Sheryl Sandberg, chief operating officer of Facebook Inc.
David Paul Morris | Bloomberg | Getty Images
Former Meta operating chief Sheryl Sandberg is leaving the company’s board of directors.
“With a heart filled with gratitude and a mind filled with memories, I let the Meta board know that I will not stand for reelection this May,” Sandberg wrote in a Facebook post on Wednesday.
Sandberg, 54, joined Facebook in 2008 as Mark Zuckerberg’s top deputy after spending about seven years at Google. In 2012, she became a board member at the company. During her tenure, Facebook rose from a highflying startup to become one of the most valuable companies in the world, topping a $1 trillion market cap at its peak in 2021.
Sandberg announced her departure from Meta in mid-2022, following multiple controversies that dogged the company and sullied its reputation among users, lawmakers and investors. Most notably, Facebook was central to the spread of disinformation ahead of the 2016 election and during the early days of the Covid pandemic in 2020. The company has also been in the subject of antitrust investigations and was scrutinized in Sandberg’s waning days for its insufficient efforts to combat hate on its platform.
When Sandberg stepped down as Meta COO in June 2022, she was replaced by Javier Olivan, who had been serving as Meta’s chief growth officer.
Since leaving Meta, Sandberg has dedicated much of her time on her LeanIn.org nonprofit, which focuses on empowering women tin the workplace, and related projects.
“I wanted my new chapter to be able to really make a difference,” Sandberg told CNBC Make It in August. “We’ve been in development on this since I was at Meta, but being able to have the time to put into [this launch] and to really be … a bigger part of this has meant a lot to me.”
Shortly after Sandberg’s post, Zuckerberg responded with a short reply.
“Thank you Sheryl for the extraordinary contributions you have made to our company and community over the years,” Zuckerberg wrote. “Your dedication and guidance have been instrumental in driving our success and I am grateful for your unwavering commitment to me and Meta over the years. I look forward to this next chapter together!”
Meta technology chief Adam Bosworth wrote, “Amazing run Sheryl, thank you so much for everything you did for all of us and also for me personally.”
Meta’s board consists of Zuckerberg, who serves as chairman, as well as former PayPal Executive Vice President Peggy Alford, venture capitalist Marc Andreessen, Dropbox CEO Drew Houston, former McKinsey & Company senior partner Nancy Killefer, former U.S. deputy secretary of the treasury Robert M. Kimmitt, DoorDash CEO Tony Xu and Tracey T. Travis, a former CFO at Estée Lauder.
Here’s the full text of Sandberg’s post:
With a heart filled with gratitude and a mind filled with memories, I let the Meta board know that I will not stand for reelection this May. After I left my role as COO, I remained on the board to help ensure a successful transition. Under Mark’s leadership, Javi Olivan, Justin Osofsky, Nicola Mendelsohn, and their teams have proven beyond a doubt that the Meta business is strong and well-positioned for the future, so this feels like the right time to step away. Going forward, I will serve as an advisor to the company, and I will always be there to help the Meta teams.
Serving as Facebook’s – and then Meta’s – COO for 14 ½ years and a board member for 12 years has been the opportunity of a lifetime. I will always be grateful to Mark for believing in me and for his partnership and friendship; he is that truly once-in-a-generation visionary leader and he is equally amazing as a friend who stays by your side through the good times and the bad. I will always be grateful to my colleagues and teammates at Meta for all the years of working side by side and all they taught me. And I am particularly grateful to my fellow Meta board members for their lasting friendships, the guidance they provided me for so many years, and their stewardship of products that mean so much to people all over the world.
The need for second — and often third — incomes is mounting, according to a top digital bank executive.
Current CEO Stuart Sopp finds almost half of the firm’s payment customers have more than one job.
“If you’re having a paycheck over the past year, 20, 25% of paycheck depositors have at least one extra job. A further 20% incremental from there have two jobs,” Sopp told CNBC’s “Fast Money” on Thursday. “They’re trying to make that money go further because of inflation.”
“Wage inflation is moderating quite substantially,” he said. “America has a sort of tail of two cities right now. Two groups: The wealthy and less affluent.”
Sopp launched Current, which provides mobile banking without monthly fees and offers secured credit cards, in 2015. It originally focused on helping medium to lower income customers. His company Current reports almost five million members.
He’s particularly concerned about less affluent consumers spiraling into debt to pay for basic necessities.
“They’re being forced into risks like risky credit cards,” noted Sopp, a former Morgan Stanley trader. “Unsecured credit cards… are not suitable for everyone.”
Sequoia Capital and Andreessen Horowitz, two of Silicon Valley’s most high-profile venture firms, are poised to take a massive hit on their last investment in grocery delivery company Instacart, a deal that closed in 2021 as tech stocks were soaring.
In its latest IPO prospectus update, filed Friday, Instacart said it plans to sell shares at $28 to $30 apiece, valuing the company at around $10 billion at the top of the range.
That’s more than 75% below where Sequoia and Andreessen invested in early 2021. At that time, Instacart sold shares at $125 a piece for a $39 billion valuation. The delivery economy was booming because of Covid shutdowns, and Instacart’s services were seeing record demand.
“This past year ushered in a new normal, changing the way people shop for groceries and goods,” Instacart finance chief Nick Giovanni said in a press release at the time.
In the more than two years since then, Instacart and its investors have learned that growth during that period was anything but normal. Instacart was closing out a quarter in which revenue surged 200%. In the quarter before, sales jumped almost sevenfold. Instacart said it was preparing to increase head count by 50% and bolster investment in advertising.
Sequoia’s Mike Moritz, who led his firm’s investment and recently announced his departure after 38 years, said in the same press release that Instacart was “fulfilling its role as a vital service for consumers, a reliable partner for retailers and an effective platform for advertisers.” Fidelity, T. Rowe Price and D1 Capital Partners also participated in that financing round.
Then the economy reopened, inflation spiked and the Federal Reserve started boosting interest rates, which hovered near zero throughout Covid. Consumers started shopping again in person on tightened budgets, and with capital costs jumping, investors began demanding that cash-burning companies find a path to profitability. Last year, the Nasdaq suffered its steepest drop since the 2008 financial crisis.
It’s also true that venture firms haven’t seen any real returns from IPOs since before the 2022 market collapse. The dearth of exits is particularly stark because VCs invested record amounts of capital in 2020 and 2021, including deals at high valuations in areas such as crypto and fintech.
Even with the changing market conditions, Instacart has continued to grow but at a dramatically slower pace. Revenue increased 15% in the latest quarter from the year prior, and operating expenses have come down over that time, allowing the company to turn profitable.
From a valuation perspective, the bigger issue is that Instacart raised the $39 billion round during a record stretch of tech IPOs, and just a couple of months after fellow sharing-economy companies Airbnb and DoorDash had blockbuster offerings.
There hasn’t been a notable venture-backed tech IPO in the U.S. since late 2021, and Instacart and Klaviyo are the only two that have publicly filed recently. Car-sharing service Turo is also on file, but its initial prospectus came out in early 2022.
Fortunately for Sequoia and Andreessen, they began investing in Instacart when the company was in its early days and the stock price was much lower than it is today. Assuming the stock price holds up, there’s still considerable money to be made for limited partners. Because of the lock-up period, the firms can’t begin selling shares until 180 days after the offering.
Sequoia is the largest investor in Instacart, with a 15% stake on a fully diluted basis. The 400,000 shares it purchased in 2021 are a small sliver of the 51.2 million shares it owns. In total, the firm has invested about $300 million for a stake that would be worth over $1.5 billion at the top of the range.
Sequoia led Instacart’s $8.5 million Series A round in 2013, when the price was just 24 cents a share, according to the prospectus. Andreessen led the next round at $2.98, and Sequoia participated. Both firms were in the Series C at $13.31 a share and the Series D at $18.52.
Because Andreessen’s total ownership is below 5%, its full stake isn’t disclosed in the prospectus.
Representatives from Sequoia and Andreessen declined to comment.
Not until 2020 did Instacart’s share price climb to around where it is today, in a $200 million round led by Valiant Peregrine Fund and D1. Neither Sequoia nor Andreessen participated in that round.
Even if Instacart’s IPO can’t lift its valuation anywhere near its Covid-era peak, it’s likely that Sequoia, Andreessen and other venture firms are hoping it helps lift public investor enthusiasm for new tech stocks. Arm, which was taken private by SoftBank in 2016, reentered the public market on Thursday and jumped 25% in its debut.
Instacart on Monday submitted an updated filing for its upcoming initial public offering, saying it is looking to raise up to $616 million of fresh capital alongside existing shareholders at a valuation of as much as $9.3 billion.
In the filing, Instacart said it is setting an offer price of between $26 and $28 for its IPO. Instacart said it would issue 22 million shares in total, comprising 14.1 million of newly issued shares from the company and 7.9 million shares from selling stockholders. At the higher end of that pricing scale, Instacart will be looking to net roughly $616 million in proceeds.
Instacart looks set to attract a valuation of between $8.6 billion and $9.3 billion. On a fully diluted basis, its share count will total 331 million. That’s including restricted stock units, stock options and warrants.
Instacart previously said that multinational food giant PepsiCo would come on board as an investor in the company, purchasing $175 million of shares in a concurrent private placement. Goldman Sachs, one of the underwriters, will act as an agent in connection with the private placement and receive a fee equal to 1.5% of the total purchase price of shares sold.
Instacart said in its filing that Norges Bank Investment Management, Norway’s massive sovereign wealth fund, had also expressed interest in becoming a cornerstone investor in the firm’s IPO. Alongside TCV, Sequoia Capital, D1 Capital Partners and Valiant Capital Management, the fund would purchase up to roughly $400 million in the offering.
However, underwriters “could determine to sell more, fewer, or no shares to any of the cornerstone investors, and any of the cornerstone investors could determine to purchase more, fewer, or no shares in this offering,” Instacart added.
Instacart, one of the largest U.S. online grocery delivery firms, will be among the biggest public flotations to take place this year. The company competes with traditional retailers, as well as tech firms like Amazon, DoorDash, GoPuff, and Grubhub.
The company’s updated IPO filing comes as British chip design firm Arm prepares for a blockbuster debut that could value it at as much as $52 billion. Last week, Arm said the New York IPO could fetch it up to $4.87 billion in fresh capital.
The debuts will put the IPO market to the test after a year-long freeze on stock market listings as a result of higher interest rates and rising inflation. Investors are hoping for a good showing from the latest raft of public offerings — but performance will depend heavily on market conditions when the companies actually list.
Clarification: The headline of this story has been updated to clarify the valuation using the total share count on a diluted basis.
Instacart, the grocery delivery company that slashed its valuation during last year’s market slide, filed its paperwork to go public on Friday in what’s poised to be the first significant venture-backed tech IPO since December 2021.
The stock will be listed on the Nasdaq under the ticker symbol “CART.” In its prospectus, the company said net income totaled $114 million, while revenue in the latest quarter hit $716 million, a 15% increase from the year-ago period. Instacart has now been profitable for five straight quarters, according to the filing. PepsiCo has agreed to purchase $175 million of the company’s stock in a private placement.
Instacart said it will continue to focus on incorporating artificial intelligence and machine learning features into the platform, and that the company expects to “rely on AIML solutions to help drive future growth in our business.” In May, Instacart said it was leaning into the generative AI boom with Ask Instacart, a search tool that aims to answer customers’ grocery shopping questions.
“We believe the future of grocery won’t be about choosing between shopping online and in-store,” CEO Fidji Simo wrote in the prospectus. “Most of us are going to do both. So we want to create a truly omni-channel experience that brings the best of the online shopping experience to physical stores, and vice versa.”
Instacart will try and crack open the IPO market, which has been mostly closed since late 2021. In December of that year, software vendor HashiCorp and Samsara, which develops cloud technology for industrial companies, went public, but there haven’t been any notable venture-backed tech IPOs since. Chip designer Arm, which is owned by Japan’s SoftBank, filed for a Nasdaq listing on Monday.
Founded in 2012 and initially incorporated as Maplebear Inc., Instacart will join a crop of so-called gig economy companies on the public market, following the debut in 2020 of Airbnb and DoorDash and car-sharing companies Uber and Lyft a year earlier. They’ve not been a great bet for investors, as only Airbnb is currently trading above its IPO price.
Instacart shoppers and drivers deliver goods in over 5,500 cities from more than 40,000 grocers and other stores, according to its website. The business took off during the covid pandemic as consumers avoided public places. But profitability has always been a major challenge, as it is across much of the gig economy, because of high costs associated with paying all those contractors.
Headcount peaked in the second quarter of 2022, Instacart said, “and declined over the next two quarters, reducing our fixed operating cost base.” At the end of June, the company had 3,486 full-time employees.
In March of last year, Instacart slashed its valuation to $24 billion from $39 billion as public stocks sank. The valuation reportedly fell by another 50% by late 2022. Instacart listed Amazon, Target, Walmart and DoorDash among its competitors.
The biggest area for cost reductions has been in general and administrative expenses. Those costs shrank to $51 million in the latest quarter from $77 million a year earlier and a peak of $102 million in the final period of 2021. Instacart said the drop was the “result of lower fees related to legal matters and settlements.”
Simo took over as Instacart’s CEO in August 2021 and became chair of the company’s board in July 2022. She was previously head of Facebook’s app at Meta and reported directly to CEO Mark Zuckerberg. Apoorva Mehta, Instacart’s founder and executive chairman, plans to transition off the board after the company’s public market debut, according to a 2022 release.
The company’s board also includes Peloton CEO Barry McCarthy, Snowflake CEO Frank Slootman and Andreessen Horowitz’s Jeff Jordan.
Instacart will be one of the first independent grocery delivery companies to go public. Amazon Fresh, Walmart Grocery and Google Express are all units of large corporations. Shipt was acquired by Target in 2017 and Fresh Direct, another direct-to-consumer grocery delivery company, was bought by global food retailer Ahold Delhaize in 2021.
Sequoia Capital and D1 Capital Partners are the only shareholders owning at least 5% of the stock. Instacart said those two firms, along with Norges Bank Investment Management and entities affiliated with TCV and Valiant Capital Management, have “indicated an interest, severally and not jointly” in purchasing up to $400 million of shares in the IPO at the offering price.
Instacart’s move into AI has come largely through a string of acquisitions in the past two years. Those deals include the purchase of e-commerce startup Rosie, AI-powered pricing firm Eversight, AI shopping cart and checkout solutions provider Caper, and FoodStorm, a software startup specializing in self-serve kiosks for in-store customers.
The company also touted its use of machine learning in predicting grocery availability for retailers and increasing consumer sales. It said its algorithms predict availability every two hours for the “large majority” of its 1.4 billion grocery items, and that more than 70% of customers purchased items through Instacart’s recommendation algorithm in the second quarter of 2023.
Goldman Sachs is leading the offering. That’s the former employer of Instacart finance chief Nick Giovanni, who was previously global head of the tech, media and telecom group at the investment bank.
Car-sharing service Turo filed its IPO prospectus in January 2022. A month earlier, Reddit said it submitted a draft registration for a public offering. Instacart’s confidential paperwork was filed in May of last year.
None of them have hit the market yet.
Despite a bloated pipeline of companies waiting to go public and a rebound in tech stocks that pushed the Nasdaq up 30% in the first half of 2023, the IPO drought continues. There hasn’t been a notable venture-backed tech initial public offering in the U.S. since December 2021, when software vendor HashiCorp debuted on the Nasdaq.
Across all industries, only 10 companies raised $100 million or more in U.S. initial share sales in the first six months of the year, according to FactSet. During the same stretch in 2021, there were 517 such transactions, highlighted by billion-dollar-plus IPOs from companies including dating site Bumble, online lender Affirm, and software developers UiPath and SentinelOne.
As the second half of 2023 gets underway, investors and bankers aren’t expecting much champagne popping for the rest of the year.
Many once high-flying companies are still hanging onto their old valuations, failing to reconcile with a new reality after a brutal 2022. Additionally, muted economic growth has led businesses and consumers to cut costs and delay software purchases, which is making it particularly difficult for companies to comfortably forecast the next couple of quarters. Wall Street likes predictability.
So if you’re waiting on a splashy debut from design software maker Canva, ticket site StubHub or data management company Databricks, be patient.
“There’s a disconnect between valuations in 2021 and valuations today, and that’s a hard pill to swallow,” said Lise Buyer, founder of IPO consultancy Class V Group in Portola Valley, California. “There will be incremental activity after a period of absolute radio silence but it isn’t like companies are racing to get out the door.”
The public markets tell an uneven story. This year’s rally has brought the Nasdaq to within 15% of its record from late 2021, while an index of cloud stocks is still off by roughly 50%.
Some signs of optimism popped up this month as Mediterranean restaurant chain Cava went public on the New York Stock Exchange. The stock more than doubled on its first day of trading, indicating high demand from retail investors. Buyer noted that institutions were also enthused about the deal.
Last Friday, Israeli beauty and tech company Oddity, which runs the Il Makiage and Spoiled Child brands, filed to go public on the Nasdaq.
That all comes after a big month for secondary offerings. According to data from Goldman Sachs, May was the busiest month for public stock sales since November 2021, driven by a jump in follow-on deals.
While investors are craving new names, they’re much more discerning when it comes to technology than they were at the tail end of the decade-long bull market.
Mega-cap stocks Apple and Nvidia have seen outsized gains this year and are back to trading near all-time highs, boosting the Nasdaq because of their hefty weightings in the index. But the advances are not evenly spread across the industry.
In particular, investors who bet on less mature businesses are still hurting. The companies that held the seven-biggest tech IPOs in the U.S. in 2021 have lost at least 40% of their value since their debut. Coinbase, which went public through a direct listing, is down more than 80%.
That year’s IPO class featured high-growth businesses with even higher cash burn, an equation that worked fine until recession concerns and rising interest rates pushed investors into assets better positioned to withstand an economic slowdown and increased capital costs.
Employees of Coinbase Global Inc, the biggest U.S. cryptocurrency exchange, watch as their listing is displayed on the Nasdaq MarketSite jumbotron at Times Square in New York, April 14, 2021.
Shannon Stapleton | Reuters
Bankers and investors tell CNBC that optimism is picking up, but ongoing economic concerns and the valuation overhang from the pre-2022 era set the stage for a quiet second half for tech IPOs.
One added challenge is that fixed income alternatives are back. Following a lengthy stretch of near-zero interest rates, the Federal Reserve this year lifted its target rate to between 5% and 5.25%. Parking money in short-term Treasurys, certificates of deposit and high-yield savings offerings can now generate annual returns of 5% or more.
“Interest rates are not only about the cost of financing, but also getting investors to trade out of 5% risk-free returns,” said Jake Dollarhide, CEO of Longbow Asset Management. “You can make 15%-20% in the stock market but lose 15%-20%.”
Dollarhide, whose firm has invested in milestone tech offerings like Google and Facebook, says IPOs are important. They offer more opportunities for money managers, and they generate profits for the tech ecosystem that help fund the next generation of innovative companies.
But he understands why there’s skepticism about the window reopening. Perhaps the biggest recent bust in tech investing followed the boom in special purpose acquisition companies (SPACs), which brought scores of less mature companies to the public market through reverse mergers.
“It seems the foul odor of failure from the 2021 SPAC craze has spoiled the appetite from investors seeking IPOs,” Dollarhide said. “I think that’s done some harm to the traditional IPO market.”
Private markets have felt the impact. Venture funding slowed dramatically last year from record levels and has stayed relatively suppressed, outside of the red-hot area of artificial intelligence. Companies have been forced to cut staff and close offices in order to preserve cash and right-size their business
Pre-IPO companies like Stripe, Canva and Klarna have taken huge hits to their valuations, either through internal measures or markdowns from outside investors.
Few have been hit as hard as Instacart, which has repeatedly slashed its valuation, from a peak of $39 billion to as low as $10 billion in late 2022. Last year, the company confidentially registered for an IPO, but still hasn’t filed publicly and doesn’t have immediate plans to do so.
Similarly, Reddit said in December 2021 that it had confidentially submitted a draft registration statement to go public. That was before the online ad market took a dive, with Facebook suffering through three straight quarters of declining revenue and Google’s ad sales also slipping.
Now Reddit is in the midst of a business model shift, moving its focus beyond ads and toward generating revenue from third-party developers for the use of its data. But that change sparked a protest this month across a wide swath of Reddit’s most popular communities, leaving the company with plenty to sort through before it can sell itself to the public.
A Reddit spokesperson declined to comment.
Turo was so close to an IPO that it went beyond a confidential filing and published its full S-1 registration statement in January 2022. When stocks sold off, the offering was indefinitely delayed. To avoid withdrawing its filing, the company has to continue updating its quarterly results.
Like Instacart, Turo operates in the sharing economy, a dark spot for investors last year. Airbnb, Uber and DoorDash have all bounced back in 2023, but they’ve also instituted significant job cuts. Turo has gone in the opposite direction, more than doubling its full-time head count to 868 at the end of March from 429 at the time of its original IPO filing in 2021, according to its latest filing. The company reportedly laid off about 30% of its staff in 2020, during the Covid pandemic.
Turo and Instacart could still go public by year-end if market conditions continue to improve, according to sources familiar with the companies who asked not to be named because they weren’t authorized to speak publicly on the matter.
Byron Deeter, a cloud software investor at Bessemer Venture Partners, doesn’t expect any notable activity this year, and says the next crop of companies to debut will most likely wait until after showing their first-quarter results in 2024.
“The companies that were on file or were considering going out a little over a year ago, they’ve pulled, stopped updating, and overwhelmingly have no plans to refile this calendar year,” said Deeter, whose investments include Twilio and HashiCorp. “We’re 10 months from the real activity picking up,” Deeter said, adding that uncertainty around next year’s presidential election could lead to further delays.
In the absence of IPOs, startups have to consider the fate of their employees, many of whom have a large amount of their net worth tied up in their company’s equity, and have been waiting years for a chance to sell some of it.
Stripe addressed the issue in March, announcing that investors would buy $6.5 billion worth of employee shares. The move lowered the payment company’s valuation to about $50 billion from a high of $95 billion. Deeter said many late-stage companies are looking at similar transactions, which typically involve allowing employees to sell around 20% of their vested stock.
He said his inbox fills up daily with brokers trying to “schlep little blocks of shares” from employees at late-stage startups.
“The Stripe problem is real and the general liquidity problem is real,” Deeter said. “Employees are agitating for some path to liquidity. With the public market still pretty closed, they’re asking for alternatives.”
G Squared is one of the venture firms active in buying up employee equity. Larry Aschebrook, the firm’s founder, said about 60% of G Squared’s capital goes to secondary purchases, helping companies provide some level of liquidity to staffers.
Aschebrook said in an interview that transactions started to pick up in the second quarter of last year and continued to increase to the point where “now it’s overwhelming.” Companies and their employees have gotten more realistic about the market reset, so significant chunks of equity can now be purchased for 50% to 70% below valuations from 2021 financing rounds, he said.
Because of nondisclosure agreements, Aschebrook said he couldn’t name any private company shares he’s purchased of late, but he said his firm previously bought pre-IPO secondary stock in Pinterest, Coursera, Spotify and Airbnb.
“Right now there’s a significant need for that release of pressure,” Aschebrook said. “We’re assisting companies with elongating their private lifecycle and solving problems presented by staying private longer.”
Investors are looking for clarity after a few days of dramatic turns. Monday was a mess as markets tried to figure out the ramifications of the Signature Bank and Silicon Valley Bank shutdowns. The Dow finished down, marking its fifth straight losing day, while the Nasdaq managed to squeak out a slight win. Regional bank stocks took a huge hit as the government’s actions to limit the fallout from Silicon Valley Bank and Signature failed, at least for the moment, to reassure investors and depositors alike. First Republic, for instance, fell a whopping 62% on Monday. Yet, those stocks could be in store for a rebound Tuesday. Follow live markets updates.
Federal Reserve Chair Jerome H. Powell testifies before a House Financial Services hearing on “The Federal Reserve’s Semi-Annual Monetary Policy Report” on Capitol Hill in Washington, U.S., March 8, 2023.
Kevin Lamarque | Reuters
The Federal Reserve is still on track to raise its benchmark interest rate by a quarter point next week, despite the second- and third-biggest bank failures in history. As of Monday, even with the turmoil in the market, especially among regional banks, traders saw an 85% probability that the rate hike would still happen as the central bank tries to cool inflation. Goldman Sachs stood out as the contrarian voice, however, arguing that Fed Chairman Jerome Powell and crew will hold off for now on a rate increase. “We think Fed officials are likely to prioritize financial stability for now, viewing it as the immediate problem and high inflation as a medium-term problem,” Goldman said in a note to clients. The Fed’s next policy-setting meeting is scheduled for March 21-22.
A shopper browses meat department at a Los Angeles supermarket on Feb. 13, 2023 in Los Angeles.
Mario Tama | Getty Images News | Getty Images
Speaking of inflation, the government’s consumer in flation report for February is due at 8:30 a.m. ET Tuesday. It’s expected to come in somewhat cooler than January’s consumer price index, showing that the Fed continues to make a little progress in its battle against price increases. This report will take on added significance given the context of the Silicon Valley Bank and Signature Bank failures, which triggered turmoil among regional banks. As CNBC’s Patti Domm points out, before the banking upheaval, a hot CPI report might have pushed the Fed to jack up rates by half a point next week. Now, with the stability of the financial system at the top of everyone’s mind, even a bigger-than-expected reading isn’t likely to push the Fed to go higher than a quarter point.
Travelers wait for an Uber rideshare vehicle at Los Angeles International Airport (LAX) on February 8, 2023 in Los Angeles, California.
Mario Tama | Getty Images
Shares of Uber, Lyft and DoorDash all jumped in off-hours trading after a California appeals court allowed such companies to treat their drivers as independent contractors and not employees. The decision upheld a measure called Proposition 22, which California voters approved in November 2020 after a costly campaign on which ride-share and delivery companies spent more than $180 million. Monday’s ruling overturned a lower court’s rejection of Proposition 22, which was contested by a group of rideshare drivers. The measure exempts Uber and others from following several compensation laws.
Local residents of the village of Bohorodychne walk on a destroyed bridge over the Siversky Donets to retrieve bread from the other bank, in Bohorodychne, Donetsk Oblast, on March 10, 2023, amid Russia’s military invasion on Ukraine. (Photo by ANATOLII STEPANOV / AFP) (Photo by ANATOLII STEPANOV/AFP via Getty Images)
Anatolii Stepanov | Afp | Getty Images
Authorities extended a Russian-Ukraine grain export deal for 60 days, Russia’s deputy foreign minister told a Russian news agency. The agreement has enabled Ukraine to export wheat, corn and other agricultural products through the Black Sea. A Russian blockade during the earlier stages of the war had hurt global food supplies and fueled price inflation. Elsewhere, Ukraine President Volodymyr Zelenskyy defended his decision to continue defending the eastern Ukrainian city of Bakhmut. “We must destroy the enemy’s military power – and we will destroy it,” he said. Follow live war updates.
– CNBC’s Sarah Min, Jeff Cox, Patti Domm, Rohan Goswami and Holly Ellyatt contributed to this report.
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For nearly two decades, Vita Coco has sold its coconut water to health-conscious consumers as a fresh way to hydrate. This year, it’s changing the pitch.
The beverage company is pushing its namesake brand into new use cases and occasions, partnering with Diageo on a canned cocktail and marketing the drink as a hangover aid.
Co-founder Mike Kirban compared Vita Coco’s transformation to that of Ocean Spray, the agricultural cooperative that sells cranberry products.
“Ocean Spray is a brand that’s four times our size, that’s all based on one ingredient,” the company’s executive chairman told CNBC. “And we should be bigger than Ocean Spray pretty quickly, because I think the coconut is cooler than the cranberry.”
Founded in 2004, Vita Coco started as a coconut water brand but has since expanded into other beverage categories, like energy drinks and water. Its namesake brand still accounts for three-quarters of the company’s revenue, which reached $335.8 million in the first nine months of 2022.
The company went public in October 2021, just before the market for initial public offerings dried up as inflation, the war in Ukraine and economic uncertainty weighed on investors.
Vita Coco’s stock is up less than 1% since its IPO, but it’s fared better than many other consumer companies that went public around the same time, like Sweetgreen and Allbirds.
In May, Kirban transitioned from co-CEO at the company to his current role, leaving Boston Beer veteran Martin Roper as the sole chief executive — another step of Vita Coco’s evolution.
Just months before Vita Coco’s IPO, both Coca-Cola and PepsiCo exited coconut water. Coke sold Zico back to its founder as it slimmed down its portfolio, and Pepsi offloaded O.N.E. as part of the $3.3 billion sale of its juice business.
Despite the beverage giants’ size, they had been unable to compete with Vita Coco, which is credited with bringing coconut water to the U.S. and still holds 50% share of the market, excluding its private-label business.
Their exits from the segment opened a new distribution avenue for Vita Coca. As long as Coke and Pepsi were in the coconut water business, their contracts with venues ranging from stadiums to college campuses shut Vita Coco out.
With the momentum of new growth opportunities, Vita Coco is now pushing into bars and restaurants. Step one of the plan is teaming up with Diageo for three canned cocktails mixing Captain Morgan rum and Vita Coco coconut water: a mojito, a piña colada and a strawberry daiquiri.
“If you go to Brazil or Southeast Asia, coconut water is what you mix with cocktails,” Kirban said. “The idea is to start getting consumers used to drinking coconut water cocktails with the ready to drink with Diageo partnership.”
Kirban said Vita Coco would be partnering with a spirits company for its broader on-premise expansion plans, but declined to name the partner.
Over the last few years, alcohol and nonalcoholic beverage companies have been teaming up, leaning on each others’ brand equity and expertise to gain so-called “share of throat.” For example, Captain Morgan can introduce itself to Vita Coco’s health-conscious, younger consumers, while Vita Coco benefits from the rum’s mass market appeal.
Vita Coco has also been leaning into its reputation as a hangover “cure.”
Since late 2019, the brand has used New Year’s Day as way to pitch hangover recovery kits and subscriptions that feature its products in collaborations with Postmates, Lyft and Reef Kitchens.
This year it’s partnering with DoorDash for a promotion Monday morning following the Super Bowl.
The marketing strategy is something of a reversal, after years of resisting the association.
“With our board, there was always a discussion,” Kirban said. “When you talk marketing, do we want to talk about hangovers? Is that OK for us to talk about?”
And it’s not done there. After the hangover subsides, Vita Coco wants to be the non-dairy milk in your coffee.
In late January, the brand announced it’s partnered with Alfred Coffee, a high-end chain with locations in California and Texas, to create a non-dairy coconut milk for its baristas to use.
Vita Coco plans to expand the product designed specifically for coffee — separate from the coconut milk it sells in supermarkets nationwide — to other coffee shops and eventually to store shelves.
Evercore ISI analyst Mark Mahaney sat down with CNBC Pro to share the tech names he is looking at going into 2022. He also breaks down what stocks he views in the travel space that could do well, even in a possible recession.
