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Thread of National Business that May Not Survive Coronavirus

MaybeACoordinator

By MaybeACoordinator
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BevoSwag

BevoSwag 272

Posted
Posted
9 hours ago, royiv said:

A long time. They have billions of cash.

The Wisconsin Pension Fund agrees with you.

The State of Wisconsin Investment Board made some big changes in some of its largest stock investments in the first quarter, a period marked with volatility brought on by the coronavirus pandemic .

SWIB, as the board is known, manages state trust funds that at the end of 2019 totaled more than $128 billion, 91% of which falls under the Wisconsin Retirement System.

SWIB sold Apple (ticker: AAPL), Microsoft (MSFT) and Intel (INTC) in the first quarter, and doubled its stake in ride-hailing firm Uber Technologies (UBER). It disclosed the trades in a form it filed with the Securities and Exchange Commission.

The Wisconsin Retirement System is the eighth-largest U.S. public pension fund and, by some measures, among the best. A study by the Pew Charitable Trusts using 2017 data found that Wisconsin had the best-funded state pension, with a funded ratio of 102.7%—meaning it had $1.03 in assets for every $1 in liabilities. The average state was only 69.1% funded, and only seven other states had a funded ratio over 90%. At the end of 2018, the pension remained fully funded.

While the article implies they sold AAPL, MSFT and INTC they just reduced their holdings and still hold a ton of those three stocks.

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bullzak

bullzak 421

Posted
Posted

Have to think just about any retailer that has been taken out by a PE firm is in huge trouble unless they are significant online players. 

The model is established. Lever the shit out of it and maybe exit big. 

Retail as we know it will be a smoking crater if this goes on another few months. 

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Buzzrock

Buzzrock 14918

Posted
Posted

My wife is still watching her cooking shows, and I gotta say the production value between a full crew and a couple of kids with iPhones is negligible. It still takes some talented editing, but shooting the footage in a well lit kitchen seems pretty effortless.

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Guest Lobo

Guest Lobo

Posted
Posted
5 hours ago, bullzak said:

Have to think just about any retailer that has been taken out by a PE firm is in huge trouble unless they are significant online players. 

The model is established. Lever the shit out of it and maybe exit big. 

Retail as we know it will be a smoking crater if this goes on another few months. 

It's not so much retail, it's the fucking moronic real estate plays they make.  People like buying stuff.  They even like buying stuff in person.  But the asinine overheard that goes into our purchases because of their idiotic need to have 3,000 square feet at a marquis intersection in a given market is beyond dumb.  When I look at pitch decks that say, "Coveted pad site within 2 mile radius of 7000 households with median income of $175,000".....developers just shit themselves in excitement and all I can think is, "Okay, so that's a demographic that gets their shit online, why the fuck do we need this physical footprint, aka eyesore?"  Retail developers are dead men walking, they just don't know it yet.  

Oh wait, they're all busy inventing "experiential retail".  I keep forgetting every single person in the industry is a visionary.  Let the adults handle this, y'all go back to sleep.

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Deej

Deej 76759

Posted
Posted (edited)
3 hours ago, Buzzrock said:

My wife is still watching her cooking shows, and I gotta say the production value between a full crew and a couple of kids with iPhones is negligible. It still takes some talented editing, but shooting the footage in a well lit kitchen seems pretty effortless.

Applies to porn, too.

Philip-Baker-Hall-Floyd-Gondolli-Boogie-Nights-150x150.gif

Edited by Deej
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Larry T. Spider

Larry T. Spider 1746

Posted
Posted
19 minutes ago, TonyTexas said:

Uber has  $11 billion in cash on the balance sheet. . But in 2019, they had almost  $5b  in negative cash flow. 

It’s this and that they have already played so many games to get more of the fare. They are running out of options. I don’t see them going away though because investors will keep throwing money at them.

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WBT

WBT 20561

Posted
Posted
3 hours ago, Larry T. Spider said:

It’s this and that they have already played so many games to get more of the fare. They are running out of options. I don’t see them going away though because investors will keep throwing money at them.

But why?  The business model has never made sense.

1. Take market share from taxis.

2. ??????

3. Profit

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Larry T. Spider

Larry T. Spider 1746

Posted
Posted
1 hour ago, WBT said:

But why?  The business model has never made sense.

1. Take market share from taxis.

2. ??????

3. Profit

They are foolish to give them money, but uber sees themselves as a technology company first and a rideshare company second. They sell investors on all these innovative ideas they have in R&D. They point to how they basically created the rideshare industry and took it world wide to build credibility that they can do the same elsewhere.

They also have an incredible amount of data about their customers. They know what your battery percentage is and that you will pay more for a ride when it’s closer to zero, amongst many other details. 

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Guest Lobo

Guest Lobo

Posted
Posted

Yeah, I can't believe the option to spend an extra hour getting a car and dropping it off in Boston for $90/day and parking it for $40/day didn't sustain itself in the age of a Navigator picking you up within a minute of leaving the terminal and taking you wherever you wanted for $19. 

Covid-19 didn't kill Hertz anymore than O.J. killed Nicole and Ron.  

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Dbeasy

Dbeasy 15047

Posted
Posted
But why?  The business model has never made sense.
1. Take market share from taxis.
2. ??????
3. Profit


I don’t understand why Uber can’t make money. All they provide is an app, a driver screening and signup process, and dispute resolution. They should have no problem making money.
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Blotto

Blotto 23497

Posted
Posted
58 minutes ago, Dbeasy said:

 


I don’t understand why Uber can’t make money. All they provide is an app, a driver screening and signup process, and dispute resolution. They should have no problem making money.

 

Uber was able to grow revenue rapidly without ever having to show a profit because private capital was happy to keep giving them money. At the end of the day, they get paid to move people from point A to point B. They didnt invent a fundamentally new mode of transportation or really change the cost of moving people. They just undercut the cost because they didnt have to give a fuck about making money doing it. They made the experience smoother at a lower cost, but once profitability becomes a concern, what's their long term moat? The technology infrastructure can be provided by a shitton of programmers in India and delivered to taxi companies as a SAAS solution on Azure or AWS. 

Self-driving autonomous fleets would change the game, but it's not clear they lead the industry in that potential (more so than Google, Tesla, Ford, MobileEye/Intel, etc...).  Until then their drivers still pay the same amount of money for gas, vehicles, insurance and Uber still needs their cut. Despite all the hype and potential for profit, removing the driver from the equation doesnt seem like a reality in the next few years. They may be able to squeeze their contract employees enough to eek out a profit, but I doubt they can squeeze enough to justify their current valuation. As pointed out above, they can probably hang around for years, but can they ever demonstrate the earnings that a $55 billion dollar market cap enterprise should be delivering? Can they do so while still having to pay drivers? I doubt it.

Reminds me of Groupon in a way. They tried to insert themselves between the consumer and service/product company and take their cut. They had huge hype, spectacular growth and a big IPO, but it became clear it was a business model that couldnt support the cut they had to take to take in the process. The consumer got a lower price (good for the consumer) but what value did Groupon ultimately deliver to their customers? Once you account for Groupons take, not much. If you raise the price on the meal, pottery class etc... the consumer loses interest, and if you don't raise price the vendor loses interest. Groupon has never turned a meaningful profit since they went public in 2011. The banks that took Groupon public made bank as did the VC's backing Groupon. But Groupon as a public company and most of their customers didn't fare so well. It was a technology platform in search of a market that as it turns out couldn't absorb the cost of the platform.

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Guest Lobo

Guest Lobo

Posted
Posted
1 hour ago, TwiceHorn said:

I'm not sure I'd equate filing Chapter 11 with going out of business, even in these times.

Thanks for explaining business.  I never said they were going out of business, was just trying to make an OJ killing/business killing joke.  Sorry, I'll be much more textbook about business next time on this thread.  It will be curious how their asset sheet of cars they've already generously written down depreciation on jives with cash flow.  Another fun fact, after Enterprise---these all-stars own more of their own pad-side real estate off airport properties than any other rental car outfit.  Their franchise model is bleeding them dry due to in-house financing (in some cases, not all).  But yes, their new app alongside the new Cutlass Cieras coming in next year should help turn things around.  ;)

I like watching the walking dead finally realize they're dead.  There'll always be a model for rental cars (car repairs, families on vacation that need a big vehicle for all the gear and to hit multiple sites, business travelers with the same need, et. al.).  But Hertz and others like them pass on the insane G&A burden of their antiquated model onto the 25% of travelers who still need rent cars.  We're all paying with each rental for what people did 15 years ago.  Nevermind their weird way of still purchasing fleet cars.  

Let 'em die, we got much bigger fish to fry during this current/coming downturn.  

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Larry T. Spider

Larry T. Spider 1746

Posted
Posted
15 minutes ago, Blotto said:

Uber was able to grow revenue rapidly without ever having to show a profit because private capital was happy to keep giving them money. At the end of the day, they get paid to move people from point A to point B. They didnt invent a fundamentally new mode of transportation or really change the cost of moving people. They just undercut the cost because they didnt have to give a fuck about making money doing it. They made the experience smoother at a lower cost, but once profitability becomes a concern, what's their long term moat? The technology infrastructure can be provided by a shitton of programmers in India and delivered to taxi companies as a SAAS solution on Azure or AWS. 

Self-driving autonomous fleets would change the game, but it's not clear they lead the industry in that potential (more so than Google, Tesla, Ford, MobileEye/Intel, etc...).  Until then their drivers still pay the same amount of money for gas, vehicles, insurance and Uber still needs their cut. Despite all the hype and potential for profit, removing the driver from the equation doesnt seem like a reality in the next few years. They may be able to squeeze their contract employees enough to eek out a profit, but I doubt they can squeeze enough to justify their current valuation. As pointed out above, they can probably hang around for years, but can they ever demonstrate the earnings that a $55 billion dollar market cap enterprise should be delivering? Can they do so while still having to pay drivers? I doubt it.

Reminds me of Groupon in a way. They tried to insert themselves between the consumer and service/product company and take their cut. They had huge hype, spectacular growth and a big IPO, but it became clear it was a business model that couldnt support the cut they had to take to take in the process. The consumer got a lower price (good for the consumer) but what value did Groupon ultimately deliver to their customers? Once you account for Groupons take, not much. If you raise the price on the meal, pottery class etc... the consumer loses interest, and if you don't raise price the vendor loses interest. Groupon has never turned a meaningful profit since they went public in 2011. The banks that took Groupon public made bank as did the VC's backing Groupon. But Groupon as a public company and most of their customers didn't fare so well. It was a technology platform in search of a market that as it turns out couldn't absorb the cost of the platform.

I don’t even think self driving cars would change my perception of uber too much. Right now they have a virtually unlimited fleet and they don’t pay for the vehicle, gas, wear and tear, insurance, etc. The current fleet fluctuates with need as there are more drivers out on New Years even and Halloween. 

With self driving cars they would have to purchase enough to meet the high demand times, which means they are sitting around most of the time. It seems expensive and inefficient. 

They are smart enough to think of a solution, but passengers are rough on the cars even with the driver in it. I can’t imagine what people will do when there isn’t one. Lots of bodily fluids going on. Right now uber has people that cleans the cars for free...

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Blotto

Blotto 23497

Posted
Posted
19 minutes ago, Larry T. Spider said:

I don’t even think self driving cars would change my perception of uber too much. Right now they have a virtually unlimited fleet and they don’t pay for the vehicle, gas, wear and tear, insurance, etc. The current fleet fluctuates with need as there are more drivers out on New Years even and Halloween. 

With self driving cars they would have to purchase enough to meet the high demand times, which means they are sitting around most of the time. It seems expensive and inefficient. 

They are smart enough to think of a solution, but passengers are rough on the cars even with the driver in it. I can’t imagine what people will do when there isn’t one. Lots of bodily fluids going on. Right now uber has people that cleans the cars for free...

I'm not sure I  that I agree that they don't pay for vehicle, gas, wear and tear etc.... as that all gets baked into the percentage of the fare that the driver keeps (approx 70%). Its just an indirect expense. If they choose to lower the fare percentage they kick back to their drivers, they risk losing their ability to deliver  the service they offer as drivers may find the opportunity not profitable enough to bother .  Once/if self driving becomes a reality, they can operate their fleet 24/7 and lower the number of cars on the platform, reducing the money spent on vehicles, insurance etc... (I'm making some assumptions on what their insurance costs would be for a fleet of CPUs vs human drivers that they indirectly pay for today). They will know exactly what their capacity is at any time without having to worry about Larry the Uber driver deciding a booty call is more enticing than a $12 fare to the Domain.  In any case, this probably isn't the ideal thread for this discussion, but I'm guessing we're both negative on Uber's near term profitability prospects. 

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TwiceHorn

TwiceHorn 31450

Posted
Posted
1 hour ago, Lobo said:

Thanks for explaining business.  I never said they were going out of business, was just trying to make an OJ killing/business killing joke.  Sorry, I'll be much more textbook about business next time on this thread.  It will be curious how their asset sheet of cars they've already generously written down depreciation on jives with cash flow.  Another fun fact, after Enterprise---these all-stars own more of their own pad-side real estate off airport properties than any other rental car outfit.  Their franchise model is bleeding them dry due to in-house financing (in some cases, not all).  But yes, their new app alongside the new Cutlass Cieras coming in next year should help turn things around.  ;)

I like watching the walking dead finally realize they're dead.  There'll always be a model for rental cars (car repairs, families on vacation that need a big vehicle for all the gear and to hit multiple sites, business travelers with the same need, et. al.).  But Hertz and others like them pass on the insane G&A burden of their antiquated model onto the 25% of travelers who still need rent cars.  We're all paying with each rental for what people did 15 years ago.  Nevermind their weird way of still purchasing fleet cars.  

Let 'em die, we got much bigger fish to fry during this current/coming downturn.  

Wasn't really directed at you. There have been a number of posts on this thread about going out of business mentioning Chapter 11.

For some highly leveraged companies, it may be a death rattle.

For some with questionable business models, same, especially if highly leveraged.  

For some, it's just a convenient way to hold creditors at bay until this shakes out.

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Dnaguy

Dnaguy 11943

Posted
Posted

Stage Stores filed for Chapter 11.

They're not coming back.....

I mean, maybe someone buys the assets. Take that back. Someone will buy it’s assets.

But the Houston based corporation with a buying office, etc. it’ll never be again.

 

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woohorn

woohorn 1131

Posted
Posted
For arguments sake, is a buffet less safe than table service? If so, why?  

 

 

 

Shared serving utensils. Substantially more movement among diners. I also figure some of the spread in jails and old folk homes is due to dining arrangements. Here's a video allegedly showing spread... 

 

 

 

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Aqua Buddha

Aqua Buddha 14590

Posted
Posted
4 hours ago, Dnaguy said:

Stage Stores filed for Chapter 11.

They're not coming back.....

I mean, maybe someone buys the assets. Take that back. Someone will buy it’s assets.

But the Houston based corporation with a buying office, etc. it’ll never be again.

 

Your wife works there, correct?

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Macanudo

Macanudo 12976

Posted
Posted
4 hours ago, Dnaguy said:

Stage Stores filed for Chapter 11.

They're not coming back.....

I mean, maybe someone buys the assets. Take that back. Someone will buy it’s assets.

But the Houston based corporation with a buying office, etc. it’ll never be again.

 

Not really all that shocking.    They've been struggling for a while and the niche for crappy, cheap clothing and limited home goods has been filled by Wal-Mart and Target.   

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Incredulity

Incredulity 11665

Posted
Posted
11 hours ago, Lobo said:

Yeah, I can't believe the option to spend an extra hour getting a car and dropping it off in Boston for $90/day and parking it for $40/day didn't sustain itself in the age of a Navigator picking you up within a minute of leaving the terminal and taking you wherever you wanted for $19. 

Covid-19 didn't kill Hertz anymore than O.J. killed Nicole and Ron.  

Don’t forget getting nickeled and dime to death over rock chips and the like.  Those motherfuckers tried to make a claim against my insurance for windshield and paint damage.  Checked me out the car in subterranean garage, checked in car in broad daylight.

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Guest Lobo

Guest Lobo

Posted
Posted
2 hours ago, woohorn said:

Shared serving utensils. Substantially more movement among diners. I also figure some of the spread in jails and old folk homes is due to dining arrangements. Here's a video allegedly showing spread... 

 

 

 

 

Fake news, viruses don't spread that fast.  You have to either be gay or black to have it spread like that.  Those people are neither.  

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Js1

Js1 85311

Posted
Posted
On 5/12/2020 at 2:13 AM, Dnaguy said:

Stage Stores filed for Chapter 11.

They're not coming back.....

I mean, maybe someone buys the assets. Take that back. Someone will buy it’s assets.

But the Houston based corporation with a buying office, etc. it’ll never be again.

 

That was one of my old clients back when I was in Houston. That sucks 

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Dnaguy

Dnaguy 11943

Posted
Posted
1 hour ago, Js1 said:

That was one of my old clients back when I was in Houston. That sucks 

as much as it sucks for Houston, it's really a blow to all the small towns that Stage serves.

Going to full off-price a la Burlington, TJ MAXX, etc seemed to be a way for it to survive... and then COVID.

Oh well. I guess everyone in small town America should get a prime account. It's Walmart or Amazon and that's it.

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Guest Lobo

Guest Lobo

Posted
Posted

That's not an unrealistic posit. CRE developing assholes are continuing to fund, and deliver, even now...millions of square feet of eyesores even uglier than their wives and country club back dues.  People do love a cheap deal at a Jimmy John's...but eventually they'd prefer their children don't live with the ill-planed, eyesore fuckups of the generation before them.

What the fuck do some people have against trees and streams?  

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GHOSTUSER

GHOSTUSER 361

Posted
Posted
19 hours ago, Lobo said:

That's not an unrealistic posit. CRE developing assholes are continuing to fund, and deliver, even now...millions of square feet of eyesores even uglier than their wives and country club back dues.  People do love a cheap deal at a Jimmy John's...but eventually they'd prefer their children don't live with the ill-planed, eyesore fuckups of the generation before them.

What the fuck do some people have against trees and streams?  

Jesus what the fuck did we in the CRE game do to take the jam out of your doughnut. I’m still leasing up space in new retail centers.

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Guest Lobo

Guest Lobo

Posted
Posted (edited)
16 minutes ago, Iconoclast Texan said:

Jesus what the fuck did we in the CRE game do to take the jam out of your doughnut. I’m still leasing up space in new retail centers.

Good, I'm glad somebody's doing well.  I just don't like eyesores, there's just a lot of empty space around me that's never gonna get filled, it's gonna trade and trade for a decade.  I don't really give a shit about the industry, I just don't like the eyesores that took more natural space around my part of Austin...just a old man yelling at clouds.  

One fun thing we're doing with our bank is you get in with the digital providers (Q2/Kasasa/Kony/et. al.) and them and the bank can't help but brag about how efficient they are and how they can reduce G&A and real estate burn (under the guise of buying their bank of course).  You marry that up with those local/state banks' leases with strip centers.  If they make up enough of the revenue from that little strip center in that tertiary market and you know they're so damn efficient that they won't need the space in another year or so (and again, the banks and their service providers are not hiding this intel-they're bragging about it).  So if the pad site or en-cap is enough of the revenue stream, and it's gonna be gone soon...you can tell if the whole project is fucked.  Now this isn't a huge deal for a truly massive urban strip center with 5 pads and 15 store fronts.  But some tertiary market that relies heavily on the bank for the one corner pad or the massive end-cap.  That could very well be 25% of the revenue.  you can tell almost to the month when that legacy lease is gonna get broken.  You can use that to pluck up land or you can also find out which ones are just big enough to have been bundled into public REIT's that you can short the shit out of.  This doesn't work as well for fabric stores or Subways going out of business, but think about the type of real estate owned by banks.  They tend to get the best spots for obvious reasons with hundreds of square feet of impervious cover for teller lanes and lobby parking.  Even in urban settings, look at how many skyscrapers USED to have banks on their bottom floors as a captive audience facilitator.  

Anyway, it's a niche move but SMALL/CFI banks went and overextended themselves on long leases in prime spots because that was their model.  When they're in trouble in terms of of overhead or nowadays that even their oldest customers are mobile banking because of ease of use/pandemics perpetually changing the way we think of the futility of branch banking in person.    

  But you pump enough drinks into their OCC regulators or pretend your bank wants to buy theirs, you find out who is shutting down a couple of branches to consolidate into an online branch to save cash.  They, or their tech providers will tell you as well.  You can start making interesting plays as those lease breaks send mid-size town strip centers into oblivion.  We're not shorting banks, we're shorting their stupid real estate overhead.  The best part is we're looking at branches that earn less than $15/foot.  The bank lending group itself wouldn't give you a loan for a business model that earns that much, yet their tertiary market CFI branch makes less than that and is propped up otherwise.  But hey, free pens and a personal touch phone call to tell you about exciting finance options when those new Pontiacs come in this Fall.  

Edited by Lobo
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