WeOut

MARKETS

  • U.S. markets: Stocks posted a three-day losing streak, but at least it’s Friday.
  • World: Israeli Prime Minister Benjamin Netanyahu was indicted on charges related to three corruption cases yesterday, one more than the government's two failed attempts at creating a coalition this year.

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AUTO

I Am Cybertruck. I Come in Peace.

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When Tesla CEO Elon Musk introduced his company’s first electric pickup truck in Los Angeles yesterday, he said, “It doesn’t look like anything else.”

He got that right. The Cybertruck is Tesla’s sixth vehicle and definitely its most bizarre...but so was the presentation. When Musk asked Chief Designer Franz von Holzhausen to throw a metal ball at the truck to demonstrate its toughness, Franz shattered a window. Twice.

Well, the Cybertruck has nowhere to go but up. The starting price is $39,900 and it can go zero to 60 in about 2.9 seconds, according to Musk. The truck has three battery ranges, the top of which can last 500+ miles per charge.

The backstory: Musk outdid himself with the pre-launch hype.

  • Yesterday he tweeted, “Tesla Cybertruck (pressurized edition) will be official truck of Mars.”
  • “I think the Tesla side of the truck is our best product ever,” he told investors on the company’s last earnings call.

So why get into pickups?

What if we told you that the three top-selling vehicles in the U.S. are the Ford F-150, Chevy Silverado, and Ram 1500.

  • Last year, full-size truck sales grew to almost 2.5 million units—the rest of the new car market was basically flat, reports The Drive.
  • Full-size truck owners are the most loyal out of any vehicle category.
  • Pickups and SUVs currently account for seven out of 10 U.S. vehicle sales.

And you already probably knew this in your gut, but people buy trucks even when they don’t really need them. 75% of truck owners tow something one time a year or less, according to Strategic Vision data cited by The Drive.

Sounds like an opportunity for Tesla, but there’s still product-market fit to worry about. After all, making an electric pickup truck is like topping an Impossible Burger with bacon—who’s your target customer?

  • Only 4% of truck buyers say they’d pay extra for a more fuel efficient vehicle.

Bottom line: Musk has been able to change the conversation around electric vehicles before. This could be his biggest challenge yet.

BROKERAGE

Schwab Brokers TD Ameritrade Deal

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Brokerage power forward Charles Schwab is in talks to buy small forward TD Ameritrade, CNBC first reported yesterday.

  • A deal would cost Schwab over $25 billion, per the FT.

Zoom out: Free stock trading platforms like Robinhood and Fed Chair Jerome Powell’s rate-slashing rampage have created last-cup-in-beer-pong pressure for the brokerage industry.

  • Last month, Schwab pulled the nuclear option and eliminated commissions.
  • TD Ameritrade did the same right after—but it's poised to take a much bigger hit. 36% of TD's 2018 net revenue came from commissions vs. Schwab’s 7%.

Consolidation might raise some D.C. eyebrows over antitrust. Together, the two firms claim up to 70% of the registered investment advisor custody market, per KBW data cited by Reuters. The combined company would have around $5 trillion in assets.

Looking ahead...industry disruption has forced firms to shift focus from trading to managing those customer assets. In 2018, half of Schwab’s $10+ billion in revenue came from interest earned.

STARTUP

WeOut

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WeWork is laying off 2,400 employees, nearly 20% of its global workforce.

What had been everyone’s favorite tragicomedy is now just a disaster. WeWork swung for an IPO in September but missed badly—investors decided that huge losses, a lack of focus, and sketchy corporate governance presented risks they weren’t willing to take.

  • Then, WeWork’s valuation sank from $47 billion to ~$8 billion following a bailout from the Japanese conglomerate SoftBank, which had already committed more than $10 billion to WeWork.

Big picture: This round of layoffs will inevitably be compared to the departure of cofounder Adam Neumann, who stepped down with an exit package worth around $1 billion.

  • In a letter to management earlier this month, around 150 employees slammed Neumann. They wrote, “We don’t want to be defined by the scandals, the corruption, and the greed exhibited by the company’s leadership.”

Bottom line: WeWork needs a drastic overhaul if it wants another crack at an IPO. It lost $1.25 billion last quarter, more than double its losses in Q3 2018.

SOCIAL MEDIA

Google Doesn’t Need Your Political Party Anyway

Google officially joined the “at least we’re doing more than Facebook” club and announced adjustments to political ad targeting this week.

Advertisers today can tailor ads to individuals’ political leanings (left, right, independent, Never Brewers). Moving forward, targeting categories are broadening to age, gender, postal code, and your internet browsing history.

  • Changes roll out in the U.K. in the next week, the EU by year’s end, and everywhere else Jan. 6.
  • Google said “demonstrably false claims” that could subvert electoral processes are still prohibited.

The rest of the pack

Last Friday, Twitter finally explained in detail the political ad ban taking effect today (including walking back an outright ban on "issue-based" advertisers). And Snap CEO Evan Spiegel said his platform has dedicated fact-checkers for ads.

Even Facebook’s trying to get away from what Facebook’s doing. Company execs are reportedly considering changes to controversial political ad policies, the WSJ reported yesterday.

Zoom out: For social media companies, the debate over political ad policies seems to be, “Which one will make us look less bad?”

QUIZ

Quiz Pro Quo

Subscribes to The Turnout. Always shares ChapStick. Polling high for Morning Brew's Person of the Year. It’s the Brew’s Weekly News Quiz.

1. We told you this was coming. What eight-letter Swedish word means “flight shame” in English? Here’s the longer definition: “the inherent guilt that an individual feels as a result of one’s aviation-related carbon footprint.”

2. Which ride-hailing app just shut down operations in NYC, leaving its loyal customers to brave the L train once again?

3. Fill in the blank: _____ has inked a mega-deal to sponsor the Olympic Games until 2028.

4. Which beauty deal didn’t go down this quarter, or ever?

  1. Coty bought a 51% stake in Kylie Cosmetics for $600 million
  2. The L’Oréal Group bought Peach & Lily for $550 million
  3. Estée Lauder bought the remaining share of Have & Be for $1.1 billion
  4. Shiseido bought Drunk Elephant for $845 million

5. A study published last week found that heavy drinking jumped 9% on average within a couple of years of what event?

Answers: 1. flygskam 2. Juno 3. Airbnb 4. the L’Oréal Group did not buy Peach & Lily 5. Uber arriving into the market

WHAT ELSE IS BREWING

  • Cannabis stocks rose yesterday after a U.S. congressional committee passed a bill that would decriminalize marijuana.
  • Former President Obama said that he’s concerned about disruptive technologies at Salesforce’s Dreamforce conference.
  • Macy’s suffered its first quarterly drop in same-store sales in almost two years.
  • Mike Bloomberg, the former NYC mayor, has filed paperwork to run for president in 2020.
  • A local sheriff said the weapon used in a Southern California high school shooting last week was a "ghost gun" that was built from parts and didn't have a serial number.

FRIDAY PUZZLE

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FRIDAY PUZZLE ANSWER
3. The pathways to 6 and 7 are blocked.

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