Key Events

👉 The FTC bans noncompetes

The Federal Trade Commission (FTC), which is responsible for fostering fair competition, bans the use of non-compete employee contracts in the US, arguing that that they
Restrict the freedom of workers
Suppress wages
Slow down new business formation.

Non-compete clauses are contractual clauses that prohibit employees from engaging in certain competitive activities such as working for a competitor, starting a competing business, or soliciting clients from a former employer. Approximately 1 in 5 Americans are employed under noncompetes.

The FTC estimates a labor market free from noncompetes could see wages grow $400 billion over the next decade, and new business formation to grow to 8,500/year.

👉 US to ban TikTok unless sold

President Biden signed the bill that will force TikTok’s parent company ByteDance to sell the platform to a US company, or the app will be banned in the US.

Bytedance has 270 days to find a buyer, and if they are unable to do so, then mobile users will be unable to download or update the app. The earliest a ban could occur is January 2025. If there is progress in divesting the business, President Biden can grant an additional 90 days.

Why does this matter? It puts the ban behind the presidential election to prevent outrage.

Meta and Google are consensus winners in this decision. Analysts estimate Meta could draw 60% of TikTok US ad revenue, and Youtube could take another 25%.

👉 Tesla stock rises despite poor earnings

In Tuesday’s earnings call, Tesla reported a poor quarter with EPS down ~50% y/y, but this was expected. Price cuts had a significant impact, compressing gross margins 18%.

Tesla stock jumped 12% post-market on expectations of accelerated launch of Model 2 (2H25).

People often think that if a company misses earnings, the stock price should drop, and if it doesn’t, they believe it is a growth stock, thus driven by sales. But, this is not the case.

Stock price reflects the market’s price-implied expectation which are based on forward looking statements. This is updated when a company provides guidance during earnings calls. This is what leads the stock to fluctuate. It’s not because of historicals, but the market’s adjustments to future expectations.

Mergers & Acquisitions

Communications infrastructure REIT Uniti Group is in advanced talks to reunite with telecom provider Windstream in a deal worth up to $15B.

Private Equity

CVC Capital Partners is exploring options for its controlling stake in $11.8B Italian drugmaker Recordati.

Initial Public Offerings

Microsoft-backed cloud and data security startup Rubrik’s $713M IPO is ~20x oversubscribed.

Venture Capital

Independent renewable energy provider Nexamp secured a $520M capital raise.