The slowing of U.S. consumer spending is evident, with rising credit growth outpacing income increases. July 9, 2024 | Peel #746 Silver Banana goes to... [Harvest Returns. ]( In this issue of the Peel: - Credit Growth + Spending Slowdowns = WTF, JPow?
- Eli Lilly smells opportunity in bowels while the Paramount saga is finally over
- The Battle of Southwest is only a month in and already getting hot Market Snapshot ð¸ Banana Bits ð - AI meets specialty glass as Corning shares [pop off on earnings](=)
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- Morphic, an MA-based firm developing integrin therapies for chronic illness, is close to un-constipating the market for inflammatory bowel disease.
- Eli Lilly wants a piece of that and the other oral-based therapies Morphic is working on. Shares boomed as the $3.2bn all-cash price tag represents a 79% premium from Fridayâs close. SolarEdge (SEDG) ð27.37% - Little orphan Annie was finally right on Sunday as the sun did come out âTomorrow,â lighting up solar-related stocks.
- Bank of America analysts upgraded SolarEdge, calling it undervalued. The rest of the sector got the message, with Invescoâs Solar ETF TAN up 1.10%. What's Rotten 𤮠Paramount Global (PARA) ð-5.33% - When literally no one is happy with a mergerâs outcome, you know it mustâve been a good deal. And no one is happy at Paramount, least of all investors.
- Negotiations are finally over as Skydance, Redbird, and KKR are paying $8bn to buy National Amusements for $2.4bn and invest the rest in Paramount.
- Class A shareholders will receive $23/sh and B holders $15/sh in some combo of cash and stock. Skydance CEO David Ellison will run the new media giant. Chipotle Mexican Grill (CMG) ð-5.16% - Like the amount of chicken in their bowls, Chipotle shares are headed lower after a rowdy last few weeks. The 50-for-1 split is over, and now analysts wonder whatâs next.
- Prices have surged in recent years, turning off increasingly price-conscious customers. Plus, [damning analysis]( from that Wells Fargo analyst shows the company has a long way to go in standardizing portion sizes. Thought Banana ð¤ The Battle of Southwest Activism has a wide range of strategies. On one end, you have the Greta Thunberg methodâskip school, scream at people, block highways, and desecrate sacred art and monuments. And on the other extreme, you have Elliott Managementâbuy up chunks of a company, then publicly bully them until theyâre humiliated enough to follow orders. Iâm not sure which is more annoying for those involved. But we sure know which one works a helluva lot better. What Happened? In the four short weeks since Elliott showed up at Southwestâs door, discussions have gone from polite conversation to Game of Thrones-level plotting, pillaging, and, most of all, poisoning. Normally, Wall Street throws a party for the share price of any company lucky enough to get bullied by Elliott. However, given that this is Elliottâs first attempt at hijacking an airline (no pun intended), analysts are scratching their heads at the $1.9bn investment made by the activist fund. With ~11% of Southwest shares under its control, Elliottâs only clear demands so far have been to : - fire CEO Bob Jordan,
- fire Chairman Gary Kelly, and
- allow Elliott CEO Jon Pollockâs son to sit in the cockpit during all future flights That last one might not be true, according to rumors, but it would make as much sense as the fundâs campaign so far. Hereâs the thing about airlinesâtheyâre all terrible. Small seats, constant delays, the risk of death (in a Boeing 737, at least) when something goes wrong, and countless other inconveniences make fixing an airline a lot different than fixing f*ckinâ [Pinterest.]( Further, unlike other targets of Elliottâs activism, Southwest is already in defense mode. Marc Benioff, CEO of other recent Elliott target Salesforce, said he has âthoroughly enjoyed getting to knowâ the team at Elliott. Meanwhile⦠Southwest has elected to shoot itself in the foot, face, and head by adopting a poison-pill strategy at 12.5%. Basically, that means that if/when âany investorâ (wonder who it could be in this case) amasses more than a 12.5% stake in Southwest, the firm will automatically begin selling new, discounted shares to existing investors. The poison pill strategy allows management to maintain undisputed control of the firm at the risk of damaging the companyâs reputation by entrenching executives to avoid accountability. News will emerge (hopefully) over the next few weeks that will uncover whether Elliott has a plan or plans to figure it out along the way. Stay tuned. The Big Question: What kind of turnaround does Elliott have in store? You buying Southwest along with Elliott? Banana Brain Teaser ð¡ Previous ð If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 70/r years. If Pat's parents invested $5,000 in a long-term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college? Answer: $20,000 Today ð In a small snack shop, the average (arithmetic mean) revenue was $400 per day over a 10-day period. During this period, if the average daily revenue was $360 for the first 6 days, what was the average daily revenue for the last 4 days? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says ð¤ âIf you want to be a millionaire, start with a billion dollars and launch a new airline.â â Richard Branson How Would You Rate Today's Peel? ð[All the bananas]( ð[Meh]() ð©[Rotten AF]( Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE](=) // [WSO ALPHA]() // [ACADEMY](=) // [COURSES]( // [LEGAL](=) [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis")
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