UCLA Makes History With Their Under Armour Deal, Plus Best Buy Gets Hit Where it Hurts

by 2 years ago

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“We shouldn’t make you think about Twitter” — Twitter CEO Jack Dorsey, after announcing that the social site will be changing its character limit so that users can think more about what they want to say and less about how to cram it into 140 characters.

MARKET SNAPSHOT

Big Picture

  • U.S. stocks finished much higher, riding the backs of the tech and finance sectors. The major indexes staged one-day gains not seen since early March, thanks in part to a massive rise in new home sales (more on that below)

Alternatives to Watch

  • The dollar rose to 10-week highs against other major currencies as the home sales data backed up the view that the economy could handle a rate hike in June

Market Movers

  • Though most stocks finished positive yesterday, GoPro was one of the biggest winners, rising 5% after announcing a partnership with Red Bull

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CORPORATE PRIMER

Best Buy Gets Hit Where it Hurts

E-commerce is mowing down retailers left and right. The latest company hit: good ol’ Best Buy. The electronics retailer recorded weak mobile device sales yet again, with the lone bright spot being a slight increase in appliance revenue. The sales decline, however, isn’t what worried investors. No, the final straw was CFO Sharon McCollam announcing her exit, especially disheartening because many hoped she would be the pivotal player in Best Buy’s resurgence. The statement surely made a mark, as Best Buy shares fell 8%. About that resurgence…

Monsanto Is Thoroughly Unimpressed

Here’s how we imagine this went down: Bayer and Monsanto enter a dark room. Bayer opens up a briefcase with $62 billion and coolly slides it over…Monsanto asks “where’s the rest of my money?” Long story short, Monsanto rejected the $122 per share buyout offer that would’ve created the largest agrochemical company in the world. The rejection comes despite the offer being a 37% premium to Monsanto’s share price on May 9 (the day Bayer announced the proposal). It makes sense—analysts on the Street are saying Monsanto should settle for no less than $140 a share, and Monsanto is reportedly still interested in a deal. Bayer, for its part, hasn’t ruled out the possibility of going hostile if the two can’t agree amicably, so more fireworks could still be in the cards.

Snapchat Is Up and At It

You may recall from March the Brew’s story on Snapchat raising funding at a $16 billion valuation—a valuation that was, sadly, unchanged from the previous year. Now, just two months later, Snapchat is looking to raise $200 million at a valuation that’s jumped up to $20 billion. My, how the times have changed. But what’s new? Well, at the end of March, Snapchat revamped its chat platform, introducing features enabling users to seamlessly skip from photo to text to calling. Thanks to the revamp, Snapchat has positioned itself more competitively with apps like Messenger and WhatsApp, likely contributing to the healthy valuation boost. That’s what’s up.

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U.S. MACRO

New Home Sales Really Do It This Time

Don’t worry economic optimists, we come bearing good news—blowout April new home sales, released yesterday, point to a healthy economy. And we do mean blowout: they increased an insane 16.6%, the biggest percentage increase in 24 freaking years. The median price for a new home, currently at a record $321,000, is nearly 10% higher than just a year ago. Where’s all this wealth coming from? An improving labor market has steadily pushed up wages, and a shortage of available homes means it’s time to build. We probably don’t have to tell you that the news also makes it all the more likely the Fed will raise interest rates at its June meeting (but we will anyways, ’cause the Brew has your back).

OTHER STORIES

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ECONOMIC CALENDAR

  • Monday: PMI Manufacturing Index (-)
  • Tuesday: Best Buy (-), HP Enterprise (+), AutoZone (-) Earnings; New Home Sales (+)
  • Wednesday: Costco, HP Inc., Tiffany Earnings; International Trade
  • Thursday: GameStop, Abercrombie & Fitch, Royal Bank of Canada, Dollar General, Dollar Tree, Deckers Earnings; Weekly Jobless Claims; Durable Goods Orders; Pending Home Sales Index
  • Friday: U.S. Q1 GDP (2nd Revision); Consumer Sentiment; Janet Yellen Speech

UNDER ARMOUR X UCLA

Sports—it’s not just a game, it’s a way of life. Nike knows it, Adidas knows it, Under Armour knows it, and now, so does UCLA. Yesterday, Under Armour and the Bruins inked the biggest shoe and apparel deal in the history of the NCAA. For both sides, it’s a slam dunk:

  • First, let’s take a look at the terms: the contract is worth a towering $280 million over 15 years, beating out Nike’s $252 million dollar contract with the Ohio State Buckeyes earlier this year. That’ll show ‘em.
  • Under Armour will provide $7 million worth of clothing, shoes and equipment each school year. That’s a lot of swag, but there’s more: it’ll also dole out $2 million over the next eight years to improve UCLA’s facilities.
  • UCLA will receive $15 million up front and—bonus—$11 million each year in rights and marketing fees. That’s a pretty sweet deal if you ask us.
  • UA has been raking in the dough of late. The Baltimore-based company reached $4 billion in revenue last year and has signed deals with huge stars like Jordan Spieth, Cam Newton and Steph Curry. Unreal.

INTERVIEW QUESTION OF THE DAY

Dustin was born on December 28, yet his birthday always falls in the summer. How is this possible? (Answer)

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BUSINESS TERM OF THE DAY

Carry Trade — A carry trade is when investors borrow money at low rates of interest in one currency and invest it at higher rates in another currency. The most common carry trade has been the yen in recent years.

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FOOD FOR THOUGHT

Young adults aged 18-34 are living more and more with their parents. In 2014, 32.1% of young adults lived with their parent(s), while only 31.6% lived with a spouse or partner. You’re not alone if you’re a millennial just trying to save a buck!

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