đ°đĄTwitter Mounts It's Defense
Happy Hump Day everyone!
Definitely a little bit of a slower week but we at Hump Days are always striving to bring to you the most interesting developments in the world of finance. This week, Starbucks decided it may leave unions out of new benefit plans, mortgage rates hit 5% for the first time since 2011, corn future are up huge, Netflix is down bad, and Google is planning a massive $9.5B office expansion.
Hereâs to making it over another Hump! đ„
- Humphrey & Rickie
In the Markets
Featured Story
If you havenât been keeping up with whatâs happening with Twitter, thatâs okay! Thatâs what Hump Days is for!
Essentially, Elon announced out of the blue that he bought up 9% of ownership in Twitter and the company seemed ready to integrate him onto the board of directors. He then had a change of heart (or maybe this was his plan all along) and rejected their offer to join the board and subsequently came with a counter-offer to buy the company for $43B (currently worth $35B).
The Elon Musk-Twitter saga continued to develop and last week, Twitter responded in a big way to Elonâs offer to buy the company and take it private. Twitterâs board announced a âpoison pillâ plan to buy themselves more time and to figure out what their next move should be.
Now, what is a âpoison pillâ exactly, you may be wondering. The name comes from captured spies who would take a poison pill to avoid interrogation. However, in this case, a corporate poison pill is designed to deter against hostile takeovers and gets triggered once a potential acquirer crosses a certain ownership threshold. In the case of Twitter, thatâs 15%. Once in effect, it allows all shareholders - except the acquirer - to buy more shares at a steep discount and create a new class that has the same voting power. This would effectively dilute Muskâs ownership and gives Twitter leverage and more time.
This wonât be where the saga ends though, it is ultimately up to the shareholders to decide if they want to take the deal; a group of shareholders who could be frustrated because Twitter hasnât moved very far since their 2013 IPO. Nonetheless, weâll be keeping a close eye on this story.
Weekly News Roundup
CNN+ Struggles to Lure Viewers towards New Streaming Platform (CNBC)
According to people familiar with the matter, two weeks into the unveiling of CNN+, fewer than 10,000 people are using the new streaming platform on a daily basis. The paltry audience casts doubt on the future of the application following the recently completed combination of Discovery and WarnerMedia into Warner Bros. Discovery.
RH: To put that into perspective, ESPN+ has 21.3M subscribers, NBCâs Peacock has 24.5M (9M paid subscribers) and Disney+ posted 10M+ subscribers on its first day.
Musk Targets Twitter Board as Company Adopts âPoison Pillâ (Reuters)
In response to Twitter adopting a âpoison pillâ to protect itself from Elon Muskâs $43B cash buyout offer, Elon himself took to Twitter to take a swipe at the board saying if he were to buy the company, he would take it private and get rid of the board of directors which would result in a savings of $3M a year in salaries.
HY: Not sure how this will go longer-term. A few scenarios: 1) Elon wonât get his way, heâll get stopped. Poison pill will go through but Twitter stock price goes down because of it. 2) Twitter could get bought for a greater price than what Elon offered.
Netflix Down 25% After Company Reports It Lost Subscribers (CNBC)
For the first time in more than 10 years, Netflix is reporting a decline in subscribers of 200,000. Netflix cited increased competition, password sharing as well as inflation and the ongoing Russian invasion of Ukraine for the poor performance. Netflix previously told shareholders it expected to add 2.5M net subscribers during the first quarter.
HY: One quarter of losing subscribers could be OK. But if next quarter they lose more subscribers â this is a sign of a downward trend for Netflix and unless they innovate hard we could see their share price fall lower.