Friday, April 19, 2019
Even though stock buybacks have come under fire in Washington, famed investor Warren Buffett says they make "nothing but sense." In fact, Buffett announced that Berkshire Hathaway would repurchase some of its stock. Although a company can distribute money to shareholders through dividends as well, Berkshire is noted for having paid only one dividend in its history, in 1967. Berkshire recently changed its buyback policy. Previously, a buyback could only occur if the repurchase price did not exceed 1.2 times the book value. Now, the company can undertake a buyback if Buffett and his partner, Charlie Munger, believe the stock is selling below its intrinsic value.
Thursday, April 18, 2019
Lyft's stock price has fallen 17 percent from its IPO price of $72. An now, investors are suing the company, claiming the IPO was over-hyped. Specific claims in the lawsuit are that the company exaggerated its market share and the company failed to disclose that it was about to recall 1,000 bikes in its ride-share program.
Tuesday, April 2, 2019
In April 2018, Spotify underwent a direct listing on the NYSE. Now, it appears that corporate messaging service Slack will also undertake a direct listing. Both companies have sufficient cash on the balance sheet, which reduces the need to raise cash from a traditional IPO. The direct listing will provide liquidity for Slack's current shareholders and eliminate the floatation costs associated with an IPO. It will interesting to see if Slack initiates a stock buyback in the near future, similar to what Spotify did.
Monday, April 1, 2019
Ride sharing company Lyft went public on Friday. The stock price jumped as much as 23 percent, before falling to a gain of 9 percent. Today, the stock took a nose dive, dropping 11 percent, trading below its initial offering price. Lyft has yet to earn a profit, and recorded a loss of more than $900 million during 2018. How the Lyft IPO affects the decision to go public for other tech companies like Uber, Slack, and Pinterest is yet to be seen.
Auto rental company Hertz is demanding the return of $70 million in incentive compensation to former CEO Mark Frissora and other senior executives. In 2014, Hertz disclosed that it would have to restate three years of accounting statements. Hertz is accusing former management of pressuring employees to use fraudulent and misleading accounting procedures that lead to the restatements. Hertz is also demanding that the executives return the severance pay received when they left the company after the accounting scandal was unearthed.