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What investors got wrong about the Pfizer vaccine news

Welcome to Buy/Sell/Hold, Marker’s weekly newsletter that’s 100% business intelligence and 0% investment advice. Each week, our writers Steve LeVine and Rob Walker make sense of the most important developments in business right now — and give them a Buy for clever moves or positive trends, a Sell for mistakes or missed opportunities, or a Hold if they’re noteworthy but too early to call.

🦢 Why the Pfizer vaccine news isn’t a black swan 🦢

The Buy/Sell/Hold Analysis

When news broke early this week that Pfizer’s Covid-19 vaccine trials were showing surprisingly strong results — 90% effectiveness preventing the virus in preliminary findings — some investors evidently saw it as a total game-changer: Markets broadly surged, and the Dow hit its highest level since February.

Set aside whether following the Dow is a useful exercise under any circumstance; the more startling data comes from the intensity of investors making extreme judgment calls on the future of some individual companies. The wider markets suggested general optimism, but individual shares were being brutally sorted into winners and losers: Carnival Cruise Lines (up nearly 40% on Monday) and other travel stocks soared, while Zoom (down 17%), Peloton (down 25%), and others associated with lockdown trends plunged. And at first glance, maybe that seems perfectly logical.

But wait — was this news really so shocking that it rewired our vision of the future in ways that fundamentally changed the value of multibillion-dollar enterprises overnight? It’s true that the Pfizer data was better than expected. But it’s also preliminary, and leaves many questions to be answered and details to be sorted before results are finalized, approval granted, and a vaccine distributed. In general, the implications of the Pfizer announcement are that we may get a vaccine by the end of this year, followed by widespread vaccination regimes around the middle of 2021 — which has pretty much been the timeline experts have suggested for months.

In other words, the Pfizer announcement was hardly an impossible-to-predict black swan event. It was more like seeing a trumpeter swan when you were expecting a mute swan — maybe not precisely what you pictured, but pretty close.

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Consider, then, Carnival becoming 40% more valuable in a single trading session. Throughout the pandemic, cruise stocks have been buoyed by true-believer investors betting that when cruises returned, consumers would be ready. The Pfizer news brought nothing new to that theory — and the latest dismal statement of cruise industry losses has only underscored that any comeback timeline remains uncertain. (Carnival shares have sagged as the week went on.)

Meanwhile, it’s hard to imagine how any Zoom investor could have been surprised by the possibility of a vaccine curtailing the work-at-home boom — the efforts to make that happen have been massive throughout the pandemic. This is exactly why Zoom has worked explicitly to convert its pandemic branding moment into something more lasting; like it or not, Zoom is here to stay well past any large-scale vaccinations. (Its shares have recovered a bit from midweek lows.)

None of which is to minimize the hopeful significance of Pfizer’s vaccine, particularly if those early results hold up. And of course, the unexpected appearance of a real black swan that rewrites specific companies’ futures in a flash is always possible. But market hysterics aside, this was not that event — we’re still waiting on the same future we’ve been longing for since March.

Verdict: Hold

— Rob Walker

⚡ Lightning Round ⚡

Supreme — the streetwear and lifestyle brand that went from indie upstart to private equity darling — finally goes full corporate. On Monday, VF Corp, the Denver, Colorado-based owner of brands like The North Face, Vans, and Jansport, announced that it would buy the streetwear brand in a $2.1 billion cash transaction. Originally a ’90s skate shop that perfected the art of the merch drop, Supreme eventually grew into an international cult fashion brand before the private equity group Carlyle Group bought a 50% stake in the company for $500 million in 2017. Supreme has managed to stay hip despite its slow evolution from offbeat outsider to big business firm — and VF now has the keys to deploy Supreme’s digital prowess to the rest of its portfolio. Keep your eyes peeled for limited edition $500 Jansport backpacks. Hold.

McDonald’s unveils an alternative meat burger with an uninspired name. McDonald’s has finally decided to follow Burger King and White Castle’s lead by announcing a forthcoming plant-based burger called, uh, the McPlant. If McDonald’s and its reported partner in meatless meat production, Beyond Meat, successfully produce and sell McPlants at the scale McDonald’s has mastered for beef and potatoes, this could be one of the biggest tests to date of the broad consumer demand for plant-based products. Unfortunately, with a name like McPlant, McDonald’s not only fails to evoke the sensations of its iconic burger (as Burger King did with its Impossible Whopper), but mistakenly assumes customers craving Big Macs and nuggets would decide to order “plants” instead — or that the most diehard vegetarians would want their plants prepared by McDonald’s. Sell.

China’s version of Prime Day shatters records. E-commerce giant Alibaba pulled in a record-breaking $74 billion in sales from Singles Day, the company-manufactured online shopping holiday for single people in China that’s basically Prime Day meets Valentine’s Day. Just as some U.S. retailers converted Black Friday into a days-long online shopping experience, Alibaba extended Singles Day into more of a Singles Week, with some sales launching at the start of the month even though the holiday formally takes place on November 11. Buy.

We may be reaching peak podcast consolidation. Spotify — which already acquired podcast companies Gimlet, Parcast, and The Ringer — announced on Tuesday that it’s also buying podcast hosting and advertising company Megaphone for $235 million to help bolster the podcast ad tech it launched in January. SiriusXM made a similar deal in July when it bought the podcast company Stitcher and its advertising branch, Midroll, for $325 million, proving that the audio giants are hoping to secure the market for ads much as they are the market for exclusive content. Meanwhile, Wondery — one of the few remaining sizable independent podcast companies — has reportedly been in talks with Apple and Sony about a possible acquisition, as well. Hold.

📈 The Number: 17%

That’s how much less employees who joined early stage startups earned in a decade compared to those who had joined established companies.

This entrepreneurial wet blanket comes courtesy of a Danish study, whose authors tracked the earnings of startup workers in Denmark from 1992 to 2012. Despite the allure of stock options, the researchers found taking boring nine-to-five cubicle jobs actually ended up being more profitable in the long run than joining a scrappy new venture, particularly at startups with fewer than 50 employees. Not only did the roles pay less, but workers at startups — which have a higher risk of failing — also experienced more periods of unemployment.

Amazingly, these same trends didn’t hold true for startup founders, who earned more in the long run than their peers who never became entrepreneurs. So the next time a founder tries to hire you for their team, you may want to consider asking them to join yours, instead.

— Kaushik Viswanath, Senior Editor, Marker

📖 Longread of the Week: How pizza won the pandemic — and $15 salads from chains like Sweetgreen got left behind.

🔎 Marker’s New Fixation 🔎

If there’s one piece of furniture that defines 2020, it’s the Nugget: A $230 children’s couch made of foam cushions that can be arranged into a fort (or a chair, or a tent, or a ball pit, or whatever shape kids can imagine). With kids stuck at home during the pandemic, demand for the Nugget recently reached a fever pitch; a Facebook group devoted to the kiddie couch currently tops 60,000 members. In October, the North Carolina startup that produces the Nugget instituted a weekly lottery system to let parents vie for the chance to buy its limited stock — a process BuzzFeed referred to as “Supreme drops for moms.” Last week, my own sister-in-law sent me a video of my two-year-old nephew happily jumping around his own slate-gray Nugget. “I’ve wanted one since about March,” she told me. “But then Covid hit, and they’ve been sold out.” She (and her mom and her sister) had been entering the lottery weekly since it started, and finally hit the jackpot. Sure, in our day, you just pulled the cushions off the living room sofa and accepted that you would get yelled at by mom. But in a world where school and work and the playground are all under one roof, you can’t really blame parents shelling out for furniture designed to be jumped on.

— Bobbie Gossage, Deputy Editor, Marker

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