After Hours Summary: PINS +14%, SGH +6%, LEVI +1% all higher following earnings/guidance, select China names under pressure
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: GNMK +22.2%, PINS +13.9% (issues upside revenue guidance for Q1; withdraws FY20 guidance, announces departure of COO), SGH +6%, PRGO +3.2% (light volume), LEVI +1.6%
Companies trading higher in after hours in reaction to news: NYMT +33.6% (provides business update - is current with its repurchase agreement payment obligations, including margin requirements), NLY +20% (issues business update in shareholder letter), KNOP +10% (ticking higher after saying it has not experienced any material changes in its operations since the filing of its annual report on March 19), IVR +8% (provides financing update), SGMS +7.1% (won the Iowa Lottery's 10-year contract for a new statewide gaming system to serve the lottery and the 2,400 retail locations where Iowa Lottery games are sold), FDX +2.4% and UPS +1.8% (indicated higher with WSJ reporting that Amazon will suspend competing delivery services)
After Hours Losers:
Companies trading lower in after hours in reaction to news: IQ -2.7% (responds to short seller report; believes report contains "numerous errors, unsubstantiated statements and misleading conclusions"), ZUO -2.2% (light volume; appointed Paolo Battaglini, Chief Accounting Officer, to serve as interim CFO, Principal Financial Officer and Principal Accounting Officer effective on April 5, 2020), DIS -1.6% (downgraded to Equal Weight from Overweight at Wells Fargo)
Several China related companies are lower after TAL Education (TAL) update: TAL -21% (announced certain employee wrongdoing discovered in the Company's routine internal auditing process), GSX -10.9%, EDU -6.3%, BABA -3.5%, NTES -2.7%, BIDU -2.5%, HUYA -2.2%, VIPS -1.7%, WB -1.2%
Jack Dorsey creates $1B COVID-19 relief fund using Square equity
Jack Dorsey announced in a series of tweets today that he is shifting $1 billion in his Square equity to create a fund dedicated to COVID-19 relief. The Twitter and Square CEO is calling the fund Start Small and posting a tally of disbursements and recipients in a public spreadsheet.
Dorsey said in his announcement that the new initiative will shift the focus to other causes at some point.
The first Start Small contribution listed is $100,000 to America’s Food Fund — an effort led by Leonardo DiCaprio and Laurene Powell Jobs dedicated to providing meals to vulnerable populations disrupted by the COVID-19 pandemic.
Other top backers of America’s Food Fund include Oprah Winfrey ($1 million) and Apple ($5 million), according to the organization’s GoFundMe page.
That’s what we know so far from a tweet posted Tuesday afternoon by the American tech entrepreneur who co-founded and leads not one, but two publicly listed companies.
Other top backers of America’s Food Fund include Oprah Winfrey ($1 million) and Apple ($5 million), according to the organization’s GoFundMe page.
That’s what we know so far from a tweet posted Tuesday afternoon by the American tech entrepreneur who co-founded and leads not one, but two publicly listed companies.
Medical groups warn of serious shortages of hydroxychloroquine
Drug has become prized since Donald Trump and others began saying it could treat coronavirus
Sufferers of serious medical conditions eased by hydroxychloroquine have reported shortages in parts of Europe since US president Donald Trump and others began to claim the drug could be used to combat coronavirus.
The medicine, an anti-malaria treatment also used by sufferers of lupus and rheumatoid arthritis, has become harder to find during the escalating international campaign to deploy it against coronavirus, European medical advocacy groups said.
This highlights a potentially problematic side effect of the rush to promote hydroxychloroquine as a virus remedy, despite the lack of robust evidence that it works.
Alain Cornet, general secretary of Lupus Europe, a patients’ group, said he hoped the drug would prove effective against the virus but warned the dash to use it was potentially damaging. He cited anecdotal evidence that some people had bought out pharmacy supplies to stockpile at home.
“I think it’s irresponsible to have big announcements when you can’t guarantee that everyone can get it,” he said. “The impact . . . is that some people who need it won’t get it.”
Mr Cornet said a survey by his organisation in late March suggested up to 60 per cent of patients had not been able to find hydroxychloroquine at pharmacies. While in most instances the drug arrived within a few days, in about 10 to 20 per cent of cases — potentially representing thousands of people — it did not.
Lupus is estimated to affect more than 100,000 people in Europe — the vast majority of them women — and experts think use of hydroxychloroquine over the past decade has helped sufferers live longer. At least another 2m people in Europe are thought to suffer from rheumatoid arthritis.
Both are diseases of the immune system. This means many sufferers will be at greater than average risk from Covid-19, particularly if they are forced to seek hospital treatment because a drugs shortage has caused their conditions to flare.
The European League Against Rheumatism (Eular) — which represents patients, health professionals and scientific societies — said it had received reports of localised hydroxychloroquine shortages in Austria, Portugal, Serbia and the UK.
Drug industry officials say doctors in some countries had been prescribing the drug for coronavirus, leaving medical authorities scrambling to ensure supplies to longstanding users.
“Hydroxychloroquine is a tried and tested drug for rheumatoid arthritis and particularly lupus,” said Iain McInnes, Eular president.
“These are patients who are already immunosuppressed and so they are part of a vulnerable group. Lupus is a disease that can target major organs, for example the kidneys, so the risks are potentially quite significant,” added Prof McInnes.
Mr Trump has repeatedly referred to hydroxychloroquine as a “game changer” in the fight against coronavirus, despite an absence of clinical trials proving its effectiveness. His advocacy of the medicine has led to soaring demand from manufacturers scattered across the globe as the medicine is off-patent.
Drugmakers, including Novartis, Sanofi, Teva and Mylan, have said they would ramp up production of the drug and distribute it for compassionate use.
India, one of the largest hydroxychloroquine manufacturers, signalled a softening of its export ban on the drug after Mr Trump threatened to retaliate if New Delhi did not fulfil existing orders.
India placed a blanket export prohibition on hydroxychloroquine on Saturday as it raced to contain an outbreak of the virus that threatens to overwhelm its fragile healthcare system.
But India's ministry of external affairs said on Tuesday that — while exports of hydroxychloroquine would remain restricted — “the stock position could allow our companies to meet the export commitments that they had contracted”.
WeWork sues SoftBank for backing out of $3bn deal
Move escalates hostilities between investors who helped drive sky-high valuation of office group before its crash last year
A special committee of WeWork board members issued a legal challenge over SoftBank’s withdrawal from a $3bn deal on Tuesday, in what is expected to be the first of several legal disputes over the Japanese group’s decision to pull out of an earlier agreed share buyout.
The committee’s lawsuit against SoftBank and its Saudi Arabia-backed Vision Fund, filed in a Delaware court, said the group had “engaged in a purposeful campaign to avoid completion of the tender offer”.
The $3bn agreement was just one part of a multibillion-dollar rescue package SoftBank negotiated with WeWork last autumn that injected $1.5bn in emergency capital into the office company and provided new debt to stave off imminent insolvency.
The lawsuit represents an escalation of hostilities between two of the shareholders who helped turn WeWork into one of the world’s most highly valued companies before its crash last year, when a failed initial public offering left the high-spending company with just a few weeks worth of cash and reset its valuation from $47bn to under $10bn.
The special committee includes Bruce Dunlevie of Benchmark Capital, which bolstered WeWork’s claim to be a tech company when it became the first Silicon Valley investor to back Adam Neumann’s start-up in 2011. The committee’s other member, Coach chairman Lew Frankfort, is another longtime WeWork board member and shareholder.
“SoftBank’s failure to consummate the tender offer is a clear breach of its contractual obligations under the [master transaction agreement] as well as a breach of SoftBank’s fiduciary obligations to WeWork’s minority stockholders, including hundreds of current and former employees,” the committee said in a statement.
SoftBank’s legal argument hinges on a provision of the rescue deal, which permitted it to back out of the share purchases if SoftBank, the Vision Fund or WeWork faced “material liability” over investigations into the company and its co-founder Adam Neumann, who stepped down last year.
The special committee said that none of the investigations into WeWork and its behaviour, which includes an inquiry from the Securities and Exchange Commission, would result in any material liability to the company. It added that SoftBank was aware of all of the investigations when it amended its rescue deal in December.
The $3bn deal was also dependent on regulatory approval as well as separate transactions involving two WeWork joint ventures in Asia.
“None of the conditions that SoftBank listed gave it a legitimate basis to terminate the tender offer,” attorneys from Wilson Sonsini, which is representing the committee, wrote in their complaint.
How a judge interprets those provisions and determines potential material damages will decide the fate of suit.
SoftBank will "vigorously" defend itself, a spokesperson said, describing the lawsuit as "a desperate and misguided attempt" to rewrite the tender agreement. “Nothing in the special committee’s filing today credibly refutes SoftBank’s decision to terminate the tender offer," the Japanese group said, adding that it remained fully committed to WeWork's success.
The legal battle between WeWork’s largest shareholders has broken out as the economic tumult triggered by the coronavirus pandemic is putting new pressure on its business.
Most of the group’s tenants are on short-term leases, allowing them to walk away in a downturn, and thousands have already withheld rent or told the company they plan to terminate their leases, according to people familiar with the details.
The company, which had $4.4bn of cash and commitments at the end of last year, has also lost access to $1.1bn of debt financing that had been contingent on the completion of the tender offer. Lawyers for the special committee said WeWork could be “further imperilled by losing access to this potential source of funding”.
SoftBank and the Vision Fund declined to comment.