Situational awareness: Casper, the original mattress-in-a-box direct-to-consumer retail disruptor. It went public yesterday at $12 a share and opened this morning at $15. That's well below the $23.12 per share that Series B investors paid as long ago as June 2015. Go deeper.
In this week's newsletter: Tesla volatility, the rise of borders, FICO scores, rental brokers, coronavirus, and more. All in 1,642 words — a 6-minute read.
Photo illustration: Sarah Grillo/Axios. Photo: Jörg Carstensen/picture alliance via Getty Images
"As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone."— Elon Musk, "Taking Tesla Private" blog post, August 2018
Tesla stock has been in Ludicrous Mode for the past few days. Given its bonkers gyrations, it's now easy to see why CEO Elon Musk might feel that he was right all along in wanting to take the company private back in 2018.
The stock market is failing at its primary role of price discovery, the determination of how much securities and companies are worth. There's no rational reason — and certainly no news — explaining why Tesla's value should have fluctuated by more than $20 billion per day.
Be smart: A stock that can melt up for no particular reason can just as easily melt down.
When the share price is as volatile as this, valuation feels more like a sugar high than the true wisdom of the crowds, and a buy-and-hold strategy feels like utter foolishness. Hedge fund manager Cliff Asness has argued that the price opacity of private markets has significant positive value. If that's the case then Tesla in particular should probably be private.
Flashback: Musk said in 2018 that he wanted to take Tesla private at $420 per share, which corresponded to a valuation of $76 billion. At the time, that was a significant premium to the open market price.
The bottom line: If Tesla is going to be a vehicle for speculators, it should be one in which they sit behind the wheel, rather than one they buy on the Nasdaq.
By the numbers: Tesla's market cap rose by $11 billion on Thursday, $23 billion on Monday, and $19 billion on Tuesday, before falling by $27 billion on Wednesday.
Illustration: Sarah Grillo/Axios
It's not just goods and services that cross international borders every day — it's people, too. But now the world is retreating into national shells, and the U.S. is leading the way in discouraging international travel.
Driving the news: In recent days, the U.S. has...
Of note: This was roughly the same week that the U.K. left the EU, with seismic implications for the future of labor mobility both into and out of Great Britain.
How it works: If you've ever spent much time in a place with invisible international borders, you'll know how magical it feels. I had a great vacation in Alsace last summer, and often didn't even know whether I was in France or Germany. In places like Alsace, or the island of Ireland, hard borders mean war and bloodshed, while their absence means peace and prosperity.
How it fails: International trade is already suffering from the coronavirus, including the travel and tourism sector. In the present climate, it's harder than ever for companies and countries to reverse course and start rebuilding severed international links.
The big picture: Coronavirus may only be a short-term problem. Over the long term, however, the outlook is similarly bleak, thanks to the geopolitical consequences of global warming.
The bottom line: When international travel and migration starts to decline, that's a bad sign for everybody except nationalists.
Illustration: Aïda Amer/Axios
Your credit score changes quite a lot. The reasons why it changes can be hard to nail down, and doing the thing that's best for your long-term financial health can, annoyingly, often be bad for your credit score.
Sometimes your score changes due to circumstances entirely out of your control, like when FICO changes its algorithm. That's what's happening now.
No one knows what the effect on lending will be. Lenders won't necessarily use the new score, and even if they do use the new score they won't necessarily draw the line in the same place that they did with the old score.
Why it matters: Credit scores have risen by about 20 points, on average, over the past 10 years, and are now at an all-time high. Lenders want more differentiation among borrowers, and they want credit scores to reflect more long-term information, so that's what they're getting.
The bottom line: Individuals, in the words of the Serenity Prayer, should accept the things they cannot change. Whatever changes FICO makes are outside their control; the best thing they can do is just concentrate on their overall financial health rather than on one numerical indicator of creditworthiness.
Illustration: Sarah Grillo/Axios
Renting an apartment in New York is ridiculously difficult and expensive, in no small part because of the dominance of a curious tribe of people known as "rental brokers." As the NYT explains, these creatures "have near absolute control over apartment listings, viewing appointments and leases."
Driving the news: In a widely applauded yet unexpected move, New York state regulators have decreed that renters can no longer be charged broker's fees.
How it works: Rental brokers charge astonishing sums for simply bringing together landlords and renters. The standard fee is 15% of the first year's rent, payable up front — that's $6,300 on an apartment costing $3,500 per month.
What's next: If landlords want to continue to use brokers, they will have to pay them themselves. Brokers are warning that the broker's fee will then end up showing up in higher rent. But now landlords will have a clear financial incentive to use cheaper brokers. That should help drive prices down across the industry.
Illustration: Sarah Grillo/Axios
The World Health Organization says it will host a “major meeting” with researchers and health agencies from around the world on Tuesday to address the novel coronavirus outbreak, Axios' Courtenay Brown writes.
Why it matters: Thousands of people have been infected, and the death toll is rising. There is no proven treatment or vaccine.
The United States Courthouse in Austin, Texas — designed by Mack Scogin Merrill Elam Architects and completed in 2012 — is a striking complex cube constructed mostly from local limestone.
The courthouse is neither brutalist nor deconstructivist, yet it was singled out for opprobrium in a preliminary draft of a new federal order obtained by Architectural Record.
Go deeper: Kriston Capps of CityLab asks whether the White House is trying to ban modern architecture.