General Body Meeting 11/5: Market Update, IBM Sell Pitch, and Adobe Buy Pitch

Energy Analyst Alex Borik ‘23 and Elena Duffy ’23 delivered this week’s market update. The S&P 500 hit record highs this week as the stock market continues to soar. The S&P 500 has risen 15 of the last 17 days, and the NASDAQ hit all-time highs as well.  This comes off the positive Jobs Report, where the US added thousands of jobs and crushed previous estimates.

In other Wall Street news, Peloton was crushed this week. The stock fell 34% after reporting abysmal earnings and cutting revenue forecasts up to $1 Billion. When the smoke cleared, they reported a loss of $1.25 per share. Other quarantine pandemic earners like Roku and Chegg also had disappointing earnings this week. Some winners of the week included Uber, which was up 5.9%, and Airbnb which climbed 11.8%.  Qualcomm was another winner on the street, as the stock closed on Thursday up 13%.

Pfizer shares swung to the upside by 11% after they released that they have developed a COVID pill which has succeeded in cutting hospitalizations and deaths by 89%.  Shares of Pfizer’s competition fell following the news, especially Moderna. The stock dropped 21% and their Q3 earnings came in well below analyst predictions.  In global news, OPEC opted against output boost despite growing international pressure. They had previously said they would add 400k barrels a day in monthly investments.

Consumer Spending Analyst Rich Magnus ’22 delivered the club’s first buy/sell pitch of the year. Rich proposed that the club sell its current IBM position and buy Adobe.

Rich argued that IBM is a relic of the past, and its hybrid cloud approach cannot keep up with the new-age cloud giants. The company is demonstrating very little growth and operates on an outdated business model.  They have a brutally negative revenue trend and revenue has dropped every year since 2011.  Adobe on the other hand has gone down a different route. They have experienced unparalleled growth since becoming a SaaS company in 2013, and while there is some seasonality on product offerings, Adobe’s sales are booming. Adobe has had a steadily increasing cash position and consistent revenue growth over the past five years. While Adobe and IBM have both tried to change their business models for the future, Adobe is a clear winner.

The club elected to sell its current IBM position and approve the purchase of ADBE.




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