đź’° Citi's entrepreneurial streak
Hey Snackers,
"Discovery Plus" — Sounds like a cross between a premium credit card and an e-grocery subscription, actually the latest streaming service.
Yesterday, the UK became the 1st country to approve Pfizer and BioNTech's Covid-19 vaccine. The first doses will roll out next week.
Citi's venture capital side hustle is surprisingly active — and it's trying before buying
"The Shazam for food"... Sounds promising. Venture capitalists invest in private startups with high growth potential. In exchange for money, they get shares (which they hope will eventually translate to way more money). When you think of VC, you're probably thinking Andreessen Horowitz, Sequoia, and Monica from Silicon Valley. But banking OG Citi also has a surprisingly active venture arm:
- 9: The number of unicorns Citi Ventures has invested in. Six of its companies have exited (aka: gone public) at $1B+ valuations.
- 61: The number of new portfolio companies Citi has backed since 2015.
The OG misspelled company name... Citi's been doing it for years. It also invested early in companies like Plaid (which Visa's trying to acquire for $5.3B) and Jet.com (which Walmart bought for $3.3B). When those companies get bought or go public, Citi cashes in — sometimes, with massive returns. Other notable Citi investments:
- Square: The mobile payments company IPO'd at a $9 share price in 2015. Now the stock is worth ~$200.
- DocuSign: The e-signature classic has more than 5X'd in value since its 2018 IPO.Â
- Honey: PayPal bought the digital coupon company for $4B. From all the ads we hear from YouTubers and podcasters, it seems to be doing swimmingly.
Citi invests in what it knows... Wild stat: two-thirds of Citi's portfolio companies have a commercial relationship with Citibank. For example, Citi uses DocuSign to offer customers free e-signatures. By knowing and using the products it's investing in, Citi has a better grasp of their value and growth potential.
Nasdaq makes big moves for more boardroom diversity
Which Nasdaq?... Nasdaq is the publicly traded company which owns and operates the tech-heavy Nasdaq stock exchange. Now, it's looking for SEC approval to implement a board diversity rule for the ~3K companies listed on its exchange. It would be one of the biggest moves ever made to diversify predominantly white and male corporate boardrooms.
- The Proposal: Require companies to have at least one woman on their boards and a director who is a racial minority or who identifies as LGBTQ.
- The Status: 75% of Nasdaq's companies don't meet that proposed requirement. But they might have to in order to stay on the exchange.
- The Future: Nasdaq-listed companies would have to provide diversity stats within a year, and have one “diverse” director within two years (... or explain why they can't).
Deliver the stats... Studies indicate that companies with diverse boards perform better financially and are more innovative. Every S&P 500 company had at least one female director at the end of 2019, but males still controlled 73% of all board seats. Last year, just 59 of the 500 S&P companies disclosed their directors' ethnicity, reporting 78% white board members.
Big corporations can act as de facto lawmakers... and significantly shape society without actual legislation. This year, Goldman said it would no longer ship IPOs of American companies that don't have at least one “diverse” board member. As the gatekeeper to one of the biggest stock exchanges in the world, Nasdaq has even more serious leverage.
The Slack-quisition is official: we're looking at what it means for investors
PFWTM are really familiar... On Monday, we wrote that Salesforce was in talks to buy Slack for more than $17B. On Tuesday, Salesforce confirmed it's buying Slack for $27.7B — its biggest splurge ever. Today, we're looking at what happens to your shares post-acquisition.
- For each share of Slack stock that you own, you'll get $26.79 in cash and ~7.8% of a Salesforce share.
- ~$44: The price of Slack's stock yesterday — it was trading at $29 last week before the news.
- ~$44: The value you'd get if the acquisition happened yesterday: $26.79 + $17.16 (the fraction of a Salesforce share, ~$220). The market almost perfectly priced in Slack's acquisition price.
Big BTW... The deal still has to get OK'd by shareholders and regulators. We don't know what Salesforce's stock price will be when/if the deal goes through, but that'll affect the value of what Slack shareholders end up with.
- For Slack shareholders, it seems like a win. Slack's WFH sales gains pale in comparison to Zoom's, but its shares just got a big boost.
- For Salesforce shareholders, it seems like a loss. Some don't think this major splurge on unprofitable Slack makes sense — so the stock is down 14% this week.
Salesforce seems desperate to keep growing... and it's leaning on other companies to make that happen. The software giant has made 60+ acquisitions over the years. Salesforce and Slack both reported earnings on Tuesday (they coordinated — so cute). While Slack’s sales are growing nearly twice as fast as Salesforce’s, both saw a slowdown from the previous quarter.
What else we’re Snackin’
- Um: Elon Musk told employees that Tesla stock could "get crushed like a soufflé under a sledgehammer" if investors don't see future profit increases.
- OhShip: UPS slaps a shipping limit on companies like Nike and Gap as the e-holidays stretch delivery services to their limits.
- Chill: Cloud data company Snowflake revealed sales more than doubled last quarter in its first earnings report as a public company.
- Plus-er: Walmart is dropping its $35 online shipping minimum for Walmart+ members to compete with Amazon Prime (even more).
- ThreeTok: TikTok is reportedly testing longer, three-minute videos — currently the limit is one minute.
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Thursday
- Weekly jobless claims
- Earnings expected from Dollar General, DocuSign, Kroger, and Ulta
Correction: Yesterday we said Zoom brought in $777B in sales last quarter — we meant $777M 🙄
Disclosure: Authors of this Snacks own shares of Tesla and Walmart
ID: 1434838
Wall Street. Served Simple. No Bull.