The Week in Business: Robinhood Fizzled as Silicon Valley Sizzled

The Week in Business: Robinhood Fizzled as Silicon Valley Sizzled
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The Week in Business: Robinhood Fizzled as Silicon Valley Sizzled

The Week in Business: Robinhood Fizzled as Silicon Valley Sizzled

Robinhood’s highly anticipated public offering fizzled out on Thursday. The stock market startup’s shares opened at $ 38, but ended the day down 8.4%. The drop reflected investor skepticism about Robinhood’s grand mission to upset Wall Street. As part of this mission to democratize investment, Robinhood has offered up to a third of its initial shares to its clients through its app. This could have reduced a trading “pop” on day one, which is typically generated by retail investors who were excluded from an initial public offering. Robinhood ended Thursday with a value of around $ 29 billion, which still isn’t bad for an eight-year-old company.

The pandemic has been terrible for the world, but it has been great for businesses in Silicon Valley. Alphabet and Microsoft both announced record profits last week. Alphabet, Google’s parent company, reported last quarter profit of $ 18.5 billion, which is higher than it earned in 2015 as a whole. Its chief executive, Sundar Pichai, attributed a “rising tide of online activity.” Microsoft made $ 16.5 billion and its top executive, Satya Nadella, said usage of its collaboration products “has never been higher.” Apple, Facebook and Amazon have also reported significant increases in their profits. Tesla said it sold more than twice as many cars in the three months ended in June than in the same period last year.

The US economy revived in the second quarter, reaching its pre-pandemic, inflation-adjusted level. Exactly a year earlier, it had experienced its worst quarterly contraction on record. The good news from the latest report is that the economy appears to be recovering faster than it did after the financial crisis. The bad news is that US production remains below its prepandemic growth path and is still hampered by supply constraints and a shift in spending from services to goods, among other factors. The trajectory of the economy is also uncertain, as the highly contagious Delta variant of the coronavirus could threaten earnings.

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General Motors will release its results on Wednesday, and analysts will be watching the impact of the global chip shortage on its business. Like other automakers, the company has been forced to stop or slow production of some of its vehicles, hampering its ability to take advantage of strong demand for cars and trucks. Ford announced last week that its profits had fallen by 50% in large part due to the chip shortage. And automakers aren’t the only companies having problems: Apple said on Tuesday that the shortage will affect its smartphone business in the three-month period ending in September.

The Centers for Disease Control and Prevention reversed its guidelines on masks for those vaccinated on Tuesday, saying they should now wear masks indoors if they are in a Covid-19 hot spot. This news, along with growing concerns about the highly contagious Delta variant, has thrown a new wrench into plans to reopen corporate offices. Google, Adobe, Uber and Facebook have joined a growing list of companies demanding that workers be vaccinated to return to the office, and several companies have said they will delay their plans. The unions reflected the sometimes conflicting concerns of their members, with some pushing for more safety measures and others questioning vaccination requirements.

On Friday, the Labor Department will release data showing whether a hiring explosion in June continued into July. Economists will also learn whether reopening the economy is pushing back the millions of workers who left the workforce during the pandemic and whether employers are raising wages as they try to rehire.

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The Federal Reserve has said it will not raise interest rates and continue to buy government bonds, but the economy is growing. Peacock, Comcast’s streaming service, received a much needed boost from the Olympics. You might need a “sad day”. And on Monday, a U.S. ban on investing in 59 Chinese companies with links to the Chinese military goes into effect.

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