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  • Jamie Adams

Is Facebook Coming For Your Mind Next?

Peloton launches its IPO, Facebook acquire advanced AI, Netflix fall short on earnings, Nike excel and we say farewell to Adam Neumann, for now... It's the Five On Friday of course!


The Quick Fix


#PelotonLaunch - Peloton launched its hotly anticipated IPO on Thursday, but saw its stock price drop 11% on the opening day.


#FacebookCTRL - Facebook have reportedly paid between $500 million and $1 billion for the acquisition of brain-computing manufacturers CTRL-labs.


#StreamingDownhill - For the first time this year, Netflix stock entered negative territory on Monday as competition begins to ramp up in the streaming wars.


#JustDoIt - Nike released its first-quarter earnings for 2020 this week, which saw the company beat Wall Street analysts with increased sales revenue both online and in its stores.


#AndFinally - It is a sad day here at MyWallSt as our favorite CEO Adam Neumann is forced to step down following a turbulent year at The We Co.


#PelotonLaunch

Shares of exercise bike manufacturer Peloton fell 11% in the company’s market debut on Thursday, giving it a market value of $7.2 billion. 


What does this mean?

The long awaited IPO for Peloton went live on Thursday, with trading opening up on the Nasdaq. The stock opened at $27 per share, below its IPO guide price of $29 which was at the high end of expectations. Peloton is the first company to make bicycles and treadmills equipped with screens for users to join live and recorded fitness classes remotely. It has earned a loyal and avid following of users who stream its classes from their homes or work. At a time when many companies aspire to the Netflix model of subscription membership, the company boasts 1.4 million members, which it defines as an individual with a Peloton account. Peloton has 100,000 subscribers to its $39 per month service and charges roughly $2,000 for bikes and $4,000 for treadmills which help it to command strong margins at 44%. The company has a firm base to build off, which will help as its net losses in 2019 widened to $245.7 million, which may grow further with the company eyeing international growth.


Bet you didn’t know

Peloton hosts up to 48 live classes every single day for its customers to join in.


#FacebookCTRL

On Monday it was announced that Facebook had completed the acquisition of CTRL-labs, a New York startup that specializes in allowing the control of computers using your brain.


What does this mean?

Just when you thought Facebook couldn’t find a new way to invade our privacy data, Mark Zuckerberg goes and buys a company which is creating a potential ‘mind-control’ device. Ok, so it’s not technically a mind control device, but it does allow the control of computers using the brain and I think we can call that a stepping stone. Facebook’s takeover of CTRL-labs is said to have cost between $500 million and $1 billion. The startup will join Facebook Reality Labs, a division of the social media company that is working to develop augmented-reality smart glasses. Facebook has been working on brain-computing technology since 2016 that would allow the user to control their devices ‘telepathically’ and gave an update in July of this year that, although the research into brain-computing was promising, it was still years away from a usable product. The acquisition comes in the midst of an antitrust investigation into Facebook’s competition practices and if the company has been stifling competitors. Perhaps Facebook can use a mindtrick or two to get out of this mess!


Bet you didn’t know

Neuroscientists estimate that the human brain can hold up to 2.5 petabytes of data at its full potential, which is roughly two and a half million gigabytes of data.

 

#StreamingDownhill

Despite a strong showing of 27 wins in this years Emmy awards, streaming platform Netflix’s stock officially entered negative territory for 2019 on Monday.


What does this mean?

It has not been the easiest of months for Netflix who, after flirting with all-time highs in July, have seen a gradual decline in its stock price. Since those July highs, Netflix has lost two landmark series – ‘The Office’ and ‘Friends’ – and has seen future streaming rivals NBC and Disney+ unveil a strong lineup, with Apple also unveiling the cheapest streaming subscription on the market at $4.99 per month. On top of all of this, the company reported a loss in domestic paid subscribers for the first time in eight years, while shared passwords may be costing the company millions. Netflix saw most of its 2019 gains in January when it proved its brand power by raising subscription prices up to 18%, and still seeing its stock price go up. In a market now crowded with competitors, this will not be so readily accepted. While it is unlikely any of these competing streaming platforms will be ‘Netflix-killers’, it is worrying that, before these new competitors have even launched, Netflix’s stock is dropping.


Bet you didn’t know

In 2005, Blockbuster turned down an opportunity to buy the then-fledgling Netflix for a cool $50 million. Bummer!



#JustDoIt

It’s been a good week for sportswear giant Nike as its new products drove earnings to top expectations in its Q1 report. 


What does this mean?

Nike reported on its first quarter earnings for fiscal 2020 this week with a positive outlook on the future following a big boost in sales. Earnings topped analysts expectations and saw the company hit an all-time high of $90 per share. The company reported earnings per share of 86 cents versus 70 cents expected, while revenue came in at $10.66 billion versus $10.44 billion expected. Online sales were also up 42% according to CEO Mark Parker, with U.S. sales up 4%, and surprisingly, Chinese sales up 27% during the period. Despite the so-called ‘retail apocalypse’ which has struck brick-and-mortar stores worldwide, Nike seem to be riding the storm well, maintaining strong links with suppliers such as Foot Locker, while also enhancing its ecommerce strategy. Nike even joined the subscription game earlier this summer as it launched its Nike Adventure Club, where customers can pay a subscription and receive the latest ranges of sneakers. The future's looking good for one of the world’s most recognizable sporting brands.


Bet you didn’t know

One of Nike’s biggest endorsers, Michael Jordan, actually preferred Adidas sneakers and was only convinced to meet Nike at the last minute by his parents in 1984. Good call Mom and Dad.


#AndFinally

The investing community was not shocked at all when it was announced that Adam Neumann would be stepping down as CEO at The We Co earlier this week. Ok, I know that last week (and the week before that) I said that we wouldn’t discuss WeWork for a while, but this news is too big to simply ignore. Neumann will lose his executive position but retain his seat as nonexecutive chairman, the company says. Vice Chairman Sebastian Gunningham (a former Amazon exec) and CFO Artie Minson (formerly of AOL and Time Warner Cable) will take over as co-CEOs. “While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction and I have decided that it is in the best interest of the company to step down as chief executive,” Neumann said in a statement. I can’t help but feel that we may not have seen the last of Adam Neumann, but for now, it might be time to say farewell to this years wackiest market story.


What does this mean?

The move most likely means that the company will delay its IPO indefinitely, but this remains to be seen, as much of The We Co’s credit line depends on a 2019 IPO and $3 billion raised.


Bet you didn’t know

WeWork is Neumann's third attempt at a business. His first business idea was women's shoes with collapsible heels, but it didn't take off. The second business was Krawlers, baby clothes with built-in knee pads.


The Week In Numbers


400,000

is how many new subscribers to Match.com signed up for its paid service after being misled by fraudulent, bot messages from the company, according to an FTC lawsuit.


1.3 million

is how many U.S. workers had overtime pay extended by the Labor Department this week.


$4.35 trillion

is how much in tax U.S. Sen. Bernie Sanders believes can be raised over 10 years with his proposed ‘Wealth Tax’.



MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Facebook, Netflix and Nike. Read our full disclosure policy here.

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