Tesla Sells Junk (bonds), Malls Love Apple, Watching TV Has Become Stressful, and Facebook Will Now Take Your Order…

We have an amazing team here at BlueOrange. Kaspars is on a well deserved vacation, and Krista and our summer intern Renārs do a great job keeping everything in order, while also providing thoughtful and fresh insights into making us a little bit better every day.

Here are some links that they found interesting this week:

Tesla manages to raise $1.8b through junk bonds yielding 5.3%
Earlier this month, Tesla came out with a statement saying that the money required to fund the projected production ramp of its recently released Model 3 is going to be raised through a bond offering. At first, the electric carmaker wanted to raise $1.5 billion, a number that, due to high demand, was later increased to $1.8 billion.

The bonds were given a rating of B-minus by the Standard and Poor’s rating agency. A ‘B-‘ rating is neck deep junk bond territory.

Daimler (A rating) bonds with a comparable maturity are currently trading at a yield of 3%. This implies that Tesla’s borrowing costs are ostensibly 75% higher than Daimler’s.

This disparity in financing costs may prove to be a significant hindrance in terms of Tesla actualizing its grand ambitions.
LINK: Tesla bonds

Apple – Every Landlord’s Dream
As it turns out, Apple has replaced department stores and is now the anchor store of shopping malls – with people going to fix their iPhone or just attending a coding course at their local Apple store, neighboring shops benefit from the extra foot traffic.

Reportedly, mall owners are willing to even foot the bill for the building of the Apple stores, as it adds value for the other tenants, increases the value of the mall, ultimately letting the landlords increase the rent.

According to Robin Abrams, a New York City real estate executive, hedge funds, while valuating shopping malls, would value a shopping mall with an Apple store higher than a shopping mall without the store of the US tech-giant.
LINK: Apple Stores are Saving Malls

The Messy, Confusing Future of TV? It’s Here
Nearly a million Americans per quarter are dropping their pay-TV subscriptions, while Netflix continues to add to its already substantial subscriber base. Cable TV as we once knew it is in decline, but for the time being, that doesn’t necessarily mean that it is being replaced with something better. Sure, each new streaming platform has its own value proposition, but we are currently veering into a situation where a having number of subscriptions becomes inevitable do to licensing restrictions. This somewhat undermines the primary principle of ‘convenient viewing’.

Thankfully, a few third-party services have take up the mantle to replace TV Guides. One such example is “Can I Stream It?”, a search engine that will tell you which streaming platform has your favorite show. Nevertheless, there is currently no industry-wide solution in sight.

Will media industry giants eventually cooperate in order to bring the best experience to the customers? Or will Google welcome everyone to YouTube, where they would provide a portal for advertising revenues and/or batch streaming services. You know, kind of like what network TV used to do… The more things change, the more they stay the same…
LINK: The Future of TV

Americans Love Ordering Pizza on Facebook
Scrolling through Facebook could become even more enjoyable, especially if the ad of your favorite meal pops up and you are just one click away from ordering something delicious. Easy as that. US restaurants are starting to realize the huge potential of receiving online orders through popular applications such as Facebook. Increasingly, chat bots are taking care of your order details, while your Amazon account info takes care of the financial side. Placing orders though Facebook is inherently more convenient than downloading multiple apps for your favorite restaurants or cafes. The same applies for your method of payment – it’s a win-win situation for Amazon and restaurants.

Why would you ever want to create your own app and spend 8 years to capture 25% of your sales online (like Starbucks) if you could – like Papa John’s – reach a level of 60% digital orders in just a couple of months by using Facebook?
LINK: Facebook Will Now Be Taking Your Orders