The Week's Top Stories: Trade Troubles, and Spotify's Podcast Gambit

February 8, 2019

From Wall Street to Silicon Valley, these are the top stories that moved markets and had investors, business leaders, and entrepreneurs talking this week on Cheddar.

  • Trade Troubles: Markets lost steam in the latter half of the week after the White House indicated that U.S. and Chinese trade negotiations still have a ways to go before the March 1 deadline. President Trump and Chinese President Xi Jinping are not expected to meet before that date. If a deal isn't reached by the end of the month, additional tariffs will kick in, escalating the trade war ー and likely spooking investors further. See more.

  • State of the Union: When the president addressed the nation for the annual State of the Union, investors paid close attention to a pair of proposals he floated: a massive infrastructure overhaul ー the third year in a row President Trump proposed such an endeavor to Congress ー and a push to lower prescription drug prices. Both plans were light on details, though Democratic leaders signaled they were willing to work with the White House on those initiatives. See more.

  • Google Earnings: Google parent Alphabet ($GOOGL) kicked off the week with an earnings report that beat expectations, showing nearly $32 billion in quarterly revenue, but nevertheless sent shares sliding. The company said it's investing heavily in features and products that diversify its revenue away from ads, a realm in which Amazon ($AMZN) is making strides to take on the Google-Facebook ($FB) digital ad duopoly. Those include efforts to apply Google's A.I. technology into all aspects of the business, CEO Sundar Pichai said, and grow enterprise cloud services, where Amazon and Microsoft ($MSFT) still dominate. The earnings report also noted strength in holiday shipments of Google Home hardware, like the new Home Hub speaker-screen device.

  • Spotify's Podcast Gambit: Streaming giant Spotify ($SPOT) also reported earnings this week, announcing its first quarter of profitability since the company launched 13 years ago. Spotify took in an operating profit of around $107 million but warned it would lose as much as $113 million next quarter. The biggest news in the earnings release was the announcement that Spotify agreed to buy Gimlet Media, the podcasting powerhouse, in an aggressive move to own more original non-music content. Podcasts have been available on Spotify since 2015, but the company has only recently begun to focus on expanding its offerings. It makes sense: streaming services pay licensing fees to artists and record labels every time a user plays a song. Podcasts require no such cost. Spotify now counts 96 million paid subscribers worldwide, almost double the user tally of Apple ($AAPL) Music, its biggest competitor. See more.

  • Tech IPOs Back on Track: After the government shutdown forced the IPO market to a halt, things are starting to heat back up. Postmates, the food delivery app, reportedly filed confidential plans with the SEC for an initial public offering that would value the company at $1.9 billion. Postmates raised $100 million last month and is working with JPMorgan and Bank of America on pricing its offering. Meanwhile, Slack, the red-hot workplace messaging service, filed paperwork to go public later this year with a direct listing, according to multiple reports. Unlike an IPO, direct listings eschew the traditional process of using underwriters to decide how many shares list and at what price ー instead giving investors the opportunity to buy a stake in the company purely based on demand. Slack is looking for a valuation as high as $10 billion. See more.

  • Jeff Bezos vs. David Pecker: The blog post of the year (or perhaps the decade) goes to Amazon CEO Jeff Bezos, who on Thursday authored a piece in Medium that accused the media conglomerate American Media Inc. and its chief David Pecker of blackmail and extortion. AMI's tabloid, The National Enquirer, allegedly obtained illicit and compromising photos of the tycoon ー images the paper threatened to release if Bezos didn't stop his investigation into how the magazine obtained his private text messages, which it had previously published. As of Friday, prosecutors in the Southern District of New York are investigating the possibility that Becker may have violated an immunity deal he struck as part of his cooperation in the Michael Cohen campaign finance case.

ーby Carlo Versano