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Apple CEO Tim Cook hit out at companies like Facebook again: Anything that collects personal data and uses it against customers ‘should not exist’ (AAPL)

Fri, 03/01/2019 - 3:40pm

  • Apple CEO Tim Cook seemed to hit out at Facebook again on Friday, saying that no one should be allowed to create detailed dossiers on users and then use that personal data against them.
  • Speaking at the company's annual meeting, Cook called for regulation and said such practices "should not exist."
  • Cook has repeatedly criticized Facebook in the past.

CUPERTINO, California — Apple CEO Tim Cook amped up his criticism of Facebook on Friday, saying that no one should be allowed to collect detailed information on people and use that information against them.

Responding to a question at its annual shareholder meeting here about how the company views privacy, Cook warned about "someone" assembling detailed dossiers on just about everyone and using that information to "pit one group against the other."

"The idea that someone has built this enormous, detailed profile of you and of everybody in this room and then takes that detailed profile to ... stir the pot, this is offensive to us," Cook said, adding, "We think that's it's just wrong to do, and it should not exist."

Cook didn't mention Facebook by name, but the implication was clear. Facebook's service has been hijacked repeatedly to spread divisive propaganda, not only during the 2016 presidential campaign, but also in Myanmar against the Rohingya minority group. Critics have also charged that Facebook's algorithms have served to amplify disagreements and disunity by promoting emotionally charged and divisive posts.

Cook called again for new privacy regulations

Apple's CEO also prefaced his statement by saying that "we don't have to look very far" to see the dangers of a world in which everything people do online is tracked and monitored. Facebook is headquarteredin Menlo Park, California, which is just up the road from Apple's headquarters, As he's done before, Cook called for new regulations to protect privacy and govern data collection by Facebook and other companies.

"We think regulation is necessary in this case," he said. "I'm a big believer in the free market, but I'm also a big believer in looking in the mirror and admitting when it's not working. And it is not working."

Cook has tried to position Apple as a defender of privacy. He's repeatedly criticized the data collection practices, particularly Facebook in the wake of last year's Cambridge Analytica scandal. Last month, Apple turned off Facebook's internal iPhone apps in response to reports that it was go around the iPhone maker's policies to track users phone activities.

He's also repeatedly emphasized the privacy protections Apple's devices, software, and services offer users.

But Apple benefits in multiple ways from companies whose business models are more dependent data collection. It receives billions of dollars each year from Google to ensure that the latter's search engine is the default on the iPhone. What's more, Facebook's assortment of apps are among the most popular on Apple's devices.

SEE ALSO: The real lesson of Facebook's Apple dust-up shows why Zuckerberg's 'hacker way' is even more dangerous than we thought

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Green Growth Brands' CEO says he's gearing up for an M&A tear and explains the types of companies he's going after

Fri, 03/01/2019 - 3:32pm

  • Marijuana retailer Green Growth Brands is gearing up for lots of M&A, the company's CEO Peter Horvath said in an interview with Business Insider.
  • Horvath also said Green Growth Brands will be "following through" on its bid to take over Aphria.

Marijuana retailer Green Growth Brands is gearing up for a dealmaking tear, the company's CEO Peter Horvath said in an interview.

In the rapidly growing marijuana industry, "M&A is part of the game" said Horvath. "It's safe to say we'll be involved for at least five years in a meaningful way."

Horvath said Green Growth Brands would prefer to acquire targets who own licenses to operate dispensaries in states with legal marijuana, but that don't have the retail stores up-and-running yet.

"We aren't wowed by what people out there are doing," said Horvath, who comes to the cannabis industry with a wealth of retail experience across Victoria's Secret, American Eagle, and DSW. "We prefer to buy unexecuted licenses so we can make all the decisions."

Read more: An executive who led turnarounds at Victoria’s Secret and American Eagle reveals what the cannabis industry can learn from big retail brands

He also said that he thinks other marijuana retailers are spending "too much" on licenses and that Green Growth is "trying to be smarter than what we see out there."

Horvath listed off eight transactions Green Growth Brands has made in recent months as examples, including partnerships with DSW and the Simon Property Group to sell its Seventh Sense brand of CBD skincare products in malls around the US.

Horvath also said Green Growth is still interested in its bid to take over Aphria, even after being turned down in December.

While Green Growth isn't likely to raise its bid for Aphria, Horvath said, it remains committed to trying to get a deal done. 

Irwin Simon, Aphria's new board chairman, said earlier in January that the two companies may enter a retail partnership at a later date, an idea that Horvath is open to.

Aphria, however, isn't the only target Green Growth Brands has in the near-term, said Horvath, though the company will hold off making formal offers until the Aphria bid is resolved.

One thing Horvath said that he won't be spending lots of money on is advertising. 

He said that MedMen, a publicly traded chain of upscale marijuana dispensaries in the US, was "wasting its time" putting up billboards and trying to run ads on television.

MedMen recently partnered with director Spike Jonze to produce a 2-minute spot called "The New Normal," which was rejected by major TV networks and posted directly online

Read more: 'It gets tiring': Cannabis retailer MedMen's CMO talks about the challenges of marketing marijuana and why education is a key pillar of its strategy

"That's 0 calories," said Horvath. "I don't know what that has to do with their business — it's not going to create new customers."

A spokesperson for MedMen couldn't be reached after several attempts for comment. 

Rather, Horvath said in his view the best way to create and retain customers is through word-of-mouth. If someone has a great experience in-store or with a product, they're more likely to tell their friends, family, or co-workers about it.

For what its worth, Horvath isn't concerned about the Food and Drug Administration's recent moves to crack down on CBD-containing food and drinks, because they're focused on the skincare side for now. 

"I'm kind of agnostic to that," said Horvath. "If the FDA came down hard, our competitors would be sitting on inventory they couldn't sell. If I'm being malicious, I hope they come down hard."

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Lyft says its business got a major boost from Uber's extremely scandalous 2017

Fri, 03/01/2019 - 2:59pm

  • Lyft says the #DeleteUber campaign from 2017 gave a boost to its business.
  • The viral hashtag called on users to ditch the ride-hailing company, and Lyft says it saw its revenue per user grow significantly over the same time period.
  • On Friday, Lyft filed S-1 paperwork to go public, providing an unprecedented window into the company's finances.

In January 2017, the #DeleteUber social media urged people to delete their Uber accounts after the ride-hailing company was accused of exploiting a protest against President Trump's travel ban to make money.

The hashtag spread like wildfire — and it now looks like it had a significant positive impact on Uber's key competitor, Lyft.

On Friday, Lyft published its S-1 paperwork as it prepares to go public in what is expected to be the first of many multi-billion dollar IPOs throughout 2019. The documents offer investors and analysts an unprecedented glimpse inside the Silicon Valley transportation firm's financials — including that it had revenues of $2.15 billion for the 2018 fiscal year, up from $1.06 billion a year prior, with significant losses of $911.3 million in 2018, up from $688.3 million in 2017. It reportedly plans on going public at a valuation between $20 billion and $25 billion.

And it also specifically calls out early 2017, when #DeleteUber was at its peak, at a period when Lyft saw improved rates of growth in the average revenue generated by active users of the app. Also of note is that, around the same time, former Uber engineer Susan Fowler wrote a bombshell blog post that accused the company of fostering a hostile workplace — putting the company and its culture under harsh scrutiny.

Ultimately, founder  Travis Kalanick ultimately resigned as Uber CEO in June 2017, acceding to pressures both inside and outside the company, following this string of scandals. Uber's loss, though, seems to have been Lyft's gain, in terms of its business. 

"The growth rate in Revenue per Active Rider increased significantly in the first and second quarters of 2017 as our brand and values continued to resonate with riders and they increased their usage of Lyft instead of competing offerings," the S-1 says.

In its S-1, Lyft heavily promotes values like "social responsibility," in a seeming attempt to differentiate itself from its bigger and better-funded rival Uber, which has come under fire for what is percieved as its cutthroat approach to competition. 

"To advance our mission, we aim to build the defining brand of our generation and to promote a company culture based on our unique values and commitment to social responsibility. We believe that our brand represents freedom at your fingertips: freedom from the stresses of car ownership and freedom to do and see more," it says.

"In addition, our core values focus on authenticity, empathy and support for others and encourage our team members to take initiative. These values have given rise to a unique company culture that fosters an amazing community of drivers, riders and employees, and has helped establish Lyft as a widely-trusted and recognized brand. We believe many users are loyal to Lyft because of our values, brand and commitment to social responsibility."

It also says that the "Y" in Lyft stands for "why" — as in, the reason the company exists, which is its mission to "improve people's lives with the best transportation."

More broadly, Lyft's overall market share in the United States has also grown significantly — nearly doubling over the last two years.

"As ridesharing becomes more mainstream, we believe that users are increasingly choosing a ridesharing platform based on brand affinity and value alignment. Our U.S. ridesharing market share was 39% in December 2018, up from 22% in December 2016," it says.

In the fourth quarter of 2018, Lyft had 18.6 million active users and 1.1 million drivers.

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Lyft has to pay Amazon's cloud at least $8 million a month until the end of 2021 (AMZN)

Fri, 03/01/2019 - 2:57pm

  • In its IPO filings, Lyft said it's on the hook to pay Amazon Web Services (AWS) at least $300 million by the end of 2021 for cloud-computing services. 
  • Depending on when the deal began in January and when it ends in December, it means Lyft is paying between $8.33 million and $8.57 million to AWS every month.
  • If Lyft doesn't hit the $300 million mark, it'll have to pay Amazon the difference, in accordance with the agreement.
  • It's a reminder that cloud computing isn't as cheap as some think.

Lyft is going public, and its filing gives us the best look yet at the ride-hailing firm's financials, its corporate focus, and how it does business in general.

Buried in there is the revelation that Lyft is contractually obligated to pay at least $300 million to Amazon Web Services (AWS), Amazon's market-leading cloud-computing business, between January 2019 and December 2021. Some quick napkin math shows that — depending on when exactly the contract began in January 2019 and ends in December 2021 — Lyft is committed to spending between $8.33 million and $8.57 million a month on AWS, which hosts its entire app and platform.

Notably, Lyft said that if its usage of Amazon's cloud doesn't hit or exceed that $300 million threshold, it'll have to pay the difference. Lyft committed to spending at least $80 million in each of the three years of the deal, with the stipulation that it will spend $300 million in aggregate overall. The S-1 filing said this figure was actually an addendum to an existing deal — in March 2018, Lyft agreed to pay AWS $150 million by June 2021; in January 2019, it extended the deal to what it is now.

It's not uncommon for high-flying startups such as Lyft to rely on the cloud. So-called public cloud-computing platforms, such as AWS, allow developers to rent supercomputing capacity from the tech giants' own massive-scale data centers. It means that as a company grows, it can add more computing capacity with the push of a button. 

Another example of this kind of deal is when Snapchat's parent company went public in 2017. It revealed that it was on the hook to pay Google Cloud, the search giant's answer to AWS, some $400 million a year through 2022.

In a broader sense, the Lyft deal with Amazon Web Services reveals sometimes-uncomfortable truths about the cloud-computing industry. While it's often billed as being cheaper than maintaining your own servers in your own data center, that's generally only true at small scales. 

At larger scales, such as Lyft's, the costs can quickly add up to be significant.

As The Information recently reported, several companies have found the size of their monthly AWS bills to be a surprise. At a certain point, some large-scale web companies, including Dropbox, have actually moved from Amazon's cloud back to their own servers.

However, that can be a costly project, requiring significant investment both in rearchitecting the entire infrastructure and in transferring data from one place to the other, as well as hiring new and different types of talent. 

So take Lyft's cloud situation as a reality check on cloud computing — for both its promise for smaller companies and its potential to be more expensive than many might think.

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After weeks of worry, Americans' tax refunds are finally trending up

Fri, 03/01/2019 - 2:07am

  • The average tax-refund amount was down significantly from last year during the first three weeks of the 2019 tax season.
  • Democratic lawmakers blamed the GOP tax-cut law for the decrease, and many Americans expressed outrage online about receiving smaller refunds.
  • But the latest IRS data indicated the average refund is now up 1.3% compared with 2018.

After three weeks of hand-wringing, some Americans got good news about the size of their tax refunds.

The IRS data from the first three weeks of the tax season showed that the size of the average tax refund was down significantly compared with the same time periods in 2018. In fact, after the third week of the 2019 tax season — which ended February 15 — the average refund was just $2,640 compared with an average refund of $3,169 through the first three weeks of the 2018 filing season, a 17% decrease.

But new data from the IRS, released on Thursday, showed that the size of the average tax refund issued has not only caught up to 2018 but also surpassed it.

The average tax refund through the first four weeks of the tax season was $3,143, according to the data, up 1.3% from the $3,103 average refund over the same time period in 2018.

The increase, according to the Treasury Department, was because of delayed payments from two key tax credits.

"As previously stated, the increase in the weekly data is primarily due to the remainder of the Earned Income Tax Credits and Child Tax Credits being paid out this week," the Treasury said in a statement.

"Despite the higher refund average, we remind taxpayers that weekly filing season data is variable and will continue to fluctuate. We caution against drawing broad conclusions on refunds overall this early in the filing season."

The drop in refund size frustrated many Americans. Some blamed the tax-reform law, known as the Tax Cuts and Jobs Act, which was supported by President Donald Trump and Republicans. In fact, people started to use the hashtag "#GOPTaxScam" when bemoaning the smaller refunds.

While the size of a refund is not indicative of the amount that a filer pays in federal taxes, some Democratic lawmakers, including House Speaker Nancy Pelosi, also blamed the tax-reform law for the shrinking refunds.

"Once again, American families are feeling the reality behind the empty promises of the GOP Tax Scam," Pelosi said on February 11.

Read more: Democrats claim the decline in Americans' tax refunds is proof the GOP tax law screwed over the middle class — but the truth is more complex

But analyses show that a large majority of Americans saw a decrease in their overall tax burden for 2018 and any drop in a tax filer's refund was likely because of regulatory adjustments on how much employers were instructed to withhold from employees' paychecks.

According to Daniel Silver, an economist at JPMorgan, the catch-up in the average refund size is encouraging given the past weeks' data but not a huge win for the GOP tax law.

"It is a very favorable development for consumption to see refunds more in line with past years’ experience after seeing the significant lag in the data prior to the latest daily report," Silver wrote in a note to clients on Thursday.

"But if refund issuance is simply in line with that of recent years, this could be viewed as a disappointment given some expectations that the Tax Cuts and Jobs Act would lead to a jump in refunds this year."

SEE ALSO: Even after getting his tax cuts, Trump still couldn't deliver on his biggest economic promise

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Tesla has changed its Autopilot package — customers now have to pay more for some features (TSLA)

Thu, 02/28/2019 - 8:32pm

  • Tesla has added some Autopilot features to an upgrade package, called "full self-driving capability," that were previously available in the base package.
  • The new package costs an extra $5,000, and includes features which were previously available in the base Autopilot package.
  • The base Autopilot package costs $3,000, so the total cost of Autopilot with the upgrade package is $8,000.

Tesla has added some Autopilot features to an upgrade package, called "full self-driving capability," that were previously available in the base package.

A Tesla representative confirmed the changes to Business Insider.

Read more: Tesla is finally releasing the long-awaited $35,000 Model 3

The new package costs an extra $5,000, and includes features like Navigate on Autopilot (which allows Tesla vehicles to navigate highway on-ramps, off-ramps, and interchanges with driver supervision), Autopark (which allows Tesla vehicles to park with limited driver assistance), and Summon (which allows Tesla vehicles to drive to their owners in parking lots), which were previously available in the base Autopilot package.

The base Autopilot package, which allows Tesla vehicles to steer, accelerate, and brake with driver supervision, costs $3,000, and is required for customers who purchase the "full self-driving capability" package,  so the total cost of Autopilot with the upgrade package is $8,000.

Tesla says upgrade package will include "automatic driving on city streets" and the ability for Tesla vehicles to "recognize and respond to traffic lights and stop signs" later this year.

Have a Tesla news tip? Contact this reporter at mmatousek@businessinsider.com

SEE ALSO: Tesla stock slides after Elon Musk warns it won't be profitable in Q1

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Elon Musk says Tesla will probably not be profitable in the first quarter of 2019 (TSLA)

Thu, 02/28/2019 - 7:24pm

  • Tesla CEO Elon Musk said during a conference call with reporters on Thursday that the automaker would likely not be profitable in the first quarter of this year.
  • Musk added that he expected Tesla to be profitable in the second quarter.
  • Musk's statement marks a reversal from his prior prediction that Tesla would be profitable in every quarter beginning in the third quarter of 2018.
  • During the automaker's fourth-quarter earnings call back in January, Musk had said he was "optimistic" that Tesla would earn a small profit during the first quarter.

Tesla CEO Elon Musk said during a conference call with reporters on Thursday that the automaker would likely not be profitable in the first quarter of this year.

Musk added that he expected Tesla to be profitable in the second quarter.

Musk's statement marks a reversal from his prior prediction that Tesla would be profitable in every quarter beginning in the third quarter of 2018. During the automaker's fourth-quarter earnings call, in January, Musk had said he was "optimistic" that Tesla would earn a small profit during the first quarter.

Musk had said on that January call: "I'm optimistic about being profitable in Q1. Not by a lot, but I'm optimistic about being profitable in Q1 and for all quarters going forward."

Read more: Tesla is shuttering most of its stores as the company switches to an online-only sales model

During the second half of 2018, Tesla posted the first consecutive quarterly profits in its history, though it failed to meet Wall Street's expectations for its fourth-quarter earnings.

The automaker posted adjusted earnings of $1.93 per share on $7.23 billion in revenue during the fourth quarter. Wall Street analysts had expected adjusted earnings of $2.10 per share on revenue of $7.1 billion.

Have a Tesla news tip? Contact this reporter at mmatousek@businessinsider.com.

SEE ALSO: Here are 4 people who could take Elon Musk's place if he were to step down

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We went to one of the best grocery stores in the US that only has locations in Texas and Northern Mexico and saw why it has such a cult following

Thu, 02/28/2019 - 7:18pm

  • A number of things come to mind when one thinks of Texas: cowboy hats, Tex-Mex food, and wide open spaces are some of them.
  • What should also be on that list is a century-old grocery store that many Texans swear by: H-E-B.
  • It's many a Texan's one-stop shop for food, household items, and a slew of other necessities.
  • It also happens to be the fourth best grocery store in the US thanks to its strong combination of market share, sales growth, sales efficiency, and emotional connection with its shopper base, according to a recent report by data company Dunnhumby.
  • That's just a sliver of the national attention that H-E-B has garnered in its years of operations.
  • To put the store into perspective, the regional chain is the Texas equivalent of a Safeway or a Publix, but with a fanbase that's arguably even more loyal. 
  • Here's what it's like inside H-E-B.

SEE ALSO: We compared In-N-Out, Shake Shack, and Texas favorite Whataburger — and the winner is clear

We visited a location in Hutto, Texas, a town north of Austin.

It's one of only 400 H-E-B stores, most of which are in Texas and some in Northern Mexico. None of the other 49 US states have locations.

Source: H-E-B



Since it was founded in Kerrville, Texas, in 1905, the company has embraced its strong Texan identity, one that resonates with its customers and has kept them coming back.

Source: H-E-B



See the rest of the story at Business Insider

Tesla stock slides after Elon Musk warns it won't be profitable in Q1 (TSLA)

Thu, 02/28/2019 - 7:15pm

  • Tesla will not be profitable in Q1 as it was in its previous two quarters, CEO Elon Musk said Thursday.
  • The guidance comes the same afternoon as Tesla said the $35,000 version of its Model 3 was available for preorder.
  • Shares sank as much as 4% in after-hours trading. Follow the stock in real time here.

Shares of Tesla sank as much as 4% in after-hours trading on Thursday, according to Markets Insider data, after CEO Elon Musk warned that the company might not be profitable in the first quarter of 2019.

"We do not expect to be profitable in Q1 but profitability in Q2 is likely," Musk said on a conference call Thursday.

His comments came after two consecutive quarters of profitability, a first in the company's history, and on the same day as Tesla announced the long-awaited $35,000 version of its Model 3 was finally available to order.

More from Tesla's big news announcement:

SEE ALSO: We took the Tesla Model 3 for a test drive. Here are the best and worst features.

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Andrew Cuomo and other Democrats are begging Jeff Bezos to reconsider New York for HQ2 after Amazon abruptly announced plans to ditch the city (AMZN)

Thu, 02/28/2019 - 7:04pm

  • New York governor Andrew Cuomo is trying to get Amazon to reverse its decision to ditch its HQ2 plans for the city.
  • According to The New York Times, Cuomo has been speaking to Amazon execs, including CEO Jeff Bezos, to try and get the company to change course.
  • Business leaders in NYC are also calling on Amazon to reconsider.

Andrew Cuomo is determined to win Jeff Bezos back.

According to a report from The New York Times published Thursday, the New York governor has been quietly pleading with Amazon and its founder to take back its abrupt decision to abandon its plans for an HQ2 headquarters in New York City. 

Amazon had announced the city as a location for part of its expansion, but backed out following fierce opposition from activists concerned about gentrification and the tax incentives it was offered as part of the deal. 

The Times is reporting that Cuomo has spoken to Amazon executives — including CEO Jeff Bezos — "multiple" times since the decision, and further reports that Cuomo "said he would navigate the company through the byzantine governmental process."

A consortium of businesspeople are also publishing an open letter to Amazon in the paper on Friday asking it to reconsider.

"We know the public debate that followed the announcement of the Long Island City project was rough and not very welcoming. Opinions are strong in New York—sometimes strident," the letter reads. "We consider it part of the New York charm! But when we commit to a project as important as this, we figure out how to get it done in a way that works for everyone."

Signatories to the letter include Mastercard CEO Ajay Banga, Citigroup CEO Michael Corbat, General Atlantic CEO William Ford, Morgan Stanley CEO James Gorman, and Goldman Sachs CEO David Solomon.

"Governor Cuomo will take personal responsibility for the project's state approval and Mayor de Blasio will work together with the governor to manage the community development process," the letter adds.

Starting in September 2017, Amazon ran a highly publicized search for a suitable location to build a major new office that it called a second headquarters, joining its base in Seattle, Washington, for up to 50,000 workers. It ultimately decided on not one but two locations: New York City, and Virginia, effectively splitting the HQ2 plan into two significant regional offices.

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More layoffs expected at Tesla as the company shutters most of its retail stores (TSLA)

Thu, 02/28/2019 - 7:03pm

  • Tesla announced Thursday that it was shifting to an online-only sales model.
  • "Many" of the company's 378 stores will be closing, it said in a blog post, which will mean more layoffs. 
  • In January, Tesla fired 7% of its workforce in a bid to cut costs. 

In a surprise announcement on Thursday, Tesla said it was closing "many" of its 378 retail stores around the world as it shifts to an online-only sales model.

That will mean another round of layoffs at the electric automaker like affected some 7% of its workforce in January in a bid to cut costs following its production ramp for the Model 3. 

Tesla did not respond to questions from Business Insider about how many stores will be closing, or how many employees might be affected. 

"Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected," the company said in a blog post. 

"Over the next few months, we will be winding down many of our stores, with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers. The important thing for customers in the United States to understand is that, with online sales, anyone in any state can quickly and easily buy a Tesla."

On a conference call with reporters and analysts, Musk said the closings were the only way to keep costs down. 

"We will be closing some stores and there will be a reduction in head count as a result," he said. "There's no other way for us to achieve the savings required." 

Are you a Tesla retail employee? Got a news tip? Get in touch with this reporter at grapier@businessinsider.com. Secure contact methods available here. 

More from Tesla's announcement:

SEE ALSO: We took the Tesla Model 3 for a test drive. Here are the best and worst features

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Tesla is shuttering most of its stores as the company switches to an online-only sales model (TSLA)

Thu, 02/28/2019 - 6:31pm

  • On Thursday, Tesla announced it would eliminate most of its stores and move to an online-only ordering model.
  • Tesla is also doing away with the traditional prepurchase test drive.
  • It's unclear if this plan will work in the US, given the prevalence of franchised auto dealers who have traditionally opposed direct sales.

There was a lot of speculation about what Tesla CEO Elon Musk would announce this week after he tweeted that some big news was coming.

But nobody expected Tesla to kill off its physical retail locations.

The top news was the arrival of the long-awaited $35,000 Model 3, the true mass-market vehicle that Tesla promised in 2016 but hasn't been able to deliver until now.

Arguably, the bigger news was that Tesla is going to an online-only (or mostly) sales model.

"You can now buy a Tesla in North America via your phone in about one minute, and that capability will soon be extended worldwide," the carmaker said in a statement.

Read more: I put Tesla's high-performance Model S and Model 3 up against the BMW M5 and M3 to see how they compared — here's the verdict

"Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected. Over the next few months, we will be winding down many of our stores, with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers. The important thing for customers in the United States to understand is that, with online sales, anyone in any state can quickly and easily buy a Tesla."

Potential opposition from franchise car dealers

It's not clear how Tesla will achieve this e-tailing objective in the face of the resistance it has traditionally received from franchised auto dealers in various US states. It is possible to configure and price a vehicle via a manufacturer's website, but a customer must complete the purchase by connecting with a dealership.

On a conference call with the media after the announcement, Musk said that the new plan would enable Tesla to sell cars more effectively and that the carmaker would be ramping up its service side. But in response to a question from Business Insider, he acknowledged that Tesla expects pushback from established auto dealers. 

"This is 2019," he said. "People want to buy things online."

But he added that franchise-dealer opposition would be a violation of interstate commerce, and that is unconstitutional.

"Good luck with that," Musk said.

To achieve the shift to online-only sales, Tesla will also streamline the buying experience.

"We are also making it much easier to try out and return a Tesla, so that a test drive prior to purchase isn't needed," the company said.

"You can now return a car within 7 days or 1,000 miles for a full refund. Quite literally, you could buy a Tesla, drive several hundred miles for a weekend road trip with friends and then return it for free. With the highest consumer satisfaction score of any car on the road, we are confident you will want to keep your Model 3."

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NOW WATCH: What would happen if Elon Musk left Tesla

Tesla is finally releasing the long-awaited $35,000 Model 3 (TSLA)

Thu, 02/28/2019 - 6:00pm

  • Tesla is releasing the long-awaited $35,000 version of its Model 3 sedan.
  • The $35,000 model is now available for order on Tesla's website.
  • Delivery for the vehicle will take two to four weeks, the site says.

Tesla is releasing the long-awaited $35,000 version of its Model 3 sedan.

The $35,000 model is now available for order on Tesla's website. Delivery for the vehicle will take two to four weeks, the site says.

The $35,000 "standard range" trim has a 220-mile range, a maximum speed of 130 mph, and the ability to accelerate from zero to 60 mph in 5.6 seconds.

Tesla has also made available a "standard range plus" trim, which has a 240-mile range, a maximum speed of 140 mph, and the ability to go from zero to 60 mph in 5.3 seconds. Delivery for the "standard range plus" trim will take two weeks or less, the automaker's site says.

Trading of Tesla shares was paused by Nasdaq at 4:57 pm for about 43 minutes.

Read more: Tesla is shuttering most of its stores as the company switches to an online-only sales model

Tesla said in a blog post that it would close many of its retail stores and shift sales online, a move that allowed the automaker able to introduce the new Model 3 trims. Tesla will increase investment in its network of service centers.

Customers will have a seven-day or 1,000-mile trial period within which they can return their vehicle for a full refund, Tesla said, an extension of the automaker's prior three-day trial period.

Tesla CEO Elon Musk presented the Model 3 as the automaker's entrance into the mass market, saying the vehicle would begin at $35,000 when it was unveiled in March 2016. The Model 3 received over 400,000 preorders, but until Thursday the least expensive version of the vehicle started at $42,000, before federal and state incentives.

Tesla began producing the Model 3 in 2017, but production was subject to significant delays because of what Musk would call excessive automation at the automaker's assembly plant in Fremont, California, and its battery factory in Sparks, Nevada. Tesla reached a long-delayed goal of building 5,000 Model 3s in one week in June 2018, and met its production guidance for the vehicle during the fourth quarter of 2018.

Musk would frame the Model 3 as a make-or-break moment for Tesla in a 2018 interview with Bloomberg, in which he said the vehicle would be the last product on which the automaker would have to bet its existence.

"I believe Model 3 is the last bet-the-company situation," he said.

The Model 3 has received positive reviews from automotive critics and topped Consumer Reports' 2019 owner-satisfaction ranking for cars, but the vehicle has also been subject to reports of quality issues. Consumer Reports retracted its recommendation of the Model 3 as a result of feedback from subscribers, who cited problems with the Model 3's door handles, loose interior trim and molding, paint defects, and cracked windows.

Have a Tesla news tip? Contact this reporter at mmatousek@businessinsider.com.

SEE ALSO: SpaceX will launch its Crew Dragon spaceship into orbit for the first time ever on Saturday. Here's how to watch live.

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Nordstrom spikes on strong guidance (JWN)

Thu, 02/28/2019 - 5:42pm

  • Nordstrom reported mixed quarterly results.
  • The retailer said digital sales jumped 16% during the fiscal year.
  • Nordstrom gave full-year earnings guidance that topped Wall Street estimates.
  • Watch Nordstrom trade live.

Nordstrom shares were up 7.5% late Thursday after the company reported full-year earnings guidance that topped Wall Street estimates. 

For the fourth quarter, the retailer reported mixed results, earning $1.48 a share on revenue of $4.48 billion. Wall Street analysts surveyed by Bloomberg were expecting earnings of $1.42 on revenue of $4.6 billion. 

For the full year, Nordstrom said digital sales increased 16% versus a year ago, and made up 30% of total revenue.  

The retailer sees full-year earnings per diluted share for fiscal year 2019 of between $3.65 and $3.90, stronger than the $3.67 that analysts surveyed by Bloomberg were expecting. Nordstrom also said it expects net sales to grow between 1% and 2%.

 

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Gap is going bananas after announcing it's spinning off Old Navy (GPS)

Thu, 02/28/2019 - 5:42pm

  • Gap announced Thursday evening that it was spinning off Old Navy. 
  • Shares of Gap spiked 19% on the news.
  • The retailer announced mixed quarterly results. 
  • Watch Gap trade live.

Gap shares surged late Thursday, gaining more than 19%, after the retailer announced it was spinning off its Old Navy unit

"Following a comprehensive review by the Gap Inc. Board of Directors, it's clear that Old Navy's business model and customers have increasingly diverged from our specialty brands over time, and each company now requires a different strategy to thrive moving forward," Robert Fisher, Gap Inc.'s Board Chairman said in a press release.

Thursday's decision comes as Gap stores have struggled while Old Navy has thrived. For the fiscal year, global Gap comparable sales fell 5% year-over-year while Old Navy's rose 3%, according to the earnings release.

And those struggles have been reflected in Gap's stock, which had seen a nearly 30% slide from their January 2018 highs before Thursday's gains. The stock's poor performance has led to calls from Wall Street analysts to spin-off the Old Navy brand. In August, Jefferies analyst Randal Konik wrote a note titled, "Dear B.O.D. of GPS... Please Change Name of Company to Old Navy."  

The news of Old Navy's spin-off came alongside Gap's mixed fourth-quarter results. Gap earned $0.72 a share on revenue of $4.62 billion, compared to the $0.69 and $4.7 billion that was anticipated. 

Looking ahead, Gap sees full-year 2019 earnings per share excluding costs of between $2.11 and $2.26, missing the $2.40 to $2.55 that analysts surveyed by Bloomberg were expecting. 

Gap's stock was little changed for the year before Thursday evening's surge. 

This story is developing. Check back for updates.

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The lifeblood of Venezuela's economy is taking a beating in the wake of Trump's sanctions

Thu, 02/28/2019 - 4:57pm

  • Oil shipments from Venezuela have reportedly fallen by more than a third over the past month.
  • That's after the Trump administration imposed sanctions on the country's state-run oil industry.
  • The sanctions were rolled out in an attempt to cripple the government of President Nicolas Maduro, who is facing global pressure to cede power to opposition leader Juan Guaidó.

Venezuela's oil shipments have reportedly fallen sharply since the US hit the country with energy sanctions.

Reuters reported Thursday that oil shipments from the country dropped 40% to 920,000 barrels per day over the past month.

The Trump administration said in January it would impose economic penalties against PDVSA in an attempt to cripple the government of President Nicolas Maduro, who is facing global pressure to cede power to opposition leader Juan Guaidó.

While the country's oil output has fallen sharply in recent years, it had until 2019 been a major source of heavy crude for the US. Most of Venezuela's shipments over the past month have gone to India, Singapore and China.

Oil revenue in Venezuela has in the past accounted for for 98% of export earnings, according to OPEC.

Analysts say the sanctions, along with output reduction among OPEC and other major producers, could point to a heavy crude squeeze ahead.

"With these production agreements, those countries that have cut production made it abundantly clear that they would cut lower-value heavy crudes first," Ashley Petersen, a senior oil analyst at  Stratas Advisors, said in a recent interview. "Add to that the issues in Venezuela, and then the shut-ins in Alberta and you suddenly have less heavy than expected."

Oil prices were mixed Thursday afternoon, with West Texas Intermediate trading just over $57 per barrel and Brent around $66.

SEE ALSO: Cannabis producer Canopy Growth jumps after saying it's teaming up with Martha Stewart (CGC)

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Tesla has suspended orders ahead of Elon Musk's big announcement (TSLA)

Thu, 02/28/2019 - 4:48pm

Tesla has suspended orders of cars on its website ahead of CEO Elon Musk's much-awaited announcement at 2 p.m. PT on Thursday.

The order screen has been replaced with a message saying "the wait is almost over." 

Tesla did not immediately respond to a request for comment from Business Insider. 

Musk's tweet about news coming on Thursday sparked a flurry of conjecture as to what the news may be. One Wall Street analyst told clients that it could be the long-awaited $35,000 base-model Model 3 or an update to the company's self-driving software.

It could also be the Model Y, though Ben Kallo, an analyst at Baird, said that likely wasn't the case given the work it took to scale production of the Model 3. 

"Regardless of the content of the company update, we think the demand concerns are overblown and believe the announcement could be a catalyst," Kallo said of Tesla's stock price. 

Check back here at 2 p.m. PT for the big announcement. 

SEE ALSO: Elon Musk plans to announce some Tesla news on Thursday — here's what one Wall Street analyst is expecting

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A growing chorus of Wall Street experts think emerging markets are set to explode higher — but many investors are missing the opportunity

Thu, 02/28/2019 - 4:38pm

  • There's a growing consensus on Wall Street that emerging-market stocks, which were battered and bruised last year, are poised for a sharp rebound in 2019.
  • The group has rallied this year after many major indexes fell into bear markets in late 2018. But they've trailed US equities so far in 2019, suggesting room for upside.

Experts across Wall Street are getting much more optimistic about emerging-market stocks after a brutal 2018 — but investors don't seem to have caught up.

Sure, the stocks have surged so far this year, along with the rest of the market — a welcome development for investors who saw the main stock indexes of Hong Kong, China, South Korea, Mexico, and Turkey all tumble into bear markets during 2018.

But the 10% return in the benchmark MSCI Emerging Markets Index has lagged the S&P 500 by more than a full percentage point during the period. That gap — which comes after US stocks also beat EM stocks last year — is one reason experts think EM stocks look inexpensive today.

Ajay Kapur, Bank of America Merrill Lynch's head of Asia-Pacific and global EM strategy, joined the chorus this week. He acknowledged that corporate and economic fundamentals might not be where many investors want right now, but he said they should consider buying EM anyway.

Growing liquidity and looser financial conditions are paving the way for fundamentals to improve over the longer term, which is reason enough to load up right now, according to Kapur. He said some of his firm's clients were frustrated about missing the rally so far, and he attributed that to them failing to understand why they should be bullish.

Kapur also noted that markets in Russia, Peru, China, Turkey, and Chile had all fallen sharply despite relatively small cuts in earnings expectations. More specifically, he said the software sector and companies like Alibaba and Baidu had also sunk further than their earnings estimates would justify.

This chart suggests that those kinds of losses often turn to big gains the next year:

Kapur is far from alone. The EM space has also captured the attention of some of the most respected names on Wall Street. Here's a rundown of other notable experts predicting strong gains for emerging markets:

Jeremy Grantham, strategist and cofounder of Grantham, Mayo & van Otterloo

Grantham, the widely respected investor who successfully predicted the last two financial bubbles, said he thinks the stocks should provide good returns over many years. He agreed that they're inexpensive, though he said a lot of patience and willingness to take short-term losses might be required.

Kate Moore, chief equity strategist at BlackRock

Moore said in December that fundamentals for EM stocks hadn't gotten any worse despite the calamitous drops in stock prices. But she acknowledged that a year earlier she thought 2018 would be a good year for the stocks as the global economy kept growing.

David Kelly, chief global equity strategist at JPMorgan Asset Management

Kelly said that the stocks had tumbled to inexpensive and attractive prices and that most US investors aren't buying enough of them. As for recessionary fears, Kelly said there were few signs that the overall global economy will melt down, quelling one of the biggest fears around EM.

Vincent Deluard, macro strategist at INTL FCStone

Deluard said emerging markets would replace US tech giants as the market's leaders. He called them a good hedge against a weakened US dollar and added that many of the stock drops last year happened for reasons that were unique to individual countries and didn't suggest deep problems for the broad, diverse emerging-markets sector.

SEE ALSO: The 3 reasons big investing firms have been plowing an unprecedented amount of money into ETFs

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Meet the 15 richest American family 'dynasties,' who have a combined net worth of $618 billion

Thu, 02/28/2019 - 4:25pm

  • The fortunes of wealthy family dynasties in the US have been increasing, according to a new report by the Institute for Policy Studies
  • The report looked at the 15 wealthiest family dynasties from the Forbes 400 list and found they have a combined wealth of $618 billion.
  • Since 1982, the combined wealth of the top three families has increased by 5,868%, totaling $348.7 billion.

Income inequality in America is getting worse, and dynastic wealth, which has been bemoaned by Warren Buffett, may be one of the reasons why.

The left-leaning Institute for Policy Studies' "Billionaire Bonanza" report examined the growing concentration of wealth in the US by looking at 15 dynastically wealthy families from the Forbes 400 list and data from the Federal Reserve's Survey of Consumer Finance.

"Each of these family's wealth comes from companies started by an earlier generation, either a parent or more distant ancestor," the report said. "Each of them also represents a wealth dynasty passing generation to generation free from interruption."

Read more: How the billionaire Koch brothers became 2 of the most influential political donors in America

It found that the median American family owns just more than $80,000 in household wealth, while the 15 family dynasties own a combined $618 billion.

Since 1982, the combined wealth of the top three families — the Waltons, the Kochs, and the Marses — increased by 5,868%, totaling $348.7 billion.

Here's a closer look at how they and the rest of the wealthy dynastic families from the Forbes 400 built their wealth, ranked from lowest net worth to highest net worth. The estimated total wealth for each family is a sum of each individual family member's wealth listed on the Forbes 400 and does not include the wealth of any family members not on the Forbes 400.

Note that the Forbes 400 doesn't encompass all of America's wealthy dynastic families — some individual family members have less than the $2.1 billion in personal wealth needed to make the list.

SEE ALSO: The 25 richest American families, ranked

SEE ALSO: US inequality is only getting worse, and the 'dynastic wealth' bemoaned by Warren Buffett may be one of the reasons why

15. The Cathy family is worth $11 billion thanks to its fried-chicken fortune.

Source: The Billionaire Bonanza Report



The family's wealth comes from fast-food chain Chick-fil-A, founded in 1967 by Samuel Truett Cathy.

Source: Forbes



His sons, Bubba and Dan, share the family's wealth, with a fortune of $5.5 billion each.

Source: The Billionaire Bonanza Report



See the rest of the story at Business Insider

Here's the pitch deck Trumid, a Wall Street trading startup backed by George Soros and Peter Thiel, used to raise $53 million

Thu, 02/28/2019 - 4:11pm

  • Electronic-trading startup Trumid Financial landed $53 million from stock exchanges in Germany and Singapore in a fundraising round last year. 
  • Business Insider got a look at Trumid's investor presentation, which gives an inside look at what it's like to start a venue that matches bond buyers and sellers using technology.

Wall Street electronic-trading startup Trumid Financial went out hat in hand last year for more money to fund its expansion plans.

Business Insider got a look at Trumid's investor presentation, which gives an inside look at what it's like to start a venue that matches bond buyers and sellers using technology. As you can see from the slides, it's not easy. Volumes, at least in the beginning, can be hard to find. 

Nonetheless, Trumid landed $53 million from stock exchanges in Germany and Singapore in last year's fundraising round. The Asia exchange signed on as the lead investor to help fuel the startup's push into that region.

Already backed by Peter Thiel and George Soros, the company declined to comment on whether the billionaire investors participated in this round. A person close to the startup said it continues to enjoy financial support from its early investors. 

Trumid looks to be one of the survivors in what has been a multiyear period of expansion and consolidation among dozens of electronic trading startups. Many were started by Wall Street traders disrupted by new technologies and shrinking trading desks. 

The startup specializes in a type of corporate bond trade that's bigger than $5 million, which can be difficult for investors to execute on electronic platforms, according to a March 2018 report from research firm Greenwich Associates. While these large trades only make up 1% of the total orders in the market on a given day, they make up over 40% of the notional traded.

While we obtained the pitch deck without Trumid's help, the company provided some updated figures. 

Here, Trumid explains how it fits into the market.

An overview of how the corporate bond market is changing and why that presents an opportunity for electronic venues like Trumid.

A rundown of Trumid's user base, which looks like it has grown substantially since 2015. By yearend 2018, the company had over 400 users.

The number of clients connected to the trading venue increased by 20% in 2018 over the prior year. By  January 2019, the firm had 413 institutions onboarded across both the sell side and buy side.

However, that missed its January 2019 projections, as shown in the above slide, by 5 firms. 



See the rest of the story at Business Insider


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