Space: the business frontier
Elon Musk draws a lot of attention, good and bad, for what he does at Tesla. Today is different: His other company, SpaceX, is scheduled to send two American astronauts into orbit this afternoon. It’s the first crewed space launch from U.S. soil in nearly a decade, and the first ever in a privately made spacecraft.
Two astronauts will take off in a Crew Dragon from Cape Canaveral, Fla., at 4:33 p.m. Eastern (weather permitting). NASA last sent astronauts into space on a craft of its own nine years ago. In the meantime, it has relied since on Russian spacecraft, while betting on private companies like Boeing and especially SpaceX to develop new vehicles.
• Mr. Musk is taking the opportunity for cross-promotion: The crew members, Douglas Hurley and Robert Behnken, will be ferried to the Crew Dragon in a NASA-branded Tesla Model X.
A lot is riding on the launch. NASA thinks the future of space — at least for low-earth orbit, for now — is chartered flights on private spacecraft, Quartz’s Tim Fernholz writes. If successful, he adds, the flight “promises a whole new world of economic activity in space, with private organizations doing what once required an entire nation, creating new opportunities for experimentation and discovery.”
It looks like a bargain. The Crew Dragon is the cheapest human-carrying spacecraft yet made for NASA. The agency’s contracts with private companies have fixed prices, an incentive to keep costs down.
And it could be one giant leap for the space business. “As getting to space becomes cheaper, humans will do more there that adds value to their lives back on Earth,” writes Mr. Fernholz, who chronicled the exploits of Mr. Musk, Jeff Bezos and other moguls in the new space race in his book “Rocket Billionaires.”
Twitter fact-checks Trump
For years, the social media service has declined to weigh in on the president’s missives, even when he has spread false information or made threats. That changed yesterday.
The company added links to two of President Trump’s tweets, in which he falsely claimed that mail-in ballots could lead to a “rigged” presidential election in November. The text urged readers to “get the facts” about mail-in voting and the links went to information that refutes the president’s claims.
Twitter has refused to act before when critics argued that some Trump tweets violated the service’s policy. And it hasn’t responded to Mr. Trump posting false conspiracy theories about the death of a former aide to Joe Scarborough, despite entreaties from her bereaved husband.
Blowback is likely. Mr. Trump later tweeted, “Twitter is now interfering in the 2020 Presidential Election,” and threatened to respond. His administration is reportedly considering federal reviews of perceived bias against conservative viewpoints on social media. And some of his allies in Congress have called for tech companies to be stripped of broad immunity from liability for content posted on their platforms.
Earnings are terrible. Stocks are soaring.
What gives? The Times’s Matt Phillips tries to make sense of it all.
First-quarter earnings were dismal. Profit per share at S&P 500 companies was down about 13 percent in the first three months of the year, the worst slump since 2009. Analysts expect worse to come: a 43 percent fall in the second quarter and 25 percent drop in the third, according to FactSet.
• The pandemic makes forecasting difficult, and it doesn’t help that a third of blue-chip companies have withdrawn their financial guidance for 2020.
Yet valuations are high — and rising. By some measures, stocks are as expensive, relative to earnings, as they were in the heady dot-com days. After the S&P 500 shed a third of its value in February and March, the subsequent rally has pushed the index back to flat for the year. Futures imply another more gains today.
• Investors tell Matt that markets “priced in” bad economic news during the earlier decline, and have since positioned themselves for a V-shaped recovery. What’s more likely is that the Fed’s enormous bond-buying programs have pushed debt yields so low that stocks are the best place to seek a return, regardless of how ugly the earnings look.
Should the C.E.O. work from home, too?
In yesterday’s newsletter, we asked where the C.E.O. of a company shifting to “remote-first” should work: at the office, or mostly remote like everybody else? DealBook readers had a range of opinions — here’s a selection of the responses, lightly edited for clarity and space:
• “A C.E.O. who does not meet people in person is a captive to the aperture of a camera lens rather than the aperture of her eyesight. All of us who have managed international organizations know how much better we understand remote offices after we have visited them.” —Bill Perlstein, senior managing director of FTI Consulting, Washington
• “The office doesn’t matter for the C.E.O. (who travels a lot anyway) or any other executive. What matters is what they accomplish. If you think about it, the office environment is an expensive artificial structure that enables lots of unnecessary personnel issues. I rarely missed going into the office when I moved from the corporate environment into the entrepreneur world.”—Joe Carlin, Cary, N.C.
• “As a former director of research at Eastman Kodak, the best ideas came from colleagues talking over coffee or at lunch about some pie in the sky idea or discussing a problem they could not solve.” —Emily Jones, Rochester, N.Y.
• “I am an ‘outbound C.E.O.’ That means over 50 percent of my time is spent outside of the office constructing high-value relationships with investors, customers, vendors and strategic partners. Significant growth occurs outside of the office walls. An ‘inbound C.E.O.’ spends over 50 percent of their time in the office and builds value by management of the company processes. In my opinion, this type of C.E.O. should be defined as a C.O.O.”—Steve Baird, executive chairman, S-Ray Inc., Vancouver, Wash.
• As a now-retired C.E.O., I would say that being on-site was essential. I felt responsible for creating a positive work environment and for maintaining a caring office culture. I don’t see how I could have met those objectives remotely.”—Erica Moeser, Madison, Wisc.
HBO enters the streaming wars
A new streaming platform, HBO Max, comes online today, a big bet in a crowded market. AT&T bought HBO in 2018 as part of Time Warner and plans to spend more than $4.5 billion on the streaming service in the coming years, The Times’s Ed Lee writes.
AT&T is aiming for 50 million HBO Max subscribers by 2025. What’s it offering them? For $15 a month, some 10,000 hours of programming, from HBO prestige series like “Game of Thrones” to Warner Bros. properties like “Friends” and the Harry Potter movies.
Will this work? HBO has long been an innovator, but now it’s playing catch-up to — deep breath — Amazon Prime Video, Apple TV Plus, Disney Plus, Hulu, Netflix, Peacock and others.
HBO faces two major hurdles, Ed tells us.
• The first is brand confusion:
“There’s HBO, HBO Now, HBO GO and this thing called HBO Max. If you’re confused, you’re not alone. But it boils down to HBO (regular) and HBO Max, which is just HBO with more stuff. This will eventually be cleared up as marketing messages flood the terrain and 30-second spots HBO (regular) runs in front of all its content makes that more clear.”
• The second is price:
“At $15 a month, it’s the most expensive of the streamers. And now is not a time to be charging more than your competitors.”
The N.Y.S.E. welcomes masked market makers
Gov. Andrew Cuomo of New York rang the opening bell at the Big Board yesterday, the first day in two months that people were working on the trading floor.
Temperature checks, masks and mandatory social distancing rules greeted traders. Only about a quarter of the usual contingent were allowed in, reportedly after signing liability waivers, according to The Wall Street Journal. Photos of the sparsely filled floor captured the compromises required of businesses trying to return to normal.
The speed read
• Warner Music, the home of Ed Sheeran, Cardi B and Led Zeppelin, has filed to go public at a valuation of up to $13.3 billion. (NYT)
• Jio, the digital and wireless arm of India’s Reliance Industries that is backed by Facebook and big private equity firms, is reportedly preparing for an I.P.O. (Bloomberg)
Politics and policy
• The Justice Department ended inquiries into stock trades by three senators: Dianne Feinstein, Democrat of California; James Inhofe, Republican of Oklahoma; and Kelly Loeffler, Republican of Georgia. (NYT)
• Facebook executives reportedly played down internal research showing how the company’s algorithms made the site more divisive. (WSJ)
• The C.E.O. of Palantir, Alex Karp, said he might move the data consultancy to escape Silicon Valley’s “increasing intolerance and monoculture.” (Axios)
Best of the rest
• Will Las Vegas’s comeback plan — social distancing in casinos and no touching of cards — work? (NYT)
• The cost of lockdowns fell disproportionately on mothers, and that could widen the gender pay gap, a study found. (Bloomberg)