SnapChat’s IPO Valuation Goes Down A Few Notches, Plus Canadian GOOS Files For Its IPO

morning-brew-new

Enjoy your February 17th hand-crafted Brew!

QUOTE OF THE DAY

“Apparently, there is this thing called ‘Dad jokes’ and I make them”Elon Musk, in between tweets about Tesla and SpaceX.

Market Snapshot

  • Though the Dow eked out a small gain, the Nasdaq and S&P 500 both snapped their multi-session momentum on Thursday, despite data showing lower than expected jobless claims, an indicator of economic health
  • New housing starts data revealed a drop in January construction, despite beating analyst expectations. While construction on apartments fell 8%, single family housing starts, a better signal of economic health, are nearing a 10-year high

Kate Spade Pops

…After a solid fourth quarter and confirmation that it’s exploring a sale of the company. The designer brand posted better-than-expected revenue and profit, rising 9.8% and 39% respectively, despite a shaky handbag market. Kate Spade (+14.69%), which also designs clothing and accessories, has relied more and more on its Kate Spade New York brand over the last few years, and it’s paying off. Yesterday, the company confirmed that it is exploring strategic alternatives (likely a sale) and investors are salivating at the potential. Now, where can I get me one of those handbags?

Google Fiber’s in a Tangle

…As it heads for major restructuring (again). Remember Google Fiber? One of Alphabet’s pet projects, it’s a super high-speed internet service that uses fiber optic cable rather than typical wire. The latest? Alphabet (+0.58%) reassigned hundreds of employees from its Fiber teams to other divisions in the company and stopped expanding the service as the project was “hellishly expensive” (read: $1 billion). Now, as Google Fiber decides to go wireless, the next move could potentially be a Webpass-tested service that follows you wherever you go to provide internet access. Sounds too good to be true? Hear this—an update on Google’s Project Loon came right after, as scientists reported progress on optimizing the data-carrying balloons in airspace. While it scales back on earth, Alphabet is still shooting for the moon.

All Eyes on Snap

…As its valuation goes down a few notches. Don’t cry too soon, because this is just a lower valuation range to ensure sufficient demand for shares of the company in its upcoming IPO. Price it too low, and you won’t get paid as much as you would like. But, too high, and the IPO ends up looking unsuccessful. The expected value of the company was initially between $20 billion and $25 billion. However, Snap said on Thursday it was targeting a valuation in the neighborhood of $19.5 billion to $22.3 billion. High valuation or not, investors are wondering if it will go the Facebook (+0.30%) route (ie: making money) or share Twitter’s grisly fate (-2.33%).

The Canadian GOOS

…Spreads its wings. Canada Goose, the family-owned jacket company, has officially filed for its IPO under the stock ticker symbol “GOOS.” Over the past year, demand for the company’s high-end parkas has skyrocketed, generating huge increases in profit. Being a family-owned company, the current CEO is Dani Reiss, grandson of the founder. However, they have other forces to thank for its success: the company has been backed by Bain Capital since 2013. With over a third of sales coming from U.S. buyers, the Canadian coat maker has done fairly well internationally. But, angry animal activist groups and massive amounts of debt still could be an issue. On a brighter note, this deal is still giving investors goosebumps.

Other Stories

  • Alex Acosta nominated as U.S. Secretary of Labor
  • Nestle reports lower profit and slowdown in sales
  • Ferrari to reveal its fastest production car ever
  • Facebook goes head-to-head with LinkedIn by introducing job listings

Economic Calendar


Water Cooler

Building A Global Community, Like by Like

Yesterday, Mark Zuckerberg posted a roughly 5,800-word letter on Facebook. The statement was an update to his original founder’s letter, posted when the company went public in 2012. Titled “Building Global Community,” the letter outlines both abstract and tangible impacts for Facebook to facilitate efforts against isolationism. Here’s more:

  • Facebook has more than 1.8 billion users worldwide. In his letter, Zuckerberg stressed using the social media giant as a platform to create a global “social infrastructure,” acting much like churches or unions do for individual communities.
  • Specifically, the letter outlines how Facebook could influence five different aspects of community-building: being supportive, safe, informed, civically-engaged and inclusive global communities.
  • Of course, there are limits to Facebook’s global outreach, namely in China and India. Regulatory and privacy issues in Europe are also making waves for the company. More like ripples, really. If the past few years have been any indication, there’s no stopping Facebook.

The Breakroom

Interview Question of the Day

A writer was fifty years old in the year 2000 but he was forty years old in the year 2010. How can this be possible? By the way, there’s a logical answer. (Answer)

Business Term of the Day

Hypothetical: You come across food in your fridge that has a “sell-by” label. The current date has passed the “sell-by date,” and you proceed to throw away the food because you guess this term means the food has spoiled. Well, it wasn’t spoiled. Thankfully, after 40 years of letting us guess, the grocery industry has made moves to clear up the confusion. Now there will be only two terms: “Use By” and “Best if Used By.” The former to indicate when perishable foods are no longer good and the latter is a quality descriptor.

Food for Thought

UPS trucks almost never take left-hand turns. Why? This practice actually saves the company millions of gallons of fuel each year, and cuts down on emissions equivalent to over 20,000 passenger cars. Additionally, turning left is one of the leading “critical pre-crash events” (an event that made a collision inevitable), occurring in 22.2% of crashes, as opposed to 1.2% for right turns.

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