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Good Morning!
TGIF! Let’s see what’s going on in the finance world today:
👉 Peleton lands major partner
👉 Shipping in Red Sea is halted
👉 Credit markets face challenges
PELOTON: Lands Huge Partner
Peloton made a huge deal with TikTok, aiming to reshape its image and reach a wider customer base as it faces declining sales and profits. This partnership will introduce a new fitness section on the social media site named "#TikTokFitness Powered by Peloton." This hub will host a variety of content, including brief fitness videos, extended live classes, material from Peloton's instructors, and collaborations with TikTok influencers.
This move comes six months after Peloton repositioned itself as a comprehensive fitness brand accessible to everyone, coupled with the introduction of a tiered pricing model for its application. These initiatives are part of Peloton's strategy to redefine itself beyond being just a high-end exercise equipment manufacturer, aiming to attract new clientele who might find its premium fitness machines unaffordable but are interested in subscribing to its digital content offerings.
Source: CNBC
Peloton gained significant popularity on Wall Street during the Covid-19 pandemic as gyms closed and consumers turned to its stationary bikes and home treadmills. However, as the pandemic eased and life returned to normal, the company saw a sharp decline in demand.
🎯 GRIT TAKE: This is a huge deal…upgrade to VIP to read the full GRIT Take.
SHIPPING: Halted In Red Sea
On Friday, Maersk, a leading shipping company, announced its decision to continue rerouting its ships away from the Red Sea for an indefinite period due to ongoing safety concerns amidst repeated attacks by Houthi militants.
This rerouting strategy involves bypassing the most direct route between Europe and Asia, which is through Egypt’s Suez Canal, and instead taking the lengthier Cape of Good Hope passage around southern Africa.
Source: gCaptain
The impact of this diversion has been felt across various European businesses. Companies like Ikea from Sweden, the UK's Next, and the appliance manufacturer Electrolux have all reported potential delays in certain products because of these supply chain disruptions.
Maersk had previously resumed its shipping operations through the Red Sea and Gulf of Aden after a temporary halt in December. However, the company was compelled to stop again this Tuesday following an attack on one of its vessels.
CREDIT: Markets Face Challenge
As we step into the new year, the credit markets have faced a challenging start, marked by one of the most pronounced cross-asset sell-offs in recent memory. This has led to a significant decrease in value, with losses running into hundreds of billions of dollars. According to Bloomberg's data, the combined worth of the high-grade and junk bond markets has diminished by about $240 billion, dropping to $13.6 trillion. This is the lowest it has been since December 13.
Source: Vanity Fair
The decline in market value was compounded by the bond index rebalancing that occurred at the end of the last month. To put it into perspective, the global credit market's overall value was one trillion dollars less than its present level at the end of October.
Headlines You Need To Know: 🎙
The Man Who Defied All Odds
This man defied all odds, became a billionaire, and then paid for an entire college tuition for a whole graduation class.
Robert Smith was born in 1962 in Denver, Colorado, where his parents were both school principals, and they instilled in him a deep respect for philanthropy and education. After graduating from Cornell with a degree in chemical engineering, Smith worked at Goldman Sachs for six years, where he spent his time overseeing a $50 billion portfolio in mergers and acquisitions.
Source: Yale
Smith left Goldman Sachs in 2000 to launch his own fund, Vista Equity Partners, that focused on Enterprise Software, specifically financing their debt. However, no one believed in Smith’s vision because enterprise software companies had no hard assets that could be put up as collateral. In response, Smith presented his investors with the future revenue of subscription-based businesses, and the projections blew them away.
Today, Vista Partners is worth over $85 billion and is one of the largest and most successful investment tech firms around and Robert Smith is a billionaire. In fact, in 2019, during his graduation speech to Morehouse College, he paid for every graduating student’s college tuition.
Chart of the Day
📊 The Average 401K Balance In The Past 5 Years
Source: Fidelity, Unusual Whales
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