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House Speaker Nancy Pelosi has quieted calls in the past to begin impeachment proceedings, but that all changed yesterday, as she announced that the House will open a formal impeachment inquiry against the President, stating that he has violated his oath of office and obligations under the Constitution.
A whistleblower, presumably Tekashi 6ix9ine, alleged that there were shenanigans between the President and a foreign leader. Trump allegedly withheld providing military aid to Ukraine days before allegedly telling Ukrainian President Volodymyr Zelenskiy that he should investigate Joe Biden and his son Hunter.
US markets were all in the red yesterday, with the NASDAQ falling 1.46%. The S&P 500 and NASDAQ both had their worst performances in a month. Shares plummeted in the early afternoon as rumors of the inquiry began to swirl, rebounded during the day after Trump tweeted that he’d release his call transcript but fell again after Pelosi officially announced the impeachment inquiry.
The bottom line …
Historically, the markets react worse to the possibility of impeachment inquiry compared to the actual proceedings (looking at you Slick WIlly and Dick Nixon). Of course, it’s a small sample size.
So what’s next? The markets will begin to factor in how likely an impeachment is to pass through both the House and the GOP controlled Senate, and what the potential Pence led White House would look like.
OUT OF OFFICE
Well, that’s all she wrote for Adam Neumann. The writing was on the wall for the WeCEO whose stock was dropping faster than Antonio Brown in your fantasy league. Pressure had been mounting for Neumann to step down amid claims that he had been exploiting the company for his own good, major governance lapses and at least one scathing WSJ character assassination.
Neumann’s out, who’s in?!
Artie Minson and Sebastian Gunningham will serve as Co-CEOs for the foreseeable future at We Company. The two are no slouches with Minson having taken AOL and Time Warner Cable public and Gunningham boasting LinkedIn endorsements for “running Amazon’s marketplace biz” and “being a Bezos lieutenant.” I wonder if they will get adjoining co-working offices?
Despite their experience in the industry, the combo will have a tough time taming the beast that Neumann created as it doesn’t appear that the company will search for another solo CEO until after its IPO.
So we can still IPO this year?
In the words of Randy Jackson, “that’s a no from me dog.” Now that Neumann is out, it seems like it is back to the drawing board for We. The company didn’t officially rule out an IPO by the end of the year, but it also hasn’t indicated that it’s in any rush.
We reported $800M in sales in its latest quarter. The problem is that the company still managed to lose $600M over the same time period. Good luck, Artie and Sebastian.
The bottom line …
It’s up to the co-CEOs to channel their inner shake-and-bake and turn this company around. Until We shows that it can narrow its losses, and the CEOs prove that they can step up as leaders, the chances of you investing in The We Co. in the public markets any time soon are minuscule.
IN OTHER NEWS
- Saudi Aramco isn’t going to be deterred by a measly drone strike, that’s for sure. The Kingdom is taking its oil business public and plans to double down with investors, providing a 10% float compared to the initial 5% expected. Crown Prince Mohammed bin Salman is seeking a $2T valuation, giving it a more than 8x leg up on Alibaba’s $25B IPO, the world’s previous largest public offering.
- Google and Starbucks got in the win column in Europe. The European Court of Justice ruled that Google doesn’t need to abide by the EU’s “right to be forgotten” if its operating outside of the economic bloc’s reach. Starbucks also went all FTW. It won an appeal against a ruling that would have forced the overpriced coffee conglomerate to cough up more than $28.27M to Dutch authorities to resolve outstanding tax obligations.
- Juul is ready to restructure. After a proposed ban on popular flavors, like all of them, which make up 80% of the vape maker’s sales, the company announced it would be cutting hiring while still planning to expand operations. Not sure how that works. The company currently employs around 4k people, up from 225 at the end of 2017. Juul sales fell in August, from $294M in July to $278M. The company is also facing the fallout from state backlash, including Massachusetts, which yesterday declared a public health emergency and called for a four-month ban of vape product sales, marijuana or otherwise.
- Nike had a great quarter, including a 7% growth in sales driven by gains in China. Nike’s revenue in China rose 22% last quarter, while CEO Mark Parker said Chinese regional growth has been in the double digits every quarter for the last five years. In Kaepernick country (the US), Nike sales were up 4%, leading the company to more than $4B in growth. Meanwhile, 8chan users are praying for Zion to blow out another shoe to create more bulletin board material.
- German prosecutors are licking their chops. VW Chief Executive Herbert Diess, Chairman Hans Dieter Pötsch, and former CEO Martin Winterkorn are in deep sh*t for their alleged role in the 2015 emission scandal. They’ve been officially charged with withholding information from investors. In less surprising news, VW and all three of the execs denied the claims.
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