Tuesday's Headlines: Starbucks Shakes Up Its Leadership
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Moving Up ⬆️
Chegg (CHGG) +12.5%
Upstart Holdings (UPST) +9.5%
2U (TWOU) +8.4%
Atlassian (TEAM) +7.7%
Redfin (RDFN) +7.6%
Moving Down ⬇️
Match Group (MTCH) -6.0%
Bumble (BMBL) -5.1%
Prologis Inc. (PLD) -1.3%
Casey's (CASY) -1.1%
Stitch Fix (SFIX) -1.1%
Here are the stories that you need to know ahead of market-open today, Tuesday the 21st of June:
Starbucks Shakes Up Its Leadership ☕️
The world’s largest coffeehouse chain has announced that its North American president, Rossann Williams, will be leaving the company imminently. This is the latest in a litany of changes that have occurred, beginning with the departure of CEO Kevin Johnston and subsequent return of Howard Schultz to the role on an interim basis.
Williams is to be replaced by Sara Trilling, the head of the company’s Asia-Pacific division, effective today. This significant leadership change likely came about due to the ongoing unionization effort by Starbucks (SBUX) employees, with Williams previously being one of the public faces of its anti-union push. With over 150 cafes having voted to unionize, the company likely deemed it wise to reduce its adversarial stance.
COO John Culver explained in an internal memo that this was “a difficult, but necessary change to our North America business.” He followed on by stating that “the decision was not taken lightly and was one preceded by discussion about a next opportunity for Rossann within the company, which she declined.”
More change is now likely for Starbucks, with Schultz having already committed to raising wages and improving working conditions, while pausing the company’s stock buyback program. The coffee chain is currently down close to 40% this year to date, so any changes are likely to be heavily scrutinized by investors as it continues through this transitory period of upheaval.
JetBlue Renews Its Offer to Buy Spirit Airlines ✈️
JetBlue has renewed its commitment to buy Spirit Airlines by increasing its cash offer and reiterating its willingness to offload other assets in order to satisfy regulators.
Yesterday, JetBlue bumped up its offer price for the Floridian low-cost carrier from $31.50 to $33.50 per share. Though the market was closed yesterday in observance of Juneteenth, Spirit Airlines stock is up more than 12% in premarket trading this morning, implying an opening price of about $24 a share.
Considering the scrutiny that consolidation in the airline industry typically gets from regulators who are keen to keep the industry competitive, JetBlue has also committed to shed assets to push the deal through, with its latest offer “significantly” increasing the divestitures it would be willing to commit to.
This is just the latest development in what has become a protracted battle between JetBlue and its domestic rival, Frontier Airlines, over cutting a deal with Spirit. Frontier had actually already agreed to merge with Spirit back in February of this year in a deal valued at $6.6 billion, which would have seen a new company formed under the control of Frontier. However, the deal was then put on hold due to JetBlue’s interest in buying the company outright.
It’s been a challenging couple of years for the airline industry thanks to the pandemic, but low-cost carriers managed to weather the storm better than most due to their focus on domestic travel, which didn’t face as much restriction. Regardless of whether Spirit strikes a deal with either Frontier or JetBlue though, it will create one of the largest U.S. carriers, which is sure to catch regulators’ eyes.
Cloudflare Skips a Beat ☁️
A number of the internet’s most iconic names were down last night due to an outage on Cloudflare’s (NET) servers. Amazon Web Services, Google Services, Doordash, Coinbase, and NordVPN were affected, among many, many more.
Luckily, this isn’t Cloudflare’s first rodeo and its team was able to identify the problem and get servers back up and running in just over 20 minutes. The outage hasn’t had any lasting effect on Cloudflare’s share price.
Now for those of you wondering: “what is Cloudflare and how can it seemingly be hosting the entirety of the internet?”, you’re not alone.
Cloudflare is one of those companies that exists on the corner of complexity and crippling boredom, but it’s also essential to the modern web.
Cloudflare is a web-infrastructure company with a particular focus on security. Its products include content-delivery-network services, DDoS mitigation, and distributed domain-name-server services. In layman’s terms, it helps keep websites safe from cyber attacks and ensures they can process and return information quickly.
Clearly, Cloudflare is pretty good at it. It has more than 3 million clients, many of whom are giants of the tech world we all know and love. Like many of its contemporaries, it has adopted a foot-in-the-door sales approach where many of its services are free to small businesses, while larger clients pay a subscription fee for enhanced features and support.
This has helped the company keep revenue climbing, it has maintained revenue growth of more than 50% for seven consecutive quarters.
While this outage is a reminder of the web’s vulnerability, it still seems pretty safe in Cloudflare’s experienced hands.