Typically, investors buy shares in a company because they believe in the firm’s strategy, leadership, and vision for the future.

But what about when investors are buying shares because they hate how the company operates?

That’s the question that Starbucks executives had to answer after activist investing firm Elliot Investment Management set its sights on a board seat, taking a stake in the coffee giant last month.

Elliott Management, which has roughly $65 billion in assets, has amassed a position in Starbucks worth about $2 billion, according to CNBC, and the firm has floated various options for improving the beleaguered company’s performance. The home of the Frappucino has fallen on hard times this year as it shifts more toward take-out orders and faces slowing demand internationally. The chain reported in April that same-store sales had fallen for the first time in nearly three years.

After months of internal discussions, CNBC reported that Starbucks’ board of directors and Elliot are in the final stages of talks to end the corporate feud. The discussions could result in Jesse Cohn, one of Elliot’s managing partners, becoming a board member at Starbucks, with current Starbucks CEO Laxman Narasimhan being allowed to stay at the helm. Other parts of the agreement would include a potential board expansion and governance improvements. However, nothing is finalized yet.

So what actually are activist investors?

Activist investors are investment firms (usually hedge funds) that target and invest in companies, and then lobby the company they invested in to switch up how they do business.

The goals of activist investors can vary from policy changes, like pushing an oil company to streamline its carbon emissions goals, to a focus on improving the business and juicing stock market returns, like trying to oust a current chief executive.

Usually, activist investors are hedge funds that buy a minority stake in a firm, and then use either a public or internal pressure campaign to achieve their aims. If activist investors can’t use the power of persuasion to reach executives, they often opt to conduct a proxy war for seats on a company’s board of directors. In the case of Elliot and Starbucks, it looks like they may have been successful.—LB

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🟢 What’s up

• Nvidia jumped 4.08% after it was named a top “rebound” stock by Bank of America.
• Keycorp leaped 9.24% on the news that the Bank of Nova Scotia will invest $2.8 billion in the company.
• Robinhood Markets rose 3.46% due to an upgrade from Piper Sandler analysts who say the company’s sudden decline gives it an attractive entry point.
• Monday.com popped 14.78% thanks to a strong earnings report from the software maker, due in no small part to sealing the largest deal in company history.
• Barrick Gold soared 9.36% after beating earnings estimates on both the top and bottom lines thanks to the rising price of gold.

What’s down

• Jetblue Airways descended 20.66% after 1) it unveiled plans to raise $3 billion in debt, and 2) it was downgraded by both S&P and Moody’s.
• Qualcomm slid 0.97% thanks to a downgrade by Wolfe Research due to fears of oncoming competitions from Apple.
• Hawaiian Electric Industries sank 14.06% on the news that it has issued a going-concern warning—meaning it’s probably going out of business.
• Marathon Digital dipped 11.27% after it revealed plans to issue $250 million in convertible debt.
• Albemarle stumbled 6.90% after an absolutely terrible earnings report thanks to the declining price of lithium.

If you think the stock market had a crazy week, just wait until you hear about what’s going on with bitcoin.

Bitcoin’s selloff began last weekend when the cryptocurrency dropped 20%, plummeting from over $60,000 on August 3 to below $50,000 by August 5, its lowest price since February of this year. The drop coincided with a widespread market meltdown, largely due to fear of a US recession, Japan’s index plunging, and geopolitical instability in the Middle East.

Then, the digital asset recovered by the end of last week, rising back above $61,000 last Thursday—before dropping again over the weekend and this morning.

Right now, Bitcoin’s sitting at about $59,000.

The wild price fluctuations are a stark reminder that cryptocurrency tends to roughly correspond with equity markets, even though many have argued that bitcoin is a hedge against volatility elsewhere in the market.

“Sharp market pullbacks can feed on themselves in crypto, creating a downward cycle that needs to exhaust itself before we bottom. That's because, as prices drop, leveraged traders face margin calls and are forced to sell,” wrote Matt Hougan, CIO of Bitwise, in a note last week.

Is the drop a buying opportunity?

Don’t expect crypto prices to stabilize anytime soon (or ever, some would argue).

“The market is so fragile right now that any hint of selling pressure leads to multiples of actual selling ahead of the forced selling,” wrote Jeff Dorman, chief investment officer at Arca, last week.

But some analysts argue that even though crypto is volatile, the recent selloff had more to do with external economic factors—and that if you’re a long-term believer in cryptocurrency, you shouldn’t back out now.

“​​If you were ever bullish on the market, there’s no reason you should be less bullish today after this week’s events,” Dorman wrote last week. In a note today, he called the market drop last week, “One of the dumbest sell-offs in history, certainly in terms of magnitude, as it was entirely technically driven.”

The bottom line? Crypto is a speculative asset, and most financial experts agree it shouldn’t comprise more than 5% of your portfolio. This past week’s ups and downs weren’t enough to spook many bitcoin bulls, but if you decide to jump into crypto investing, be ready for a wild ride. —LB

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• Yet another subscription to add to your collection—but this one’s from Chuck E. Cheese.
• Utility stocks have soared thanks to AI data center demand, and analysts don’t see a slowdown anytime soon.
• The idea of a strategic bitcoin reserve has some flaws.
• The way the Treasury Department funds the US debt may be undermining the Federal Reserve’s monetary policy.
• New rules for realtors go into effect this week, which will either change real estate forever or do absolutely nothing, depending on who you ask.
• Last week’s selloff has left dozens of stocks significantly undervalued, including British American Tobacco, Wayfair, and Western Union.

The Producer Price Index, or PPI, measures the change in price that US producers receive for their goods and services. In layman's terms, it measures inflation for manufacturers. It measures wholesale inflation, rather than CPI, which measures inflation for individual consumers—but make no mistake, if things are getting more expensive for the companies making stuff, it’ll eventually get more expensive for you to buy their stuff.

Unfortunately, while inflation has been decelerating for consumers, it shows no signs of slowing for producers. PPI rose 2.6% year over year in June, up from a 2.4% gain in May. Economists expected PPI to rise another 2.3% year over year in July.

Before the open

• Home Depot (HD) is a key earnings report to watch, sitting at the crossroads between consumer spending and the housing market. The stock enjoyed a strong surge ever since the pandemic, when people trapped in their houses felt the need to renovate their homes, but shares are basically flat this year thanks to shareholder fears that all that remodel spending has dried up. In short, this report will define Home Depot’s direction for the rest of the year. Consensus: $4.50 EPS, $43.38 billion in revenue.
• Tencent Music Entertainment (TME) is a subsidiary of Tencent Holdings, the Chinese tech giant. TME is a dominant force in the Chinese music industry, but has been looking to expand abroad for some time now. It owns 8.6% of Spotify, ownership that Spotify reciprocates with 8.6% of TME, and recently struck a deal with Universal Music Group to further expand its international reach. Shareholders will want to hear more of the company’s growth plans during this call. Consensus: $0.16 EPS, $996.68 million in revenue.

If you’ve noticed a lot of athletes taking selfies together on the podium, that’s all part of Samsung’s latest marketing scheme. The phone giant has been handing Galaxy Z Flip6 Olympic Edition smartphones to winning athletes alongside their medals in order to snag some free publicity.

The stunt has worked well, particularly after a headline-grabbing selfie between the North Korean and South Korean mixed doubles table tennis teams. The two countries have some serious history, so the show of sportsmanship and camaraderie has been applauded far and wide.

Unfortunately for the North Korean team, that selfie was as close as they’ll get to the new limited-edition Samsung smartphone.

While other athletes get to keep the phone, according to the South Korean Foreign Ministry, the giveaway would violate UN sanctions against North Korea under Security Council Resolution 2397. That resolution prevents the supply of "all industrial machinery" to North Korea, and considering Samsung is based in South Korea, it seems likely that the company will toe the line and keep the phones at home.

So much for the Olympic spirit.—MR