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THE HEADLINES

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SMELLS LIKE TEEN VAPING

Photo by Lee Phillips from Pexels

Full cavity searches all around. The FDA made a surprise raid on JUUL HQ in SF last Friday.

The presumably labcoat-clad agents seized thousands of marketing documents as part of the FDA’s crackdown on teen vaping and e-cigarette use. As if smelling like the inside of a La Croix can and looking like the douchebag wasn’t deterrent enough.

JUUL which owns 75% of the e-cig market has been a targeted by the DEA’s less sexy, more scientifically inclined cousin, the FDA. Early last month the FDA put JUUL and others on blast, giving them 60 days to prove that their Fruit Loop flavored vape juice isn’t marketed towards children. Apparently, the FDA couldn’t wait that long …

Shares of traditional tobacco companies popped on the news.

Water Cooler Talking Point: “The real issue here isn’t teen smoking, it’s that JUUL is still printing documents on paper.”

DON’T CALL IT A COMEBACK

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Try as you might, there’s no killing Geoffrey the Giraffe. Toys R Us, which filed for bankruptcy protection in September of 2017, was set to hit the auction block, selling off its remaining intellectual property. However, controlling lenders changed their minds on Tuesday, instead deciding to revive the brand rather than let the vultures have their way with Geoffrey’s carcass.

The reorg plan proposed by Toys R Us and Babys R Us lenders revolves around the brand’s biggest asset, the brand itself, and cashing in on global licensing agreements. The plan would also allow Toys R Us to create and invest in new, domestic retail operations under the name.

The original bankruptcy auction was set to include the Toys R Us and Babys R Us brands, registries, domain names, and Geoffrey the Giraffe himself. After discussion, the controlling parties decided that the IP was far too valuable to let go. They might be onto something: the bankruptcy punched an $11B hole in the US toy industry.

Water Cooler Talking Point: “This holiday season the Toys R Us Wish Book will feature forgiveness of $5B of long-term debt and the untimely death of Jeff Bezos.”

PRESTIGE WORLDWIDE

China’s Prestige Worldwide, Tencent Music Entertainment Group, has filed to go public in the US. Investors … possibly you!

Tencent Music owns four of the largest music apps in China: streaming apps QQ Music, Kuguo Music, and Kuwo Music, and karaoke app WeSing. The brand has pleasured the eardrums of some 800M unique active monthly users in Q2 2018 alone. To put that into perspective, Spotify, which owns 9% of Tencent Music, boasted 180M monthly active users over the same period.

This deal has the potential to be the biggest IPO by a Chinese company in the US. Tencent expects to raise as much as $1B at a $30B valuation. The company has posted an annual profit for the past two years, netting $199M last year. A tech company with a profit? That’s a weird premise, eh Snapchat …

Water Cooler Talking Point: “Look, we can bicker about this all night, but what’s done is done. Are you guys gonna invest or not?”

IN OTHER NEWS

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Wipe that sh*t eating grin off of your face, Bernie Sanders. Amazon is raising its minimum wage to $15. The change will apply to 250k full or part-time employees and 100k seasonal workers. The company also plans to lobby for an increased federal minimum wage, because, ya know, misery loves company.

“Hear me out on this one … we poach the CEO from a struggling arts on crafts store to right the ship at our struggling discount clothing retailer. Whaddya say?” – JCPenney’s recruiting team pitching JCP’s board, probably. Jill Soltau, the former head of JoAnn Fabrics will take over the top post at JCPenney beginning on October 15th.

We see you, Elon. Tesla appears to be subscribing to the under-promise, over-deliver school of thought … and Wall Street is having none of it. Despite delivering 83.5k vehicles, 3.5k more than analyst estimates for the quarter, TSLA shares dropped on Tuesday.