The WOLF STREET REPORT: What Unicorn Money-Sinkholes Actually Disrupted

Wayfair, Zillow, Uber, Lyft, WeWork, Carvana, Tesla, Airbnb, Casper Sleep, Zume, and many others – they all have accomplished an amazing feat: losing tons money year after year during the Good Times in mundane profitable industries.

By Wolf Richter for WOLF STREET.

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  218 comments for “The WOLF STREET REPORT: What Unicorn Money-Sinkholes Actually Disrupted

  1. andy
    May 17, 2020 at 9:27 pm

    To lose this much money, and get rich. They call it audacity.

    • nick kelly
      May 18, 2020 at 12:54 pm

      Dow up 900 on quick vaccine hopes.
      Professional (medical!) consensus: ‘optimistically 12 to 18 months and we may never have one.’

      • char
        May 18, 2020 at 1:28 pm

        We don’t need a vaccine. A good lock down and good surveillance afterwards can extinguish the virus. But for that you need good governance.

        • ewmayer
          May 18, 2020 at 3:48 pm

          No, such measures will slow the spread, but you can ‘extinguish’ the Covid-19 novel coronavirus about as much as you can ‘extinguish’ the common cold, roughly 1/3rd of which is due to infection and re-infection by other, less lethal coronavirus strains.

          Re. Stawk Markets, another couple months of these “markets rally on vaccine hopes!” days and the Holy DJIA, praised be its name, may catch up with the number of US Covid-19 fatalities. At which point Trump econ-advisor Kevin Hassett will surely feel inspired to write a sequel to his 1999 height-of-the-DotCom-bubble “Dow 36,000” masterpiece.

        • Wisdom Seeker
          May 18, 2020 at 6:09 pm

          Good governance? The only way you get good governance is to have a population that demands good governance. Oops.

          Absent that, you’d need a compliant rights-less population (plenty of examples) AND a government hell-bent on extinguishing the virus (China). And even China can’t do it.

          Awfully tough to convince all of the people to believe something when their livelihood depends on them not believing. Ain’t gonna happen.

          We could have all the hard-core science in the world, and it wouldn’t matter because we have the government we deserve, and the media we deserve. You could line up all the politicians and media end to end, and they will never reach an honest factual conclusion.

          COVID is revealing a lot of unpleasant truths.

        • char
          May 18, 2020 at 6:58 pm

          China can and is doing it. But it is important that you don’t let it get loose. Getting it back in its cage when it has infected 100k people in your country is much harder.

          Greece is an example until now of good governance.

      • WT Frogg
        May 18, 2020 at 1:33 pm

        NK: It’s amazing how massive doses of Hopium can cure a lethargic stock market ( casino).
        However, I think that a massive Fleet enema could be just what the doctor ordered. 😉😉

        Disclaimer: I am not a Doctor but I did stay at a Holiday Inn Express once.
        Stay safe

      • Bobby Dents
        May 18, 2020 at 2:02 pm

        Dow now down 100

      • Lisa_Hooker
        May 18, 2020 at 2:06 pm

        Dow up 900 on statement by Jerome on nationwide television Sunday night that the the Fed will apparently lend, and print if necessary, any amount. It’s digital. It doesn’t cost anything. No limits.

      • andy
        May 18, 2020 at 2:40 pm

        Well, if profits don’t matter why would pandemic matter. Fed prints, markets rise.

        • Thomas Roberts
          May 18, 2020 at 5:22 pm

          It’s not about profits, it’s about confidence; and, a pandemic makes a-lot of people shaky.

        • Bead
          May 18, 2020 at 7:27 pm

          There is no alternative

    • MCH
      May 18, 2020 at 5:33 pm

      Audacity of Hope you mean..

      Hope that no one notices that the company is screwing over the investors

      Hope that the investors continue to be idiotic and plow in more money so they can support the bad habit

      Hope that the current incumbents all go out of business so they can raise their prices later

      Hope that the consumers don’t realize how much of a deal they have on their hands and continue to slow burn their effort until the company can go IPO and rip off a different set of investors

      Ha ha, hilarious, read this note about Doordash’s effort to buy customers. It’s hilarious.

  2. May 17, 2020 at 9:31 pm

    All lost money, and I presume all will be elligable for a bailout, while the USPS will be allowed to dangle in the wind.

    • polecat
      May 17, 2020 at 11:26 pm

      .. along with us lesser mokes. I mean, after all .. who needs a functioning Postal Service, right ?? ..or the plebians it was once mandated to serve, when the high-tone Cloud People are tended, and fellatioed to by other means?

    • HD
      May 18, 2020 at 2:07 am

      Good thing that Carreyrou wrote his book when he did, otherwise you quys would also be on the hook for Theranos. Imagine that, an investigative reporter with guts and a spine in all the right places saves society billions of dollars. Might be a lucrative new job description: journalist-gatekeeper.

      • sdb
        May 18, 2020 at 8:23 am

        Theranos would be worth 100 B now by claiming they can confirm C19 from a single blood drop .

      • kam
        May 18, 2020 at 9:56 am

        These are the most visible of cash burners.
        I read financial statements all the time.
        More than 50% have no positive cash flow, hence, the increasing touting of EBITDA.
        But after accounting for real depreciation, depletion, amortization, and capital replacement, EBITDA disappears.

        • cb
          May 18, 2020 at 12:47 pm

          Good for you. EBITDA is a complete joke and shouldn’t even be a reference point, yet it is a mainstay of much financial reporting. It just shows the devolvement of common sense and ethical reporting.

        • char
          May 18, 2020 at 2:38 pm

          You get negative cash flow if you have a little to much share buybacks.

    • Harrold
      May 18, 2020 at 10:06 am

      Can’t vote by mail if there is no USPS.

      • Cas127
        May 18, 2020 at 10:22 am

        You don’t need the USPS if a certain party is just going to invent votes anyway.

        On the other hand, invent-a-vote will at least spare us from the perpetual “late voting”/”just found a some more vote boxes” way of life in the one or two dozen Dem machine metros (looking at you south Florida, Philadelphia, Chicago, LA, etc).

        • Harrold
          May 18, 2020 at 11:51 am

          *yawn*

      • joe2
        May 18, 2020 at 10:27 am

        Facebook will step up to handle voting. Of course it will block votes it deems fake or misguided or wrong.

        • char
          May 18, 2020 at 2:42 pm

          Google had as unofficial motto: Don’t do evil

          Facebook unofficial motto is DO EVIL, WITH GUSTO

      • VintageVNvet
        May 18, 2020 at 11:35 am

        This is true Harrold, and the possibility of ”vote harvesting,” by any name is not a good thing to contemplate; OTOH, I remember well the days when the very liberal republicans AND very conservative democrats who actually ruled the area I grew up in would drive to ”the quarters” by any name, pick up the voters, drive them to the polls and made sure they voted, then drive them to the liquor store on the way home, with the clear understanding that they could get any single bottle of booze, gratis…
        Otherwise, these voters were not allowed anywhere near either of those places,,,
        So what exactly has changed in the last 60 years??? LOL Both of these antique ”parties” have been doing this kind of stuff for eva,,, and just another aspect of why they both need to go away once and for all…
        ”Clean House, Senate Too!!!”

        • Lisa_Hooker
          May 18, 2020 at 2:12 pm

          Too expensive. Simply have dead registered Democrats vote. Chicago solved this problem long ago.

        • WES
          May 18, 2020 at 3:10 pm

          Lisa:

          That is why Mark Twain said the only proper way to bury a Democrat, was face down!

          That way on election night they couldn’t dig themselves out!

        • char
          May 18, 2020 at 4:55 pm

          WES:

          Democratic party was a different party back then. republican too. The demographics of their voters have reversed

    • Canadian
      May 18, 2020 at 11:16 am

      I doubt any unicorns will get bailouts. I wish I could say the same for the Post Office — a Chapter 11 restructuring with a cleanup of management and wipeout of old stupid debts would do it a world of good.

      • Bead
        May 18, 2020 at 7:32 pm

        Just make Bezos pay more to ship via the US mail. If he complains break up his monopoly.

        • Canadian
          May 19, 2020 at 9:49 am

          Bezos will just bypass the USPS and revenue will further plummet, accelerating the USPS’s demise.

          Nobody can force someone to pay more for something than it is worth. Not even a government monopoly.

          Though the use of antitrust law as a “strongarm tactic” to gain leverage than as a protection for competitive markets is certainly in keeping with the current lawless era within which we find ourselves.

  3. 2banana
    May 17, 2020 at 9:41 pm

    “It’s going to be a doozie”

    New mug?

    • May 17, 2020 at 10:57 pm

      Noted :-]

      • Erle
        May 18, 2020 at 2:27 am

        That was masterful. It is a pity that you limit your time on this.
        You made it clear that the wreckage goes far beyond the investors in the junk. I have to feel very sorry for those in legitimate businesses that will go down with the unicorns. I suppose that they just didn’t have the same spigot of phony cash as did the darlings of the FED and the stock jobbers.

        • kam
          May 18, 2020 at 9:59 am

          Without the FED financing Wallstreet with the U.S. taxpayer’s implied guarantee of the Fed’s Credit Card, NONE of this cash-burning would be possible.

      • VintageVNvet
        May 18, 2020 at 11:43 am

        Glad to see that VG motto noted 2B and Wolf:
        I am looking forward to the purchase of at least a pair of mugs of at least 3/4 Litre ASAP,,,
        and, if I manage to stay alive, awake, and ready enough (to take care of some more delicious daily doses of WS and appropriate ”liquidity”,,,) another set of mugs of at least one full litre after that…
        Both sets, or at least the first, would seem to be needing a LOT of very straight lines down the outside of each mug, along with another of the wonderful graphics by Kitten, and the corresponding motto of course.
        Thank you again for the continuing education!!

      • Lisa_Hooker
        May 18, 2020 at 2:15 pm

        “Hope lasts longer than your money.”

    • caticorn
      May 18, 2020 at 10:38 am

      2banana,

      Yet another—‘Debt out the Wazoo’

    • OutWest
      May 18, 2020 at 1:13 pm

      “It’s going to be a shakedown like we’ve never seen before”

      A quote from my spouse last night.

    • In NoVA
      May 18, 2020 at 4:53 pm

      Hmm I work for a Softbank funded company… and I bought a mug a few months ago. So I suppose in theory there is a tiny bit of Softbank money in the Wolfstreet mug biz :-)

  4. Bill Cornell
    May 17, 2020 at 9:51 pm

    Many of them will fail next year (although, sadly, Tesla probably won’t join them). AirBnB is kaput after this – who would travel, let alone stay in some random house or apartment.

    But… they’ll be back in different guises before long. The sole reason is low interest rates. Investors will continue to gamble on these stupid experiments because what the hell else are they going to do with their money?

    • MM
      May 18, 2020 at 1:13 am

      I know there’s not a lot of love for Tesla on this site, but I don’t think it belongs in this list. I think the stock is overvalued, but it makes real, innovative products, unlike the other unicorns mentioned.

      • May 18, 2020 at 1:31 am

        MM,

        Tesla makes cars. EVs have been around since the 1800s. Functional ICE cars have been around since the early 1900s. Tesla is in a mundane profitable industry. And Tesla extracted another $2.3 billion from investors in Feb 2020 by selling more shares, to have more money to burn through. In its entire existence, it never had a profitable year. It has been burning billions of dollars year after year. It totally belongs on this list.

        • Phoenix_Ikki
          May 18, 2020 at 2:25 am

          At this point, $2.3 billion from investors so their sun god name EM can continue to go on more tirade on twitter. Selling a cult of personality is a good business as long as people are buying the hype and so far they are eating it up good.

        • roddy6667
          May 18, 2020 at 2:45 am

          VW just started selling an EV, the ID.3 for $33,000. One variant has a greater range than the Tesla Model 3. You can walk into a VW dealer and drive it home.

        • Tim
          May 18, 2020 at 6:30 am

          I think you mean Phoenix_Ikki that they will continue to buy it up until they have no more money left, even to eat.

        • Harrold
          May 18, 2020 at 10:11 am

          You can’t buy an ID.3 in the United States.

          So, I guess $33k is a good price.

        • CRstophr
          May 18, 2020 at 11:20 am

          Wolf,

          It is easy to agree with every point you make on Tesla and it is Wolf’s list.

          Certainly, Tesla may be doomed – when and if the “phunny money” actually ever “phails”.

          The “phunny money” actually DOES ever “phail” and DOES always “phail”. Yet the pool of “phunny money” is kept ever liquefied by continual replacement injections and occasional incantations in the vicinity of the “greed-stone” talismans.
          Thus, it seems that a hydra-like group of “well-springs” never dries up – greater fast money, greater fish money, greater fool money, greater FED money. The outpourings of these “phonts” are infused with highly distilled essence of fractional reservedness and essence of socialized loss abatement offering virtual immunity to the “healthier and hardier investors”.

          Surely, it would be far more impressive if Tesla successfully boot strapped a real enterprise in a rail/rust-belt city like Baltimore, Cleveland or Pittsburgh.

          Surely, it would be far more impressive if Tesla and SpaceX didn’t look like a 21st century remake of the real Howard Hughes story. But then how would all of the other “stag spirits” be rallied and encouraged to participate in the creation processes of other unicorn nesting sites and hunting grounds?

          Personally, I won’t be caught in a Tesla Model . for technical and “optics” reasons. I will however, admit that greater fools abound and can often perform for me a useful service.

          So as much as I agree on a purists level of the technical and scholarly. I do believe that Tesla will continue to exist as long as it is a “useful asset” to some.

        • MM
          May 18, 2020 at 1:03 pm

          Obviously the EVs Tesla makes are not comparable to those of the 1800s, nor to the various wimpy options available before Tesla. There has been some real innovation here. ICE cars needed to be disrupted; in a sane world this would have been pushed much more by policy, but at least we have something.

          While Tesla’s finances are … aggressive, shall we say, its profitability is a bit more complicated than eg Uber. It HAS had profitable quarters, and has deliberately decided to go negative again, usually to produce the next model.

      • MC01
        May 18, 2020 at 6:21 am

        Casper Sleep also makes products every bit as innovative as Tesla’s: decades old technology with a new wrapper.
        In fact Tesla’s technology is actually older than Casper’s: the last Baker Electric rolled off their Cleveland factory in 1914 while the foam mattress was patented by Dunlop in 1929. And to be honest the Brass Era was full of NEV manufacturers, using both electric and steam engines. The Owen Magnetic even replicated in a tight package the hybrid electromagnetic drive used on US Navy battleships of the era, no mean feat of engineering.

      • polecat
        May 18, 2020 at 10:45 am

        It’s as if the Muskoxen was ready made to be spirited off to LV426 .. for the good of the Company, but to be tested first on Terra, so as to determine if it’s directives by those ‘acid-for-blood’ alien Cloud People hold true .. or, conversely, if it’s ”gaming over man-Gaming Over!’

        • BuySome
          May 19, 2020 at 12:04 pm

          Wake up Ripley, it was all just a deep space dream. The courts finally woke up and ruled corporations are not limitless lifespan individuals with all rights and no responsibilities. They’re dead. Now, be a good Betsy Ross ’cause we’ll need you to sew a flag showing a snake consuming it’s own tail. And a motto that says “Don’t ‘spread’ on me”.

      • Canadian
        May 18, 2020 at 11:17 am

        Tesla loses money making cars, just like Uber loses money providing taxis and Casper loses money making mattresses. All important businesses, all with innovations. None with a penny of annual profit.

        • char
          May 18, 2020 at 4:31 pm

          Tesla is like Amazon before AWS. They don’t want to make money but grow the business. Uber looses money because their business is in essence loss-making

        • Canadian
          May 19, 2020 at 9:53 am

          Tesla is nothing like Amazon.

          Amazon is a services platform. Tesla is a capital-intensive manufacturer.

          The stunt of unilaterally ignoring health laws at Tesla is what happens when a company that makes physical products at a loss runs into reality.

          Eventually, I expect that Tesla’s flaunting of the law will include safety and roadworthiness directives, pollution controls, and any other pesky laws that Elon Musk decides he doesn’t like… And of course, he will get away with it for a while. Until the company runs out of greater fools in the investor and lending community and succumbs to better designed, more affordable vehicles from GM, Ford, Honda, Nissan and VW that are on their way in the next couple of years.

          Sold at a profit, too.

        • char
          May 20, 2020 at 5:55 pm

          Amazon is a very capital intensive distributor. They, like Tesla have a pay back horizon of a decade or more.

          A first generation car is hard to sell at a profit. I doubt Honda will make money on their first generation. Ford is selling itself to VW and GM,Nissan & VW lost money on their first few generations of EVs. The current range of EVs are good enough and from now all battery improvements will be put in lowering the production price. Which can lead to much more profit and/or lower sales price.

      • Bruce
        May 18, 2020 at 2:18 pm

        MM – One thing to keep in mind is how much money Tesla makes selling the pollution credits. If that were to get stripped out, the loss percentages of sales would be even worse than it is.

    • VintageVNvet
      May 18, 2020 at 6:34 am

      Not so fast on the airbnb part BC,
      Friend abnb’d their house ( and stayed in a tent themselves) to earn money for their own special vacays,,, and each time had their house professionally cleaned before and after the abnb.
      Seems to me that there will be ratings for all the places, including ratings for the professional cleaners so that potential renters can make their own decisions???
      Such ratings, that have already started in various forms and venues, will also become much more prevalent for all kinds of lodgings, from ritzy to camping locations, eh?

      • Lisa_Hooker
        May 18, 2020 at 2:25 pm

        Like the bond rating agencies, the cleaners will end up being rated by the owners that pay the cleaners. That worked out well. aff. Libor interest rate.

    • char
      May 18, 2020 at 3:02 pm

      Tesla is a profitable company in essence. Just wildly overvalued. And they use that overvalued stock to invest in their Denso. Which makes some financial sense in the long run. Not that Tesla-Denso would be highly profitable but it does increase profits somewhat and it increases the moat around Tesla. Tesla is a bet that batteries will continue to drop in price. Batteries are the biggest costs of an EV. So if they drop in costs by 50%, which is not an unreasonable thought, then a no profit car becomes a highly profitable car.

      But breaking the lock-down is one of the most stupid things Musk could have done. It shows him, and Tesla, as somebody that does not give a thing about other peoples life. It removes all the green image it had

  5. May 17, 2020 at 9:59 pm

    $PTON is looking a lot like Tesla at the moment

  6. CCC
    May 17, 2020 at 10:00 pm

    Wolf. I love these podcasts. Great work!

    The whole thing reminds me of 1999 when I worked for a company in the Bay Area called Portera, which died shortly after that. They had started as an online project management software company and they had decided the next step was to move into bookkeeping/accounting for small businesses online. The whole industry was talking about “monetizing the eyeballs” and I kept wondering how we were going to do that if we were going to take a low cost bookkeeping business and move it online. Would the fact that the companies had to scan their receipts to us instead of handing them to us let us monetize more eyeballs? It seemed like a long shot so I left a few months later.

    They died shortly after that so it seems like the right decision. The only thing I regret about that time is not sinking everything I had into Amazon. At the time they just mailed you books.

    • Christopher
      May 18, 2020 at 9:36 am

      Do you still remember the “God, just one more bubble please!” stickers after 2001?

      These days fell so much like 1999 – FED pumping money and tech stocks taking off.

  7. CCC
    May 17, 2020 at 10:22 pm

    And I may or may not work in the healthcare industry now and Covid cases have stubbornly stopped falling. Before we have really “opened up”.

    • Erle
      May 18, 2020 at 2:36 am

      It may be that the hospital rackets will figure out that they can peel off layers of accumulated bunions of administration. The same for “Health Insurance” companies. Bye Bye to layers of higher education barnacles and shipworms. There is a permanently lost tax base to feed them.

      • joe2
        May 18, 2020 at 10:33 am

        Dreaming. Administrators and bureaucrats do not go easily into that good night.

    • MC01
      May 18, 2020 at 4:28 am

      That’s not what we’ve seen here over the past month (since we slowly started re-opening) but every place is different.

      What’s not different is the fact this epidemic doesn’t go to zero new cases in a nice straight line like the OMS/WHO and the Chinese government wanted us to believe but seesaws lower, hitting plateaus as testing capacity builds up and then you get a long tail of isolated cases and localized clusters for months. In short not even epidemics go to heck in a straight line.
      Over the past few weeks new cases here have been overwhelmingly of the “German” kind, meaning mild or even very mild in nature: hospitalization is not needed in these cases, just home quarantine and careful testing, albeit to rule out false negatives tests need to be repeated to avoid another “re-infection” scare.

      The big problem right now is predicting how this stuff will mutate. While now we have reliable data for the past three months or so (including many livid scare pieces on “super-aggressive” strains apparently able to defy gravity) we lack all the baseline data, meaning the genetic data from the original Wuhan outbreak strain. The data we got from China back in February was less than worthless, and apparently had been tampered with, and it has now transpired the Chinese government ordered all Covid-19 samples held in non-military research and medical facilities to be destroyed on January 3 already, no doubt to prevent genetic data to be shared with foreign research partners.

      I am honestly surprised we are allowing all the folks responsible for this fiasco to get away with it, not so much because there needs to be justice in this world but because I tremble at the thought of what else this motley assembly of buffoons and murderers have in store for us.

      • Javert Chip
        May 18, 2020 at 7:23 am

        You may thank various ideological USA politicians and a compliant press.

        What’s a 100,000 extra dead folks (they were gonna die some day, anyhow) if that’s what’s required to bring you the “New Normal”?

        • jm
          May 18, 2020 at 9:10 am

          No, they won’t die someday anyway, if we get a vaccine or effective treatments, and people wear masks until that time.

        • MC01
          May 18, 2020 at 10:35 am

          I don’t get your point.

          My point is we, the people, must demand accountability from all parts involved, because those responsible are already trying to snake their way out of it, meaning they know what they did were not mistakes in good faith.
          Think about the OMS/WHO. They are now pledging they will launch an internal investigation over their handling of the crisis… are they serious? And much more critically are we going to let them get away with a “mistakes were made” report?
          Or think about my local healthcare system. It used to be one of the best in Europe and the best in Italy. Not anymore.
          Now we know the crowded hospital waiting rooms (completely free healthcare for all those over 65 no matter how rich they are) after the alarm was sounded on January 31 were the prime vector for the virus. Who’s responsible? Why weren’t the existing epidemic protocols to eliminate crowding activated? “A series of unfortunate circumstances” won’t work this time around.
          And why are the “post-emergency” Covid-19 wards being quietly scuttled? The money’s already there and we know that piling patients together like we (and NYC) did early in the crisis means a death sentence for far too many innocents. We need to be ready for another emergency, as the saying goes better safe than sorry, so why scuttle those contingency plans? Is there a better plan? If so what is it?
          I could go on for a decade, and if I live that long I probably will.

        • Bobby Dents
          May 18, 2020 at 2:25 pm

          You do realize it mutated coming out of Asia to a more infectious, in that regard, the WHO never had a chance. SARS generally mutate twice. Wait until the 20-40 year old club start dropping faster this fall/winter before it dies out completely.

        • MCH
          May 18, 2020 at 5:51 pm

          @MC01

          Remember, the WHO are not run by a bunch of politicians, you must trust the WHO because they are data driven, run by healthcare professionals, doctors, and scientists who have your best interest at heart. Listen to them, they know what they’re talking about. *end sarcasm*

          The funny thing about the science is this, it’s all about hindsight, in hindsight, obviously this was a pandemic, the data supported it. Of course, after a few hundred thousand people around the planet gets infected, and a monkey scratching his balls in a zoo while hurling his poop at the passerby could’ve predicted it was a pandemic too.

          The rest is noise, as for accountability, go ahead, make China accountable, see how you like it without your cheap consumer goods. (That is always the implied threat)

      • joe2
        May 18, 2020 at 10:40 am

        I agree with you for what it’s worth. But nothing new under the sun. It’s not a lack of intelligence in the human species as many think. Intelligence just gives you an edge in the savage combat of nature. Everything is a weapon and every weapon will be used.

        • VintageVNvet
          May 18, 2020 at 11:53 am

          Beg to differ J2: IMHO, it IS not only a”lack of intelligence” in our species, but, perhaps even more damning, it is what now appears to be an intentional ”dumbing down” of most of us.
          Being a teacher in two high schools in the mid 1980 era was a very educational experience for me, if for no other reason than to see many of the kids who resisted, by any and every means they could, the indoctrination and warehousing being mandated to make daily boredom and subsequent ”turning off” SO prevalent.
          My fave example is the ”celebrity” who was quoted as saying something like, ” ‘murricans are SO dumb,,, their IQ is, like, 99.”

      • Social Nationalist
        May 18, 2020 at 2:24 pm

        I don’t quite agree. China’s cased “unofficially” peaked at 3 million and 100000 dead. It was pretty quick up and down. They just live in a different kind of society that think tribal.

        • BuySome
          May 19, 2020 at 12:42 pm

          Aha! Yes, the old war. East meets West. Importance of the individual versus survival of the group. One man-one farm or one tribe-one nation. The first battle of ideologies fought on American soil. The second played out around Pearl Harbor and Midway. Where comes the next? Another battle or the whole war settled at once? Or should we agree to finally disengage when the only sure winner is always a little bug? The great dilemma for our small minds.

      • char
        May 18, 2020 at 4:48 pm

        The seesaw is the normal behavior of epidemics. WHO has two target audiences. Doctors and the general public. What you are claiming as straight line down lie is something no doctor, let alone an epidemics specialist would believe. They know from experience that it always goes down in a seesaw. So you are mistaken the message to the general public, which has always an undertone of everything will be okay, to those to the medical community which was correct for the knowledge at that time.

        • Wisdom Seeker
          May 18, 2020 at 6:21 pm

          NOT correct given the knowledge at the time.

          Plenty of coverup in December and whitewashing since January.

          Wuhan turned into a Potemkin village of carefully generated faux data while millions were infected and tens of thousands died.

          I’m with MC01. I can’t even begin to tell you how disgusted I am.

  8. Shiloh1
    May 17, 2020 at 10:31 pm

    Hi Wolf. Is there a way to tell how much share price increase of any of these in past 6 – 7 weeks is due to short covering?

    Love the use of the word “bamboozle”. Used to hear it in context of infamous Chicago Cubs trades, like when Lou Brock and Lee Smith were dealt.

    • May 17, 2020 at 11:00 pm

      Shiloh1,

      Yes, there was a lot of short-covering going on. Some of these stocks were among the most obvious shorts, and among the most shorted. But I don’t think anyone can say what percentage of the price surge was due to short-covering what was due to other reasons.

  9. MonkeyBusiness
    May 17, 2020 at 10:31 pm

    Thank you Federal Reserve!!!

    Well at least they are trying their best to maintain full employment in the tech industry that is.

    • Phoenix_Ikki
      May 18, 2020 at 12:16 am

      You gotta thank Uncle Jerome again for his 60 mins interview. The guy is on a media tour now to let the world know he won’t turn his back on the stock market ever. Assured the market the FED is not out of ammunition anytime soon and market ate it up like a 3 year old on ice cream binge, aftermarket up close to 300 pts now…guess another bull day tomorrow. Those promises are more effective nowadays than actually printing out more money, guess the FED is learning after Trump’s playbook afterall. Lip service go a long way..

      • May 18, 2020 at 9:42 am

        More misinformation. If you didn’t know how the Fed works and you watched you know even less. JP looked scared and disheveled. He seemed all over the place, but programmed ignorance is an effective means of governance, which explains the ascendancy of Trump. My lawyers make their lawyers look bad, and the law is an ass. The market goes up the next day after the hot scared money around the world sees a casino with no rules, no oversight, and leaders willing to do anything to make sure the bettors get 110% ROI. American investment titans like Buffett have cashed in their chips. Meanwhile they bitch about China, while foreign money is holding this up. One consistent theme in GFC was corruption which is the downside to throwing trillions of dollars at Wall St.

        • Phoenix_Ikki
          May 18, 2020 at 1:45 pm

          Yup totally agree with you but this cocktail of misinformation and vaccine/FED optimism sure is paying off big time to the start of this week that’s for sure.

        • sunny129
          May 18, 2020 at 4:38 pm

          ‘programmed ignorance is an effective means of governance, which explains the ascendancy of Trump’

          well said!

          Mr. Powell jaw boned with the statement that we have ‘all the tools’. Without hesitation, he added ‘we create digital money’ (out of thin air)
          Next on the 4th bubble as a cure to previous 3! Hurrah!

  10. Flying Ryan
    May 17, 2020 at 11:17 pm

    $45 Billion in Saudi Arabia head-chopper money funded this Vision Fund joke that funded this start-up garbage. These start-up CEOs are merely “dream-sellers” who sell a dream in a power point presentation.

    • Javert Chip
      May 18, 2020 at 7:31 am

      Softbank didn’t start the start-up garbage; they simply figured out how to make the losses faster & easier. This is investing for people who don’t understand investing.

      Now it’s gotten even better: venture capitalists for people who don’t understand capital.

  11. BoyfromTottenham
    May 17, 2020 at 11:20 pm

    Great report, Wolf – thanks from down here in Oz!
    I may be old fashioned, and forgetting about the investor side of things for now, for a business with ‘just an app’ to lose very large and increasing amounts of money year on year, its costs must be clearly rising much faster than its revenue, and this seems to be a deliberate act, rather than simple incompetence. Does nobody read the annual reports of these companies and discover that, say, the executives are robbing the business blind? Or are these reports so fake that even a careful reading doesn’t set off alarm bells? Or as you seem to suggest, have investors really suspended their disbelief and are piling in to a ‘new business model’ based on wishful thinking on steroids? Any thoughts?

  12. polecat
    May 17, 2020 at 11:35 pm

    What ! People are shocked that there be conjurers within our midst?

    A sucker born, is an IPO unearned yet unscorned … so sayeth our betters!

    • lisa2020
      May 18, 2020 at 7:34 am

      Two thumbs up.

      You get a gold star for the day.

      You have summed up the new business model that Wolf was presenting from the more rational perspective.

      You nailed the real and really totally ancient non-GAAP business model.

      AND, you did it in right under 25 words!

  13. Raymond Rogers
    May 17, 2020 at 11:35 pm

    I’m wondering if these are debts that will break the CLOs. These ratings agencies dont want to look like Lehman back in the day, and there seems to be quite a few downgrades as of late. When the whole makeup of the clo is officially rated as junk is that when things really head south?

    • Erle
      May 18, 2020 at 2:41 am

      The good thing is that the FED has stated that it will buy the bonz and effluvia of the fallen angels based upon the previous prices before the yorked up their lunch.

    • sunny129
      May 18, 2020 at 5:02 pm

      Don’t worry. Fed will create new ‘digital’ money out of thin air and buy them ALL! No one is allowed to fail or go bankrupt.
      The ‘new’ normal in American economy, managed by Fed!

      Everything has been going up since last Tuesday – ETFs of IG, HYG, JNK even SJNK, Angels (ANGL) Fallen Angels (FALN). This was openly declared, days ahead by Fed!

  14. apm
    May 17, 2020 at 11:42 pm

    What happened to antitrust enforcement, or better to say, how is this legal? Isn’t this the classic anti competitive behavior of the rich investor who has tones of capital to burn willing to sell under price to drive the smaller business out of existence, not because they have a better product, but because they simply can burn through cash for longer. And if you burn enough cash, you can gain a monopoly, at which point you can finally make money as a monopolist.
    If these companies were only “scaming” their investors into burning their money, it would be one thing. But it is also hurting/disrupting all of these other (small) businesses, as how is it possible to compete against limitless cash burning as a small business?! Wasn’t that exactly what antitrust laws were designed to protect against?

    • May 18, 2020 at 12:23 am

      apm,

      “antitrust enforcement…”???? 🤣🤣🤣🤣

      • BuySome
        May 18, 2020 at 1:04 am

        Wow! Covered all that without even having to stop for a glass of water on the podium…quite amazing. So it appears that “E Pluribus Unum” is just code for “Well sanctioned combination in restraint of trade”? Can I play too!!?

      • lisa2020
        May 18, 2020 at 7:43 am

        The FTC is dead, in the middle of the road, and keeps getting fan caked with mud. A few people love their creation. A lot don’t like the taste or the smell.

        • sunny129
          May 18, 2020 at 4:48 pm

          All REGULATORS are captive to those they regulate, starting with FAA & BA!
          This is not a BUG but regular practice, for decades!

          Btw; They all selected from the very same industry, they are supposed to regulate. If one is for aiming for a cushy job/consultant in that industry, would you bite the hand which is going feed you, later, once your stint with Govt is over!?

          Revolving door tradition kept alive by both parties, with no shame or accountability. Of course no outrage or protest from the public ( either ignorant or comotosed!)

          America – the best democracy money can buy!

    • kate sweat
      May 18, 2020 at 2:22 pm

      Is that the point – killing off any competition?

      • BuySome
        May 19, 2020 at 12:52 pm

        When you build a farm in a place with no trees to make into fence rails, the simple solution is to kill all the other neighboring farmers. No one cares that you don’t till the soil and produce crops because now you are Land Rich Gentry. Just forge a few signatures and pay off the filing clerk.

  15. California Bob
    May 17, 2020 at 11:58 pm

    Shouldn’t the shale oil scam be in the list?

  16. DR DOOM
    May 18, 2020 at 12:06 am

    I wish them all continued success in future losses. These companies will be remembered and will be the examples of the great economy of the US post WW2. Wharton and Harvard will grant PH.D.’S on the study of what makes them great. They will be extolled in the lofty perches of academia of what is possible in Keyenesian Economics if foresight,planning and executive management merge to deliver the synergies of the fiat system. This is a triumph for man-kind, a new way forward . This is the triumph of the genius of the central bank and the constant toil of the American political system to be able to deliver this extraordinary result. This is the is the American Dream.

  17. Short_Seller_Blake
    May 18, 2020 at 12:09 am

    After detained, Bernie Madoff said it best, “If you think I’m running a ponzi scheme, what about the whole american economy? It’s the biggest ponzi scheme in history?”

    If there’s one thing Madoff is an expert in, it’s ponzi schemes. The stock market is a sickening JOKE.

    • paul easton
      May 18, 2020 at 1:46 am

      American ingenuity can’t be beat. We not only pioneered the simulated economy, but we figured out how to think of it as real!

      • DeerInHeadlights
        May 18, 2020 at 6:55 am

        So true.

    • roddy6667
      May 18, 2020 at 3:02 am

      Bernie is in jail because he didn’t have a printing press for money. The government does.

      • Harrold
        May 18, 2020 at 10:20 am

        Bernie’s crime was that he stole from the rich and powerful.

        • DeerInHeadlights
          May 18, 2020 at 12:45 pm

          Exactly. That’s why Pharma Bro also went to jail.

    • jm
      May 18, 2020 at 9:16 am

      No. A Ponzi scheme produces nothing of value. Do you think the US economy produces nothing of value?
      Another Madoff lie.

      • DeerInHeadlights
        May 18, 2020 at 12:49 pm

        Sure, it’s an exaggeration to say that the U.S. economy produces nothing of value. But what would you call the off-shoring of jobs and the financialisation of the economy in the last 2-3 decades? When FIRE dominates the economy, it results in precisely the decline we’ve seen in manufacturing and real industrial production.

      • char
        May 18, 2020 at 5:10 pm

        ” A Ponzi scheme produces nothing of value. ”

        That is not the definition of a ponzi scheme. There were Ponzi schemes that did definitely produce things of value. The main definition of a Ponzi is that the profit of old investors come out the inlay of new investors.

        See for an example Bitcoin. It does have some value as a payment method for ransom software but the profit of old investors come near complete out of the inlay of new investors

  18. Anthony
    May 18, 2020 at 2:28 am

    One way of really seeing how bad Uber is doing, if you live in a city, just turn the Uber app on and see how many ubers are driving around,,,,,My own city of Manchester UK normally has 60,000 university students hanging around until June, at the moment none. In the summer we also get thousands of international students coming to learn English…… Tick tock….

    • California Bob
      May 18, 2020 at 10:40 am

      I have both the Uber and Lyft apps. In my California Central Valley town the in-service Lyft drivers always outnumber the Uber drivers by a factor of 2 or 3 (the Uber drivers might be double-dipping). Don’t know what that means except, possibly, that driving for Lyft is preferable somehow.

      • char
        May 18, 2020 at 5:16 pm

        Two options.

        The lyft app is lying. Knowing those companies totally and completely unbelievable. I’m not saying that on advise from my lawyer.

        Drivers prefer Lyft where you live.

  19. andy
    May 18, 2020 at 2:52 am

    Its amazing how much money you can waste when money is free.

  20. V8
    May 18, 2020 at 3:11 am

    Agree with Anthony – all University cities in UK now have same issue.

    None will be open before September and will the students actually come back this year….

    • Tim
      May 18, 2020 at 6:41 am

      What proportion of courses actually need more than 4 weeks of face-to-face time over the course of each semester?

      How many courses are only 5-6 hours of taught time and the rest ‘self-directed learning’?

      Would it therefore be not more efficient for staff and students only to be around for those types of focused periods. Much cheaper on the old accommodation front of your son or daughter only has to be on campus for 8-12 weeks a year and can do the rest of their assignments over the internet.

      • Harrold
        May 18, 2020 at 10:22 am

        All of the hard sciences require lab time.

        Your question might be – are the courses of study that require no in person learning be taught at a university?

        • Tim
          May 18, 2020 at 11:56 am

          Or, are there courses taught at university for the sole purpose of providing funding for other courses. Courses that put bums on seats but are of no use at all to those studying them.

        • Dave Kunkel
          May 18, 2020 at 1:56 pm

          With the technology we have now, why couldn’t the labs be simulated and done online?

        • Wisdom Seeker
          May 18, 2020 at 8:19 pm

          @Dave Kunkel –

          I’m a professional experimental physical scientist. There’s no such thing as a simulated lab at the university level. That might work for middle school but not above.

          The entire point of experimental science labs at university level is NOT to illustrate the theory – those activities are called “demonstrations”. The point of labs is to get students to understand what it takes to do good experiments. The underlying theory mostly just provides a context for exploring the qualities and foibles of a particular set of experimental tools.

          Students who have actually paid attention in experimental labs learn how bloody tough it is to produce good scientific data (as opposed to “theory”), and that knowledge is priceless when looking at something like COVID data and recognizing how much of what you’re being told is half-baked statistical obfuscation vs. what we actually genuinely know.

          The other day I ran across some news articles claiming that because 2 people in Washington State had experienced “COVID like” symptoms in December, and then tested positive for the antibodies recently, therefore COVID must have been around the US in December. That’s an interesting claim but it’s totally unproven because the antibody test has a meaningful false-positive rate and literally millions of people in the US had “COVID-like” symptoms at the end of 2019: it was flu season. With a 3% false-positive rate, there must be a good 30,000-100,000 “COVID sufferers” in November or December who would test positive for the antibodies now. All false positives!

          Experimental Labs teach you to appreciate that sort of thing, in a way that simulations never will!

        • fajensen
          May 19, 2020 at 5:10 am

          @Dave Kunkel

          With the technology we have now, why couldn’t the labs be simulated and done online?

          Because computers lie: Simulations only shows what we already know *and* someone you don’t know also think is important to display to you!

          Using simulations teaches students to always look for the confirmation of expected, which is boring and will not produce the kind of engineers / scientists that we want to have.

          We don’t want to confirm known theory, we want to somehow break it, especially relativity!

        • sc7
          May 19, 2020 at 7:55 am

          Thank you @Wisdom Seeker

          There’s a strong anti-education/anti-intellectualism slant in the comments on this site, perhaps corresponding with the Austrian Economics refugees from Zerohedge.

          Those claiming all of it can be done online know very little about the pedagogical process of higher ed. Online courses aren’t a substitute for quality learning, it’s why most students right now HATE the zoom classes. Only the exceptional few that can self teach can get much out of them.

          Ever try to hire a “coding bootcamp” developer? They can’t pass a basic FizzBuzz test. Any student with a proper four year CS degree can do that in their sleep. That is the night and day difference of what you end up getting in the workforce.

          Or are we going to single out the token “gender studies” degree that makes up <1% of all graduates?

      • char
        May 18, 2020 at 5:23 pm

        University, place to meet your partner, find your friends and network.

        Some knowledge may also be transferred.

    • char
      May 18, 2020 at 5:20 pm

      You mean the foreign Chinese students that provide the money to run the university?

      I doubt it

  21. Xabier
    May 18, 2020 at 3:39 am

    ‘Disruption’ = Destruction.

    ‘De-growth’ and ‘Transition’ = Collapse.

    Collapse is not in the future, we are on the arc already.

    Amend expectations accordingly.

  22. Kaz Augustin
    May 18, 2020 at 4:17 am

    There has been a lot of discussion on this site about the fact that the stock market is broken. Once you internalise that, everything else follows. You keep mentioning “investors”, Wolf, but aren’t almost all the investors large companies now? I believe that the actual human investors are only a small percentage, which leads me to believe that it’s the algos at those large institutional investors that are going nuts. Bad programming? Bug as a feature to enrich certain parties? Who knows…my tinfoil hat is at the dry cleaner’s today.

    As I see it, the only way to possibly make any money moving forward is to do your due diligence as we all used to, and then go looking for *private* companies to invest in. Draw up an airtight agreement between both parties and then have at it. If you invest locally, you’re also doing your community a world of good. The stock market is now only for mugs.

    PS For CCC, mate, I think I remember that company as I was working in the Valley around the same time. :) There were A LOT of pie-in-the-sky ideas at the time: “Just build a portal and retire early when you’re bought out!” LOL Also, came across mention of a peer-to-peer browser today called Beaker. To me, it’s a GUI-friendly torrent system. It’s at Version 1.0 atm, but I can see the potential (and vulnerabilities) in having a browser that uses the same infrastructure but bypasses corporate-based internet serving; that is, you use dat:// rather than http://. You basically host your information on your own machine with the option to “host” (aka “seed”) others’ info. There’s still a bit of nastiness in needing a Twitter handle(!) in order to create your own website but I’ll be watching its development.

    • Cas127
      May 18, 2020 at 10:39 am

      Kaz,

      Generally agree but the big hurdles to private investing are,

      1) Weaker risk diversification possibilities relative to public markets,

      2) Minority shareholder oppression by majority shareholder – law libraries are filled with such cases,

      3) Extreme illiquidity of private, minority shareholdings.

      All three points are inter-related and the root cause of the public’s preference for publicly traded companies.

      Address those three issues and you’ll have a winner.

    • Wisdom Seeker
      May 18, 2020 at 8:23 pm

      The “local private capital plan” fails when a fiat-funded behemoth monopoly (with no need to show a profit) decides to claim your sector of the local economy, moves in and drives you out of business.

      Millions of former local business owners have felt that pain. And their employees too.

      But who will they vote for, and why?

      • Cas127
        May 19, 2020 at 9:09 am

        WS,

        But “non-profit” fiat funded unicorns self-destruct (see non-profit) and that leaves room for competitors to re-emerge.

        In the interim, consumers are being subsidized by the “non profit”.

        It is an ongoing dynamic, not encrusted corruption (for which, see local school districts…wholly tax funded, regardless of personal family use…now *that’s* a monopoly and then some…one that can charge non-customers…)

  23. Fat Chewer.
    May 18, 2020 at 4:49 am

    That was an outstanding report Wolf. Keep up the good work. Wolf Street is an excellent MSM disruptor.

  24. breamrod
    May 18, 2020 at 5:30 am

    speaking of Tesla. The word on the street is they’re going to need to raise again soon. Notice that their stock price has been supported at around 765 the level of their last raise. I’m guessing when they announce their new battery the stock takes a stab at the old highs and that’s when they will raise. As Carlin said “it’s a big club and you ain’t in it”. Elon Musk is part of the club for sure.

  25. Tim
    May 18, 2020 at 6:26 am

    And as if on queue, Soft bank ( or Soft-In-The-Head-Bank) have announced losses for 12 months through March 2020 at 961.6 yen or $9 Billion dollars.

    Now who did they invest in……?

    • Tim
      May 18, 2020 at 6:48 am

      … of which apparently $18 Billion from one particular fund. Which one was that now?

  26. Xypher2000
    May 18, 2020 at 6:42 am

    I wonder if Tesla is going to have to pay for the proper recycling of its batteries when they wear out every 8 – 10 years? Who pays for prius batteries, or do they just get tossed in the landfill like phone batteries?

    • Tim
      May 18, 2020 at 6:50 am

      They ascend to a nirvana with their owners….

      • polecat
        May 18, 2020 at 1:26 pm

        ..minus the Phoenix-like ‘rebirth’ …

        • Wisdom Seeker
          May 18, 2020 at 8:25 pm

          You can get the full Phoenix effect if you put the used lithium batteries in water… ;)

    • MC01
      May 18, 2020 at 6:57 am

      Toyota has full cycle management of their hybrid batteries: they even replace them at or below cost to get them back. Replacing a battery pack on an old Prius is €5,000 including labor, VAT, consumables etc which is not exactly expensive.
      Mind however that so far apart from the odd defective battery they have only replaced third series and earlier batteries: newer ones last much much longer before performance degradation sets in.

      I take Tesla (whose battery cells come the same source as Toyota) is in the same boat, but in most of the world Tesla has little in the way of post-sale support and the sales network is basically a mate who sells to friends. ;-)

      • Ethan in NoVA
        May 18, 2020 at 4:45 pm

        You can buy Prius batteries waaay cheaper and swap them out yourself. 1/5th of that.

        People hack on Tesla batteries too.

      • char
        May 18, 2020 at 6:16 pm

        They may both be from Panasonic but IIRC Toyota’s batteries are not lithium so totally different

    • Just Some Random Guy
      May 18, 2020 at 8:09 am

      Does GM pay to recycle engines and transmissions from its cars?

      • May 18, 2020 at 10:22 am

        GM doesn’t need to because engines and transmissions have value either as cores for rebuilt engines or as scrap metal. There is a lot of aluminum in them, which is a very valuable metal. But even cast-iron blocks have value, as do the engine parts. A whole industry has built up around reusing and recycling engines and transmissions (as well as other auto parts). This has been done for something like a century.

        This – reusing or recycling — is much harder to do with a battery, though progress is being made. EV batteries that are no longer suitable for driving are still good for stationary applications as backup, and so, for example, power companies use them. And recycling of batteries is making progress too.

        • VintageVNvet
          May 18, 2020 at 12:09 pm

          True that Wolf, and the ”re-manufacturing” biz in USA is, (or maybe I should say was in light of recent events,?) a very good biz for many years, with separate companies being very cost effective at rebuilding engines, and sometimes even giving a very good guarantee.
          I got a rebuilt short block one in 09 that was guaranteed for as long as I owned the vehicle. And never had any problem until I finally sold the vehicle in 18. (And wish I still had it, of course, after owning it 25 years.)
          Many remanufactured engines were available for cars, trucks, boats, and airplanes for many years, and, in many cases, they performed better than the OEM.

      • char
        May 18, 2020 at 6:20 pm

        Lead batteries certainly. It is possible that certain market require it for the whole.

    • May 18, 2020 at 11:25 am

      Bought a lawn mower battery yesterday. $30 with a $12 core charge, and $1 envir fee. Pretty soon the fees will be more than the battery.

  27. David Hall
    May 18, 2020 at 6:53 am

    Tesla made money in a good quarter. Electric cars are quiet and do not pollute the city streets.

    Amazon lost money YOY as reported in the most recent quarter, yet it is one of the most valuable companies on earth. If initial investors held onto their investments, they would have been paid back nicely, even though their company lost money year after year before turning a profit.

    In 1999 NASDAQ tech investors were into huge gains with the index peaking above 4000 in Y2K – 2000. Within three years the NASDAQ index was below 1000. Internet startups without positive cash flow were delisted. Investors who held onto their stocks suffered losses.

  28. Cobalt Programmer
    May 18, 2020 at 7:00 am

    If an individual investor or a college kid is throwing money in these unicorns, that is OK. What about the public and private pension funds. Are they really invest in these companies directly or by passive ETFs? There will be another bailout. Don’t worry!

    • Wisdom Seeker
      May 18, 2020 at 8:26 pm

      Don’t worry, many of the unicorns are private, so only well-managed pension funds and professional fund managers can lose your life savings in them.

  29. timbers
    May 18, 2020 at 7:12 am

    The internets are saying the housing market has already bottomed. I didn’t even see the bottom it happened so fast but the internets are smart. The stocks are exploding higher.

    And The Chairman said a few days ago there was never a stock bubble because it was all Covid’s fault.

    All is normal. Buy the stocks.

    • May 18, 2020 at 10:10 am

      The “internets” is in your own imagination where you pick and choose what suits your dreams.

      • Lisa_Hooker
        May 18, 2020 at 3:07 pm

        Hope will last longer than your money.

      • May 19, 2020 at 11:52 am

        Remarkable isn’t it that the internet to this point hasn’t lived up to the promise, they continue to push last century mass produced and advertised brand name products. The early 30s were a revolution in consumer goods and a terrible time to be in the markets.

        • May 19, 2020 at 6:52 pm

          But thank-god for the internet. I allows my little outfit to exist and prosper and attract readers from all over the world.

          If I had done this in the 1980s, I would have had to fax my daily reports to those few people subscribing to it.

      • Engin-ear
        May 19, 2020 at 4:15 pm

        Oh, that one is funny.

        I never thought of Internet as of Rorschach test 2.0.

        Did you know that this test will celebrate its 100th birthday in 2021?

    • polecat
      May 18, 2020 at 1:32 pm

      Can we put all the Fedheads within them .. you know, as in “All is Contained” .. with a 55gallon drum of rubbish & offal handy, as in the days of old, to be cast forth thusly, so they come to see the error of their ways?

  30. May 18, 2020 at 7:13 am

    Isn’t Amazon in this category?

    • May 18, 2020 at 10:06 am

      No. Amazon has been very profitable for many many years. It has made huge investments using its own cash flow and profits, not investor funding. That said, it’s overvalued by a huge margin. But that’s another issue.

      • Just Some Random Guy
        May 18, 2020 at 11:37 am

        I’ve been hearing that Amazon is overvalued for 10+ years. Much like Vancouver real estate that has been overvalued for 40 years. At what point does the value stop being overvalued? 50 years? 100?

        • char
          May 18, 2020 at 6:24 pm

          When it goes back to the means.

        • MCH
          May 18, 2020 at 6:24 pm

          When Jeff Bezos is no longer involved in Amazon, then it will no longer be overvalued. (think Apple and Microsoft)

          Same is true with Musk and Tesla…

          Dorsey and Twitter

          Zuck and Facebook

          Kalanick and Uber

          Adam and Wework… heh heh, sorry, just had to throw that last one in there.

        • char
          May 19, 2020 at 9:02 am

          @mch

          So Uber is not overvalued anymore?

  31. Crush the Peasants!
    May 18, 2020 at 7:28 am

    The VC’s all made money with this shyte.

    Take it public. Cash out in multiples. Dump it into 401k’s, widow’s and orphan’s funds, public employee pension funds, etc.

    Implosion. Hoocoodanode?

    Next time, different exciting stories.

    Rinse and repeat.

    • BlowingBubbles
      May 18, 2020 at 7:32 pm

      Spot on! BB

  32. Michael Engel
    May 18, 2020 at 8:45 am

    1) EV sales in China plunged 40%.
    2) People at the bottom of income spent their gov stimulus check on electronic games. The rich got out of their houses to the sun and fresh air with brand new topless sport cars.
    3) The new leader of the pack is biotech. IBB is an upthrust above 2015
    peak.
    4) Three months ago : kill US // 100K senior citizens death.
    5) America is open, facing the worse recession in the last 90 years.
    6) There is hope that IBB will save the infected DOW, in repetition.
    7) There is a growing supply of unemployed cardios, orthos, radiologists, but the demand for US $ is still growing.

  33. Fat Chewer.
    May 18, 2020 at 8:45 am

    The whole thing only makes sense when you realize that IT and electronics are vital national industries. They are the hub of an industry with very long tentacles. They are too important to fail. They don’t need bailouts, they get enough handouts to live quite well. It’s all psy-ops aimed at the media, pollies, investors, competitors and the daydream believers.

    They are waiting for the Boomers and us Gen X’ers to die off so they can eliminate cash. The Millennials are already acting like cash is dead. The potential market for electronic money is already huge. That means dotcoms diversifying into financial services. We are right in the middle of this turning point in history, but seeing it in real time doesn’t look the same as it would in hindsight.

    That printer at the Fed can finally be honorably retired at that point. Adding or withdrawing liquidity (yes kids, the Fed CAN take money back out of the system by raising interest rates) will be a cinch. We’ll just have to take their word for it when they say it’s happening. Hey, isn’t that jawboning?

    • Lisa_Hooker
      May 18, 2020 at 3:17 pm

      Sign at a pharmacy register after hurricane in Florida: “Sorry, cash only.”

    • char
      May 18, 2020 at 6:27 pm

      Paying hookers and blow electronically is not smart. I expect cash to survive for a very long time

      • Fat Chewer.
        May 19, 2020 at 4:33 am

        Yeah, I never said I liked it, it’s just what I think they will do.

  34. Kessler
    May 18, 2020 at 9:24 am

    The value of these companies is their decoupling of stock prices from profitability. You can’t grow stock in a fantastic matter, if it’s tied down to the real world. Once you cut that cord, you just let the hot air carry you higher and higher, bigger and bigger, so that you can’t be allowed to fall.

  35. BuySome
    May 18, 2020 at 9:52 am

    Read the list of toppings here and ordered from the menu. A nice cardboard box wrapping, but got a bellyfull of crust with a thin veneer of fancy flavor. Oh, the stomach ache! Will my credit card issuer get me a refund? What about my Frequent Fryer points? Trying not to stretch my budget beyond the expectations of $1200 deposits going to infinity on a straight line.

    • VintageVNvet
      May 18, 2020 at 12:32 pm

      VERY good BySm,,, and, to be surly, as opposed to surely,,, and, ”farmed out”, as opposed to ”far out” at the same or similar time frame, aka who the fook knows even what the ”possibilities” are, not to mention the ”probabilities” might end up being, eh???
      OTOH, clearly and far shored,,,
      many of the folks commenting hereon are alive, awake, and ready to do battle or at least bottle with the very best dragons/dregs/ drags on the economy at all levels, and I not only ” ‘preciate” them, along with THE Wolf, of course and as mentioned,,,
      but really and truly ask all of them/you/us, especially the KL,Karen/MC01/ME, etc., to at least try to continue to educate and entertain me as has been done very successfully recently.
      and I would only request that you do not make me laugh SO hard that choking ensues,,, otherwise, my zoo keep3R is likely to forbid me this wonderful site! (just joking, or at least i hope i am)
      Thank you all…

  36. timbers
    May 18, 2020 at 11:04 am

    Powell says no V recovery…stocks explode.
    Powell says bad economy maybe thru 2021…stocks explode.
    Powell issues grim warns about stock prices…stocks explode.
    Powell excuses himself to go to the men’s room…stocks explode.
    Uber announces massive layoffs…stock explodes.
    Eight people didn’t get Covid sick…stocks explode.

    Looks like everything is normal to me.

  37. Anon1970
    May 18, 2020 at 11:27 am

    How is Robinhood doing? it pioneered zero commission stock trading and forced the larger brokerage firms to follow its lead. Is it making a profit? In December 2019, a CNN article noted that it had a market value of about $9 billion but had not yet gone public.

    • Wisdom Seeker
      May 18, 2020 at 8:32 pm

      Robinhood is gaining customers like crazy. Apparently everyone who got laid off or “working from home” is now a pro day trader on the side.

      Hopefully that translates into increased profitability?

      Wonder when people will ask how a broker makes its money from its customers, if it’s not charging them trading commissions? Although for the customers I suppose it beats the broker making money the other way AND charging commissions…

      • char
        May 20, 2020 at 6:06 pm

        Lending out the customers stock behind their back?

    • MC01
      May 19, 2020 at 3:38 am

      Like so many other private companies in the same position Robinhood is keeping their cards very close to their chest.
      Since they are still tapping into the venture capital markets I’d say they are still losing money, but without their detailed financials it’s impossible to say if they’ll ever be profitable.
      One thing’s for certain though: the $9 billion valuation is as reliable as Chinese economic data.

  38. MonkeyBusiness
    May 18, 2020 at 11:30 am

    Uber just laid off more people. This time tech people are included. Apparently they also got rid of the entire ATG i.e. their self driven vehicle group.

    Stock rallies 10%.

    This market is insane. The company just made an admission that their core business is unsustainable and yet the stock rallies. Why not lay off everyone then?

    • Phoenix_Ikki
      May 18, 2020 at 1:28 pm

      Nah insane would be if this close to 1k pts tally today isn’t due to us just got a vaccine,cured and immunized everyone in US and around the globe and revenue is picking back up 110% by next month…Oh wait, you mean to tell me none of that actually happened? I sure as heck wouldn’t know it looking at market action today.

    • char
      May 18, 2020 at 6:32 pm

      Because than the CEO would be unemployed. He can still extract more money out of the company so theshow must go on.

  39. Ralph Hiesey
    May 18, 2020 at 11:32 am

    The smartest stock investments are obviously those that pay no dividends.

    When dividends is zero there is NO LIMIT to the imagination for how much money they eventually COULD make in the future.

  40. Michael Engel
    May 18, 2020 at 11:56 am

    1) Adolf Miller was not yelling, because he was on vacation in his SF hometown, and Hoover was traveling in the south, in Aug 1927, Benjamin Strong, NY Fed head, gave Norman(GB) & Rist(France) a blow ==> un petit coup de whisky, for free, in Andrew Mellon estate in LI north shore.
    2) After the Sterling reenter gold, there was a global shortage of gold.
    3) In 1926 US wholesale prices were falling 10% and the CPI fell 2%.
    4) German prices were cheap, recovering from the hyperinflation.
    Germany had no gold. Gold was flying out of the BOE vaults straight to France. Churchill ( Exchequer minister) Sterling fix was too high.
    5) France & US got the gold. GB financial stress led to a growng tension with France.
    6) Bejamin Strong offered a compromise : he will cut NY Fed rate by 0.5%
    from 4% to 3.5% to stop the European fight.
    7) Four Fed reserve banks were in defiance : SF, Chicago, Philadelphia and Minneapolis : “such move will fuel the stock market speculations.
    Inflation of credit is not an answer to European difficulties.”
    8) A cease fire was reached in Europe.// An ugly & bloody Fed bank reserves civil war led to Crissinger, the Fed governor, resignation (Fed govr May 1923 to Sept 2927). // A DOW bubble was created by central banks, our good friends. The Dow went up from 170 to 381. // yong Who replace Crissinger was fired in 1930.

    • char
      May 18, 2020 at 6:34 pm

      2) reentered gold ==> Crashed their economy

  41. LouisDeLaSmart
    May 18, 2020 at 12:11 pm

    \\\
    “The easiet thing in the world is to run a money losing business…”
    by Wolf at Wolfstreet report. 17/05/2020, 09:01 (mm:ss)
    Beautiful. I am taking this quote with me to the bar to have a beer. :)
    \\\
    One of the most profound statements on the topic of the US economy, it’s elites and their debt culture. How come this happened? I was reading a German phylosopher Eugen Drewermann. He states that the rules of micro- and macro- economics have been engraved into the minds of students ,and the system, to such an extent that they are equated with the laws of physics; unchangable and a neccesseary component without which the universe will seize to exist. Somehow over time it seems that debt and loss have become part of their dogma.
    \\\
    It kind of reminds me when we had a Earth centric solar system although all men of knowledge knew otherwise. And only the most brave challanged this falshood publicly, at great personal cost. We are, it seems, in “The Dark Ages of Capitalism”. I just wonder will the FED burn “the heretics” at the stakes?
    \\\

    • Wisdom Seeker
      May 18, 2020 at 8:37 pm

      @Louis – you nailed it. Econ is taught as gospel but they sort of overlooked that pretty much the entire foundation of the credit system was tossed out when the US abandoned gold standard for good.

      If such a foundational change were made in a real science, everyone and their cousin would be reworking everything that depended on the modified assumption. (Failing to do so would be like rewriting Newton’s Equations and expecting everything to still behave the same way.)

      And yet the economists have sailed on for almost 50 years without so much as a clue that everything in a fiat-currency system is subtly different. Or maybe those that know have used that knowledge to enrich themselves in mountains of fraudulent credit, quietly but slowly impoverishing the rest who didn’t get that nice little Fed Inflation Fringe Benefit…

      • char
        May 19, 2020 at 9:06 am

        The last 200 years we have lived in a fiat world. The gold backing was fake. It was always: We print more money if we have too

        • LouisDeLaSmart
          May 19, 2020 at 9:37 am

          \\\
          Dear Char, no this is not the case. I suggest reading about “Operation Bernhard” of the WW2 where Germany managed to forge the British pound and threatened to destroy the entire economy by overflooding the market with currency. Today if (Uncle SAM?) someone were to print 2 trillion dollars per year, nothing happens.
          \\\
          Gold backed currencies are sensitive to quantity of the same available on the market. You can increase the number of notes on the market, but the net value will stay the same. FIAT currencies are much less so, if not invariant; hence
          the money losing argument and vast overprinting.
          \\\
          A great read is ” Krueger’s Men” by Malkin, Lawrence (2008).
          \\\

        • char
          May 20, 2020 at 6:10 pm

          You do know that banknotes where not 100% backed by gold but more something like 20%

        • Wisdom Seeker
          May 20, 2020 at 7:35 pm

          @char – nonsense. Gold was being shipped all over to settle accounts. Coins were made of gold or silver.

          And banknotes were exchangeable for those physical metal coins.

  42. carbpow
    May 18, 2020 at 12:32 pm

    Perhaps Wolf could do a podcast explaining why people keep pouring money into losing businesses. Are they insane? The venture capital people are supposed to be smart. If they are the smart ones in the country we are in a world of hurt.

    • MonkeyBusiness
      May 18, 2020 at 12:43 pm

      You don’t understand how the VC world works. They are smart.

      Go to Youtube and find the following:

      Venture Capital – Silicon Valley Ponzi Scheme – Chamath Palihapitiya

    • Crush the Peasants!
      May 18, 2020 at 3:44 pm

      If you are sitting at the table, and you don’t know who the bag holder is….

  43. Yertrippin
    May 18, 2020 at 1:18 pm

    Fantastic reporting Wolf. Another major feature of this game is they not only destabilized the industry they were targeting, but completely destabilized the advertising industry, especially digitally. In the process they made tech companies like Google and Facebook MASSIVE amounts of money.

    By completely overpaying for any and all online ad space they accomplished strangling small to mid sized business while increasing their position with Google, Facebook etc. The massive scale of these ad buys made tech huge profits and the visitors driven by the ads in turn manipulated the algorithm increasing their organic visibility providing yet more people to feed into the messaging, ad clicks, and traffic.

    While ad buys do not directly affect organic rankings, visitors do, and that is the loophole in which tech companies get paid. I would guess this “revolutionize the industry” model was highly supported by tech if not suggested. It’s a clever way to let tech companies suck up investor money increasingly and continually generated by their own hubris of their ad platforms and search results.

    • Yertrippin
      May 18, 2020 at 1:38 pm

      So in conclusion, these robot monsters accomplished two goals. Making company principles rich and generating huge money for the tech companies that help do it. Success!

      A truly modern partnership.

    • May 18, 2020 at 3:38 pm

      Internet shopping is antithetical to the established passive consumer practices, (you know buying something to keep up with the Joneses). My friend brags on her beamer, I tell her, hon, it’s just another SUV. They all look the same. There is something to hidden status, (wherever Petunia is?) Like people who have phones they can barely operate. Never seen brand recognition this sublime. Whether its Beyond Meat, or Tesla. Of course the companies are subprofitable, this is more of ‘less is more’, trade your Cadillac for a glorified golf cart, or soybean curd for top sirloin. Then you have to advertise twice as hard.

  44. Michael Engel
    May 18, 2020 at 1:21 pm

    The DOW is up, add removal is down.

    • Bobby Dents
      May 18, 2020 at 2:07 pm

      tomorrow it is down. What then???

  45. Buysome
    May 18, 2020 at 1:23 pm

    Never confuse reason and wealth. If you had a “rich uncle” willing to bestow favors, would you count the coins in your pocket? When the bill comes, just use the last dime and make the call.
    For reason, try a four quadrant truth table and a scratch pad, assuming there is any paper left without pretty pictures of dead guys.

  46. Dennis Wright
    May 18, 2020 at 1:42 pm

    Just wondering…………..how long did Amazon lose money? Maybe the Unicorns mentioned believe they can have Bezo’s success also if they hang in there. Just sayin’.

    • char
      May 18, 2020 at 6:42 pm

      Not long*. Until 2000 or so. after that they were in the netherworld of no profits but also no losses

      * paying staff options is a form of hidden losses

    • MC01
      May 19, 2020 at 3:44 am

      It took about four years for Amazon to break even and two extra years to be profitable. Since Q1 2004 they have been profitable almost every quarter, albeit those profits are kept low for purely fiscal reasons.
      Remember that Amazon’s chief strength is how they are able to harness tax codes worldwide to their advantage: nobody, not even the big New York investment banks, is as good as Amazon in that sector.

  47. fred flintstone
    May 18, 2020 at 3:13 pm

    What most seem to be missing is that no amount of fed stimulus can make up for a large reduction in the velocity of money. Will velocity recover……not until a vaccine is out and is being injected into bodies by the million. So a minimum of another year of very slow conditions. On top of the flat demographic situation and spent out consumers this is going to go a lot longer than the stock market thinks. A lot of restaurants and retail will be gone before the recovery which will slow it even more.

  48. May 18, 2020 at 3:50 pm

    The bulls in this market buy shares not knowing where the money comes from. These unicorns have less revenue, at least they know the debt (and the bulldog) has to be fed, something the US government has forgotten. They have less revenue and that revenue is critical to debt servicing, so Musk kept his factories open defying an order. He also wisely spent some of his uncollateralized cash on virus safety for his workers. He may have pulled off the trick. Now if he can invent his own vaccine, his factory may be the safest place on the planet and people will pay him to work there.

  49. Leave a Reply
    May 18, 2020 at 4:53 pm

    So Wolf, what’s your take on the AI’s running stock trading? Were the wild -900 and the other crazy +900 point days out of control AI algos because the selling and buying % were out of wack for programed daily advances or decline expectations…? With all the bad news in all your headlines the only thing I can see keeping the stock market above 10,000 is that they must all have been bailed out, or expect to be bailed out. The other day a -16% retail sales for last month you would think the market would have dumped 2,000 points and still be crying about it. How can market reaction to -16% retail sales be so muted?

  50. Wakarimasen
    May 18, 2020 at 10:04 pm

    The question is, why investors like to burn their own cash. Who are this investors ? Their target obviously cannot be making money. So what is their target. The chart of Wayfair is breathtaking. Now they are near their alltime high !

    • Engin-ear
      May 20, 2020 at 4:17 am

      My understanding is that there are short term traders (like human intraday traders and ever increasing part of high frequency trading bots) that DO NOT care about the fondamentals like cash and alike by the very spirit of their activity.

      Why the long term investors might do it… may be because it is the cleanest dirty shirt .. dunno.

  51. Noelck
    May 19, 2020 at 1:47 am

    I’d just be curious how much 401K and pension money is in these momentum stocks.

    It is truly unreal. I just can’t believe capitalism would let this happen.

  52. May 19, 2020 at 8:45 am

    I just read a story about a pizzeria owner who made money by buying his own pizza from Doordash. It turns out they were selling the pizzas $8 cheaper so he bought it from them for $16 and they paid him $24. That’s a new way to make money with venture-backed, money-losing businesses.
    Here is a link to the story: https://www.theverge.com/2020/5/18/21262316/doordash-pizza-profits-venture-capital-the-margins-ranjan-roy

    • Engin-ear
      May 20, 2020 at 4:36 am

      Truly amazing situation and fun to read.

      Even if I failed to understand if it was finally a money making situation for this small pizza owner.

      I mean if a person made a personal purchase subsidized by Doordash, how it can be translated into business purchase with the business profits.

      Different pockets, different fiscalilty…

  53. Paul Schuyler
    May 19, 2020 at 3:14 pm

    You’re all completely missing the big picture. Obviously something basic has changed in how our Universe operates. You-all need to wake up. Bad news equals good news for the stock markets. Terrible news is even better. Cataclysmic news is the best of all. Maybe we’ll get really lucky and Godzilla Himself will rise out of the Bay and stomp up and down on the financial district like a toddler with a tantrum. That would be a massive boon for stocks! Sinkhole startups tap into this unseen ‘Inverse’ energy. Don’t you get it? Inverse world. Up is Down. Bad is Good. Wrong is Right.
    Profit-Black Hole = Profitable Monopoly. Yin-Yang,capiche? Get with the program, people!

  54. No Expert
    May 20, 2020 at 3:37 am

    Almost like the bigger speculators can pump up the bubble the safer the bubble becomes rather than riskier as the state cannot allow it to burst (Too Big To Burst?). To let it burst risks the house of cards coming down.

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