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Meme stocks hit a wall on Thursday with GameStop, AMC and Clover down big

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The WallStreetBets forum on the Reddit Inc. website on a laptop computer and the logo on a smartphone arranged in Hastings-On-Hudson, New York, U.S., on Friday, Jan. 29, 2021.

Tiffany Hagler-Geard | Bloomberg | Getty Images

The meme-stock mania created by the day-trading Reddit crowd fizzled a bit on Thursday.

It’s easy come, easy go for many speculative names favored by retail investors including AMC Entertainment and GameStop as they suffered double-digit losses on Thursday, pulling back from their recent explosive rallies. The video game retailer shed more than 20% even after announcing two high-profile executive hires from Amazon. The movie theater chain dropped 10% Thursday, turning negative on the week.

Another red-hot meme stock Clover Health, which at one point occupied the WallStreetBets’ message board this week, pulled back 10% Thursday. Clean Energy Fuels, which rallied over 31% just Wednesday, tumbled 15%.

If the January trading mania is any guide, it’s not surprising that these latest rallies are turning out to be short-lived. A CNBC PRO analysis available exclusively to subscribers found that on average, Reddit stocks’ runs lasted nine trading days from the start to their first big drop during the initial frenzy at the beginning of 2021.

CNBC identified the starting point for five stocks popular on message boards earlier this year — GameStop, AMC, Bed Bath & Beyond, BlackBerry, and Koss Corp. — by finding the first time each stocks’ single-day trading volume at least doubled its 30-day moving average of shares traded. That typically represents the point at which a flurry of new investors took interest in a stock that was not being heavily traded.

On Thursday, GameStop investors seemed to be running for the exits after the company said it appointed former Amazon executive Matt Furlong as its new CEO. It also picked another former Amazon executive, Mike Recupero, as chief financial officer. Meanwhile the company’s fiscal first-quarter results showed sales up 25% and a narrower loss than it reported a year ago.

The decline in shares came as GameStop also said it may sell as many as 5 million shares. Additional shares dilute the value of existing shareholders’ stakes. The stock is still up more than 1,100% on the year, however.

AMC is down for a second straight day after soaring 83% last week. The movie theater, which was on the brink of bankruptcy not long ago, managed to sell 20 million shares in two separate deals last week amid the rally, generating around $800 million in capital.

— CNBC’s Nate Rattner contributed reporting.

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Microsoft to launch Xbox Cloud Gaming service for TV

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A gamer plays soccer title Pro Evolution Soccer 2019 on an Xbox console.

Sezgin Pancar | Anadolu Agency via Getty Images

Microsoft is developing dedicated streaming hardware that people will be able to hook up to their TVs to use its Netflix-like cloud gaming service.

The company is betting the future of video games will be a subscription-based model where people pay a certain amount of money each month to get access to a plethora of titles.

Its Xbox Game Pass service does exactly that, offering access to a library of games developed both in-house and by third-party studios.

That’s mostly digital downloads, but last year streaming was added with Microsoft publicly releasing Xbox Cloud Gaming. The feature is sort of like a “Netflix for games,” allowing gamers to play games that are hosted on remote servers and then streamed to users over the internet.

A number of other companies have launched similar game-streaming services, including Google with Stadia and Amazon with Luna.

Now, Microsoft is aiming to push its cloud gaming product to other platforms. It started rolling out Xbox Cloud Gaming to some users via a web browser on iPhones, iPads and PCs in April (Microsoft couldn’t launch a proper mobile app for cloud gaming on Apple devices due to a dispute over App Store policies). And on Thursday, the company announced it wants to expand the service to TVs as well.

One way it plans to do that is by partnering with manufacturers to add cloud gaming to smart TVs. But Microsoft is also developing streaming devices which users can plug into their TV or computer monitor to stream games from the cloud. The company didn’t elaborate on what those devices could look like, though it’s reminiscent of Amazon’s Fire TV and Google’s Chromecast dongles, both of which now support cloud gaming.

In addition, Microsoft says it is working with mobile carriers like Telstra in Australia to offer new Xbox subscription models. It’s also expanding cloud gaming to four new countries — Australia, Brazil, Mexico and Japan —  later this year, and aims to publicly launch the browser-based version of the software to all members of its $15-a-month Xbox Game Pass Ultimate subscription in the coming weeks.

Microsoft said it plans to add cloud gaming to its new Xbox Series X console, which launched last November to compete with Sony’s PlayStation 5. In the next few weeks, the company will also upgrade the servers that power its cloud gaming service from its old Xbox One hardware to the Xbox Series X.

Microsoft competes aggressively with Sony when it comes to gaming. But it’s taking a different strategy to its Japanese counterpart. While Sony is known for blockbuster exclusives that can only be played on a PlayStation console, Microsoft is focusing on embedding its Xbox services onto multiple platforms, including mobile and PC.

Microsoft has been stepping up its investments in gaming, buying the iconic studio Bethesda for $7.5 billion in its biggest video game-related acquisition yet.

The company is holding a joint event with Bethesda on Sunday as part of the E3 gaming conference to show off new games, with fans speculating they will reveal some details about a hotly-anticipated sci-fi game called Starfield.

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fresh calls to investigate the origins of covid

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U.S. President Joe Biden speaks during a meeting with a bipartisan group of members of Congress.

Pool | Getty Images News | Getty Images

LONDON — The European Union and the United States are expected to call for more progress on an investigation into the origins of Covid-19, according to a draft EU document.

The draft document, seen by CNBC, is the foundation for the outcome of an upcoming summit between U.S. President Joe Biden and European leaders which is due on Tuesday. Its wording could change right up until the end of the meeting

Speaking Thursday, European Council President Charles Michel, who chairs European summits, said: “The world has the right to know exactly what happened, in order to be able to learn the lessons.”

We have to know where it did come from.

Ursula von der Leyen

European Commission president

At the same news conference on Thursday, European Commission President Ursula von der Leyen said: “It is of utmost importance that we learn about the origin of the coronavirus.”

“There is this horrible pandemic, a global pandemic we have to know where it did come from in order to draw the right lessons and to develop the right tools to make sure that this will never happen again and, therefore, the investigators need complete access to whatever is necessary to really find the source of this pandemic,” she added.

These statements follow Biden’s call last month for the World Health Organization to carry out a second phase of a probe into the origins of the virus, which was first detected in the Chinese city of Wuhan in late 2019.

A WHO report said earlier this year that the most likely cause of the virus was natural, and dismissed a lab leak theory. But it suggested that further studies would need to be carried out.

The U.S. intelligence community said last month that it “does not know exactly where, when, or how the Covid-19 virus was transmitted initially but has coalesced around two likely scenarios: either it emerged naturally from human contact with infected animals or it was a laboratory accident.”

The discussion on the origins of the coronavirus comes at a time when the U.S. and the EU also intend to talk about their broader relationship with China.

While on the one hand, the U.S. and the EU want to criticize what they describe as human rights violations in China; on the other hand, they want Beijing to engage constructively on climate change policies and to open up certain parts of its economy.

Biden is hoping that the EU will be a partner when it deals with China over the coming years.

“Biden believes that with a broad coalition, you may be able to push China down a more constructive path. International pressure, that is pressure not coming from Washington only, could prove useful on any of these topics,” Jeremy Ghez, associate professor at H.E.C. Business School in Paris, told CNBC last week.

The EU decided in March to put on hold the ratification of an investment agreement with Beijing — a deal that had been presented back in December, just weeks before the inauguration of Biden.

This investment partnership is now frozen following a diplomatic row between Brussels and Beijing. In March, the EU decided to impose sanctions against China for its treatment of the ethnic minority Uyghurs and Beijing retaliated by announcing counter-sanctions against members of the European Parliament.

The ethnic Uyghurs, who live mostly in China’s west, have been identified by the United Nations, United StatesUnited Kingdom and others as a repressed group. China’s Foreign Ministry in March characterized such claims as “malicious lies” designed to “smear China” and “frustrate China’s development.”

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Stripe launches software to help companies calculate sales tax

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The Stripe logo pictured on a smartphone with U.S. dollar banknotes in in the background.

Budrul Chukrut | SOPA Images | LightRocket via Getty Images

LONDON — Stripe on Thursday debuted a new product that it says will make it easier for businesses to calculate and collect sales taxes, marking the digital payment giant’s latest push into other areas of finance.

The service, called Stripe Tax, will automate the calculation and collection of sales tax, value-added tax and goods and services tax for transactions made through Stripe’s platform. British newspaper publisher News UK and Dutch start-up Routetitan are among those already using the service.

Matt Henderson, Stripe’s EMEA lead, said working out how much sales tax needs to be paid on certain transactions can be a complex process, with rules varying across different countries. In the U.S., there are over 11,000 different sales tax jurisdictions, “often the size of a small town,” Henderson told CNBC.

“There’s a lot of different variables that go into determining what’s the right rate and when is it due for collection and payment,” he added. “In Germany, for example, a pet rabbit is 19% VAT and a pet guinea pig is 7% VAT, whereas in the U.K. or Ireland you wouldn’t make a distinction on such things.”

Businesses can enable Stripe Tax by adding a single line of code to their website, the company said. Stripe will use data like a customer’s location and the product or service being sold to work out how much tax is due. Stripe makes money by taking a small cut of the transaction from its merchants.

Stripe, which competes with the likes of Square, Adyen and Checkout.com, got a big boost from the coronavirus pandemic last year as many businesses moved online due to lockdown restrictions around the world.

Stripe attracted more than 500,000 new clients in Europe alone since the start of the pandemic, according to Henderson. The company has been increasingly expanding into areas beyond payments, such as lending and bank accounts from partners like Citigroup and Goldman Sachs.

However, Stripe ruled out any intention of becoming a fully-fledged bank, with President John Collison saying last year he doesn’t believe in the Silicon Valley mentality of “doing everything themselves.”

Stripe was last privately valued at $95 billion in a March funding round. The company said it would use the fresh funds to expand its European operations. Stripe’s sales tax software was developed out of Dublin, where it employs about 80 engineers.

“We really need to be in investment mode, partly because there is still unfinished business in payments but also because there’s just so many other things adjacent to payments that are obstacles for businesses to grow online,” Henderson said.

The launch of the company’s new product comes after it acquired U.S. start-up TaxJar, which specializes in sales tax software, in April.

According to Bank of America, the total addressable market for sales tax is estimated to be worth $24 billion. A number of companies compete in the space, including sales tax specialists Avalara and accounting software provider Intuit.

Stripe is a seven-time CNBC Disruptor 50 company that ranked No. 2 on this year’s list.

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