Here’s what you need to know:
Recognition…Eric Risberg / Associated Press
One dirty IPO secret is that even the coolest may only make a handful of people rich – and it may not be ordinary people, employees, or even fancy pre-IPO investors who get a windfall.
DoorDash and Airbnb are expected to see spectacular first sales on public exchanges this week, trading at levels far higher than expected a few weeks ago.
Buying stocks in relatively young and unproven companies – which usually describes tech companies selling their stocks to the public for the first time – is often a coin toss bet. Even the professional investors who buy stocks of hot companies before going public don’t always get rich unless they toss their money around early and get lucky. Companies like Uber, Lyft, Snapchat, and Slack that you may have heard of were meh IPO investments at best.
Check out Airbnb. Among those investors who had a special chance to buy Airbnb stock nearly four years ago, every $ 10,000 they bought is worth about $ 11,500 when Airbnb starts selling its shares for $ 60 every Selling dollars to the public. Kind!
But if your aunt had invested $ 10,000 in a simple fund almost four years ago that reflected the ups and downs of the S&P 500 stock index, she would now have $ 15,600. More beautiful.
The pandemic hurt Uber and Lyft’s businesses, but their stocks were losers before. Uber’s share price has rebounded and is up 30 percent since the spring. Still, anyone who bought Uber stock on its 2019 IPO – and even the professional investors who bought its stock in the previous four years – would have made far more money buying an index fund. Uber employees who were hired prior to going public and were partially paid in stocks would also have been better off getting paid in an index fund.
People who bought Snapchat stock as part of its 2017 IPO had to wait more than three years not to lose money on their bet. Slack just sold at a share price not much higher than its first public share sale last year.
These are examples picked from cherries. There are companies whose stock prices have risen since going public and made people rich – Zoom Video is a great example of technology. And the folks who have already bet on the DoorDash restaurant delivery app will make a big win if the company goes public this week.
Will Airbnb be a successful IPO? It depends. It will definitely be for venture capital firm Sequoia, which is early on to Airbnb. And things are certainly going better than expected when the trips froze earlier this year. But nobody can predict with certainty whether the share price will skyrocket like Zoom’s since going public in 2019 or how Lyft’s will fall after the IPO.
That’s the lesson. Cool companies don’t always invest well. The people yelling Robinhood about their hot IPO may not know what they’re talking about.
Goldman Sachs has reached an agreement to purchase the minority partner in its Chinese securities joint venture. This could make Goldman Sachs the first global bank to take full ownership of its securities operations in mainland China since the Communist Party took control of foreign-owned companies in the country in the 1950s.
In a memo to employees on Tuesday, Wall Street Bank said it had reached a definitive agreement to buy a 49 percent stake in Goldman Sachs Gao Hua, which is still held by its local partner Beijing Gao Hua Securities. Goldman Sachs has not disclosed a price for the transaction.
The deal follows a pledge made by Chinese leaders in 2017 to ease or lift restrictions on foreign bank ownership amid deteriorating trade relations with the United States. The move was part of an unsuccessful effort by China to convince Wall Street to reject President Trump’s plans to impose tariffs on Chinese goods.
Goldman Sachs could be the first to take full control of its Chinese securities business, depending on regulatory approval and the speed with which the deal is closed.
JP Morgan Chase is already fully involved in its futures business in China but still has a joint venture for other mainland activities. Other investment banks such as JP Morgan Chase, Morgan Stanley, UBS and Nomura are in various stages of increasing their stakes in their Chinese securities businesses.
Commercial banks, on the other hand, have avoided increasing their share of commercial banking in mainland China to over 25 percent. This would subject these operations to further global banking regulations.
Goldman Sachs announced on March 27 that it had received regulatory approval to increase its stake in Goldman Sachs Gao Hua from 33 percent to 51 percent. Tuesday’s memo was previously reported by the Wall Street Journal.
Recognition…Aaron P / Bauer-Griffin via Getty
Last week, when Jason Kilar, CEO of WarnerMedia, announced that 17 more Warner Bros. films would be appearing simultaneously on HBO Max and in theaters. WarnerMedia kept the big agencies and talent management companies in the dark until about 90 minutes before a press release was issued to keep the news of 17 films moving from breaking out (and to move quickly instead of getting in to entangle the expected setback), report Brooks Barnes and Nicole Sperling.
The surprise move left the agencies on a war basis. Representatives of a major Warner Bros. boycott were circulating in the Directors Guild of America. A talent agency partner spent part of the weekend meeting with litigation attorneys. Some people angrily referred to the studio as Former Bros.
The 97-year-old studio, the home of Humphrey Bogart (“Casablanca”) and Bette Davis (“Now, Voyager”), is suddenly in the uncomfortable center of a Hollywood that is changing at the speed of light. Even before the pandemic, streaming services such as Netflix, Apple TV + and Amazon Prime Video ensured that films were seen and their creators were compensated. Now that theaters are struggling with the coronavirus and the public is largely stuck at home, even traditional film companies are forced to move forward.
It’s not that all actors and directors are against streaming. Many big names make films for Netflix. However, Warner Bros.’s move last week raised fundamental financial questions. If old-line studios are no longer trying to maximize box office for every movie, and instead switch to a hybrid model, where success is measured in part by ticket sales and part in the number of streaming subscriptions sold, what does that mean for Talent Pay packages? ?
How studios compensate A-list actors, directors, writers and producers is complicated because contracts are negotiated film by film and person by person. But it boils down to two checks. One is guaranteed (a high upfront fee) and one is a gamble: a portion of ticket sales after the studio recovers its costs.
If a movie flops, the second payday never comes. When a movie is a hit, as is often the case with superheroes and other fantasy stories, paying the “back-end” of wheelbarrows of cash can add up.
Recognition…Jason Henry for the New York Times
Uber, which has spent hundreds of millions of dollars on a self-driving car project that executives once believed was a key to profitability, is handing over autonomous vehicle efforts to a Silicon Valley startup, the companies said Monday.
Uber will also invest $ 400 million in start-up Aurora. Hence, it essentially pays the company to take over the autonomous vehicle operations that had become financial and legal problems. Uber will likely license every technology that Aurora creates.
The deal is a fire sell-off for a high-profile but star-crossed effort to replace Uber’s human drivers with machines that could drive themselves. This is also an indication of the challenges facing other autonomous vehicle projects that have received billions in investments from Silicon Valley and automakers but have not produced the fleets of robotic vehicles believed to have hit the streets by now.
Aurora’s executive director Chris Urmson said Aurora’s first product won’t be a robotic taxi that could help Uber’s hail business. Instead, it will likely be a self-driving truck, which Mr Urmson believes has better chance of success in the short term, as long-haul truck driving on highways is more predictable and doesn’t involve passengers.
In a statement, Uber chief executive Dara Khosrowshahi said he looks forward to bringing Aurora technology to market “in the years to come”. Uber declined to comment on the deal.
Rashida Jones, senior vice president of news for MSNBC and NBC News, will become the first black woman to lead a major television news network. Her promotion, announced by Cesar Conde, chairman of NBCUniversal News Group, is another major shake in the network’s senior leadership positions. She will succeed Phil Griffin, the MSNBC president whose left-wing shows achieved high ratings in the Trump years, and major media brands such as “The Rachel Maddow Show” and “Morning Joe” will be on February 1st after a twelve-year tenure depart, the network said on Monday.
Japanese advertising giant Dentsu Group plans to cut around 6,000 jobs as it grapples with the effects of the coronavirus pandemic. In a securities filing in Tokyo on Monday, Dentsu provided details of its restructuring strategy, which will cost 88 billion yen (approximately $ 850 million) to implement over two years and which will cut its international workforce of 48,000 by 12.5 percent includes. The timeline will vary depending on the location, the company said.