Markets
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David Crowther & Luke Kawa

Opendoor surges after trading firm Jane Street reveals 5.9% stake

Shares in retail darling Opendoor Technologies are 8% higher in early trading on Thursday, after proprietary trading firm Jane Street revealed a 5.9% stake in the company in a new filing, equivalent to beneficial ownership of more than 44 million shares. At current prices, that’s a position worth $390 million and change.

Many Opendoor bulls are cheering this announcement as vindication from a major institution, and a material positive catalyst for the online real estate company. The reality is much less clear and considerably more nuanced. Jane Street is a firm that specializes in market-making and holds a 5% stake or more in 221 US publicly-traded securities, per Bloomberg data. It is impossible to know what Jane Street’s true net Opendoor exposure is, since its options positions are not disclosed. No one but Jane Street knows that.

If we had to make an educated speculation, this stock position is much more likely to be a hedge related to calls Jane Street may have sold on Opendoor than it is a plain vanilla expression of optimism on the company’s prospects.

(There is a certain irony that, in this scenario, traders’ reaction to the revelation of a hedge serves as something that immediately makes that hedge more useful!)

The stake is owned by a number of different Jane Street Group subsidiaries. Jane Street Capital reported owning about 3.2 million shares; Jane Street Global Trading reported owning 17.2 million shares; while Jane Street Options, LLC was reported as the beneficial owner of the bulk of the stake, equivalent to 23.6 million shares. A little over one-third of the stake, 15.5 million shares, were reported as “acquirable through conversion of convertible bonds held.”

Opendoor’s stock has whipsawed in recent days as large shareholders have exited some of their positions. Indeed, just yesterday it came to light that Access Industries, one of Opendoor’s top shareholders, had sold nearly $100 million of OPEN on Tuesday.

Separately, data out yesterday revealed that “sales of newly built homes rose a much larger-than-expected 20.5% in August compared with July,” according to CNBC, which might have contributed to positive sentiment on the stock, which gained 16% yesterday.

As of 5am ET, the stock was the 9th most-traded in the United States, with heavier volumes (in dollar terms) than tech giants Oracle, Google, and fellow retail favorite Palantir.

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Max Knoblauch

Carmax tumbles on worse than expected earnings and sinking used car sales

Shares of CarMax sank more than 13% in premarket trading following the company's second quarter earnings report.

The used-vehicle retailer posted adjusted earnings per share of $0.64, missing Wall Street estimates of $1.04 per share by 38%. CarMax's sales came in at $6.59 billion, a 6% drop from the same period last year and also below the analyst consensus of $7.01 billion.

CarMax sold 5.4% fewer used vehicles to retail customers, with retail unit sales coming in at 199,729. Its average selling price for the vehicles dipped 1% to $25,993.

CarMax's sales are still ahead of rival Carvana, though the latter has been working diligently to close the gap. Despite selling fewer cars, Carvana's market cap is more than 10 times CarMax's. CarMax's report also weighed on Carvana in the premarket Thursday, with the stock down more than 3%.

markets
Tom Jones

Hertz is up on refinancing efforts, announcing an upsized $375 million senior notes offering

Rental car behemoth Hertz is up around 6% from yesterday’s close in early trading, after the company announced an upsized $375 million exchangeable senior notes offering, increased from the previously announced offering size of $250 million.

The indebted vehicle hire company, which posted its seventh quarterly loss in a row last month, said:

Hertz Corp. intends to use $300 million of the net proceeds from the issuance of the Notes to fund the partial redemption or repurchase of its outstanding Senior Notes due 2026 on or before December 31, 2025 and to use the remaining net proceeds for general corporate purposes, which may include the repayment of outstanding indebtedness.

Hertz shares roared as much as 19.7% after-hours yesterday, on its initial announcement of the notes offering.

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Hyunsoo Rim

Intel rises as the company seeks Apple as next big backer amid turnaround push, per Bloomberg report

Not content with just having the US government and Nvidia as new shareholders, Intel has approached Apple about a possible investment as it seeks to revive its business, according to a report from Bloomberg.

The two companies have floated ideas on working more closely, although the discussions are in an “early-stage" and may not lead to a deal. Intel has also reached out to other companies about potential partnerships.

The move comes after a wave of equity investments in the chipmaker: last week, Nvidia committed $5 billion to acquire a stake in Intel and co-develop data center and PC chips. In August, SoftBank bought $2 billion worth of Intel shares, and the US government secured an $8.9 billion (~10%) stake to support domestic chip production.

In recent years, Intel has been losing ground to rivals, with sales peaking at $77.9 billion in 2020 and declining since. The company has also scaled back plans for new chip factories and is cutting about 22% of its workforce by the end of this year.

For Apple, the talk revives a long relationship with Intel: Apple sourced its Mac processors from Intel since 2006, before switching to its own in-house silicon in 2020.

Shares of Intel jumped nearly 4% in pre-market trading Thursday, and are up 42% year-to-date. Apple is down less than 1% pre-market.

Luke Kawa, Nia Warfield
16h
US stocks drop for second straight day

The S&P 500 and Nasdaq 100 each gave back 0.3% while the Russell 2000 underperformed with a 0.9% drop.

Alaskan Coastal Brown bear waving
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Matt Phillips

Momentum stocks sputter, weighing on markets

Risky momentum stocks that retail traders piled into this year sputtered on Wednesday, throwing a bit of sand in the market rally.

Recent retail favorites like Rocket Lab, Hims & Hers, Palantir, Oklo, and SoundHound AI — all members of Goldman Sachs’ thematic basket of “high beta momentum stocks” — were in the red on the day, with little specific company news, suggesting the pullback is more about the market rethinking a broad-based trade rather than expressing specific concerns about individual companies.

Shortly before 1 p.m. ET, the iShares MSCI USA Momentum Factor ETF was down 0.7%, its worst day since late August.

Why is momentum suddenly sputtering? That’s the tricky bit.

The current crop of momentum stocks tends to be stocks with very high valuation ratios, suggesting that the traders buying them are betting their earnings will come far in the future rather than any time soon. (That is, of course, if they’re not just buying them based on the fact that they’ve gone up a lot.) But it’s impossible to say exactly why the momentum trade is fizzling a bit today.

It could be that after a giant romp — Rocket Lab, for example, is up almost 50% over the last three months — these stocks just need a breather.

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