Scout Daily Update: JOLTS Weakens

STOCK NEWS

Tesla Motors Inc (NASDAQ:TSLA): Shareholders will have a special meeting on November 17th to vote on the Solar City merger plan. Tesla plans to issue 11,080M shares of Tesla common stock. Tesla Motors Inc (NASDAQ:TSLA) shareholders will own 93.1% of the combined companies and SolarCity shareholders will own 6.9%.

Amazon.com, Inc. (NASDAQ:AMZN): is launching Amazon Music Unlimited streaming service. There are a few pricing tiers: $7.99 per month, $79 per year for Prime members, $9.99 for non-Prime members, and Echo-only plan for $3.99 per month, and a family plan for $14.99 per month or $149 per year. Jeff Bezos made the following statement on the acquisition “Amazon Music Unlimited brings real value to the millions of people who are already Prime members, with a choice of subscribing for only $7.99 a month or even $79 per year. Plus, customers are going to love Amazon Music’s all-new app for iOS, Android and desktop. And if you want a sense of the future of voice-controlled music, go ahead and ask Alexa for a free Music Unlimited trial, and play around on your Echo. If you don’t know the name of a song but know a few lyrics, if you want to hear songs from a specific decade, or even if you’re looking for music to match your mood, just ask.”

Sprint Corp (NYSE:S): will be mortgaging 14% of its airwaves which is worth $16.4 billion. The firm is looking to raise $3.5 billion. This would be able to satisfy the capital constraints the firm has as it had $3.17 billion in negative cash flow for the fiscal year ending in March. Partially because of this deal the firm expects to be rated investment grade by Moody’s and Fitch.

Danaher Corporation (NYSE:DHR): agreed to buy Phenomenex which is a supplier to Danaher. It is a privately held manufacturer and distributor of high-value consumables for separation sciences. Ross Muken, who is an analyst at Evercore ISI, estimates Danaher Corporation (NYSE:DHR) paid $700 million for the company. At this purchase price the firm had an enterprise value to revenue multiple of 3.5X as it has $200 million in revenues. It has an enterprise value to EBITDA multiple in the low teens, giving it a 10% return on invested capital by the 5th year.

ECONOMIC NEWS

The big economic news of the day was the JOLTS job openings index had the biggest miss on record. This is a bad sign, but it needs to be taken with a grain of salt given it has only been calculated for a few years. The takeaway from this labor data is that the labor market is peaking. Employment is a late cycle indicator so it should weaken further sometime by the end of this year or early next year.