Yelp’s Share Price Crashes, Chesapeake Energy Stock Plummets As Much As 50%
Congrats to Sarah B. in Philadelphia for winning last week’s third-ever Morning Brew quiz! You know the drill: make sure to open Friday’s issue for this week’s quiz (plus, watch for a special sixth question that could influence future issues).
“We’re open, especially on February 8th” — Moe’s Southwest Grill, in response to Chipotle temporarily closing all of its restaurants on Monday to hold an all-staff food safety meeting. Chipotle made up for the closure by giving away “raincheck” burritos.
- U.S. stocks picked up towards the end of yesterday’s session after a brutal opening (a mid-day energy rally didn’t hurt), but the financials sector fell hard enough to keep markets negative on the day—and European stocks fared even worse
Alternatives to Watch
- Gold spiked 3.5%, its best one-day gain since December 2014, while U.S. treasury yields fell, both signs of investors fleeing stocks in favor of safer assets
- Leading the lagging financials sector down was Deutsche Bank, which took a 10% hit amid renewed worries Germany’s largest bank could struggle to meet payments next year
The New China
Move over, China: after reporting impressive third quarter GDP, India is clearly leading the way of the world’s fastest growing economies. The magic number was 7.3% growth, an increase over last quarter’s 6.6% growth, and the country’s highest in five years. While this is great news for India, it shouldn’t come as a surprise. India’s young population and massive growth in the tech industry, compared to China’s aging population and economic slowdown, makes the young superpower look pretty good.
Rumor Has It
When you hire a lawyer, people automatically assume you’ve done something wrong. Exhibit A: Chesapeake Energy, which reportedly hired a law firm, spurring rumors that the company is filing for bankruptcy. Even though Chesapeake denied the report, investors were spooked, causing its stock to plummet as much as 50% yesterday. This development is only the latest in a series of unfortunate events for the company, which was recently forced to cut jobs due to declining natural gas prices.
Yelp in Pain
It was quite an eventful day for Yelp: its CFO stepped down, earnings were released early due to a bug and its share price crashed…happy Monday, Yelp. The restaurant review service beat expectations on revenue and earnings, but only after seeing costs rise 57%, calling into question whether its 40% revenue jump was actually meaningful. Yelp has lost over a third of its value in the last month, and after dropping 11% yesterday, the future looks bleak.
Apollo Rises from the Ashes
Private equity firm Apollo Global Management has agreed to purchase Apollo Education (no relation, until now) for $1.1 billion, taking the company private in the process. Apollo Education is the owner of for-profit University of Phoenix, which has struggled in recent years due to enrollment drops and its…sketchy recruiting strategies. Meanwhile, ex-investors of Apollo Ed. are throwing a fit for their compensation: all cash, and at a 37% premium to its stock price. Apollo Management will have its hands full, but clearly there’s a reason for the investment…right?
- Wired is launching an ad-free website to appease ad blockers
- Chipotle blames outbreak on its own sick employees
- India introduces net neutrality rules barring Facebook’s free internet
- U.S. inflation survey tumbles in red flag for Fed
- Monday: Twenty-First Century Fox (-), Hasbro (+), Yelp (-) Earnings
- Tuesday: Disney, Baidu, Coca-Cola, CVS, Panera, Spirit Airlines, Viacom, Wendy’s Earnings; Job Openings and Labor Turnover Survey
- Wednesday: Tesla, Twitter, Time Warner, Cisco, Whole Foods, Zynga, Expedia, Sketchers Earnings
- Thursday: CBS, PepsiCo, Pandora, Time, Kellogg, TripAdvisor, Activision Blizzard, Groupon, Zillow Earnings; Weekly Jobless Claims
- Friday: January Retail Sales
FILM MONEY, MAKE MONEY
If you’re like most of us, your friends have told you that you just have to watch The Big Short. We should probably listen—in case you haven’t noticed, films and TV shows about the finance world are experiencing quite the renaissance:
- Before The Big Short, don’t forget about The Wolf of Wall Street, which made a pretty $400 million back in 2013. Of course, The Big Short has already grossed $100 million, which isn’t too shabby either.
- Then there are other films to watch out for, such as Equity, starring Breaking Bad’s Anna Gunn, and Money Monster with George Clooney. But it wasn’t always this way—before the financial crisis, finance-based films and shows typically flopped.
- Compare that to now, where Showtime’s hedge fund show Billions averaged six million viewers during its premiere and replays. Finance entertainment: a billion-dollar industry? We think so.
INTERVIEW QUESTION OF THE DAY
You have a 10x10x10 cube made up of 1x1x1 smaller cubes. The outside of the larger cube is completely painted red. On how many of the smaller cubes is there any red paint? (Answer)
WORK TIP OF THE DAY
Be slow when reacting to the urgent requests of others. By doing this, you will ensure that you don’t put too much on your plate and are able to meet the core and most important daily objectives that you originally set out to accomplish that day.
FOOD FOR THOUGHT
119.4 million: although the score for Super Bowl 50 wasn’t too high, you’d better believe the number of viewers were. The game tallied a whopping total of 119.4 million views, nearly shattering Super Bowl 48’s record—it’ll have to settle for being only the third-most watched Super Bowl of all time.