Walmart changes name to Walmart

Quote of the Day

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Market Snapshot

• The S&P stumbled through its fourth straight loss, dragged down by energy stocks.
• The Nasdaq regained some steam with a push from Facebook.
• The Nikkei and Hang Seng fell 2% from mining and technology stocks, respectively.
• Somebody stop Bitcoin. It topped $14,000 in midday trading.

Steinhoff Pads More Than Its Mattresses

Steinhoff may be the largest consumer goods retailer you’ve never heard of, but now it’s in the headlines following a disastrous triple whammy: it postponed releasing its yearly financial statements, its CEO resigned, and its stock fell a breathtaking 63%.

But, that comes with the territory when prosecutors announce an investigation into “accounting irregularities,” a polite way of saying you probably cooked your books.

It’s a pretty big book of business

From its HQ in South Africa, Steinhoff pulls the strings on a vast retail empire of more than 6,500 stores across 30 countries. And the story of how it got there is one of conquest. Like a savvy Risk player, the “African IKEA” ransacked the European continent, snatching up smaller players in the U.K. (discount retailer Poundland) and France (furniture chain Conforama) the last several years.

Not satisfied with those spoils of victory, Steinhoff made its way to the U.S. in 2016, when it bought Mattress Firm—owner of Sleepy’s—for $2.4 billion. In all, it was an M&A sprint even Google would be proud of.

But the good times...they never last

German investigators (Steinhoff is listed on Frankfurt’s exchange) are looking into whether it artificially boosted its top line.

How would one go about this? You didn’t hear it from us (but you might have heard it from Enron), sell intangible assets—patents, trademarks, copyrights—to your subsidiaries...disguised as third-parties. Prosecutors say these contracts were worth in the triple-digit millions of euros.

This revelation led to the resignation of veteran CEO Markus Jooste and a stock chart that looks like Bitcoin’s...flipped over.

So who’s putting out this mattress fire?

Christo Wiese, Steinhoff’s uber-wealthy chairman and largest shareholder (he was worth $4.3 billion...not anymore). In order to figure out what accounted for the “accounting irregularities,” he’s following the old corporate adage:

“When it doubt, hire PwC to clean up your mess.”

A Name Changer for Walmart

In the biggest name change since Metta World Peace, “Wal-Mart Stores Inc.” (-0.57%) will soon be called just “Walmart Inc.” Wait, that wasn’t the name the entire time?

Apparently not.

The decision to drop “Stores” from its brand goes hand-in-hand with Walmart’s swan-dive into e-commerce. As CEO Doug McMillon puts it, “[we must follow] our growing presence as a retailer, serving customers no matter how they choose to shop.”

And it’s been a pretty, pretty big shift to say the least.

We’re talking acquisitions of e-tailer Jet.com for $3 billion and Bonobos for $310 million, two-day delivery, and a slowdown from opening hundreds of stores each year to just a dozen.

So far it’s paid off. E-commerce sales are up 50% from last year, compared to the industry average of 13%. But if Walmart really wants people to buy into the name change, it’s got room to grow.

Brick-and-mortar retail still accounts for 95% of its top line.

HQ Quizzes Investors, "So What Are We Worth?"

If you haven’t started playing yet, you might be the only one. The daily live trivia game HQ has overtaken offices, classrooms, and cafes like a virus. And now...it’s hoping to raise $15-20 million at a $100 million valuation (and it's getting looks from every major VC in the Valley).

Just two months ago—when it first launched—HQ was worth $0. But its smooth-talking host Scott Rogowski has charmed his way into the hearts (and brains) of nearly 315,000 live players tuning in to play daily at 3 pm and 9 pm.

Well, that and the fact that anyone who gets all 12 questions correctly splits $1,000 in prize money.

The brainiacs behind the sensation, CEO Rus Yusupov and Colin Kroll, are familiar with this rags to riches formula. The two founded six-second video app Vine in June 2012, which only three months later sold to Twitter for $30 million.

So if history repeats itself, HQ might be acquired before any investment gets through. Either way, we’ll be playing at 3 pm today. Just look for “Morning Brew” in the chat section among the sea of “dilly dilly’s!”

UnitedHealth Ensures a Future Beyond Insurance

UnitedHealth (-0.07%) grew some stones and paid $4.9 billion for kidney-care provider DaVita’s (+13.57%) physician group.

And while the deal is overshadowed by this week’s CVS-Aetna mega-merger, it’s nothing to turn and cough at. With the acquisition, UnitedHealth will round out its roster of more than 30,000 physicians with 2,200 more medical professionals and 15,000 affiliates.

If you’re wondering what the country’s largest health insurer is doing providing medical care, you haven’t been following UnitedHealth. Its Optum medical services division (covering everything non-insurance related) has had a busy ’17. Through three four acquisitions, Optum now operates in 60 markets with outpatient clinics, surgery centers, and physician practices.

Its ultimate goal is to provide ⅔ of the entire U.S. population with primary care services.

As for DaVita, it was more than happy to part ways with its medical group. Though it brought in $4.11 billion last year (30% of total revenue), payments from Medicare slowed to a trickle...resulting in an operating loss of $5 million.

What Else Is Happening…

• Home Depot (-1.12%) is coming for your shares, announcing a $15 billion buyback program.
• You can now stream Amazon Prime Video on Apple TV in over 100 countries.
• If he can secure a deal with 21st Century Fox (+0.67%), Disney (-1.54%) CEO Bob Iger can expect a new contract.
• Not to be outdone by Iger, Roger Goodell also signed a five-year extension worth $200 million to remain commissioner of the NFL.

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

The Backburner: Bitcoin Billionaires

Not all Bitcoin success stories come from some tween in his parents’ basement who “could just tell this technology had potential.”

In fact, there are two who stand out above all else. The Winklevoss twins.

Rejected from Zuckerberg's inner circle with a payday of $65 million, Tyler and Cam threw $11 million on the crypto in 2013. And as of a few days ago, they are now worth over $1 billion. That’s right, Tyler and Cam are the world’s first Bitcoin billionaires.

But their foray into Bitcoin goes past any blind bets. The Winklevii were so hopped up on the tech’s potential, they founded their own trading exchange, Gemini, and were the major advocates behind Bitcoin ETFs and futures contracts.

You know...those futures contracts that are being listed by the country’s largest derivatives exchanges (CBOE and CME) in the next two weeks?

Impressive, yes. But for the Winklevii, they’re still $68 billion away from catching Zuck.

The Breakroom

Question of the Day

Sally and Anna took turns multiplying numbers. Sally picked the number four. Anna multiplied that by 4 to get 16. Sally multiplied that by 4 to get 64. Anna multiplied that by 4 to get 256.

After going back and forth several times, one of them got the number 1,048,576. Who came up with that number, Sally or Anna?

(Answer located at the bottom of newsletter)

Business Trivia

Wal-Mart Stores officially changing its name to Walmart has got us thinking about other companies changing their names. Can you name the previous corporate names of the following companies?

Alphabet, Tapestry, Mondelez International, Altria

(Answer located at the bottom of newsletter)

Stat of the Day

50%—PS4 consoles sent in for repair in New York that are infested with cockroaches. They’ve been taking EA Sports’ slogan just a little too seriously.

Breakroom Answers

Question of the Day: Anna (Explanation)

Business Trivia: Google (Alphabet), Coach (Tapestry), Kraft Foods (Mondelez International), Philip Morris (Altria)