In what would likely come as the biggest IPO in recent memory, Uber says it is planning for a potential IPO in 2019. Parties close to Uber say that its bankers delivered valuation proposals for an IPO in the range of $120 bn. That is an eye-opening figure because it is almost double the company’s valuation from its most recent funding round 2 months ago. There are no guarantees the company will go public next year, but its CEO has said it is aiming for a public debut in the second half of 2019.
FINSUM: We do not think that valuation is out of the question given how much investor anticipation there might be for this IPO. The IPO market has been red-hot, so nothing seems out of reach.
Want to find a good test for whether the Fed has hiked rates too far? Look no further than everyone’s favorite, the FANG stocks. There is an increasing risk that the Fed may get very hawkish with its rate hikes, and if that happens, FANGs will show the pain first, says Julius Baer & Co. Baer thinks that the S&P 500 might sink 20% on the back of rate hikes before the Fed starts to moderate its action. It believes FANGs will feel the brunt of the losses. The NYSE FANG+ index peaked three months ago and has fallen 13% since June.
FINSUM: We do not disagree that rate hikes could cause market losses, but we don’t know why FANGs would feel the most heat other than the simple fact that they have gained the most.
In a turn of events that stretches the boundaries of our understanding, Elon Musk took to Twitter yesterday to mock the SEC. The move comes in the same week that the CEO agreed to settle a suit with the regulator over his misleading tweets this summer. Musk tweeted yesterday afternoon that “Just want to [say] that the Shortseller Enrichment Commission is doing incredible work … And the name change is so on point!”. Legal experts say the tweets jeopardize his potential settlement the SEC as they violate specific clauses of the agreement.
FINSUM: We know he is a defiant character, but this kind of behavior seems to show extremely poor judgment, if not borderline mental instability.
Amazon has just taken a big step to improve the welfare of its enormous mass of workers. The company has raised the minimum wage across all its businesses to $15 per hour. The wage will apply to the company’s 250,000 employees and 100,000 holiday workers and will begin on November 1st. Amazon also says that it will now push for an increase to the federal minimum wage of $7.25 per hour.
FINSUM: This is a good move for Amazon’s workers, but it might be even better for Amazon’s reputation. The company has recently come under scrutiny for its labor and monopolistic practices, and this is one way to offset those concerns.
Another tumultuous week for Tesla is in the books, but for the first time in a while, it looks the company may be headed in a positive direction. Last week, the SEC sued Elon Musk for fraud based on his tweets about taking the company private, which sent the stock plunging. However, on Saturday, it was announced that Musk had reached a settlement with the regulator, agreeing to give up his chairmanship of the board, in addition to a $20m fine, but remaining CEO. This news sent the stock soaring in pre-market trading.
FINSUM: This seems like a better operational and governance structure for Tesla and we hope it will prove a positive development.
Tesla investors got some grim news yesterday (unless you are the group hoping for Musk’s departure). That news is that the SEC is suing Elon Musk for fraud and is seeking to have him removed as the leader of Tesla. The suit seeks to have Musk banned from serving as an officer or director of a public company. The basis for the suit is the series of tweets Musk made regarding taking the company private, which the SEC says were “false and misleading statements”.
FINSUM: This is a pretty serious move from the SEC, made worse by news out today that Musk chose the price of $420 as a marijuana reference to impress his girlfriend.