This week’s news includes; Uber IPO flops, Trump escalates trade war tensions, Starbuck’s receives $2.3 billion in free promo from GoT , hackers steal $41 million in Bitcoin from crypto exchange.
Below are our top 10 stories that you need to know about. Be sure to check our twitter page, Facebook page and Instagram Page, for regular posts of important headlines. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- Chambers Student: STEM students: how to become a commercial lawyer.
- City A.M. Was Gordon Brown right to sell off our gold reserves 20 years ago?
- The Guardian – Vinyl revival: is there an environmental cost to record sales
1. UBER IPO
Uber launched its long-anticipated IPO last Friday but it turned out to be a flop. Uber set its opening price at $45 but it ended the day at $41.57, down 7.6%. This brought Uber’s value down to roughly $69.7 billion, a far cry from the $120 billion valuation mooted last year. This fall in price makes it the largest ever first day cash loss for IPO investors. Buyers who bought at the $45 price collectively loss $655 million on the first day. The IPO was not a complete flop, Uber managed to raise $8.1 billion making it one of the largest IPO’s in history.
Uber failed to entice investors for numerous reasons. Aside from being plagued by controversies, Uber has also failed to turn a profit and the company warned it may never do so. The tech giant posted a loss of $3 billion in 2018, despite rising revenues. Its future could turn on its performance in the driverless car industry. Uber has invested heavily in self-driving technology and has teamed up with a number of car manufacturers with hopes of deploying self-driving taxis in the near future.
The IPO certainly came at tough time. Investors are jittery over numerous of macroeconomic issues such as the US trade war with China (see below). Uber’s main rival Lyft has also suffered, seeing its share price dip for five consecutive days.
2. US-CHINA TRADEWAR
The US-China trade war has escalated yet again as Donald Trump increased tariffs on $200 billion worth of Chinese goods. Products previously hit with 10% tariffs will now face 25%. This hike is expected to hit 6000 imported goods such as smartphones, shoes and food.
Donald Trump asserts that the tariffs will give the US a stronger negotiating position in trade talks. China has confirmed that it will retaliate with its own tariffs on US. Trump has hinted that the added 25% could soon be removed, much to the delight of markets.
Surprisingly, US stock markets dipped but not as significantly as anticipated by many. The S&P 500 was only down by 2.2%. Markets do not see these additional tariffs being maintained for an extensive period. As tension continues to escalate however, where this trade war will end remains to be seen.
Check out our previous insight article exploring where the trade war began and how it affected businesses.
3. HARRY’S ACQUISITION
Men’s grooming company Harry’s has been acquired by Edgwell Personal Care, the owner of Wilkinson’s Sword for $1.37 billion. Harry’s has disrupted the shaving sector by offering grooming products via online subscription. One of the main features is that customers sign up on a certain number of razor blades per month. Harry’s has now snapped up 2% of the $2.8 billion men’s shaving sector in its 6 year existence. This has spurred competitors into action. The world’s largest shaving brand, Gillette, released its own online subscription service. Unilever also purchased of Harry’s rival, Dollar Shave Club for $1bn in 2016. The global men’s grooming sector is expected to hit over $78 billion over the next 4 years.
4. UGGS TRADEMARK CASE
A maker of ugg boots, Eddie Oygur has lost an expensive lawsuit against US footwear maker Deckers Outdoor. Oygur sold boots named “uggs” online to US customers. “Uggs” is a common term used amongst Australian surfers. Deckers , who has owned the UGG trademark since 1995, filed a trademark claim against Oygur. A Chicago court found Oygur had infringed upon Deckers’ trademark. Oygur has was ordered to pay $450,000 in statutory damages and could face millions in legal costs. Deckers makes over $1 billion a year from sales of UGG products.
5. KPMG FINED OVER CO-OP BANK AUDIT
KPMG has been fined £4 million and reprimanded over its 2009 audit of Co-operative Bank. The Financial Reporting Council found serious “failures to exercise sufficient professional scepticism.” The failures primarily came following the merger of Co-operative Bank and Britannia. KPMG failed to explain the risk of loans Co-op acquired through the merger. KPMG’s payout was reduced by £1 million as they agreed to settle. The relevant partner Andrew Walker will pay £100,000.
KPMG was also fined two weeks ago for its inadequate audit of insurance firm Syndicate 218. The debate around whether the big four accountancy firm’s should be broken up is heating up.
BBC News looks closer at the woes of Co-operative Bank.
6. STARBUCKS RECEIVES $2.3BN IN FREE PROMO FROM GAME OF THRONES
A coffee cup gaffe in Game of Thrones gave Starbucks an estimated $2.3 billion in free advertising. Viewers of HBO’s Game of Thrones noticed a modern coffee cup on the table during a feast. Game of Thrones is set in a medieval fantasy world so for eagle-eyed viewers, this was evidently a mistake. The cup was a craft services coffee cup. The logo however, was green but blurry so many viewers simply assumed it was Starbuck’s.
Within two days of airing, “Starbucks” and “Game of Thrones” (including variations) were found within the same tweet over 193,000 times. Some analysts have estimated that this product placement gaffe provided Starbucks with as much as $2.3 billion in free advertising, given the buzz created. 11.8 million viewers tuned in for last week’s episode of Game of Thrones.
7. SSE CUTS JOBS
Energy supplier SSE has announced that it will cut 444 jobs. Employees in its retail division will be offered “enhanced redundancy opportunities”. The firm is looking to shed its retail division in favour of energy generation and distribution. For months a merger between SSE and n-power was on the cards but recently fell through.
SSE like many other energy suppliers is feeling the squeeze amidst increasing competition and costs. SSE lost 460,000 energy customers last year alone. A number of smaller competitors such as Extra Energy and Economy Energy have collapsed over the past 12 months. The market is under even more pressure after the UK government introduced an energy price cap earlier this year.
8. HACKERS STEAL $41M FROM CRYPTO EXCHANGE
Hackers have stolen $41 million in bitcoins from the Binance cryptocurrency exchange. 7,000 bitcoin were withdrawn in a single transaction. The hackers used various techniques to carry out a large-scale coordinated security breach. Binance assured users however, that no customer funds would be affected and a full scale security view will take place. All deposits and withdrawals were subsequently suspended and will remain so for at least a week.
Japan based Binance is one of the world’s largest cryptocurrency. The firm was founded in China but moved its headquarters to Japan due to a Chinese government crackdown on cryptocurrencies. Bitcoin’s price fell 4% following the announcement of the hack, down to $5820.
9. DEBENHAMS GETS CVA APPROVAL
Debenhams’ creditors have given the company a green light to carry out its Company Voluntary Arrangement (CVA). The CVA will entail store closures and rent reduction requests for other stores. 50 stores are expected to close and 22 have already been earmarked. CVA’s require 75% creditor approval to be accepted and Debenhams creditors overwhelming voted in favour. The high street retailer fell into administration last month and fended off last ditch bids from Mike Ashley.
Debenhams posted a record loss of £491.5m last year and currently employs 25,000 people in the UK.
10. UK COAL FREE WEEK
The UK has gone its first coal-free week since the industrial revolution. At this rate, the government could hit its target of phasing out coal-fired generators by 2025. This is combined with an increased use of renewable energy sources. The vast majority of the UK’s energy comes from natural gas, 46%. Over 22% of energy also comes from nuclear power. Despite the progress in the reduction of coal reliance, there is still substantial work to be done as the threat posed by climate change grows. The UK aims to cut greenhouse gases to nearly zero by 2050 but many campaigners argue such a long-dated commitment is too little too late.