Investment bank Jefferies takes $69 million WeWork writedown - Business Insider | Canada News Media
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Investment bank Jefferies takes $69 million WeWork writedown – Business Insider

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  • Jefferies Financial Group took another hit from WeWork – this time a $69 million writedown to its stake in WeWork parent We Co – in the quarter ending November 30, the investment bank said in an earnings statement released on Wednesday.
  • Previously, Jefferies slashed the estimated value of the stake by $146 million on August 31, more than two weeks before the shared-workspace group shelved its plans to go public.
  • The bank had originally invested $9 million in the now-embattled office company.
  • In October, Goldman Sachs said it took an $80 million hit from its investment. SoftBank, meanwhile, wrote down $4.6 billion from WeWork, it said in November earnings.
  • For more stories about WeWork, click here.

Jefferies Financial Group again cut the value of its small WeWork stake, the investment bank said in an earnings release on Wednesday.

Its merchant banking unit had invested $9 million in the company for a stake that it said was worth $269 million as of May 31.

In September, the bank said it had slashed the estimated value of the stake by $146 million on August 31, more than two weeks before WeWork shelved its plans to go public.

The September adjustment reflected a „significant discount due to uncertainty regarding the timing and pricing of We’s IPO,“ CEO Rich Handler and President Brian Friedman said in the third-quarter earnings release. „As the facts at We become clearer, further adjustments may be made in future periods.“

The company did not comment on the latest writedown or offer any additional information in the statement on Wednesday reporting fourth-quarter earnings.

WeWork’s valuation plummeted from $47 billion a year ago to less than $5 billion in November. In September, intense scrutiny of its finances and leadership from investors and the media forced WeWork to remove cofounder Adam Neumann as CEO and scrap its IPO plans.

In September, Jefferies said it had earned $31 million in cash from the $9 million investment in WeWork, and retained a 0.8% stake in the company.

Other investors could follow Jefferies‘ lead with further disclosures about their own WeWork writedowns in coming earnings. In October, Goldman Sachs said it took an $80 million hit from its investment. SoftBank, meanwhile, wrote down $4.6 billion from WeWork, it said in November earnings.

The Japanese investor is now trying to right WeWork after the company’s tumultuous autumn.

The Japanese investor’s chief operating officer, Marcelo Claure, took the helm of WeWork as chairman after founder Adam Neumann was ousted. Last month, the company overhauled its compensation plan, cut various non-core businesses, and launched a newspaper ad campaign to restore confidence in its shaken business.

Jefferies reported $196 million in overall net income for the quarter ending November 30.

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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