😵 Google Abandons Largest-Ever Acquisition

MARKET UPDATE

Good Morning Investor! Shares of Taiwan Semiconductor ($TSM) surged an additional 1.5% on Thursday, riding the wave of positive sentiment from their recent earnings release. The stock has officially joined the trillion-dollar club, making it the coolest kid in the semiconductor schoolyard. Meanwhile, over in CRM land, shares of HubSpot ($HUBS) took a nosedive, collapsing almost 17% on Wednesday. The culprit? Alphabet ($GOOG) decided it’s just not that into acquiring HubSpot anymore (more on this dramatic breakup below).

TODAY’S BIG HEADLINES

Google Abandons Largest-Ever Acquisition

Microsoft is Copying Netflix with Xbox

Congressman Josh Gottheimer’s Timely Investments Raise Red Flags

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MERGERS & ACQUISITIONS

Google Abandons Largest-Ever Acquisition😵

Almost a Match Made in Heaven: Back in April, Reuters broke the news that Alphabet ($GOOG) was considering a jaw-dropping $31 billion bid to acquire HubSpot ($HUBS), the second-largest player in the CRM space. If this had gone through, it would have been the internet giant's largest acquisition ever, promising a potentially stellar success story given Google's track record.

Love on the Rocks: Fast forward to this week, and it looks like Google is swiping left on the deal. The two parties didn’t even get to the due-diligence stage. The culprit? Regulatory scrutiny. With antitrust regulators breathing down everyone's neck, Google decided to back off for now.

• This potential mega-deal would have been one of the tech world’s biggest moves this year, putting it in the same league as Synopsys's ($SNPS) pending $34 billion acquisition of Ansys ($ANSS).

Shareholder Plan B: Google’s aim was to bolster its competitive edge against Microsoft ($MSFT), Oracle ($ORCL), and industry titan Salesforce ($CRM). Now that the HubSpot dream is on hold, Google might redirect the $31 billion towards further share buybacks or beefing up their newly minted quarterly dividend. It’s not the big splash they wanted, but it’s something shareholders might still appreciate.

GAMING & SOFTWARE

Microsoft is Copying Netflix with Xbox🐱

Netflix-Style Revival: Just when people were starting to write off Netflix ($NFLX), the streaming giant bounced back with a highly successful ad-supported subscription tier, reigniting its user growth. Now, Microsoft ($MSFT) is taking a page from Netflix’s book to rejuvenate its gaming division.

• Xbox has announced that it will split its popular Game Pass subscription into two tiers, reserving the biggest and most popular releases for the pricier option.

• The monthly cost for PC Game Pass is jumping from $9.99 to $11.99, while the Ultimate tier is going up from $16.99 to $19.99. Both these tiers will continue to offer day-one releases, but console users with the Standard package will miss out.

Changing the Script: Microsoft recently revealed that major franchise titles like "Call of Duty" will be available on Game Pass the day they’re released. However, new subscribers who want to play these blockbuster games right away will need to fork out a 25% premium on their monthly membership. This move comes as Xbox has maxed out its console subscriber base and now aims to boost its average revenue per user (ARPU).

• This strategy shift shows Microsoft’s plan to upsell fans to Game Pass Ultimate and hike ARPU. It's a key part of the company's broader vision to transition gaming towards a mobile/cloud model, allowing gamers to stream their favorite titles without needing dedicated gaming hardware.

POLITICS & INSIDER TRADING

Congressman Josh Gottheimer’s Timely Investments Raise Red Flags🧐

Savvy, or Well Informed?: Congressman Josh Gottheimer, who isn't even in the top 30 wealthiest members of Congress, seems to be trying to change that with some eyebrow-raising tech investments. Given his committee roles, his stock picks are raising questions about insider knowledge and ethical boundaries.

• Gottheimer recently disclosed stock purchases dated July 9, 2024, including investments in Apple ($AAPL) and Broadcom ($AVGO). Both buys are valued between $1,001 and $15,000, which may not sound like much, but it's the thought (or inside scoop?) that counts.

• What’s particularly interesting is that several other politicians have also been gobbling up shares of chip maker Broadcom. None other than Nancy Pelosi herself purchased between $1,000,001 and $5,000,000 worth of shares just last month. Maybe there was a flash sale on congressional stock tips?

The Full Story: Apple and Broadcom are just two of the ten positions held by the congressman, but there's a clear pattern: he's a techie. His other investments include Microsoft, Nvidia, and Advanced Energy Industries ($AEIS), which provides power systems and thermal measurement instruments for semiconductor manufacturing, flat panel displays, and data storage products. Gottheimer seems to have a knack for picking stocks that just happen to align with his committee's interests.

• Gottheimer, a member of the House Committee on Financial Services among others, also sold off 100 positions throughout June and July. Maybe he got spooked, or maybe he’s just another victim of the addictive charm of Robinhood ($HOOD). Whatever the case, it seems the honorable gentleman has been busy.

MORE NEWS

Additional market-moving events🌎

Intuit Layoffs: Financial software and tax prep company Intuit ($INTU) is laying off 1,800 employees as part of an AI-focused reorganisation. (APNews)

Costco Raises Fees: Costco ($COST) announced its first membership fee increase since 2017, raising standard fees by $5 and premium fees by $10. The hike follows similar increases by rivals. (CNN)

Walmart Goes Automated: Walmart ($WMT) announced it will open 5 automated grocery distribution centers across the U.S. to enhance supply chain efficiency and bolster its online grocery business. (CNBC)

Crypto Lawsuit: BitMEX, a cryptocurrency exchange, pleaded guilty to violating the Bank Secrecy Act for failing to implement an adequate anti-money-laundering program. (WSJ)

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