pfizer to be more aggressive on the M&A front and to use the cash they have made from COVID vaccine and oral antiviral sales to grow the company,” wrote Cantor Fitzgerald analyst Louise Chen in a note Tuesday. Biohaven would be Pfizer’s biggest deal since the summer of 2019.
Do-Over: Biohaven represents a rerun of sorts for Pfizer. Nurtec, as well as the drugs Biohaven has in development, are known as anti-CGRPs. Pfizer developed one, but sold the rights to it in 2012; in the meantime, rival Eli Lilly became a big player in the space. Now they get to butt heads over treating migraines. | | | | | | Fitness | ‘Thinly Capitalized’ Peloton Looks to JPMorgan, Goldman for $750 Million Injection | | Peloton sure knows how to spin its wheels these days. Unfortunately for the former pandemic darling, that’s not a good thing.
On Tuesday, Peloton announced it was $757 million in the red for its latest quarter, a massive loss that caught even a bearish Wall Street off guard. Burning more cash than carbs these days, the company will also borrow $750 million in five-year debt from JPMorgan and Goldman Sachs to try and anchor a turnaround. | Looking for the Right Fit | | In the time of lockdowns, everyone rushed to buy a Peloton bike, or so it seemed. With lockdowns lifted, no one is rushing to buy a Peloton, or so it seems. That has led to a bumpy road of late. Activist investors asked for leadership changes and even demanded the company sell itself. Peloton’s co-founders stepped down. Then, two months after he started his new job in February, new CEO Barry McCarthy was slammed by one of those activist investors for making the company “worse off now than before.”
Peloton blamed its latest loss — which came on a 24% revenue decline, its first since going public in 2019 — on unexpectedly weak demand. Even more of a problem is that Peloton’s flailing performance has left it cash-poor. With just $879 million, McCarthy said the company — which canceled a planned $400 million factory and laid off thousands to try and rein in costs — is “thinly capitalized for a business of our scale.” Peloton agreed to the $750 million loan to help right its rig, but questions about turnaround plans remain: | • | | Management believes Peloton can transform itself from a hardware-first company into a fitness subscription-led digital firm and McCarthy reaffirmed its wildly optimistic goal of reaching 100 million subscribers. Today, the company claims 3 million paying subscribers, with only 195,000 of those joining in the last quarter (less than half the number of new subscribers vs. the same period last year). | | • | | Peloton has dropped the price of its bikes and treadmills — again — but wants to raise the price of its connected fitness subscriptions (already there's been an uptick in cancellations). | | | | “Turnarounds are hard work,” McCarthy said on an investor call. “It’s intellectually challenging, emotionally draining, physically exhausting, and all-consuming.” Sounds like a proper Peloton workout.
Right Idea, Wrong Time: In theory, the pivot to digital is not a bad idea, as subscription-based businesses have a history of earning higher valuations from Wall Street than do manufacturers. Yet subscription kings Netflix and Spotify have each seen share prices drop over 70% since all-time peaks last year. Peloton’s market cap of $4.28 billion is off by more than 90% from its $50 billion high last year. | | | | | | SPONSORED BY realtymogul | Embrace Your Inner Mogul | Become a hard lump of snow that ruins a skier's day. (Sorry, we had to make one dad joke today.) Inside of all of us there’s a real estate mogul just waiting to emerge. The only issue? Most of us lack realtor contacts… and the handyman skills to fix a burst pipe… and the patience to deal with tenants throughout all this. But here’s the thing – with RealtyMogul, you don’t need any of that. All you need is some capital and enough fingers to create an account. Simple. The RealtyMogul platform gives you direct access to institutional-level real estate deals on apartments, offices, and more, all offered by different real estate companies. It’s all handled through their sleek investing platform and real estate firms who manage the properties for you. The end result? You tapping into the potential gains of real estate, without any of the heavy lifting. Get started on RealtyMogul right here in just minutes. | | | | | | Entertainment | Dr. Seuss Enterprises Eyes Lucrative IP Sale | | Movie and television studios crave intellectual property; they want it a lot. For in the world of mass entertainment, recognizable characters and stories are hot, hot, hot. We’ll cut the rhymes before you get annoyed, but this is one story media executives should not avoid. (OK, no more. Promise.)
On Tuesday, sources told Axios that Dr. Seuss Enterprises — the private company managing Theodor Seuss Geisel’s life's work — is currently talking to bankers about a valuation of the late author’s oeuvre in preparation for a possible sale to Hollywood. | The Cash in a Hat | | Whether it’s Warner Bros or Netflix or Walt Disney, securing the rights to popular children’s books is akin to winning the entertainment lottery. Just look at the House of Mouse, which acquired Marvel Entertainment for $4 billion in 2009 and subsequently turned the comic book publisher's IP into one of the most successful and valuable entertainment franchises of all time.
The killer investment sparked a decade-long run of Hollywood studios fighting over potentially lucrative pre-existing IP. In recent years, the streaming boom has led to widespread demand for children’s content. If other author catalogs are any indication, selling the rights to Dr. Seuss' iconic stories could turn Hop on Pop and Fox in Sox into Money in Bank Account: | • | | In September, Netflix acquired the Roald Dahl Story Company, which has rights to the late author's popular works such as James and the Giant Peach, Matilda, and Willy Wonka and the Chocolate Factory, for a reported $600 million, per the Financial Times. | | • | | Sources tell Axios the Dahl sale prompted the intensely private Seuss group to evaluate its options, but the company believes it could command a much higher price tag. Dr. Seuss is the top literary license in the United States — children’s or otherwise — in terms of print sales, per data from NPD BookScan seen by Axios. | | | | And, of course, it's not just movies and TV shows. The Dr. Seuss catalog is seemingly tailor-made for theme park resorts, meaning any potential sale is very likely to eclipse the $600 million Dahl haul. Oh, the places you could go… | | | | | | Extra Upside | • | | Tesla halted most of the production at its Shanghai factory due to Covid lockdowns. | | • | | Netflix plans to launch a crackdown on password sharing later this year. | | • | | Irrespective of just how poorly Peloton is performing in the public markets, the bikes are still crazy expensive. To help out, we want to give you $1,800 for an exercise bike of your choice. Enter here.* *Partner | | | | | | |  | Just For Fun | | | | | Written by Sean Craig and Brian Boyle. | | No longer want to receive these emails? Unsubscribe here. Copyright © 2022 The Daily Upside, LLC., All rights reserved. 1230 York Avenue, Box 154, New York, NY 10065 | | | | |
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