AUTO

Tesla Is Officially the S&P’s Most Eligible Bachelor

Yesterday, financial analysts and Brew writers alike waited around all day for Tesla’s earnings report like it was George R.R. Martin’s next GoT book. Tesla delivered: The electric automaker posted $104 million in net income, paving the way for inclusion in the S&P 500. 

That’s a big deal

The S&P 500 tracks the performance of 500 of the largest companies listed on U.S. stock exchanges. In order to paint an accurate picture of U.S. stocks, it is occasionally rebalanced—companies are added and removed—by an eight-member Index Committee. The committee uses quantitative and qualitative metrics to determine if a company should be included...but only after it becomes eligible.

• How do you become eligible? Among other things, do what Tesla just did: Report four consecutive quarters of profitability, including the most recent quarter. 

Tesla is huge

Whether you want to attribute Tesla’s monster ~$295 billion valuation to amateur traders getting that Musk fever or its widening technological advantage over competitors, the company’s stock has been going bonkers. 

• It's up over 270% so far this year, including a more than 50% increase in July alone.

Tesla would be the most valuable company ever added to the index—and larger than 95% of the companies currently listed. And while a potential S&P inclusion might send its stock even further into ludicrous mode...

The S&P bump isn’t really a thing

Companies do typically see a short term uptick in value, but “this price effect is largely temporary and reverses gradually after the inclusion,” professor Maria Kasch told the WSJ. 

• The data backs it up: Of the 10 companies added to the S&P this year, only five have outperformed the broader index.
• But if we've learned one thing, rules don't really apply to Tesla. Shares rose about 4% after hours. 

Bottom line: Remember, eligibility ≠ inclusion, but it's hard to see the Index Committee, which can add a company to the S&P at any time, saying no to the world's most valuable automaker.

+ While we're here: Tesla said it's going to build its next Gigafactory near Austin, TX. 

GEOPOLITICS

Houston, We Have a Geopolitical Problem

The U.S. and China have entered the ring for Round #137 of their heavyweight bout for economic supremacy. This time, the tussle is over the Chinese Consulate in Houston, TX, which the U.S. ordered shut down late on Tuesday.

The reason: The State Department accused China of “massive illegal spying and influence operations throughout the United States.” The most recent espionage episode came this week, when U.S. prosecutors charged two Chinese hackers with stealing sensitive coronavirus-related info from American firms.

China called the closure an "unprecedented escalation" and, to fulfill the official rules of Tit-for-Tat Diplomacy, said it would retaliate.

What is a consulate anyway? Not to be confused with its stronger, better-looking cousin the embassy, a consulate is a diplomatic outpost inside another country, typically handling smaller issues related to trade, tourists, and expats. 

U.S. officials reportedly believed the consulate in Houston was China’s spying HQ. At the very least, it contained sensitive info: On Tuesday night, police responded to reports of documents being burned on the premises of the consulate.

RESTAURANTS

Yelp Report Gives Reopening Push Zero Stars

Yelp published a report yesterday describing how the past few months have gone for the companies listed on its site. 

Turns out, a pandemic isn't great for business. Some of Yelp’s main findings: 

• When states like Texas and Florida reopened businesses in May, consumers started to resume pre-pandemic activities like going to bars and restaurants. However, those same places experienced caseload spikes in June. 
• Of all the businesses struggling right now, restaurants are faring the worst. Of the ~26,000 restaurants that have closed since March 1, more than 60% have done so for good. California, the largest state by population, has also suffered the most permanent restaurant closures, representing 14.4% of the total number. 
• Between May 25 and July 10, interest in Black-owned business on the site soared 7,000% annually amid a nationwide outcry against systemic racism. 

Looking ahead...while total closures are falling, permanent closures are increasing—meaning the ratio of permanent to temporary business closures is also rising. 

SPONSORED BY HERMAN MILLER

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We used to conduct newsletter biz from our couches, convinced we could work hard and lounge hard in the same space. We were just fools who hadn’t yet discovered Herman Miller’s ergonomic office chairs. 

Herman Miller’s ergonomic design dream team uses pressure mapping, 3D scanning, and R&D to create chairs that encourage a healthy posture and better workday focus. 

Our tushes have never been more comfortable. Our posture has never been more perfect. Our work has never been more impressive. Just look at how well-written this ad is.

Butt the fun doesn’t end with ergonomic chairs. Herman Miller also makes plenty of non-butt-related workspace essentials, like standing desks and storage options. 

Right now you can save 15% on ergonomic office chairs and home office solutions, plus get free shipping on all office chairs. Do your butt (and your career) a favor.

Check out Herman Miller’s Work Well Sale today.

SPORTS

Baseball Is Back

After what felt like an inning with six different pitching changes, a rain delay, and a naked guy running onto the field, baseball season is finally returning. Today—nearly four months after its planned March 26 start date—is opening day for the MLB. 

Here's what's different

• Rules: Baseball's long (too long?) 162-game season has been trimmed to 60 games. The league has also decided to adopt universal designated hitters (DHs) to inject more offense into games.  
• Fans: As the pandemic continues to get worse before it gets better, the MLB has left it up to local governments to determine whether fans will be allowed to attend games. No teams are currently allowing any fans.  
• Advertising: Ballparks and advertisers are getting creative with the extra real estate in the empty bleachers.

Bottom line: So far, only six of the 10,548 coronavirus tests administered by the MLB have come back positive. But since the MLB isn't playing in a self-contained “bubble” like the NBA, the question remains—will an outbreak cut the season short? 

+ While we're here: The Dodgers and the Yankees are the current World Series favorites, but the machine learning PhDs in the Brew Sports (BS) lab inform us that the Tampa Bay Rays will win.

ANTITRUST

She Who Controls the App Store Controls the World

This week, the Brew is previewing next Monday's antitrust hearing by profiling each Big Tech company at the table. 

Company name: Apple

Volunteered as tribute: CEO Tim Cook

The charges: To access the 1.5 billion active devices running Apple’s iOS, developers must first pass through the App Store. But Apple's set stringent rules around its App Store, including a 30% cut of sales. The committee will drill down on whether Apple is stifling competition and raising prices for consumers. 

The rebuttal: Apple literally built the modern app marketplace. iOS apps facilitate hundreds of billions of dollars in e-commerce annually and support millions of jobs. Apple also says its fees are in line with other digital platforms. 

For the entire drama, read our full piece here. 

COLLEGE

Enroll in Brew U

Are you still in college? Cherish it. And think about becoming a Brew Ambassador. It's a new program we're launching to help spread the Brew's mission of making the business world more exciting and accessible for the next generation of leaders.

What you'll get: 

• Free Brew swag 
• An incredible learning experience 
• Grade A resume fodder 

Plus, if you ever pursue a diplomatic job overseas, you can say you have ambassadorial experience. 

What we'll get: 

• Invited to your house parties. Ha, no, totally kidding...unless? 

Learn more about the Brew U Ambassador Program here. 

WHAT ELSE IS BREWING

• Slack filed an antitrust complaint against Microsoft in the EU.
• Microsoft, meanwhile, reported 13% revenue growth last quarter. However, sales in its Azure cloud unit grew less than 50% for the first time ever.
• The U.S. government signed a nearly $2 billion deal with Pfizer and German company BioNTech to produce up to 600 million doses of a coronavirus vaccine. 
• Billionaire hedge fund manager Bill Ackman’s special purpose acquisition company got a nice bump in its public debut.
• UBS reached a 20-year deal for the naming rights to the NY Islanders’ arena on the grounds of the Belmont Park racetrack.

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BREWS BETS

How to attend Comic-Con@Home: Watch panels on the YouTube channel, see the schedule of events here, and print out a badge if your lanyard collection is running low. 

A fun start to the day: Ozy's got a brand new newsletter, Whiskey In Your Coffee, that will fuel your curiosity and get you amped for the day ahead. Think forward-looking stories, global insights, and a few dangerously tasty treats. Sign up for free today.

Make your eyeballs happy: The winning image of the 2020 iPhone Photography Awards was shot on an iPhone 6. See more of the winners and honorees here.

FROM THE CREW

Own the Morning

Outside of Hermione, ultra-successful people don’t make it to where they are by magic. So the Brew is talking to high-performers to see what makes them tick. First up is professional poker player Daniel Negreanu. Quick bio:

• Six-time World Series of Poker bracelet winner
• Third on all-time tournament poker money list
• 449K YouTube subscribers 

We slid into Negreanu’s DMs to ask him how he “owns the morning” and some other questions about life as a professional poker player. 

3 things you do in the morning that are essential to starting your day off right: 1) Drink a large bottle of water 2) vegan breakfast 3) workout in the gym, weight training 

1 thing you do in the morning that other people definitely don’t do: I weigh myself literally every morning.

1 thing about your industry no one outside of it understands: People think of poker as gambling, and it is...but most jobs are. If you own a restaurant, you are gambling that you will make more money than you spend. If you are a stockbroker, you don't win every day, but if you make good decisions consistently you will make money over the long run.

1 thing that you are weirdly snobby about: Flights and hotel rooms. I don't waste a lot of money on extravagant things outside of these two things. I fly first class and always look to get a high end hotel room.

NAME THE CORPORATE HQ

Which company occupies this volcano/lagoon-themed headquarters? Here are some clues...

• Location: Fuschl am See, Austria
• Industry: Food/bev
• Fun fact: It owns various soccer teams across the world

NAME THE CORPORATE HQ ANSWER

Red Bull