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Today's markets: Amazon faces Washington's wrath

Catch up on our morning blog for all the latest news that affects your portfolio
May 26, 2021
  • Supply shortages hit UK building industry
  • M&S swings into loss
  • Washington DC sues Amazon

Raising money in a crisis isn’t an especially good strategy for listed companies. Raising money when markets are buoyant and investors are clamouring to pick up company shares is much more sensible. That is one of the reasons we’ve seen a flurry of institutional placings in the last few months. That and the fact that it is far better to fix the roof while the sun is shining - or at least raise the funds which will allow you to fix the roof quickly. Michael Taylor explains why Sosandar (SOS) has pitched its recent fundraising far better than previous placings here. 

But the sun is not shining for all retailers. High street retailer Ted Baker (TED) has extended its credit line by over a year as it looks to fund an overhaul of its struggling business. The company’s failure to prepare for the digital age of retail has hurt it particularly badly during the pandemic. And it is not the only retailer in a dangerous position: this morning’s financial results from Marks & Spencer (MKS) show the extent of the covid-inflicted damage. The company reported a pre-tax loss of £201m, from a £67m profit in the previous year.

Meanwhile, vaccine hero/villain (depending what side of the narrative you’re reading), AstraZeneca (AZN) is bulking out its credit supply with a $7bn bond offering in the US. The notes carry a coupon of between 1.2 per cent and 7 per cent and mature between 2023 and 2051. 

Bonds have also captured the headlines of the mainstream media this morning on the revelation that the Belarussian government raised money in London via a bond offering earlier in the year. At the time, the national government claimed it was hoping to improve its ESG credentials. Hijacking international flights and capturing journalists suggests there is still room for improvement in the country’s ESG performance - the government of Belarus certainly isn’t the first organisation to fail to live up to ESG claims. 

Catch up with all of the UK’s latest corporate actions, including takeovers and fundraisings, here and follow more of this morning’s top stories in our blog below. 

Is Michael Burry right about Tesla? 

When Michael Burry – famed for profiting handsomely from the 2008 subprime mortgage crisis – makes a big call, investors tend to listen. Especially if he is selling something short. That’s why markets are rippling with chatter following the publication of his hedge fund’s latest quarterly filing with the US Securities and Exchange Commission (SEC): Scion Asset Management has purchased put options on 800,100 Tesla (US:TSLA) shares worth over half a billion dollars.

But is he right? We have analysed the bear case here.

Washington DC sues Amazon 

The District of Columbia filed a lawsuit against Amazon (US:AMZN) last night, accusing it of breaking competition law by blocking third-party sellers from offering better deals for their products elsewhere, resulting in higher prices for consumers. The attorney-general for the district, Karl Racine, has accused the tech titan of levying fees as high as 40 per cent on third-parties’ product price. 

“You and I are locked into buying a good at an artificially high price set by Amazon,” Racine said in an interview with Bloomberg. 

“The DC attorney-general has it exactly backwards — sellers set their own prices for the products they offer in our store,” a spokesperson for the company said in a statement. “Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively.”

The lawsuit places particular emphasis on consumer welfare, even as some legal pundits argue that antitrust law should be amended to also focus on the wider competitive dynamic in the market. The news comes as Amazon reportedly closes in on a $9bn takeover of Hollywood studio MGM.