Uber & Lyft, Johnson & Johnson’s Covid-19 Vaccine, ViacomCBS and the Super Bowl

Lyft and Uber buy more time, Johnson & Johnson plans a pivotal Covid-19 vaccine trial and ViacomCBS looks to secure Super Bowl ads.
New York, NY, USA -- May 8th, 2019: Uber and Lyft Drivers With Signs on Strike and Protesting Outside the New York Stock Exchange at 26 Wall Street (By Cory Seamer)
New York, NY, USA -- May 8th, 2019: Uber and Lyft Drivers With Signs on Strike and Protesting Outside the New York Stock Exchange at 26 Wall Street (By Cory Seamer)
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Good morning! Today’s word count is 1,301 words, or an 8-minute read. Let’s get to it:

“Wall Street’s major indexes were little changed shortly after the opening bell as investors digested recent weak economic data amid thin trading volumes during the peak summer vacation period,” The Wall Street Journal writes.

  • S&P 500: $3,386.01
  • Nasdaq: $11,258.40
  • Bitcoin: $11,879.99
  • U.S. 10-Year: 0.640%

Justin Oh’s Quick Read

$LYFT and $UBER stock have meaningfully underperformed for a while. California’s government wants them to classify their drivers as employees and bear the costs associated with full employment (16% and 9% of their rides, respectively). My read is that the companies will probably pass along the extra costs to California customers. $LYFT and $UBER are expected to grow 30%+ per year over the next couple of years, snapping back when we emerge from quarantine and continuing after that. In that lens, $LYFT looks interesting at 3.6x forward sales (I would prefer to own it than pay up for $UBER at 5.7x forward sales). The real threat to these businesses is that they will most likely get substantially weakened when autonomous driving comes to market. My view is that we are a decade away from driverless networks, they will continue to grow strongly in the next 5-10 years, and there will most likely be an opportunity to pivot the business when that does come. If you believe autonomous driving is coming in 5-10 years, I would pass on these stocks. But if you think there’s no way it comes in the next decade, then $LYFT might provide fantastic growth at a great price.

Lyft, Uber Get More Time as They Fight California Order

For Uber and Lyft, it’s business as usual right now. On Thursday, a state appeals court paused a lower-court ruling that required the ride-hailing companies to reclassify their drivers as employees.

Why It Matters

It’s a temporary solution to a long-term problem.

  • California passed its “gig-worker law” in January, requiring companies to treat workers as employees rather than independent contractors if “if they are controlled by their employer and contribute to its usual course of business.”
  • Drivers would then be eligible for sick days and benefits.
  • California, where both companies are based, filed a lawsuit in May against Uber and Lyft to compel them to reclassify their drivers as employees.

Uber and Lyft disagree.

  • Both have argued they are tech platforms that connect riders with drivers and not transportation companies.
  • Reclassifying drivers would force Uber and Lyft to assign prescheduled shifts, removing any flexibility.
  • To make that business economically viable, the companies say they would be forced to consolidate their fleets to fewer drivers who work 40 hours a week.
  • A move like that could drastically reduce their footprint in cities where demand is spotty and force them to raise prices to offset new costs with managing driver operations at a time where the companies already struggle to turn a profit.

California won, but it’s nowhere near over.

  • A state judge ruled in favor of the government last week and gave Uber and Lyft until Friday to reclassify their drivers, alleging they were violating new state law.
  • The companies have their sights on a November ballot initiative, where California voters can decide whether to exempt them from the gig-worker law.
  • A higher court granted a stay, and Uber and Lyft have until Sept. 4 to submit sworn testimony that they’ve developed the infrastructure needed for reclassification should the ballot measure and appeal fail.

Numbers to Consider

  • 16 Percent – How much California accounted for Lyft’s rides in the second quarter.
  • 9 Percent – Uber’s share of Q2 business in California.
  • 50,000 – A rough estimate of how many of Uber’s 200,000 California drivers it would be able to retain under the new law.


Johnson & Johnson Plans Pivotal Covid-19 Vaccine Trial

“Johnson & Johnson plans to launch by late September what could become the largest clinical trial of a coronavirus vaccine to date, enlisting up to 60,000 people world-wide to test whether its experimental shot safely protects from Covid-19,” The Wall Street Journal writes.

Why It Matters

It’s noticeably different from other trials.

  • At that size, the targeted enrollment is double the size of other pivotal studies from Moderna, Pfizer and AstraZeneca.

It’s unclear why J&J is planning such a big late-stage trial.

  • Infectious-disease specialist and Vanderbilt professor of preventive medicine William Schaffner said efficacy could be determined quicker if more people are enrolled. 

How is it going to work?

  • J&J’s vaccine will be tested at nearly 180 locations in the U.S. (28 states) and eight other countries where transmission rates are high (Brazil, Chile, the Philippines and South Africa)
  • The study will follow subjects for more than two years, but preliminary results could become available much sooner.

One of the U.S. government’s bets is on J&J.

  • The company recently signed a $1 billion contract with the federal government to supply 100 million doses for the U.S.

Numbers to Consider

  • $150.78 – J&J’s open price Friday.


A Quick Look

ViacomCBS Seeking Millions for 30-Second Commercial Spots in 2021 Super Bowl

  1. ViacomCBS is seeking roughly $5.5 million for 30-second commercial spots in 2021’s Super Bowl, similar to earlier this year. Last year’s network, Fox, charged as much $5.6 million, including ad placement on both the TV and digital screen.
  2. CBS is also requiring advertisers in the Super Bowl telecast to spend an additional $200,000 and appear in the game’s online stream.
  3. Advertisers are looking for a contingency plan – an opt-out of their Super Bowl commitments in case Covid-19 affects the NFL season or the league’s championship.
  4. The 2020 Super Bowl drew 102 million viewers for Fox across platforms. According to ad data firm Kantar, the channel’s ad revenue for the game totaled $525.4 million.


Worth Your Time

Shifting Tides: A few weeks ago, Kodak’s future was looking up as the company was the proposed benefactor of a $765 million government loan to manufacture pharmaceutical ingredients. Today, the deal is on “life support,” and Trump trade adviser Peter Navarro, who initially pushed the deal through, is distancing himself. Kodak “bungled” its release of the news to local media and sent its stock on a “roller coaster.” Now, the SEC and congressional committees are probing. Here’s how it all happened. (WALL STREET JOURNAL)

A Fight For Change: “Facebook employees are pressing the company’s leadership to review its handling of hate speech in India, saying the company has tolerated toxic content by prominent political figures and failed to enforce its policies evenhandedly. In a letter sent by members of the social-media giant’s internal group for Muslim employees, called [email protected], staffers from India, the U.S. and Middle East said Facebook needed to make its policy-enforcement process for high-profile users more transparent and less susceptible to political influence.” (WALL STREET JOURNAL)

Go Big Or Go Home: Jack Ma has high aspirations for Ant Group. He’s seeking to raise as much as $30 billion in a dual Hong Kong and Shanghai listing. At that rate, the move would value the financial affiliate of China’s e-commerce giant Alibaba at $225 Billion. If Ant Group can do it, it would be the biggest public market debut ever. (BLOOMBERG)

Crack The Code: “Lambda School, which runs virtual nine- and 18-month (part-time) computer science courses for $30,000 — currently covering data science and full-stack web development — with payments for the course based on a sliding scale that only kicks in after you land a job that makes at least $50,000, has raised $74 million in equity in a Series C round.” (TECH CRUNCH)

Band Together: “In a letter to Apple Chief Executive Tim Cook on Thursday, a trade body representing the New York Times, the Washington Post, The Wall Street Journal and other publishers said the outlets want to know what it would take for them to get better deal terms—which would allow them to keep more money from digital subscriptions sold through Apple’s App Store.” (WALL STREET JOURNAL)


Bayer AG announced it will pay $1.6 billion to settle claims that its birth control device, Essure, causes serious health complications.

ThreadUp, an online secondhand clothing marketplace, is planning to go public in early 2021 and has raised a total of $337 million from investors since being founded in 2009.

Triller, a significant rival to TikTok that could benefit if the app is banned in the U.S., is threatening to sue a research firm over a report suggesting it inflated its downloads.

“Exo, a developer of new diagnostic hardware for the medical industry, has raised $40 million in a new round of funding as investors continue to back new companies that are reducing the cost and complexity of medical devices.”

In the first occurrence where regulators grilled a CEO of one of the tech companies facing potential antitrust violations, Mark Zuckerberg answered questions under oath before the FTC this week.

Former Snap content chief Nick Bell has joined Google to oversee product for Google Images.

Jeff Wilke, Amazon’s CEO of WorldWide Consumer is retiring.

A Couple Cents Content

Catch up on Thursday’s Live Show where Justin Oh talks Apple, Uber, Lyft and more. (YOUTUBE)

Justin Oh breaks down how people develop immunity through vaccines. (TIKTOK)

Take a trip back in time and learn how an earthquake crashed the economy and created the Fed, (TIKTOK)

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