Ariel Kau, Ethan Lin Executive Committee Members

Transcript:Ariel Kau, Ethan Lin Executive Committee Members:
Ariel Kau, Ethan Lin Executive Committee Members Market Update October 4th, 2018 Headlines 1 JUUL Hit With Surprise Inspection by FDA FDA officials visited JUUL Labs’ San Francisco headquarters without warning last week The inspection involved collecting 1,000+ pages of JUUL sales & marketing documents JUUL represents 73% of the U.S. e-cigarette market and is fighting off accusations of marketing to minors, in addition to a potential FDA ban on flavored vaping products Federal Reserve Discusses Redefining Big Banks The Fed is reconsidering the criteria for what is considered a “large financial institution” Discussions are focused on raising asset thresholds and lowering liquidity requirements, and reflect a desire to moderate financial regulations put in place after the 2008 crisis This move demonstrates the rising support of deregulation highlighted in current politics Amazon to Raise Its Minimum U.S. Wage to $15 per hour Recent bad press on Amazon’s labor practices has increased its already costly turnover rate Amazon needs to attract 100,000 seasonal employees for the holiday season Although raising the minimum wage increases Amazon’s expenses, this shift will make Amazon more competitive from a recruiting and retention perspective Large retail companies like Target, Costco and Walmart recently raised worker minimum wages in response to growing dissent over corporations’ role in rising wealth inequality Company of the Week: Tesla (NYSE: TSLA) 2 A Tumultuous Third Quarter Ends On A Good Note A premature LBO announcement leading to fraud charges by the SEC and numerous public mishaps by Elon Musk blighted the company’s image Tesla announced that it met its Q3 Model 3 production target of 55,840 vehicles Continued Model 3 sales could turn Tesla’s profitability and cash flow positive Model 3 Delivery Issues Arise Amidst Production Success Recent production success has shed light on struggling delivery and supply chain logistics Despite achieving a build rate of 5,000 Model 3s per week, delivery inefficiencies have hindered revenue recognition and have led to dissatisfaction and inventory accumulation, raising investor and customer doubt An Unclear Future Awaits The settlement with the SEC over securities fraud charges allows Musk to remain as CEO However, it requires Musk to give up his position as chairman of Tesla’s board for 3 years and mandates the addition of two additional board members independent of Musk Tesla may change direction to deliver more immediate value to shareholders, despite continued Model 3 production growth and heightened prospects of profitability Deal