The stock market today is abuzz with the successful IPOs of AirBnB and DoorDash. The former, which we mentioned earlier this week, was better than anticipated, raising the valuation of the company to $100 billion (note: it was around $30 bn before the pandemic began).
Stock market experts, however, are wary of both IPOs. The two companies have been heavily affected by the pandemic, in somewhat opposite fashion. DoorDash, which is a food delivery company, was successful in Q2 of 2020 as lockdowns essentially meant people had to rely more on takeout. On the other hand, AirBnB, which is a property rental service and an alternative to hotels, had a terrible year because people did not travel much. Generally speaking, both companies have not been profitable in 2020.
It is not usual for investors to buy the stock of companies that are losing money. What we are seeing at the moment is part of a general trend where end-of-the-pandemic optimism fueled the demand for stocks - any stocks. But be warned that something akin to this happened in 1999 with tech stocks and the majority of the companies that raised a lot of capital in their IPOs went bankrupt by 2002.
In other news, the Pfizer-BioNTech vaccine was officially backed by the Food and Drug Administration in the United States. It will most probably be approved today, which will permit the US to begin the vaccinations immediately. This will make it the third country to start vaccinating its population against the coronavirus, after the United Kingdom and Canada.
Vaccines are sorely needed in the US, where more than 3,000 people died yesterday for the second day in a row. The United States also surpassed 16 million total infections yesterday (it confirmed 217,000 new cases on Thursday), with close to 300,000 deaths.
Pfizer and Moderna’s vaccines are currently also pending approval in the European Union, where just yesterday Pfizer’s application got hacked. It is still not publicly known what sort of information was stolen, but the European Medicines Agency said the hack will not affect the evaluation of the drug.
Germany saw its highest daily increase in coronavirus cases ever yesterday, confirming over 28,000 cases, despite the lockdown. The trend of infections is also up in the Netherlands, a country that implemented lockdowns much earlier this fall when it experienced its worst Covid-19 outbreak.
Cases also remain consistently high in the United Kingdom, where vaccinations have already started. We might not see the influence of the vaccines until weeks, if not months after a significant proportion of the population has been vaccinated.
Last but not least, the markets are preparing for the final breakdown of the Brexit negotiations. Both the European Union and the United Kingdom have expressed their pessimism about a trade agreement by the end of the week. As there will soon not be enough time to legislate a deal, the two are expected to formally end their talks next week, whether they have a deal or not.
