Cancel your Empire subscription; Twitter, Elon Musk Deal Could Be Announced Monday; Starbucks Is Having an Identity Crisis. Can Howard Schultz Fix It?; Troubled Trump app Truth Social goes down for hours with series of outages; As the pandemic exploded, a researcher saw the danger. China's leaders kept silent.
1) For those of you who subscribe to one of our paid newsletters, I have a strange message: I want you to cancel your subscription...
I don't want to lose you as a customer, of course, but I do want you to take advantage of the best deal we've ever offered.
2) As I expected, Elon Musk was serious about his bid for Twitter (TWTR), assembling a credible financing package last week.
So, not surprisingly, the company's board is giving it serious consideration, and it looks like it may accept the offer: Twitter, Elon Musk Deal Could Be Announced Monday. Excerpt:
Twitter is in advanced discussions to sell itself to Elon Musk and could finalize a deal Monday, people familiar with the matter said, a dramatic turn of events just 11 days after the billionaire unveiled his $43 billion bid for the social-media company.
The two sides worked through the night to hash out a deal that would be valued at $54.20 a share, the people said. There are no guarantees they will reach one.
Twitter had been expected to rebuff the offer, which Mr. Musk made April 14 without saying how he would pay for it, and put in place a so-called poison pill to block him from increasing his stake. But after the Tesla Inc. (TSLA) chief disclosed that he has $46.5 billion in financing and the stock market swooned, Twitter changed its posture and opened the door to negotiations.
The Wall Street Journal reported Sunday that Twitter had warmed up to Mr. Musk's proposal and could reach a deal this week.
Twitter shares rose more than 5% premarket Monday.
The only thing that surprises me is that no other bidders have emerged for this unique asset, so it looks like Musk will get it at what I consider to be a bargain price.
3) If I were teaching a course on leadership and/or strategy, I would assign this Wall Street Journal article on the challenges Starbucks (SBUX) founder Howard Schultz faces as he assumes the CEO position for the third time: Starbucks Is Having an Identity Crisis. Can Howard Schultz Fix It? Excerpt:
When Howard Schultz acquired the local Seattle coffee chain Starbucks in 1987, he imagined opening tens of thousands of Italian-style cafes where people could linger over espresso, a "third place" between the home and office. That vision left a mark on American consumer culture.
Now Mr. Schultz, 68 years old, is back at Starbucks Corp. for a third stint as chief executive officer, and the company is a far different place than it was when he stepped away in 2017. Customers get about 70% of their orders to go, bypassing the spaces the company spent so much time and money creating. And many of them want elaborate iced drinks, not handmade cups of espresso.
That transformation, accelerated by the pandemic, has sparked an identity crisis for the 51-year-old chain, and a host of problems for its cafes. It also has kicked off an unusual management saga in which the company's powerful early leader considers remaking the strategies of his successors. Mr. Schultz must now decide how much to rewrite the playbook that made Starbucks a global phenomenon.
I don't have a strong opinion on the stock, though this line got my value-investing heart racing:
Starbucks's shares have fallen 32% in the last 12 months, while a Standard & Poor's index of restaurant stocks was down 6% during the same period.
But just because a blue-chip stock is down a bunch doesn't mean that it's cheap and won't fall further – just ask Netflix (NFLX) shareholders, for example.
At 3.6 times revenues, 11.7 times EBIDTA, and 21.1 times earnings, I would say the stock is fairly valued right now, with the incredible quality of the business being offset by a number of question marks, which are outlined well in the WSJ article.
4) Another day, another black eye for Truth Social, which has become a laughing stock – along with the stock of its merger partner, Digital World Acquisition (DWAC): Troubled Trump app Truth Social goes down for hours with series of outages. Excerpt:
New social media platform Truth Social was down for hours on Monday after being hit with a series of outages.
Outages were reported from just after 7am EST to around 3.30pm, according to DownDetector.
As the outages fell drastically following 3.30pm, users flooded the social media platform with complaints.
The most-reported complaints came from users of the Truth Social app according to DownDetector.
"It was terrible this morning," one user wrote, responding to the outage, according to The Daily Beast.
Another user reportedly said it was the "worst I've ever seen it."
Users reported that they saw a "loading" page, and couldn't access any of the platform's already limited features during the outage.
5) It appears that COVID did not originate in a Wuhan lab, which I covered in one of my e-mails a month ago:
This should (though almost certainly won't) put to rest another raging debate about the origins of COVID: New Research Points to Wuhan Market as Pandemic Origin. Excerpt:
Scientists released a pair of extensive studies over the weekend that point to a large food and live animal market in Wuhan, China, as the origin of the coronavirus pandemic.
Analyzing a wide range of data, including virus genes, maps of market stalls and the social media activity of early Covid-19 patients across Wuhan, the scientists concluded that the coronavirus was very likely present in live mammals sold at the Huanan Seafood Wholesale Market in late 2019 and suggested that the virus spilled over into people working or shopping there on two separate occasions.
The studies, which together span 150 pages, are a significant salvo in the debate over the beginnings of a pandemic that has killed nearly six million people across the world. The question of whether the outbreak began with a spillover from wildlife sold at the market, a leak from a Wuhan virology lab or some other event has given rise to pitched debates over how best to stop the next pandemic.
"When you look at all of the evidence together, it's an extraordinarily clear picture that the pandemic started at the Huanan market," said Michael Worobey, an evolutionary biologist at the University of Arizona and a co-author of both new studies.
Several independent scientists said that the studies, which have not yet been published in a scientific journal, presented a compelling and rigorous new analysis of available data.
"It's very convincing," said Dr. Thea Fischer, an epidemiologist at the University of Copenhagen, who was not involved in the new studies. The question of whether the virus spilled over from animals "has now been settled with a very high degree of evidence, and thus confidence."
That said, Chinese leaders have behaved disgracefully at every step, failing to warn the world about the emerging COVID virus, even after they knew it was highly contagious and deadly, and then engaging in a huge cover-up ever since. Shame, shame!
Here's an editorial in the Washington Post about this: As the pandemic exploded, a researcher saw the danger. China's leaders kept silent. Excerpt:
The researcher was alarmed. She wrote to a co-worker on WeChat, a messaging service, at 9:28 a.m., saying the sample was brimming with something that looked like SARS.
The co-worker wrote back, recalling the Beijing plague outbreak they had worked on together,
This exchange took place 28 days before Wuhan was locked down because of human-to-human transmission of the novel coronavirus. In late December and early January, a number of researchers and the Chinese government were aware the virus could spread rapidly, but the truth was kept from the public. In those weeks, the virus exploded, leading to a pandemic that has killed more than 6 million people, by official tally. The actual toll is probably twice as many, or more...
Her story points to a coverup with tragic consequences of historic proportion. A severe danger was concealed until it was too late. It came about because of a culture that prioritizes political stability at any cost, extraordinary state secrecy, and missteps by public health officials who did not speak out.
The episode serves to underscore once again why a serious investigation is needed to get to the bottom of how the pandemic began. The virus's origins might have been caused by a zoonotic spillover, a bat coronavirus jumping to humans, possibly with an intermediate host. Or it might have been an inadvertent leak from a laboratory in Wuhan studying bat coronaviruses. Only by learning what really transpired can we reach any conclusions about how to prevent it from happening again. China could go a long way toward finding the answers, but instead it has slammed the door on further inquiry.
Best regards,
Whitney
P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.