Tuesday Nov.26, 2019

$56B of acquisitions in 24 hours

_Uber got the opposite in London_
_Uber got the opposite in London_

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

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.

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

London tries to ban Uber (for a 2nd time) for "unfitness"

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.

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)

Tuesday

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

ID: 1021836

Get Your News

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Latest Stories

Markets
Worse than expected
11h
Ugly numbers, but Tesla shares bounce
Elon Musk
Rebecca Moretti, Rani Molla
12h
Just the start

Banning
TikTok

What it means for the rest of the market

Business
Jack Raines
14h

The FTC vs. Big Handbag

The Federal Trade Commission has sued to block big tech, big grocery, big vacuum, and now, big… “affordable luxury handbag.”

Yesterday, the FTC sued to block Tapestry Inc’s $8.5B acquisition of Capri holdings. The agency is worried that a merger between Tapestry, which owns the Coach and Kate Spade brands, and Capri, which owns Michael Kors, would eliminate competition in the market.

The crux of the FTC's argument lies in the scope of the "accessible luxury" handbag market, where Tapestry competes with Michael Kors, with the FTC saying the following:

Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

The deal would eliminate fierce head-to-head competition on many important attributes including on price, discounting, and design. Tens of millions of Americans that purchase Coach, Kade Spade, and Michael Kors products could face higher prices

While Capri and Tapestry are two of the largest players in this market, winning an antitrust case won't be so straightforward, as consumers have other options at similar price points, including Marc Jacobs (owned by competitor LVMH), Tory Burch, Cuyana, and Mansur.

FTC Moves to Block Tapestry’s Acquisition of Capri

FTC Moves to Block Tapestry’s Acquisition of Capri

The crux of the FTC's argument lies in the scope of the "accessible luxury" handbag market, where Tapestry competes with Michael Kors, with the FTC saying the following:

Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

The deal would eliminate fierce head-to-head competition on many important attributes including on price, discounting, and design. Tens of millions of Americans that purchase Coach, Kade Spade, and Michael Kors products could face higher prices

While Capri and Tapestry are two of the largest players in this market, winning an antitrust case won't be so straightforward, as consumers have other options at similar price points, including Marc Jacobs (owned by competitor LVMH), Tory Burch, Cuyana, and Mansur.

Sponsored by
Go Deeper with Market Depth

Nasdaq TotalView powers the need-to-know data serious investors rely on.

Read more
Scuba Diving in the Wild Blue Yonder in French Polynesia
Matt Phillips
16h

Tesla had a good ride, but the stock’s price destruction is historic

Few people have created as much value as Elon Musk. The iconoclastic entrepreneur took Tesla from a market capitalization of roughly $2 billion at the time of its IPO in 2010 to $1.2 trillion in early 2023. That’s a return of about 55,000%. Musk made a lot of people a lot of money.

On the other hand, Tesla shares are down nearly 60% since their all-time peak. The company has ceded ground in EVs, prompting a series of profit crushing price cuts to preserve market share. The cumulative loss in market value over that period is pushing $800 billion. Few corporate executives have presided over such a degree of value destruction.

And it could get worse, as people are bracing for an ugly update when Tesla reports after the close Tuesday.

Jack Raines
Opinion
18h
Starbucks could use a CIO

Customers give Starbucks billions of dollars in prepaid credits each year. Should the coffee chain be investing it?

Starbucks American Coffee Chain Cafe In Amsterdam
Tech
Rani Molla
18h

Smaller AI models are in

Tech companies that have long touted the enormity of their AI models are now saying size doesn’t always matter.

Microsoft is the latest tech company to introduce smaller AI models, as part of its Phi-3 tech family. Last week Meta released two smaller models of its AI Llama 3 and earlier this year Alphabet did the same. All are open sourcing these models to encourage wider adoption.

Microsoft says its smallest model, which can fit on a smartphone and wouldn’t need to be connected to the internet to work, is nearly as good as OpenAI’s GPT-3.5. A Microsoft exec suggested this less expensive model could be a good fit for online advertisers, if not doctors.

Microsoft Makes a New Push Into Smaller A.I. Systems

Microsoft Makes a New Push Into Smaller A.I. Systems

Microsoft says its smallest model, which can fit on a smartphone and wouldn’t need to be connected to the internet to work, is nearly as good as OpenAI’s GPT-3.5. A Microsoft exec suggested this less expensive model could be a good fit for online advertisers, if not doctors.

Business
wake up!
19h
Morning earnings report
$127

The average bitcoin-transaction fee hit an all-time high of $127 on Friday.

The temporary spike came as the halving cut miner rewards and traders forked over huge sums of BTC (skewing the average) to be included in the first post-halving block.

Adding fuel to the fee fire was the launch of Runes, a new protocol that lets developers create memecoins on top of the bitcoin blockchain. The debut was so popular that fees popped as traders fought for limited block space.

23h

Amazon adds shoppable live TV to Prime Video, as more Americans buy while they binge

Nia Warfield
Read

Your inbox is ready

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

23h

Warehouse whale Prologis cuts its outlook as retailers embrace “just in time” storage

Max Knoblauch
Read
Business
Reporting soon
4/22/24
Ahead of tech earnings
Sic transit gloria mundi
4/22/24

Chants & chill

Sophia Smith Galer
One Nun Praying Near Group of Nuns
Jack Raines
4/22/24
Nvidia had the 2nd-largest stock decline, ever

Where does Nvidia's recent plunge rank in the steepest stock crashes?

US-TECHNOLOGY-AI-HUANG
2024-04-22-1-america-importing-less-from-china

The US now buys more goods from Mexico than from China

Chinese imports are down as companies begin to "nearshore" in Mexico

Tom Jones, David Crowther4/22/24
2024-04-22-paramount-global-site

Multiple bidders want to buy Paramount Global’s sprawling media assets

William Coulman, David Crowther4/22/24
Junk

How much of the world’s plastic is recycled? Only a fraction

Landfills still account for the majority of plastic disposal

Millie Giles, David Crowther4/22/24
Markets
Matt Phillips
4/22/24

Stock market gains for 2024 cut by more than half

All of the sudden, the stock market seems to be running out of steam.

There’s no big mystery here. War in the Mideast has pushed up oil prices, which will help keep inflation elevated. And annoyingly high price increases in March have already pushed the June Fed rate cuts the market was banking on farther into the uncertain future.

All that’s added up to higher interest rates and lower stock prices.

Tech
Rani Molla
4/22/24

AI needs so much electricity that tech companies are getting into the energy business

To accommodate tech companies’ pivots to artificial intelligence, tech companies are increasingly investing in ways to power AI’s immense electricity needs.

Most recently, OpenAI CEO Sam Altman invested in Exowatt, a company using solar power to feed data centers, according to the Wall Street Journal.

That’s on the heals of OpenAI partner, Microsoft, working on getting approval for nuclear energy to help power its AI operations. Last year Amazon, which is a major investor in AI company Anthropic, said it invested in more than 100 renewable energy projects, making it the “world’s largest corporate purchaser of renewable energy for the fourth year in a row.”

This can all feel like a bit of spin, as these tech companies move the narrative toward their use of green energy rather than questioning whether they truly need to be consuming so much energy in the first place.

Exclusive | Sam Altman Invests in Energy Startup Focused on AI Data Centers

Exclusive | Sam Altman Invests in Energy Startup Focused on AI Data Centers

That’s on the heals of OpenAI partner, Microsoft, working on getting approval for nuclear energy to help power its AI operations. Last year Amazon, which is a major investor in AI company Anthropic, said it invested in more than 100 renewable energy projects, making it the “world’s largest corporate purchaser of renewable energy for the fourth year in a row.”

This can all feel like a bit of spin, as these tech companies move the narrative toward their use of green energy rather than questioning whether they truly need to be consuming so much energy in the first place.

Super Bowl Winning Team Head Coach and MVP Press Conference

Private equity is eating sports

Private equity firms may soon own your favorite football franchise.

Jack Raines4/22/24
Karma

The front page evolves

ByRyanBroderick

MonApr 222024