The Tesla And SolarCity Merger Is Definitely Happening, Plus Best Buy Is Up 50% This Year

By 11.18.16

morning-brew-new
“We made a mistake here and we apologize. Our automated system allowed an ad promoting hate. Against our policy. We did a retro and fixed!” — Twitter CEO Jack Dorsey, tweeting (of course) an apology after Twitter accidentally displayed a promoted ad from a white supremacist group. Oops.

Market Snapshot

  • Still going strong…major U.S. indexes drifted slightly higher Thursday, as Fed Chair Janet Yellen said an interest rate hike could happen “relatively soon
  • U.S. housing starts, an indicator of an improving housing market, rose a whopping 25.5% from September, the fastest pace since 2007—sending homebuilding stocks soaring higher

Tesla X SolarCity: It’s Go Time

…The controversial Elon Musk merger extravaganza was approved by the shareholders of both companies yesterday. Usually shareholder votes to approve mergers are NBD, but this one carried greater weight. Why? We all knew SolarCity (+1.86% after hours) shareholders would give the green light—the solar panel maker has a ton of debt and is struggling financially, which is why many saw Tesla’s (+0.55% after hours) $2.1 billion buyout offer as more of a bailout. Yet Tesla shareholders also overwhelmingly voted for the deal—85%, to be exact—showing that perhaps they bought into Musk’s vision of an all-in-one sustainable energy powerhouse. If there’s one thing we’ve learned over the years, it’s this: don’t bet against Musk.

A Slap In the Face

…For JP Morgan Chase (+0.80%) as it was hit with a $264 million fine. Not good. The bank was accused of bribery and corruption in its hiring and internship tactics in China. What that actually meant: hiring children of leading Chinese businessmen and investors, not all of whom were particularly qualified. Very sneaky, but not sneaky enough: the settlement follows a three-year investigation into the institution and is bound to set a precedent for crackdowns on big banks. So, were those interns worth $264 million?

Walmart Falls Short

…Despite an eighth straight quarter of U.S. sales growth, Walmart (-3.08%) failed to appease investors after missing on same store sales and earnings. That said, it’s not only about stores these days. With its recent acquisition of Jet.com and newfound push towards e-commerce, online sales surged 20.6%—nothing to shake a stick at.

Best Buy Surges

…Wait, really? Yes. Really. Best Buy (+13.70%), known by those under 35 as the showroom for Amazon, is now up 50% this year, and it just beat analyst estimates for the quarter. We’re still serious, and it gets better: Best Buy’s profit rose to $194 million from $125 million a year ago, due in part to U.S. online revenues surging 24%. While Best Buy anticipates a dip in the near future thanks to product recalls (looking at you, Samsung), the tech retailer appears to be on pace for a solid end to 2016.

Airbnb Wants It All

…Booking accommodations, restaurants, activities and more. Ambitious much? Yep, but Airbnb wants it bad. The booking giant announced its newest feature: “Trips,” which will allow hosts to not only offer accommodations, but also excursions and other activities (for a fee). Think acrobat lessons on Venice Beach or sailing in Havana—or some other equally Insta-worthy millennial picture-fest. The expansion is actually a defensive move—Airbnb needs to generate new revenue streams to protect against the regulatory scrutiny its core booking business gets. And with a $30 billion valuation on the line, you’d better believe Airbnb is fighting back.

Other Stories

Economic Calendar

Don’t Snap and Drive

A decade ago, cell phones ushered in a new era of distracted driving. While it used to be just calls and texts, interactive apps are the new culprits. Beyond music and maps, apps like Snapchat and Pokémon Go have been causing accidents all over the country. Here’s a closer look:

  • After four decades of steady declines, highway fatalities spiked last year and are on the rise again this year. In just the first half of 2016, highway fatalities increased 10.4%.
  • From a policy angle, the Department of Transportation announced the “Road to Zero” strategy in October. Zero fatalities, that is—the ambitious plan is to completely eliminate them within 30 years.
  • From an industry perspective, most new cars are made with software to allow drivers to use apps hands-free. Automakers claim that the feature promotes safe driving, but the results are unclear. Some say the influx of in-car technology only encourages distracted driving. Stay safe out there.

Interview Question of the Day

A milkman carries a full 12-liter container of milk. He needs to deliver exactly six liters to a customer who only has an eight-liter and a five-liter container. How can he do this? (Answer)

Stat of the Day

Relief pitcher Aroldis Chapman is looking to cash in on his elite status after helping the Chicago Cubs win the World Series. Fangraphs projects Chapman will pitch about 65 innings in 2017. Scatter his annual salary—$25 million—over 65 innings and you get $384,615 per inning. Not impressed? Chapman tossed 976 pitches this year. So if the tall left-hander gets the contract he demands, he’ll make a cool $25,615 every time he fires a pitch in 2017. Wow.

Food for Thought

Jeff Bezos has invested billions to make Amazon a top e-commerce player in India. How’s that going? Bank of America Merrill Lynch estimates that by the end of this year, Amazon will control about 28% of India’s total e-commerce gross merchandise volume. Not bad.


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