Tesla's a Big Wig with the Big Rigs

Quote of the Day

#1 Jeff Bezos: Bezos won 2017 — and set Amazon up to dominate the next decade. #recode100”

Market Snapshot

• U.S. jobless claims fall to 5-week low.
• All three major U.S. indexes rose slightly, as investors anticipate tax reform.
• Bitcoin skyrocketed past 19,000 Thursday morning, before retreating off its highs.
• Gold hit a 4-month low.

SoftBank House Hunts with Compass

When we hadn’t heard a peep from Masayoshi Son for over two weeks, we knew something had to be up...

…and that appears to be the case, as SoftBank’s Vision Fund invested $450 million in real estate tech company Compass. The last 30 days have been very kind to Compass, which also raised $100 million from Fidelity four weeks ago. It’s now valued at $2.2 billion.

$2.2 billion for what?

Even in 2012, Compass (or as it was called then, Urban Compass) had stars in its eyes. Early backers like Goldman Sachs and AmEx CEO Kenneth Chenault invested $8 million...one of the largest seed rounds ever at the time.

Maybe that’s because the founders themselves are a dynamic duo: Robert Reffkin, who was chief of staff to Gary Cohn at Goldman Sachs, and Ori Allon, a serial entrepreneur who sold startups to Google and Twitter.

And this time, they came up with...

Compass, a platform helping connect buyers and sellers of real estate. If that sounds familiar, it is. With Zillow, Homes.com, Trulia, Redfin, and others helping you find that exposed brick walk-up of your dreams, it’s a crowded space. And with transaction volume in the U.S. real estate market reaching trillions of dollars, we’re not surprised to see startups rubbing shoulders.

So what does Masa see in Compass?

A gorgeous platform practically overflowing with data. Literally, data might ooze from your phone onto your hand. With Compass, you’ll find an innovative interactive search tool, Collections (the “Pinterest of real estate”), which attempts to help you and your broker communicate more efficiently.

Compass is the real estate equivalent of the iPhone, which carefully curates your experience from opening the package through sending your first “A[?] love you” text.

So what to do with $450 million?

Three words: expansion, expansion, expansion. While Compass has staked a claim in 11 U.S. cities, it’s got global ambitions. And given it is set to do $350 million in annual revenue (from 16,000 transactions), Compass has a war chest to take on the road.

For Allon, one thing matters: “Really aggressive growth.”

GE Powers Down Its Power Division

Everyone knew this was coming, but it still stings: GE is cutting 12,000 jobs in its power unit, or about 20% of the workforce.

Given that it’s the conglomerate’s largest division, generating $27 billion in revenue last year, the move is especially painful. And GE’s not the only one singing a mournful power ballad. In November, Siemens’ (the GE of Europe) also laid off 6,900 workers in its own power division.

The energy sector just ain’t what it used to be. The coal-fired plants fueling GE’s dominance are going out of style in favor of renewables. So much so that 89% of more than 1,000 companies surveyed had established carbon emissions targets (read: less coal, more solar).

Soft demand drove CEO John Flannery to trim GE Power, but he’s not stopping there. His goal to deflate a bloated GE started with slashing the dividend in half and will continue until $3.5 billion is saved over the next two years.

A good start, but probably not enough to rescue GE from earning the dubious distinction of “dog of the Dow” for 2017.

Is Tesla Looking Like a Big Wig With New Big Rig Orders?

Elon Musk went from awkward, hair-thinning, Yellow-page service provider at Zip2 to All-American trucker faster than you could crack open that next Bud Light. And Anheuser-Busch was impressed, pre-ordering 40 new Tesla Semis to optimize local operations.

America’s favorite beer company has been investing in ways to lower its annual $120 million fuel spend 30% by 2025. And it sees Musk’s 500-mile range electric semi as the perfect solution to its 150 to 200-mile deliveries.

Walmart must’ve felt the same way, marking itself down for 15 trucks right after the big unveiling.

But not everyone’s cozying up to Musk. Tesla’s facing some obstacles with long-distance logistics suppliers concerned about battery weight and vehicle recharge time.

Actually...they’re not even convinced there are enough charging stations to begin with.

Tesla’s no stranger to bumps and bruises (looking at you, Model 3), so this shouldn’t be too much of a setback. But even with a number of new orders piling in, that’s still a fraction of the 300,000 big rigs ordered industry-wide each year.

Walmart Jumps into Meal Kit Madness

First a new name. Now a new menu.

The largest retailer on the planet has begun offering meal kits to its 260 million customers.

And the move comes at a bad time for meals-in-a-box.

Competition is tight as companies fight for a slice of a $2 billion pie, while market leaders like Blue Apron (whose stock price is down ~70% since IPO) struggle to make the economics of meal services work.

But, Walmart's not dumb.

Rather than dive in blind, it’s partnering with meal subscription brands including Takeout Kit and Home Chef to have them provide meals and fulfill orders.

Brand partners get access to Walmart’s massive customer base, while Walmart earns a commission from meal kit sales and explores another vertical in the ever-important grocery business (56% of global sales).

If this goes well for Walmart, meal kits become a question of when, not if.

What Else Is Happening…

• Save the date: AT&T-Time Warner trial to kick off on March 19th.
• Saudi Arabia’s Crown Prince coughed up a record $450.3 million for Leonardo da Vinci’s Salvator Mundi at a November auction.
• Ford will produce electric vehicles in Mexico, while converting its Michigan assembly plant to a hub for driverless vehicles.
• Instagram is testing a standalone messaging app called Direct.

Economic Calendar

• Monday     Earnings: No Events

                    Economic Events: Factory Orders (+)

• Tuesday    Earnings: Dave & Buster’s (+), Lands’ End (+)

                  Economic Events: International Trade (-), ISM Non-Mfg Index (-)

• Wednesday    Earnings: Broadcom (+), Lululemon (+)

                        Economic Events: ADP Employment Report (+), Petroleum Status (+/-)

• Thursday   Earnings: Cloudera (+)

                   Economic Events: Jobless Claims (+)

• Friday       Earnings: No Events

                 Economic Events: Consumer Sentiment

Buy/Sell/Hold

Buy: Bitcoin

Is there any other option? Just when you think the cryptocurrency has plateaued (whether a hack, fear of regulation, etc.) it hits another ridiculous milestone. Now, with the country’s largest derivatives exchanges signing off on Bitcoin futures, there’s a heightened sense of legitimacy. Just think about this for a second: as of 12/6, Bitcoin’s market cap was higher than 97% of the S&P 500’s components.

Sell: Bitcoin

Sell it, sell it fast! By the time you read this, Bitcoin will be chilling at 20k and you’ll start hearing whispers of tulip mania—an iconic bubble in 17th century Netherlands, where people were clawing off arms and legs to buy tulip bulbs. The reason? Just because everyone else was. You can guess what happened next…(spoiler: crash).

Hold: Bitcoin

“Tulip bubble shmulip bubble…I ain’t cashin this in even if it means giving up my left kidney. You only need one of those, anyways. Everyone said it wasn’t hitting 6K...then everyone said it wasn’t hitting 10k. Bitcoin’s goin’ all the way to 100k and I’m buyin’ myself a baby kangaroo.”

(Our imagination of everyone holding Bitcoin right now)

The Breakroom

Question of the Day

Every answer is a two-word phrase, in which the first word is an adjective ending in -y, and the second word sounds like the first one without that -y.

Ex. Mideast ruler who trembles —> SHAKY SHEIK

1. Flying mammal that's nuts
2. Numerous fellows
3. Nobleman who arrives prematurely
4. Wacky singer Malik formerly of One Direction

(Answer located at the bottom of newsletter)

Rank by Net Worth

Trump Administration officials: Betsy DeVos, Andy Puzder, Steven Mnuchin, Rex Tillerson

(Answer located at the bottom of newsletter)

Stat of the Day

3,641,308—Retweets of Carter Wilkinson trying to earn a year’s worth of free chicken nuggets from Wendy’s, which required him to get 18 million retweets. He came up just a bit short, but it still was the most retweeted tweet of 2017.

Breakroom Answers

Question of the Day: Flying mammal that's nuts [batty bat], Numerous fellows [many men], Nobleman who arrives prematurely [early earl], Wacky singer Malik formerly of One Direction [zany Zayn]

Rank by Net Worth: Betsy DeVos ($1.25B), Rex Tillerson ($325M), Steven Mnuchin ($300M), Andy Puzder ($45M)