GM’s Big Lyft-off; Blame it on China; Smoking Gun Stocks

Baby you can drive my car…

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Image courtesy of suphakit73/FreeDigitalPhotos.net

GM’s gone and plunked down a whopping $500 million to get in on some ride-sharing action. The lucky recipient of this half billion dollar prize was none other than Über’s biggest competition: Lyft. Besides this being one GM’s biggest moves ever, this latest development also marks the biggest move by an automaker in the ride-sahring industry. Plus the car company gets a nice comfy seat on the Lyft board. President and co-founder John Zimmer says Lyft plans to use the $500 million to help build brand awareness, lest you find yourself unaware of Lyft and its lofty endeavors. Lyft’s valuation is now priced at a cool $5.5 billion. Nothing to scoff at, yet it still pales in comparison to Über’s mammoth $62.5 billion valuation. Lyft plans on developing a line of self-driving cars, the perfect addition, it would seem, for a ride-hailing/sharing company. The idea is to be able to call upon these driverless vehicles on demand. And apparently, the race to develop self-driving cars is all the rage right now in Silicon Valley.

Drop it like it’s hot…

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Image courtesy of suphakit73/FreeDigitalPhotos.net

It’s all China’s fault that 2016 got off to a rocky start on Wall Street today. Lousy economic data, which included weak demand for Chinese manufacturing, set a downer of a tone for 2016’s very first day of trading.  Shares of companies all over the  world plunged, including here, where the Dow dropped taking the S&P and Nasdaq with it. U.S. listed shares of Chinese companies also took a hit, even investor darling and “It” stock Alibaba Group Holdings Ltd. But it was Chinese markets that dropped a staggering 7% with Shanghai’s Composite Index hitting its lowest levels in three months. Chinese authorities whipped out the country’s “circuit breaker” mechanism, an idea that must have sounded at good some point, but maybe not so much anymore. Basically, if the the CSI300 (a Chinese index) drops or rises 5% during the course of the trading day, then trading stops automatically for fifteen minutes. But after that fifteen minute period, if the CSI300 continues to drop or fall 7%, then trading gets suspended for the whole rest of the day. Some people think this “circuit breaker” deal is overkill and only making China’s fiscal issues worse.  Since June, Chinese authorities have been trying to figure out ways to restore investor confidence in the nation’s stocks. Analysts, however, say part of the big sell today off had more to do with a 6 month lock-up that just ended. Authorities made it so that institutional investors couldn’t sell off certain stocks for the last six months. The idea was to give a “boost” to Chinese indexes. But did it work? Hmmm.

 

And in other news…

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Image courtesy of suphakit73/FreeDigitalPhotos.net

While plenty of stocks on U.S. indexes took a hit (because of China, as you may recall from a few sentences ago), one industry that actually surged today was guns. Whatever your position on firearms, the fact is that when tragedy strikes and calls for tougher gun laws are sounded, plenty of Americans scramble to get their hands on even more guns. It’s debatable whether the trend is because people feel safer for possessing one or because of the fear that the government attempt to limit constitutional rights. Sure, calls for stricter gun control came crashing down following attacks in Paris and San Bernardino. And sure, Barack Obama has big executive plans to curb some constitutional rights in the near future, but oddly enough, that only sends consumers out to stock up on their firearms supply. According to the  National Instant Criminal Background Check System, there were 38% more background checks this December than December 2014. Want some more numbers? Smith and Wesson Holding Corp. saw particularly strong sales towards the end of the year with its shares getting a nice boost, while Sturm, Ruger & Co. pulled down a 52 week high last week.

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One response to “GM’s Big Lyft-off; Blame it on China; Smoking Gun Stocks

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