Monday was an eventful day for stock traders as news from various companies materialized.
This time, Spotify, Uber, and Starbucks made the headlines. Here’s what you need to know about this week’s latest stock market updates:
Uber to Officially Join the S&P 500 Index
The S&P 500 (USA 500) is one of the market’s biggest and most popular indices as it tracks the performance of 500 of the US’ biggest publicly traded companies. In addition, the S&P 500 index is considered to be one of the most followed indices.
According to S&P Dow Jones Indices, Uber is officially joining the index before the market opens on December 18. Uber met the criteria for being added to the S&P 500 following its third-quarter earnings results on November 7, which demonstrated profitability over the preceding four quarters according to generally accepted accounting principles.
As such, given this index’s importance, the news that the ride-sharing services giant, Uber (UBER), joined the S&P 500 may be an important one that should be closely monitored by stock traders and investors.
But that’s not all, in addition to Uber, manufacturing company Jabil (JBL), and materials manufacturer and supplier company Builders FirstSource will join the index, hence replacing Alaska Air Group (ALK), Sealed Air (SEE), and SolarEdge (SEDG).
Moreover, it may be worth noting that, from a historical perspective, stocks tend to experience an upswing when they become part of the S&P 500. This uptrend is often attributed to investors purchasing these stocks before the official inclusion date as they seek potential profits, and capitalize on the upward momentum generated by the announcement and leading up to the inclusion.
Nonetheless, it is also important to keep in mind that past performance does not indicate future results and that the effects of this inclusion are yet to be determined. Since the start of the year Uber has soared by 131%.
Accordingly, on Monday, digital music streaming service leader, Spotify (SPOT) joined the layoffs bandwagon as it announced plans to cut off 17% of its workforce, marking the company’s third round of layoffs this year.
The dreary announcement was made by Spotify's CEO, Daniel Ek, who sent an email that the company is taking significant measures to reduce costs. Ek also stated that there was an excess of employees during the years 2020 and 2021, a period when capital was abundant, and tech companies were heavily investing in team expansion.
Perhaps unsurprisingly, following the less-than-rosy announcement, Spotify’s stock dropped by over 7% on Monday. Nonetheless, it may be interesting to note that despite the gloomy news and the economic hurdles the company has gained over 137% so far this year
Starbucks’ Suffering Streak
Similar to numerous other businesses, Starbucks appears to have faced significant challenges during this tumultuous year marked by economic hurdles, slowdowns, boycotts, and labor strikes.
Despite having rallied in earlier November this year and despite having reported a strong sales outlook for fiscal 2024, sources suggest that Starbucks’ sales were weakening as the company experienced “material slowing” last month.
Furthermore, according to data, general sales in the coffee and snacks sector have weakened recently.
This, as a result, led Starbucks to lose 1.6% on Monday, marking its 11th consecutive decline and its longest losing streak since its initial public offering in 1992. Additionally, it lost about 3.2% of its value since the beginning of the year, and only time will tell where it might head next. (Source: Yahoo Finance)
This week unfolds as an interesting one for both traders and analysts, with notable developments stemming from key players such as Spotify, Starbucks, and Uber.
These updates have created market volatility and furnished valuable insights, offering a glimpse into the potential trajectory of the stock market as we approach the new year.