A Bad Week for CEOs: CEO Daily

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Good morning.

Last week was a bad one for CEOs. The top dogs at WeWork, eBay and Juul all got bounced, and Herbert Diess of Volkswagen was charged with stock market manipulation.

What did we learn in the process? Citing high-sounding rhetoric from WeWork’s Neumann, HP’s Wenig and VW’s Diess, the New York Times’ David Gelles says we learned purpose is not a replacement for profit. But did anyone doubt that? We also learned from Juul that pushing potentially poisonous products on the public isn’t a good strategy, either. I particularly liked NYU professor Scott Galloway’s takeaway on the WeWork affair: beware of CEOs who sound like your yoga instructor.

A more constructive result of the week is that the IPO market has come down to earth. Peloton shares are trading 15% below their Wednesday IPO price. More broadly, seven of the year’s 10 biggest IPOs prior to Peloton are under water, having lost some $45 billion of their one-time value. The biggest losers? Lyft and Slack, down 53% and 42% respectively. The surprise winner: Beyond Meat, which is up 237% from where it started.

The average IPO return for 2019 is now a sensible 6%, down from 30% at the end of June and 18% from two weeks ago. That’s suggests the bubble is deflating in an orderly way—certainly preferable to popping.

More news below.

Alan Murray

alan.murray@fortune.com
@alansmurray

TOP NEWS

China Denial

The White House has issued a partial denial regarding a Friday Bloomberg report that stated it was considering curtailing U.S. investments in Chinese companies and markets. One option that was reportedly on the table was the forced delisting of Chinese companies from U.S. exchanges. Treasury response: “The administration is not contemplating blocking Chinese companies from listing shares on U.S. stock exchanges at this time.” Bloomberg

Forever 21

The “fast-fashion” firm Forever 21 has filed for Chapter 11 bankruptcy protection. It wants to close up to 178 U.S. stores, though it does not want to leave any major markets in the country. If the plans go through, Forever 21 would mostly pull out of Asia and Europe, while continuing operations in Mexico and Latin America. CNBC

Rio Tinto

Rio Tinto has reportedly dropped its long-gestating plan to sell or float its Canadian iron-ore unit. The seesawing price of iron ore may have put off potential suitors. Wall Street Journal

Whistleblower Testimony

The whistleblower in the Trump-Ukraine scandal will testify before the House Intelligence Committee, Chairman Adam Schiff said yesterday. The hearing will be held in such a way as to preserve the whistleblower’s anonymity. There’s no date set for the event yet, though. Washington Post

AROUND THE WATER COOLER

VW Claim

The biggest legal claim in Volkswagen’s history kicks off in court today. The final number of Dieselgate claimants will become apparent after the initial oral hearing, but at last count it ran to 400,000 car owners (whose vehicles are now worth a lot less than they were supposed to be worth). This is the first test of Germany’s new “declaratory model action” system, which is roughly analogous to the U.S. class action system. Financial Times

Black Zero

Germany’s ruling Christian Democrats are resisting domestic and international pressure to ditch their strict budgetary policy known as the “black zero,” which involves taking on no new debt. Angela Merkel’s government has been able to maintain the policy due to an unusually long growth cycle, but the economy is slowing and tax revenues are declining. Reuters

Narrow Rally

Yes, U.S. stocks are collectively doing extremely well right now, but rallies are in fact limited to a narrowing set of individual stocks. Instinet executive director Frank Cappelleri: “With fewer stocks hitting new highs, the question is: Has the market been using bond-proxy sectors as leadership stocks, or is the low interest rate environment keeping other sectors like financials back that have a bigger punch?” Wall Street Journal

Charles Schwab

Charles Schwab stopped by Fortune‘s office to discuss some of the many lessons he’s learned over the years. The legendary investor, who has a new book out, warns against overthinking when opportunities present themselves, advises knowing your limits, and extols the benefits of listening to outsider perspectives. Fortune

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.

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