Alphabet Takes on Some Heavy Lyfting; Crash and Burn: Black Monday Crash-iversary Turns 30; Blue Apron Puts Employees on the Chopping Block

 

Car-ma?

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Uber? What’s Uber? I can tell you what Uber isn’t. It isn’t $1 billion more valuable. But you know who is? Its rival Lyft, which just received a very hefty sum of money from Google’s parent company, Alphabet, following a very recent financing round that brings its total valuation to $11 billion. CapitalG, an Alphabet growth investment fund, will now get a seat on the board and an even cushier relationship with the ride-sharing company.  Incidentally, Alphabet is also connected to Uber. However, that relationship went south when Uber went ahead and started developing autonomous cars that compete directly with Alphabet’s Waymo autonomous-driving technology. Naturally, that didn’t sit well with Alphabet. If you recall, and it’s totes okay if you don’t, Alphabet then sued Uber, alleging the beleaguered ride-sharing company committed trade secret theft. Some analysts believe that this little infusion from Alphabet is the company’s way of hitting back at Uber. Seems legit.  In any case, it appears an IPO may be on the horizon for Lyft and if Alphabet’s throwing money at it, it might turn out to be a stock worth watching.

Unhappy anniversary…

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Today’s date marks an anniversary many would like to forget: The stock market crash of 1987, aka, Black Monday. It was exactly 30 years ago today that the Dow Jones Industrial Average (DJIA) crashed 508 points to a smidge past 1700. The index tanked by 22% and the shockwaves rippled all over the world. It was an even bigger one day drop than the stock market crash of 1929.  But miraculously, the market recovered. Well, maybe not for everyone.  In any case, this week (of all weeks), that very same index just hit a new record, breaking the 23,000 mark. To put it in perspective, if the DJIA crashed by 22% today, it would need to lose almost 6,000 points – heaven forbid! Poo poo poo.  Some market experts warn that we could experience another disastrous drop. However, following the nightmare of Black Monday, certain safeguards, dubbed “circuit breakers,” were put into place that basically – and very conveniently – shut down the market after major drops. This prevents trading and sell-offs that could cause further damage. And basically, now if the S&P 500 falls either 7%, 13% or 20%, depending on certain factors, market trading is halted automatically. You are now free to breathe a sigh of relief.

Stick a fork in me…

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Nothing spells trouble like having to cut your workforce just four months after going public. Which brings us to Blue Apron, purveyor of fine meal-kits, which just found itself having to do just that. The fact is, there’s a lot of competition sprouting everywhere, from Amazon and its Whole Foods acquisition to Albertsons picking up the company Plated in order to sell their kits at the grocery chain’s 2000+ locations. For Blue Apron, it meant having to slash 6% of its workforce which amounts to about 300 employees. The stock is trading today at around $5.20 a share, down almost 50% from its IPO price back in June.

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Standard & Poor’s Overrated Ratings Settlement; Spirited Numbers for Whiskey and Bourbon; Who Will Radio in on RadioShack?

Poor ratings system…

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Image courtesy of suphakit73/FreeDigitalPhotos.net

It’s shaping up to be an expensive week for Standard and Poor’s, the ratings company owned by McGraw Hill Financial Inc. After two years of legal wrangling, where the Department of Justice accused the S&P of defrauding investors, S&P agreed to pay for $1.5 billion in a settlement. According to the lawsuit, S&P made sub-prime mortgages sound way better than they actually were, generously over-rating them during the height of that hard-to-forget financial crisis of 2008. One of the juicy little highlights from the lawsuit, as taken from an excerpt from an instant-messaging exchange between two of its analysts, goes a little something like this: “It could be structured by cows and we would rate it.” So what were they trying to say about our friends in the bovine community? Hmm. While S&P gets to avoid admitting actual wrongdoing, as per the terms of the settlement, it will be shelling out $687.5 million to the DOJ and another $687.5 million to 19 states and the District of Columbia. S&P said the DOJ was only coming down on them because it downgraded the US sovereign debt from AAA all the way down to AA+, but the DOJ says NOT! In a separate lawsuit, S&P  reached a settlement with pension fund, Calpers (California Public Employees Retirement System), also a victim of S&P’s too-generous sub-prime mortgage ratings system.

I’ll drink to that…

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Image courtesy of artur84/FreeDigitalPhotos.net

It’s been a very good year for bourbon and whiskey as exports of these spirited spirits topped the $1 billion mark. Even here in the US, sales for Kentucky bourbon and Tennessee whiskey grew, with revenue for both rising 9.6% to $2.7 billion and 19.4 million cases of the stuff being scooped up. 19.4 million cases? Who are you people drinking all this? But it’s the premium selections that are really hitting it big with drinkers…er, consumers, as revenue in that category is up over 19%. All this while beer seems to be experiencing a decline on the whole by 4% in the last five years, with Budweiser losing 28% for that same time frame, despite those super Superbowl ads. Craft beer, however, tells a different story as that tasty category is experiencing an uptick. Some analysts are even thinking all these increasing numbers come courtesy of millennials, who seem to prefer high-quality spirit versus the stuff their parents enjoy. By the way, it should be duly  – and might I add, fondly – noted, that Kentucky produces 95% of the world’s bourbon supply. Go Kentucky!

Shacked out…

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Image courtesy of cool design/FreeDigitalPhotos.net

Rumors are swirling as to who will emerge and scoop up RadioShack as bankruptcy looms near for the company that was just never able to compete with the behemoth that is e-commerce. The New York Stock Exchange had suspended trading of the 94 year old company on Monday, with shares tanking down to $0.14 a share in after hours trading. So will it be Sprint who decides to take up some of RadioShack’s retail leases? The company has 4,300 stores in the US, alone. Or will Amazon add the chain to its arsenal and increase its brick-and-mortar presence in the world? Word on the street is that Jeff Bezos might do just that as a way to showcase some of the gazillions of products that Amazon has to offer, for the right price, of course.