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THE HEADLINES

ANTITRUST FALL

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US regulatory bodies are salivating a la “Butch” Heddo at the opportunity to bend over US tech giants and conduct a full cavity search. Following reports Friday that the Department of Justice would begin investigating Google’s lyin’ and cheatin’ ways, rumor has it that the FTC will get the nod to kick the tires on Facebook’s anticompetitive practices.

While the DOJ’s investigation will open the kimono on a variety of Google’s lines of business, the FTC’s Facebook investigation will hone in on the ambiguously defined “digital competition practices.” All but sealing Google+’s fate and sticking a fork in MySpace surely won’t help Zuck’s case.

Come on in, the water’s fine

As if regulatory scrutiny wasn’t enough …

Late on Monday, the House Judiciary Committee announced its own investigation into digital markets which will include requests for information and hearings … which tech leaders probably won’t show up for. The committee has also promised to review antiquated antitrust laws.

So, what happened?

Markets didn’t appear to give a rat’s ass about which three-letter-acronym governmental agency (or legislative body for that matter) will take a look under the hood. Shares of the FANG’s got steamrolled by the prospect of probes …

• Facebook fell 7.51%
• Amazon dropped 4.62%
• Netflix, which is not under government investigation and is just trying to live its best life still fell nearly 2%
• Google plummeted 6.11%

LUNCH-N-LEARN

“Get off my lawn.” – Warren Buffett to Justin Sun and his merry band of cypherpunks

The Oracle of Omaha and crypto founder, Justin Sun, are going on a man-date. Sun was the highest bidder in an auction that offers up the chance to dine with the investing G.O.A.T. as part of a charitable fundraising campaign.

Proceeds of the auction benefit the San Francisco based charity, Glide, which provides shelter and food for the homeless population in SF (read: anyone that makes under $110k). Sun’s record-breaking bid of $4.57M brings the total amount raised during the organization’s 19-year history to over $30M.

To be a fly on the wall

This lunch is shaping up to be more awkward than that time you and Brad showed up at the office in the same Patagonia and Brooks Brothers’ gingham.

Warren Buffet is the 88-year-old “Oracle of Omaha” who has been quite vocal about his mistrust of the digital assets. He even went so far as to say in February of this year that bitcoin is a delusion that attracts charlatans.

Justin Sun, on the other hand, is the 28-year-old founder of cryptocurrency Tronix and China’s version of Snapchat, Peiwo. Tron was launched in 2017 and is the tenth largest cryptocurrency in the world with a market cap of $2.56B.

Party of 9

Justin seemingly will take full advantage of his “+7” as he plans to bring other prominent names in the blockchain industry along to try and convince Warren that cryptocurrency isn’t ‘rat poison squared’.

DOG FIGHT

PetSmart is taking its DTC arm, Chewy, public at a valuation of $7B. So less than a standard vet bill. PetSmart hopes to leverage Chewy’s growth to raise $648M with its sale of 36M shares.

They’re good dogs, Brent.

Despite losing $267.9M last year and $338.1M in 2017, Chewy brought in a whopping $3.53B during the year of our Lord 2018, up 67% from the year prior. Who’s a good boy?

Still not convinced? 2018 was the first year that Chewy’s revenue hasn’t more than doubled since its inception. Last year, PetSmart valued Chewy at $4.45B in documents shared with investors.

But it isn’t without controversy …

A portion of Chewy’s business had been moved to an unrestricted subsidiary in an effort to keep creditor’s paws off of it. PetSmart’s private equity owners, BC Partners, and creditors have been at odds over the transfer of the lucrative online portfolio.

Those same lenders argued that PetSmart was insolvent at the time of the shift, rendering the original transfer fraudulent and giving them rights to the online goldmine. PetSmart owes $4B to lenders in a loan that will come due in 2022.

Fool me once …

Now is probably a good time to remind investors that the last online pet store to IPO went down as the poster-child of internet 1.0 busts. Oh, and PetSmart (yes, the same PetSmart that will take Chewy public) owns the rights to the Pets.com domain.

IN OTHER NEWS

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• Shots fired. Mexico announced that it is likely to retaliate (read: so long avocados) following a surprise tariff announcement by President Trump last week. A coalition of Mexican officials led by Foreign Minister Marcelo Ebrard is in Washington this week meeting with US officials to work out a deal to avoid the tariffs on all US imports from Mexico that would rise to 25% by October.  The team stressed that tariffs may actually lead to a worse economy in Mexico and result in more immigrants attempting to travel into the US. No word on how the tariffs will affect prices at your local weed dealer.

• Quest Diagnostics, America’s preferred strip-mall blood testing center announced yesterday that close to 12M patient’s financial and medical information has been compromised thanks to a data breach. American Medical Collection Agency which provides billing services to Optum360, a Quest contractor, notified Quest that unauthorized access of its bill payments system occurred last month. It is unclear exactly what information was obtained but the companies noted that an unauthorized user had access from August 1, 2018 to March 30, 2019.

• Down with the ship. Eddie Lampert is going all in on Sears properties and purchasing “Sears Hometown,” via his hedge fund, Transform Holdco LLC for $21M. Transform already owns a percentage of the Sears spinoff but will pick up the remaining 42%. Sears Hometown posted $1.4B in sales last year and fetched a share price of $2.25.

• UBS is leading a group of 14 firms coming together to create a blockchain trade settlement technology for cross-border trades. The company, called Fnality International, will utilize a bitcoin-like token called a Utility Settlement Coin (USC) to confirm the details of trades. After 4 years and $63.2M invested, it seems that the firms have actually found a use-case for crypto.

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