Skip to Content

Salesforce Leadership, Samsung Splurge, Snap Volatility: CEO Daily for August 8, 2018

Good morning.

Elon Musk doesn’t much like short-sellers, stock analysts, or annoying reporters like me who raise questions about his campaign to save the world. So if someone is willing to give him the money to take Tesla private, and avoid such scrutiny, why shouldn’t he? That’s what he suggested he was going to do in a note to employees yesterday. “Funding secured,” he claimed, at a price of $420 a share — 20% over the market price. Musk’s comments caused Tesla’s stock price to jump 10% (the markets half believed him), putting pesky short sellers in a squeeze.

But if anyone is really considering giving Musk the money to pull off this maneuver, they should ask themselves this: when in the history of business have the outspoken opponents of transparency and scrutiny turned out to be the good guys? If CEO Daily readers can think of such an example, please send it to me. (By the way, I could ask the same question about politicians who rail against transparency and scrutiny.)

Tesla was not the only stock that had a good day yesterday. Amazon, Alphabet and Microsoft all moved closer to the trillion dollar benchmark, and the S&P 500 approached its January all-time high. The U.S. markets are brushing off the threat of a serious trade war, even though that threat seemed to intensify yesterday.

By the way, while I believe no one wins a trade war, markets seem to be taking Trump’s view that the U.S. can prevail. While U.S. markets are near their year highs, Chinese markets are down 20% for the year.

News below.

Alan Murray
@alansmurray
alan.murray@fortune.com

Top News

Salesforce Leadership

Salesforce vice chairman and president Keith Block is becoming co-CEO alongside Marc Benioff, the company has announced (via a Fortune exclusive.) “This announcement really reflects how Salesforce is run today, which is that Keith and I over the last five years have developed a very strong partnership,” Benioff said. “We wanted to cement that, so we’ve exchanged our vows and now we’re co-CEOs.” Fortune

Samsung Splurge

Samsung plans to invest around $22 billion over the next three years in artificial intelligence, 5G mobile tech, car components and biopharma, the South Korean company said today. The investment, which represents a 6% rise over spending in the last few years, is intended to help Samsung grow beyond its weakening core businesses: chips and smartphones. Wall Street Journal

Snap Volatility

Saudi billionaire Prince Al-Waleed bin Talal has spent $250 million on a 2.3% stake in Snap. Combined with Q2 revenues that beat analyst expectations, the news saw Snap’s shares pop by as much as 14%, though only after plunging 11% first. The social media company also reported a sequential decline in daily active users—a result of Snapchat’s redesign, the firm admits—but continued growth in monthly users. Bloomberg

Papa John’s

Papa John’s shares plunged more than 8% after the company reported a 6% same-store sales decline that outstripped analysts’ fears. Ousted founder John Schnatter was quick to comment: “Instead of addressing the real and fundamental issues confronting the Company since [Steve Ritchie took over as CEO] and taking actions to turn sales around, the Company is trying to deflect attention from the source of the problem—management’s ongoing failures with regard to financial performance—and blame me for its problems.” Fox Business

Around the Water Cooler

Amazon Groceries

Amazon is launching a grocery pickup service, where Prime subscribers can order their groceries online and pick them up at Whole Foods stores—a bit like what Kroger and Walmart already offer. This “click and collect” feature is cheaper than delivering groceries to people’s homes. Amazon’s new service will launch first in Sacramento, Calif. and Virginia Beach, Va. Fortune

Facebook and Banks

Reports recently stated that Facebook has been asking banks to turn over customers’ transaction data, but the social network says it’s only trying to serve users who opted into accessing certain financial data through the Messenger app, and it does not use the information for advertising purposes. Facebook: “Like many online companies with commerce businesses, we partner with banks and credit card companies to offer services like customer chat or account management…The idea is that messaging with a bank can be better than waiting on hold over the phone—and it’s completely opt in.” BBC

Chemical World

Under a late Obama-era law, the EPA has to evaluate tons of chemicals to see if they need regulating. However, following successful industry lobbying, in most cases the agency has decided to do so without factoring in their effects on the air, ground or water. This makes the evaluations less than useful when determining if the chemicals are dangerous if improperly disposed of. New York Times

German Rules

Germany is to bolster its defences against Chinese acquisitions by increasing the government’s ability to veto deals. The veto will apply to acquisitions of at least 15% of a German firm from outside the EU, if there’s any threat to public order or national security—currently, the threshold is 25%. “We want to be able to take a much closer look at companies in the defence sector and in critical infrastructures, and certain other civilian technologies that are relevant to security, such as IT security,” said economics minister Peter Altmaier. Financial Times

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.