Shares of major technology and entertainment companies notched gains in the week ended July 10 even as a surge in COVID-19 cases continued to weigh on the broader market.
The S&P 500 and Dow Jones Industrial Average tumbled this week as confirmed COVID-19 cases in the U.S. passed 3 million and investors began reassessing their once-optimistic bets on a smooth economic recovery.
Twitter Inc. stock, however, shot up to new highs this week after the company hinted at plans to offer a subscription-based service.
The platform this week posted a job listing seeking a senior full-stack software engineer who will become part of "Gryphon," a new team that is building a subscription platform.
Rosenblatt Securities analyst Mark Zgutowicz, though, said Twitter is "highly unlikely" to consider a paid subscription offering. The company may instead provide a subscription tier "for data and analytics that its power users may consider," but the initial total market would be less than 10 million users, he noted.
Twitter stock closed July 9 trading up 15.71% for the week, at $35.72 each.
Fellow tech company Microsoft Corp. also got a boost after a Wall Street analyst noted the changing business landscape due to COVID-19 could be a boon for the company's cloud-computing business.
In a July 9 note to clients, Daniel Ives upped his price target on Microsoft stock to $260 from $220 while reiterating his "outperform" rating. The analyst said he has observed strong demand for Microsoft's Azure cloud computing platform over the past few months as more people work remotely, and he expects that trend to continue.
Microsoft ended the July 9 trading session up 3.91% for the week.
Turning to Spotify Technology SA, shares of the audio streaming company increased after inking a $20 million podcast deal with advertising company Omnicom Group Inc. As part of the deal, the clients of Omnicom Media units Hearts & Science LLC, OMD Worldwide Group and PHD Media LLC will be granted "first-mover access" to Spotify's exclusive podcast content.
Still, Bernstein analyst Todd Juenger this week downgraded his rating on Spotify stock to "underperform" from "market perform," noting it is "unlikely" the company's podcasting push will generate a significant boost to its bottom line. Among other hurdles, Juenger cited tough competition from the likes of Apple Inc. and Amazon.com Inc.
"If this is such a big opportunity with important downstream network effects, do we really expect formidable competitors like Apple, Amazon, Google LLC and Tencent Music Entertainment Group will passively sit back and let Spotify capture it, unchallenged?" the analyst said.
Spotify closed July 9 at $274.79, up 1.22% for the week.
Cinema chain AMC Entertainment Holdings Inc. also inched upward amid reports the company is nearing a financing deal with private equity firm Silver Lake Management LLC that could delay a near-term bankruptcy filing.
The proposed agreement would require bondholders to provide a $200 million senior loan and to exchange their unsecured claims at a discount for new, second-lien debt. Silver Lake, which has a seat on AMC's board, would swap its $600 million of convertible bonds for first-lien debt. The deal could reportedly be announced in a few days.
AMC has raised concerns over the past few months about its ability to continue operating profitably after its cinemas worldwide were shuttered amid the coronavirus pandemic. It expects to have all of its theaters reopened by early August.
AMC closed July 9 trading up roughly 1%, at $4.57 a share.