Uber bombed. Now what?

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All eyes on Uber’s Day 2 

Today is a big test for Uber: Can it overcome tumbling 7.6 percent from its I.P.O. price on Friday to do better during its second day on the public stock markets?

Uber suffered the worst first-day dollar loss of any U.S. I.P.O. ever. That’s a terrible start for the biggest market debut in years. What was supposed to be a celebration turned into an exercise in expectations management: “I think we came public on a tough day, and a tough week,” Dara Khosrowshahi, the company’s C.E.O., told Mike Isaac of the NYT.

And that’s a bad omen. “If a stock falls below its I.P.O. price on the first day or even in the weeks that follow, the offering is considered a flop — a red flag that investors have concerns about a company’s outlook,” Stephen Grocer of DealBook writes. “It can also put a chill on the I.P.O. market, making investors wary of buying into other big deals to come.”

Potential culprits for the mess include:

• Stock market investors who were jittery about the U.S.-China trade war (though by late Friday afternoon, Uber shares were still down even as the S&P 500 rose)
• Bankers who priced the offering too high
• The “Lyft effect” of the company’s archrival having traded poorly for weeks
• The business model of Uber itself, which offers no certainty of a profit anytime soon

Among the losers: PayPal, which invested $500 million in the I.P.O. and suffered a $37 million loss within hours; Saudi Arabia, whose three-year-old investment in the company is still in the red; and Uber employees, many of whose stock options and restricted shares are barely above water.

Shares in Uber appear poised to fall further, since they’re down in premarket trading this morning. But it’s worth keeping the long term in mind: Facebook took a year to climb above its I.P.O. price — and now trades at about five times that level.

The trade war’s perfect storm

The re-escalation of the U.S.-China trade war can’t be explained by just one factor. Here are the major issues that have caused renewed tensions:

• China won’t compromise on some of America’s big concerns. It’s notably reluctant to end lavish government subsidies for its homegrown industries, which Washington claims distort the markets.
• President Trump is confident about the U.S. economy, and claims that his tariffs are a multibillion-dollar, mostly one-way payment by China to the American Treasury. (Larry Kudlow, the director of the National Economic Council, disagrees: “Both sides will pay,” he said yesterday.)
• He’s also thinking about 2020. Mr. Trump is determined to present himself as tougher on the Chinese than any of his challengers in the presidential race, and appears to believe that walking away from a deal might put him in a better position politically than signing one.
• And this could just be the new normal — “an initial skirmish in an economic conflict that may persist for decades, as both countries battle for global dominance, stature and wealth,” Ana Swanson and Keith Bradsher of the NYT write.

What now? Administration officials say talks will continue, with Mr. Kudlow adding that that could possibly include a meeting next month between Mr. Trump and President Xi Jinping of China at the Group of 20 summit meeting in Osaka, Japan. But Jeanna Smialek, Jim Tankersley and Mark Landler of the NYT write that “Mr. Trump has muddied that message with tweets suggesting he would be happy to leave tariffs in place indefinitely.”

And markets still look gloomy. Futures suggest that all the major U.S. markets will open at least a percentage point lower, after suffering their biggest weekly decline of the year.

TV isn’t dead yet, say the TV networks

This is “upfronts” week, when TV networks publicize the shows they’ll be airing this fall. The mission this year, according to Ed Lee of the NYT: to demonstrate to advertisers that Netflix and other streaming services still don’t rule the roost.

One of the TV industry’s main arguments, according to Mr. Lee, will be that the networks offer rare “opportunities to reach millions of people in real time.” That’s especially important as audiences fragment due to the proliferation of online viewing services like Netflix, Hulu, YouTube and dozens of others.

Advertisers poured $20 billion into TV ads last year, up 5 percent from the previous season. TV executives hope that’s a sign that obituaries for their industry remain premature.

Here’s this week’s schedule:

• NBC kicks things off this morning at Radio City Music Hall, near its headquarters in Midtown Manhattan.
• Fox holds its event this afternoon at the Beacon Theater.
• ABC stages its presentation tomorrow at Lincoln Center.
• CBS closes out the upfronts on Wednesday at Carnegie Hall.

Another thing to watch for: new faces at many of the networks. Disney’s TV properties are now overseen by Dana Walden, who previously worked at Fox. Charlie Collier, who ran AMC, now oversees the slimmed-down Fox network. And CBS will hold its first upfronts since ousting its longtime chief, Les Moonves.

A pact to curb violent online content

Prime Minister Jacinda Ardern of New Zealand this week plans to use the recent Christchurch terrorist attacks to demand that the biggest internet platforms do more to stamp out violent and extremist content, Charlotte Graham-McLay and Adam Satariano of the NYT write.

• “Ms. Ardern will be in France with President Emmanuel Macron to sign an agreement they crafted called the ‘Christchurch Call’ that asks the social media giants to examine the software that directs people to violent content, and to share more data with government authorities and each other to help eradicate toxic online material.”
• “A number of nations are expected to sign on to the nonbinding pledge, including Britain, Canada, Jordan, Senegal, Indonesia, Norway and Ireland.”
• “The United States, which has been reticent to regulate the internet out of concerns it will harm free speech, is not among the expected signers. Nor is Australia.”
• “Representatives from Facebook, Google, Microsoft and Twitter are among those scheduled to attend the summit on Wednesday hosted by Mr. Macron and Ms. Ardern. Facebook, Google and Microsoft said they would sign the pledge. Twitter declined to comment.”
• “Social media companies will be left with the thorny task of deciding what constitutes violent extremist content, since it is not defined in the accord.”

Would you fly on a 737 Max ever again?

Boeing hopes that its best-selling plane will be cleared to fly again by late summer. But Alison Sider and Robert Wall of the WSJ write that persuading passengers to climb aboard will remain a big challenge.

• “I just don’t know there’s anything Boeing could do to re-instill my confidence in this plane,” Lance White, a radiologist who flies a few times a year, told the WSJ.
• The WSJ reports that Boeing may enlist celebrities to endorse the plane, as well as having executives board the 737 Max’s first flights back in service.
• But the traditional playbook for dealing with safety issues might not work, given the scale of Boeing’s troubles.
• “You can’t brand your way out of a problem like this,” Thomas Ordahl of the brand consulting firm Landor told the WSJ.

More: Boeing’s lead independent director expects changes to how planes are certified for safety. And pilot unions for Southwest Airlines, United Continental and American Airlines have been subpoenaed by federal grand juries as part of the Justice Department’s investigations into the 737 Max.

Facebook gears up for antitrust action

In 2019, the most fashionable thing to think about Facebook is that it should be broken up — and the social network is reportedly readying for that situation too.

• Senator Kamala Harris, a Democratic presidential hopeful, said yesterday that she wants to “seriously take a look” at breaking up Facebook, calling it “essentially a utility that has gone unregulated.”
• That’s on the heels of a call by Chris Hughes, one of Facebook’s four founders, who said last week in an NYT Op-Ed that the social network needs to be dismantled.

And Facebook is hiring competition experts, according to a Business Insider analysis of the company’s current open job listings. Open positions in the U.S., Europe and Asia include a competition counsel and several public policy experts focused on antitrust.

Revolving door

Major shareholder advisory firms urged investors in Volkswagen to vote against nearly all of the carmaker’s board members.

Foxconn will reportedly nominate Liu Young, the head of its chip business, to succeed Terry Gou as group chairman.

Barclays has hired Ken Brown, a former deal maker at Nomura and Lehman Brothers, as chairman of equity capital markets for Europe and the Middle East.

The speed read

Deals

• Total’s deal to buy Anadarko’s liquid natural gas assets in Africa would cement its position in the natural gas market — but it is pushing into riskier territory. (WSJ)
• The BAIC Group of China reportedly wants to buy a stake of up to 5 percent in Daimler. (Reuters)
• SoftBank’s Vision Fund agreed to invest $800 million in Greensill Capital, a British supply-chain lender. (Bloomberg)
• Sycamore Partners offered to buy Chico’s FAS, the clothing retailer, for $407.8 million, after having previously been rejected. (Reuters)
• Flywheel Sports, the boutique spinning-class company, was reportedly taken over by one of its lenders, Kennedy Lewis Investment Management. (Bloomberg)

Politics and policy

• President Trump said it would be “appropriate” to discuss having Attorney General Bill Barr investigate Joe Biden. (Politico)
• Rudy Giuliani canceled a trip to Ukraine, where he intended to press government officials to embrace pro-Trump investigations. (NYT)
• Questions have arisen about expenses that the N.R.A.’s chief, Wayne LaPierre, billed to the advocacy group’s ad agency, including $39,000 for clothes. (WSJ)
• Neil Gorsuch and Brett Kavanaugh were expected to be judicial twins on the Supreme Court. That hasn’t proved true. (NYT)
• Prime Minister Theresa May of Britain is under growing pressure to quit as her Conservative Party looks poised to lose seats in coming elections. (FT)

Tech

• Federal prosecutors want to disqualify the lawyer defending Huawei in a bank fraud case, arguing that his previous work as a deputy attorney general poses a conflict of interest. (NYT)
• A nonprofit organization, Mined Minds, promised to create coding jobs in Appalachia. It has since been accused of being a sham. (NYT)
• Russia and the far right are spreading disinformation ahead of European elections this month. (NYT)
• And Russia wants you to think that 5G is dangerous. (It isn’t.) (NYT)
• Facebook’s online dating push isn’t going so well. (Barron’s)
• Bitcoin climbed above $7,000 amid a broad rally in cryptocurrencies. (Bloomberg)

Best of the rest

• Teva and other big pharmaceutical companies conspired to inflate generic drug prices by up to 1,000 percent, according to a lawsuit by state attorneys general. (NYT)
• Pakistan says it will accept a $6 billion bailout from the I.M.F. (NYT)
• Africa will soon be home to the largest free-trade area in the world. (Axios)
• Why entrepreneurs in China “feel like second-class citizens.” (FT)
• Cuba plans to ration the sale of some basic goods. (WSJ)
• Billions of dollars of investments that rely on calm markets could exacerbate the current market volatility. (WSJ)
• “How a Chinese scientist broke the rules to create the first gene-edited babies.” (WSJ)
• Sweden reopened its investigation into a rape allegation against the WikiLeaks founder Julian Assange. (NYT)

Thanks for reading! We’ll see you tomorrow.

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