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​CHINA'S NETFLIX

SALES SOAR

General Motors Co. (NYSE: GM) will no longer report monthly car sales. According to Reuters:

General Motors Co said on Tuesday it will stop reporting monthly U.S. vehicle sales, saying the 30-day snapshot does not accurately reflect the market and will instead issue quarterly sales.

GM will also no longer report monthly sales in China, its largest market, and Brazil. GM will provide monthly data to the U.S. Federal Reserve, industry associations and government agencies across the globe but that data is not made public.

Vacancies at malls have surged. According to The Wall Street Journal:

Empty space in regional shopping malls reached a six-year high in the first quarter, adding further stress to regions being hit by a retail earthquake that is shaking up the job market across the U.S.

The vacancy rate in big U.S. malls increased to 8.4% in the first quarter of 2018, up from 8.3% in the fourth quarter and the highest since the fourth quarter of 2012, according to real-estate data firm Reis Inc., which studies 77 metropo


Tesla Inc. shares sank more than 7% Monday, suggesting investors were in no laughing mood over Chief Executive Elon Musk’s bankruptcy jokes as the electric-vehicle maker grapples with the aftermath of a fatal crash and prepares this week to release production results.

The drop to $248 a share in early trading extended a selloff that has lopped off 36% from the stock since its peak in September.

























































Mr. Musk delivered his April Fools’ tweet (“Tesla Goes Bankrupt”), in which he joked Tesla failed to raise enough cash in a last-ditch Easter Egg sale, at a time when his company’s cash position is under real scrutiny. Last week, Moody’s Investors Service downgraded Tesla’s credit rating and cautioned about the company’s outlook, citing concerns about cash levels.

CBS Corp. (NYSE: CBS) may make a low-ball bid to buy Viacom Inc. (NASDAQ: VIAB). According to Bloomberg:

CBS Corp. will offer less than the current market value of Viacom Inc. in its opening bid for the owner of MTV and Nickelodeon, according to a person with knowledge of the matter, showing how far apart the companies are as they explore recombining.

CBS will propose that its chief executive officer, Leslie Moonves, run the merged company for at least two years, said the person, who asked not to be identified discussing private negotiations.

Twenty-First Century Fox Inc. (NYSE: FOXA) may sell Sky News to Walt Disney Co. (NYSE: DIS). According to Bloomberg:

21st Century Fox Inc. is offering to sell Sky News to Walt Disney Co. as it seeks to win over U.K. regulators reviewing its 11.7 billion-pound ($16.5 billion) bid for broadcaster Sky Plc.

Disney is interested in acquiring Sky News regardless of whether its larger $52.4 billion takeover of most of Fox goes through, a move that would guarantee the editorial independence of the operation, Fox said in a submission to the U.K.’s Competition and Markets Authority. Fox could also legally ringfence Sky News, it said.

Rupert Murdoch’s Fox is bolstering efforts to secure the Sky takeover after Comcast Corp. in February made a surprise competing offer for the pay-TV company. Acquiring the 61 percent of Sky that Fox doesn’t own is part of Murdoch’s broader plan to sell Fox’s media businesses to Disney but the European takeover has been held up by additional scrutiny, after allegations of harassment at Fox News in the U.S. and as a 2011 phone-hacking scandal at Murdoch’s newspapers continued to dog the billionaire media tycoon.

Walmart Inc. (NYSE: WMT) may buy an online pharmacy. According to CNBC:

Online pharmacy start-up PillPack is in talks to be acquired by Walmart for under $1 billion, according to two sources familiar with the matter.

PillPack’s focus on making it easier for customers to order and fulfill medications is an attractive proposition for Walmart and other e-commerce companies that are looking to enhance their health care offerings. The talks come amid reports of early acquisition talks between Walmart and health insurance giant Humana, which would be a much larger deal.

​APRIL NEWSLETTER 1

​The second-largest initial public offering (IPO) of the first quarter went off as planned Thursday, when Chinese video streaming firm iQIYI Inc. (NASDAQ: IQ) sold 125 million American depositary shares (ADSs) at $18 per ADS, raising $2.25 billion. After opening at $18.20, things fell apart and the new issue closed its first day of trading down 14%. Each ADS is equal to seven ordinary shares.

The company is controlled by China’s largest internet search firm, Baidu Inc. (NASDAQ: BIDU), which holds about 93% of the company’s voting power. Based on the IPO price, iQIYI has a market cap of around $13.67 billion, and Baidu will retain ownership of more than 80% of the class A common stock.

iQIYI posted revenue of $2.57 billion in 2017 but also posted a net loss of about $553 million, up from a loss of $462 million in 2016.

The company’s chief financial officer, Xiaodong Wang, said that the company plans to turn to producing original content in order to attract more subscriptions. In 2017 subscriptions accounted for about 35% of total revenues.

Wang said, “If you want more subscribers, you need more original content — it’s the same strategy as Netflix.” What Wang did not mention is that such a strategy is very expensive. Netflix plans to spend $8 billion on original programming in 2018 alone. That’s an increase of 25% for the company’s 2017 budget.

Netflix’s production budget puts the company in the same class as traditional TV and movie firms like Time Warner, Fox and Disney.

iQIYI has about 60 million paying subscribers in China, compared with about 110 million global Netflix subscribers, of which 53 million are U.S. subscribers. Clearly there’s room for the Chinese firm to grow in a country with almost half a billion households.

After posting a first-day high of $18.52, ADSs dipped consistently throughout the rest of the day to close at $15.55, down 13.6%. Nearly 80 million shares traded hands Thursday.
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​CAR BUYING

​When it comes to shopping for cars online, people are more satisfied with smartphone apps than with desktop websites, according to survey results released Tuesday by J.D. Power. The top-ranked platform for both smartphones and desktops are owned by Cox Automotive, a division of Cox Enterprises.

On the desktop side, Cox’s Autotrader achieved the high score of 789 out of a possible 1,000, based on four metrics: navigation; appearance; information/content; and speed. Among smartphone apps, Cox’s Kelley Blue Book was ranked at the top with a score of 809 on the same criteria.

J.D. Power’s digital practice leader, Amit Aggarwal, said:

Five years ago, we would have been amazed to see higher satisfaction for vehicle research and shopping on a 5-inch screen. Year over year, smartphone users are visiting more content areas to configure vehicles, compare vehicles, search for inventory, view technical specifications and more.

Trailing Autotrader in the desktop category were TrueCar with a score of 782, Cars.com (778) and CarGurus (777). The average score among the nine sites included in the survey was 765. Autoblog, now part of Verizon’s Oath subsidiary, was the lowest ranked with a score of 707.

Among smartphone apps, top-ranked Kelley Blue Book finished two points ahead of Edmunds.com (807). Carfax, which is owned by IHS Markit, ranked third with a score of 804. The industry average in this category was 782 and Autoblog again posted the lowest score (739).

The results are based on responses from 4,392 evaluations of automotive manufacturer websites by new- and used-vehicle shoppers who indicate they will be in the market for a vehicle within the next 24 months, with 2,130 being desktop evaluations and 2,262 being smartphone evaluations. J.D. Power fielded in January 2018.

​CURRENT EVENTS

Fiat Chrysler Automobiles N.V. (NYSE: FCAU) reported Tuesday that March sales increased by 14% to 216,063 vehicles, compared with March 2017 sales of 190,254. The Jeep brand posted a sales increase of 45% year over year as sales of the new Wrangler jumped 70% to nearly 28,000 units and Compass sales soared 553% to 17,302 units.

The Jeep Patriot showed a year-over-year sales decline of 98% and the Renegade posted a sales gain of 21%. Grand Cherokee sales fell 4% and Cherokee rose 63%. The Patriot badge is being retired, and the Compass is now Jeep’s single entry in the compact sport utility vehicle (SUV) market.

Analysts at Cox Automotive had projected March sales at 195,000 units, a 2.5% year-over-year increase. Kelley Blue Book (KBB) estimated an average selling price of $36,508 for March, down 1.2% year over year and flat month over month.

FCA continues to implement a strategy of reducing sales to daily rental car companies. March fleet sales accounted for 25% of the month’s sales, or about 53,750 units. March retail sales were the best for the month since 2001 and total sales for the month were the best since 2006.The company’s Jeep brand sold a total of 98,382 units in March. The Jeep Wrangler sold 27,829 units in the month and Cherokee sales rose to 23,764 units.

Ram pickup sales declined 11% in March to 41,307 units. Last year, Ram sold 46,384 pickups in the month. The February decline came on top of a 16% drop in January sales and a 14% drop in February. The new 2018 Ram pickups began shipping to dealers in March.

Year-over-year sales of the company’s Chrysler brand rose 15%, as sales of the new Pacifica minivan posted March sales of 13,086 units, up 40% for the month. Chrysler 200 sales fell 93% year over year in March to 189. FCA continues to try to sell all dealer inventory on this discontinued model. Sales of the Chrysler 300 rose 25% to 6,223 units.

The company’s Dodge brand sales fell 2% year over year in March. Dodge Caravan sales rose 4% to 16,292 units in the month. The company’s Journey compact SUV saw sales drop by 13% year over year to 10,275 units sold in March.

Alfa Romeo sales rose 364% in March, as sales of the new Stelvio pushed the total to 2,576 for the month. The namesake Fiat brand sold just 1,544 units in March, a 47% year-over-year decline.

FCA’s shares traded up 5%Tuesday morning at $20.95 in a 52-week range of $9.60 to $24.95. The 12-month consensus price target on the stock is $31.71.