Gapping upIn reaction to strong earnings/guidance:
- VNDA +25.6%, DXCM +19.5%, ASRT +17.8%, IVC +14.1%, LVGO +13.4%, CECO +13.2%, CNDT +11.8%, MEET +11.8%, ELF +11.5%, BL +11.5%, JE +11.3%, EYE +11.2%, TXMD +9.9%, GDDY +9.6% (also announces new $500 mln buyback program), MBUU +9.6%, LXRX +9.4%, ANGI +9.3%, SAIL +9.1%, RL +9%, MT +7.3%, DNR +7%, BIDU +6.9%, IIPR +6.6%, IQ +6.2%, QCOM +5.5% (also appoints Akash Palkhiwala as CFO), NKTR +5.5%, FOCS +5.2%, TRGP +5%, ALB +4.9% (also filed mixed securities shelf offering), AEL +4.9%, NEX +4.9%, RDFN +4.8%, EBS +4.7%, XRAY +4.5%, CAH +4.1%, KDP +3.8%, NVRO +3.7% (also announced CFO retirement), PROS +3.5%, ECPG +3.4%, TTGT +3.3%, GOGO +3.2%, FISV +3.1%, ORA +2.9%, RDCM +2.9%, NLSN +2.8% (also completes strategic review -- confirms plans to split, will reduce quarterly cash dividend payment to $0.06 from $0.35) WYNN +2.7% (also filed mixed securities shelf offering), ATSG +2.5%, ZTS +2.5%, ET +2.4%, FOXA +2.4% (also authorized $2 bln stock repurchase program), PAAS +2.4%, AZUL +2.4%, TLND +2.3%, NRG +2.3%, MRO +2.2%, ERI +2.1%, ADNT +2.1%, SQ +2%, GTS +2%, CBB +1.9%, ZAGG +1.8%, WK +1.8%, APHA +1.8%, CNP +1.8%, WNC +1.7%, TTI +1.6%, ABC +1.5%, CNQ +1.4%, DISH +1.4%, CXW +1.3%, EVOP +1.3%, DVAX +1.2%, TEVA +1.2%, CORE +1.1%, DISCA +1.1%
Other news:
- UNIT +5.2% (declared quarterly dividend of $0.22/share)
- CHRS +2.6% (acquired rights to commercialize Bioeq's biosimilar candidate to Lucentis in the US)
- AVP +2.1% (Brazilian anti-trust authority approves co's acquisition by Natura)
- AUPH +2.1% (completes FDA-requested clinical drug-drug interaction study in patients with lupus that investigated the potential effect of voclosporin on blood levels of mycophenolate acid)
- CNHI +1.7% (launches new buy back program to repurchase up to $700 million in the Company's common shares)
- RTIX +1.6% (Glen Capital Partners disclosed 6.9% active stake)
- ARGX +1.5% (prices offering of 1,410,057 ADSs at a price of $121.00 per ADS and the sale of 2,589,943 ordinary shares at a price of €109.18 per ordinary share)
- ARVN +1.2% (prices offering of 4,545,455 shares of its common stock at $22.00 per share)
- HPQ +0.8% (confirmed conversations with Xerox [XRX] regarding potential combination)
Analyst comments:
- REGN +1% (upgraded to Buy from Neutral at Citigroup)
INSTAGRAM, FACEBOOK TO BAN THE USE OF THE EGGPLANT AND PEACH EMOJI IN A SEXUAL MANNER
MISS2BEES
It’s safe to say that we’re not talking about fruit when we send someone the eggplant or peach emojis. For this same reason, Facebook and Instagram have updated their guidelines to ban the use of the emojis as a sexual expression on their social media platform.
Hover over the keyword to read more about the topic without leaving this page!
If a user uses either of the aforementioned emojis to suggest that they’re sexually aroused then the user will get flagged and it will qualify as “Sexual Solicitation.”
“[Content] will only be removed from Facebook and Instagram if it contains a sexual emoji alongside an implicit or indirect ask for nude imagery, sex or sexual partners, or sex chat conversations,” Instagram tells The New York Post. “We aren’t taking action on simply the emojis.” Such emojis used to cover nipples, butts or any other private or suggestive areas will also lead a user to be flagged that could later get them banned from either platform.”
Links to adult content or pornography will also get a user banned. Adult star, Kendra James, admitted that her money flow has been affected when she “told a man who DM’d me demanding free nude pics that this was my job and he could join my site.”
What are your thoughts on Instagram and Facebook’s new policy?
LONDON (Reuters Breakingviews) - Masayoshi Son’s SoftBank Group is a giant tech-investment machine whose gears are greased by generous dollops of debt. Borrowing worked well for the $80 billion company as asset values rose; it could become a problem as they go into reverse.
On Son’s preferred measures, SoftBank’s debt burden seems manageable. The Japanese billionaire wants to keep borrowing below one-quarter of the value of its assets, which include stakes in e-commerce group Alibaba, two telecom operators, chipmaker Arm and a chunk of the $100 billion Vision Fund. On that count he has a comfortable margin of safety: net debt was $45 billion at the end of June, or just 17% of his portfolio’s $260 billion worth, using market prices for the listed stakes and SoftBank’s estimates for its private holdings. Cash on hand covers at least two years of bond repayments, while cash flows were more than twice annual interest payments in the 12 months to June.
DEBT ONION
Those measures don’t tell the full story, however. To start, Son’s telecom subsidiaries - America’s Sprint and Japan’s SoftBank Corp – have together borrowed about $90 billion. Legally the debt is non-recourse, which means SoftBank could walk away without being pursued by angry creditors. But it’s hard to imagine Son ever washing his hands of Sprint. Doing so would wipe out over a tenth of the Japanese group’s asset value and make it harder for other units to borrow in future.
Indeed, Son recently used SoftBank’s balance sheet to bail out office sublessor WeWork. Credit investors are apt to wonder whether rescuing cash-burning investees is a contingent liability.
There’s another layer of leverage in Son’s $100 billion Vision Fund, which owns stakes in loss-making companies like Uber Technologies. About $40 billion of the investment vehicle’s capital is in preferred shares which pay a 7% annual coupon to investors like Saudi Arabia’s Public Investment Fund. Though it’s not strictly debt, Son has to honour those payments before rewarding his own shareholders. The fund has also signed deals with banks allowing it to borrow up to $4.1 billion against some of its investments, partly to help pay those coupons. That magnifies the downside if the portfolio stumbles.
Finally, there’s Son himself. The 62-year-old tycoon has pledged 38% of his $18 billion SoftBank stake as collateral for personal loans, Bloomberg reported, and he accounts for most of the $5 billion SoftBank has lent employees to invest in the Vision Fund. That means both he and the parent group are more geared to the vehicle’s performance.
THIN COVER
Even using Son’s narrow net debt definition, SoftBank’s borrowings are more burdensome than they look. The official loan-to-value ratio is premised on a puffed-up portfolio. For example, the company values the 26% shareholding in Alibaba at its $120 billion market value even though taxes on any disposal could be up to 30%, Bernstein analysts reckon. Equity investors rightly take a more sceptical view. SoftBank’s market value is just 38% of the touted value of Son’s portfolio, after deducting debt.
The group’s ability to meet future interest repayments is also less solid than it looks. SoftBank received about $4.5 billion in cash from its portfolio companies in the 12 months to the end of June. This comfortably covered debt-servicing costs of about $2.1 billion. But that cash came from just two sources. The first was the Vision Fund, which paid $2 billion in management fees and proceeds from the sale of holdings like chipmaker Nvidia. The second was SoftBank’s eponymous Japanese telecom business, which paid its parent $2.5 billion in dividends.
Cash proceeds from the Vision Fund are hardly reliable: demand for initial public offerings of tech companies has cooled after the WeWork flop. If Son depended entirely on payments from the local telecom business, he would have little room for manoeuvre. In the 12 months to June, SoftBank’s interest bill was 82% of the dividends it received from the unit. SoftBank also faces a looming spike in debt repayments, with almost $14 billion due in the next three calendar years, using Refinitiv data.
HARD SELL
So what can Son do if he needs cash? The good news is that he’s hardly short of liquid assets: selling just 4% of Alibaba at its current price could cover all SoftBank bonds falling due from 2020 to 2022, assuming a 30% tax rate. The tycoon could also offload unlisted assets like Arm, which he bought for about $32 billion in 2016.
The bad news is that a forced seller rarely gets a good price. SoftBank is by far Alibaba’s largest shareholder; reducing its stake would create a self-reinforcing overhang on the stock. Meanwhile Son’s financial engineering would backfire as asset values fell. SoftBank’s net debt is almost two-fifths of its enterprise value. A 20% fall in the value of its portfolio should therefore send the shares down by almost a third. At that point, Son’s giant investment machine would be running in reverse.
Early premarket gappersGapping up:
- VNDA +25.6%, DXCM +21.8%, ASRT +17.8%, LVGO +14.8%, CBB +14.4%, IVC +14.3%, CECO +13.2%, CNDT +11.8%, BL +11.5%, JE +11.3%, TXMD +10.7%, ANGI +9.3%, GDDY +9.2%, ELF +9.1%, SAIL +9.1%, MT +8.1%, NEX +6.9%, IQ +6.8%, IIPR +6.7%, BIDU +6.5%, QCOM +6.4%, CHRS +6.3%, NKTR +5.5%, AVP +5.3%, ALB +4.9%, AEL +4.9%, EYE +4.9%, RDFN +4.8%, ET +4.7%, EBS +4.7%, UNIT +4.6%, NLSN +4.5%, FOXA +4.2%, DNR +4%, NVRO +3.7%, PROS +3.5%, ECPG +3.4%, TTGT +3.3%, GOGO +3.3%, TRGP +3.2%, FISV +3.1%, CXW +2.8%, LKSD +2.8%, ATSG +2.5%, AZUL +2.4%, WYNN +2.4%, ORA +2.4%, AZUL +2.4%, TLND +2.3%, ERI +2.1%, PAAS +2%, WRK +1.9%, WK +1.8%, HPQ +1.6%, RTIX +1.6%, ABC +1.5%, CNQ +1.4%, DVAX +1.2%, COST +1.1%, SQ +1.1%, CORE +1.1%, APHA +1%
Gapping down:
- OBSV -29.5%, FOSL -29.1%, TPIC -19.1%, PBYI -18%, BAND -16.1%, INSG -15.3%, GLUU -15.1%, ROKU -13.7%, EXPE -13%, AAOI -12.5%, VERI -11.1%, RP -10.4%, RUBI -9.4%, QTWO -9.3%, QTNT -8.7%, LCI -6.9%, EYPT -6.9%, QUOT -6.7%, FSCT -5.7%, STNG -5.5%, UPWK -5.4%, CVNA -5%, STAY -4.9%, COMM -4.7%, AGIO -4.4%, RCII -4.2%, EQH -3.7%, EOLS -3.6%, TRIP -3.6%, BIP -3.6%, SEAS -3.1%, TELL -3%, MFC -2.6%, SEDG -2.4%, AM -2.3%, TWTR -2.3%, KGC -2.3%, XRAY -2.3%, DRRX -2.1%, YETI -2%, ARVN -1.8%, GTN -1.6%, VSLR -1.5%, SUN -1.5%, TPC -1.3%, DCP -1.3%
SoftBank Founder Calls His Judgment ‘Really Bad’ After $4.7 Billion WeWork Hit
Masayoshi Son says of WeWork co-founder Adam Neumann: ‘I shut my eyes to a lot of his negative aspects’
TOKYO— Masayoshi Son, the billionaire founder of SoftBank Group Corp. , said Wednesday his “really bad” judgment championing U.S. office-sharing company WeWork left the Japanese conglomerate and its massive tech-investment fund with the biggest quarterly loss in its 38-year history.
Standing in front of a screen projection of stormy seas and dire Japanese-language headlines, Mr. Son told a news conference in Tokyo that he had made serious errors in judgment that led the group to post earnings “of the deepest red.”
SoftBank and the Vision Fund wrote down the value of their WeWork stakes by $4.7 billion and $3.5 billion, respectively. The $100 billion Vision Fund also wrote down the value of its holdings in U.S. ride-hailing company Uber Technologies Inc. and about 20 other investments, leading to an operating loss—the fund’s first—of nearly $9 billion for the quarter, and a group-wide net loss of $6.4 billion.
“My own investment judgment was really bad. I regret it in many ways,” Mr. Son said.
Mr. Son is fighting to preserve his reputation as one of the world’s savviest and most influential technology investors after the spectacular collapse of one of his most prized portfolio companies and the tumble in value of several others.
WeWork, officially known as the We Co., lost almost $40 billion in value after an attempt to go public backfired a few months ago amid widespread skepticism about the company’s profitability and management.
All told, SoftBank and the Vision Fund have plowed nearly $20 billion in debt and equity into WeWork, yet value the company at less than half that, at $7.8 billion.
SoftBank had recently stepped in with a $9.5 billion bailout that boosted the group and Vision Fund’s stake in WeWork to 80%.
The collapse was particularly embarrassing for Mr. Son because he had pushed for the investment in WeWork—which before the October bailout had totaled more than $10 billion—and championed its founder, Adam Neumann. Mr. Son said he had been too enamored of Mr. Neumann’s positive qualities and turned a blind eye to negatives, including governance problems.
Mr. Son pledged never to mount another rescue of a portfolio company and said SoftBank and the Vision Fund were now using the ability to turn a profit in the future as the premier yardstick for measuring the value of its investments. He said the group is working on guidelines to ensure good governance at its portfolio companies.
Yet Mr. Son also mounted a spirited defense of the Vision Fund’s overall performance and outlook, saying that despite last quarter’s write-downs the fund still had investment gains of $11 billion since its inception in 2017. Mr. Son said the Vision Fund’s return was well north of 13%.
Mr. Son also said his plans for a second Vision Fund of about the same size as the first continue to move forward, despite the WeWork mess. Some potential investors have become more cautious but haven’t pulled out, and many of the first fund’s investors are still interested in putting money in its successor, he said. “There’s no need for me to be so overcome with regret that I wither away,” Mr. Son said. “The vision remains the same.”
California Probing Facebook’s Privacy Practices
State’s attorney general accuses tech giant in lawsuit of not complying with subpoenas related to investigation
California is investigating Facebook Inc. FB -1.43% ’s privacy practices, the state’s attorney general revealed Wednesday in a lawsuit that accuses the Silicon Valley tech giant of failing to adequately comply with information requests.
Attorney General Xavier Becerra said he has asked the San Francisco Superior Court to force Facebook to comply with investigators’ subpoenas, the latest of which were issued in June.
“The responses we have received to date are patently inadequate,” he said at a press conference.
California prosecutors began probing Facebook in 2018, shortly after the company said data from as many as 87 million of its users may have been improperly shared with Cambridge Analytica, a British political consulting firm that worked on President Trump’s 2016 campaign and has since shut down. Facebook says it has complied with requests from California authorities.
As it sought to settle a privacy investigation by the Federal Trade Commission, Facebook uncovered emails that appeared to connect Chief Executive Mark Zuckerberg to potentially problematic privacy practices at the company, The Wall Street Journal previously reported. Facebook’s unearthing of the emails while it responded to the federal probe raised concerns internally that they would harm the company, at least from a public-relations standpoint.
The emails suggest Mr. Zuckerberg and other senior executives didn’t make compliance with an existing FTC consent decree a priority, the Journal reported. The potential impact of the internal emails was a factor in the tech giant’s desire to reach a speedy settlement with the FTC.
In July, the FTC approved a roughly $5 billion settlement with Facebook related to privacy missteps by the company.
California said in its legal filing that it doesn’t believe Facebook has searched the emails of either Mr. Zuckerberg or Chief Operating Officer Sheryl Sandberg in response to the subpoena.
“We have cooperated extensively with the state of California’s investigation,” Facebook Vice President of State and Local Policy Will Castleberry said Wednesday. “To date, we have provided thousands of pages of written responses and hundreds of thousands of documents.”
Mr. Becerra’s office said it issued a first round of subpoenas to Facebook on June 4, 2018, including about the company’s ties to Cambridge Analytica. It waited more than a year for responses from the social-media giant, the attorney general’s office said.
A second round of information requests was issued this past June. In that case, the company didn’t answer 19 of 27 sets of written questions, gave only partial responses on six others and didn’t provide any documents to six document requests, the attorney general’s office said.
California’s investigation focuses on Facebook’s compliance with state privacy and consumer protection laws, the lawsuit says, including whether Facebook allowed its business partners to access user data even when those users had opted out of such sharing, as well as the company’s technical explanations about how its software allowed outside entities to access user data.
Facebook and other tech giants face increasing pressure from regulators for some of their actions. A bipartisan group of more than 40 state attorneys general in September formally launched an investigation into Facebook and Alphabet Inc. ’s Google to determine whether the companies sought to stifle competition, potentially harming consumers.
Federal officials are also examining whether other big tech companies, including Apple Inc. and Amazon.com Inc., exert too much power over competitors. Google has said it is complying with the probe. Apple and Amazon have generally said they don’t engage in anticompetitive behavior.
While California, where Facebook is based, hasn’t been involved in the effort by state attorneys general, Mr. Becerra hasn’t officially ruled out the state’s involvement.
California is set to debut a sweeping privacy law in January. The law intends to give residents unprecedented rights to know what data businesses collect about them. Mr. Becerra in October released a draft of regulations to enforce the new law.
As Facebook aims to comply with the FTC consent decree, it has been trying to stamp out areas where user data is improperly shared. In a blog post Tuesday, Facebook said it found instances where app developers had more access to user data than intended. It has asked the developers to delete the information they shouldn’t have been able to access, the company said.
“The new framework under our agreement with the FTC means more accountability and transparency into how we build and maintain products,” Konstantinos Papamiltiadis, Facebook’s director for platform partnerships, said in the blog post. “As we continue to work through this process we expect to find more examples of where we can improve, either through our products or changing how data is accessed.”