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You’ll Never See The World The Same Way Again
TikTok owner ByteDance (BDNCE) and the U.S. government are in discussions over possible ways allowing for something less than a full sale of TikTok’s U.S. operations, the WSJ reports.
That follows acts by China’s government that throw some roadblocks at such a sale – and with a nearing deadline for TikTok to agree to a sale or be shut down.
Even without a full sale, the outcome would likely involve some kind of restructuring.
ByteDance has been considering options that include a sale to a team of Microsoft (NASDAQ:MSFT) and Walmart (NYSE:WMT), or to a group including Oracle (NYSE:ORCL). But since President Trump issued an executive order calling for divestiture, China issued new restrictions on exporting artificial intelligence tech.
An Ireland regulator has ordered Facebook (NASDAQ:FB) to suspend data transfers to the U.S. about its European Union users, The Wall Street Journal reports.
That preliminary order is the first significant step that EU regulators have taken in response to a July ruling from the EU’s top court restricting such transfers, finding that Europeans have no effective way to challenge U.S. government surveillance.
Compliance would mean re-engineering Facebook to silo off most data it’s collecting from European users, or Facebook halting service to them entirely.
Ireland’s Data Protection Commission has the power to fine Facebook up to 4% of annual revenue – or $2.8B.
Shares have pared gains a bit, but are still up 2% on the day.
Waze, the navigation company owned by Google (GOOG, GOOGL), is laying off 5% of its global workforce and shutting down several offices as it refocuses on key markets, The Verge reports.
A company email says Waze will close offices in the Asia-Pacific and Latin America regions.
That comes amid a drop in navigation business amid the stay-at-home measures of the pandemic. Both monthly active users and kilometers driven have dropped.
Waze disclosed in April that customers drove 60% fewer miles in March than in February, with drops of 90% in Italy. But the figures got worse as the pandemic went on.
The company will “rethink priorities” and “focus our resources on product improvements for our users, accelerate our investments in technical infrastructure, and refocus our sales and marketing efforts on a small number of high-value countries,” CEO Noah Bardin says in the mail.
Warren Buffett may be famous for his dependable investing philosophy, but like many things in 2020 the regular playbook doesn’t seem to apply.
Less than a month ago, Berkshire Hathaway surprised Wall Street by buying Barrick Gold. In 2000, Buffett had scoffed at investments where you “take some piece of metal that people dig out of the ground in South Africa and then put back in the ground at Fort Knox” and in 2012 vice chairman Charlie Munger said Berkshire has “never had the slightest interest in owning gold”.
Now the company is using some of its huge cash pile to delve into an unprofitable tech IPO. It’s unclear who made the call on the investment and Buffett has plenty of people of he calls upon for ideas (Todd Combs, Ted Weschler were the driving forces between Berkshire buys of Apple and Amazon). But it’s still out of the ordinary.
Cloud computing high flyer Snowflake (SNOW) said in a filing last night that Berkshire Hathaway (BRK.B, +1.6%) will buy $250M in class A shares in a private placement at a price equal to the IPO price.
“Berkshire Hathaway Inc. has agreed to purchase 4,042,043 shares of our Class A common stock from one of our stockholders in a secondary transaction at a price per share equal to the initial public offering price that will close immediately subsequent to the closing of this offering,” Snowflake said.
Snowflake reported revenue of $242M H1 2020, up about 133% from the year-ago period, with net loss of $171M.
The company came in at No. 40 on the CNBC Disruptor 50 list of 2020.
Buffett, who turned 90 in August, looks to be the classic example of an investor who believes IPO stands for “It’s Probably Overpriced.” Investment banks “don’t even call” Berkshire Hathaway about new issues, Munger said on CNBC last May.
But it’s not unprecedented.
Berkshire invested in Brazilian fintech StoneCo as it went public in October 2018. Jack Ma’s Ant Financial, which is expected to go public soon and could raise a record $30B, also invested in StoneCo.
One of Buffett’s most famous investments was also a relative new issue. GEICO went public in 1949 when Benjamin Graham’s Graham-Newman Partners divested part of its stake. Shortly after, Buffett bought GEICO shares while he was getting his Master’s at Columbia under Graham. The “stock actually traded as a low as $1 in 1949, and appreciated up to $95 in 1955, a 95-bagger for those fortunate souls who bought the stock six years earlier,” according to John Huber of Saber Capital Management.
The Snowflake investment is pretty small ($750M) compared to the $150B cash pile Berkshire had amassed by the end of June. But it could be a signal that it’s looking into investments that can lure the younger investing crowd.
“One thing that was clear at Berkshire’s last in-person shareholder meeting, in 2019, was that it needs to do a better job courting the next generation of investors, who may have less fascination with Buffett than with tech pioneers like Elon Musk and Jeff Bezos,” Take Kim and Tara Lachapelle write on Bloomberg Opinion. “And considering Tesla and Amazon’s five-year return is more than 500%, compared with Berkshire’s 63%, they’d be justified. But look out tech kings: new decade, new Buffett — and one, it appears, who is willing to let Berkshire go in new directions.”
Zillow (Z, ZG) has started buying and selling homes in Jacksonville, Fla.
That’s the 25th U.S. market to become part of its Zillow Offers service, and the fourth in Florida (along with South Florida, Tampa and Orlando).
Zillow had suspended home-buying activities with the onset of the COVID-19 pandemic, slowly bringing those back until all 24 markets were again running as of Aug. 4.
Today marks the first expansion of that business since then.