We’re very happy to bring you a special edition of the Five On Friday where we take a look back on the biggest stories of 2020.
#MarchMadness — Markets tanked in March as investors finally woke up to the economic realities that the coronavirus pandemic would have.
#SPACAttack — This year was a surprisingly good year for IPOs, but deal-making was all about the SPAC in 2020.
#AcquisitionOfTheYear — There was some tough competition here between Teladoc and Salesforce, but the acquisition of Slack takes the prize.
#StockOfTheYear — Really tough contest here, what with Tesla and Amazon’s successes, but the top prize this year has to go to Zoom.
#AndFinally — We couldn’t round off 2020 without mentioning its very own rendition of 2019’s WeWork debacle: Nikola Motors.
Following a decade of unprecedented prosperity and growth, especially in tech, a microscopic virus managed to bring it all crashing down in March — at least temporarily.
What a recovery though!
If you look at the almost-daily all-time highs we are seeing from major indices and stocks alike at the moment, you wouldn’t know that the market had a Great Depression-esque event on March 16. Though the Coronavirus Crash (let’s see if that name sticks) began on 20 February, selling intensified during the first half of March caused by global fears about the spread of the virus, oil price drops, and the possibility of a recession. During the crash, there were several daily drops across global stock markets, but the largest fall averaged 12-13% and came on March 16, nicknamed ‘Black Monday II’. What followed was the shortest bear market history as trillions of dollars in stimulus aid from the Federal Reserve and Congress helped to prop up an American economy gripped by recession. As well as this, high-flying stocks like Apple, Microsoft, and Alphabet have powered this year’s rally, far outpacing the rest of the market as retail investors bet heavily they could prevail in a stay-at-home economy. As we enter 2021, 2020 will be remembered by investors for many things, including the rise of ‘Robinhood traders’, the work-from-home revolution, and, unfortunately, the immeasurable damage caused by a global pandemic. Let’s hope 2021 is a little less exciting.
Bet you didn’t know
As of December, the Five Big Tech stocks — Facebook, Amazon, Apple, Microsoft, and Google — made up more than a fifth of the S&P 500’s total value.
The SPAC bonanza of 2020 has broken records on Wall Street, but why did so many choose this method of going public?
Hold up, what is a SPAC?
A Special Purpose Acquisition Company is one that is formed with no commercial operations in mind, but rather with the purpose of raising capital through an IPO. Once the company is public, the funds raised get locked into a trust account and within two years, this ‘blank-check company’ must make an acquisition deal or it will face liquidation. 2020 has been the best year for SPACs on record, with more than $73 billion raised this year by blank check companies — more than five-times that of 2019’s previous record total of $13.6 billion. From January to October, roughly 165 SPACs were listed, almost triple the number of global SPAC IPOs issued in the year previous and five times that of 2015. While 2019’s high-profile SPAC was Virgin Galactic, this year we had DraftKings, Nikola Motors, and Fisker Inc. 2020 represented a real shift in opinion away from IPOs and towards SPACs, including expediting the traditional IPO process to avoid some SEC scrutinies and allowing companies to disclose forward-looking projections rather than their financial history — which is advantageous for companies that have not yet reached profitability but expect to soon. You might want to read more about SPACs in our full write-up here, because there’s plenty more flotations on the horizon in 2021.
Bet you didn’t know
According to an industry study published in January 2019, from 2004 through 2018, approximately $49.14 billion was raised across 332 SPAC IPOs in the United States.
Salesforce acquiring collaboration software tool Slack for $27 billion to rival Microsoft Teams was the biggest acquisition story of 2020.
Salesforce’s biggest acquisition to date
As you might know, the MyWallSt team are big fans of Slack and many of us were even early investors — but the announcement that Salesforce was buying the company was a shock to us all. It was crowned the ‘Acquisition Of The Year’ for many reasons. For one, the pricey purchase will shake things up in the tech world by helping Salesforce compete against its rivals, Google and Microsoft. Salesforce can now offer a unified communication platform and may opt to entice customers by offering Slack for no fee — which would really stand up against Microsoft Teams. Microsoft’s communication platform also represented a hurdle to Slack’s growth in 2020, so together both companies can now offer a stronger product. Second of all, Salesforce might have got the deal (steal) of the decade. At $27 billion, Salesforce has essentially bought one of the most innovative software solutions which already has 130,000 paid clients, giving it more opportunities to cross-sell its products. But was the deal the right decision for Slack? Many investors remain disappointed and believe Slack could have been worth a lot more in ten years had it been left to grow.
Bet you didn’t know
Salesforce literally acquired the company across the street. Benioff made light of the proximity of the two companies, which are just across a plaza from each other, during Salesforce’s Q3 earnings by saying he can see Slack’s CEO Stewart Butterfield wave at him from their San Francisco HQ.
Never in modern civilization have so many people worked, schooled, and socialized from home. Almost every in-person event switched to a Zoom invite link in 2020, resulting in a highly-profitable year for the teleconferencing company.
Zoom is crowned the Five On Friday’s company of the year
Zoom proved to be a formidable force in a year of fear and uncertainty. If you were a Zoom investor pre-pandemic, you have been lucky enough to witness its share price increase by roughly 622% since January. As the virus inflicted fear in us all, ‘I’ll zoom you’ replaced just about every social and work occasion. Yet there was nothing scary about Zoom’s profits in 2020, their Q3 earnings report showed year-over-year revenue growth of 367%. It seemed like nothing could slow Zoom down until vaccine developments caused shares to drop in early December, as well as disappointment that forecasted revenue would slow down to a measly 329% for the current quarter. As vaccine rollouts are now on the horizon, this could represent the beginning of a slowdown in growth for stay-at-home stocks, but one thing is for sure, working-from-home is going to stay popular, meaning there will always be a place for Zoom in all our remote working lives.
Bet you didn’t know
When Zoom CEO Eric Yuan first left Cisco Webex to start the company, he called it Saasbee Inc.“Let’s Sasbee tonight” just doesn’t have the same ring to it, does it?!
It seems like only yesterday that my weekly bashing was aimed at Adam Neumann and WeWork. Alas, I have found a new victim of my ridicule in 2020 and it’s Nikola Motors. Investors might see this and think, “hmm, well weren’t Nikola shares up like 700% this year?” Why yes, they were. There are reasons why they’ve since collapsed though, so let’s look at Nikola’s 2020:
- June 4: Nikola goes public via SPAC on the NASDAQ.
- August 5: Nikola reports its first-ever quarterly earnings as a public company, revealing just $36,000 in revenue — all from solar installations.
- September 8: Nikola announces a blockbuster deal with General Motors to partner up in vehicle production.
- September 10: Hindenburg Research publishes a short-seller report, accusing Nikola of “intricate fraud built on dozens of lies” and forcing Nikola to confirm that it does not even have a working truck yet.
- September 15: It is revealed that the SEC is investigating Nikola for defrauding investors.
- September 21: CEO and co-founder Trevor Milton steps down from his role amid SEC investigation.
- November 9: Nikola reports $0 revenue in its Q3 earnings.
- November 10: Nikola execs confirm that they have been subpoenaed by the Department of Justice.
- November 30: GM gives up its equity stake side of the deal and Nikola’s lock-up period ends, sparking sell-off.
- 2021-: Who knows…
Sooooo, Nikola isn’t a good investment?
Not so much, no. The once-heir-apparent to Tesla’s EV crown is hilariously light on the bull cases as of late. It has no product, no equity deal with GM, and exactly $0 revenue. The funniest part of all this though has to be the truth behind the company’s Nikola One truck prototype reveal in December 2018. In September, one of Hindenburg’s accusations was that the truck didn’t actually function at all but was rolled down a hill. Turns out it was true and Nikola was forced to ‘fess up. Queue the internet doing its thing and a litany of memes emerging. Ah, what a year we’ve had, but I don’t think there’ll be as scandal-heavy a company to match this in 2021, not unless WeWork decides to go public again…
Bet you didn’t know
My favorite ‘Bet You Didn’t Know’ of the year was when I covered a Nikola story in September, and noted how, by selling my 2001 Ford Ka for $400 in 2015, I have officially sold more vehicles to-date than Nikola Motors.
The Year In Numbers
days is how long MyWallSt has officially been a remote-working business. Thanks to COVID-19, it has been that long since we have seen any of our colleagues or office.
worth of Tesla stock is traded on average per daily session, as of December, making it the most-traded stock of the year.
is the monstrous market cap that Apple finally breached in August of this year, making it the world’s most valuable company.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.