Could Chipotle’s Stock Rebound In 2017? Plus Vine Isn’t Going To Die After All

by 12 months ago

morning-brew-new
Enjoy your December 19th hand-crafted Brew!

QUOTE OF THE DAY

Boring, it’s what we do” — Elon Musk, tweeting while stuck in traffic that he’s gonna start a company to fix traffic called “The Boring Company.” You can’t make this stuff up, people.

Market Snapshot

  • U.S. markets dropped on Friday as investors reacted to rising geopolitical tensions between the U.S. and China, along with the Fed signaling an acceleration of rate hikes in 2017
  • That didn’t stop Trivago, a TripAdvisor rival that provides customers with comparisons between hotel deals, which rose 10.7% in its IPO
  • Shares of Nintendo dropped 8.5% despite the record-breaking number of downloads for the company’s Super Mario Run app, which has received mixed reviews so far

Two Bad 2016’s

…Might make for one good 2017. Over the weekend, Chipotle (+2.54%) and activist investor Bill Ackman reached a deal to name four new board members, including two aligned with Ackman’s hedge fund, Pershing Square. What’s in it for Chipotle? Ackman will limit his maximum stake in the company, and he’ll keep all activist comments on the down low for the next two years. In a year that’s seen Chipotle stock down 30% from a food safety crisis while Ackman has been destroyed on his Valeant position, joining forces might spell redemption in the new year.

Trouble in Board of Directors Paradise

…The Redstone saga continues. Viacom (+0.89%), the media giant that owns networks like MTV and Comedy Central, has been in a leadership struggle for most of 2016. To sum it up: 93-year-old Sumner Redstone and his daughter, Shari, ousted former Viacom CEO Philippe Dauman earlier this year, claiming that Sumner was unfit to lead the business due to mental incompetency. Here’s the real kicker, though: many believe that Shari has been manipulating her father to wrestle control of the company. Power play or not, Shari’s come out on top—Sumner Redstone has announced that he will step down from Viacom’s board in February, leaving Shari in charge of National Amusements, the company that owns 80% of Viacom and CBS.

Mylan Has Its Own Saga Too

…Remember Mylan (+0.16%), the controversial maker of the EpiPen? Well, Mylan is hoping it’s not too late to say sorry—the company announced that it will release a generic version of the EpiPen that will cost half of the current $600 brand price. It might not be enough to appease everyone, though—20 U.S. states filed a joint lawsuit on Thursday, targeting generic drugmakers like Mylan and Teva for accusations of price-fixing. So yes, it might be a bit too late to say sorry.

Vine Rises from the Dead

…Kind of. Twitter (-0.80%) announced on Friday that it actually won’t be entirely killing Vine. Remember, Twitter bought the six-second video app back in 2012, but announced a few months ago it would be shutting it down amidst lagging growth. Not so fast though—instead, Twitter will actually be releasing a new app in January called Vine Camera. Vine Camera will allow users to create videos like before, but there won’t be a Vine feed within the app itself. And if you’re Vine-famous, don’t fear, your videos aren’t going anywhere: the company has announced plans for a Vine archive. Twitter CEO Jack Dorsey maintains that profitability is paramount on the company’s checklist for 2017. Vine may have proved to be too expensive for the company to maintain, but it’s just too fun to do away with entirely.

It Was Fun While It Lasted

…U.S. housing starts ended their winning streak in November. Homebuilding took a tumble last month, falling 18.7% in November from its nine-year high and undoing many of October’s gains. Should you be worried? Not yet—housing permits (which give permission to start construction of future homes) still looked solid for November, hitting a nine-year high. This signals that plans for homebuilding are underway even though the actual construction hasn’t started yet, giving us reason to shake off the drop in housing starts. The dip also follows super strong October numbers, so it still fits in with overall trends of gradual growth and increasing demand in the housing market. Long story short, no need to be spooked.

Other Stories

Economic Calendar

  • Monday: Janet Yellen Speech
  • Tuesday: Nike, BlackBerry, FedEx, General Mills, Carnival, CarMax, Darden Restaurants Earnings
  • Wednesday: Accenture, Bed Bath & Beyond Earnings; Existing Home Sales
  • Thursday: Rite Aid Earnings; U.S. Q3 GDP (3rd Estimate); Weekly Jobless Claims; Durable Goods Orders; Personal Income and Outlays
  • Friday: New Home Sales; Consumer Sentiment

Is It Christmas Yet?

According to most workers, the answer is basically yes. Peakon, a Danish start-up, surveyed 3,000 British workers about their work mindset around the holidays. The results showed that most workers check out over a week before Christmas. So if you’re reading this at work and your mind is already on the holidays, you aren’t alone. Here are the facts:

  • 54% of British workers surveyed say that they mentally check out for the holidays by December 16. In other words, the workweek isn’t even close to productive for over half of the workforce.
  • Perhaps unsurprisingly, the responses differed based by age. Nearly 60% of millennials have already checked out, compared to only 40% of baby boomers. For baby boomers, it usually takes until December 20 before a majority of them check out.
  • What are these festive workers doing instead of focusing on their jobs? Online shopping for Christmas gifts, obviously. One survey found that 50% of workers admitted to shopping online during work hours.
  • So how are companies trying to address this issue? Some companies are giving workers an extra day off during December to Christmas shop. One company, Jargon PR, literally gives employees “bonus Christmas shopping days” in December. Bold strategy, let’s see if it pays off for them.

Interview Question of the Day

How do interest rates affect a bond’s coupon rate? (Answer)

Startup of the Day

Airbnb, everyone’s favorite hospitality disrupter, has filed for another $153 million in Series F funding. At a valuation of around $30 billion, Airbnb trails only Uber in the U.S. startup rankings. What does this funding filing tell us? Looks like Airbnb won’t be having its IPO anytime soon.

Food for Thought

Fact or fiction? China owns the most U.S. debt. Fiction! Technically, Americans and the U.S. government hold the most U.S. debt. But until October, China was the largest foreign holder of U.S. debt with around $1.3 trillion. Now what country holds the American foreign debt crown? Japan, with $1.13 trillion compared to China’s $1.12 trillion.


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