Pres Trump tweets: "As usual, China said they were going to be buying “big” from our great American Farmers. So far they have not done what they said. Maybe this will be different!"
China Global Times Editor-in-chief Hu Xijin tweets: "It is hoped Hong Kong can restore order by itself. That is the best end. If the development of the situation suggests there is no such hope, Beijing's intervention will be inevitable." - "It's a hard choice, but once it becomes the decision. it will be a firm one."
Why Tencent Music Is Stuck With the Same Old Song
China’s largest online music company will struggle to change its tune.
NYSE-listed Tencent Music’s latest quarterly results, reported Monday, struck a bum note. The number of users paying for its Spotify-like music-streaming service rose by a third year-over-year, but since it made less revenue from each of them, sales growth from online music slowed to just 20%. Its share price slumped 6.6% in after-hours trading.
Instead of music, nearly three-quarters of total revenue comes from selling virtual goods to users of its live-streaming and online-karaoke apps, who then gift these to performers they love. That is a problem in the medium term, since the segment faces increasing competition from other entertainment options, like short-video apps and games streaming.
The backdrop helps explain a potential deal from parent Tencent, which spun off the music arm in December. The Chinese videogames and social media giant is in talks to buy 10% of Universal Music, the world’s biggest label, owner Vivendi said last week. That stake could rise to 20% in time.
This tie-up could make music subscriptions more important by helping Tencent Music better compete with its rivals, units of Alibaba and NetEase. The three share the vast majority of their music libraries, partly due to government pressure. Having even a small percentage of exclusive songs could be a key differentiator.
Some analysts think Tencent could also press Universal to take a tougher stance on Bytedance, a valuable Chinese startup that runs the popular short-video apps TikTok and Douyin. These are taking users’ attention away from Tencent games and Tencent Music apps. Theoretically, Universal could withhold licenses or demand higher licensing fees from Bytedance. However, Tencent’s ability to influence Universal’s commercial decisions could be limited.
The more-serious problem is convincing Chinese fans to pay for music. Piracy is rampant and paying users make up less than 5% of Tencent Music’s user base.
Tencent Music’s stock trades at 33 times expected earnings—higher than both its parent and many other Chinese internet companies. With that in mind, now isn’t a good time to tune in.
Scooter Brand Prix Revs Up in Race to Stay on Streets of Paris
Lime, Bird, competitors vie for city approval with ad campaigns, hiring shifts, efforts to yank vehicles from bottom of Seine
PARIS—The fight to be an official provider of electric scooters in Paris is driving firms to dredge discarded vehicles from the River Seine, run apologetic ad campaigns, redesign their models and reshape their workforces.
This fall, Paris plans to award operating licenses to no more than three scooter companies and ban the rest. The chance to operate with limited competition in one of Europe’s most densely populated cities has pushed Lime, Bird Rides Inc. and other scooter services to show city officials they are taking a hands-on approach in a laissez-faire business.
The companies let people use smartphones to rent scooters by the minute and discard them when they are done, which has resulted in cities around the world littered with abandoned scooters. Vandalism, road accidents and thefts of the vehicles have led to restrictions in San Francisco, Nashville and other major U.S. cities. In London, officials were debating whether to allow scooters when a YouTube star was killed last month in a crash.
Paris “will demand that every operator follow social and environmental rules,” said Deputy Mayor for Transportation Christophe Najdovski. More than 1,200 scooters have been impounded, and the city now monitors the location of all scooters in real time, barring their use on sidewalks and banning riders from doubling up on one scooter.
For scooter companies, the fear of expulsion from Paris is outweighing the cost of hiring employees to collect the vehicles. The French capital’s compact layout makes it more cost-effective to deploy staff to distribute and maintain the scooters, which appeal to tourists scooting between landmarks and to commuters who don’t drive to work.
Uber Technologies Inc. UBER -7.62% -owned Jump, a scooter and bicycle provider, says 73% of users are locals. Lime says it has garnered more than a million riders since it launched in Paris last year. In 2018, individual riders logged more miles in Paris than any other city where Lime operates, according to the company.
At Le Meurice hotel, concierge Bertrand Kerzreho sees the scooters whiz down Rue de Rivoli and worries about guests’ safety. “People don’t respect the rules,” he said.
B-Mobility, co-founded by Olympic sprinter Usain Bolt, has redesigned its scooters to make them heavier, with less foot space, to prevent horseplay. “It’s not a scooter you would buy in a toy store,” said Anne-Sophie Frenove, B-Mobility’s Vice President Europe.
Operators have donated equipment and sent volunteers to work with Guppy, an environmental organization that in one day of work in June dredged more than 50 scooters from the depths of the Seine. The practice of fishing for scooters has become so common that Guppy now receives angry calls about piles of muddy scooters and bicycles abandoned on the riverbank by amateur divers.
Bird is rolling out new scooters with thicker wheels and tougher frames better suited for Parisian cobblestones. The company also plans to create a European hub in Paris within the next few years, hiring 1,000 employees, said Kenneth Schlenker, the firm’s managing director in France.
“At the scale we’re at in Paris, specifically, the full-time employment model makes a lot of sense,” Mr. Schlenker said.
Lime kicked off a charm offensive by running ads on hundreds of billboards across the city, acknowledging the public’s exasperation. “Sh*tty scooters,” one billboard reads in French. The company has hired teams to rove the city, moving illegally parked scooters and instructing users on how to ride safely.
Lime also is reconsidering its labor strategy, a spokeswoman said, shifting the criteria for who can work as “juicers,” the company’s term for the freelancers who collect and recharge scooters for a fee—often by stacking them precariously and riding off. That flexible workforce underpins the business model of many scooter companies, allowing them to expand globally without accumulating overhead.
“This is a very intensive, very difficult business, and unless you have a lot of fleet on the ground, a lot of rides, a lot of riders giving you feedback, a lot of governments who you work closely with, it’s very hard,” said David Spielfogel, Lime’s policy director.
Ride-hailing companies like Uber and Lyft Inc. also rely on gig workers while spending heavily on customer acquisition to achieve scale. But some scooter operators say any resemblance with such car services is superficial, and a handful have avoided freelancers for reasons unique to their business. For example, while Uber drivers often own their cars, motivating them to look after the vehicles, juicers are typically encouraged to collect and charge as many scooters as possible, sometimes leading to mishandling.
Amsterdam-based startup Dott hired 80 workers in Paris with collectively bargained benefits, and says it sees its staff as a team of “asset managers or fleet operators” rather than “a marketplace, putting individuals in relation with assets,” according to Nicolas Gorse, Dott’s general manager in France.
The company says it is focused on squeezing value out of its fleet, not expanding to new markets. “We were not looking for a scalable model that lets you do 150 cities in a matter of months,” Mr. Gorse said.
Berlin-based Tier Mobility, which operates in Paris, says it eschews juicers because they cause more wear and tear on scooters. By deploying its own maintenance crews and checking scooters nightly at refurbishment sites, Tier says it has cut the rate of depreciation for its latest model to €1.25 a day. Tier estimates that rate would rise to €15 a day if the company relied on juicers like some of its competitors.
“It’s more economically viable, and it’s more sustainable for us to run the operations and keep control over our fleet,” said Alexandre Souter, who runs Tier’s French operations.
One German scooter company operating in Paris changed its name this summer from Flash to Circ to distance itself from its roots as a startup. Circ is pitching itself to Paris officials as a bespoke operation that tailors its services to large cities like Marseille and Bordeaux as well as quaint French towns Carry-le-Rouet and Sausset-les-Pins.
“Flash, it’s cool. But it also means quick, scale-up, this kind of thing, and we don’t stand for that,” said Stéphane Mac Millan, general director of Circ France
Gapping down
In reaction to disappointing earnings/guidance:
- CVET -27.3%, VCTR -19%, BE -11.8%, AAP -8.2%, BEST -6.5%, TME -5.1%, IIVI -3.9%
Other news:
- PTLA -2.7% (announces $200 mln stock offering)
- UDR -1.2% (prices underwritten public offering of 7.5 mln shares of its common stock)
- AKAM -1% (proposes $1 bln offering of convertible senior notes due 2027)
- PEGI -0.6% (after seeing late spike higher on M&A speculation)
- SO -0.5% (to sell 30 million equity units in public offering)
Analyst comments:
- N/A.
Gapping up
In reaction to strong earnings/guidance:
- AVYA +14.3%, CEPU +11.4%, VFF +9.9%, DOYU +8.4%, GNLN +5.5%, ELAN +5%, PAM +4.8%, PSN +4.3%
Select metals/mining stocks trading higher:
- AUY +4.2%, GFI +3.4%, GOLD +2.9%, SBGL +2.4%, SLV +2.0%, GDX +1.8%, GLD +1.0%
Analyst comments:
- CVIA +2.8% (upgraded to Equal Weight from Underweight at Barclays)