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| Hello Insiders! Today's business newsletter covers: - 🤝 ESPN rebrands Barstool Sportsbook as ESPN Bet and divests Barstool Sports to its founder, David Portnoy.
- 💵 U.S. credit card debt balance surpasses $1T for the first time.
- 🔍 SEC hits Wells Fargo and BNP Paribas with hundreds of millions of dollars in fines over WhatsApp and email communications.
Also, tell us how businesses can adapt to changing consumer behaviors and preferences here! If you find this newsletter helpful, please share it with your friends and colleagues. Thank you. Arbër
p/Arber | |
| 1 | | ESPN is partnering with Penn Entertainment to rebrand Barstool Sportsbook as ESPN Bet. Penn also announced that it has divested its stock in Barstool Sports. More: - As part of the agreement, Penn will pay ESPN $1.5B over a 10-year period, while ESPN also has warrants to buy around 31 million Penn shares.
- Barstool Sports, which was acquired by Penn earlier this year for $388M, will be divested to its founder, Dave Portnoy.
- Due to a stipulation in the contract between Penn and Portnoy, Penn will receive 50% of a possible future sale of Barstool Sports.
- In a public video, Portnoy stated that operating in a regulated market is not "the right thing" for Barstool and that he intends never to sell the company again.
- ESPN Bet will launch this fall and will be available in 16 states in the U.S.
- Penn's betting business became the first to be profitable in the first three months of the fiscal year, a period when betting companies usually struggle.
Zoom Out: - Barstool Sports is a New York-based sports journalism and mainstream culture media outlet. Founded in 2003, the company became one of the most popular sports blogs and launched some of the most downloaded podcasts in the U.S.
- The company became a source of controversy when Portnoy was accused of sexual misconduct in 2021. Portnoy denied the accusations and called the articles published on him "hit pieces."
- He later sued Business Insider over the news outlet's stories on the matter, but a judge dismissed the suit in November 2022.
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| 2 | | Credit card debt in the U.S. surpassed $1T for the first time in Q2. 
What the numbers say: Consumers added $45B in credit card debt this past quarter. The trend is in line with recent years, where with the exception of the pandemic, U.S. credit card debt has consistently increased. Relevance: The $1T figure has made economists question whether U.S. consumers can withstand the financial pressure that comes from owing a debt that is generally not forgiven. Combined with student debt and auto loan debt, U.S. citizens owe over $3T. More data: Auto-loan balances rose by $20B, reaching $1.58T. This means that auto loan debt has now exceeded student debt for the first time since 2009. Student-loan balances fell by $35B, totaling $1.57T. The figure is set to change once Federal student loan payments are no longer suspended after October. Balances increased by $45B, the most out of all debt types, while delinquency rates returned to pre-COVID-19 levels. | | | |
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| 3 | | The SEC has hit Wells Fargo and BNP Paribas with hundreds of millions of dollars in fines over unrecorded WhatsApp, text, and email communications between employees. The two companies are the last to be fined in a string of investigations conducted by the government agency in recent years. More: - Wells Fargo will pay $125M to the SEC, while BNP Paribas will pay $35M. Additionally, the two financial institutions were also fined by Commodity Futures Trading Commission and will pay $75M each.
- The SEC has also warned other financial companies that their messaging practices are being monitored and warned them to cooperate with the agency before it is forced to investigate on its own.
- Financial organizations are required to monitor and save communications that are related to their business, even when they are conducted off their working hours. According to regulators, failing to do so makes their job harder and increases the chances of manipulation and wrongdoing, thus causing them to investigate.
Zoom Out: - Overall, the amount in fines related to suspicious messaging practices has now surpassed $2.5B since December 2021.
- Last year, banks such as Bank of America Corp., Citigroup Inc., and Goldman Sachs Group were obliged to pay fines surpassing $1B.
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| 4 | | The government of Italy has passed a controversial one-off 40% tax on banks' profits from interest rates, vowing to use the funds to help people with borrowing costs. The government is set to receive around $2.1B from the levy. More: - The decision caused shares of the major banks in Italy to plummet and led to widespread criticism over the possible negative effects the tax may have on the country's banking sector.
- Shares of Intesa Sanpaolo and UniCredit, two of Italy's largest banks, dropped by 8% and 6.5%.
- Italian deputy prime minister Matteo Salvini said that banks had profited billions from interest rates, hinting that the decision is not detrimental to their ability to operate. Italian Foreign Minister Antonio Tajani stated that the decision is not against banks but rather one that "protects families."
- Italy's parliament now has 60 days to pass the tax proposal into law.
Zoom Out: - Other European countries such as Hungary, Spain, and Lithuania have also recently implemented windfall taxes on banks.
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| 5 | | Rivian reported a quarterly net loss of $1.2B, beating analyst estimations. The company stated that it expects to deliver 52,000 vehicles in 2023, double what it delivered in 2022. More: - Rivian had $1.12B in revenue, beating the $1B analysts estimated the company would make.
- The company's $1.2B net loss represents an improvement compared to the same period in 2022 when it had a $1.7B net loss.
- Rivian delivered 12,640 vehicles during the second quarter, up 59% from its Q1 delivery number total.
- It produced 13,992 vehicles in Q2, up from 9,395 in Q1 2023 and 4,401 in Q2 2023.
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| 6 | | Alltrna has raised a $109M Series B to develop therapies for "Stop Codon Diseases." Stop Codon Diseases is a term that includes cystic fibrosis, muscular dystrophy, cancer, etc. More: - Stop Codon Diseases occur when the code for an amino acid has been mutated into a premature stop codon, resulting in protein activity that is hindered and, thus, creates disease.
- Stop Codon Diseases affect around 30 million people globally.
- Flagship Pioneer led the funding round, while Alltrna's founder also participated in the round.
- The company is based in Cambridge, Massachusetts.
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- WeWork has stated that it has substantial doubts about whether it can continue operating in the foreseeable future due to its financial obligations.
- Ryanair CEO Eddie Wilson has said that Italy's new law that aims to protect consumers from price fluctuations is illegal and steps on the principles of a free market economy.
- Greta Gerwig, the director of "Barbie," has become the first woman to direct a movie that has earned $1B at the global box office.
- Financial SaaS platform Credgenics raised $50M in a round led by WestBridge Capital, Accel India, Tanglin Venture Partners, and Beams FinTech Fund. The funding round values the company at $340M.
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Term of the Day Internal rate of return: VC firms use internal rate of return (IRR) to analyze a fund’s performance and give the annualized percentage returns earned by the fund. Question of the Week Do you think the 9-to-5 workday still relevant in today's modern workplace? Join the conversation |
INSIDE BUSINESS LEADERBOARD (7 DAYS) |
 | Writer | | Arbër is an Inside writer who also has experience in entrepreneurship. He has experience covering Consumer Tech, Venture Capital, NFTs, Crypto, etc. Arbër holds a Bachelor's degree in Business from XAMK University in Finland. When he is not reading(and writing) business news, he chooses to watch sports or anime...and then read news about sports or anime. | | This newsletter was edited by Aaron Crutchfield | |
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