In the latest market moves, MRC Global and Constellation Energy emerged as the top 1-day gainers, rising 4.81% and 4.04%, respectively, following positive developments like a stock buyback for MRC and billion-dollar contracts for Constellation. Bank OZK and Janover saw modest increases of 0.34% and 0.51%, boosted by a dividend hike and crypto adoption news. Similarly, Cytek Biosciences climbed 3.96% on stock buyback news, while AppTech Corp. gained 2.44% after the announcement of a CEO departure. On the downside, Carvana suffered a significant one day loss of 11.22%, driven by negative short-seller reports, while ACADIA Pharmaceuticals declined 1.34%, despite being added to the S&P SmallCap 600 index. 

Microsoft Commits $80 billion to Build more AI-focused Data Centers

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Microsoft President Brad Smith, in a new blog post, called this moment a "golden opportunity for American AI" and outlined the company's vision under the new Trump administration. Microsoft plans to invest over $80 billion in AI data centers globally in FY 2025, with half of the investment focused in the U.S. This comes after CEO Satya Nadella highlighted "capacity constraints" that slowed AI expansion due to the lengthy process of building data centers. The new plan addresses these scaling challenges and positions Microsoft for significant AI growth. We'll be breaking down how to play this for our Level 2 readers soon.

Biden Blocks Nippon Steel’s $14 Billion Acquisition of U.S. Steel

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President Biden’s decision to block Nippon Steel’s $14 billion bid for U.S. Steel signals a growing trend of protectionism in U.S. economic policy. Citing national security concerns, Biden argued that domestic steel production is critical to safeguarding supply chains and maintaining infrastructure resilience. “Without domestic steel production and steel workers, our nation is less strong and less secure,” Biden said in his statement.

Supporters of the decision, including the United Steelworkers union, applauded Biden for prioritizing domestic jobs and industries. “Nippon Steel has a long history of undermining U.S. markets by dumping its products,” said union president David McCall, emphasizing the need to keep U.S. Steel under American control.However, critics argue that the decision could deter foreign investment, harm U.S. Steel’s modernization efforts, and reduce global competitiveness. Nippon had pledged $2.7 billion to upgrade aging U.S. Steel plants and promised job security and bonuses for workers. With U.S. Steel shares falling over 7% after the announcement, the decision could have long-term implications for the U.S. manufacturing sector and its reputation as a reliable destination for capital.

Rivian Soars After Meeting 2024 Production Targets

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Rivian stock surged 24.5% on Friday, marking its best day since going public in 2021, after the EV maker reported 2024 production and delivery numbers in line with revised expectations. The company produced 49,476 vehicles, delivering 51,579, with fourth-quarter deliveries surpassing estimates at 14,183 units.

The rally followed a challenging year in which Rivian faced a 43% stock decline due to production shortfalls and cash burn. However, Rivian announced that a critical component shortage no longer constrains production, fueling investor optimism ahead of its February earnings report.

Hindenburg Research Short Targets Carvana

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Hindenburg Research has launched a scathing critique of Carvana, disclosing a short position and calling the company’s turnaround efforts a “mirage.” The report accuses the online used-car retailer of relying on questionable financial practices, including the use of unstable subprime loans and alleged accounting manipulation, to present an overly optimistic picture of its financial health. It also scrutinizes the relationship between CEO Ernie Garcia III and his father, Ernie Garcia II, who owns DriveTime and is Carvana’s largest shareholder.

It is worth highlighting the Garcias’ controversial history. Ernest Garcia II, convicted of bank fraud in the 1990s during the collapse of Charles Keating’s Lincoln Savings Bank, has amassed billions from Carvana’s growth. Critics argue this past raises ethical questions about the company's leadership.

Hindenburg’s report, titled “Carvana: A Father-Son Accounting Grift for the Ages,” alleges that Carvana has been offloading risky loans to a related entity, masking underlying weaknesses in its balance sheet. The report claims that lax underwriting standards and artificially inflated loan values are temporarily boosting income while concealing long-term risks. Additionally, it alleges that Carvana uses transactions with DriveTime to avoid markdowns by selling vehicles at a premium, thus distorting its revenue figures.

Another key accusation involves Carvana’s loan extensions. Hindenburg suggests that Carvana is manipulating delinquencies by extending repayment terms through an affiliate of DriveTime, allowing the company to avoid reporting a rise in default rates. The report also highlights insider trading activity, noting that the Garcias sold billions in stock while Carvana’s valuation surged.

In response, Carvana dismissed the report as “intentionally misleading and inaccurate,” arguing that the claims are recycled from previous short-seller attacks. However, the report has raised serious questions about Carvana’s financial practices and governance, fueling investor skepticism about the sustainability of its turnaround strategy.

Shares of Carvana fell 19.22% following the report’s release, marking the first significant decline in months for the company, which saw its stock surge nearly 300% in 2023. With a 19,000 P/E and $6 billion in debt, it looks like there's a lot further the stock could drop.

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