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- Stock traders returned after the three-day holiday weekend with selling on their minds. The major averages posted notable losses, led by a 2.6% drop in the Nasdaq.
- Amid the selling spree, meme stocks were particularly hard hit. As investors jettisoned speculative names, one-time high-fliers like AMC (NYSE:AMC), GameStop (NYSE:GME), Bed Bath & Beyond (NASDAQ:BBBY) and Inovio Pharmaceuticals (NASDAQ:INO) all posted notable losses.
- Silvergate Capital (NYSE:SI) represented another major decliner on the session. The stock lost a quarter of its value on a disappointing earnings report.
- Unilever (NYSE:UL) showed weakness as well, with investors reacting badly to the company's attempts to buy GlaxoSmithKline's (NYSE:GSK) consumer business. With the decline, the stock set a fresh 52-week low.
- Looking at some of the day's biggest gainers, Activision (NASDAQ:ATVI) was a standout, skyrocketing on a $69B deal to be acquired by Microsoft (NASDAQ:MSFT).
- M&A headlines also contributed to a rally in Houghton Mifflin Harcourt (NASDAQ:HMHC). The stock rose on reports that the firm was looking to sell itself.
Sector In Focus
- The mood surrounding meme stocks has changed dramatically in the past year. Tuesday saw high-profile names once favored by retail traders sell-off, despite an online attempt to trigger a renewed short squeeze.
- AMC (AMC) fell 8%, while GameStop (GME) retreated nearly 7%. Looking at some other meme names, Bed Bath & Beyond (BBBY) dropped 9% and Inovio Pharmaceuticals (INO) fell 10%.
- In January of 2021, the meme craze first burst into public consciousness, when a short squeeze targeted at GME prompted shares to skyrocket.
Standout Gainer
- Activision (ATVI) jumped 26% after the video game maker announced that it has agreed to a nearly $69B deal to be acquired by software giant Microsoft (MSFT).
- Under the terms of the deal, MSFT will pay $95 per share for ATVI in cash. Through the transaction, the Xbox maker will acquire a catalog of games that include the Halo franchise and titles like Call of Duty and Warcraft.
- In a nod to the current regulatory climate for Big Tech, the deal has a breakup fee of $3B.
- ATVI jumped $16.92 to close at $82.31. With the advance, the stock marked its highest close since August. Still, shares remain well off a 52-week high of $104.53.
- In addition, ATVI finished Tuesday 15% below the amount contemplated in the merger deal. Meanwhile, MSFT edged down more than 2% to close at $302.64.
Standout Loser
- A disappointing quarterly report sparked a massive sell-off in shares of Silvergate Capital (SI). The stock dropped 25% on the news.
- The company reported a quarterly profit of $0.66 per share, up from last year but below the amount seen in the previous quarter. The figure was also well below the $0.73 per share that analysts had predicted.
- SI retreated $35.04 to finish Tuesday's trading at $103.34.
- The stock had reached a 52-week high of $239.26 last November but has lost ground in recent weeks. The latest slide has taken SI to its lowest level since September.
Notable New High
- A report that the education publisher is exploring a possible sale sparked a rally in shares of Houghton Mifflin Harcourt (HMHC). The stock climbed almost 10% to reach a fresh 52-week high.
- According to Bloomberg, HMHC has hired a financial advisor and could draw interest from private equity suitors. Meanwhile, the company could still decide to remain independent, Bloomberg reported, citing people familiar with the situation.
- HMHC closed Tuesday's trading at $17.73, a gain of $1.57 on the session. The stock also managed to set an intraday 52-week high of $18.48.
- Shares had traded in a broad range since November. Tuesday's rally allowed the stock to jump above recent resistance.
Notable New Low
- Unilever (UL) dropped 14% after it confirmed it has offered about $68B to acquire GlaxoSmithKline's (GSK) consumer business. With the retreat, the stock fell to a new 52-week low.
- News broke over the weekend GSK had rejected three non-binding offers from UL for the unit, with the latest offer coming in at £50B, or the equivalent of $68B. Amid worry that UL would overpay for the asset, the company promised "financial discipline" as it reviewed a potential transaction.
- UL declined $7.84 to close at $46.45. During the session, the stock also established a fresh 52-week low of $46.07.
- Ready for more of the day's best- and worst-performing stocks? Head over to SA's On The Move section.