Wow!
MARKETS
- U.S. markets: They took promising China trade news and ran with it. The S&P is one day away from its best first quarter performance since 1998.
- Housing: The average 30-year fixed rate mortgage fell from 4.28% to 4.06% this week. That’s the steepest weekly drop in a decade.
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RIDE-HAILING
And...We're Off
It may not be in your Siri Suggestions. Or even on your phone’s front page. But today, when Lyft goes public, it’ll at long last overshadow perpetual rival Uber by hitting the public markets first.
Lyft, pricing its IPO at $72 a share and boasting a value of more than $24 billion, is the fifth-largest public offering since the financial crisis, and second only to Facebook’s 2012 offering among U.S. tech startups. Uber’s IPO? Still in the paperwork phase.
Let’s run the numbers
Rides are good. Lyft gave 18.6 million people at least one ride in Q4, up from 6.6 million in late 2016. It has a 39% share of the U.S. ride-hailing market, up from 22% in 2016.
But losses are worse. Total costs and expenses hit $3.1 billion in 2018, up 77% annually. And Lyft reported a loss of $911 million last year, which grew from $688 million a year earlier.
- That means Lyft will have lost more than any other U.S. startup in the 12 months leading up to its IPO, per S&P Global Market Intelligence.
But Lyft’s (standing-room only) pitch is about trimming costs. And it’s highlighting that while losses are growing...you should see its revenue. The company reported sales that more than doubled last year to $2.16 billion.
Lyft is changing the tides
For years, stakes in some of this country’s most successful startups have been open only to the VC crowd. When Lyft lists shares on the Nasdaq today, it’ll open the floodgates to anyone with disposable income and opposable thumbs.
And more high-value tech firms could follow. Uber, Slack, Pinterest, and Postmates have all filed SEC docs. Palantir, Airbnb, and Peloton could do the same later this year. Many expect 2019 to be the biggest year on record by dollars raised.
BANKING
Tim Sloan Starts His Condo Search
Tim Sloan is retiring from his post as CEO of Wells Fargo. As a proper send-off, the bank’s shares jumped nearly 3% after hours yesterday.
Sloan took the CEO job in October 2016, tasked with cleaning up a number of scandals at Wells Fargo that were only just crescendoing. It started with employees opening millions of potentially fake accounts to meet sales goals, but the “pattern of consumer abuses,” as D.C. lawmakers called it a few weeks back, continued from there.
Sloan’s retirement comes as a surprise (a welcome one for Sen. Elizabeth Warren, likely an unwelcome one for Warren Buffett).
- This month, Wells Fargo disclosed that Sloan received a 5% raise to $18.4 million in 2018.
- And when reports surfaced that the bank was shopping for a new CEO at Goldman Sachs, Wells Fargo issued strong reports that the board had Sloan’s back.
- C. Allen Parker, the bank's general counsel, will become interim CEO (C. EO?).
+ While we’re here: Morgan Stanley’s No. 2 is also retiring. COO Colm Kelleher will leave MS this summer after 30 years at the bank.
TELECOM
1-800-Okay You're Definitely Not a Human
Wouldn’t be all that surprising if Google’s most-searched term this week was “robocalls.”
1) Verizon said it will help users block robocalls...for a price. The biggest cell phone carrier in the U.S. has a new Call Filter app that offers “enhanced call protection” for $2.99/month, as well as a free lower-tier service.
2) The Federal Communications Commission has some calls to make itself. Telecom watchdogs in the U.S. have levied financial penalties of $208.4 million against robocalling violators since 2015. The trouble is in the follow-through. So far, per the WSJ, they've collected $6,790.
- Reminds us of the Seinfeld joke: They know how to take the reservation...but not how to hold the reservation.
3) The Federal Trade Commission might have better luck. It announced this week that it reached settlements (complete with fines of up to $3 million) with four operations responsible for billions of illegal robocalls. FYI, analysts predicted last fall that nearly half of all mobile calls this year would be scams.
AVIATION
Collapsed Airlines That Make You Go...WOW
Facing insurmountable financial odds, Iceland’s WOW Air collapsed, canceled all flights, and left thousands of passengers stranded across two continents.
WOW is (was?) a low-cost, privately held airline known for zooming you across the Atlantic for less than a night out in Reykjavík.
- The airline had been working to secure its long-term financial future for several months.
- After a potential investor pulled out of a deal, WOW said it was in talks to be bought by rival Icelandair earlier this week...but the deal never came through, per the FT.
- The collapse shows that financial sustainability remains tough for budget airlines.
Yesterday was the most Monday Thursday ever for WOW travelers. The airline advised passengers with scheduled flights to seek “rescue fares” from other airlines, or request refunds through their credit card companies or travel insurance.
So...Twitter did what Twitter does best: absolutely drag the company.
ECONOMY
That’s Not So Raven
Economists like making predictions. They’re constantly using the yield curve, stock prices, even lipstick to forecast the vicissitudes (impressed?) of the global economy. But...what if they’re not any good at it?
Follow Bloomberg here. Of the 469 downturns since 1988, the International Monetary Fund predicted four (4) in the spring of the preceding year, economist Andrew Bridgen found.
So when we tell you: The National Association for Business Economics found 42% of its members predict a U.S. recession beginning next year, 10% this year, and 25% in 2021...
Remember that the IMF isn’t the only group of economists with a losing record. A recent working paper found that of the 153 recessions in 63 countries from 1992-2014, only five (5) were predicted by a consensus of private sector economists in the spring of the preceding year.
Bottom line: Economists can keep trying, but there’s only one person we trust to predict the future. Someone get Gregg on the line.
QUIZ
We Don’t Quiz and Tell
More clairvoyant than Gregg. Cozier than the FAA and Boeing. Looking for more awesome writers (seriously, we’re hiring). It’s the Brew’s weekly news quiz.
1. Apple had its big “services” event on Monday. How many of the new/revamped products can you name?
2. What company am I? 1) I’m based in Dubai 2) I refer to my drivers as “captains” and 3) I agreed to be acquired by Uber this week for $3.1 billion.
3. A vote to legalize recreational marijuana in which state was called off this week?
4. We’ll name a country. You have to decide whether it’s Scandinavian, Nordic, Baltic, or a combo.
- Iceland
- Denmark
- Estonia
- Sweden
5. How do you pronounce “gif,” according to Dictionary.com?
Answers: 1) Apple TV+, Apple TV Channels, Apple Card, Apple News+, Apple Arcade 2) Careem 3) New Jersey 4) Iceland = Nordic, Denmark = Scandinavian & Nordic, Estonia = Baltic, Sweden = Scandinavian & Nordic 5) With a soft “g”
WHAT ELSE IS BREWING
- Facebook (-0.19%) has been charged by HUD with violating fair housing laws by allowing real estate firms to limit who sees their ads on FB’s platforms.
- Disney (+0.39%) will ban smoking and vaping inside its U.S. theme parks starting May 1.
- Amazon (+0.44%) is keeping Austin techy. It plans to add 800 jobs at its campus there as part of its big Texas expansion.
- JPMorgan (+1.13%) is reportedly cutting hundreds of jobs in its asset and wealth management division.
- Nomura (-1.10%) is also making cuts, but those will be in the dozens and in its trading and investment banking units.
BREAKROOM
Friday Puzzle
With all the robocalls you’ve been getting...you probably know your phone’s keypad pretty well by now. So here’s how this puzzle works: We’ll give you a telephone number, and you’ll have to decode which famous person it belongs to. We’ll give you a hint, too.
Want an example? 532-2974 (politician) = Jeb Bush. The letters match the numbers on the keypad.
- 846-2665 (business executive)
- 239-6623 (musical artist)
- 844-379-6637 (athlete)
- 366-292-8766 (actress and activist)
- 526-328-7836 (author)
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Breakroom Answers
Friday Puzzle
1. Tim Cook 2. Beyonce 3. Tiger Woods 4. Emma Watson 5. Jane Austen (our inspiration)
Occaecati facilis id earum veniam possimus quos. Cumque qui pariatur nemo corrupti culpa. Sequi qui dignissimos nihil voluptas deserunt non.
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