MARKETS

Is Oprah Running the IPO Market?

If you thought WFH has made your life busier, the market for public offerings has you beat. At least 17 companies filed to go public in the U.S. last week—the most active week in the last five years, according to Refinitiv. Let’s see who’s been practicing their bell ringing in the mirror.  

Never heard of it but should

Snowflake: Founded by former Oracle developers eight years ago, Snowflake harnesses the power of the cloud to make big datasets more accessible. It’s okay if you don’t really know what that means because Snowflake’s business customers do: Its revenue grew 174% to $265 million in fiscal 2019.

Best of the rest:

• Unity is a videogame engine that powers over half of the 1,000 most popular games in both Apple's and Google’s app stores. 
• JFrog makes tools for software developers and reported more than $100 million in revenue in 2019. But the best part of this IPO is the ticker: FROG. 
• Sumo Logic is another data analytics company, who, you guessed it, is cloud-based. 
• Asana is a project management software company with a familiar tech founder—Dustin Moskovitz also helped start a little company called Facebook. 

Heard of it but don’t really know what they do

Palantir: Another company that you can broadly describe as a big data analytics firm, Palantir was founded in 2003 by a group that includes famous investor Peter Thiel. Worth more than $20 billion, it's one of the most valuable private tech companies—but it's not profitable. Last week, Palantir revealed a $588 million loss in 2019 despite plenty of customers in government and defense.

• In its paperwork released last week, CEO Alex Karp lashed out against Silicon Valley culture, which is a big deal for a company founded and nurtured in Silicon Valley. Palantir's leaving for Denver. 

The other big ones

DoorDash, the food delivery company, reportedly made moves last week to go public in Q4 of this year.

Airbnb: After bookings declined 70% in May as the pandemic decimated its business, Airbnb’s long-rumored IPO seemed to be off the table. But people started getting bored of their own houses and (a slimmed-down) Airbnb cemented its comeback by filing confidentially to go public a few weeks ago.

Ant Group: The Chinese fintech titan and Alibaba offshoot plans to raise over $30 billion in a historically huge IPO in Asia. It could push 2020’s tech IPO haul past $57 billion, the second-highest amount since 1999’s internet bonanza. 

Bottom line: After a few quiet moments in the spring, the IPO market is stiff-arming the pandemic and setting itself up for a record-setting year. 

AVIATION

United Airlines Sends Change Fees to the Exit Row

Sign of the times: an airline is actually removing fees rather than adding them. Yesterday, United said it’s permanently getting rid of its change fees for most U.S. plane tickets effective immediately. 

Typically, it costs $200 to admit you were a little buzzed and accidentally booked a flight to Charleston, West Virginia, instead of Charleston, South Carolina. But with air passenger levels 70% below normal, United is hoping a little customer service will go a long way. Getting rid of change fees was often the top customer request in the United suggestion box, said CEO Scott Kirby. 

• Airlines had granted waivers on change fees during the pandemic, but United is the first among them to make it permanent.
• Well...besides Southwest. It didn’t charge passengers to swap tickets in the first place.

So what’s it mean for the biz? Ancillary fees were a growing revenue stream for airlines. United collected $625 million from change and cancellation charges last year; the entire U.S. industry—$2.8 billion.

TECH

The Wrinkliest Story of 2020 Just Got Wrinklier

China is putting up one of those CVS-style glass cases around TikTok. Late on Friday, its government made changes to tech export laws that could hamstring ByteDance’s attempted sale of TikTok’s U.S. operations. 

The backstory: This month, President Trump decided to force ByteDance to divest TikTok's U.S. business, prompting the likes of Microsoft, Oracle, and anyone with more than 100 Twitter followers to submit bids for the super popular video app. 

What’s new: There are more hoops to jump through. For the first time in 12 years, China updated a list of technologies that are banned or restricted from being exported abroad to include a technology that sounds a whole lot like TikTok’s secret sauce: Its powerful recommendation algorithm.

The fallout: This is a big-time flex by China, “It could be an effort to outright block the sale, or just raise the price, or attach conditions to it to give China leverage down the road,” Chinese economic policy expert Scott Kennedy told the NYT.

Bottom line: Tariffs...Huawei...add TikTok to the list of geopolitical football games China and the U.S. are currently playing.

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STOCKS

Stocks Do the Splits

Today, stock splits for both Apple (4-1) and its partner-in-hypergrowth Tesla (5-1) will go into effect.

What exactly does that mean? 

A stock split is when a public company gives more shares to existing shareholders, while chopping the price of each share so the total value of those holdings doesn't change. A 5-1 stock split for Tesla means shareholders get five shares for every one they currently have, but the price will drop from $2,213/share to about $443. 

• The idea is to make a stock look more attractive to investors who can't stomach paying more than $2,000 for one share (although that's less relevant now that brokerages offer fractional shares). 

Why it matters: Stock splits have no bearing on a company’s value, the same way cutting a pizza into 16 slices instead of eight doesn’t give you more pizza. But Apple's and Tesla's stocks are booming regardless: Apple’s stock is up 30% since announcing its stock split in late July; Tesla's has jumped 61% since its August 11 announcement.

+ While we’re here: Today is also the first day of trading for the new-look Dow Jones Industrial Average. Salesforce, Amgen, and Honeywell are replacing ExxonMobil, Pfizer, and Raytheon in the index...a decision motivated by Apple's stock split. 

CALENDAR

Week Ahead

The possibility of NYC hosting big events again will be tested this week as the U.S. Open begins.

Monday: U.S. Open first-round matches; Zoom earnings

Tuesday: First day of September 

Wednesday: Fed Beige Book; ADP employment report; earnings (Rocket Companies, Macy’s) 

Thursday: Tenet is finally released in the U.S.

Friday: Jobs report for August; Mulan comes to Disney+

WHAT ELSE IS BREWING

• Mark Zuckerberg said Facebook made a mistake in not removing a militia group’s Facebook page that encouraged citizens to “take up arms” and defend the city of Kenosha, WI.
• Box office recap (been a minute since we wrote that): Christopher Nolan’s Tenet made $53 million overseas, while The New Mutants brought in an encouraging $7 million domestically.
• Home sales in the NYC suburbs jumped 44% in July over last year, per Miller Samuel.
• Warren Buffett celebrated his 90th birthday by announcing his company, Berkshire Hathaway, acquired a ~5% stake in five leading Japanese conglomerates.
• Pinterest is canceling its lease on a 490,000-square-foot office space in San Francisco. The termination fee? $89.5 million.

BREW'S BETS

Mow money. Graze is the autonomous lawnmower disrupting the $100 billion landscaping industry. And if you can believe it, they’re letting you invest in this grass game changer—but only until Sept 18th. Invest in Graze before it’s too late.*

Advanced security, but make it simple. That’s what SimpliSafe said, and by golly if they didn’t do it: Their 24/7 home monitoring system can be installed in under an hour, ready to dispatch police, fire, and medical pros ASAP. Order it here.*

Architecture Brew? Check out 11 finalists for the Dezeen Awards for design and architecture. These are some crazy looking buildings.

Remembering Chadwick Boseman: 1) The tweet that Twitter said was the most-liked ever 2) a tribute by Clint Smith of The Atlantic 3) the Avengers pay their respects and 4) Chadwick's conversation with Trevor Noah in 2018.

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FROM THE CREW

Start Talking

On Mondays, we present some of the most complex business topics of the day, give you a few balanced resources, and encourage you to discuss with friends, family, and coworkers. 

This week’s topic: pot. Next month, the House will likely vote on a bill to decriminalize marijuana and leave legalization up to the states. Have the last few months changed how lawmakers think about weed?

1. COVID-19 has benefitted legal sales of marijuana and chipped away at the illicit market. (Politico)
2. How do marijuana taxes work? (Tax Policy Center)
3. The economic benefits of legalizing weed. (Investopedia)
4. Pennsylvania’s governor is calling for legalization to help small businesses affected by the pandemic. (USA Today)
5. Cannabis hasn’t turned into the tax windfall some states expected. (Politico)

CROSSWORD

Props to Brew reader Glen Anderson for creating this week's excellent and extremely flattering Brew Crossword. Give it a try here.

After opening up the crossword for submissions, the Crew has been incredibly impressed by the puzzling ability of our readers. 

• How to submit yours: Send your 15x15 crossword in a PDF file to crosswords@morningbrew.com for consideration. Extra points for creativity and humor. Good luck!

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