New Start-Up That Makes Travel Affordable; One Down, More to Go: Wells Fargo’s John Stumpf Goes Buh-Bye; Delta Gets its Due for August Outage

Coffee, Tea or Affordable Travel?


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There’s a one year old tech start-up that wants to get you traveling. It’s called Airfordable, and it lets users pay for airline tickets through installments. But first you need to take a screenshot of your itinerary and upload it to the site. Then the company sends you a payment plan. If you want to make it yours, you need to shell out a third of the price for the initial deposit. But once your ticket is paid off, Airfordable will present you with an e-ticket and you’re well on your way. Co-founder and CEO Ama Marfa came upon the idea whilst in college and unable to afford the $2,000 airfare to fly home and see her family in Ghana. And she wasn’t the only one as several students, both domestic and international encountered similar challenges. So how does Airfordable make a buck? By simply adding a service fee of between 10% – 20% spread evenly across the payments. If a user defaults or needs to change plans, all the money that was paid, minus the initial deposit, gets put back into their Airfordable account, where users have up to a year to use the money towards a different flight.  As with any ambitious start-up, the company plans to branch out into vacation packages and hotels. Airfordable already has 27,000 users and scored a seed round of funding from Y Combinator. Not bad for a company that came into existence after America’s abysmal choices in the presidential primaries.

What are you going to do with all that free time?


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The drama continues at embattled Wells Fargo but at least John Stumpf has finally threw in the executive retirement towel yesterday. At first denying and then blaming 5,300 terminated  low-level employees, Stumpf managed to incur the wrath of investors, lawmakers and consumers. Oh my! His abysmal handling of the scandal that involved the opening of countless fraudulent accounts gained extra special attention from Senator Elizabeth Warren. And if for some inexplicable reason you feel sympathy for Mr. Stumpf, then don’t. He’s walking away with over $133 million – and that’s after a $41 million clawback in unvested options courtesy of Congress. That $130 million figure is not a typo. In case you’re wondering how on earth he will be walking away with more money than those 5,300 terminated employees probably made in the last ten years combined, he’s entitled to 2.4 million shares, $4.4 million from deferred compensation plus another $20 million from his pension account. But take heart that he received no severance. Isn’t that reassuring? But that’s not his only source of income. For now anyways. While Stumpf has been CEO at Wells Fargo since 2007, he also still sits on the boards of Target and Chevron and collects…wait for it…about $650,000 frrm those positions. Both Target and Chevron have yet to take an official position on whether Mr. Stumpf will continue his  roles at those organizations. But judging by how events have been unfolding, he might just end up with a lot more free than he anticipated.



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Delta Airlines took a profit hit for the third quarter. The airline lost $150 million from its massive tech outage that saw the cancellation of 2,300 flights over the course of three days back in August. Even though analysts expected that, Delta still earned $1.3 billion, a 4% drop over last year at this time, but still adding up to $1.70 added per share.  The company took in $10.5 billion in revenue, which is not as impressive as one might think considering that it was a 5.6% decrease and a $724 million drop from the same time last year. And yes, about $100 million of that was from the outage.  In any case, analysts wanted to see revenues of $10.55 billion. So no matter how you crunch those numbers, they disappoint. Part of the problem was that the airline had too many seats – a fact that was not lost on the number crunchers. Delta will scale back its seat offerings next year in an effort to boost prices. Something to look forward to. Because fuel prices are still a relative bargain, Delta got away with spending just $1.4 billion, 22% less than it did during the same time last year. But experts don’t expect that to happen again. Shares for the airline are down 23% for the year, which only adds to the weirdness surrounding the sudden departure of executive chairman Richard Anderson just two days ago.

Peso: 1, Trump: 0; Trump Gets Shut Down – Just Not the Right One; How Nobel! Contract Theory Gets Props



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The peso is rising and ironically, Mexico has Donald Trump to thank. Who would have thunk it? The more Donald’s chances for the presidency dwindle, the higher the peso goes.  There is an O’Henry novel in there somewhere. The peso, in fact, had hit a record low just hours before the first debate on September 26 after falling 9% against the dollar this year.  Then this weird thing happened: the Mexican currency rebounded when Hilary Clinton went into full-court debate/attack-mode; or maybe from the negative momentum spewing from Donald’s Trump’s mouth – you decide. However, the peso did lose some of its gains when Trump began attacking Clinton’s use of her private e-mail server and all of her own shifty activities. But over the weekend the peso has been enjoying some new impressive gains and even surged to a one-month high, at least in part owing to Trump’s 2005 “Locker Room Talk” video which viscerally offended…everyone. Of course, we mustn’t rule out his performance at Sunday night’s debate. His showmanship seemed to just about clinch the demise of his presidential aspirations and also presumably helped the peso gain some much needed mojo. I guess that’s what they call karma. After all, he did say that if he wins, he’s going to slap some hard-core tariffs on Mexican imports and that’s a scary thought for a country who sees 80% of its exports going to the U.S. Trump wants to chuck NAFTA, or at the very least, renegotiate the terms so that they are more favorable to the U.S. That’s besides having our neighbor to the south foot the bill for a wall to keep out immigrants.



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In other Trump news, the Trump Taj Mahal closed its doors…for good. Wish you could say the same of the candidate with the same name, huh? Trump opened the Trump Taj Mahal in 1990, and billed it as “The eighth wonder of the world.” Try not to throw up in your mouth. It was one of the largest casinos in the world and held the dubious distinction of having gone through multiple bankruptcies. Talk about the Trump theme song. In case you were hoping this closure puts a ding in Trump’s armor, don’t bother. He hasn’t owned it for years. He lost his share to bondholders and then resigned as chairmen. The property belongs to activist-investor Carl Icahn, and after massive losses and a breakdown in negotiations with unions, 3,000 employees now find themselves out of work.  Not that the news came as any great shock seeing as how the closure was announced in July. A thousand union members went on strike back then, in part angered that they only saw 80 cents per hour in raises for the last twelve years. Believe it or not Trump hadn’t even owned the casino for much of that time. So we don’t get to completely blame him. Meanwhile, the cost of living in the A.C. went up 25% for the same period so things weren’t adding up for all the casino’s employees. Union members wanted healthcare and pension benefits. Icahn said his last bid offered medical benefits, though the union still didn’t bite. Keeping the casino open would have meant more than $100 million in losses, that would have been in addition to the $350 million that the casino lost in the last few years. And nobody I know likes to lose money. Especially when there are so many commas involved.

Winner winner…


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Now let’s move on to two people who actually make the world a better place. Too bad neither one of them is running for President. Oh well. But I guess winning the Nobel Economics Prize probably means you’re over-qualified for the position anyway. In any case, congrats are in order for MIT’s Bengt Holmstrom and Harvard University’s Oliver Hart. Their work on “contract theory” is so impressive that it seems only fair to hand them the prestigious award, which also comes with a $928,000 cash prize. As for contract theory, it deals with how to best design contracts, taking into consideration human behaviors in business. Whether you like it or not, contract theory has played a big part in executive pay. It helps out in all kinds of situations like how to effectively run corporations, dole out corporate compensation and even formulate bankruptcy legislation. It also studies the implications of workplace pay, like whether managers should get bonuses or stock options, or if teachers and healthcare workers should be paid a fixed rate or a salary that is performance-based. Contract theory also examines whether certain institutions, like schools hospitals and prisons, would fare better if they were privatized. Although, I find it somewhat disconcerting that prisons were lumped with hospitals and schools. Just saying.

Add the Military to Wells Fargo’s List of Haters; Tesla’s Not Down With Discounts; Beverage CEO’s Earnings Lose Fizz

And the list of offenses just keeps growing…


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As Wells Fargo CEO John Stumpf continued to get a much-deserved beating by Congress today, the bank now finds itself staring down the wrong end of a Justice Department sanction. The reason? It seems Wells Fargo improperly repossessed cars owned by…wait for it…members of the military. That’s right. Wells Fargo was screwing over the very folks who defend this country.  Is your stomach done churning yet?  The bank apparently violated the Service-members Civil Relief Act and both Federal prosecutors and the Office of the Comptroller of the Currency have big plans for the bank that have nothing to do with stock options and hefty bonuses. It’s borderline-disturnbing that Wells Fargo proudly proclaims on its website that it has “a history of making banking easier for our servicemen and servicewomen.” If found guilty, Wells Fargo could end up forking over an estimated $20 million in penalties. That would be in addition to the $185 million that Wells Fargo was fined for opening up those two million fraudulent accounts.  Sadly, Wells Fargo isn’t even the first bank to repossess vehicles from service people who were delinquent on their loans. Banco Santander had to pony up $9 million last year for similar actions.

Blame it on Reddit…


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Looks like the discount days are over at Tesla where CEO Elon Musk sent out an email to his employees telling them to stop the practice. Apparently, Tesla has a “no negotiation no discount policy” that was in effect since day one, ten years ago when consumers could first start purchasing the battery-operated vehicles. Musk isn’t even into discounts for employees – which I think is a bit unfair. Just saying. No discounts even when the average vehicle discount in the U.S. is just under $4,000. Of course, discounts can still be applied to floor-model vehicles, test-drive vehicles and vehicles that were damaged during delivery. But for brand-spankin’ new Model S cars, which sell – or should anyway – for about $100,000, don’t even bother calculating their costs other than what the sticker price says. This whole hoopla came about because someone on Reddit posted a question about discounts for Tesla vehicles. The responses to the question did not sit well with Musk, or with analyst Brad Erickson of Pacific Crest Securities. In a research note, Erickson suggested that Tesla was getting loose with discounts in an effort to sell more cars for its third quarter – of which 22,000 were delivered. That figure, by the way, is a 90% increase over last year at this time.  But considering that Tesla has posted an operating loss for 14 consecutive quarters, I suppose there some logic at hand.

Fizzy logic…


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Nick Caporella, the CEO behind the fan favorite drink LaCroix, probably isn’t felling too bubbly right about now. Glaucus Research Group just released a very unflattering report about the Florida-based company, basically accusing it of cooking the books. The report also says Caporella used false invoices and other forms of creative accounting to inflate earnings when they weren’t quite where he wanted them to be. In all fairness, Glaucus has a short interest in the company, in the form of 2.26 million shares.  If National Beverage’s stock falls, Glaucus stands to gain a sizable chunk of cash. And that’s exactly what happened as National Beverage’s stock took an 8% hit today despite calling the report “false and defamatory.” It seems some of Glaucus’ research came from a failed 2012 lawsuit from a former associate.  In any case, shares of National Beverage were up 58% in the last twelve months  – that is, up until its recent drop. Interestingly, the soft drinks National beverages sells, including Faygo and Rip It energy drinks, sell for 40% less than Pepsico’s offerings, yet both companies have the same reported operating margin. Weird, right?  Another unusual tidbit is that despite National Beverages major increases in profit and revenue, its advertising and shipping costs remained flat, according to Glaucus’ report at least. Last month the company reported first quarter earnings where revenue was up 17% to $217 million and profit was up 69% to $29 million. Not bad for a company that basically sells fizzy flavored water and Shasta – remember that one? In the meantime the SEC is staying mum on the subject and the stock closed at $42.67.

The Hits Keep on Coming for Wells Fargo; Janet Yellen Gets a Grilling; Perk Up! Thursday is National Coffee Day



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The hits just keep on coming for Wells Fargo as the great state of California gave the bank a major diss in the form of a year-long suspension of its business relationships. The bank is officially barred from underwriting debt and handling bank transactions for the Golden State. And if Wells Fargo still can’t get its act together, it can expect a “complete and permanent severance.” Yikes. I guess that’s what happens when you open up 2 million fraudulent accounts and according to State Treasurer John Chiang, promote “a culture which actively promotes wanton greed.” More yikes. Since Chiang oversees $2 trillion worth of banking transactions, besides managing a $75 billion investment pool, he’s probably a bit sensitive about the way banking institutions handle all that money. In the meantime, Wells Fargo CEO John Stumpf will kiss goodbye his $41 million in unvested stock awards.  Carrie Tolstedt, who oversaw the division that was responsible for green lighting the fraudulent accounts, loses all of her unvested awards and gets no further retirement benefits.  Other than the really good ones she already received.



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Fed Chairwoman Janet Yellen took a beating today from Congressman Scott Garrett over Lael Brainard’s chummy relationship with Hillary Clinton. Brainard, in case you might not know, is the governor of the Fed and is rumored to be the top pic for Treasury Secretary. She also gave $2,700 to the Clinton campaign. Congressman Garrett doesn’t take too kindly to this appearance of impropriety and asked the Chairwoman if this doesn’t pose a conflict of interest for the Fed, seeing as how Brainard is in talks with the Clinton campaign. After all, the Fed is supposed to be non-partisan. Yellen, said she was’t aware that there was, in fact, a conflict while also maintaining that the Central Bank has no biases as far as politics are concerned. Of course, Donald Trump disagreed vehemently with that assessment during Monday night’s presidential debate when he insisted that the Fed is keeping rates low to make Obama look good.  Incidentally, Janet Yellen chaired President Bill Clinton’s Council of Economic Advisers. Besides all that, there apparently is no issue with Fed officials giving money to campaigns. Who knew.

Oh the perks…


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Consider this next bit a public service announcement:  Thursday September 29 marks National Coffee Day. Yes, that’s a real thing. And before you whip out your wallet, you might want to know which eating establishments wont be charging you for your java fix. If you happen to be near a Krispy Kreme store, then I urge you to step inside. Rumor has it you’ll score a free coffee and glazed donut just for showing up. But be sure to say thank you! Manners are key. If you’re a fan of Wawa coffee, then you’re in luck as that chain is also offering free cups of its brew. Particpating 7-Elevens are also giving out free coffee. Just make sure you have their smartphone app and register for its 7Rewards program. Dunkin’ Donuts will offer medium-sized cups of coffee for just 66 cents in honor of the company’s 66th birthday. As for Starbucks, don’t expect any freebies. Ever. However, the company is affording you the opportunity to be charitable. For every brewed cup of Mexico Chiapas Starbucks sells, the company will donate a coffee tree to Latin American growers whose crops have been destroyed by fungus.

Sheryl Sandberg: Lean In Women of Corporate America!; Major Tech Company Needs Major Diversity Overhaul; It’s Claw and Order for Wells Fargo

Corporate America Blues…


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Sheryl Sandberg had some thoughts to share with world today in the Wall Street Journal. And when the founder of and COO of Facebook has thoughts, it’s in everyone’s best interest to hear them loud and clear.  Sandberg wrote about the results of a 2016 study of Women in the Workplace, arguably the most comprehensive annual review of women in corporate America. With 132 companies and more than 4.6 million employees surveyed, the results might shock you, but will mostly disappoint. And here’s why: Women continue to face social pushback for daring to ask for what they deserve. Gasp! Apparently such actions are still viewed as “bossy” and “aggressive.” And that is so weird because men are not viewed that way at all for the same actions. Go figure. But then there’s also the fact that women are underrepresented at every single level and hold less than 30% of senior management roles. As if that’s not bad enough, women are also less likely to get promoted from entry level positions to managerial ones and lose ground the higher they climb up that golden corporate ladder.  The news only gets worse for women of color as they are the most under-repped group with the steepest drop-off as they get to middle and senior management. There is hope, though, as more women are asking and getting promotions and raises.  They are negotiating those items just as much as their male counterparts. Unfortunately, women are still less likely to get promoted.  Which is bananas since research has shown that gender diversity helps businesses get better results, revenue and profit.  Sandberg suggests companies set targets, openly discuss gender stereotypes and start helping businesses get better through gender diversity. Let’s hope 2017’s study shows some markedly different results.

Speaking of a lack of diversity…


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When you count the FBI and U.S. Army as your clients, showering you with hundreds of millions of dollars in contracts, it’s best to foster a diverse workplace that shuns the slightest hint of discrimination. And so we have Palantir Technologies, a data mining company founded by Peter Thiel that is rumored to be valued at about $20 billion. The Labor Department is suing Palantir Technologies over discrminination practices against Asian applicants. If the name Palantir Technologies sounds vaguely familiar, it’s because the company’s resources helped track down Osama Bin Laden. Osama Bin Laden aside, the Labor Department believes the company routinely discriminated against Asian applicants for software engineering jobs. In one example, out of an applicant pool of 130 for an intern position, where 73% of the applicants were Asian, only four Asians were actually hired along with 17 non-Asians.  Palantir charges that the Department of Labor was using “flawed statistical analysis,” yet the Labor Department contends that there is just a one in a billion chance that that selection happened by chance. At least Palantir will be in good company as Facebook and Twitter were also sued for discrimination…by Asian-American women.

And then there’s Wells Fargo…


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The Board of Directors at Wells Fargo might just be clawing back some of the lofty compensation awarded to CEO John Stumpf and former head of community banking Carrie Tolstedt. That decision will be made on Thursday when Mr. Stumpf gets to testify before the House Financial Services Committee to talk about the two million credit and debit cards that were opened without authorization – under the department that Tolstedt ran. Tolstedt conveniently retired in July, by the way. The big question remains as to how much will be clawed back from Stumpf and Tolstedt.  Stumpf took home about $160 million while Tolstedt walked away with around $90 million. Not too shabby considering the massive fraud that happened under their watch.  And as I mentioned in an earlier post, no top level employees were fired or penalized, yet many many low level employees were given their walking papers. Which is weird because lower-level employees usually just follow the orders they’re given. After all, acting unilaterally in a major banking institution is typically frowned upon. Meanwhile, as Wells Fargo continues to stay mum on the subject, the Department of Labor is launching an investigation into the bank’s questionable workplace practices.


Mylan CEO Using New Math; End for Land’s End CEO; Mousy Talk on Twitter



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Let’s give it up for Mylan CEO Heather Bresch for providing us with some fiscal humor today. In case you missed it, she told Congress last week that poor little Mylan only makes $50 on each EpiPen 2 pack for which it charges $600. But the darndest thing happened. It seems that, for some strange reason, when Mylan calculated its sales and profit figures to present to Congress, the pharmaceutical company applied a statutory U.S. tax rate of 37.5%. Which is so weird because Mylan re-domiciled in the Netherlands in order to pay less taxes. In fact, last year Mylan paid a rate of 7.4%. And that’s even weirder because at that rate, Mylan’s profits come in closer to $160 per pack. The company sells over 4 million packs a year. If that’s not a $240 million arithmetic discrepancy, then I don’t know what is. Several members of Congress had strong opinions on Ms. Bresch’s capacity for honesty and presumably, math.  Representative Buddy Carter (R-GA), who as luck would have it is also a pharmacist in real life, called Mylan’s creative pricing a “shell game.” Shares of Mylan dropped a smudge.  Oh well.



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After less than two years on the job, Lands’ End CEO Federica Marchionni is out effective immediately. The now-ex CEO, who held posts at Dolce and Gabbana and Ferrari, just couldn’t seem to bring a luxurious vibe to a very middle America brand. Go figure. To be fair, the Wisconsin-based company is giving her credit for helping Lands’ End sow the seeds towards becoming a global lifestyle brand.  Which is incredibly heart-warming.  She probably didn’t help her cause when she interviewed Gloria Steinem for the company’s Spring catalog. At first she ticked off the anti-abortionists just for featuring the iconic yet controversial figure. After all, the company does sell a lot of uniforms to Catholic schools.  I’m pretty sure there’s a joke in there, but I’m not inclined to look for it. Then she managed to tick off the pro-choicers when she apologized to the anti-abortion activists for writing about Steinem in the first place. You can’t win, I tell you.  In the end, however, it did all come down to money, and Ms. Marchionni didn’t really make any for the company. Lands’ End sales were down 7% last year while shares were down 33% for the year. To add insult to fiscal injury, shares are down again today 11%, perhaps because the company now finds itself looking for its third CEO in just over two years.

Tweet tweet, squeak squeak…


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Could Twitter be going to the rodents? That might not be such a bad thing if word on the street – Wall Street, that is – is true.  Rumor has it that Disney is making a play for the social media company along with Google and Salesforce. Shares have been going up on the news since Friday and those shares need all the help they can get as Twitter continues its struggle to increase revenue. But the House of Mouse rumblings seem to have the most traction with talk that the company is currently working on a potential bid for Twitter. Interestingly enough, Twitter CEO Jack Dorsey sits on the Disney board so an acquisition isn’t so far-fetched. And since Disney’s biggest biz, cable television, has been losing ground to online streaming services, Disney Chief Bob Iger has been investing heavily in tech, thereby making a Twitter acquisition a very logical move. Twitter itself is looking to evolve into a bona fide media company, already offering live streaming NFL Thursday Night Football and the Presidential debates that air tonight. That focus will fit in nicely at Disney. Twitter’s hoping an acquisition deal will put the company’s value at a meaty $30 billion.  And who doesn’t like the sound of $30 billion?

Ya-Oops! Internet Biz Breach; Tesla Calling Out Wolverine State; Budget Beauty Goes IPO Glam

Out of breach…


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As if things couldn’t get any dicier at Yahoo, the company is now facing the wrong end of a security breach with roughly 500 million Yahoo accounts caught in the fray of the company’s core internet business. And all this as Yahoo hopes to close a $4.8 billion deal with Verizon so the telecom giant can acquire those compromised core internet assets. It seems talk of a breach surfaced way back in August when a story broke out about a hacker, who goes by the name “Peace,” sold a ton of personal info that included birthdates, usernames, scrambled passwords etc. for the price of three bitcoins. In case you were wondering, because I know you were, that’s around $1,800. The question of the day is should Yahoo have come clean about the breach sooner and been a bit more proactive? After all, there are laws regarding breaches in 48 states that stipulate that companies must alert affected customers within a certain amount of time. But Yahoo might be in the clear since no social security numbers or other financial information was supposedly involved.  For those who have Yahoo accounts and want to take additional precautions, besides changing passwords, they can visit



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Tesla’s not very happy with Michigan right now as evidenced by the lawsuit it filed against the state and its Governor Rick Snyder. Tesla is screaming foul, calling a 2014 Michigan law unconstitutional, because it seems to have been designed to protect auto titan and Michigan darling, General Motors. Apparently, the Great Lake state doesn’t take kindly to automakers selling their cars directly to (gasp!) consumers and refuses to issue a dealership license to the maker of the pish-posh battery-operated cars. Car salesmen find Tesla’s business model positively odious because it has the car company selling its motorized wares directly to the folks who will ultimately be driving them, thereby cutting out the middleman i.e. car salesmen. Tesla, which is also suing Michigan Attorney General Bill Schuette and Secretary of State Ruth Johnson – her department officially rejected Tesla’s license application – is hoping a judge strikes down the the law because it impedes commerce between states. Tesla is currently barred from selling and repairing its cars in Michigan, as well as not being licensed to sell them in Connecticut, Texas and Utah.

IPO glam…


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There’s a new darling on Wall Street and this time it’s one that has very little to do with tech. Enter e.l.f. beauty  – which stands for eyes, lips, face (duh!) – a cosmetics company with 9 stores in the New York area, two stores in the L.A. area and is also sold in 19,000 retail locations including Walmart and Target, of course. E.l.f., which trades on the NYSE exchange under the ticker symbol ELF, is positively fabulous if only because of its super-special price point: it’s considerably lower than other brands with most of its products selling for $6 or less. Backed by private equity firm TPG, the IPO was set to debut between $14-$16 a share, but was then later priced at $17 per share with 8.3 million shares up for grabs.  None of that seemed to matter when it opened this morning at $24 a share and then soared 59% to $27.09. That gave the company a value of over $1 billion which is not bad for a company that sells a bargain product in a very crowded $57 billion global cosmetics industry.