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Tesla to pay out $137M to ex-worker, Rent the Runway files for IPO, IATSE votes to strike

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Yahoo Finance's Julie Hyman breaks down Tuesday’s business headlines.

Video Transcript

JULIE HYMAN: A Tesla contract worker who says he endured racist abuse at the company has been awarded almost $137 million. Oscar Diaz was an elevator operator at Tesla in 2015 and 2016. The case was only able to proceed because Diaz did not sign a mandatory arbitration agreement. That's what Tesla typically uses to force employees to resolve disputes in private rather than in court.

Hollywood could be shutting down the International Alliance of Theatrical Stage Employees. It said 99% of its members who voted chose to authorize a strike. The union represents 150,000 camera operators, makeup artists, cinematographers, and other behind the scenes professionals in the US and in Canada. The union is pushing for higher pay for streaming service work and higher wages for assistants and coordinators on all productions. A renewed round of negotiations with film studios and streaming services is set to begin today. And we should mention the employees who are under contract at some services, like HBO, for example, are not subject to this strike because their contracts do not expire until the end of the year.

And Rent the Runway filed for an initial public offering with a placeholder value of $100 million. The company's valuation dipped during the pandemic, and its business is still challenged. Rent the Runway reported a net loss of $85 million in the first six months of this year. And, Brian Sozzi, full disclosure-- I have been a long time Rent the Runway customer, and I also paused my subscription at the beginning of the pandemic, but then took it up again because I still wanted to wear clothes for this job, including this top-- again, full disclosure. But the company's still losing money, and its subscribers are still below where they were pre-pandemic.

BRIAN SOZZI: Julie, isn't this-- you know, as a subscriber, isn't this the ultimate work-- going back to the office type play? For this to really, I think, be a successful IPO and a successful business model, I mean, don't we have to all be going back to the office so we need to be showing up in different outfits instead of really wearing the same shirt and pair of pants every single day, no?

JULIE HYMAN: Well, maybe and maybe not. You know, certainly, we are seeing people-- people don't just rent the clothing to go to the office, they rent it to go out. In fact, I would argue a lot of people rent it to be able to have things to go out in, and they aren't necessarily buying as many things they just rent things. And you know, we have heard glimmers of this, right?

We've talked to people who have said that fashion is really coming back, excess is coming back. Remember, we heard that commentary. We see in today's Piper Sandler teen survey that teens are spending the most on clothing once again, which is a switch from where it had been over the past few years where food had been the highest spend. So you are seeing signs that an interest in fashion and interest in clothing is coming back.

Is that going to benefit Rent the Runway specifically? I think that still remains to be seen. Are they going to be able to do it profitably? That really remains to be seen, because this is a company that has relatively high and persistent fixed costs from shipping the garments to people, dry cleaning, et cetera. So we'll see how the financials end up working out.

BRIAN SOZZI: I do like their logo-- very snazzy, very clean, very new age millennial.