🏛️ Elon’s $420 trials

1. Elon Musk heads to trial over his infamous $420 tweet as regulatory tension brews

Lawsuit secured… Elon Musk is heading to court over his “funding secured” tweet. Refresher: in 2018 Musk tweeted that he’d secured funding to take Tesla private at $420/share. Turns out the funding wasn’t so secure. Another issue: Elon didn’t follow required SEC disclosure procedures. Regulators said Musk’s surprise tweet misled investors and caused Tesla stock to spike. Also in 2018, Elon and Tesla agreed to pay $20M each in fines to settle with the SEC (and Elon agreed to step down as chairman). But the chapter wasn’t closed there…

• Elon’s trial kicked off yesterday in San Francisco. The subject: a class-action lawsuit brought by former Tesla investors who said the $420 tweet lost them billions.
• Elon says he did talk to Saudi sovereign wealth fund execs about securing funding for a $72B Tesla buyout — but the cash turned out to be far from secure.
• Experts say it could be a hard case for Musk to win, with one judge saying no reasonable jury would find the tweet “accurate or not misleading.”

Stirring the pot… Elon’s tension with securities regulators and investors has been building for years, from calling regulators “bastards” over the $420 fraud charges to his slew of tweets about dogecoin in 2021. Now the billionaire could pay billions if jurors rule in shareholders’ favor when his trial ends next month.

THE TAKEAWAY

Private takes can bring public problems… Elon is boss of three companies (Tesla, Twitter, SpaceX) but Tesla’s the only one that’s public. That status comes with lots of responsibilities and expectations, both from regulators and from investors. Elon’s used to ruffling feathers and getting away (mostly) unscathed. But this trial could hit Tesla’s rep.

2. Younger consumers dominate luxury spending as social media fuels designer FOMO

Chanel? In this economy?... Apparently, if you’re under 40. Millennials and Gen Z’ers were responsible for all the luxury market’s growth last year, according to a Bain & Co. report. The luxe consumer is getting younger: Gen Z shoppers are starting to buy designer goods at 15 (3 years earlier than millennials). Think: Dior foundation, Cartier watches, and Moncler puffer jackets. The trend’s benefiting the industry’s biggest companies.

I could wear my Louis Vuitton… raincoat. The economic weather isn’t favorable, with soaring interest rates, slowing growth, and sticky inflation. Still, luxury sales have largely stayed shielded from the economic storm. Designer retailers like Louis Vuitton owner LVMH and Gucci owner Kering thrived last year as the strong US dollar put European goods “on sale” for Americans, while a surge in wealth creation has boosted spending.

• Vuitton index: LVMH shares surged to a record high yesterday, solidifying its lead as Europe’s most valuable company (its owner, Bernard Arnault, is also the world’s richest person). LVMH owns 70+ luxe brands, including Dior, Bulgari, and Dom Pérignon.
• Sticker shock: Thanks to strong demand, luxury labels can get away with big price hikes. Chanel’s classic flap bag now costs 60% more than it did prepandemic. Meanwhile, Rolls-Royce sold a record # of cars last year — at an average price of $534K.

THE TAKEAWAY

Luxury labels are social staples… Social media is driving a luxury spending craze among younger consumers who see designer staples as social-status symbols. Teens are ordering those Jacquemus mini bags they see in fashion posts and that Armani foundation that went viral on TikTok. It’s partly why younger generations are expected to account for 80% of global luxury purchases by 2030.

What else we’re Snackin’

• Brew: DoorDash is expanding its Starbucks delivery partnership nationwide (think: ordering a cold brew mid-Zoom call). Starbs, which already partners with Uber Eats, will get double delivery exposure.

• Aisle: Americans aren’t shying away from $500 Chicago-Miami round trips: United Airlines unloaded expectation-beating earnings thanks to healthy demand and pricey fares, which offset high fuel costs.

• SuitePT: Microsoft plans to integrate OpenAI’s generative AI tech into all its products, like Word, Bing, and Outlook (think: using ChatGPT to help you write emails).

• Slip: Goldman Sachs had its worst earnings miss in a decade after a deal-making slowdown led to a 66% profit hit. Morgan Stanley also saw profits slump, but was boosted by record wealth-management revenue.

• Chill: As the World Economic Forum kicks off in Davos, Switzerland, biz leaders and economists are warning of a global recession this year. On the plus side, tech giant ABB says the worst of the chip shortage could be over.

Snack Fact of the Day

Wednesday

• Earnings expected from Charles Schwab, Prologis, and JB Hunt

Authors of this Snacks own shares: of Tesla, Microsoft, and Starbucks

ID: 2684616