by Shane Ormond
On Feb 20, 2020
Shares of Groupon and Blue Apron tanked yesterday after their quarterly reports reignited skepticism about the companies’ “unconventional” business models. (And by “unconventional” I mean “doesn’t work.”)
Blue apron, groupon, e-trade, morgan Stanley
Blue apron, groupon
- We(Don’t)Work Here Anymore
- Juul’s CEO Burns Out
- Democrats Launch Official Impeachment Proceedings
- Get an Unfair Advantage at Trading (Part Two)
We(Don’t)Work Here Anymore
Adam Neumann resigned yesterday as CEO of WeWork’s parent company, We Co., amid growing concern that he might have been a total dingus all along.
This time last year, the party-on-top party-on-the-sides CEO was preparing to take his company public as the “most-valuable” IPO of all time.
But eyebrows were raised (and faces were palmed) when the company released its financials as part of its S-1 filings earlier this year.
The filings told a sordid tale of ballooning losses, hundreds of millions of dollars of real-estate deals and personal loans, and just a bunch of weird stuff that Adam was doing.
It transpired that Neumann was buying properties with his personal money and leasing them back to his company.
He was borrowing heavily against his stock to buy private jets. And he even sold the rights to the word “We” for $6 million to his own company.
(This guy makes the best deals with himself.)
“This is not the way everybody behaves,” former Twitter CEO Dick Costolo told the Wall Street Journal. “The degree of self-dealing in the S-1 is so egregious, and it comes at a time when you’ve got regulators and politicians and folks across the country looking out at Silicon Valley and wondering if there’s the appropriate level of self-awareness.”
In the wake of its disastrous S-1 filing, We Co. slashed its market valuation from $47 billion to as low as $15 billion. Earlier this month, the company which rents real estate from its own CEO canceled its IPO roadshow and postponed its IPO until it could sort this mess out.
(And by “sort this mess out”, I mean “get rid of Adam without a lawsuit.”)
Trade-in Your Neumann for a New Man
Like a child who doesn’t understand money or the world or even basic concepts, Adam would often tell people that his goal in life was to become the world’s first trillionaire. (Which is hard to do when you have a penchant for buying $60 million jets.)
Adam may have to push his goal back a few years for now, as the overlords at the Softbank Group, who own a third of We Co., have decided to remove Adam as CEO of the Adam Does Whatever He Wants Funtime Company.
Neumann will remain at We Co. as a non-executive chairman (which means he’s technically your boss, but you should never do what he tells you). And he’ll be succeeded as CEO by two of his deputies (which means they have to share a big two-person suit that makes them look like a conjoined twin).
Artie Minson, finance chief of We Co., will take control of finance, legal, and human resources. Amazon veteran Sebastian Gunningham (who may or may not be an entire British football team) will take the wheel on marketing and technology.
Neumann will voluntarily give up (is being forced to) cede majority control of the company, reducing his supervoting shares from 10-to-1 to 3-to-1.
The rollicking comedy duo of Minson & Gunningham is expected to start hacking away at staff and try to stem the explosive hemorrhage of money spilling out of the company.
Given the current state of affairs, it’s unlikely that We Co.’s IPO will go ahead this year.
However, the company’s lawyers are currently negotiating for a $3 billion loan with JPMorgan and Goldman Sachs. And their old pal Softbank is expected to fork over a chunk of its own money to keep the company afloat long enough for Minson & Gunningham to sort this big old mess out.
And speaking of ousted CEOs…
Juul’s CEO Burns Out
In déjà vu news, Kevin Burns will be stepping down as CEO of Juul Labs amid a seemingly never-ending avalanche of negative press.
Burns will be replaced by an executive from the Altria Group, which owns a 35% stake in the company. (Who, disappointingly, will not be Kevin Burns in a mustache calling himself Kevin Vapes.)
K.C. Crosthwaite (who sounds like the hero in your bad detective novel) was handpicked by Altria for his experience working closely with regulators as Altria’s chief strategy officer. (And that was for cigarettes, which are typically a harder sell than e-cigarettes.)
After a spate of mysterious illnesses linked to “ripping fat cotton”, the administration is expected to crack down on vaping later this year and potentially ban most of Juul’s totally rad products that are definitely not for kids.
“The progress we’ve made in reducing youth tobacco use is jeopardized by the onslaught of e-cigarette use,” tweeted Ned Sharpless, the FDA’s acting commissioner. “Nobody wants to see children becoming addicted to nicotine & we will continue to use our regulatory authority thoughtfully & thoroughly to tackle this public health crisis.”
Juul says it has no plans to lobby against the ban of flavored e-cigarettes (because the press would not be great). And the company will suspend all broadcast, print, and digital advertising for the foreseeable future.
Altria CEO Howard Willard told the Wall Street Journal that the proposed ban would have an impact on Juul’s business, but it’s unclear exactly what restrictions the FDA is preparing.
“I continue to believe Juul will continue to be successful and a good investment for Altria in the long run,” Mr. Willard said, adding that Juul’s new CEO would “work in a responsible way” with the FDA and other regulators to address youth vaping (aka yaping).
Shares of Altria rose about 4% in premarket trading on Wednesday after it was announced that the company would be going ahead with its potential merger with Philip Morris International.
Democrats Launch Official Impeachment Proceedings
After months of indecision, infighting, and another in-word I can’t think of right now, House Speaker Nancy Pelosi said that Congress will move ahead with an official impeachment inquiry.
The decision to start official impeachment proceedings follows a report that President Trump withheld aid from Ukraine in exchange for dirt on political rival Joe Biden.
(Not sure why you’d need to go all the way to Ukraine to find dirt on Biden when we have all these creepy pictures of him groping people right here on American soil.)
Pelosi, who is notoriously allergic to even talking about impeachment, said yesterday that “the actions taken to date by the president have seriously violated the Constitution.”
Democratic strategists say Pelosi has chosen to act now because a five-page transcript of a phone call is easier to read than a 448-page report.
“This tracks more closely to Watergate because there is a direct cause-and-effect harming a political foe,” strategist Joel Payne told The Hill.
President Trump — who was meeting with world leaders at the U.N. General Assembly — tweeted “PRESIDENTIAL HARASSMENT!” as Pelosi made the announcement and he vowed to fight the “breaking news Witch Hunt garbage.”
Yesterday, the Senate voted unanimously to release the transcript of the phone call between President Trump and Ukrainian President/former comedian who starred as a man who was accidentally voted the president of Ukraine (not a joke) Volodymyr Zelensky.
In the transcript, which was released as I was finishing up this story, President Trump urges Zelensky to “do us a favor” and contact Attorney General William P. Barr about opening a potential corruption investigation connected to former Vice President Joseph R. Biden Jr.
“There is a lot of talk about Biden’s son, that Biden stopped the prosecution, and a lot of people want to find out about that,” said the President, according to the transcript. “So whatever you can do with the attorney general [Barr] would be great.”
In Other News
ONE LAST THING
Get an Unfair Advantage at Trading (Part Two)
Yesterday, James Altucher was telling us how to gain an unfair advantage at trading by removing the human emotion from the process by writing his own trading software.
I could probably bumble through this idea. But James can explain it better than anyone, so I asked him to write today’s One Last Thing.
Take it away James:
I knew all the cognitive biases. I had studied them. The stock market is like the collective psychology of the entire planet.
If individuals can make irrational decisions because of these biases, then so can the entire market. So can you. So can I.
My software helped me find hundreds of patterns where I was able to prove people were acting irrational.
If you invest in the opposite direction of millions of crazy people, you make a ton of money.
I didn’t know anyone else doing this at this time. There were a few secretive hedge funds doing it. And then I did it.
Some of the patterns I found were unbelievable. I couldn’t believe those were opportunities to make 100%, 200% or even more in a day.
Other patterns were insane: like if a biotech company had a drug that caused brain cancer… wait two days and then buy.
I started day trading more and more money. Top hedge fund managers were even giving me their personal money to trade.
Some days I would trade over A BILLION DOLLARS worth of equities. In a DAY.
All because of my software. I took the emotions out of it. I only traded when the software saw a pattern kicking in.
I’d go out to lunch sometimes and come back and see that the software found a pattern, made the trade, and had already exited with a profit.
Here’s the thing. Here’s the universal secret about investing:
- People are ALWAYS irrational. Which means there’s always patterns in the market that will make a lot of money. Yesterday. Today. Tomorrow. New patterns.
- Having software to find new patterns is an UNFAIR ADVANTAGE.
DO NOT INVEST unless you have an unfair advantage.
In 2008 again I found new patterns to invest. Patterns that worked every day. While the world was burning, I was making money. I made money on the day Lehman Brothers went bankrupt.
One time in 2009 I was impressing my then girlfriend by showing her the gym in my building. I had obviously never been there before.
18 years after I first started writing this software, I went back to it. I knew there would be incredible opportunities over this next year because of what he described
I looked for the new patterns in this crazy new environment. Everything seems so peaceful, but everyone is scared.
Everything seems calm, but a volcano can erupt any moment, perhaps causing the most irrational behavior we’ve ever seen.
But that means more money than ever can be made.
I kept looking and looking for more patterns. My rule: I have to have patterns for up markets, sideways markets, down markets, booms and busts.
I did what I do to solve problems. I wrote more software…
And then I found it… A pattern that worked again and again…
One that lasted about 7 days on average. So it would give regular people trading at home a window to invest (and NOT just computer software making a trillion trades per second).
I don’t know about you, but after reading that I wanted to know more about James’s new software and how it would work in 2019 when the stock market is defying all common sense and expectations.
So I asked James to come back Friday and do a special edition of One Last Thing and tell us more about how it works.
Closing Data for 9/24/19
DIJA $26,813.74 ↓ 0.51%
S&P Index 500 $2,967.00 ↓ 0.83%
NASDAQ $7,993.63 ↓ 1.46%
Gold $1,540.00 ↑ 0.56%
Silver $18.63 ↓ 0.44%
Bitcoin $8,547.90 ↓ 11.9%
- Consumer sentiment for September came in far lower than expected; economists point to trade tensions and oil volatility as likely causes.
- Yesterday bitcoin fell 15% to below $8,000, its lowest level since mid-June.
- Nike (NKE) shares hit an all-time high on strong earnings. The company’s CEO credits product innovation and e-commerce for the positive results.
Editor, One Last Thing