Before the Bell: What Jumped Over 300% on Thursday and Was Up 250% in Friday's Premarket?

Premarket action on Friday had the three major U.S. indexes trading mixed. The Dow Jones industrials were up 0.09% while the S&P 500 was down 0.05% and the Nasdaq 0.53% lower.

Ten of 11 market sectors closed higher Thursday. Communications services (2.33%) and consumer cyclicals (2.31%) posted the day’s best gains. Real estate (−0.4%) was the day’s only loser. The Dow closed up 1.14%, the S&P 500 up 1.33% and the Nasdaq up 1.99% on Thursday.

Two-year Treasuries added one basis point to end Thursday at 3.96%, and 10-year notes rose by four basis points to close at 3.45%. In Friday’s premarket, two-year notes were trading at around 3.96% and 10-year notes at about 3.43%.

Thursday’s trading volume was near the five-day average. New York Stock Exchange winners outpaced losers by 2,130 to 859, while Nasdaq advancers led decliners by about 4 to 3.

The Census Bureau releases March retail sales data before markets open on Friday. Sales are forecast to have dropped by 0.4% in the month, equal to the February decline. Excluding automobiles, sales are forecast to drop by 0.4%, a larger decline than February’s 0.1% drop.

The University of Michigan’s preliminary consumer sentiment index for April will be released after markets open. Economists expect sentiment to have improved from 62.0 in March to 62.7.

Among S&P 500 companies, SolarEdge Technologies Inc. (NASDAQ: SEDG) led Thursday’s winners with a gain of 7.7%. HSBC analysts initiated coverage on the stock with a Buy rating and fair value estimate of $531. With the stock closing at around $385 on Wednesday, investors sniffed out a bargain. Its main rival in the solar inverter space, Enphase Energy Inc. (NASDAQ: ENPH), added nearly 7% as it surfed the wave.

Progressive Corp. (NYSE: PGR) dropped 9.71% on Thursday to post the worst loss among S&P 500 stocks. Investors were not amused after the company reported an earnings miss before markets opened. Operating revenue rose by 15.8% year over year, but expenses increased by 20%, pushing gross margins into negative territory.

It is hard to top CXApp Inc.’s (NASDAQ: CXAI) Thursday story. The stock closed at $1.60 per share on Wednesday, opened at $2.75 on Thursday, and closed the day at $7.13, up 345%. Friday may bring more of the same. Shares traded at $26.34 in the premarket session, up almost 270% from Thursday’s close.

CXApp was spun out of Inpixon (NASDAQ: INPX) in early March and came public in the middle of the month following a SPAC merger with KINS Technology Group. CXApp stock began trading on the Nasdaq on March 15 at $4.50 per share and closed at $1.33 per share on Tuesday. The company provides a “workplace experience platform,” also known as a superapp. Singapore-based Grab Holdings Ltd. (NASDAQ: GRAB) came public in late 2021 to much fanfare, reaching an all-time high of around $17.00 before dropping to a closing price of around $3.00 on Thursday.

CXApp’s IPO was structured as a reverse Morris trust transaction, a tax-free spinoff of assets in which the selling company (Inpixon in this case) retains a greater than 50% stake in the new company, even though the buyer (KINS in this case) is the acquirer.

The company issued two classes of common stock, A and C, identical except that class C common stock:

… is not listed and automatically converts into class A common stock “on the earlier to occur of (i) the 180th day following the Closing and (ii) the day that the last reported sale price of CXApp Class A common stock equals or exceeds $12.00 per share for any 20 trading days within any 30-trading day period following the Closing.

Unless something happens to cut the premarket price in half by the end of the day, the share price will easily exceed the $12 threshold for the first time. Only 19 more trading days to go until the untradable class C shares become tradable class A shares.

By the way, asset management giant BlackRock Inc. (NYSE: BLK) revealed earlier this month that it had taken a 9.8% stake in CXApp common stock.

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