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Did you see the article from two months ago that said SEC, Amazon “plans to win unconditional EU antitrust approval”? i robot Will it jump 39% in one day?
Written by Wolf Richter of Wolf Street.
Amazon’s acquisition of iRobot at an exorbitant price of $61 per share, announced in August 2022, is now likely to be rejected by EU competition regulators, sighs Amazon. However, the deal was decided from the beginning.
iRobot became a meme stock around 2017, had massive spikes and crashes, and was taken to the next level during the meme stock mania of 2020 and early 2021. On January 29, 2021, iRobot stock is [IRBT] The stock soared to an intraday high of $197, giving it a market capitalization of $5.5 billion. We have come to call this phenomenon consensual hallucinations. Ah, to the moon!
But after that infamous February rally, this sort of thing started to fall apart, and iRobot stock crashed. To date, it has fallen 91% to $17.26, including 45% Katumf over the past 5 days. The company is now a shining hero in the pantheon of failed stocks.
This unfair acquisition announcement comes just months before Amazon makes its next announcement, this time announcing mass layoffs, including in its hardware division, which makes consumer devices like the Echo, Alexa, Fire, and Kindle. Ta. iRobot’s consumer gadgets should fit right in there. And Amazon has changed its mind about its strategy regarding these gadgets.
Sadly, after the acquisition announcement, iRobot became busy publicizing things that went wrong with the company, including declining revenues and large losses.
In July 2023, Amazon lowered the acquisition price to $51.75, causing iRobot stock to plummet. Doubts about the completion of the deal began to grow, and the stock price continued to fall.
On November 8, 2023, iRobot reported huge losses and terrible earnings. By November 20, the stock was trading in the $29 range, with doubts remaining whether the EU competition watchdog would approve the deal. And then a miracle happened. It’s actually not a miracle, just normal market manipulation that we’re used to.
Someone listed by Reuters as “Exclusive” cited, as usual, the names of “three people familiar with the matter” and said that Amazon “plans to obtain unconditional EU antitrust approval” for the iRobot acquisition. It seems that he planted the story that “this is true.” , and later on CNBC and others, and the stock price soared 39% that day, from its November 22 closing price of $29.83 to $41.48 the next day. SEC, have you looked into this?
So on Thursday evening, January 18, the Wall Street Journal reported that European Commission competition officials “met with Amazon representatives on Thursday to discuss the deal,” one of the people said. . Amazon was told at the meeting that the deal was likely to be rejected, the person said. Amazon declined to comment. ”
“Plans to reject the deal will require formal approval from the commission’s 27 political leaders before a final decision is made. Historically, this process has been closely followed by the bloc’s competition commissioner. It is unlikely that the recommendation of one Margrethe Vestager will be overturned. The committee has a deadline of February 14th for a final decision.”
Shares instantly plummeted 40% in after-hours trading on Thursday. It closed Friday at $17.26, down 27% on the day and 91% since the meme stock’s peak in January 2021.
Many people lost a lot of money on iRobot. However, if they were able to escape in time, there were some who made large sums of money through fake approval announcements. There are no victims here. It’s all part of the fun, part of the consensual hallucination that people were eager to be a part of. And there are still many consensual hallucinations circulating, and people are still eager to participate in them. Will it continue like this without fading?
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