All Eyes on Elon
Elon Musk is buying Twitter for $54.20 per share. In his signature style, the world’s richest man once again included the magic “420” number in his bid. This time, though, the mercurial billionaire really did secure funding (including $13 billion of cash proceeds from the sale of Tesla stock). In a stunning reversal, Twitter’s board of directors approved the $44 billion sale of the company to Musk only 10 days after adopting a poison pill designed to prevent it. The sequence of events leading up to the deal announcement, which we expect to be dramatized by one or more streaming services in the near future, was highly unusual and entertaining. After revealing that he had acquired a 9.2% “passive” stake in Twitter on April 4th, Musk and Twitter announced that Elon would be joining Twitter’s Board of Directors. Musk then proceeded to launch a barrage of critical tweets about Twitter (most of which he subsequently deleted), including one in which questioned whether Twitter was “dying.” Less than a week after announcing that Elon would be joining the board, Twitter CEO Parag Agrawal tweeted that, in fact, Musk would not be joining the Board after all. A few days later, Twitter’s board adopted the poison pill which, 10 days later, they withdrew in connection with their announcement that the company would, in fact, be sold to Elon. Trading at a 10% discount to Musk’s offer price, Twitter shares reflect the market’s belief that the deal may not proceed according to plan. While we certainly don’t know how the situation will unfold, we do feel highly confident in one thing — there will be more drama!
Inflation: Front and Center
Inflation is now on everyone’s mind. And for many younger Americans, inflation is a new phenomenon. While Millennials and subsequent generations had come expect rising asset prices (houses, stocks, cryptocurrencies), higher prices for goods and services seem to be catching many by surprise. And, with new claims for unemployment benefits at their lowest levels since 1968, the dreaded wage-price spiral effect appears to be taking hold. According to the WSJ, many technology workers are demanding annual pay increases of 20% or more. In a sign of the times, Starbucks founder Howard Schultz announced that the company would suspend its stock repurchase program as it seeks to fend off unionization efforts and improve its public image.
The Evolving Workplace
There no longer seems to be much of a debate around whether or not pre-pandemic work norms will reassert themselves as the impact of COVID-19 subsides. The workplace will almost certainly look different from how it looked before. The question is, how radical will the changes be? Airbnb made headlines in April by telling its employees that they can work remotely, forever. Previously, the company had told employees to expect to return to work in September of this year. And when the WSJ publishes an article debating whether the optimal workweek consists of 2 or 3 days in the office, the obvious assumption is that 5 days in the office is unthinkable. The shift to working from anywhere presents challenges for companies grappling with how to monitor time and attendance.
Regulatory Spotlight
The SEC threw a new wrench in the SPAC works in April by issuing new proposed rules that would require enhanced disclosures and increase potential liability under the federal securities laws for shell companies (including SPACs), target companies, and investment banks participating in de-SPAC transactions. In the wake of the SEC’s proposed new rules, Citi announced that it would pause new SPAC issuance until there is more more clarity around potential legal risks.
Lighter Notes
– Dress Codes. Companies are struggling to define appropriate dress codes as employees return to the office. We hadn’t thought of combining blazers with hoodies, but maybe we should have!
– Caller ID Gotchas. Another odd pandemic-era phenomenon is causing confusion and embarrassment in the workplace as employers screen the calls of employees whose phones are registered to their parents or other family members. Awkward!
– Baby Giant. Astronomers discovered a gigantic, Jupiter-like alien planet in its early stages of formation. The planet’s unusual development is challenging current theories and is expected to improve our understanding of the universe.
– DALL-E. At the OpenAI artificial intelligence lab, researchers are building technology called DALL-E (a marriage of the lovable WALL-E robot and impressionist painter Salvador Dali) that lets you create digital images simply by describing what you want to see.
