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Tesla, United Airlines and Wirecard

Tesla announces it’s close to self-driving cars, United Airlines prepares for mass layoffs and Wirecard might be in the middle of another fraud.
Tesla CEO Elon Musk
"Elon Musk" (CC BY 2.0) by jdlasica
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July 9, 2020 – Tesla announces it’s close to self-driving cars, United Airlines warns of massive furloughs and Wirecard might be in the middle of another fraud.

Today’s word count: 1,371 words (9 minutes)

Tesla ‘Very Close’ To Level 5 Autonomous Driving Technology, Musk Says

The future of self-driving cars may be nearer than we think. Tesla chief executive Elon Musk announced Thursday his firm is “very close” to achieving level 5 autonomous technology, “referring to the capability to navigate roads without any driver input,” according to Reuters. He added he is confident Tesla will reach “basic functionality” for level 5 this year.

Why It Matters

Actual driverless cars were supposed to have arrived already, and companies such as Alphabet-owned Waymo and Uber have poured billions into autonomous driving. A pre-pandemic story from Vox earlier this year detailed how artificial intelligence drove optimistic predictions for self-driving cars in the 2010s, but that technology has since stalled.

But it sounds as if Tesla is on the verge of a breakthrough. The electric car maker currently employs an autopilot system that uses external, cameras, radars and sensors, but does require some driver assistance and doesn’t make the vehicle autonomous.

Even if Musk and Tesla do get to level 5 soon, autonomous cars aren’t going to take over immediately. “Industry insiders have said it would take time for the technology to get ready and public to trust autonomous vehicles fully,” Reuters writes.

Numbers to Consider

  • 15,000 – The number of Model 3 sedans Tesla sold last month, according to industry data.
  • $1,365.88 – Tesla’s stock price Thursday morning.
  • $253.337 Billion – Tesla’s market cap Thursday morning.

Read More: (REUTERS)

United Airlines Warns It May Furlough 36,000 Staff

There could be dark times ahead for United Airlines, and the rest of the airline industry. The Chicago-based carrier is notifying 36,000 employees of possible layoffs. United could look to shed almost half of its U.S. workforce. The news comes a week after American Airlines announced it might have as many as 20,000 more staff than it needs to handle reduced demand.

Why It Matters

“The industry had been on a roll before the crisis hit, with low-cost carriers in emerging markets helping drive a decadelong boom that added 100 million new fliers a year, while many airlines finally shrugged off their legacy of losses to generate record profits. The pandemic has brought that to a grinding halt, and what United on Wednesday called ‘a last resort’ in preparing staff for mass furloughs signals that worse is to come, with government aid providing only a reprieve,” The Wall Street Journal writes.

With Covid-19 surging in certain parts of the country, passengers aren’t ready to return to the skies yet. This week, the IATA said 55 percent of almost 7,000 they surveyed in early June were pushing back potential travel plans. It’s a noticeable rise from 39 percent after a similar poll ran in April. In the best-case scenario, United expects to operate 40 percent of its pre-pandemic schedule by the end of the year, and the reduced demand is leading to a massive contraction in the industry.

Numbers to Consider

  • 751,000 – The number of workers employed by U.S. airlines at the start of the year, according to Transportation Department data.
  • 95,000 – The size of United’s workforce worldwide, with potential furlough notices going out to roughly 45 percent of domestic employees.
  • $84 Billion – The expected losses of the airline industry in 2020.

Read More: (WALL STREET JOURNAL)

Wirecard Under Criminal Scrutiny by U.S. Authorities as Part of Probe into Alleged Bank-Fraud Conspiracy

The hits keep on coming for Wirecard AG. Not even a month after the company filed for insolvency, the Justice Department is now exploring whether Wirecard played a role – both as a payment processor and an offshore merchant bank – in an alleged $100 million bank-fraud conspiracy connected to an online marijuana marketplace.

“Two businessmen have already been charged in the alleged fraud, accused of conspiring with third-party payment processors and others to trick U.S. banks into approving credit-card payments for marijuana products. The men were able to do this, prosecutors said, by using phony companies with accounts at offshore merchant banks that in turn earned steep fees off the transactions,” The Wall Street Journal writes.

Why It Matters

Considering Wirecard has “long been dogged by allegations from investors that the company used third parties and shell companies to generate fake revenue,” allegedly conspired to mislead auditors at Ernst & Young and revealed $2 billion on its balance sheet likely didn’t exist, should anyone be surprised?

Wirecard was not named in the indictment or any public court filings, but it’s reasonable to think more skeletons will emerge from the firm’s closet. Interestingly enough, when one of the businessmen – a German e-commerce consultant – was arrested for this case, a Wirecard executive offered to post his bail, according to court filings. The Wall Street Journal reported people familiar with the investigation said Wirecard executives worked with the two key figures in this case “to create a payment processing network that authorities say skirted banking rules and defrauded U.S. banks.”

Numbers to Consider

  • $100 Million – The amount of credit and debit transactions processed in the alleged scheme, although prosecutors said it was likely a “significant underestimate.”
  • $14 Billion – The value of Wirecard on June 17. Eight days later, it filed for insolvency.
  • $3.9 Billion – The debt Wirecard allegedly owes creditors.

Read More: (WALL STREET JOURNAL)

A Quick Look

Report says Quibi lost 92% of its earliest users after free trials expired

  1. During Quibi’s first three days, the app landed 910,000 users with three-month trials. Those trials have expired, and the short-form video platform has only retained roughly 8 percent, or a maximum of 72,000, of those users.
  2. When Disney+ launched, it received 9.5 million users in its first three days, and 1 million users (or 11 percent) converted to paid subscriptions. The big difference is Quibi offered a three-month free trial, whereas Disney wen with a 7-day one.
  3. Sensor Tower estimates Quibi has been downloaded 4.5 million times in total since early-April. The app has also since shifted to a 14-day free trial instead of three months.

Read More: (TECH CRUNCH)

Worth Your Time

Gonna Get Better: Slack announced its acquisition of Rimeto Wednesday, a four-year-old subscription software startup that emerged out of the minds of a group of former Facebook employees. Rimeto’s software gathers and aggregates data about employees from a company’s internal database. Integrating its functionality will allow Slack users to search for things like a person’s name, titles, contact information, skills, experience and current projects. Adding this kind of functionality is a strong move by Slack to capture more of the remote work market. (SLACK)

Silent Victory: It’s a double dose of Slack today. Stratechery’s Ben Thompson took a pretty in-depth look at the rivalry between Slack and Microsoft Teams with two key points: 1. By doing everything, even mediocrely, Team’s provides a whole that is greater than the sum of its parts. 2. Slack may not win the vertical integration battle, but it carved out an impressive space horizontally, and the app’s continued survival is “victory enough.” (STRATECHERY)

Ballad of a Comeback Kid: Novavax Inc. was on its last leg, trading at 36 cents a share last May. The three-decade-old vaccine company had failed to land a single one. It fired 100 employees, and its holiday party was “held in a conference room and featured pizza slices and bottles of Coke.” Then, Covid-19 happened; the company announced it would receive $1.6 billion from the federal government to develop a potential vaccine and shares climbed north of $100. Novavax’s turnaround has upended the pharmaceutical world and spurred new investor optimism for companies chasing vaccines. (WALL STREET JOURNAL)

Dancing With Danger: Robinhood opened the door to a whole new generation of retail investors but placed inexperienced ones in the fire line. Studies show when small investors trade more frequently, their returns suffer. It’s even worse with options trading. The aftermath has resulted in sobering consequences for some. It raises an important question of whether Robinhood is at fault for opening the doors to a dangerous industry. (NEW YORK TIMES)

A Couple Cents Content

I recapped everything you need to know about Wirecard’s fraud. (POST)

Check out part two of Justin Oh’s how-to invest in real estate the right way. (YOUTUBE)

Catch up on Monday’s live show before tonight’s. (YOUTUBE)

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Thanks for reading!

— Justin Birnbaum

Image:Elon Musk” (CC BY 2.0) by jdlasica

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