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Bloomberg
Airbnb’s $1 Billion Bargain Is a Sign of Things to Come
(Bloomberg Opinion) -- Private equity has often found it tough to invest its $1.3 trillion of committed capital in technology companies.For all of their desire to get into the game, tech’s bubbly valuations meant private equity investors often couldn’t justify writing big checks, and some of the hottest startups’ lack of profitability made it hard to raise the debt on which the industry depends to fund its deal-making.The pandemic-induced downturn may herald a change to that equation. On Monday, Airbnb Inc. announced it had raised $1 billion in debt and equity securities from Silver Lake, the tech buyout giant, and Sixth Street Partners. It granted the investors warrants that can be converted into shares, valuing the San Francisco-based company at $18 billion, a drop of almost half since it last raised funds in 2017, the Wall Street Journal reported. Airbnb also agreed to pay the new investors an interest rate of more than 10%. Such generous terms would be unimaginable under normal conditions: The tech bros are getting desperate.It won’t be the last such move. As equity markets tumble, private market valuations are also falling. And as companies need cash to see themselves through the crisis, ready access to capital is also drying up. That’s creating windows for private equity funds to invest under more favorable conditions.To make the most of the situation, they’ll need to get creative. Leveraged buyouts are private equity’s staple, but with the cost of debt soaring, such deals are becoming harder to fund. What’s more, many firms need to prioritize reinforcing the balance sheets of existing investments to ensure they can weather the storm, shoring up their operations and ensuring employees are safe.All that means that while buyouts are being put on the back burner, opportunistic funding of companies — especially those whose underlying businesses are strong but which have been hit disproportionately by the impact of the virus — through debt or equity is on the rise, according to Nikos Stathopoulos, a partner responsible for tech investment at BC Partners in London.The Airbnb example is instructive. Silver Lake, which has been behind buyouts of Dell Technologies Inc. and NXP Semiconductors NV in the past, and Sixth Street are this time relying on debt and equity instruments to get regular returns and a minority stake.While venture capitalists might gamble on getting a 10-fold return on their initial investment, a buyout company looks perhaps to double its initial outlay when it exits an investment. The difference is the risk: a VC firm is likely to see no return at all on many of its bets, while PE wagers on what it thinks are sure things. Between the two is a category known as growth equity: the returns are lower than VC and higher than PE, but the risk is higher than the latter too. Private equity has been creeping steadily into the growth market, a trend that will accelerate as long as funds’ terms permit it.Insight Partners announced a new $9.5 billion growth equity fund last week, its biggest ever, adding to $160 billion of growth funds raised globally over the previous two years. This isn’t to say buyouts are impossible: On Tuesday, Nordic buyout firm EQT AB agreed a deal in principle to acquire Air Liquide SA’s cleaning products business for some 900 million euros ($980 million) including debt. Rather than relying on banks to underwrite loans and distribute them to new investors, they might instead turn to private credit funds and commercial lenders. It’s a more expensive option, but that extra cost can be offset by the lower deal valuations.Should private equity gain a bigger foothold in tech, then it will accelerate an overdue trend: A focus on the importance of cash generation. The stumbles of WeWork, Uber Technologies Inc. and others had already brought profitability under scrutiny. In order to secure capital in today’s environment, companies will need to demonstrate the ability to generate cash once conditions return to normal. Those businesses with reliable cash flows already — and in the enterprise software industry there are plenty — may be less vulnerable anyway.For sure, the number of new private equity deals is likely to slow. But there will be some openings that firms won’t pass up.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Bloomberg
Just Eat Takeaway 1Q Orders Rise 50% on Virus-led Delivery Boom
(Bloomberg) -- Just Eat Takeaway saw a 50% jump in first-quarter orders, as food delivery firms around the world see rising demand for their services with people ordered to stay home to slow the spread of the coronavirus.Takeaway also said it suffered from cyberattacks in the week starting March 16, affecting several hundred thousand orders, the company said in a statement Thursday.Key PointsTakeaway said the onset of the coronavirus crisis in Europe caused order volumes to decline in mid-March due to restaurant closures and a significant reduction in lunch orders.Order volumes recovered strongly by the end of March, Takeaway said, adding “average order values increased markedly, which are expected to return to normal levels after the crisis.”Takeaway says it’s added thousands of restaurants after it saw a pick up in applications because of government bans on dine-in services.Dutch food delivery firm Takeaway merged with U.K.-based Just Eat earlier this year but the two businesses are being run independently under orders from U.K. antitrust authorities who are currently investigating the combination.The figures released Thursday only pertain to Takeaway’s business.Get MoreFood delivery firms are adapting to the pandemic. Pizza delivery companies are listing new job postings while Uber Technologies Inc. is transitioning ride-hailing drivers to its Uber Eats service, which competes with Takeaway.“Takeaway.com is one of the few, and privileged, companies that has only modestly been affected by the crisis,” Takeaway Chief Executive Officer Jitse Groen said in a statement. “The most notable effect on our figures has been, what we now believe to be, a temporary impact on our March orders.”Still, analysts have warned that food delivery firms could still be impacted down the line if people are turned off by ordering food for hygiene reasons or if restaurants start to shutter. “Restaurant delivery may suffer as eateries can’t survive on delivery alone,” Bloomberg Intelligence analysts said in a recent note. “Even if restaurants try to stay open, demand may be depressed amid economic uncertainty.”Read more: Food Delivery Firms Start Contactless Services During PandemicFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Bloomberg
Oyo Furloughs Thousands of Workers in Setback for SoftBank
(Bloomberg) -- Oyo Hotels & Homes, the Indian budget lodgings service backed by SoftBank Group Corp., is placing thousands of employees globally on indefinite furlough as it tries to survive through the coronavirus pandemic, according to people familiar with the matter.Oyo said in a statement employees in countries excluding India would be affected without specifying numbers, adding that it’s not considering job cuts at this time. The startup, one of the largest in SoftBank’s portfolio, hasn’t yet determined the precise number of workers impacted because it is sorting through labor laws in various countries, said one of the people, who didn’t want to be identified disclosing internal discussions.Ritesh Agarwal, founder and chief executive officer, told employees in a video message and note that the impact of the crisis has been significant. Revenue dropped 50% to 60% from the initially estimated 10% to 15%, he said. A certain number of workers “will go on a temporary leave of absence or furloughs for a minimum period of 60 to 90 days,” he said. “This will ensure that these jobs are safe while we reduce costs and streamline business operations.”Oyo’s move -- tantamount to going into hibernation -- is the latest setback for Masayoshi Son’s SoftBank, whose portfolio has been buffeted by WeWork’s implosion and volatile share prices at once high-flying Slack Technologies Inc. and Uber Technologies Inc. The billionaire has called for greater financial discipline among the founders in his portfolio, spurring job cuts at outfits such as Zume Pizza Inc. and shutdowns of startups including Brandless Inc.“The negative impact of the coronavirus on tourism and the hotel industry is huge,” said Daisuke Seki, chief executive officer at IB Research & Consulting Inc. in Japan. “Oyo may be suffering more than WeWork. SoftBank was unlucky in that sense. The business model for Oyo is good, yet the situation is just very bad.”The Japanese company may have to inject more money into the business to support it, Seki said, a messy prospect after the controversial bailout of WeWork. SoftBank’s Vision Fund has so far invested about $1.5 billion in Oyo.Oyo has more than $1 billion of cash in the bank and is exploring options to remain viable over at least the next 36 months, one of the people said. SoftBank shares rose as much as 3.5% in Tokyo trading.Son has been a keen supporter of founder Agarwal, helping fund the hotel company’s international expansion. Oyo had been growing at a rapid clip, but, as with other travel businesses, the outbreak of Covid-19 has side-swiped the company. Its reputation also suffered due to customer complaints about bad experiences along with grievances about poor or unfair treatment from several of the more than 20,000 hotel owners in its chain.Furloughing employees is just one of a series of actions to be taken by Oyo, which include management pay cuts and a freeze on marketing spending. Agarwal will forego his entire salary for 2020. In January, even before the coronavirus outbreak reached pandemic proportions, Oyo had already fired thousands of employees and cut minimum guarantee agreements with hotel partners in an effort to stanch cash bleed.Son and the 26-year-old Agarwal both have much at stake. Last year, the Oyo founder borrowed $2 billion to buy more shares in his own company, people familiar with the matter have said. Son personally guaranteed the loans to Agarwal, another person familiar with the matter has said.Read more: SoftBank-Backed Oyo to Cut About 5,000 Jobs in OverhaulSix-year-old Oyo increased revenue to $951 million for fiscal year 2019, from $211 million the previous year. Losses climbed to $335 million, or 35% of revenue, from $53 million as the startup expanded into China and other new markets. India accounts for about 40% of revenue currently but there could be no correlation between pre- and post-Covid 19 sales figures, said the person, who was privy to discussions.Agarwal founded Oyo in India as a way to reserve budget accommodations online with reliable quality. With the backing of SoftBank, the company expanded internationally and was aiming to become the biggest hotel chain in the world by room count before the coronavirus outbreak. Its aggressive expansion has proven controversial after another SoftBank portfolio company, WeWork, crashed after attempting to go public.Oyo also counts Airbnb Inc., Sequoia Capital and Lightspeed Venture Partners as investors. It promoted its real estate business chief, Rohit Kapoor, to CEO for India and South Asia in December to shake up the business.Read more: SoftBank-Backed Brandless Shutters, Cuts About 70 Employees(Updates with analyst comment from fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Oilprice.com
The Hottest Tech Startup To Watch In 2020
Investors are going green in a big way, and as traditional companies feel the heat for not adapting, one small startup is set to win big
Zacks
The Zacks Analyst Blog Highlights: Dropbox, Alibaba, Chegg and The Rubicon Project
The Zacks Analyst Blog Highlights: Dropbox, Alibaba, Chegg and The Rubicon Project
Zacks
Buy 5 Top Stocks Flying High Despite Coronavirus Pandemic
Despite the coronavirus-induced mayhem, a handful of stocks rallied in the past month. Some of these carry a favorable Zacks Rank.
Bloomberg
Uber Expands Option for Companies to Get Food Delivered to Staff
(Bloomberg) -- Bloomberg’s daily technology newsletter is chronicling the impact of Covid-19 on the global tech industry. Sign up here.Uber Technologies Inc. is expanding a program for businesses to order food delivery to their employees’ homes, a response to surging demand during the coronavirus pandemic.The option, previously only in the U.S., will be available starting Wednesday to companies in Brazil, Canada, France and the U.K., Uber said. San Francisco-based Uber is accelerating a rollout of the service, with another dozen countries planned for the rest of the year.The world’s largest ride-hailing company, like other transportation providers, is looking for new sources of revenue as the effects of the pandemic choke its main business. Uber has said rides plummeted by as much as 70% in some of the hardest-hit cities as governments place limits on travel. Lyft Inc., the second-largest provider in the U.S. and Canada, is seeking to partner with companies to provide drivers with additional work delivering food or medical supplies. In the meantime, Lyft told its drivers to apply for jobs at Amazon.com Inc.The food delivery app Uber Eats is available in 45 countries, but the ability for businesses to cover orders for employees only arrived in the U.S. last year. Before the virus struck, customers used the service to cater lunches at the office, as well as delivering meals to staff working off-site.In March, usage increased 28% from February, Uber said. There are more than 1,200 companies now using Uber Eats for Business. Early customers include GoodRx Inc., which runs a site to find discounted pharmaceuticals, and Talkable, a marketing software maker.Strengthening the food delivery business was a priority for Uber even before the coronavirus outbreak. The company sees it as a key ingredient in its recipe for turning a quarterly profit by the end of this year.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Financial Times
The mystery of Travis Kalanick’s ‘Internet Food Court’
For a brief moment, it looked as if Travis Kalanick was back to his cunning old self with a brazen idea to capitalise on the coronavirus lockdown: an “Internet Food Court” whose key selling point was its lack of physical dining space. A press release, sent to reporters on Monday, heralded the service — which had a soft opening last month — as being “like a mall food court, except less mall and more internet”. Under one roof, “cloud” or “ghost” kitchens, with no other physical presence, serve up food from 30 distinct restaurant brands and distribute them via the four leading food-delivery platforms: DoorDash, Uber Eats, Postmates and Grubhub.
Zacks
Why Cloudera, Inc. (CLDR) Might be Well Poised for a Surge
Cloudera, Inc. (CLDR) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.
Zacks
Is ManTech (MANT) Stock a Solid Choice Right Now?
ManTech (MANT) has seen solid earnings estimate revision activity over the past month, and belongs to a strong industry as well.
Simply Wall St.
Is Everbridge, Inc. (NASDAQ:EVBG) Trading At A 32% Discount?
Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Everbridge, Inc...
Zacks
4 Internet-Based Stocks to Buy Amid Coronavirus-Led Lockdown
Here, we have picked four Internet-based services stocks that are poised to benefit significantly from the COVID-19-incited panic.
Zacks
Market to Stay Northbound Despite Volatility: 5 Growth Picks
Although, short-term fluctuations will continue on account of the coronavirus-induced crisis, overall market movement will remain positively sloped.
Zacks
4 Top-Ranked Tech Stocks That Weathered the Coronavirus Storm
Here we have picked four top-ranked tech stocks that have weathered the coronavirus impact, so far this year, and have potential to rally further given their robust fundamentals.
Oilprice.com
Uber’s Green Competitor That’s Taking The World By Storm
The pressure is growing across the globe to go green, and one ambitious ride-sharing service has risen up to the challenge in a big way
Zacks
PRAA vs. EEFT: Which Stock Is the Better Value Option?
PRAA vs. EEFT: Which Stock Is the Better Value Option?
Zacks
New Strong Sell Stocks for April 6th
Here are 5 stocks added to the Zacks Rank 5 (Strong Sell) List today.
Zacks
Medallia Sees Hammer Chart Pattern: Time to Buy?
Medallia has been struggling lately, but the selling pressure may be coming to an end soon.
TechCrunch
Uber partners with Flipkart and BigBasket in India to deliver essential items
Uber is resuming some services in India as it looks to help other firms deliver grocery and other essential items in select parts of the country, nearly two weeks after New Delhi ordered a three-week lockdown for its 1.3 billion people. The American firm said on Monday that it has partnered with Flipkart to deliver everyday essentials in Delhi, Mumbai, and Bangalore. The announcement comes days after Uber inked a similar deal with online grocer BigBasket and Kolkata-headquartered chain Spencer’s Retail.
Zacks
ManTech International Sees Hammer Chart Pattern: Time to Buy?
ManTech International has been struggling lately, but the selling pressure may be coming to an end soon.
Simply Wall St.
StoneCo Ltd. (NASDAQ:STNE) Analysts Just Cut Their EPS Forecasts Substantially
Market forces rained on the parade of StoneCo Ltd. (NASDAQ:STNE) shareholders today, when the analysts downgraded...
Financial Times
Uber starts listing other jobs for its drivers
Uber has started listing regular job openings at other companies in its app, including at 7-Eleven, Amazon and McDonald’s, as it tries to help drivers who have suffered a sharp drop in demand. The company also said its more than 240,000 drivers who hold a commercial license would be paired with logistics companies, such as those who offer long-haul freight, for other employment opportunities. From Monday, US-based users of the Uber Driver app will see a new Work Hub section listing other ways of making money.
Financial Times
Saudi Arabia’s PIF takes 8.2% stake in cruise operator Carnival
Saudi Arabia’s Public Investment Fund has built an 8.2 per cent stake in struggling cruise operator Carnival, marking the Gulf fund’s latest high-profile direct investment after previous bets on companies such as Tesla and Uber. The PIF’s position amounts to a $430m stake based on the US-traded company’s share price, which rose 23 per cent on Monday, but is still down by almost 80 per cent this year. The PIF, which is used by Crown Prince Mohammed bin Salman to advance and diversify Saudi Arabia’s economic interests, revealed that it owned 43.5m shares in a regulatory filing signed by its head, Yasir al-Rumayyan, who is a close ally of the prince.
Bloomberg
What I Learned From Trying to Cut My Own Hair
(Bloomberg Opinion) -- Writing to shareholders this week, BlackRock Inc.s chief executive officer Larry Fink ruminated on how business and society will be reshaped by the searing experience of the new coronavirus:“People worldwide are fundamentally rethinking the way we work, shop, travel and gather. When we exit this crisis, the world will be different. Investors’ psychology will change. Business will change. Consumption will change. And we will be more deeply reliant on our families and each other to stay safe.”I had a similar epiphany this week while trying to cut my own hair — it turns out my regular $30 haircut isn’t as essential as I’d thought. Preparing a meal for my family later that evening made me think that eating out or getting dinner delivered isn’t as rewarding as home cooking. Right now the do-it-yourself version also feels a whole lot safer, and probably will do for a while.Compared to the courage shown by medical workers and those in other essential functions, and the devastation wrought by coronavirus on already vulnerable communities, many of us in the western world have it easy. We’re asked to do no more than stay home. But in between worrying about our jobs, our parents and how to entertain or home-school children, we’re reevaluating priorities. What will we do differently when this is over? What will we prize more and what will we give up? Once the immediate battle to protect employees and remain solvent has passed, the business world will have to confront these questions too. Two themes stand out: Instead of visiting far-flung places and seeking out mass entertainment, I’m sure there will be a bias toward more modest, local activities. And where the coronavirus has exposed dependency or vulnerability, as with the business world’s complex cross-border supply chains, we’ll seek more security and resilience.Looming above all of this is the damage that the lockdowns are inflicting on people’s incomes. The longer the economic shutdown lasts, the more reluctant the world’s consumers will be to spend, period. With more than 10 million Americans filing new unemployment claims in the past fortnight, the omens aren’t good.In the worst-affected sectors such as travel, hospitality and leisure, businesses are already facing a bleaker future. Increased consumer awareness about the negative environmental and social impact of mass tourism has now been compounded by the realization that people on planes and pleasure boats carried the virus around the globe. Lufthansa AG’s boss, Carsten Spohr, thinks the German airline will have to shrink because the economy will be smaller than before. Easyjet Plc’s founder, Stelios Haji-Ioannou, said similar this week when calling on the carrier to cancel a big order from Airbus SE.Even once travel restrictions are lifted, demand for cruises may remain weak for a “significant length of time,” Carnival Corp. warned. The beleaguered company had to offer bond-buyers an 11.5% interest rate to get them to back a $4 billion debt offering. That’s a bad sign.Fitness is another industry that relies on cramming people into confined spaces. Until recently it was booming but customers are discovering much cheaper ways to work out. Having sampled online classes and the time-saving benefit of exercising at, or close to, home, some memberships won’t be renewed. Good news for Peloton Interactive Inc.’s indoor cycling business, perhaps not for Planet Fitness Inc. or The Gym Group Plc. Until coronavirus came along, the tech world seemed hell-bent on taking agency away from individuals and consigning ownership to the dustbin. Why learn to cook when you can have food delivered in 30 minutes? Why own a car when you can take an Uber? Why look after your gadgets, when those nice people at Apple will fix them for you. But as my colleague Adam Minter pointed out this week, it’s only in a crisis that you discover the drawbacks of not being able to repair your own phone.There will be winners from this realignment too. Right now, auto sales are collapsing in Europe because you can’t go to a showroom and you’re not meant to drive far, but the freedom and security of owning a vehicle might cause sales to rebound more quickly than other discretionary purchases (provided of course that governments can curb unemployment). In China, emerging from the first virus wave, cautious consumers have begun returning to car dealers. Home improvement stores saw a brisk trade from customers wanting to fix up their homes, balconies and allotments whilst on lockdown, and some hardware stores remain open. Once the housing market reopens, urbanites may decide they’ve had enough of crowded cities and tiny apartments. The countryside is suddenly more appealing — the more so if employers become more trusting of those who want to work from home. Coronavirus has exposed our vulnerability and it won’t be the last crisis. Our planet-warming emissions mean more pain is preordained. Faced with uncertainty or disaster, humans respond by trying to strengthen their communities. We’ll also seek more control over our lives. For societies, that means equipping our health services, paying key workers properly and securing supplies. As individuals, it means out-sourcing fewer decisions and mastering things for ourselves. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.