Today we are watching…
1. Uber Technologies (#uber)
Uber and Lyft are facing a massive crisis; regulators disapprove of their business model. The two companies violated a California law recently stating they must give gig economy workers the same benefits as employees. Their shares fell almost 4% after the news broke, as neither side looks ready to concede here. If a federal court takes a dim view of the way Uber treats gig contractors in particular, it could outlaw the company from certain regions or force it to innovate a new business model. This is the worst-case scenario. For now, ride-hailing apps will keep their heads down!
2. Tesla (#tesla)
Elon Musk is taking receipt of a tranche of stock option bonuses that will erase virtually every quarterly profit his electric car company has ever made, cumulatively. He’s getting a check worth approximately $750 million, triggered by his success at keeping Tesla’s average market value above a certain level. Tesla’s market capitalization is more important than its bottom-line, apparently, because it raises money through the public markets to keep operations going. When the firm reaches scale, it should be able to produce its own, self-sustaining cash flows. Touchwood!