By Jake Sheckter, Business Editor
Each month’s edition of the YU Observer this year will include a “3-Stock Highlight” on a few stocks that have been in the news lately, have fascinating stories, or provide for an interesting read. On behalf of the YU Observer, we’d like to remind everyone that these stock picks are for educational purposes only and are not to be taken as financial advice or used for investing any real cash. This month, we will be highlighting Digital World Acquisition Corp. (DWAC), Merck & Co., Inc. (MRK), and Meta Platforms, Inc. (FB) (formerly Facebook).
Digital World Acquisition Corp. (DWAC)
Many special purpose acquisition company (SPAC) stocks have stolen the stage in the past year after announcing a deal. With polarization being the name of the game throughout the pandemic, the Digital World Acquisition Corp. (DWAC) stock may display some huge momentum to push it higher throughout the coming months and/or years. If ‘meme traders’ were able to punch in a Robinhood order right after the opening bell on October 21, 2021 for $15-$20 per share, they may have been able to cash out a near 1000% gain by the end of the day in theory. The next day, on October 22, 2021, shares skyrocketed (briefly) to nearly $175 before coming back down to earth and settling around $58.
Trump Media & Technology Group (TMTG) has merged with Digital World Acquisition Corp. to create the Truth Social network. Trump’s name is what largely fueled the temporary craze around DWAC. Trump plans to introduce TRUTH social, a social media company and/or subscription streaming service centered on being America’s “Big Tent” social media platform that encourages an open, free, and honest global conversation without discriminating against political ideology.
With most SPAC deals, there will typically be a slide deck that details the transaction, however, with the DWAC merger, there wasn’t one. Don’t worry, you don’t have to do a deep dive into SEC files because a Seeking Alpha commentator broke down the numbers for everyone. To sum everything up, there will be 177.7 million shares post-merger, which at today’s prices values the company at around $10.3 billion, generally much too high for a pre-revenue entity. This doesn’t mean that the company will flop, considering that if only 10% of the 74 million Americans who voted for Trump in 2020 paid for a $10 monthly subscription to the service, this alone could generate close to $840 million in potential annual revenue. This would also not include factors such as advertisement revenue from the platform’s free features. Until more information is released on DWAC and its merger, we may have to wait for a more reasonable valuation to come about.
Throughout the COVID-19 pandemic, pharmaceutical companies have showed that while many of them were born in the 1980s (Pfizer , Johnson & Johnson, Merck & Co., etc.), long before the tech giants that rule the market nowadays, they can still perform and excel in the stock market when disaster strikes. Merck & Co. Inc. (MRK), while not a contender for the Covid-19 vaccine, will potentially need to create an almost new niche among the assortment of anti-Covid pharmaceuticals available today. Merck & Co. recently announced their contribution to the anti-COVID industry by releasing ‘molnupiravir’, a pill that has shown promise in preventing death in pre and post-hospitalized COVID-19 patients.
In the most recent phase 3 clinical trials, molnupiravir cut the number of deaths and hospitalizations by around half in moderately ill patients. On October 11th, Merck submitted a petition for an Emergency Use Authorization to the Food and Drug Administration (FDA).
Merck as well as its partner Ridgeback Biotherapeutics announced that the Japanese Government agreed to buy 1.6 million courses of their oral antiviral medicine for approximately $1.2 billion (if approved). The U.S Government has also announced they will purchase 1.4 million courses of the antiviral for approximately $1 billion (again, only if the FDA approves it). Lastly, the UK became the first to authorize use of the drug for at-risk individuals.
However, while Merck’s stock has risen from roughly $75 on October 1, 2021, to $90 on November 4, 2021, it is important to know that Merck & Co. is not the only pharmaceutical titan in the COVID market. Pfizer’s ‘Paxlovid’ has reported a higher efficacy than Merck in trials and will undoubtedly be taking a few slices of the market share pie.
If you haven’t been online in the last month or so, you may not have realized that Facebook changed its name and company image to Meta Platforms, Inc. (FB). On October 28, 2021, CEO Mark Zuckerberg introduced Meta, which combines all of the apps and technologies Facebook owns under a new company brand. Zuckerberg elaborated, “The metaverse will feel like a hybrid of today’s online social experiences, sometimes expanded into three dimensions or projected into the physical world. It will let you share immersive experiences with other people even when you can’t be together — and do things together you couldn’t do in the physical world. It’s the next evolution in a long line of social technologies, and it’s ushering in a new chapter for our company.”
Facebook’s stock is no rookie when it comes to its history in the market, as they continue to dominate the tech and media space. Even throughout the pandemic, Facebook’s stock soared from roughly $214 pre-pandemic to $344 today, a 60% increase. Facebook’s 2021 ‘Connect’ tech conference (where Meta was revealed), brought together augmented and virtual reality designers, content creators, marketers, coders, and more to congratulate the industry’s increasing and exponential momentum and success.
For those involved in the world of cryptocurrency, Meta Platforms stated that it “also has cryptocurrency plans in the works, as the further entrenchment of the digital world in everyday life will also rewrite the script on what it means to purchase and own something”. This year’s conference highlighted and explored what the metaverse may have to offer over the next decade, possibly increasing revenues in the years to come.
If you would like to learn more about the stock market and its components, you may want to look into the Yeshiva University Stock Exchange (YUSE) Club. Learn more about the YUSE at Yusegroup.weebly.com.