💳 Apple Card... Disaster

+ TKO Group To Acquire 3 Businesses From Endeavor For $3.25 billion

October 24, 2024

Good afternoon! Goldfish is shaking things up with a bold new name: Chilean Sea Bass. In a move aimed at appealing to adult snackers, the beloved fish-shaped crackers are getting a temporary rebrand. Don’t worry, though—it's the same cheddar goodness inside, just with a more "grown-up" twist. The change, according to Goldfish’s VP Danielle Brown, is a playful nod to adults who enjoy the snack as much as kids do.

From October 23 to October 30, fans can snag a bag of these rebranded crackers for $7.38 at ChileanSeaBassCrackers. com. The name change follows a trend of brands tweaking their identities to reach new audiences, with recent examples including Campbell’s dropping “Soup” from its name and Mountain Dew reverting to its full name on bottles..

MARKETS

  • Stocks closed out a mixed day on Thursday. The Nasdaq jumped 0.8% thanks to Tesla’s blowout earnings, while the S&P 500 managed to claw back a 0.2% gain after spending some time in the red. The Dow wasn’t as lucky, dropping 150 points, as IBM’s disappointing revenue weighed it down.

  • Tesla’s strong report fueled tech optimism, giving investors hope for a solid earnings season. But not everyone was celebrating—broader concerns over rising rates and sluggish earnings kept the Dow in the red for a fourth straight session.

STOCKS
Winners & Losers

What’s up 📈

  • Tesla surged 21.92% following the electric vehicle maker’s third-quarter profit beat. CEO Elon Musk forecasted that the company will see vehicle growth of 20% to 30% in 2025. ($TSLA)

  • T-Mobile delivered strong third-quarter results, beating analyst expectations for both revenue and profit. The telecommunications giant also provided an upbeat forecast, rising 5.71%. ($TMUS)

  • ServiceNow advanced 5.39% after posting third-quarter adjusted earnings of $3.72 per share, topping Wall Street’s estimate. Revenue also exceeded expectations. ($NOW)

  • United Parcel Service reported its first revenue and earnings gains in two years, sending its shares up 5.28%. ($UPS)

  • KKR & Co. became the fourth private-markets firm to eclipse $500 billion of fee-paying assets under management, moving further beyond its buyout roots. The stock increased 3.41%. ($KKR)

What’s down 📉

  • TKO Group fell 8.73% after announcing the acquisition of three businesses for $3.25 billion from its controlling owner, Endeavor Group. The deal will increase Endeavor’s ownership in TKO from 53% to 59%. ($TKO)

  • Harley-Davidson tumbled 7.21% as the motorcycle maker slashed third-quarter motorcycle shipments by almost 40% year-over-year due to an inventory glut. The company also cut its annual revenue forecast. ($HOG)

  • IBM dropped 6.17% after posting third-quarter revenue of $14.97 billion, missing analysts’ expectations of $15.07 billion. ($IBM)

  • Tractor Supply slumped 6.09% after reporting steady but slow growth, with Q3 revenue rising 2% year-over-year but same-store sales slipping by 0.2%. ($TSCO)

  • Southwest Airlines slid 5.56% following its third-quarter earnings report. Adjusted earnings totaled 15 cents per share, while revenue exceeded expectations. ($LUV)

  • Keurig Dr Pepper decreased 4.80% after its revenue missed analysts’ estimates amid slumping U.S. coffee sales. The company also announced plans to buy a 60% stake in energy-drink maker GHOST Beverages. ($KDP)

  • Honeywell fell 5.10% after missing revenue estimates for the third quarter, posting $9.73 billion compared to the expected $9.91 billion. ($HON)

BANKING
Apple And Goldman Sachs Ordered To Pay more Than $89 Million For Apple Card Failures

Apple’s reputation for intuitive design hit a snag with its Apple Card.

Partnering with Goldman Sachs, Apple aimed to streamline credit card use, but the user experience didn't live up to expectations. The result? A hefty $89 million fine from the Consumer Financial Protection Bureau (CFPB) for mishandling consumer disputes and misleading customers about interest-free installment plans.

The fines, split between Apple and Goldman, come after issues that affected thousands of Apple Card users, particularly around dispute resolution and installment payment options.

Where Apple Fell Short

At the heart of the problem was Apple's design for reporting billing errors. The process was supposed to be seamless, but many users were left frustrated when additional forms were required, and disputes weren’t properly sent to Goldman Sachs for investigation.

On top of that, Apple’s checkout process confused customers by not making it clear they needed to opt into interest-free payments for Apple products. This led to unexpected interest charges for many.

Goldman’s Role in the Mess

Goldman Sachs didn’t escape the CFPB’s scrutiny either.

The bank faced a slew of complaints over how it handled disputes once they were forwarded by Apple. Many disputes weren’t acknowledged within 30 days, and investigations often fell short of federal standards.

The situation was worsened by Goldman’s failure to communicate how refunds and interest-free payments would work, leading some customers to rack up unnecessary interest.

While both Apple and Goldman have taken steps to resolve these issues, this situation serves as a cautionary tale about the risks of over-promising simplicity in financial products.

NEWS
Market Movements

  • 💼 Boeing workers extend strike: Boeing machinists overwhelmingly rejected a new labor deal, prolonging a strike that has stalled most aircraft production for over a month. The deal included a 35% wage increase and enhanced retirement contributions, but union members remained unsatisfied. This poses a significant challenge for Boeing’s new CEO Kelly Ortberg, who aimed to end the strike as part of his broader turnaround strategy.

  • ☕ Starbucks' new CEO faces challenges: Starbucks continues to struggle despite bringing in Chipotle veteran Brian Niccol as its new CEO. The coffee chain reported a 7% drop in same-store sales for Q3, marking the third consecutive quarterly decline. Niccol is focused on simplifying the menu and improving operations, but has a long road ahead, especially in China where competition from local chains is growing.

  • 🥤 Keurig Dr Pepper makes a splash: Keurig Dr Pepper is acquiring energy-drink maker Ghost for over $1B, marking its largest deal since its 2018 purchase of Dr Pepper Snapple. ($KDP)

  • 👓 Apple cuts Vision Pro production: Apple has significantly reduced production of its Vision Pro headset and may stop production of the current model by year-end, as it shifts focus toward developing more affordable versions. ($AAPL)

  • 🤖 Nvidia's India expansion: Nvidia will supply AI processors to major Indian companies, including Reliance Industries, to power data centers and AI initiatives. ($NVDA)
    👜 Judge blocks Tapestry-Capri merger: A federal court blocked Tapestry’s proposed $8.5 billion acquisition of Capri, citing FTC concerns over reduced competition and potential harm to consumers. ($TPR) ($CPRI)

  • 📊 U.S. economy set for strong growth: Fresh data shows the U.S. economy is on track to grow at an annualized rate of 2.5% in Q4, driven by competitive pricing and a steady pace of business activity. The strong growth is easing recession fears.

  • ⚖️ Intel wins big in court: Intel secured a victory as the E.U.’s top court ruled that the E.U. cannot reimpose a $1.14B antitrust fine related to alleged anticompetitive practices, ending a 15-year legal battle. ($INTC)

  • 🤖 AI tools expand at Morgan Stanley: Morgan Stanley is ramping up its use of OpenAI-powered tools across its investment banking and trading divisions, aiming to enhance productivity. ($MS)

  • ✈️ Southwest avoids proxy fight: Southwest Airlines and Elliott Investment Management are nearing a settlement that would grant Elliott several board seats, thus avoiding a proxy fight for control. ($LUV)

  • 💊 Novo Nordisk petitions FDA: Novo Nordisk has asked the FDA to ban compounding pharmacies from producing cheaper versions of its popular weight loss and diabetes drugs, Wegovy and Ozempic, citing safety risks. ($NVO)

ENTERTAINMENT
TKO Group To Acquire 3 Businesses From Endeavor For $3.25 billion

TKO Group, the owner of UFC and WWE, just went shopping—and they didn’t hold back.

In a $3.25 billion all-stock deal, TKO is scooping up three sports-related businesses from Endeavor Group: Professional Bull Riders (PBR), On Location, and IMG. Not only does this bolster TKO’s portfolio, but it also pushes Endeavor’s ownership stake in the company from 53% to a commanding 59%.

The deal isn’t just about grabbing new leagues. TKO’s getting a piece of the action in premium hospitality (On Location) and sports media rights (IMG). This move positions them as a heavyweight not only in sports leagues but in everything from ticket sales to media strategy. Sounds like TKO is aiming for a bigger slice of the sports entertainment pie.

TKO's Stock Buyback and Dividends: Sweet Deal for Investors

Along with the big buy, TKO is treating its shareholders to a little extra love. The company announced plans to buy back up to $2 billion in stock and kick off quarterly dividends of $75 million.

That's a solid move considering TKO's cash-generating capabilities, and it sends a clear signal: they’re serious about rewarding their investors.

TKO’s shares took a dip following the news, sliding 5.9% in early trading, but the long-term play seems geared toward solid growth. With UFC and WWE already under their belt, adding PBR and IMG only deepens TKO’s stronghold on live sports and media rights.

What’s Next for TKO?

As TKO’s President, Mark Shapiro, pointed out, this is no small acquisition. PBR hosts over 200 events a year, while On Location is known for luxe packages at major sports spectacles like the Super Bowl and FIFA World Cup.

IMG, on the other hand, is a major player in media rights deals for everything from the NFL to the English Premier League. That means TKO is moving beyond just operating leagues—they’re stepping into a full-scale sports entertainment empire.

No more shopping from Endeavor, though—at least for now. Shapiro made it clear that TKO’s not looking to buy more assets from its parent company.

But as Endeavor goes private, TKO seems primed to snatch up other opportunities in the sports and entertainment world, positioning themselves as a giant in the industry.

Calendar
On The Horizon

Tomorrow

The week fizzled out without much action on the economic front.

Durable goods—think cars, washing machines, and industrial robots (maybe) —are the heavy hitters of the manufacturing world. Tracking orders for these big-ticket items gives us a snapshot of how businesses are feeling about their future. Are they investing in long-term assets, or tightening the purse strings?

Economists are predicting a 1% drop in orders this month, a sign that the manufacturing sector is still stuck in a rut after last month’s flat performance. Looks like the industry's struggle bus isn’t pulling into the station just yet.

NEWS
The Daily Rundown

  • 🚁 Air taxis nearing takeoff: The FAA published final regulations for electric vertical takeoff and landing (eVTOL) vehicles, also known as air taxis, marking a major milestone for this emerging transportation sector. These electric aircraft, which take off like helicopters and fly like airplanes, have attracted major investments from companies like Delta and United Airlines. Carmakers like Toyota and Stellantis are also backing air taxi startups, but the industry still faces significant challenges as seen with Germany's Lilium, which is struggling financially.

  • 💣 North Korea sends troops to Russia: U.S. Defense Secretary Lloyd Austin confirmed that North Korea has sent troops to Russia, with plans to deploy up to 10,000 soldiers to aid in the conflict against Ukraine. This marks a significant escalation in North Korea’s involvement in the war, having already provided munitions to Russia. Austin warned this could further strain relations in Europe and Asia.

    🎓 MBA applications surge: Applications to MBA programs jumped 12% in 2024, reversing a two-year decline, as white-collar workers look to upskill amid a corporate hiring slowdown. Full-time, in-person programs saw a 32% rise in applications, with part-time and online MBAs also in high demand. The slowdown in tech, banking, and professional services has driven many to seek additional qualifications to stay competitive in a tighter job market.

  • 🌿 Women lead in cannabis use: For the first time, women now make up the majority of cannabis consumers, accounting for 55% of users on the app Jointly. A recent NIDA survey showed women aged 19-30 are using cannabis more frequently than their male counterparts, driven in part by its growing popularity for treating anxiety. As a result, cannabis companies are shifting their marketing strategies to cater to this new majority.

  • 🧠 Netflix and TED join forces: Netflix is partnering with TED Talks to launch a daily word game—perfect for when you’re half-watching your latest Netflix binge.

  • ✈️ Frontier and Spirit Airlines revisit merger: Frontier and Spirit Airlines are once again exploring the possibility of merging after previous attempts to combine the low-cost airlines fell through

RESOURCES
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