| |  | TOGETHER WITH |  | | | Good morning.
Breaking news this morning from the man, the myth, the legend: Elon Musk.
The enigmatic CEO has offered to acquire Twitter for $54.20 a share, representing a 38% premium to the company's share price before his 9% stake was announced.
Included in his letter to Twitter Chairman Bret Taylor was a clear message: "My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder. Twitter has extraordinary potential. I will unlock it."
PSA: The stock market is closed tomorrow in honor of Good Friday. We'll see you back here on Monday. | | | • | | JP Morgan and BlackRock kicked off an earnings season that will be chock full of Russia. | | • | | Peloton’s CEO has barely started his job, already activists are taking a swing at him. | | • | | Google marches forth with physical office plans. | | | | |  | investing | BlackRock Sparkles, JP Morgan Fizzles to Kick off Earnings Season |  | | Wednesday kicked off the first earnings season to reflect the fallout of the war in Ukraine and the shift among central banks to higher interest rates.
BlackRock, the world’s largest money manager, and JP Morgan Chase, America’s largest bank, were first up to report. Their latest results made clear that the macro headaches aren’t going anywhere any time soon. Unfortunately, Advil only works for real headaches. | No Bets on Hope | | JPMorgan’s first-quarter results were headlined by a $524 million loss tied to Russia’s invasion of Ukraine. The extreme volatility in nickel markets, which went so haywire trading even halted at certain points, led to $120 million of those losses.
Worse yet, the bank’s net income of $8.3 billion in the first three months of 2022 was down 42% compared to Q1 2021 and fell short of analyst estimates. Eating away at profits was a $900 million increase in credit reserves, $300 million for markdowns associated with Russia, and $600 million due to a greater risk of a US recession.
“I hope those things all disappear and go away, we have a soft landing and the war is resolved,” Jamie Dimon, JP Morgan’s CEO, told analysts. “I just wouldn’t bet that at all.” One thing Dimon will bet on: himself. JP Morgan said it approved a $30 billion share buyback program, suggesting confidence in its long-term prospects.
BlackRock Solid: BlackRock managed to increase its net income 18% year-over-year to $1.4 billion in the first quarter, beating analysts’ forecasts.
CEO Larry Fink said he's optimistic an "investment boom" in green energy is beginning as countries shift their energy reliance away from Russia, but even BlackRock’s results made clear the world is still a long way from reaching Putin-zero. The asset manager has taken $17 billion in losses on Russian securities due to the war.
As well, BlackRock’s inflows fell to $86 billion, half the $172 billion in Q1 2021 and down 59% from the $212 billion in Q4 2021. That suggests investors are sheepish about the market amid all the macro forces driving uncertainty right now. BlackRock’s assets under management also fell to $9.6 trillion, below the record symbolic threshold of $10 trillion the firm passed at the end of 2021.
The Bottom Line: Get used to quarterly reports chock-full of Russia caveats. | | | | | | | | Fitness | Two Months After Helping Oust Peloton’s Last CEO, Activists Are After the New One | | Even for a company that specializes in causing perspiration, Peloton should know it isn’t a good thing when your executives are constantly sweating out their future.
Two months ago, the fitness company’s previous CEO, company founder John Foley, resigned under pressure from Blackwells Capital, a prominent activist shareholder angry with Peloton’s floundering business. On Wednesday, Blackwells blindsided his replacement with a renewed attack. | Spinning Their Wheels | | Peloton, with its state-of-the-art stationary bikes and treadmills, used pandemic lockdowns to double its revenue to $4 billion in the fiscal year ending June 30, 2021. The trick was as simple as selling home exercise equipment to everyone attempting to fend off DoorDash induced love handles.
But then governments rolled back pandemic restrictions, gyms reopened, and Peloton’s sales slumped. In January, Blackwells Capital — which owns about 5% of Peloton shares — published a scathing report accusing the company of being the worst performer on the Nasdaq 300, and called on Foley to resign and for Peloton to put itself up for sale. Two weeks later, Foley made half their dreams come true by stepping down. Foley’s replacement, former Netflix CFO Barry McCarthy, has barely had time to get comfortable in the CEO chair before Blackwells put him on blast: | • | | In a public statement, Blackwells said McCarthy has failed to end a dual-class shareholder structure that gives Peloton’s founders control of the company, essentially accusing him of being Foley’s puppet. “Remarkably, shareholders are worse off now than before,” wrote Jason Aintabi, Blackwells’ CIO. | | • | | Blackwells chided McCarthy for Peloton’s flailing stock price. The company’s market cap is currently $8 billion, down from $50 billion two years ago. Peloton shares are down 33% this year, and 21% since McCarthy took over on February 8. Peloton has also never made an annual profit since going public in 2019. | | | | Just Do It: Media reports have pointed to Amazon, Apple, and Nike as potentially interested buyers. Blackwells said Wednesday it may sue if Peloton doesn’t open itself up to bids, proving the one thing more exhausting than a spin class is shareholder relations. | | | | | | SPONSORED BY composer | This App Will Make You Question Every Investment You’ve Made | | 66% of investors regret impulsive investment decisions. That’s why over $1 trillion is managed by “quantitative” hedge funds.
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Despite Google Drive, Google Docs, Google Meet, Google Chat, Google Cloud, Gmail, and every other remote work-friendly app the search giant has launched, it wants its own employees on site. And it's paying big money for it. This year, Google will invest $9.5 billion in new offices and data centers, the company said Wednesday. | Work Hard, Play Harder | | Beginning last week, hybrid work became the law of the Google land. The company mandated most employees return to the office at least three days a week, and tried to quiet worker grumbles with perks such as hiring a marching band to entertain its Austin, Texas employees and giving its Boulder, Colorado office a brand new arcade. You know, the type of perks that totally make office work more productive than remote work.
Even as employees of its Mountain View, California office complained the return to office caused traffic headaches (apparently Google Maps couldn’t help ease that jam), Alphabet’s flagship subsidiary is forging ahead with plans to expand its physical on-site footprint: | • | | Google says it’s using the $9.5 billion investment to open data centers across the country, a new office in Atlanta, and to boost its presence in Boulder and New York. The company says the investment across over a dozen states will lead to 12,000 full-time hires by year’s end. | | • | | Google spent over $37 billion on offices and data centers in the last five years, including $7 billion last year headlined by the $2.1 billion purchase of a fancy new Manhattan office building. | | | Just Because it Rhymes With Frugal: To entice some of its Silicon Valley workers back to office, Google is hosting a a private Lizzo concert for employees. That may sound expensive, but Alphabet can certainly afford it after generating the most revenue in company history last year (when almost the entire staff just so happened to be working remotely). | | | | | | Extra Upside | • | | Holiday weekend tip: For two more weeks, you’ll have to wear masks on planes and trains. | | • | | Germany warned it will lose $240 billion in two years if Russian gas is suddenly cut off. | | | | | | | | |  | Just For Fun | | | | | Written by Sean Craig and Brian Boyle.
*Investing in securities involves risks, including the risk of loss. Composer Technologies Inc., SEC Registered RIA. This is not a recommendation of a particular security or strategy. $200 will be deposited in your Composer account once your account is funded and funds have been deployed into a Symphony within 7 days of creating an account. | | No longer want to receive these emails? Unsubscribe here. Copyright © 2022 The Daily Upside, LLC., All rights reserved. 1230 York Avenue, Box 154, New York, NY 10065 | | | | |
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