17 May 2019

Stuart Taylor

17 May 2019

Good morning,

Harold Wilson is attributed with the oft-quoted remark that ‘a week is a long time in politics’. He made the comment back in the mid 1960s and were the former prime minister alive today I’ve no doubt he would be the first to concede his assessment is now six days too long.
 
And it got me thinking; is there perhaps a more fitting cultural barometer for our times?

How about ‘a week is a long time when you are a ride-sharing app with grand ambitions‘? What the phrase lacks in snappiness it makes up for in accuracy.
 
This time last week, Uber was getting set to go public for the first time as it sought to use a mega IPO to garner a price tag that once topped $120 billion. Seven days later, Uber has seen its stock market value plummet to less than half its early prediction. What was supposed to see the company achieve the biggest stock market flotation for a US-based technology company since Facebook has instead put them in the driving seat to make a stock market debut that loses more in dollar terms than any other American initial public offering since 1975.
 
So what led to the company suffering this one-star rating on its first ride into the stock exchange?
 
Well, a number of reasons have been identified; Uber’s once-meteoric growth rate has been declining for some time now, and the struggles of its rival Lyft on the markets have warned many investors off. Perhaps Uber had also dipped into the institutional investor well too often – delivering the company more than $10 billion in funding over the last decade – the well had simply dried up come IPO as existing investors were reluctant to part with more cash.
 
The company’s CEO, Dara Khosrowshahi, addressed the disappointing performance in an email to employees earlier this week, pointing to Facebook and Amazon as high-profile examples that a brutal debut in the stock market has little predictive power.
 
The reversal of those companies’ stock market fortunes certainly do offer a crumb of comfort for Khosrowshahi. However, success depends heavily on his long-term strategy to reinvent a company that is considered to have lost its mojo, with growing calls for the company to rediscover its innovative roots and actually find a way of getting anyone and anything from A to B with a profitable and efficient model.

When he was recruited to become CEO in 2017, Khosrowshahi had a rather particular and unusual clause in his contract; he stands to receive a payout of $80 million to $100 million if Uber maintains its initial $120 billion objective during a period of 90 consecutive trading days in the next five years.
 
Whatever Uber’s next destination, for one person at least, there’s a lot riding on it.

News

Cross-party talks on Brexit between Labour and the government are expected to come to an end without an agreement. Theresa May and Jeremy Corbyn held a series of discussions over the past six weeks in an attempt to end the impasse over the process. Instead, the two leaders will move to a second phase with the intention of agreeing on a process for parliamentary votes designed to find a consensus.
 
Theresa May has said she will set out a timetable for her resignation and the election of a new party leader next month, firing the starting gun on a new leadership contest to replace her. A number of contenders have already declared their candidacy – Boris Johnson the latest to put his name forward – with a new leader crowned at the party’s autumn conference. The PM will set out her schedule for departure after MPs vote on her Brexit deal for a fourth time in the week starting 3 June. (£)

Taiwan’s parliament has voted to legalise same-sex marriage, the first in Asia to do so. In a landmark vote, lawmakers elected for the most progressive bill on same-sex unions, favouring ‘marriages’ over the alternatives ‘same-sex family relationships’ or ‘same-sex unions’.

Business & Economy

Amazon are believed to be the biggest investor in Deliveroo’s latest funding round in a move that will grant a large share of the $575 million (£450 million) the company is seeking to raise as it competes against its main rival, Uber Eats. The food delivery group is expected to use the funds to build a UK engineering team, expand its reach and develop new products.
 
The chief executive of National Grid has warned Labour that they face legal challenges if it seeks to nationalise Britain’s power and gas networks at a knockdown price. John Pettigrew said there was a ”whole host of legal routes” available to the utility company were a Jeremy Corbyn government to nationalise it at a knockdown price and said the move would see a return to “Yes, Minister levels of bureaucracy”. (£)
 
Metro Bank’s capital raising exceeded its £350 million target by £25 million. An accounting error in January left the bank without the capital required to grow and has seen shares fall by about 75% this year, wiping about £1.5bn off its market value. However, Metro took only three hours to close the book with investors after asking them to pay £5 a share, and it is believed to have had demand for $1 billion of new investment in total. (£)

Markets

What happened yesterday?

The FTSE 100 closed over 56 points higher yesterday, ending the day on 7,353 points. The more UK-focused FTSE 250 also ended firmly in the green, adding over 160 points at 19,530.

Gains on London’s blue-chip index were led by Anglo American. The company saw shares climb by more than 3% after it gained approval for the construction of a new diamond recovery vessel which could add another 500,000 carats to annual production.
 
Despite the rise on the index, Labour party plans to take National Grid back into public ownership if elected at the next election saw shares in utilities companies drop. Pennon Group, Severn Trent, United Utilities and Centrica all suffered falls.
 
Continued uncertainty over Theresa May’s position as prime minister further impacted the currency markets, with the pound down 0.1265% against the Euro at close of trading.
 
On Wall Street, the Dow Jones added 294 points at 25,942, while the S&P 500 went up around 39 points at 2,890. The Nasdaq added 119 at 7,941.

Finals
Royal Mail
 
Interims
easyJet
Future
Sage Group
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Int. Economic Announcements
(07:00) Wholesale Price Index (GER)
(10:00) Consumer Price Index (EU)
(15:00) U. of Michigan Confidence (Prelim) (US)

AGMs
Bank of Georgia Group
Bango
Baillie Gifford Shin Nippon
Braime (T.F.& J.H.) Holdings
Centaur Media
Churchill China
Cairn Energy
Hikma Pharmaceuticals
Hunters Property
Irish Continental Group Units
Ossiam Risk Wght Commo Exg ETF-USD (GBP)
Menzies(John)
Real Estate Investors
Restaurant Group
Robert Walters
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Columns of Note

The FT’s Martin Wolf says the idea of a ‘Global Britain’ is the biggest Brexit delusion of all. Wolf says that trade often occurs within supply chains, where reliability and control is vital, making the idea that there is a global alternative, which would offset the loss of the opportunities offered by the EU, a total fantasy. (£)
 
Philip Collins has a message in today’s Times for those wishing to remain in the EU: letting Brexit happen may be the smart move in the long run. Collins argues his belief that Brexit will bring Nigel Farage’s career to an end, and its only by refusing to accept the referendum result that we will “entrench the Faragist narrative of betrayal into British politics for decades to come”. (£)

Did you know?

Belonging to the Vatican bank, there is an ATM in Vatican City that is the only one in the world that has Latin instructions.

Parliamentary highlights

TODAY
 
House of Commons
No business scheduled.
 
House of Lords
No business scheduled.

Scottish Parliament
No business scheduled.