As Hedge Funds Endure Rocky Year, | Stock Market News Today


Investments in private companies are saving the year for stock-picking hedge funds.

Prominent managers that invest in both public and private companies in the same funds have seen their portfolio of public investments flail, weighed down by losses from January’s meme-stock rally and a retreat by fast-growing technology stocks. But soaring valuations of private companies and a hot U.S. IPO market have boosted their private wagers. That has helped mask their poor performance in public markets and driven up their overall returns.

Dan Sundheim’s $25 billion D1 Capital Partners, for example, is down 4% in its public bets for the year through September—but up 71% before fees in its private investments, said people familiar with the firm. The S&P 500 had a total return of 15.9% for the period.

D1 clients opt into share classes that offer varying levels of exposure to private investments. Clients in the share class that can invest up to 15% in private companies have seen gains of about 4.5%, after fees, for the period. The gains stand at 14% and 21% for clients in share classes that can invest up to 35% and 50% in private companies.

Meanwhile, Boston-based Whale Rock Capital Management was down 11.2% for its public investments in a hedge fund that can invest up to a quarter of its clients’ money in private companies, said people familiar with the fund. The performance of the fund’s private wagers shrank the fund’s losses to 3.3% for the year through September.

Hedge funds without private companies in their portfolios have had a rougher time. Palo Alto, Calif.-based Light Street Capital Management, which manages late-stage growth and other funds along with a hedge fund that only invests in public companies, is down 18.6% for the year through September in its hedge fund, said people familiar with the firm. That has brought the fund’s size down to about $1.7 billion. Its growth funds have fared much better, the people said, with Light Street’s first such fund, whose investments include the restaurant-software provider

Toast Inc.

and the software-development company

GitLab Inc.,

expected to have an internal rate of return of more than 100%.

The rush into private investing by public-market investors has helped fuel surging valuations for private companies. And as hedge funds, along with mutual funds and sovereign-wealth funds, deploy billions of dollars, they often crowd out venture and growth funds.

Hedge funds made up 27% of the money raised in private rounds this year through June, despite participating in just 4% of the deals, according to a recent report by Goldman Sachs Group Inc.

“These tech companies are growing exponentially, and managers want to capture that huge exponential growth for their clients,” said Susan Webb, founder and investment chief at the New York-based outsourced-investment firm Appomattox Advisory.

The higher-return potential is stark. Private-equity and venture strategies gained an average 14.2% a year in the decade ended in 2020, Goldman said, while hedge funds overall averaged half those annual returns over the period—and were subject to the stresses of regular redemption cycles.

Toast, a restaurant-software provider that went public last month, is an investment of a Light Street Capital Management growth fund.



Photo:

Richard Drew/Associated Press

Hybrid funds can offer distinct benefits, said Udi Grofman, global co-head of the private-funds group at Paul, Weiss, Rifkind, Wharton & Garrison LLP. “The beauty of the structure is that it allows the capital of the investors, in between being invested in private investments, to be exposed to public markets,” Mr. Grofman said. Clients typically sit on cash to fund capital calls by venture and private-equity funds.

Stock-picking hedge funds had a banner year in 2020, buoyed by markets that set new highs after bottoming that March.

Their fortunes in public markets have changed this year. The meme-stock rally in January, which sent the price of companies including GameStop Corp. and

AMC Entertainment Holdings Inc.

to extraordinary heights, dealt losses to myriad hedge funds. Whale Rock gained 71% last year, while the D1 share class investing up to 15% of clients’ money in private companies climbed 60%; in January they lost about 11% and 30%, respectively, in just their public investments.

While D1 has almost recouped those losses, Whale Rock and other growth-oriented stock pickers have struggled. Fund managers say sector rotations that have alternately favored growth or value have made it difficult to navigate markets. Long out-of-favor sectors such as energy and financials have been on a tear.

Meanwhile, private markets have continued to be supportive. The U.S. IPO market is flourishing, and companies are continuing to raise more money in private markets than in the past. Hedge funds are contributing to the brisk pace of fundraising. D1 and Tiger Global Management, which manages a series of private-equity funds in addition to a hybrid hedge fund, have participated in private funding rounds this year through September at a pace of more than a deal a week for D1 and more than two deals every three days for Tiger, according to PitchBook Data Inc.

The 44-year-old Mr. Sundheim, who started D1 after several years as chief investment officer at Viking Global Investors, said at a recent capital-introduction conference that he hadn’t expected to get as big in private companies as he has. D1 is invested in 90 private companies, he said.

He said judgment was the only competitive advantage in public markets as private markets offered the additional benefit of firms’ reputations playing a role in gaining access to deals. He said D1 in its earliest investments acted as a resource to management teams so they would be strong references for D1. Mr. Sundheim also said he was confident in his portfolio of public investments over the next three to five years.

Write to Juliet Chung at [email protected]

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Virgin Galactic, PepsiCo, JPMorgan Chase, Goldman Sachs: What to | Sidnaz Blog


Here’s what we’re watching ahead of the opening bell on Tuesday.

  • U.S. stock futures wavered, suggesting indexes would hover close to their record levels as investors awaited inflation data and earnings from the nation’s biggest banks.
  • Futures tied to the S&P 500 were relatively flat after the broad index climbed to its 39th record closing levels of the year. Dow Jones Industrial Average futures weakened 0.1%, while Nasdaq-100 futures were up 0.3%.
What’s Coming Up
Market Moves to Watch

JPMorgan Chase kicked off earnings season for big banks on Tuesday.



Photo:

Mark Kauzlarich/Bloomberg News

  • Conagra Brands


    CAG -0.53%

    declined 3.2% after reporting a fall in sales and cutting its expectations for profit next year, saying that it expects increased inflation to hit its bottom line.

  • PepsiCo


    PEP 0.02%

    shares added some fizz, rising 1.5% premarket after the food-and-beverage giant reported earnings and lifted its full-year guidance.

  • Tesla


    TSLA 4.38%

    edged up 1% in premarket trading, rising for the fourth consecutive day. CEO Elon Musk was in court on Monday to defend the purchase of SolarCity. He also said he doesn’t enjoy leading the automaker.

  • Boeing retreated 2.3%. The planemaker is facing production issues for the 787 Dreamliner, likely further delaying deliveries of the popular wide-body jets.
  • Some U.S.-listed Chinese companies are recouping recent losses, with search engine

    Baidu


    BIDU -0.53%

    adding 2.2%, e-commerce company

    JD.com


    JD -0.53%

    rising 1.5% and video-sharing firm

    Bilibili


    BILI 0.22%

    up 3.2%. Beijing said last week that it is probing tech companies’ data practices, prompting a tumble. But some of those worries may have eased after China’s top market watchdog approved

    Tencent’s


    TCEHY -3.36%

    plan to privatize search-engine affiliate

    Sogou.

  • Swedish telecom

    Ericsson

    ‘s U.S.-listed shares are up 3.5% ahead of the bell. Rating agency Moody’s issued a review of the company’s rating.

  • Meme stock

    AMC Entertainment

    slid 3.8% premarket. It has lost nearly 25% of its value this month so far.

Market Facts
  • The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all hit record closes on Monday—and in the S&P 500’s case, it was the 39th record close this year, beating the Dow’s 27 records and the Nasdaq’s 24. The broad index is ahead of the others in terms of gains this year too, with a nearly 17% rise.
  • European stocks have also been on the rise, with both the Stoxx Europe 600 and Germany’s DAX index notching record highs on Monday.
  • On this day in 1852, Wells, Fargo opened for business in San Francisco and Sacramento. It was founded by Henry Wells and William G. Fargo to convert gold dust into cash for miners, transport and safeguard letters, gold nuggets and other valuable byproducts of the California Gold Rush.
Chart of the Day
  • Global coffee prices are climbing and threatening to drive up costs at the breakfast table as the world’s biggest coffee producer, Brazil, faces one of its worst droughts in almost a century.
Must Reads Since You Went to Bed

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Vertex Pharmaceuticals, AMC, Uber, Dave & Buster’s: What to Watch | Sidnaz Blog


Stock futures are inching up, a day after the S&P 500 notched its 27th record close of the year amid the push-pull of rising inflation versus a healing job market. Here’s what we’re watching ahead of Friday’s trading start.

What’s Coming Up
  • The University of Michigan’s consumer sentiment index, due at 10 a.m. ET, is expected to rise to 84.4 during the opening weeks of June from 82.9 at the end of May.
  • The Group of Seven summit is under way in England. Leaders from the world’s seven largest advanced economies will discuss the recovery from the Covid-19 pandemic, climate change and other issues.
Market Movers to Watch
  • Shares of drug maker

    Vertex Pharmaceuticals


    VRTX 1.50%

    are looking sickly premarket, with a 15% drop. It said it will stop developing an experimental drug after it was shown in a midstage study to be unlikely to provide a clinical benefit to people with a rare genetic disease.

Vertex Pharmaceuticals’ building in Boston, Oct. 19, 2016.



Photo:

Scott Eisen/Bloomberg News

  • AMC Entertainment


    AMC -13.23%

    jumped 6.6% premarket. Late in Thursday’s session, AMC’s credit rating was upgraded by two notches, to CCC+ from CCC- , by S&P Global Ratings, as it pointed to the movie theater operator’s recent equity capital raises.

  • Skee ball anyone?

    Dave & Buster’s


    PLAY -3.78%

    shares climbed 5.2% premarket after the entertainment-venue chain reported a profit for its latest quarter as revenue picked up with consumers heading back into its locations.

  • Cruise lines caught the Covid blues. Two guests sharing a room on Royal Caribbean Group’s Celebrity Millennium tested positive for Covid-19 toward the end of the cruise, the company said. The ship was sailing out of the Caribbean island of St. Maarten, one of the company’s first voyages to restart out of the region.

    Royal Caribbean


    RCL -2.33%

    shares slipped 2% premarket, and

    Carnival


    CCL -2.04%

    was also down, by 1.4%.

  • Uber


    UBER 0.83%

    is up 0.6% premarket. A Chinese competitor, Didi Chuxing Technology, made its IPO papers public on Thursday, and could fetch a valuation upward of $70 billion. Didi is known for successfully pushing Uber out of China, winning a bruising price war that ended in 2016. But Uber also stands to benefit from Didi’s success, as it now owns a 12.8% stake in Didi.

  • Chewy


    CHWY 2.03%

    shares slipped 1.3% premarket after the pet-products retailer said it was facing labor shortages and supply problems that led it to run out of some items. Still, investors were tossed a bone when it also surprised Wall Street with a quarterly profit.

Market Facts
  • While the pandemic has hit India hard, its stock market has surged. The MSCI India index hit record highs this week and is now up 14% for the year to date.
  • Uranium this week traded at $32.05 a pound, according to UxC LLC, a nuclear-fuel data and research company. Prices reached an all-time high of $136 a pound in 2007, according to records going back to 1987.
  • On this day in 1930, trying to rebuild public confidence in the market, New York Stock Exchange President Richard Whitney had the press witness him making a bid, with his own money, of $160 a share for a 60,000-share block of U.S. Steel stock. Shortly thereafter the stock sank below $150, on its way to $21 in the market bottom of 1932.
Chart of the Day
  • Money is pouring into stocks that get good grades on issues like building a diverse workforce and reducing carbon emissions. But figuring out how high- and low-rated companies perform is nearly impossible because of inconsistencies in the way they are rated.
Must Reads Since You Went to Bed

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GameStop Doesn’t Have a Blank Check After All | Sidnaz Blog


GameStop’s stock price slid as much as 12% after hours Wednesday following the company’s results.



Photo:

nick zieminski/Reuters

Apparently, even meme-stock investors have their limits.

GameStop’s


GME 0.85%

fiscal first-quarter results reported Wednesday afternoon were encouraging in many respects. Revenue grew for the first time in three years, surging 25% year over year to almost $1.3 billion for the quarter ended May 1. That came thanks mostly to strong sales of the new PlayStation and Xbox consoles that—while still sharply limited in supply due to the global chip production shortage—drove a 37% increase in GameStop’s hardware sales to about $704 million for the quarter. The company has also been able to boost its cash reserves and reduce its debt, due to selling nearly $552 million of its shares during the quarter.

But like fellow meme-stock champion

AMC Entertainment,

GameStop seems to have discovered that individual investor love isn’t a blank check. The company said Wednesday it intends to file papers to sell up to five million shares, after selling 3.5 million shares in April.

GameStop’s stock price slid as much as 12% after hours Wednesday following the company’s results and a truncated conference call that again took no questions. AMC’s stock has fallen 21% since it announced its latest stock sale last week.

But even with such a sharp after-hours drop, GameStop’s shares remain up an absurd 1,300% from the start of the year. Which means the company will need all the help it can get to justify investors’ bets that it can renovate a videogame retail chain for an age when most games are sold digitally. The latest results also laid out starkly what a challenge that will be.

Game software, once GameStop’s largest business, fell 5% year over year during the quarter to about $398 million. This wasn’t an industrywide problem; NPD’s data shows that sales of videogame content across digital and physical channels in the U.S. rose 14% during the comparable three-month period ending in April.

Strong demand for gaming products such as the newest consoles are keeping GameStop in the game for now. But the company’s long-term revival can’t depend on machines that are updated once every seven or eight years. And GameStop is still in the staffing-up phase of whatever its plan is. The company formally installed Chewy co-founder

Ryan Cohen

to the chairman slot following a successful shareholder vote on Wednesday. It also names a new chief executive and chief financial officer—both from executive roles at

Amazon.com.


AMZN 0.52%

Mr. Cohen told shareholders Wednesday that GameStop’s turnaround will take time. He also said the company was trying to do something in retail that no one else has done before. GameStop investors seem inclined to give the company time—but not at any price.

Write to Dan Gallagher at [email protected]

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Stitch Fix, Coupa Software, Clover Health, Tesla: What to Watch | Sidnaz Blog


U.S. stock futures wavered, suggesting major indexes would turn in a mixed performance after the opening bell in an extension of the recent choppy but range-bound trading.

  • S&P 500 futures were flat. Futures on the Dow Jones Industrial Average slipped 0.2%. Contracts for the tech-heavy Nasdaq-100 edged up 0.2%.
  • Yields on 10-year Treasury notes ticked down to 1.553% from 1.570%. The dollar is up and oil prices are down slightly. Read our full market wrap here.
What’s Coming Up
Market Movers to Watch
  • Stitch Fix


    SFIX 4.36%

    : The online apparel company’s losses narrowed in the fiscal third quarter as sales jumped 44%, lifted by an increase in customers who took their shopping online. Shares leaped 14% premarket.

The Nasdaq exchange in New York displays advertising for Stitch Fix’s initial public offering in 2017.



Photo:

Richard B. Levine/Levine Roberts/Newscom /Zuma Press

  • Shares of

    Clover Health Investments

    soared after emerging as the latest target for retail traders on Reddit forums. The health-care company’s share price rose over 32% Monday and is up another 13% on Tuesday in premarket trading.

  • Shares of

    Coupa Software


    COUP 2.82%

    dropped 7.9% before the bell. The company forecast that it would post a loss in its 2022 fiscal year and named Tony Tiscornia as its new chief financial officer.

  • Tesla


    TSLA 1.01%

    shares rose 2.6%. The China Passenger Car Association said the electric-vehicle maker sold 21,936 made-in-Shanghai vehicles in China in May while exporting 11,527 cars overseas.

  • Marvell Technology


    MRVL -0.88%

    gained 4.6% after the chipmaker record quarterly sales.

  • Equity Residential


    EQR 0.74%

    fell 3.6% premarket. Shares of the real-estate investment trust had rallied in recent weeks after analysts at Morgan Stanley and BMO Capital markets had raised their target prices for the stock.

  • Another REIT,

    W. P. Carey,


    WPC -0.40%

    slipped 2.5%. The trust said it was looking to raise about $395 million in a share offering to fund potential investors and repay debt.

  • Etsy


    ETSY 2.52%

    lost 1.7% after the online crafts marketplace proposed a private offering of $1 billion in convertible senior notes late Monday.

Market Facts
  • Traders last week spent $11.6 billion on options contracts tied to AMC Entertainment Holdings, more than on the SPDR S&P 500 ETF Trust, Invesco QQQ Trust and Tesla Inc. combined, according to Cboe Global Markets data. Options on those stocks are typically among the market’s most popular.
  • Biogen shares surged 38% on Monday after U.S. regulators gave the green light to the drug known as aducanumab, the first such approval of any drug to treat Alzheimer’s in nearly two decades.
  • Demand for lithium used in batteries is expected to expand by a factor of 30 by 2030, according to the International Energy Agency. Cobalt and nickel also will be needed for batteries while copper will be used by transmission lines, electric vehicles and wind turbines. 
Chart of the Day
Must Reads Since You Went to Bed

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AMC Entertainment, Fox, GameStop: What to Watch When the Market | Sidnaz Blog


Here’s what we’re watching ahead of Tuesday’s opening bell.

U.S. stock futures wobbled ahead of a flurry of economic data.

Futures tied to the S&P 500 and the Dow Jones Industrial Average were relatively flat after both major indexes closed at record highs on Monday. Contracts for the technology-focused Nasdaq-100 gained 0.3%, suggesting the tech sector could extend its rebound when the stock market opens. Read our full market wrap.

What’s Coming Up

Earnings are due from cybersecurity firm

CrowdStrike


CRWD 0.78%

and business applications company

Coupa Software


COUP 1.53%

after the close.

Monthly retail sales for February, due at 8:30 a.m. ET, are expected to show a small decline after 5.3% growth in January, the largest gain in seven months. U.S. business inventories for January, due at 10 a.m., are expected to rise 0.3% from a month earlier.

Market Movers to Watch

—The lights go down, the curtains go back and

AMC Entertainment


AMC 25.81%

stock rallies another 1% premarket after a 26% jump Monday. Movie theatres in the big market of Los Angeles were finally allowed to reopen Monday following New York, the other critical market, which came back earlier this month.

A reopened AMC theater in New York on March 6, 2021.



Photo:

John Marshall Mantel/Zuma Press

Fox Corp.


FOX 0.25%

B-shares are among the biggest risers ahead of the open, trading about 4.2% higher. The stock price of

Rupert Murdoch’s

TV group is up more than one-third over the past month.

—Reddit favorite

GameStop


GME -16.77%

is tumbling again premarket, down 7.5% after a near 17% drop on Monday. The videogame retailer’s stock is still trading more than 10-times higher than where it started 2021.

SL Green Realty


SLG -1.66%

is down 0.6% following a similar fall Monday. The real-estate investment trust has fallen out of the S&P 500.

—A pretty dull morning all round is summed by

Tesla


TSLA 2.05%

barely moving: Elon “Technoking” Musk’s electric car company edged down 0.2%. But there was trading activity around Mr. Musk elsewhere: Bidding for a tweet he was selling as a digital asset reached $1 million Tuesday on an online marketplace that lets people pay for the ownership of tweets. The video in the tweet features a golden trophy decorated with Shiba Inus, a nod to dogecoin, and techno music.

—Energy companies are struggling:

ConocoPhillips,

Occidental Petroleum


OXY -4.34%

and

Exxon Mobil


XOM -2.55%

are all lower after falling Monday. ConocoPhillips is off, 1.1%, Occidental off 0.9% and Exxon 0.8%.

Market Fact

The Dow Jones Industrial Average hit its 14th record close of 2021 on Monday, climbing 0.5% to 32953.

Chart of the Day 

Residential home sales are hitting peaks last seen in 2006, just before the bubble burst, but this time mortgages are stricter, down payments are higher, and a tight supply is supporting prices. 

Must Reads Since You Went to Bed

Cathie Wood Persuades Investors to Stick With ARK

Tidal Wave of ESG Funds Brings Profit to Wall Street

OxyContin Owner Increases Settlement Offer to $4.28 Billion

Vanguard Hits Pause on Fund Ambitions in China

Tesla’s ‘Technoking’ Musk Joins Long Line of Odd Job Titles

Caitlin Ostroff contributed to this article.

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GameStop, Koss, AMC: What to Watch When the Stock Market Opens | Sidnaz Blog


And you thought the

GameStop


GME 103.94%

frenzy was over. Not so fast. Here’s what we’re watching ahead of the bell on Thursday.

U.S. stock futures wobbled around the flatline ahead of fresh data on economic growth, jobless claims and the manufacturing sector. But stocks popular with Reddit users including Koss and AMC were soaring premarket, after GameStop shares more than doubled near the end of Wednesday’s session.

Futures tied to the Dow Jones Industrial Average were flat. Contracts linked to the S&P 500 edged down 0.3%. Nasdaq-100 futures slipped 1%, suggesting declines in tech stocks after the opening bell. Read our full market wrap.

What’s Coming Up

A busy day for earnings reports will include premarket updates from

J.M. Smucker


SJM -1.01%

and

Papa John’s International.


PZZA 0.73%

Salesforce,


CRM 2.05%

Etsy,


ETSY -0.78%

Airbnb,


ABNB 6.72%

DoorDash


DASH 1.63%

and

Beyond Meat


BYND 1.76%

will report after the close.

U.S. jobless claims, due at 8:30 a.m. ET, are expected to fall to 845,000 in the week ended Feb. 20 from 861,000 a week earlier. U.S. gross domestic product, also at 8:30 a.m., is expected to increase at a 4.2% annual pace in the fourth quarter, a slight upward revision from the previously reported 4% gain.

U.S. pending-home sales for January, due at 10 a.m., are expected to decline 0.5% from a month earlier. The Kansas City Fed’s February manufacturing survey, due at 11 a.m., is expected to fall to 15 from 17 a month earlier.

Market Movers to Watch

—Redditers, start your engines. GameStop is up 81% premarket.

Koss


KOSS 54.96%

jumped 99%, and

AMC


AMC 18.05%

is up 19%.

Best Buy


BBY -1.77%

shares dropped 5.6% ahead of the bell after it released its latest quarterly earnings report.

Nvidia


NVDA 2.52%

shares dropped 2.4% premarket. The graphics-chip maker posted record quarterly revenue, capping a year dominated by pandemic-fueled demand for its chips as the company grappled with supply shortages.

T-Mobile


TMUS 0.13%

shares rose 4.3% premarket. It underspent its rivals in an auction of wireless airwaves while

Verizon


VZ 0.16%

spent the most on 5G spectrum. Verizon’s shares edged down 0.8%.

Rent-A-Center


RCII 0.59%

shares climbed 8.2% premarket. The lease-to-own provider reported a rise in profit and an increase in revenue for its fourth quarter.

GameStop shares more than doubled Wednesday, and were soaring again Thursday premarket.



Photo:

Stephen Zenner/SOPA Images/Zuma Press

Market Fact

The Dow Jones Industrial Average on Wednesday rose 424.51 points, or 1.3%, to 31961.86, its 10th closing high this year. Earlier in the session, the index crossed 32000 for the first time.

Chart of the Day

Investor optimism has reversed a two-decade slump in the number of companies listed on U.S. exchanges.

Must Reads Since You Went to Bed

Rare Bond-Market Inversion Signals Short-Lived Boost to Inflation

Global Trade Roars Back From Depths of Pandemic

Bank Stocks Are Enjoying the Rate Party, Maybe a Little Too Much

Airbnb’s IPO Costs Expected to Widen Its Loss

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Wynn, ON Semiconductor, GameStop: What to Watch When the Stock | Sidnaz Blog


U.S. stock futures advanced, along with bond yields and oil prices, as investors wagered that a new round of stimulus spending would bolster the economy.

—Futures tied to the S&P 500 ticked up 0.3% after the benchmark stocks gauge posted its biggest one-week advance since November and closed Friday at an all-time high. Futures for the technology-heavy Nasdaq-100 and the Dow Jones Industrial Average contracts both added 0.4%. Read our full market wrap here.

What’s Coming Up

Earnings are due from

Simon Property Group,


SPG 1.67%

Take-Two Interactive Software


TTWO 2.98%

and

KKR


KKR 1.80%

after the close.

Market Movers to Watch

The iCar may have to wait.

Apple


AAPL -0.31%

‘s talks with

Hyundai Motor Group

have failed to lead to an agreement for the South Korean auto giant to assemble vehicles for the iPhone company. But investors seem ok with that—Apple’s shares nudged up 0.1% ahead of the bell.

The Reddit crew is a mixed bag this morning, but trading is relatively calm.

GameStop

‘s shares are up 14% premarket,

AMC

‘s are up 4% and

Koss

shares edged 0.3% lower.

Wynn

‘s not a winner today. The casino operator dropped 3.4% premarket after it started a public offering of 5.5 million shares of its common stock to fund operations while the Covid-19 pandemic continues.

Wynn Resorts Ltd.’s Wynn Las Vegas casino on April 27, 2020.



Photo:

Ethan Miller/Getty Images

ON Semiconductor

‘s shares are up 5.8% premarket. Several analysts raised their price targets for its stock.

Market Fact

Dogecoin, a homage to bitcoin that was designed to serve no real purpose, is suddenly worth a total of more than $6 billion.

Chart of the Day

A flood of cash has pushed borrowing costs to unusual lows in Europe. Some companies can now borrow at lower rates than those set by the European Central Bank.

Must Reads Since You Went to Bed

Stock Clearing Rules in Spotlight After GameStop Frenzy

New York Lawmakers Float Crackdown on Hedge Funds’ Sovereign-Debt Tactics

HNA Group’s Financial Maneuvers Powered Its Rise—and Caused Its Downfall

Elliott Management Explores Raising a SPAC

Tighter Oil Supplies Inject Momentum Into Price Rally

The Biden Stimulus vs. the Bond Market

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Elon Musk’s Dogecoin Tweeting Has Believers Barking for More | Sidnaz Blog


The reckless abandon of the investing world has a new fixation: a cryptocurrency that began in 2013 as a joke, was mostly forgotten, and thanks to a flurry of tweets from

Tesla Inc.


TSLA 0.26%

Chief Executive Elon Musk, is suddenly worth a total of more than $6 billion.

It is called dogecoin, a homage to bitcoin that was designed to serve no real purpose. Dogecoin holders can’t buy much with it and can’t easily convert it to cash. For most of its life, the virtual currency has traded for no reason other than to generate online laughs.

Dogecoin is named after an internet meme that surfaced nearly a decade ago. The meme centered around an image of a Shiba Inu dog with bad spelling habits (thus doge instead of dog). Users Photoshopped the dog’s furry face onto everything from astronauts to Twinkies.

Billy Markus, shown in 2015, decided to create a cryptocurrency as a joke after seeing bitcoin gain in popularity.



Photo:

Billy Markus

Tesla Chief Executive Elon Musk triggered a rally in dogecoin with a series of tweets on the cryptocurrency.



Photo:

Jim Watson/Agence France-Presse/Getty Images

In 2013, the software developer Billy Markus was watching bitcoin gain in popularity and decided to make his own lighthearted cryptocurrency. He first based it on the videogame “Animal Crossing,” and called it bells, named after the game’s pretend currency.

People online hated it, he said. So when another developer, Jackson Palmer, shared a new idea for a cryptocurrency based on the doge meme, Mr. Markus reconfigured his code for bells to fit the meme.

He set out to create a coin so ridiculous it could never be taken seriously. In return for solving mathematical puzzles, dogecoin miners operating fast-running computers received anywhere from one dogecoin to hundreds of thousands of dogecoins.

The coin had a fleeting moment of fame when it started. In 2014, its online supporters helped fund the Jamaican bobsled team’s journey to the Winter Olympics in Sochi, Russia, and sent a dogecoin Nascar racer to the Talladega Superspeedway in Alabama. Like most memes, it faded from relevance.

Then came Mr. Musk. On Jan 28, he tweeted a faux “Dogue” magazine cover.

Dogecoin surged as a topic on WallStreetBets, the Reddit forum that incubated trading in

GameStop Corp.

In late January, the price of dogecoin rose to 8 cents from half a cent, where it had traded at the beginning of the month.

The billionaire Tesla boss tweeted about it again Thursday, breaking what he said was going to be a hiatus from the social-media platform. “No highs, no lows, only Doge,” he posted. Dogecoin immediately shot up 80% intraday, before paring gains.

Dogecoin’s network, maintained by volunteers, struggled to accommodate the influx of buyers. The volunteers ponied up real money—in euros—to buy more server space.

Mr. Markus, who no longer works on dogecoin, couldn’t believe code he wrote in three hours on a Sunday gave rise to a cryptocurrency worth billions of dollars in total market value.

“The idea of dogecoin being worth 8 cents is the same as GameStop being worth $325,” said Mr. Markus, 38 years old. “It doesn’t make sense. It’s super absurd. The coin design was absurd.”

Users can buy dogecoin with a credit card on cryptocurrency exchanges and trading platforms, including Robinhood Markets Inc.

Damian Wawrzyniak, a chef at a restaurant in Peterborough, England, hadn’t heard of dogecoin before Mr. Musk tweeted about it. He quickly scooped some up through a cryptocurrency brokerage account he has used during the Covid-19 lockdown.

Dogecoin is “a completely strange name,” he said, but he figured that Mr. Musk, who has about 45 million Twitter followers, added to its allure.

In late January, a small cohort of protesters gathered in front of Robinhood’s headquarters in Menlo Park, Calif., to protest the restrictions the broker had placed on trading in GameStop,

AMC Entertainment Holdings Inc.

and other companies that were popular on Reddit.

As Dave Jevans, the chief executive of the cryptoanalytics firm CipherTrace, walked by on his way to the grocery store, a woman approached and encouraged him to join in.

“The market’s rigged,” she said.

“Buy bitcoin,” he joked to her.

A dogecoin race car at the Talladega Superspeedway in Alabama in 2014.



Photo:

Landon Merrill

“No, no, no,” she shot back excitedly. “Buy dogecoin! Have you seen it? I think we can get it to a dollar.”

A vocal group of buyers on Reddit have made it their mantra to push dogecoin to $1. The Twitter account TikTok Investors posted a video of a woman in purple workout clothes singing about taking dogecoin “to the moon.”

In theory, it will be difficult for dogecoin to hit $1. Unlike bitcoin, which caps the number that can be mined at 21 million, dogecoin has no such limit. The rise of GameStop, however, has reminded investors that anything is possible.

Share Your Thoughts

How do you see the cryptocurrency market developing in the next decade? Join the conversation below.

The newfound fervor for the cryptocurrency has even found converts who once disparaged dogecoin. Angelicah Shaver, a 28-year-old graduate student who runs a YouTube channel focused on cryptocurrencies, called it in a tweet in early January “literally an insult to the tech community” since its creation.

But as the hype grew, she decided to use it as an opportunity to teach cryptocurrency newbies how one buys, sells and analyzes coins. She bought $1,000 of dogecoin during the last week of January, right before its price shot up, and is holding on to her position.

“Fate loves irony, and it’s so true,” she said. “I’ve spoken out against dogecoin so many times. I’ve literally said dogecoin is an insult to technology, and here I am now holding this bag of doge.”

Write to Caitlin Ostroff at [email protected] and Paul Vigna at [email protected]

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GameStop, Alphabet, Match: What to Watch When the Stock Market | Sidnaz Blog


Here’s what we’re watching ahead of Wednesday’s market action.

U.S. stock futures edged higher, with technology stocks poised to lead gains as investors cheered corporate earnings and the prospect of more fiscal stimulus.

Futures tied to the S&P 500 ticked up 0.4%, while contracts on the Dow Jones Industrial Average were up a more muted 0.1%. Tech-heavy Nasdaq-100 futures rose 0.7% after Alphabet reported strong sales growth late Tuesday. Read our full market wrap.

What’s Coming Up

Earnings updates are due after the close from

eBay,


EBAY -1.95%

IAC/InteractiveCorp,


IAC 5.82%

PayPal,


PYPL 3.00%

MetLife


MET 0.95%

and

Qualcomm.


QCOM 1.98%

The ADP employment report, due at 8:15 a.m. ET, is expected to show that the private sector added 50,000 jobs in January.

IHS Markit’s U.S. services index for January, due at 9:45 a.m., is expected to fall to 57.1 from a preliminary reading of 57.5. The Institute for Supply Management’s services index for January, due at 10 a.m., is expected to tick down to 57 from 57.2 a month earlier.

Market Movers to Watch

Some of the Reddit traders’ favorite stocks are bouncing around ahead of the bell after a rough day.

GameStop


GME -60.00%

edged up 0.5%,

AMC


AMC -41.20%

added more than 5% and

Koss


KOSS -42.86%

jumped 33%. For our live blog of the action, follow this link.

—Google-parent

Alphabet’s


GOOG 1.38%

shares jumped more than 7% premarket after its earnings reflected a continuing recovery in global ad spending that took a hit in early 2020 when people paused travel plans and other purchases.

—Online-dating company

Match Group


MTCH 2.84%

‘s shares dropped 5.4% premarket after it delivered slightly better-than-expected results Tuesday but gave a mixed outlook for the quarter and year ahead.

—Burrito chain

Chipotle


CMG 0.93%

‘s shares slipped 2.8% premarket after it said its labor expenses rose in the latest quarter as the Covid-19 pandemic worsened, while online orders increased sharply.

Spotify


SPOT 3.73%

‘s U.S.-listed shares fell 6.4% ahead of the bell. The music-streaming giant posted stronger-than-expected subscription growth in the fourth quarter of 2020, but offered a conservative outlook for the current year.

The end of an era at Amazon: The e-commerce giant’s shares edged up 0.2% after it said

Jeff Bezos

will shift to executive chairman and hand over the CEO role later this year to Andy Jassy. The surprise announcement came as the company capped off its 2020 financial performance with record quarterly sales.

—Shares of videogame publisher

Electronic Arts


EA 2.13%

fell 3.8% premarket after it reported that revenue rose 5% in the latest quarter as the pandemic continued to fuel demand for at-home entertainment. Under a new partnership with collegiate-trademark company CLC, EA will gain exclusive rights to make games that simulate U.S. college football.

The Electronic Arts gaming area during the Gamescom industry event in Cologne, Germany, Aug. 20, 2019.



Photo:

Krisztian Bocsi/Bloomberg News

Market Fact

Wood-pulp prices are soaring thanks to speculators in China, with help from paper takeout containers, a weaker dollar and people using restrooms at home instead of at the office. Bleached softwood kraft pulp futures have risen 48% on the Shanghai Futures Exchange since Dec. 1, to about $1,037 a ton.

Chart of the Day

Alibaba plans to sell billions of dollars of bonds, in what will be a test of investor appetite after the e-commerce giant’s recent run-ins with Chinese authorities.

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