GS - The Goldman Sachs Group, Inc.
| Previous Close | 215.23 |
| Open | 214.66 |
| Bid | 213.38 x 800 |
| Ask | 214.06 x 800 |
| Day's Range | 213.63 - 216.68 |
| 52 Week Range | 151.70 - 235.74 |
| Volume | 2,998,721 |
| Avg. Volume | 2,287,892 |
| Market Cap | 76.853B |
| Beta (3Y Monthly) | 1.35 |
| PE Ratio (TTM) | 8.96 |
| EPS (TTM) | 23.86 |
| Earnings Date | Oct 15, 2019 |
| Forward Dividend & Yield | 5.00 (2.32%) |
| Ex-Dividend Date | 2019-08-29 |
| 1y Target Est | 235.81 |
- Investing.com
3 Things Under the Radar This Week
Investing.com - Here are three things that fell under the radar this week.
- Bloomberg
WeWork, WeWait, WeWorry: What’s Next for CEO Adam Neumann?
(Bloomberg) -- Steve Schwarzman has doubts. So does Larry Ellison.And so, too, do the growing numbers of Wall Street bankers and investors who are all anxiously awaiting the next move by WeWork and its brash co-founder, Adam Neumann.Neumann was a no-show this week for a long-planned appearance at a SoftBank Group Corp. three-day retreat in Pasadena, California, according to people familiar with the the matter, a further sign that company executives are hunkering down. Once the WeWork initial public offering was postponed late Monday, organizers knew Neumann’s presence would be iffy, the people said. His planned appearance was rescheduled from the first day of the event at the Langham hotel to the last and then canceled altogether.In short order Neumann’s office-sharing company has gone from a get-rich story to a you’ve-got-to-be-joking melodrama -- from WeWork to WeWait to, now, WeWorry.It was a brutal week. First, WeWork’s parent company, We Co., finally conceded that its grandiose plans for going public would have to wait.Then Schwarzman, one of the most powerful figures on Wall Street, threw shade on the company’s hoped-for valuation, which has already collapsed from upwards of $60 billion to $15 billion -- or lower.“I sort of went, what? How do you get this?” Schwarzman, the head of private equity giant Blackstone Group Inc., said of the early numbers Wednesday at a luncheon in New York. Ellison, chairman of Oracle Corp., went further, according to Barron’s. He told a group of entrepreneurs at his San Francisco home that day that WeWork is “almost worthless.”And it only gets worse. In London, two deals for major office buildings that are largely leased out to WeWork started to fray. Back in its hometown of New York, the company made a small round of job cuts. And the Wall Street Journal, examining WeWork’s over-the-top culture, reported that Neumann and his friends smoked marijuana on a private jet en route to Israel last summer -- and left a chunk of the drug behind, spurring the plane’s owner to summon it back.If all that weren’t enough, Neumann’s own bankers were getting antsy: They were looking to revise a $500 million credit line secured by WeWork stock -- an acknowledgment that those shares appear far less solid than they used to.New RisksAnd, by Friday, Wendy Silverstein, a big name in New York commercial real estate who joined WeWork last year as head of its property investment arm, had left the company. She’s spending time caring for her elderly parents.Even the president of the Federal Reserve Bank of Boston was adding to the angst. In a speech Friday in New York, Eric Rosengren warned that the proliferation of co-working spaces might pose new risks to financial stability.A WeWork representative declined to comment on Neumann’s canceled appearance at the SoftBank conference, citing the pre-IPO quiet period. SoftBank also declined to comment.Rarely has so much gone so wrong so fast for a young company in the spotlight. Neumann has begrudgingly agreed to cede some of his powers. The question now: Will that be enough?“I’ve never seen a company of this size and scale generate such a consensus of negative opinion in my long, long life of following IPOs,” said Len Sherman, a Columbia Business School adjunct professor whose 30-year business career included time as a senior partner at consulting firm Accenture Plc. “There is no box that they haven’t ticked when you think of all the reasons that you might be very concerned -- like blaring red lights. Like, oh my gosh, caution, danger, danger.”WeWork now hopes to go public next month. But even that may be optimistic. Neumann, also We Co.’s chief executive officer, has to persuade investors that his company -- which has raised more than $12 billion since its founding and never turned a nickel of profit -- is worth billions on the stock market.Deadline LoomsTime is short. WeWork must complete its IPO before the end of the year to keep access to a crucial $6 billion loan.The company’s $669 million of bonds due in 2025 have dropped 5 cents this week to 97.75 cents on the dollar as of Thursday, according to the Trace bond-price reporting system.A few hours after the Journal story hit Wednesday, investors at a Goldman Sachs Group Inc. conference in New York heard from Snap Inc.’s Evan Spiegel -- Neumann’s predecessor as a celebrated startup founder whose behavior and company control attracted unflattering attention as the unicorn went public in 2017.He was asked what advice he’d give to founders looking to become CEOs of companies that have to answer to shareholders. His answer:“Don’t go public.”(Updates with CEO’s canceled appearance in third paragraph.)\--With assistance from Gillian Tan, Matthew Boesler and Sarah McBride.To contact the reporters on this story: Ellen Huet in San Francisco at ehuet4@bloomberg.net;Scott Deveau in New York at sdeveau2@bloomberg.net;Gwen Everett in New York at geverett10@bloomberg.netTo contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, David Gillen, Daniel TaubFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Traders Who Can’t Code May Become Extinct, Goldman’s Tech Pioneer Warns
(Bloomberg) -- Just how important will the ability to write computer code be to a successful career on Wall Street?According to R. Martin Chavez, an architect of Goldman Sachs Group Inc.’s effort to transform itself with technology, “It’s like writing an English sentence.”As Chavez prepares to leave the company, the onetime commodities staffer who rose to posts overseeing technology and ultimately trading is reflecting on his “26-year adventure” in the industry. “The short, short description of it is making money, capital and risk programmable,” he said in a Bloomberg Television interview to be broadcast Friday. “There are certainly many kinds of manual activities that computers are just better at.”Chavez, 55, outlined strengths that can help humans stay relevant, such as their relationship skills and ability to assess risks. Yet he predicted that longstanding career dichotomies on Wall Street, like trader versus engineer, will go away. To keep working, people will need both of those skills. Even money is going digital, a shift that goes far beyond cryptocurrencies, he said, pointing to the success of Stripe Inc. as an example of creating new ways to move funds.Stripe, for its part, has become one of the most valuable companies in Silicon Valley.Mom’s AdviceOnce Chavez leaves the bank at the end of the year, he plans to focus on “programmable money” and spend time thinking about and investing in “programmable life.”In many ways, his career to date illustrates Wall Street’s own evolution. He was early in combining traditional banking activities and engineering, honing skills in the 1990s that companies are now vying to bring into their top ranks.He was also openly gay at Goldman Sachs at a time when it was virtually unheard of. And he’s Latino, a group particularly underrepresented across Wall Street’s leadership.His mother used to tell him that he would have to work twice as hard to be successful -- which he called “excellent, excellent advice.” Ironically, something that helped him in his career, he said, was being able to speak Spanish in his job.His mom also coached him not to get wound up by what other people say. He said the lesson he took from one of her mantras, “Que digan misa,” was that “I’m just going to do what I know is right, I’m going to do my thing, and trust that it’s going to work out.”To contact the reporter on this story: Sonali Basak in New York at sbasak7@bloomberg.netTo contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, David Scheer, Steve DicksonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Zacks
Deutsche Completes Auction of Equity Derivatives Portfolio
Deutsche Bank (DB) makes progress in meeting the radical restructuring targets it had announced in July 2019 to free up capital for other productive business lines.
- Bloomberg
Goldman Shows Bright Future for Banks, If Not for Bankers
(Bloomberg Opinion) -- The continuing debate about the future of banking since the 2008 financial crisis has intensified recently on reports that banks are cutting jobs and slashing pay. While the outlook for bankers is precarious, the same can’t be said for the banks. Goldman Sachs Group Inc. has featured prominently in the chatter about cutbacks, and not just because of its preeminence among U.S. banks. As Bloomberg News reported on Monday, Goldman’s compensation per employee plummeted 61% from 2007 to 2018 after adjusting for wage growth during the period, the largest decline among 12 big U.S. and European banks Bloomberg analyzed. Apparently, few at Goldman were spared a pay cut. Chief Executive Officer David Solomon was paid $23 million last year, a third of what former CEO Lloyd Blankfein was paid in 2007.Pay isn’t the only thing declining at Goldman. Reports also surfaced on Monday that Chief Risk Officer Robin Vince is leaving, the latest in a long line of senior departures. The Wall Street Journal reported earlier this month that up to 15% of Goldman's partners may depart in 2019, far higher turnover than normal, even as Goldman named its smallest class of partners in two decades last year.The problem, according to Odeon Capital analyst Dick Bove, is that the “Fourth Industrial Revolution” — the widespread fear that robots will replace human workers — is already encroaching on trading and investment management, two key divisions at many big banks, including Goldman. Upstart financial firms are leveraging technology to offer those and other services at a lower cost, luring clients from incumbents such as Goldman and pressuring them to lower fees.Suffice it to say, big banks can’t continue to carry an army of well-paid bankers while tech-savvy competitors undercut their fees. Goldman spent roughly $12.3 billion on compensation and benefits in 2018, more than half of its total operating expenses, and just $1 billion on communications and technology, which is typical of Wall Street banks.Meanwhile, trading revenue at the five biggest U.S. banks on Wall Street shrank 8% last quarter after declining 14% in the first. In response to its own trading slump, Citigroup Inc. is preparing to cut hundreds of trading jobs this year, and it’s almost certainly not alone. “The rest of Wall Street is thinking the same way,” Jeff Harte, an analyst at Sandler O’Neill, told Bloomberg News in July.The big banks have little choice but to deploy robots of their own. Goldman bought financial adviser United Capital earlier this year, in part to acquire its digital platform FinLife CX. That followed its acquisition of personal finance app Clarity Money last year, now part of Goldman’s online bank Marcus. Merrill Lynch, once the archetypal high-touch brokerage firm, introduced an online discount broker in 2016 and a robo-adviser soon after. JPMorgan Chase introduced similar services recently. The move to automation is obviously bad for rank-and-file bankers, but it’s no better for their bosses because a smaller headcount requires fewer managers. So it makes sense that Goldman is culling its upper ranks. Solomon says that shrinking the number of partners is meant to restore “the aspirational nature of the partnership,” which is probably a gentle reminder that the firm no longer needs many of its nearly 500 partners. What’s bad for bankers, however, is likely to be a boon for shareholders. Big banks are transforming into vast technology platforms overseen by a smaller core of executives and business generators. Solomon appears to acknowledge as much by aiming to keep the partner ranks weighted toward rainmakers, according to the Journal, a role that the bots can’t play. The horde of midlevel bankers will undoubtedly be thinned, too, and some of them replaced with lower-paid programmers and engineers. Automation is likely to make banks more profitable, even as fees for their services continue to decline. The big banks also have little to fear from upstarts. Technology becomes cheaper and more widely available over time, but brand and distribution is enduring and difficult to attain. That gives Goldman and its peers a considerable edge. Remember NetBank and Bank of Internet USA? They were online banks that threatened to dethrone brick-and-mortar ones during the dot-com boom of the late 1990s. But once they demonstrated that online banking was the future, big banks rushed to offer similar services and cornered the market before the newcomers could gain traction. A similar story is unfolding with online trading, lending and money management.There are signs that the changes underway at financial firms are already paying off. Net income margin, or earnings as a percentage of revenue, for the S&P 500 Financials Index jumped to 17.5% in 2018 from an average of 12.4% from 2009 to 2017. It’s expected to climb to 18% this year, nearly matching the previous high of 18.8% in 2006. Return on capital was the highest on record in 2018 and is expected to grow again this year.The future of banking may not be bright for bankers, but it’s likely to be more lucrative for banks and their shareholders. To contact the author of this story: Nir Kaissar at nkaissar1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nir Kaissar is a Bloomberg Opinion columnist covering the markets. He is the founder of Unison Advisors, an asset management firm. He has worked as a lawyer at Sullivan & Cromwell and a consultant at Ernst & Young. For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Zacks
Goldman Sachs (GS) Stock Moves -0.85%: What You Should Know
Goldman Sachs (GS) closed at $215.23 in the latest trading session, marking a -0.85% move from the prior day.
- Bloomberg
Procore Taps Goldman for IPO at $4 Billion-Plus Value
(Bloomberg) -- Procore Technologies Inc. is working with Goldman Sachs Group Inc. to lead a U.S. initial public offering that could value the construction-management software maker at more than $4 billion, according to people with knowledge of the matter.The company is preparing an IPO for this year or early next year, said one of the people, asking not to be identified because the information is private. The company is on track to generate more than $400 million in revenue this year, this person said.Procore’s IPO plans aren’t finalized and could change, the people said.A representative for Procore couldn’t immediately be reached for comment. A representative for Goldman Sachs declined to comment.Procore would join a flurry of enterprise software IPOs that have delivered some of the best debut performances this year.Datadog Inc. rose as much as 53% in its trading debut Thursday, after rejecting a takeover offer from Cisco Systems Inc. Ping Identity Holding Corp. gained as much as 32% in its first day of trading Thursday.Procore makes software that lets building owners, developers and contractors manage and collaborate on projects, according to its website.It has raised more than $200 million and was most recently valued at $3 billion, according to a statement in July. It reported more than $250 million in annual recurring revenue, it said in the statement.Backers include hedge fund Tiger Global Management and Iconiq Capital, which manages money for billionaires including Facebook Inc. co-founder Mark Zuckerberg.To contact the reporters on this story: Liana Baker in New York at lbaker75@bloomberg.net;Crystal Tse in New York at ctse44@bloomberg.netTo contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Michael Hytha, Matthew MonksFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Zacks
Stock Market News For Sep 19, 2019
Benchmarks closed mixed on Wednesday as the Federal Reserve cut federal funds rates by a quarter percentage point, but gave mixed signals for further cuts this year.
- Zacks
Deutsche Bank (DB) Likely to Face Formal ECB Investigation
Deutsche Bank's (DB) involvement in persistent legal hassles and a low rate environment in the domestic economy are key concerns.
- Moody's
Arrow Reinsurance Company, Limited -- Moody's announces completion of a periodic review of ratings of Arrow Reinsurance Company, Limited
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Arrow Reinsurance Company, Limited and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.
- Zacks
Here is How Wall Street Reacts to Fed's Easing Cycle
Since we are expecting "insurance cuts", where a slowdown are imminent but the economy isn't in a recession, the benchmark S&P 500 is still very much poised to come up with healthy gains in the near term.
- Zacks
Should You Invest in the iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI)?
Sector ETF report for IAI
- Financial Times
Mapping flooding costs, French fallout on green QE, climate lobbying
FT subscribers can click here to receive Moral Money every Wednesday by email. This week we get an inside look at the local costs of climate change, “green quantitative easing” irks France’s central bank governor, and investors target US lobbying associations. Next week, the UN General Assembly convenes for its annual gathering in New York.
- Investopedia
Why Wall Street Pay Is Plunging
Average pay at the biggest firms on Wall Street has plunged from levels before the 2008 financial crisis, despite record profits being posted by U.S. banks, according to a detailed report in Bloomberg. Pay may be headed down yet more as interest rate cuts by the Federal Reserve threaten to dampen profit growth in the financial sector. Adjusted for average nominal wage growth since 2007, the biggest drops in average pay per employee among the 12 largest U.S. and European banks have been: 61% at Goldman Sachs, 46% at Credit Suisse, 36% at Deutsche Bank, 34% at Morgan Stanley, 32% at UBS, and 21% at JPMorgan.
- Financial Times
FirstFT: Today’s top stories
FT subscribers can click here to receive FirstFT every day by email. First off: FT.com is free to read for everyone today. If you have a friend or colleague who would be interested in any articles curated ...
- Zacks
Apple Roundup: Products, Security Issues, Analyst Opinion & Trillion-Dollar Valuation
Apple's new products, Goldman's reservations about the stock, iPhone security issues and its trillion-dollar valuation are the highlights of this roundup.
- Reuters
UPDATE 3-Big banks score win as U.S. regulator proposes easing post-crisis derivatives rules
A U.S. banking regulator on Tuesday proposed easing a rule requiring banks to set aside cash to safeguard derivatives trades between affiliates, marking one of the biggest wins for Wall Street lenders under the business-friendly Trump administration. The proposal, by the Federal Deposit Insurance Corporation, could potentially free $40 billion across the nation's largest banks, according to a 2018 survey by the International Swaps and Derivatives Association (ISDA), the global trade group that has been lobbying for the rule change for years. The proposal is subject to public comment and will likely face resistance from Democratic lawmakers and consumer groups, who have warned that chipping away at regulations put in place following the 2007-2009 financial crisis could sew the seeds of the next one.
- InvestorPlace
Visa’s Investment Shows Plaid Could Replace Libra in Fintech Space
Visa (NYSE:V), seeking entrance into the center of 21st century banking, has joined MasterCard (NYSE:MA) in taking a stake in fintech startup Plaid. Plaid writes application program interfaces that act as the infrastructure beneath bank accounts. This lets it power customer-facing fintech specialists like PayPal's (NASDAQ:PYPL) Venmo, Robinhood, Chime and Betterment.Source: Shutterstock Enabling new banking services could make Plaid a sort of Microsoft (NASDAQ:MSFT) for the fintech age -- an operating system for computerized banking.Plaid has attracted $310 million in financing. Its most recent funding round valued it at $2.7 billion. Other backers include Goldman Sachs (NYSE:GS), Citigroup (NYSE:C) and American Express (NYSE:AXP).InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut it's Visa and MasterCard, which have a joint value of almost $700 billion, that are the real get. They have global scale, brand names and good reputations for security and reliability. Battling AlibabaPlaid is ranked as the eighth largest fintech startup. The list is led by credit card issuer Stripe and includes SoFi, a lender whose name will grace the new Los Angeles football stadium. Fintech companies raised a total of nearly $40 billion last year.Fintech startups are trying to get around the high costs of working with the present banking system. Visa and Mastercard are part of that. But Visa and Mastercard are also trying to get around those costs, seeing the growth of chat-based Chinese payment systems from Alibaba (NYSE:BABA) and Tencent Holding (OTCMKTS:TCEHY). * 7 Momentum Stocks to Buy On the Dip There was an assumption that Facebook's (NASDAQ:FB) Libra -- a cheaper payment system riding on FB's data network -- might be the first to escape the high costs. Both Visa and MasterCard were part of Libra's 28-member founding group announced in June. But there are increasing doubts that financial regulators will allow Libra to launch, as many fear Facebook's size. These regulators seem to have no such fears regarding the payment processors. The Fintech StackThe investment in Plaid, which already serves cryptocurrency companies like Coinbase, brings Visa and MasterCard closer to the new financial world's operating system.Fintech is building a new financial payments stack. Right now, most of the value in the stack is in the loans it creates or the investments it enables. But as the software stack evolves, history shows that it's the company at the bottom of that stack that gains the most power, as Microsoft did starting in the early 1990s.Plaid CEO Zach Perret said his goal is to create a digitized financial system. Visa executive Bill Sheedy said his strategic goal is more important than the financial investment.That strategic goal increasingly looks like a bank. Verifying users and account balances is key to enabling loans, payments and investment -- essentially all the functions of banks like JPMorgan Chase (NYSE:JPM). Visa stock's market cap exceeded that of JPMorgan just in the last year. Many Plaid customers compete directly with banks like JPMorgan. The Bottom Line for Visa Stock and PlaidWhile Visa's payment network has proven to have enormous financial power, it still faces challenges. It can charge merchants up to 3% of a transaction's cost to process through its network. The money is soaked up by processors and banks that are part of the Visa stock network.These payment networks won't work in developing nations. The cost is too high for small merchants to bear. Instead of staying with cash, many are moving to cheaper fintech alternatives that can run through customers' mobile phones.Whether these merchants will stay with Chinese and Indian payment systems, or seek Western alternatives to access Western wallets, remains an open question. The Plaid investment shows just how desperate Visa and Mastercard are to answer that question in the affirmative.Dana Blankenhorn is a financial and technology journalist. He is the author of the environmental story, Bridget O'Flynn and the Bear, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in MSFT, BABA and JPM. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Momentum Stocks to Buy On the Dip * 7 Dow Titans Breaking Higher * 5 Growth Stocks to Sell as Rates Move Higher The post Visa's Investment Shows Plaid Could Replace Libra in Fintech Space appeared first on InvestorPlace.
- Bloomberg
Coding Startup GitLab Hits $2.75 Billion Value With New Funding
(Bloomberg) -- GitLab Inc., a platform for developing and collaborating on code, has raised $268 million in new funding in a round valuing the startup at $2.75 billion, more than double its last valuation, the company said.The San Francisco-based startup provides a single application for companies to draft, develop and release code. The product is used by companies including Delta Air Lines Inc., Ticketmaster Entertainment Inc. and Goldman Sachs Group Inc.GitLab helps companies “get faster from ‘I want to make this,’ to getting the software out the door,” Chief Executive Officer Sid Sijbrandij said in an interview. “All the companies are becoming software companies, every change you want to make influences software, and the faster you can make that change, the easier it is.”The new funds will be used to add monitoring and security to GitLab’s offering, and to increase the company’s staff to more than 1,000 employees this year from 400. GitLab is able to add workers at a rapid rate, since it has an all-remote workforce, Sijbrandij said.The investment also comes in preparation for a potential public offering next year. GitLab’s largest competitor, GitHub Inc., was acquired by Microsoft Corp. in a stock deal announced in June 2018 worth $7.5 billion. But GitLab will instead aim for the public markets, targeting an IPO or direct listing next fall, Sijbrandij said.“We’d rather stay independent as a company,” he said. GitLab has set a tentative date of Nov. 18, 2020, but the CEO added that the startup will watch market conditions and that nothing is guaranteed.The Series E funding round was led by ICONIQ Capital and Goldman Sachs. New investors include Adage Capital Management, Alkeon Capital and Two Sigma Ventures, among others.GitLab has raised a total $426 million so far, including the new round.To contact the reporter on this story: Kiley Roache in New York at kroache@bloomberg.netTo contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Molly Schuetz, Anne VanderMeyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Financial Times
Why is the Federal Reserve pouring money into the financial system?
The answer lies in both idiosyncratic short-term issues and big, structural changes in financial markets that have occurred in recent years as the Fed has unwound the huge purchases of bonds it made to boost the economy after the financial crisis.
- Financial Times
WeWork’s Adam Neumann admits to being ‘humbled’
WeWork’s chief executive Adam Neumann told employees he had been “humbled” by the aborted initial public offering of his lossmaking property group, admitting he needed to learn lessons about running a public company. its eagerly-anticipated listing, Mr Neumann expressed his contrition over the handling of the IPO process, according to people who saw the presentation. Amid recriminations over the derailed process, one person who worked closely with Mr Neumann said his outsized personality played a “huge role”.
- Reuters
UPDATE 5-WeWork delays IPO after frosty investor response
WeWork owner The We Company has postponed its initial public offering (IPO), walking away from preparations to launch it this month after a lacklustre response from investors to its plans. The U.S. office-sharing startup was getting ready to launch an investor road show for its IPO this week before making the last-minute decision on Monday to stand down, people familiar with the matter said. The company has been under pressure to proceed with the stock market flotation to secure funding for its operations.
- Bloomberg
Oil Prices Jump Most on Record After Saudi Arabia Strike
(Bloomberg) -- Oil surged the most on record after a devastating attack on Saudi Arabia intensified concerns about growing instability in the world’s most important crude-producing region.In an extraordinary start to the week’s trading, Brent futures in London leaped a record $12 a barrel in early trading Monday, before settling just above $69 for the biggest one-day percentage gain since the contract began trading in 1988. Prices may remain elevated after Saudi officials downplayed prospects for a rapid recovery of production capacity.Saudi Aramco faces weeks or months before most output from its giant Abqaiq crude-processing complex is restored, according to people familiar with matter. Saudi Arabia’s Foreign Ministry said Iranian weapons were used in the attacks on Saudi Aramco, while the U.S. blamed Iran for the attacks.For oil markets, it’s the worst sudden supply disruption ever. The attacks that damaged a key processing complex and one of the Saudi’s marquee fields highlight the vulnerability of the world’s biggest exporter. The crisis also means a “new geopolitical premium” of about $5 a barrel, Mizuho Securities USA’s Paul Sankey wrote in a note.“We have never seen a supply disruption and price response like this in the oil market,” said Saul Kavonic, an energy analyst at Credit Suisse Group AG. “Political-risk premiums are now back on the oil-market agenda.”Meanwhile, U.S. Energy Secretary Rick Perry told CNBC that a “coalition effort” will be needed to counter Iran, which the Trump administration said was behind the attacks.Haven assets including gold and U.S. government debt surged as investors fled riskier instruments. Currencies of commodity-linked nations including the Norwegian krone and the Canadian dollar also advanced. U.S. gasoline futures jumped 13%.State-run producer Saudi Aramco lost about 5.7 million barrels a day of output on Saturday after 10 unmanned aerial vehicles struck the Abqaiq facility and the kingdom’s second-largest oil field in Khurais. A Saudi military official earlier said preliminary findings showed that Iranian weapons were used in the attacks but stopped short from directly blaming the Islamic Republic for the strikes.The disruption surpasses the loss of Kuwaiti and Iraqi petroleum output in August 1990, when Saddam Hussein invaded his neighbor. It also exceeds the loss of Iranian oil production in 1979 during the Islamic Revolution, according to the International Energy Agency.“The vulnerability of Saudi infrastructure to attacks, historically seen as a stable source of crude to the market, is a new paradigm the market will need to deal with,” said Virendra Chauhan, a Singapore-based analyst at industry consultant Energy Aspects Ltd. “At present, it is not known how long crude will be offline for.”Aramco officials are growing less optimistic that there will be a rapid recovery in production, a person with knowledge of the matter said. The kingdom -- or its customers -- may use stockpiles to keep supplies flowing in the short term. Aramco could consider declaring itself unable to fulfill contracts on some international shipments -- known as force majeure -- if the resumption of full capacity at Abqaiq takes weeks. Alternatively, the kingdom’s own refineries may cut runs just to keep crude exports flowing, according to analysts with JBC and Energy Aspects.Declaring force majeure would rattle oil markets further and cast a shadow on Aramco’s preparations for what could be the world’s biggest initial public offering. It’s also set to escalate a showdown pitting Saudi Arabia and the U.S. against Iran, which backs proxy groups in Yemen, Syria and Lebanon. Iran-backed Houthi rebels in Yemen claimed credit for the attack, but U.S. President Donald Trump and Secretary of State Mike Pompeo have already blamed Iran.Trump Vows U.S. ‘Locked and Loaded’ If Iran Was Behind AttacksTrump, who said the U.S. is “locked and loaded depending on verification” that Iran staged the attack, earlier authorized the release of oil from the nation’s emergency reserves. The IEA, which helps coordinate industrialized countries’ emergency fuel stockpiles, said it was monitoring the situation.Brent for November settlement rose 15% to $69.02 on ICE Futures Europe. The global benchmark could rise above $75 a barrel if the outage at Abqaiq lasts more than six weeks, Goldman Sachs Group Inc. said.On the New York Mercantile Exchange, West Texas Intermediate futures for October delivery settled up 15% at $62.90, the highest close since May 21. Brent’s premium to WTI for the same month closed at $6.35 a barrel. Volume for both Brent and WTI hit record highs, according to the exchanges.The drama wasn’t limited to flat prices. The spread between Brent and WTI widened as much as 37%, showing that the oil spike will affect global prices more than those in the U.S., where shale output and ample supplies provide more of a buffer.\--With assistance from Nayla Razzouk, Javier Blas, Anthony DiPaola, Michael Roschnotti, Tina Davis, Serene Cheong, Dan Murtaugh, Stephen Stapczynski, Ramsey Al-Rikabi, Saket Sundria, Ann Koh, Andrew Janes, Heesu Lee, Sarah Chen, Sharon Cho and Ben Sharples.To contact the reporter on this story: Sheela Tobben in New York at vtobben@bloomberg.netTo contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Joe Carroll, Mike JeffersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
This Isn’t Facebook: WeWork’s Lesson in Going Public
(Bloomberg) -- The message to Adam Neumann was clear: You’re not Zuckerberg.Over the past month, as Neumann’s grandiose plans for We Co. started to fray, bankers began warning that he would have to loosen his iron grip on the company.The old era of Mark Zuckerburg was over, WeWork executives would soon learn. Back in 2012, Zuckerberg could take Facebook Inc. public and still retain extraordinary voting power. But that was then.And so it was that Neumann, the polarizing co-founder of WeWork, begrudgingly agreed this week to cede some of his powers. The question now: Will that be enough? Already, WeWork’s hoped-for valuation has plunged by more than half, or some $30 billion.By Friday morning, Neumann’s company had hastily filed an amended prospectus for an initial public offering -- one that will test not only WeWork and its guru-CEO but, in many ways, an entire generation of money-burning, grow-at-all-cost startups.In a matter of weeks, WeWork’s IPO has gone from one of the most hotly anticipated deals of the decade to perhaps one of the most dreaded. Despite growing skepticism over WeWork’s business prospects, Neumann has resisted corporate-governance changes that would be considered standard elsewhere.The chaos was apparent Thursday and Friday, as WeWork picked a stock exchange, emailed bankers and filed its new prospectus -- all in about 12 hours.Nasdaq ListingDefying skeptics -- among them, some of its own financial backers -- WeWork is plowing ahead with plans to go public on the Nasdaq stock market. Not even Nasdaq officials knew for certain that the company would chose the exchange until the last minute on Thursday, according to people familiar with the matter.Emails were flying into the night. The new prospectus hit just after 6 a.m. on Friday.Now, yet another deadline looms: September 27, the Friday before Rosh Hashanah, the Jewish New Year. Neumann is expected to observe the holiday and be out of communication for several days, people familiar with WeWork said. WeWork representatives did not respond to a request for comment.Neumann didn’t get where he is, atop one of the most talked-about startups of the decade, by sharing. But in a new prospectus WeWork disclosed that Neumann would wield less power via an unusual class of high-voting stock.Now, executives must persuade investors that their company -- which has raised $12 billion since its founding and never turned a nickel of profit -- is worth billions on the stock market. As of late Friday, it was unclear whether they would be able to start marketing the stock via a roadshow starting on Monday, as many had expected.$65 Billion Value?Unclear, too, is just what WeWork might fetch on the open market. Only months ago, some bankers whispered it might be worth as much as $65 billion. Now that figure has fallen to as little as $15 billion.Beyond a page or so of steps WeWork would take to tighten up its corporate governance practices, Friday’s amended prospectus was little changed from the initial one in August.The dedication, even the second time, is pure Neumann:TO THE ENERGY OF WE –GREATER THAN ANY ONE OF USBUT INSIDE EACH OF USAmong other things, the company will trim the voting advantage that gives Neumann sway over the board, and no member of his family will be allowed to sit on the board. WeWork will also announce a lead independent director by year’s end.The move leaves in place a rare three-class stock structure and Neumann still maintains a voting majority, so it’s unclear how much the changes will appease both investors and the banks in charge of managing WeWork’s IPO.Valuation QuestionsQuestions remain about how investors will value the fast-growing, money-losing office leasing business that’s backed by SoftBank Group Corp. Both of the company’s lead financial advisers --JPMorgan Chase & Co. and Goldman Sachs Group Inc. -- have previously voiced concerns about proceeding with an IPO at a valuation around $15 billion, people briefed on the discussions have said.Looking to save the IPO and limit its downside, SoftBank is in discussions to buy about $750 million worth of additional stock in the offering, the people said.The board will have the ability to remove the CEO, and the updated prospectus has taken out a clause that previously said Neumann’s wife Rebekah -- who’s listed as a founder and chief brand and impact officer of WeWork -- will have a role choosing any new chief. Some criticized the changes as not going far enough.“This is an example of posturing,” Jeffrey Cunningham, who teaches management at Arizona State University and has served on several corporate boards, said of WeWork’s changes. The company appears to be facing pressure “to go public at a time that is inappropriate and with a governance record that is questionable.”Still, the moves drove WeWork bonds to be the biggest price gainers in high-yield bond trading for part of Friday. A Fitch Ratings analyst said the changes addressed many of the issues that the ratings company raised in downgrading WeWork’s credit grade last month.“A key component of WeWork’s model is the ability to restrain growth in the event of a downturn and these governance changes increase the likelihood that an independent board will have the power to enforce such a decision,” Kevin McNeil, a director at Fitch, said in an emailed statement.(Corrects the size of the drop in WeWork’s hoped-for valuation in fourth paragraph)\--With assistance from Michelle F. Davis, Anders Melin, Tom Giles and Crystal Tse.To contact the reporter on this story: Gillian Tan in New York at gtan129@bloomberg.netTo contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, ;Michael J. Moore at mmoore55@bloomberg.net, David GillenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
