Your Stock Market Breakdown

HEADLINES
What You Need To Know

GameStop is considering investing in bitcoin and crypto, sending shares up 20%. CEO Ryan Cohen recently posted a photo with MicroStrategy’s Michael Saylor, though Saylor isn’t involved. GameStop previously launched and later shut down crypto wallets due to regulatory uncertainty. With $4.6 billion in cash, the company is exploring new investments but hasn’t made a final decision.

A Fed rate cut is unlikely before September, if at all this year, after January inflation came in hotter than expected. Markets had priced in a June cut but now see a 55% chance in September and only a slim chance of a second cut before 2026. The CPI rose 0.5% last month, pushing annual inflation to 3%, while core inflation held at 3.3%, well above the Fed’s 2% target. Fed Chair Powell acknowledged progress but said policy must remain restrictive.

Reddit shares fell over 15% after reporting weaker-than-expected user growth, despite strong earnings. The company posted 36 cents per share (vs. 25 cents expected) and $428 million in revenue (vs. $405 million expected). However, daily active users hit 101.7 million, missing estimates of 103.1 million. CEO Steve Huffman attributed the slowdown to a Google algorithm change but said traffic has since rebounded. Despite the user miss, revenue jumped 71% YoY, and first-quarter sales guidance exceeded expectations.

Honda and Nissan have ended merger talks, scrapping plans for a $60 billion deal that would have created the world’s third-largest automaker. Honda proposed making Nissan a subsidiary, but disagreements over control, factory closures, and job cuts derailed the deal. Instead, the two companies will pursue a strategic partnership focused on EVs and intelligent vehicles. Nissan shares had surged 24% in December on merger speculation but will now move forward independently.

UPCOMING
What You Need To Watch

On Monday, the stock market will be closed in observance of Presidents Day.

On Wednesday, Apple will announce a brand-new product launch, drawing attention from consumers and investors alike.

On Wednesday, the Federal Reserve will release the minutes from its last meeting, offering insight into policymakers' views on inflation and interest rates.

On Friday, the latest existing home sales report will be released, providing a snapshot of the housing market's health and buyer demand.

TIP
UNDERSTANDING BUYBACKS

Stock buybacks can be a sign of financial strength, but not all buybacks are created equal. When a company repurchases its own shares, it reduces the number of shares outstanding, which can increase earnings per share and boost stock prices. This can be great for long-term investors, especially if the company is buying back shares at a good valuation. However, buybacks aren’t always a positive sign. Some companies use them to artificially inflate stock prices instead of reinvesting in growth. Others fund buybacks with debt, which can weaken their financial position. The key is to look at whether a company is buying back shares because it genuinely has excess cash or if it's trying to mask underlying issues.

CHART
HYPE WILL KILL

TERM
OPERATING MARGIN

Operating margin measures how much profit a company makes from its core business after covering operating expenses like salaries and rent. It’s calculated by dividing operating income by revenue. For example, if a company generates $1 billion in revenue and has $200 million in operating income, its operating margin is 20%. A higher margin indicates strong cost control and pricing power, while a declining margin could signal rising costs or weaker sales.

Actions
Steps to Level Up

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