Read It And Eat 06/03

Welcome to ‘Read it and Eat’ — your go-to for bite-sized updates on corporate actions in finance, AI and anything I consider newsworthy. Join me twice a week for quick reads, where I serve up the latest insights that matter in the world of business.

As I have hit our 10th edition of Read It and Eat, I personally want to thank all our readers for sticking with us and aiming to put out more quality content going forward. I am aiming and striving to do better with this Newsletter. Here’s to 10 done and more to come!

Major Headlines

• Reddit IPO given a RED Light by its own User-Base:

• As one of the first social media websites that has dominated the tech space, Reddit. founded in 2005, and has remained privately held since then, has decided to go public. Which paves the way for the first social media company to IPO on the stock market in years. It filed its S-1 with the SEC (Securities Exchange Commission) under the ticker (“RDDT”) and is seeking a valuation of $6.5 at $35 per share, modest given that its last private raise was $10 Billion. However, it’s users are betting AGAINST it. R/WallStreetsBets says that this management has yet to prove that this user base or data set can be monetised and, per R/technology, there is great concern and speculation about the measures the new management may take to make the company profitable, such things as banking of subreddits, pay per post type system for users and an ad in between each comment. This would affect their stock price greatly because, amongst other social media apps, they are the most vulnerable to their users. Its model of community moderation has upsides — it means that the 60,000 mods are more familiar with their community than contractors would be. But Reddit doesn’t pay them and thus will have a harder time controlling them. If you squint, you can kind of see how Reddit is trying to ameliorate that risk by offering shares to power users. It seems like Reddit users, the spark that lit up Wall Street in the GameStop Frenzy might be willing to burn the entire house down with them in it. (The Verge)
  

• JetBlue Airways and Spirit Airlines couldn’t hurdle their Anti-Trust concerns:

• JetBlue Airways and Spirit Airlines scrapped their $3.8-billion merger agreement on Monday, with the low-cost carriers saying there was no path forward after a U.S. judge blocked the deal in January on anti-competition concerns. A successful deal would have created the fifth-largest carrier in the United States and potentially ensured Spirit’s survival, as it burns through cash and struggles with its debt pile. But the combination had been on the ropes ever since a Boston judge said it would harm consumers by reducing competition. (Reuters)
  

• Elon’s Mortgage for Twitter has come Due, He’s in talks to Refinance:

• Musk’s purchase of Twitter, a $44 billion acquisition in October 2022, was financed partially by his portion of stocks in Tesla and with other investors like Fidelity, Ark Invest, Baron Funds, and Jack Dorsey the founder and Former CEO of Twitter also helped Musk finance the deal. Several banks were involved in the acquisition and they reportedly want to refinance their debt in the company over a year later, according to a new report from Bloomberg. A group of banks led by Morgan Stanley seeks to refinance around $12.5 billion in debt related to the acquisition. Morgan Stanley was the largest bank lender on the acquisition, covering around one-fourth of the debt. The banks have agreed to not sell their debt in the company until X is more financially sound. (Bloomberg)
  

• With Its Reputation Battered, Boeing seeks to buy back its former subsidiary, Spirit Aero Systems:

• In the wake of the recent mid-flight door explosion. Spirit Aero-Systems, an American aero structure manufacturer was formed when Boeing sold its Wichita division to an investment firm Onex Corporation in 2005. When spun off and sold they retained Boeing as a customer, building several important pieces of Boeing’s aircraft including the fuselage of the 737 & 787, and the flight deck section of the fuselage of nearly all Boeing airliners, including working for Boeing competitors, Airbus. Now management of Boeing believes that reintegrating Spirit Aero Systems through an acquisition might be the best course of action. “We believe that the reintegration of Boeing and Spirit AeroSystems’ manufacturing operations would further strengthen aviation safety, improve quality and serve the interests of our customers, employees, and shareholders,” Boeing said in a statement on Friday. Spirit AeroSystems confirmed the discussions. (Reuters)
  

MINOR NEWS

• Musk sues OpenAi, the not-for-profit company that owns and created ChatGPT, for pursuing profits. (AP)

• Morgan Stanley opens its first office in Abu Dhabi as it expands its presence in the Gulf area. (Reuters)

• Disney Family sides with Bob Iger and against Nelson Peltz in the Iger v Peltz battle for Disney’s control in a Shareholders letter. (WSJ)

• Tesla opens U.S. charging stations and supercharger networks to non-Tesla drivers. Stands to earn Billions. (CNBC)

• Super Micro Computer, a major AI beneficiary, replaces Whirlpool in the S&P 500. (CNBC)

• Wall Street banks roll back DEI efforts, opening diversity programs to everyone (Bloomberg)

• BBC Studios acquired a 50% stake in ITV’s streaming-as-a-service subscription company Brit-Box International for $322 million. (Yahoo)

• Jeff Bezos becomes the World’s Richest Person (again). Surpassing Elon Musk. (WSJ)
  

NEWS OF THE DAY:

Millennials Set to Inherit $90 Trillion in Massive Wealth Transfer.

Although it means the death of their parents and grandparents, as baby boomers (those born between 1946 and 1964 and the Silent generation (those born between 1928 and 1945) go to meet their Makers, they will transfer their properties and equity-rich assets to the Millennials (those born between 1981 and 1996). Estimates have been published and Knight Frank is estimated to see the movement of $90 Trillion worth of assets which makes the affluent millennials the richest generation in history. It comes as a breath of fresh air for some or a distraction to others. This is because even though on paper this seems great, in reality, this may not necessarily be a good thing as soaring rents, rising inflation and student debt have contributed to millennials’ struggles to purchase their own homes or build up their savings and unless your parents acquired property to hand over to you and were able to hold onto it, not to be squeezed out due to rising costs this may not be of benefit to you.

With a focus on the positive, the potentially great wealth handover will likely have reverberations in the job market, economy, real estate and lifestyles of the recipients of this largess. Millennials, who are contending with credit card debt, burdensome student loan repayments and the challenges of affording a new home and having children, may see their fortunes change almost overnight. This newfound wealth will offer financial security to Millennials. The influx of funds will open doors toward homeownership, debt-free living and having sufficient resources to take career risks. Furthermore, If you don’t have a nest egg, you’ll most likely stay in a job that you hate because you cannot afford to lose your health benefits or have long gaps in employment.

With a lofty inheritance, Millennials can approach the job market differently. Instead of chasing dollars to make ends meet, they will have the luxury of pursuing opportunities that offer meaning and purpose that fulfil social causes.

This shift is the largest wealth transference in history. It was rightly described as “seismic” by Knight Frank, as it is estimated to make millennials five times richer in 2030 than they were in 2019. (CNN)

Gen-Z Word Of The Day

“Lock-In”

This is a slang that means to be ready and prepare yourself.