Musk still wants Twitter + Is the Peloton turnaround feasible?
A quick fix of the latest financial happenings.
Good morning, investors!
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Without further ado…
Once Again, the Musk-Twitter Acquisition Is Back on the Table.
“Eh, why not?”
After months of headline-grabbing negotiations, this is what I imagine is running through Elon Musk’s head as he mulls the acquisition of Twitter.
Just when you thought it was over, on Tuesday, Musk announced he’s recommitting to his initial offer to buy Twitter for $54.20 a share.
Some investors are understandably dubious, considering the broader economic climate as well as the stop-start nature that’s already plagued the $44 billion deal. (There’s also concern that financing could fall through.)
But for Musk, Twitter is only a piece of the puzzle — or, at least, so it seems.
What is “X.com”?
In short, it’s Musk’s vision for this country’s super app or “everything” app. Musk has compared it to the Chinese instant-messaging giant, WeChat, which has more than a billion users and all-in-one functionality.
Two Updates From Peloton: Is a Turnaround Possible?
Peloton Interactive was once a pandemic darling in the stock world, ascending from roughly $20 to $160 per share at its peak. However, it’s been all downhill from there, in the worst way possible. Peloton has since suffered through six straight quarters of losses. Shares bottomed out at $6.66 last month.
Peloton CEO Barry McCarthy, who formerly served as CFO of Netflix and Spotify, has his hands full. To combat a struggling business model, McCarthy announced 500 layoffs — roughly 12% of Peloton’s workforce — in an interview with the Wall Street Journal.
Slashing headcount is never an ideal approach, but it’s probably a necessity in Peloton’s case.
Revenue slumped in FY22 (year-ended June 30) from $4 billion to $3.6 billion, as demand for at-home equipment waned and people tightened their belts with inflation running rampant.
Meanwhile, general and administrative expenses climbed from $661.8 million to $963.4 million year over year.
Most importantly, Peloton operations burned through $2 billion of cash in FY22.
Can the company stabilize? Potentially. It’s striving to achieve breakeven quarterly cash flow by the second half of FY23 (so by June of next year).
Outside of cost-cutting news, Peloton announced partnerships with Dicks Sporting Goods and Hilton. As a result, Peloton equipment will be not only available in another 100+ brick-and-mortar stores but also on-site at all 5,400 Hilton-branded US hotels in the near future.
Three Eye-Opening Tweets
And finally, we close with three eye-opening tweets.
Rising rates > slightly lower housing prices
Hard vs. soft landing estimates
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