$56B of acquisitions in 24 hours

Tuesday, November 26, 2019 by Robinhood Snacks | Disclosures

Uber got the opposite in London

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Hey Snackers,

Treat yo' (corporate) self — we've got a new Cyber Monday.

Four big acquisitions worth over $56B closed yesterday as companies splurge on pre-holiday deals (for themselves):

Deals
1. eBay sells off StubHub for $4B so it can go free

Queen at Wembley... Texas vs. USC. Beychella. When you clench a ticket to a great event, you only sell for a high price. For eBay, it took $4B to give up online ticketing site StubHub. The buyer is Swiss-based sports ticketing peer Viagogo, whose co-founder ironically also co-founded StubhHub (small world.).

  • EBay paid only $310M to acquire StubHub in 2007. It's selling it now for $4B — that's a brag-worthy 13X return.

eBay just dropped StubHub off at college... As one of 2 major destinations for event tickets (the other is Live Nation-owned TicketMaster), StubHub is positioned for success. But it lamely languished in eBay's home — sales last year barely budged up. Now StubHub can reach its full potential as part of a company 100% focused on ticketing. That's what happened with eBay's old subsidiary, PayPal.

  • 2002: eBay acquired PayPal for just $1.5B because it needed some help processing payments.
  • 2015: eBay spun off PayPal into its own publicly-traded company worth ~$40B.
  • Today: PayPal is thriving, worth over $120B.
THE TAKEAWAY

eBay needs to focus more on eBay... Behind this sale was a powerful crew of activist investors in eBay pushing the company to get back to basics. The OG ecommerce site has fallen behind — here's today's ecommerce scoreboard:

  1. Amazon is #1 with 47% of the US market.
  2. eBay has fallen to #2 with just 6.1%.
  3. Walmart and Apple are #3 and #4 — and they're not far behind eBay.
Unfit

Uber X, Uber XL, Uber Powdered Wig... London's transport agency announced out of nowhere Monday that it is removing Uber's privilege to operate in Her Majesty's capital. The reason: "not fit and proper." Let's get more specific:

  • The claim: Uber has had a "pattern of failures" that "placed passengers and their safety at risk."
  • For example: 43 unauthorized drivers (including some banned by Uber) used their buddies' Uber driver accounts to drive, and even uploaded their profile picture so passengers wouldn't notice.
  • The result: London experienced 14K rides with those unauthorized drivers. That also means no proper insurance in place.
  • The verdict: Uber's tried to fix these issues, but London doesn't think it's fit to.

Kate Middleton can still Uber Black if she wants to... because Uber is appealing this, naturally. Its other 3.5M Uber riders and 45K Uber drivers will keep ubering too until the courts decide if the ruling is legal or not. London tried to stop Uber 2 years ago, but ultimately gave Uber another shot during that appeal.

THE TAKEAWAY

Uber's #1 threat is public policy... aka government's laws, rules, and regulations. Uber requires politicians' consent to operate, but plenty of them don't like Uber — the brand's become villainous. Airbnb, Lyft, and SmileDirectClub face similar policy threats, but can learn from where Uber went wrong: Brand reputation is critical when politicians stand between you and profits.

What else we’re Snackin’
  • Chill: Netflix goes full-on movie, reopening a 71-year-old theater in New York
  • Private?: Facebook's new research app, Viewpoints, will pay you (yes, you) to take surveys and give it more data
  • Sued: McDonald's pays $26M to California cooks and cashiers after they accused Ronald of holding back their paychecks
  • 1M: T-Mobile reveals the bad news: over 1M customers were exposed by a breach (the good news: none of it was passwords or financial info)
Snacks Daily Podcast

Charles Schwab finally answered the rumors and bought rival TD Ameritrade for $26B. But this is way more than just an acquisition — It's a Lannister-style takeover with strategies straight out of a Game of Thrones finale.

Tuesday

Disclosure: Authors of this Snacks own shares of Amazon and options of SmileDirectClub

ID: 1021836

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