8 BARRON’S September 30, 2019
26,820.
Dow industrials:-114.
Dow Global Index:-4.
1.68%
10-year treasury note:-0.
RBC’S CASE FOR MAPS AND WAZE
Stocks Swim Upstream
Trade sentiment waxed and waned,
German manufacturing cast a pall,
public offerings sank, and an im-
peachment tempest blew in. If that
wasn’t bad enough, reports surfaced
that the White House was mulling
delisting Chinese companies and lim-
iting U.S. investments in China. Well,
it could have been worse. For the
week, the Dow industrials shed 0.4%,
to 26,820.25; the S&P 500 lost 1%, to
2961.79; and the Nasdaq Composite
thudded 2.2%, to 7939.63.
Trump and Ukraine
A whistle-blower charge that Presi-
dent Trump withheld military aid to
Ukraine to pressure the Ukrainian
government into investigating former
Vice President and Democratic candi-
date for president Joe Biden, and his
son, gave new life to impeachment. As
both Trump and his lawyer Rudy
Giuliani admitted that they urged
Ukraine to investigate, House Speaker
Nancy Pelosi agreed to an impeach-
ment inquiry. A transcript of a Trump
call with the Ukraine president and
the whistle-blower complaint then
tossed gasoline on the fire.
Repo Market Rescue
The New York Federal Reserve’s injec-
tion of liquidity into the repurchase
market isn’t over. The Fed made $
billion available to the markets on
Monday, then more than doubled that
by midweek. The liquidity problems
seem to be fallout from the draining of
reserves from the system. Fears have
also arisen over a new benchmark, the
secured overnight funding rate, or
SOFR, designed to replace the London
interbank offered rate in 2021. SOFR
is based on repo rates.
Johnson Loses Again
United Kingdom Prime Minister Boris
Johnson absorbed another defeat when
the Supreme Court, in an 11-0 vote, de-
clared that his move to suspend Parlia-
ment was unlawful. Parliament then
reconvened, with Johnson facing a
majority opposition, which has already
passed a law saying the U.K. could not
leave the European Union without a
deal. Johnson has promised an exit on
Oct. 31, “do or die.” In a raucous debate,
Johnson demanded a no-confidence vote
on his own government so he could call
elections, but was again blocked.
WeWork’s CEO Steps Down
Adam Neumann, the co-founder and
CEO of WeWork, stepped down after
an initial public offering had to be
postponed. Neumann will remain the
nonexecutive chairman of the board of
WeWork’s parent, We Co.
The Week in Deals
Talks between Altria Group and
Philip Morris International broke
off, in part because of the vaping crisis
at Altria investment Juul Labs...Shares
of fitness company Peloton Interac-
tive fell 11% on its debut from an ini-
tial offering price of $29. Endeavour
Group then called off its IPO... Tesla ’s
board must defend Elon Musk’s
compensation in Delaware’s Court of
Chancery.
Google Maps’
Hidden Value
For Alphabet, the route to faster growth may lie with
Google Maps. In a research note, RBC Capital analyst
Mark Mahaney makes the case that Google Maps and
Waze are ”buried treasure,” one of the least monetized
platforms on the internet with more than a billion users.
Mahaney notes that data show over 75% of smartphone
owners regularly use navigation apps—and that Alpha-
bet’s Google has a market share of better than 80%.
Google, he says, has competitive advantages in digital
maps, with a lead in data collection and map-creating
automation using satellite and Street View imagery, plus
machine learning and computer-vision technology. Google
recently announced expanded access to its Local Cam-
paigns program, making it available to a broader set of
advertisers, and with new actions, like clickable calls and
directions. And Google has collected enough data through
Waze, he says, “to roll out more solutions for advertisers
in Maps without severely impacting the user experience.”
RBC ran more than 400 mobile keyword searches on
Google Maps across 15 U.S. cities and six international
cities and found advertising load levels about half those
for Google Maps on desktop—evidence that “Google Maps
has a long way to further monetization” of mobile maps.
Maps could generate $1.9 billion to $3.6 billion in addi-
tional 2021 revenue, he says. Mahaney, who has an Out-
perform rating on Alphabet shares, raised his price target
to $1,500 from $1,425. “Maps isn’t a thesis changer, “but it
may well provide Google with yet another lever to main-
tain its impressive 20%-plus revenue growth for nine-
plus years at massive scale.”—Eric Savitz
The National Association of Real-
tors pending-home sales survey
rose 1.6% in August over July.
2%
Gain in the S&P CoreLogicCase-
Shiller 20-City Composite Home
Price Index for July
Germany’s September Purchas-
ing Managers index fell from
43.5 in August. Below 50
suggests contraction.
$36 K
The new threshold for eligibility
to receive overtime pay after 40
hours a week, up from $23,660,
set in 2004
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THE NUMBERS
SHE SAID
“The president must be
held accountable. No
one is above the law.
Therefore, today I’m
announcing the House
of Representatives
is moving forward
with an official
impeachment inquiry.”
House Speaker Nancy Pelosi
Getty Images (Google Maps); Aurora Samperio/Getty Images (Pelosi)REVIEW