Broker or broken

MARKETS

• U.S. markets: Can’t tell if we’re watching the stock market or the 1971–74 UCLA Bruins. Stocks are on a four-day winning streak, fueled by earnings and news that China will chop in half tariffs on $75 billion in U.S. imports.
• U.S. economy: The January jobs report comes out this morning. Interesting note, per CNN Business: It’ll be the first Bureau of Labor Statistics jobs report to include same-sex couples in its count of married workers.

REAL ESTATE

NYC Is Feeling StreetUneasy

New York City has about 5.6 million renters, and if you gather them all in one room, you’ll end up with roughly 5.6 million complaints and 0.5 nice things to say.

As one of the most expensive rental markets in the world, the city’s real estate “quirks”—like skyscraper-high broker fees—have angered renters for years. But that might be changing.

Broker or broken

Last year, state regulators passed renter protections that capped application fees at $20 and security deposits at one month’s rent. On Tuesday night, they clarified those rules and casually slipped in an announcement that renters can no longer be charged broker fees, the NYT reports.

What are those? Brokers manage apartment listings, viewing appointments, and leases. They have almighty leverage over NYC renters because 1) inventory is so tight and 2) many landlords choose not to list units directly or deal with annoying prospective tenants. For their services, brokers collect fees of up to 15% of the annual lease.

• For context, in December 2019 average monthly rent was $4,412 in Manhattan, $3,410 in Brooklyn, and $3,022 in Queens, according to Douglas Elliman.

Brokers can still collect fees, but they’ll have to pry it from landlords.

More controversial than a cinnamon and lox bagel?

Proponents of the change say it will protect tenants, lower barriers to housing, and reduce NYC's homeless population.

But critics—otherwise known as the real estate industry—have other thoughts. They claim the rule will disproportionately hurt small building owners who rely on brokers and upend a system that sustains 25,000+ licensed brokers.

Others predict the fees will be passed down to tenants by landlords raising prices. Around 1 million apartments in the city are rent-regulated, but 900,000+ aren’t—and those units could potentially face higher rents.

Looking ahead...the Real Estate Board of New York threatened to challenge the rule on legal grounds.

IPO

Casper Valuation Tosses and Turns

Yesterday, mattress-by-mail company Casper Sleep went public on the New York Stock Exchange under the ticker symbol CSPR. Shares gained 12.5% on the day, but that's like scoring a goal when you're already down 6–0.

• Casper opened for trading at $14.50 per share when it had initially aimed to go public at a range of $17-$19.
• In 2019, private investors gave Casper a valuation of $1.1 billion. It began yesterday with a valuation of less than $600 million.

Big picture: Hotshot startups are answering for years of bloated private valuations. Last year’s crop of IPOs featured a series of massive, unprofitable companies (see: Uber, Lyft, Peloton) that tripped and fell when subjected to public scrutiny.

Bottom line: The disrupter may become the disrupted—Casper isn’t just competing with Big Mattress anymore. Dozens of upstarts like Purple and Walmart’s Allswell are now vying for a spot in the “sleep economy.”

INVESTING

SoftBank Has a Secret Life Coach

Yesterday, we learned three new pieces of info about the activist hedge fund Elliott Management, courtesy of the WSJ.

1. Elliott has invested over $2.5 billion in Japanese conglomerate SoftBank.
2. Elliott ratcheted up that investment recently.
3. Elliott has politely weighed in on SoftBank’s portfolio and governance decisions.

Elliott’s advice to SoftBank

For one, buy back stock. Elliott recommended repurchasing $10–$20 billion to close the not-tiny gap between SoftBank’s market value and the value of its stakes in major players like Chinese internet giant Alibaba, Uber, and Slack.

Second, Elliott is reportedly pushing SoftBank to improve transparency and investment decisions at its controversial $100 billion Vision Fund.

Zoom out: Elliott is known for bossing bosses around. Founded and owned by billionaire Paul Singer, Elliott isn’t shy about telling the Jack Dorseys of the world how to tie their Allbirds. In November, SoftBank took the biggest quarterly loss in its history, driven mainly by a $4.7 billion writedown on one of its biggest bets—WeWork.

TECH

Six More Years Until Google Maps Can Search for "Bars"

Tomorrow night Google Maps will celebrate 15 years of helping roadtrippers find their way to the nearest public bathroom.

Google is marking the occasion with a fresh new icon and fancy features, including:

• Prime in-app real estate for your saved locations (more than 6.5 billion have been staked out already)
• A curated feed by local experts and foodies showing users what’s #trending
• More opportunities for crowdsourced information, including how accessible and sweaty that subway ride will be

Google Maps made some other big changes in recent months, including adding Incognito Mode (after the app received flak for storing and sharing user data) and finally bringing over one of the most popular features from Google’s other navigation app Waze: highlighting speed traps.

Bottom line: Finding a paper map in your grandparents’ Mercury sedan is like pulling out a 20th century Rosetta stone. Mobile apps like Google’s have helped billions of people travel more efficiently.

+ While we’re here: Google unveiled Street View in 2007 and put in 110% effort making sure every nook and cranny on Earth made it in there.

QUIZ

State of the Quiz

More volatile than Tesla stock. Counts faster than Iowa. Could really use a MacBook Pro. It's the Brew's Weekly News Quiz.

1. Real estate vet Sandeep Mathrani is taking over as CEO of which company formerly led by a not-real estate vet?

2. In 83 days, Disney+’s user base grew from zero to 28.6 million. Is that greater or less than 35% of Netflix’s user base?

3. Fill in the blank: The hedge fund Pershing Square is holding on to its investment in ________ and is encouraged by the restaurant chain’s “clear plan to drive continued progress.”

4. Which fast food chain is “hand-cracking fresh eggs” for a new breakfast menu?

• In-N-Out Burger
• Wendy’s
• Bojangles’
• Burger King

5. The “Las Vegas of Asia” is shutting down casinos for two weeks because of the coronavirus outbreak. What’s the semiautonomous territory called?

Answers: 1. WeWork 2. Less than; Disney+’s is 17% the size of Netflix’s 3. Chipotle 4. Wendy’s 5. Macau

WHAT ELSE IS BREWING

• Uber heyyyyy. The ridesharing company reported a narrower loss than expected in Q4 2019 and said its goal is to run an operating profit by 2021.
• Twitter posted quarterly revenue of >$1 billion for the first time. Shares rose over 15%.
• Dr. Li Wenliang, the ophthalmologist who was hushed by Chinese local police for sounding the alarm on the coronavirus, died from the infection today.
• SpaceX is planning to spin out and IPO Starlink, its satellite internet unit.
• Related: British telecom company OneWeb launched 34 satellites into space this morning.
• Boeing is fixing another software flaw in the grounded 737 Max, but the timeline for the aircraft's return shouldn’t change.

FRIDAY PUZZLE

In today’s Friday Puzzle, we’re diving into the recesses of Reddit for wordplay known as a “Word Avalanche.” It is defined as a “highly contrived sentence, where many syllable sounds are repeated via the use of wordplay and/or puns.”

• Here’s an example clue: Rarely do fathers peddle stupid trinkets.
• Here’s an example answer: Seldom do dads sell dumb doodads.

Let’s play.

1. The explosive dinosaur may perish. He lacks strength.
2. People from Northern Europe preserved a bird inside a tin.
3. I bet my sister my breakfast that the skin on my toes doesn’t duplicate its DNA.
4. Will of Bel Air, we now see you as a ridiculous genie. *Writes critique* “That trailer was terrible!”

Keep scrolling for the answers.

FRIDAY PUZZLE ANSWER

1. Dynamite dino might die: No might.
2. Scandinavians canned an avian.
3. Might owe sis my toast if my toes did mitosis.
4. Prince, we view a lad in blue. Prints review “Aladdin blew!”

Thanks to Reddit users CAdamH, BreakingBrad83, lightquis, and CurtisMark for those hilarious word avalanches.