Equity podcast: Stocks swing after earnings for Tesla, Apple, Spotify, Snap

It was another big week for earnings on “Equity,” TechCrunch’s podcast about venture capital and the tech business. But this week, it wasn’t all good news. Spotify stumbled after its first quarterly report since joining the stock market. Tesla shares were down after Elon Musk’s unusual earnings call. Snap hit a record low after failing to gain traction with its redesign. Apple, however, surprised Wall Street when iPhone sales didn’t disappoint. We also recapped the successful IPOs for DocuSign and Smartsheet. Our special guest this week was M.G. Siegler, general partner at GV (formerly Google Ventures). In a previous life, he wrote for TechCrunch. We also had TechCrunch editor Connie Loizos, who will be helping out with the show now that I’m leaving. Yes, that’s right, I’m sad to say that it’s my last episode of “Equity.” I’ve accepted a new opportunity that I’m excited about
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Pandora shares up 8% after surprise earnings beat

Pandora’s quarterly earnings report was music to investor’s ears. The digital radio platform reported a better-than-expected first quarter report after the bell on Thursday, sending shares up 8% in after-hours trading. Wall Street liked that the company showed a sizable increase in subscriber revenue, posting $104.7 million, a 63% increase from last year. Pandora has 5.63 million paid listeners, up 19% from the same timeframe in 2017. By contrast, Apple Music says it has 40 million subscribers and Spotify has 75 million, so Pandora is a distant third in terms of paid users. But the competition is already reflected in Pandora’s stock price. It closed Thursday at $5.75, which is up a buck for the past month. It’s also substantially beneath the $37 per share that the stock was trading at in 2014. Its market cap is currently $1.45 billion. In addition to subscribers, Pandora makes
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Birchbox ownership changes hands after beauty business does recap

Beauty-in-a-box brand Birchbox has changed up its ownership structure.

The New York-based startup, which has raised almost $90 million in funding from noted venture firms like Accel Partners and First Round Capital, has a new majority owner in hedge fund Viking Global, sources confirm to TechCrunch.

First reported by Recode, Birchbox made some changes to its cap table after failing to find a suitable buyer. We are told that the details are still getting finalized, but that Viking is expected to take on a majority stake after investing about $15 million. Viking previously led Birchbox’s $60 million funding round in 2014.

Birchbox did not respond for comment. 

Birchbox has managed to become a household name amongst its targeted demographic of female millennials, but its business has faced challenges amidst growing competition. Ipsy, Glossybox, Sephora and Allure Magazine are amongst the many beauty sample box subscriptions that consumers can

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Utah’s Pluralsight unveils IPO filing

Pluralsight, the Utah-based education technology company, has revealed its IPO filing.  Given the timing of the unveiling, the company is likely targeting a May public debut. Its core business is online software development courses, helping people improve their skills in categories like IT, data and security. Businesses small and large pay Pluralsight to help train their employees. It also has offerings for individual subscribers. In the filing, the company acknowledges that it is a competitive landscape, and names Cornerstone OnDemand, Udacity, Udemy, LinkedIn Learning as others in a comparable market. It also mentions General Assembly, which was recently acquired by Adecco for $413 million.  This is the first glimpse we get at Pluralsight’s financials. For 2017, the company brought in $166.8 million in revenue, up from $131.8 million in 2016 and $108.4 million in 2015. Losses are growing, however. This is partly due to a
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Zillow surprises investors by buying up homes

Real estate platform Zillow changed up its business model this week, announcing that it plans to purchase and sell homes in Las Vegas and Phoenix. Zillow will be working with Berkshire Hathaway and Coldwell Banker to make offers on homes before it finds a buyer. Zillow will pay commissions and also “make necessary repairs and updates and list the home as quickly as possible.” Calling it “Instant Offers,” Zillow says,
“the program gives real estate agents the opportunity to acquire new listings by connecting them with motivated sellers who have taken a direct action to sell their home. Across all testing, Zillow found the vast majority of sellers who requested an Instant Offer ended up selling their home with an agent, making Instant Offers an excellent source of seller leads for Premier Agents and brokerage partners.”
Shares fell 7% on Friday, following the revelation. This is a
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Ad king Sir Martin Sorrell steps down from WPP following misconduct investigation

There’s big news in the world of advertising. Sir Martin Sorrell has stepped down from WPP, the world’s largest ad business. Sorrell had been in the midst of an unspecified investigation about “personal misconduct and misuse of company assets.” He has denied the allegations. WPP provided us with the following statement.
“Sir Martin Sorrell has stepped down as Chief Executive Officer of WPP with immediate effect. Robert Quarta, Chairman of WPP, becomes Executive Chairman until the appointment of a new Chief Executive Officer…Sir Martin will be available to assist with the transition. The previously announced investigation into an allegation of misconduct against Sir Martin Sorrell has concluded. The allegation did not involve amounts that are material…Sir Martin will be treated as having retired…
The $20.8 billion British company owns big brands in the marketing and communications world, including Olgivy & Mather, Young & Rubicam and 400 others. 
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Elon Musk says ‘humans are underrated,’ calls Tesla’s ‘excessive automation’ a ‘mistake’

In a rare mea culpa for the mercurial billionaire, Tesla CEO Elon Musk acknowledged that the company has been too reliant on robots for production.

“Excessive automation at Tesla was a mistake,” Musk wrote, responding to a Wall Street Journal reporter’s tweet. “Humans are underrated.” He also talked about this with CBS News’ Gayle King, adding “we had this crazy, complex network of conveyor belts….And it was not working, so we got rid of that whole thing.” Tesla has faced mounting public pressure amid a production slowdown for its Model 3, its lower-priced car. The company recently revealed that it missed its target to produce 2,500 cars a week, disappointing investors. The uncertainty has resulted in a volatile stock. A month ago shares were trading

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Subscription biller Zuora soars 43% following IPO

Subscription biller Zuora was well-received by stock market investors on Thursday, following its public debut. After pricing its IPO at $14, the company closed at $20, valuing the company around $2 billion. It was also much higher than expected. The company said in its filings that it planned to price its shares between $9 and $11, before it raised that range to $11 to $13. Founder and CEO Tien Tzuo told TechCrunch that he believes “a bet on us is really a bet on an entire shift to a new business model, to a subscription economy.” He is optimistic that subscriptions are the “business model of the future.” Zuora sees itself as an early pioneer in a growing category. The company believes that more businesses will shift their business models to subscriptions, across sectors like media and entertainment, transportation, publishing, industrial goods and retail. It helps its 950
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Conductive Ventures launches $100 million enterprise fund

There’s a new venture fund in town from some familiar faces. Carey Lai, who previously worked at Intel Capital and IVP, is joining forces with Paul Yeh, formerly of Kleiner Perkins. They’re calling it Conductive Ventures and it’s launching with $100 million under management. They’ll be investing in “expansion stage” companies across enterprise software and hardware categories, meaning Series A, Series B and beyond. Check sizes will be between $2 million and $7 million dollars. They expect to invest in 10-15 companies for this first fund. Conductive will be looking for “early product market fit with customer success,” Lai told TechCrunch. Then the plan is to “help them grow their businesses abroad.” It’s not a corporate venture arm, but Conductive has Panasonic as its sole LP. Because of this, there will be a special focus on helping North American startups expand into Asia, particularly Japan. Lai and Yeh touted
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6 River Systems raises $25 million for warehouse robots

As the e-commerce industry continues to explode, one startup that’s benefiting is Boston-based 6 River Systems. The business, which builds robots that speed up production in warehouses, has raised $25 million in Series B financing in a round led by Menlo Ventures, with participation from Norwest Venture Partners, Eclipse Ventures and iRobot. 6 River says it has gained early traction with its robot, “Chuck.” Jerome Dubois, founder and CEO, said that he believes 6 River has built “the first and only collaborative robot with the associates in the aisles doing the work.” In other words, 6 River aims to help humans be more efficient. Chuck keeps warehouse employees on task by guiding them through the facility through each step of the packaging process. It can glide around the room and also has a touchscreen to help workers locate items. Chuck uses sensors to help detect worker productivity. It’s
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JUMP Bikes weighing Uber acquisition, investment offers

JUMP Bikes, the on-demand biking service that integrates with Uber, has been weighing both acquisition and investment offers. A decision has not yet been reached, but right now possible options include a sale to Uber at a price that exceeds $100 million, or a venture investment round, multiple sources tell TechCrunch. One of the possible investor names that has been floated is Mike Moritz of Sequoia Capital, but we are told that JUMP has multiple options. We are also told that various parties have been upping their offers over the past week, as they fiercely compete to get ownership of JUMP.  “E-bikes” are expected to become more popular, where users are able to find and rent bikes quickly via apps. JUMP launched as Social Bicycles in 2008, but the startup recently rebranded as JUMP when it announced its $10 million Series A investment round a few months back.
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Spotify traded down 10% on first day, achieved $26.5 billion market cap

Spotify is done with its long-awaited “direct listing” experiment. The music streaming company went public without the IPO. After completing its first trade halfway through the day at $165.90, Spotify fell to $149.01. It was a down day on the stock market, but at a $26.5 billion market cap, it’s up from the private market trading that happened in the months leading up to the IPO. The top end of that range, $132, was used as a “reference point,” valuing the company at $23.5 billion. Since there was no IPO price, that demarcation is being used to say that Spotify traded up about 13% on its first day. Yet while it achieved a desirable market cap, some on Wall Street are puzzled as to why Spotify would want to go public without raising money. One myth that’s been floating around is that Spotify did this to
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Spotify opens at $165.90, valuing company at almost $30 billion

Spotify opened on the New York Stock Exchange at $165.90, giving the company a market value of $29.5 billion. The first trade didn’t happen until 12:45pm Eastern. This is halfway through the trading day, and a record for the latest opening time for a public debut. Shortly after the open, shares fell to a little above $160. The digital music company isn’t selling its shares on the stock market, meaning the company isn’t raising any money today. Instead, the event known as a “direct listing,” is a collection of transactions from existing shareholders (like employees and investors) selling shares directly to stock market investors. It took a while for the market makers to sort this out. Spotify is basically trying to recreate the secondary market activity that happened before it went public.  The company says that in 2018, shares traded on the private markets between $90 and $132.50.
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What to expect when Spotify goes public Tuesday

Digital music giant Spotify is joining the stock market on Tuesday, making it the biggest consumer tech company to go public since Snap debuted early last year. But unlike Snap, Spotify isn’t doing an IPO. The “o” part of IPO stands for offering and Spotify isn’t raising any money. Instead, existing Spotify shareholders will be selling shares directly onto the stock market. This means that employees, venture capitalists or anyone else who managed to buy Spotify shares on the  “secondary markets” can make money right away. But Spotify doesn’t know yet how many will want to sell their shares. In fact, no one really knows how this “direct listing” is going to go. Even in Spotify’s prospectus, the company acknowledged that what it’s doing is “risky.” Smaller companies have listed without an IPO, but for a company of Spotify’s size, this is unprecedented. Co-founder and CEO Daniel Ek claims
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What to expect when Spotify goes public Tuesday

Digital music giant Spotify is joining the stock market on Tuesday, making it the biggest consumer tech company to go public since Snap debuted early last year. But unlike Snap, Spotify isn’t doing an IPO. The “o” part of IPO stands for offering and Spotify isn’t raising any money. Instead, existing Spotify shareholders will be selling shares directly onto the stock market. This means that employees, venture capitalists or anyone else who managed to buy Spotify shares on the  “secondary markets” can make money right away. But Spotify doesn’t know yet how many will want to sell their shares. In fact, no one really knows how this “direct listing” is going to go. Even in Spotify’s prospectus, the company acknowledged that what it’s doing is “risky.” Smaller companies have listed without an IPO, but for a company of Spotify’s size, this is unprecedented. Co-founder and CEO Daniel Ek claims
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Gwyneth Paltrow’s Goop raises another $50 million

Actress-turned-entrepreneur Gwyneth Paltrow is getting more capital to accelerate her startup’s growth. Goop, the lifestyle brand which she founded ten years ago, is announcing a $50 million Series C round from NEA, Lightspeed Venture Partners and Felix Capital. It brings the total outside investment to $82 million. A source close to the situation tells us that the latest round is being done at about a $250 million post-money valuation, although the company denies it. Pitchbook has separately reported Goop’s post-money valuation to be $250 million. Paltrow is more than just a celebrity attached to the company. She also runs it as creative director and CEO and has become nearly as well-known for her unusual diet and beauty rituals as for her Oscar-winning acting. Goop, meanwhile, is growing. Not only does its digital property feature content about fashion, travel, and beauty, but it increasingly sells relevant products, something the company calls “contextual
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DocuSign unveils IPO filing

DocuSign has unveiled its IPO filing, confirming our scoop from last week.  The company had previously filed confidentially and the timing of the filing revelation implies that DocuSign is hoping to go public in late April. Founded in 2003, the San Francisco-based e-signature company has been an anticipated IPO for a while. It’s raised over $500 million over the past 15 years and has been valued as high as $3 billion.  The filing gives us a first glimpse at the company’s financials. Last year saw $381.5 million in revenue, up from $250.5 million the year before. Losses for last year were $115.4 million in revenue, down from $122.6 million for 2016. “We have a history of operating losses and may not achieve or sustain profitability in the future,” the company warned in the requisite “risk factors” section of the prospectus. The filing reveals
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Netflix adds former White House security advisor Susan Rice to its board

Netflix has added a board member with some big political connections: Susan Rice, who worked in the Obama administration as national security advisor and ambassador to the UN. “For decades, she has tackled difficult, complex global issues with intelligence, integrity and insight and we look forward to benefiting from her experience and wisdom,” said founder and CEO Reed Hastings in a statement. Rice directed the National Security Council staff between 2013 and 2017 and also provided the daily national security briefing to President Obama. Other members of Netflix’s board include tech execs like Microsoft president Brad Smith and Zillow co-founder Richard Barton, and investors from TCV and Redpoint. Netflix shares have nearly doubled in the past year.  The company has a market cap of $124 billion.

Microsoft surges 8% after Morgan Stanley says it will reach $1 trillion market cap

The Dow surged 669 points on Monday after trade tensions eased. Tech stocks like Amazon and Apple saw gains, but the biggest winner of all was Microsoft . The Seattle tech giant, which is a Dow 30 company, benefitted not only from the solid stock market day, but also because a Morgan Stanley analyst had kind things to say about it. Keith Weiss wrote in a note to clients that he’s raising his 12-month price target to $130, an almost 50% increase from the $90 shares traded at last week. This would give the company a market cap of $1 trillion. He’s particularly bullish on Microsoft’s cloud business. He believes that it will continue to do well, despite competition from Amazon and Google. He also likes the Office 365 software. The race to $1 trillion has been talked about for several years. Apple is currently in the lead with a market cap
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Dropbox up another 7% on day two

Dropbox’s surge on the stock market has continued, with the company going up another 7 percent on its second day on the stock market. The company saw its shares close at $30.45, giving the company above a $13 billion market cap, fully diluted. When it priced its IPO, there was a question as to whether Dropbox would surpass the $10 billion valuation it achieved in its last private round. It eliminated those concerns overnight. The first few days have been a strong indicator of investor demand for the cloud storage company. To recap, Dropbox initially hoped to price its IPO between $16 and $18, then raised it from $18 to $20. Then it ultimately priced its IPO at $21, closing the day above $28. And it still continues to go up. Bankers price IPOs to “pop” or go up about 20 percent on the first day. The surge implies that Dropbox
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