United States of America

New Amazon CEO will have cloud and ads in his cart

29 July 2021

Andy Jassy now has the reins at the $1.8 trln group. E-commerce is the base, but cloud services and advertising, both growing fast and with high margins, account for the bulk of operating profit. The two businesses face challenges: one from competitors, the other from regulators.

Robinhood spoons up taste of own medicine

29 July 2021

The limp day one stock performance of Vlad Tenev’s online brokerage following its $32 bln IPO says little about its prospects. Consider Facebook’s debut on the one hand, or Ask Jeeves on the other. The sour part is that rapid growth for Robinhood depends on share prices going up.

TPG-backed vacation deal is a worthy destination

29 July 2021

One of the private equity firm’s SPACs is merging with Vacasa in a $4.5 bln deal. The firm helps owners list and manage their vacation properties including on Airbnb. The management is experienced, the concept is solid and Vacasa could be a strategic fit for others down the line.

SPAC sheriff shows up not a moment too soon

29 July 2021

The U.S. Department of Justice accused electric-truck maker Nikola’s founder Trevor Milton of making false and misleading statements. He had already stepped down from the $5 bln firm. But investors have started pushing back elsewhere. These are needed steps to legitimize SPACs.

IPO U-turn is probably Didi’s most sensible route

29 July 2021

The beleaguered $40 bln Chinese ride-hailing group denied a report that it plans to go private a month after its U.S. debut. Changing course would be embarrassing and quite costly. But it may be the best way to get back in Beijing’s good graces amid a continuing crackdown.

Viewsroom: Climate transition, Chinese stocks

29 July 2021

Some of the biggest investors, including Brookfield and TPG, are launching mega-funds to invest in the global transition to a net-zero economy in what could be the ultimate new asset class. Richard Beales and Rob Cox discuss. Plus, Beijing’s crackdown on after-school tutoring.

Robinhood at $32 bln more option than meme-stock

29 July 2021

The digital brokerage’s IPO values its 21.3 mln customers at about $1,500 each, below one-tenth of peer Interactive Brokers. Robinhood users have less in their accounts, but demographics are on their side. For investors unfazed by its quirks, Robinhood’s beachhead has real value.

Facebook is a one-trick pony that can still kick

28 July 2021

Mark Zuckerberg’s firm raked in $29 bln in quarterly revenue, almost all of it from selling ads. Unlike rivals, Facebook hasn’t found a reliable second source of revenue and says its growth is slowing. Even so, with TV on the decline, there’s more than enough to go around.

Fed can’t ignore even fleeting inflation

28 July 2021

The U.S. central bank reiterated its belief that price spikes won't last. Still, polls show consumers worrying, making politicians edgy. Tapering the Fed's bond buying wouldn't directly counter inflation. But it has to happen sometime, and it would give Chair Jay Powell cover.

Evercore’s pay has the sweet kind of inflation

28 July 2021

The biggest impediment to the M&A trade now is not a lack of deals but a shortage of bankers to execute them. That’s why pay is surging. The $6 bln boutique is threading the needle with comp jumping less than revenue. But keeping talent, even at Evercore’s top, won’t be easy.

Apollo SPAC offers cheap ride on EV hype freeway

28 July 2021

Electric vehicle charging group Allego is listing through one of the buyout firm’s blank-cheque companies for $3 bln. It’s a crowded space, but a valuation multiple of 5 times 2024 sales is less racy than rivals. Still, only booming battery car demand will avoid a short-circuit.

Pfizer’s pandemic wealth produces ideal dealmaker

28 July 2021

The pharma giant raised its 2021 guidance, partly due to bumper Covid-19 vaccine sales. Free cash flow could hit $20 billion this year as a result. Even if share buybacks resume, CEO Albert Bourla has scope to take advantage of cheap biotech valuations by making acquisitions.

Tech giants’ next acquisition could be themselves

27 July 2021

Alphabet, Amazon, Apple, Facebook and Microsoft hold around $600 bln of cash. As revenue booms, investors will be keen to see it put to work. Doing deals is a tough sell politically, so buying back more shares could be the logical answer, even with stock prices riding high.

Big “transition” funds reflect climate realism

27 July 2021

Brookfield has kicked off a new investment vehicle with $7 bln from backers like Ontario Teachers and Temasek. Like another fund from TPG targeted partly at helping traditionally dirty industries change, it’s a recognition that most decarbonization efforts can’t be pure green.

The Exchange: Spanish PM Pedro Sánchez

27 July 2021

In his attempt to revive the economy, Pedro Sánchez wants investors to give Spain more love. Local and global politics make that a challenging proposition. John Foley met with the prime minister as he set out for Wall Street, Silicon Valley and Hollywood but not Washington, D.C.

GE chief accepts the things he cannot change

27 July 2021

Larry Culp’s monomaniacal quest to make his $120 bln conglomerate “lean” is paying off. GE’s cash flows are improving. But Culp can’t do anything about shifting tides of customers’ behavior. Investing in GE also requires getting comfortable with the things Culp can’t control.

Tesla comes of age at just the right time

26 July 2021

Elon Musk’s carmaker charged past $1 bln in quarterly profit for the first time. Margins finally rival leaders like Toyota. It’s yet to mature into its $620 bln valuation. But growing pains at Lucid and other upstarts make Tesla’s push to validate its price look less fanciful.

Third time will be the charm for Aon Willis tie-up

26 July 2021

The insurance brokers scrapped their $30 bln merger – their second attempt – because U.S. antitrust regulators opposed it. The disruption of financial services means there may come a time when the idea no longer poses a threat. By then, of course, there will be less to celebrate.

ABB offers lesson in virtue of simplicity

26 July 2021

The $75 bln Swiss industrials giant is selling a power transmission unit to RBC Bearings for $2.9 bln. The rich price vindicates CEO Bjorn Rosengren’s plan to slim down and focus on electrification and robots. That will likely cement a premium valuation versus rival Siemens.

Chinese communists are souring on capitalism

26 July 2021

Beijing wants its $120 bln tutoring industry to turn non-profit, wiping billions off U.S.-listed TAL and peers. Fintech giants are being forced to hand intellectual property to state banks. A push to shrink margins and convert private assets into public goods is gaining momentum.