In today’s top stories, Revlon’s stock price rallies 650%, Tesla’s factories lose billions of dollars and Bank of America highlights stocks with 60% upside. Hedge funds were also in the headlines after Ray Dalio’s firm increased its bet against European stocks and Warren Buffett bought more Occidental stock.
Revlon becomes a meme stock
Revlon’s [REV] stock is trending on Stocktwits and Reddit’s WallStreetBets. Retail traders have jumped on the cosmetics company since it filed for bankruptcy last week, with more than 199 million shares trading on average each day since bottoming. The stock climbed 34% on 22 June, marking a 650% rally from its record low. Despite the company’s struggling fundamentals, traders piled close to $18m into the stock over the past week.
Bridgewater’s $10.5bn bet
As economies in the region struggle to combat rising inflation and slowing growth, Ray Dalio’s Bridgewater Associates has doubled its wager against European companies over the past week from $5.7bn to $10.5bn. The fund disclosed short bets against 28 companies on the Euro Stoxx 50 index, including ASML [ASML], Sanofi [SNY] and TotalEnergies [TTE]. The company’s position is the most bearish stance against European stocks it has taken in two years.
Tesla factories lose billions
Amid supply chain disruptions and battery manufacturing issues, Elon Musk revealed that Tesla’s new factories in Berlin and Austin are “gigantic money furnaces” and have lost the company billions of dollars. Since making the remarks in an interview on Wednesday, the company has started to lay off staff and Musk has suggested that 10% of its workforce could be hit. “Our concern is, how do we keep the factories operating so we can pay people and not go bankrupt?” he said.
Buffett buys Occidental
A regulatory filing revealed that Berkshire Hathaway has snapped up more than $500m worth of Occidental Petroleum stocks, giving the firm a 16.3% stake in the energy company. Berkshire owns 152.7 million shares in Occidental, worth a total $8.5bn. Occidental’s share price was down 3.6% on Wednesday, suggesting Buffett is taking advantage of its low value. According to Barron’s, these recent moves could indicate that Berkshire will expand its stake further, or even bid for the entire company.
BofA’s small and mid-cap picks
The S&P 500 and Nasdaq are down more than 20% and 24%, respectively, year-to-date, but Bank of America believes there could be opportunities in small and mid-cap stocks. The 26 stocks highlighted by the bank in a research note have an average potential upside of 60% over the next 12 months and include DoorDash [DASH], tech consultancy Gartner [IT] and electronics manufacturer Jabil [JBL].
Mitie stock jumps after £12.4m Custom Solar deal
Facilities and buildings management firm Mitie [MTO.L] has gained 9.1% since the start of the month, boosted by the news it has acquired Custom Solar for an initial $8.8m. Mitie has already shown its renewable energy prowess by helping to supply solar panels for major UK firms like Lloyds Banking Group, Vodafone and Rolls-Royce, but the deal will help further expand its expertise and capacity.
BNPL stocks struggle in cost of living crisis
‘Buy now, pay later’ (BNPL) has been a big trend in recent years for online shoppers. However, soaring interest rates and reduced spending amid a global cost of living crisis means leading BNPL firms such as Affirm [AFRM] and Apple [AAPL] could see share prices decline. Klarna has intentions to IPO in the near future, but the company’s losses and rising competition from names like Apple could impact this.
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