Friday 03/05/19

  1. In SOCIAL MEDIA NEWS, Facebook goes crypto and Verizon looks to offload Tumblr
  2. In MONEY-RAISING NEWS, Beyond Meat’s IPO flies, Slack edges closer to flotation and Tesla asks for money AGAIN
  3. In MANUFACTURING NEWS, Bombardier has bad news for Belfast and Rolls-Royce settles engine claims
  4. In INDIVIDUAL COMPANY NEWS, Paddy Power makes strides in the US and Wesfarmers buys into Lithium
  5. In OTHER NEWS, I bring you a cheap and very tasteful flat-pack home. For more details, read on…



So Facebook looks to build a crypto-based payment platform and Verizon looks to offload Tumblr…

Facebook to build cryptocurrency-based payments system (Wall Street Journal, AnnaMaria Andriotis, Liz Hoffman, Peter Rudegeair and Jeff Horwitz) heralds a very interesting development whereby the social media giant is getting financial firms and online merchants together to launch a cryptocurrency-based payments system which, if it all goes to plan, would have a massive impact on e-commerce and be a huge step forward to legitimacy for cryptocurrencies in general. This slots in quite nicely with its recent announcement of users being able to trade within their apps and would also address criticisms of data privacy. This initiative, code-named Project Libra, has been going on for over a year and will have a digital currency at the centre of it that users can send to each other and make purchases both within and outside Facebook. * SO WHAT? * This is a really exciting development, IMHO. It’s good for Facebook because it’ll make its service that much more compelling in that it will go some way to addressing previous criticisms and it’ll be a good way for traditional payments companies – such as Visa, Mastercard and First Data Corp – to dip their toes in this area without having to

fully commit resources themselves. You could argue that if it all works, those companies could become the equivalent of turkeys voting for Christmas (because an alternative payments system like this could completely upend their business models), but you could also say that this is a great way to ease them into alternative payment options. I would have thought that this will benefit Bitcoin as well. Even if Facebook goes with its own coin (“Facecoin”?) rather than Bitcoin, the fact that a company as mainstream as Facebook has enough confidence to use a blockchain-based system will surely have a halo effect of legitimising other virtual currencies. Interesting times!

Verizon looks to unload Tumblr blogging site (Wall Street Journal, Benjamin Mullin and Sarah Krouse) highlights Verizon’s desire to sell blogging website Tumblr as part of its efforts to make its media business, which has been struggling revenues-wise, more focused. Tumblr was bought by Yahoo in 2013 (for $1.1bn!) and Yahoo was bought by Verizon in 2017, so Tumblr was a legacy from that. * SO WHAT? * Tumblr has attracted loads of interest in the past as it was one of a number of start-ups, such as Pinterest and Reddit, that investors were scrambling over but Tumblr has struggled to generate revenues. Who knows, with current interest in companies that promise a lot and are perennially in the red, Verizon may well be able to find a very willing buyer.



Beyond Meat has a juicy market debut, Slack gets closer to flotation and Tesla asks for yet more money…

Beyond Meat’s full-blooded Wall Street debut (The Times, James Dean) shows us the success of Beyond Meat’s debut on the Nasdaq as its shares stormed up by a whopping 150% despite being priced at the top of its previously hiked range. The company has a number of high-profile backers such as Leonardo DiCaprio, Bill Gates and Don Thompson (the former chief exec of McDonald’s), among others. The shares were priced at $25, opened at $46 and finished the day at $65.75! * SO WHAT? * Clearly, this was a very successful debut for a company in a very hot area (meat-alternatives). Although there are other players in this area vying for attention (like Impossible Foods, for example, which is also high-profile), the potential market is absolutely enormous so I would have thought that there is enough room for everyone. I guess that the race is on to distribute their respective products as widely as possible so they can get profitable. The quality of product is just getting better all the time, so unless there is some kind of pea/mushroom protein related scandal, I would expect a very bright future.

Slack plans May 13 online presentation for prospective shareholders (Wall Street Journal, Katie Roof) highlights yet another unprofitable tech player’s plans for flotation as it aims to make its market debut some time in June. It has filed for a direct listing on the NYSE which means that it won’t raise capital but it will enable existing shareholders

and employees to sell stock to the public. Direct listings don’t have lock-in periods which prevent shareholders from selling their shares, unlike conventional listings, so it will be interesting to see how volatile trading will be. * SO WHAT? * Slack will be the latest tech company to list, following Lyft, Pinterest, PagerDuty and Zoom Video Communications. Slack will be heartened by the warm reception that Zoom got recently, but unlike Zoom, Slack is not profitable. That said, when it recently shared its financials with the Securities and Exchange Commission as part of its filing, it showed impressive revenue growth of 82% in the latest fiscal year versus the previous one. At least it has something proper to sell that actually makes a difference!

Tesla seeks to raise $2.3bn after concerns it is running out of money (The Guardian, Dominic Rushe) shows that the electric car company is having to swallow its pride and raise a ton of money from the sale of bonds and shares as fears increase that it is running out of cash. Founder Elon Musk had previously said that he would not resort to this, but clearly he’s had to do a U-turn. Tesla’s share price has fallen by almost 30% in the last six months as investors have become increasingly antsy about its future. * SO WHAT? * Tricky times for the plucky EV pioneer. Given investors’ seemingly insatiable desire to pour money into loss-making companies at the moment though, you can’t blame Tesla for giving it another go can you! However, it still has to address problems with production, spontaneously-combusting vehicles and Musk’s predilection of posting problematic tweets. I maintain my view that it should swallow its pride even deeper and merge with a “proper” car company.



Bombardier has bad news for Belfast and Rolls-Royce addresses its troubles…

In Bombardier factory sale puts 4,000 jobs at risk (Daily Telegraph, Alan Tovey) we see that the Canadian company, which is the largest private employer in the Belfast region, has put its factory up for sale as part of a big restructuring in its aerospace division. The factory makes wings and fuselages for airliners and will worry the company’s highly skilled staff about their futures. * SO WHAT? * A sale may be made more difficult because of Brexit but obviously this

is what the politicians (and employees, I would imagine) want.

Rolls-Royce settles Trent 1000 engine compensation claims (Financial Times, Sylvia Pfeifer) shows that Rolls-Royce has drawn a line under its recent engine problems by settling compensation claims stemming from problems with the engine that powers Boeing’s 787 Dreamliner commercial jets. On the plus side, the company said that it has started to win new orders for the Trent 1000 and left its guidance for the full year unchanged. * SO WHAT? * Rolls-Royce is still undergoing a massive restructuring that will involve the shedding of 4,600 middle-management jobs, but this announcement about compensation will do a lot to address concerns over what has become a huge cloud over the company.



Paddy Power’s American bet pays off and Wesfarmers buys into lithium…

In other news bits-and-pieces, Paddy Power revenue races ahead as US opens up market (Daily Telegraph, Oliver Gill) shows that although European operations posted modest revenue growth of 4%, overall quarterly revenues shot up by almost 20% powered by a 47% rise in the States. Aussie brand Sportsbet also pumped revenues up by 20%. * SO WHAT? * Clearly, Paddy Power’s Stateside bet is paying off as it piled into a market that last year relaxed a ban on sports betting. These results do not include the effects of the crackdown on Fixed Odds Betting Terminals (FOBTs),

but the company is less exposed to this versus some of its listed peers due to its smaller high street presence.

I know that this bit of news is going to sound a bit random, but I thought that Wesfarmers/lithium: stored value (Financial Times, Lex) was worth mentioning a) because everyone’s after a bit of lithium these days because of its use in car batteries and b) because many of you will associate the company with DIY stores (it owned Homebase until relatively recently and is famous for Bunnings in Australia), so is something that you might not have expected. Wesfarmers does actually have chemical and fertiliser operations, so the purchase of mining company Kidman Resources is not actually that outrageous. * SO WHAT? * The purchase wasn’t cheap at $800m in cash, but I guess that Wesfarmers is looking to the future.



And finally, in other news…

Given house prices these days, I thought I’d leave you today with Flat-pack home costs just £30k, only takes SIX hours to build and is stunning inside (The Mirror, Zahra Mulroy Nice!

Some of today’s market, commodity & currency moves (as at hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq**DAX *CAC-40 *Nikkei **Shanghai **
7,351 (-0.46%)26,308 (-0.46%)2,918 (-0.21%)8,03712,345 (+0.01%)5,539 (-0.85%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)