Wall Street Swipes Right On Tinder IPO, Plus UnitedHealth Warns Of Obamacare Divorce

by 5 years ago

morning-brew
“We love and respect Adele, as do her 24 million fans on Spotify.” — Spotify, after singer Adele announced that she doesn’t plan to make her new album available through any streaming services, a controversial move in today’s streaming-centric music market. Her new album, “25,” launches this Friday.

MARKET SNAPSHOT 

Square and Match Group Square Off

  • U.S. stocks saw little movement on Thursday, but maintained their strong gains for the week. Healthcare was the biggest loser (balancing out solid gains in tech), led by industry giant UnitedHealth, which fell 6% (for good reason—see corporate primer for more) and dragging the Dow down with it.
  • There was more action in Europe, where markets were positive as overseas investors digested data from the Federal Reserve’s October meeting, which strongly hinted at a long-awaited interest rate hike next month.
  • The dollar dropped against the euro despite heavy conviction from the aforementioned Fed meeting, which you’d typically expect to strengthen the dollar (to be fair, the dollar remains near its 2015 highs).
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CORPORATE PRIMER

UnitedHealth Warns of Obamacare Divorce

The Affordable Care Act (aka Obamacare) is back in the headlines, and it’s not good news: UnitedHealth, America’s largest national health insurer, warned yesterday that it may drop Obamacare from its available plans as soon as next year. It’s a matter of simple economics: while enrollment has remained low, those that do sign up incur significant costs (often because they sign up only when they need healthcare and drop it once they’re healthy). If UnitedHealth exits—and there’s a good chance they do, given the $425 million they’re expected to lose in the fourth quarter due to Obamacare—it would deal a major blow to President Obama and his legacy-defining healthcare overhaul. Certainly not what the President wants as he prepares to leave office.

Best Buy Keeps the Trend Going

They say this time of the year ‘tis the season to be jolly, but we doubt Best Buy is feeling the love. The tech retailer announced subpar earnings yesterday, continuing a rough year for the company—shares are down about 20% just this year. Despite increasing sales in its computer and appliance divisions, a lackluster performance in mobile devices overshadowed the bright spots. At least misery loves company: the retail sector as a whole has struggled immensely this quarter—just ask Nordstrom and Macy’s.

Starboard Switches Strategies

Remember being told two different things from each parent? Yahoo can relate. In a letter to Yahoo management, activist investor Starboard is suggesting the company maintain its large investment in Alibaba, contradicting its previous message to sell off the investment. Starboard is now encouraging Yahoo to sell its smaller, more well-known search and display advertising business. Yahoo investors haven’t been pleased with core business performance under CEO Marissa Mayer, and a sell-off would shift Yahoo’s operations to its more optimistic Alibaba investment.

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TODAY IN TECH
Wall Street Swipes Right

Tech took over Wall Street yesterday, as both Match Group and Square took their talents to the public market. Square, a mobile payment company founded by Twitter CEO Jack Dorsey, and Match, the online dating conglomerate that owns Tinder, both entered their big day with disappointingly low IPO valuations. But despite major doubts from investors, shares of both companies surged, with Square jumping 45% and Match 23%. After a series of disappointing tech IPOs in the past year, yesterday’s success signals that tech isn’t quite dead yet.

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OTHER STORIES

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ECONOMIC CALENDAR

  • Monday: Dillard’s Earnings
  • Tuesday: Consumer Price Index; Walmart, Home Depot, Dick’s Sporting Goods Earnings
  • Wednesday: Fed Minutes; Housing Starts; Lowe’s, Target, Staples Earnings
  • Thursday: Best Buy, Gap Earnings; Weekly Jobless Claims
  • Friday: Abercrombie & Fitch, Foot Locker Earnings

MAY THE FORCE BE WITH YOU

When’s the last time a good Star Wars film came out? Depends on who you ask, but everyone would agree it’s been a while. Thankfully, the newest Star Wars film is almost here to the rescue—and it already looks like it’s going to be a galaxy-wide hit. Here’s the breakdown.

  • The film has already broken IMAX presale records, doubling the previous record of $9 million—and we’re still a month away from release. The total presales are even more jaw-dropping: over $50 million.
  • Disney (which acquired the film’s production company, Lucasfilm) paid $4 billion for the rights to Star Wars, so they have a lot of live up to.
  • The current record for opening weekend sales is held by Jurassic World at $209 million, but many believe Star Wars will break this record.
  • For comparison, the original Star Wars movie grossed $461 million, while the first prequel holds the Star Wars record at $475 million.

INTERVIEW QUESTION OF THE DAY

Alone I am 24th, with a friend I am 20. Another friend and I am unclean. What am I? (Answer)

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BUSINESS TERM OF THE DAY

Sampling Error — A statistical error to which an analyst exposes a model simply because he or she is working with sample data rather than population or census data. Using sample data presents the risk that results found in an analysis do not represent the results that would be obtained from using data involving the entire population from which the sample was derived.

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FOOD FOR THOUGHT
1,111 carats: Shares in Lucara soared 32% after it unveiled a stone of 1,111 carats—which it says is the biggest gem-quality diamond found in more than 100 years.

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J.Camm is the Managing Partner and Editor-in-Chief of BroBible.

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