From Wall Street to Silicon Valley, these are the top stories that moved markets and had investors, business leaders, and entrepreneurs talking this week on Cheddar.
Markets Approach New Highs
A handful of events in close succession stirred up markets midweek, but eventually helped the major indexes inch closer to overtaking their all-time highs. Late Wednesday, President Trump announced that he was pushing back planned tariffs on additional Chinese goods by two weeks, from Oct. 1 to Oct. 15, as a gesture of good faith so they wouldn’t interfere with the 70th anniversary of the founding of the People’s Republic of China. It was a small ー but notable ー ceasefire in the trade war that has roiled the world’s two largest economies. Then, the European Central Bank cut its deposit rate and announced a bond buyback program, giving new hope to investors worried about the slowing global economy. A positive Consumer Price Index reading helped add to the sense that, with inflation in check, the U.S. Fed is likely to cut rates at the central bank’s meeting next week. There was also a brief spike in stocks amid reports that the Trump administration was considering an interim trade deal with China, though that was short-lived with the White House denied that a limited deal was in the works. Stocks ended the week at 27,219.52, up 37.07 on the day.
Apple’s New Hardware
As expected, Apple debuted three new versions of the iPhone on Tuesday: the iPhone 11, 11 Pro, and 11 Pro Max, with prices ranging from $699 to $1,099. Each of the new phones includes a more advanced camera and some other changes under the hood, but are largely placeholder devices until the company rolls out 5G capabilities next year. Apple also introduced a new spruced up iPad, a new Apple Watch with an “always-on” display, and gave an update on its forthcoming original streaming service, Apple TV+. That product will debut in November and cost $5 a month, but as a way to get users in the door, Apple ($AAPL) says it’s offering a free year with any new device purchased. Goldman Sachs dramatically cut its price target on Apple shares for that reason, arguing that it will eat into margins over the coming year.
WeWork IPO Coming Soon
The We Company has reportedly decided on a time and place for its beleaguered public offering: Sept. 23 on the Nasdaq. The embattled parent of the co-working startup WeWork has struggled of late to convince investors that its business model could survive a prolonged economic downturn and when, if ever, it can become profitable. As a way to mitigate some of those concerns, the company said in a regulatory filing that it was making changes to its corporate governance structure to dilute the power of co-founder and CEO Adam Neumann. Each of his shares will now be worth 10 votes, rather than 20, and he will be prohibited from selling more than 10 percent of his shares until three years after the company goes public. Questions about whether this is the right time for the We offering may be outweighed by the hard fact that the company’s $6 billion credit line is contingent on an IPO by the end of the year.
Juul in Crisis Mode
The crackdown on teen vaping took a dramatic turn Wednesday when President Trump announced that the FDA was looking into an outright ban of all flavored e-cigarette products amid the growing public health crisis. More than 300 people have been sickened ー and at least six have died ー from a mysterious lung illness that doctors believe is linked to vaping. While many of those cases involved people who vaped off-brand or black market THC products, regulators have not said that legal nicotine vape products are safe. Juul, the domestic leader in the e-cigarette market, reportedly generates more than 80 percent of its sales from flavored products that would be subject to the ban. The company, of which Altria is minority investor, is said to be debating whether to embrace the FDA’s plan ー under the assumption that it could preclude regulators from taking the brand off the market altogether ー or fight back, at least in the hopes of getting an exemption for mint and menthol flavors. Meanwhile, Juul has begun its push into the Chinese market with digital storefronts on several e-commerce platforms in that country. More than 300 million people in China smoke combustible cigarettes.
SmileDirectClub Frowns in IPO
It was not all smiles for investors of the at-home orthodontics startup SmileDirectClub when it went public on Thursday. After pricing at $23, above the expected range, the stock tanked 28 percent on its first day of trading and notched a dubious record in the process: it was the worst first-day performance of any major IPO since at least 2000, according to Dealogic. SmileDirectClub has upended the orthodontics industry by offering teeth straightening kits directly to consumers by mail for far less than the cost of braces. The company has also built out a presence of more than 300 brick-and-mortar locations and inked partnerships with Walgreens and CVS. Some analysts remain skeptical about the company’s future success due to the hyper-competitive market and lack of differentiation between products.