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Wednesday Sep.25, 2019
WeWork gets rid of MeWork
_CEO Adam Neumann relishing his last day on the WeJob_
Hey Snackers,
Tinker Bell's going vegan(ish). Disney announced 400 plant-based food items are magically hitting its theme parks next month.
Markets dropped yesterday after the Speaker of the House announced she's opening up an impeachment inquiry into President Trump — political uncertainty like that can mess with investors.
WeOut
WeWork CEO Adam Neumann steps down to save the IPO
There's no "We" in Adam... Since WeWork filed to IPO last month, it's become a Wall Street punchline: Its S-1 IPO filing paperwork was super cagey ("Our mission is to elevate the world's consciousness") and its new name ("We Company") led to some pronoun jokes. On Wednesday, co-founder/CEO Adam Neumann demoted himself to eliminate the distraction he'd become:
- Title: He's out as CEO — that'll be replaced with "Non-Executive Chairman of the Board" on his LinkedIn (2 other execs will take over as co-CEOs).
- Power: Neumann had engineered himself majority voting power — each of his shares got 20 votes on corporate decisions. 20. He downgraded that to 3 votes per share.
Tell us about a time when you... did something reckless. Adam can. Just last week, the Wall Street Journal profiled his brilliance and craziness. That got investors even nervous-er about investing in Adam's hugely unprofitable co-working real estate company. Here are the low-light highlights:
- Adam had goals to never die, to become Earth's 1st trillionaire, and to be elected president of the world (more here).
- He stashed weed in a private jet he took to Israel, complicating the flight home.
- In 2016, he fired 7% of WeWork — then he passed around top-shelf tequila shots and hired Run DMC to play It's Tricky.
- And Softbank, the top Venture Capital firm invested in WeWork, wanted him to be "even crazier."
Ousting Uber CEO Travis Kalanick didn't solve all of Uber's problems... and this won't solve all of WeWork's. The IPO was already delayed because of concerns about Adam's conflicts of interest (he trademarked the name "We" and then personally sold it to WeWork to use for $6M). Now the Adam liability is gone, but these problems aren't:
- WeWork just lost the visionary leader who built it from nothing to a real estate beast.
- Its underlying business still lost $1.6B last year, and it's reportedly considering firing 1/3 of its employees to reassure investors.
Unplugged
Nio — "the Tesla of China" — plummets 22% after canceling its earning call
Keep moving. Nothing to see here... Nio would like you to continue doing whatever you're doing (and not talk about Nio). That's why the Shanghai-based electric car company revealed its quarterly earnings and then abruptly canceled the call to discuss them with investors — that's when shares dropped 22%. Nio's had a rough few months:
- Sales of its core product — the ES8 electric SUV — plummeted by 22%.
- It's losing $5M a day. Let that sink in.
- Back in June it awkwardly had to borrow $200M...from its Chairman, CEO, and buddy company Tencent.
- Now it's focused on a new mission: “Pursue a leaner operation.”
One problem... It was already pursuing a leaner operation before this. Here's how Nio was struggling already in the months before things got worse. Earlier this year, Nio had to:
- Fire 2K workers and cancel plans for a new factory.
- Close its Patagonia-enveloped Silicon Valley office.
- Sell off its Formula E ("electric") racing team.
- Spend a whopping $49M to recall cars because of fire issues (and its co-founder just retired).
Bubbles can happen anywhere... Like in China's electric car market. Half the world's e-vehicle sales are in China — but that demand is supported by subsidies (the government hands out money to make buying cleaner cars cheaper). Now China's phasing out those subsides, eliminating them by 2020. The result: Nio's sales have fallen 2-straight quarters.
What else we’re Snackin’
- Mind-blown: Facebook acquires a startup that aims to control computers through human brains
- Club: Manchester United stock falls after the team lowered its revenue projections for the 1st time in 5 years (mainly because it didn't qualify for the UEFA Champions League)
- Scrutiny: Tesla falls 7% after more legal pressure looking into its acquisition of SolarCity
- Pivot: Kik, the messaging app, just shut down all that messaging so it can focus on its cryptocurrency (it's also got a lawsuit going with the SEC)
- Diesel: VW execs were just charged with "misleading shareholders" right before news broke of their emissions cheating in 2015
- Read: Vox Media acquires "brilliant" and "despicable" New York Magazine
Wednesday
- Earnings from KB Home, AAR Corp, and Pier 1 Imports
Disclosure: Authors of this Snacks own shares of Tesla
ID: 962611
