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Musings on Markets's Blog

Runaway Story or Meltdown in Motion? The Unraveling of the WeWork IPO

September 9, 2019 Comments (0)

In a year full of high-profile IPOs, WeWork takes center stage as it moves towards its offering date, offering a fascinating insight into corporate narratives, how and why they acquire credibility (and value) and how quickly they can lose them, if markets lose faith. When the WeWork IPO was first rumored, there was talk of the company being priced at $60 billion or more, but the longer investors have had a chance to look at the prospectus, the less enthusiastic they seem to have become...

From Shareholder wealth to Stakeholder interests: CEO Capitulation or Empty Doublespeak?

August 28, 2019 Comments (0)

Last week. the Business Roundtable, composed of the CEOs of some of America’s largest companies, put out a press release that hinted at a fundamental, perhaps revolutionary, shift in corporate focus. In the statement, the CEOs seemed to be saying that corporations should be run to protect all corporate stakeholders, defined to include customers, society and employees, rather than hew to its conventional objective of maximizing shareholder wealth. The reason that I say “seemed to” is because...

Country Risk: A Mid-year 2019 Update

August 13, 2019 Comments (0)

One of the consequences of globalization is that investors, analysts and companies can no longer stay focused on just their domestic markets, but have to also understand the risks and opportunities elsewhere in the world. When developed market companies first embarked on the journey of expanding into emerging market growth economies, investors pushed up their stock prices, primarily because of the potential that they saw in these markets for expansion. Over time, though, we have learned that,...

Meatless Future or Vegan Delusions? The Beyond Meat Valuation

June 12, 2019 Comments (0)

In a big year for initial public offerings (IPOs), with Uber, Lyft, Pinterest and Zoom, to name just a few, already having gone public and more companies waiting in the wings, it is ironic that it is not a tech company, nbut a food company, Beyond Meat, that has managed to deliver the most dazzling post-IPO performance of any of the listings. As the stock increased seven-fold, investors who were able to get into the stock at the offering price have been enriched, but those who jumped on the...

Tesla's Travails: Curfew for a Corporate Teenager?

June 3, 2019 Comments (0)

It should come as no surprise to anyone that Tesla is back in the news, though it seems to be for all of the wrong reasons. From Musk's Twitter escapades with the SEC, to talk about electric lawn blowers to concerns about a debt death spiral, the company has managed, yet again, to get in its own way, and this time, it has paid a price in the market, as its stock price tests lows not seen in a couple of years. I would be lying if I said that I do not find the company fascinating, and as has...

Lyft Off? The First Ride Sharing IPO!

April 29, 2019 Comments (0)

Last week, Lyft became the first of the ride sharing companies to announce plans for an initial public officering, filing its prospectus. It is definitely not going to be the last, but its fate in the market will not only determine when Uber, Didi, Ola and GrabTaxi will test public markets, but what prices they can hope to get. My fascination with ride sharing goes back to June 2014, when I tried to value Uber and failed spectacularly in forecasting how much and how quickly ride sharing would...

Uber's Coming out Party: Personal Mobility Pioneer or Car Service on Steroids?

April 29, 2019 Comments (0)

After Lyft’s IPO on March 29, 2019, it was only a matter of time before Uber threw its hat in the public market ring, and on Friday, April 12, 2019, the company filed its prospectus. It is the first time that this company, which has been in the news more frequently in the last few years than almost any publicly traded company, has opened its books for investors, journalists and curiosity seekers. As someone who has valued Uber with the tidbits of information that have hitherto been available...

The Perils of Investing Idol Worship: The Kraft Heinz Lessons!

April 29, 2019 Comments (0)

On February 22, Kraft Heinz shocked investors with a trifecta of bad news in its earnings report: sub-par operating results, a mention of accounting irregularities and a massive impairment of goodwill, and followed up by cutting dividends per share almost 40%. Investors in the company reacted by selling their shares, causing the stock price to drop more than 25% overnight. While Kraft is neither the first, nor will it be the last company, to have a bad quarter, its travails are noteworthy for...

January 2019 Data Update 9: The Pricing Game

April 29, 2019 Comments (0)

In my last eight posts, I looked at aspects of corporate behavior from investments to financing to dividend policy, using the data that I collected at the start of 2019, to examine what companies share in common, and what makes them different. In summary, I found that the rise in risk premiums in both equity and bond markets in 2018 have pushed up costs of equity and capital, that companies across the globe are finding it difficult to generate returns on their investments that exceed their...

January 2019 Data Update 2: The Message from Bond Markets!

February 21, 2019 Comments (0)

I must admit that I don't pay as much attention to fixed income markets, as I do to equity markets, other than to use numbers from the markets as inputs when I value companies or look at equity markets. This year, I decided to look at bond market movements, both in the sovereign bond and corporate bond markets for two reasons. First, bond markets offer predictive information about future economic growth and inflation, and since one of the big uncertainties for equities going into the new year...