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News Fix: Boeing Stock Slides, Aurora Cannabis Gains a Powerful Ally

News Fix: Boeing Stock Slides, Aurora Cannabis Gains a Powerful Ally
By Vin Narayanan
Date March 16, 2019
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At 4 p.m. last Friday, Boeing stock was trading for $422.42. On Sunday, an Ethiopian Airlines flight operating a Boeing 737 Max 8 crashed, killing all 157 aboard. It was a tragic loss of life. And it was the second time in five months a Boeing 737 Max 8 had crashed. After Sunday’s accident, Boeing’s stock dropped to $371.40 in overnight trading.

The circumstances between the two crashes appeared to be similar. So with growing safety concerns and out of an abundance of caution, countries began grounding the Boeing 737 Max 8. On Wednesday, the United States became the last major country to halt 737 Max operations.

As of this writing, Boeing is trading for $375.57. That’s an 11% decline from last Friday’s market close.

Investors had two ways to approach Boeing stock this week.

The first is the Bobby Axelrod method. Axelrod is the main character in the TV show Billions. He’s a ruthless New York hedge fund manager who’s made billions by being one step ahead of the market and the law. Axelrod made his first billion when he shorted airline stocks after 9/11. Axe, as he’s known on the show, was supposed to be in his World Trade Center office that day. But he didn’t go in. And he made the short call as the towers were falling – and his colleagues were dying.

Axe would have shorted Boeing stock the very second the Ethiopian Airlines crash hit the news. And he would have done it without hesitation.

The second approach is the Andy Gordon method. Andy, of course, is the Co-Founder of Early Investing. And he’s a very savvy investor.

“Investors should consider this a buying opportunity,” he told me while munching on a bagel with cream cheese. “If you still believe in the fundamentals of the company, this is a good time to buy. It’s still one of the two biggest players. And it’s going to keep getting contracts.”

There you have it. Two different ways to think about investing in Boeing. Of course, it’s too late to short the company’s stock. But if you’re interested in value, now might be the time to invest.

Now to the News Fix!

Cannabis

New Jersey is almost ready to legalize recreational marijuana. On Tuesday, New Jersey Gov. Phil Murphy and leaders of the Legislature reached a deal on how to tax pot sales and expunge minor marijuana-related arrests from the record (CNBC).

I break down the entire deal, including the $42-per-ounce excise tax, in this week’s First Stage Investor Cannabis Report.

There’s still a lot of work that needs to be done before legislation passes. And there’s still a lot that could go wrong. But it looks like New Jersey will legalize recreational pot this year.

The other big news in weed this week is that activist investor Nelson Peltz has joined Aurora Cannabis as a technical advisor (CNBC). Peltz’s Trian Partners fund has invested billions in Procter & Gamble and millions in Wendy’s and Mondelēz. So his experience in consumer goods will certainly help Aurora Cannabis.

But Peltz has the option to buy almost 20 million shares at a price of $7.74 per share. If he exercises this option, he’ll be the company’s second-largest shareholder. And he’s not the type to sit quietly in the background. It will be interesting to see how all of this plays out.

So far, investors love it. Aurora Cannabis stock jumped almost 14% when the news was announced.

Startups

Last week, The Fix reported that Lyft had reported a $911 million loss in 2018. The loss was disclosed in Lyft’s IPO documentation.

This week, word has arrived that Uber plans to make its IPO disclosures in April. After Uber files its paperwork, it will hit the road to try and drum up support from big investors (Reuters).

The big question everyone is waiting for is just how much money Uber lost last year.

WeWork is making an interesting play in the food industry. It’s creating a coworking space for food startups in New York and investing $1 million in seed-stage food companies through an accelerator program (Eater).

And it looks like SmileDirectClub will IPO this summer. The teeth-straightening company expects to do $1 billion in revenue in 2019 and has picked J.P. Morgan to manage the IPO (Axios).

Crypto

The Cboe Futures Exchange (CFE) is pushing the pause button on bitcoin futures trading. No new contracts will be added this month. And existing contracts won’t be listed beyond June (MarketWatch).

This isn’t necessarily bad news for crypto. CFE is getting crushed by CME (Chicago Mercantile Exchange) in the bitcoin futures space. The trading volume at CME is substantially higher. CFE needs to figure out how to compete in this space. Right now, it’s not working.

The Fix isn’t sure if the Mt. Gox case will ever end – or if the mysteries surrounding it will ever be solved.

Mark Karpelès, the owner and CEO of the defunct crypto exchange that lost $500 million worth of bitcoin in 2014, was convicted Friday for falsifying data. He was found not guilty on all other charges and given a suspended sentence (CNN Business).

The bitcoin that was lost in 2014 would be valued at $2.9 billion today. If you’re interested in the history behind Mt. Gox, TNW has a great (and brief) explainer.

Samsung has finally confirmed that its Galaxy S10 phone will include a crypto wallet. But that crypto wallet won’t be able to store bitcoin – at least initially. For now, the wallet can handle only ethereum and ethereum-based tokens (CoinDesk).

And Finally…

Thursday, March 14, was Pi Day – the day we celebrate everyone’s favorite irrational number (the date 3/14 matches up with 3.14, the first three digits in Pi) and our love for pie. In honor of Pi Day, the Fix is ranking our favorite pies – and giving you the first 20 decimal places in Pi.

Pies

  1. Blueberry
  2. Apple
  3. Key lime
  4. Pumpkin
  5. Pecan

Pi: 3.14159265358979323846

And that’s your News Fix.

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