Today we are watching…
1. Snap (#snap)
Snap, owner of Snapchat if you hadn’t guessed, just hurt its stock by issuing convertible bonds. Convertible bonds are loans that give the lender an embedded option to turn interest payments into shares or convert the entire bond’s par value into its equivalent value in shares. The announcement of some $750 million in convertible bonds threatens to dilute the value of shares already outstanding, which is why they’ve fallen 5% at the open. The company’s done these convertible offerings before to raise money, and it’ll do them again. The money will be used “strategically,” CEO Even Spiegel says.
2. Gilead Sciences (#gildsci)
The markets were roaring for Gilead Sciences as its remdesivir vaccine solution was carted off to laboratories for testing this week, but the biotech industry is incredibly unforgiving. It’s nigh-impossible to predict the outcome of a medical trial, and sadly this one doesn’t seem to have gone to plan. Remdesivir “did not improve Covid-19 patients’ condition or reduce the virus presence in the bloodstream,” according to a leaked report, and with that, goodbye stock gains. Gilead is refuting the draft report. It says the dismissal isn’t fair, inconclusive, and badly worded. The drug is still in play, but the investors behind it are out.