Uber's Carnage: the Rise of Distressed Taxis

New York City Taxi Medallions Selling at Significant Discounts

Uber's Carnage (Distressed Taxis). As taxi medallion owners continue to struggle, Evgeny Friedman's bankrupt taxi companies are establishing "market value" for the New York City taxi medallion - and it's at the low end of a recently established spectrum. The New York Times writes, "In August alone, 12 of the 21 medallion sales were part of foreclosures; the prices of all the sales ranged from $150,000 to $450,000 per medallion." Friedman's medallions sold last week to a hedge fund for $186k/each for a block of 46. As context, medallions were once worth as much as $1.3mm. Considering that there are approximately 13.8k taxis in New York City today, one observer noted that it would take Uber (or Lyft), approximately $2.6b to simply buy out the entirety of the City's fleet at that valuation - a cost of a small percentage of Uber's supposedly sizable market cap. So there you have it: "disruption," quantified.

Morrison & Foerster 1. Debtors -$2000.

So this is kind of absurd. In the Sungevity Inc. case, the debtors sold two Toyota Priuses and a Ford Ranger truck for the sum total of $10,500. We bet that after attorney drafting hours and partner review, this led to a sum total of ($2000) to the bankrupt estate. Who wants the other side of it? 

Taken from public filing.

Taken from public filing.

Spotify ♥️ New York

New York Governor Cuomo announced that Spotify would be relocating from its midtown location to the World Trade Center, adding 1000 "new" jobs to New York and retaining the 830 jobs that might have otherwise moved to New Jersey (or somewhere). He celebrated this as a win for New York, a win for the burgeoning NY tech scene, a win for job growth, and a win for Spotify, who gets to keep its Americas HQ in NYC.  

But this begs the question: what the eff?! Just this past week rumors were swirling about Spotify's cash bleed, it's delayed IPO and its more-expensive-by-the-quarter $1b of debt. How can it afford an expensive lease and a headcount increase of 1k? 

It probably can't. We don't know how many of those 1000 added jobs will actually come to fruition. Is there a penalty if it doesn't? We don't know how many of that number will be transplants from Stockholm (meaning no payroll increase). 

Are we being defensive because just last week we highlighted reports of potential bankruptcy? Maybe. But this is a free option for Spotify. They get $11mm in tax incentives (basically free rent) to move to the World Trade Center. This allows them to say "look, we're healthy" as they head towards an IPO while allowing Larry Silverstein to say, "look, the WTC is full!" 

Apple Music claims millions of subscribers as part of its fast-growing services business. Amazon Prime claims 65mm members who get access to music. Google Play has music. Both Google and Amazon have voice-operated hardware - the hottest hardware on the market - the best use case for which is voice-operated music. Pandora recently reported terrible numbers and Tidal effectively just sold for parts. The music space - except maybe vinyl, believe it or not - is extremely difficult.  

We've seen lately how politicians spin deals on the basis of jobs. We are skeptical.  

This looks like lipstick on a pig.  

Christmas Indicators - Hardware

Now that Christmas is behind us, there will be a lot of focus on retail numbers and the performance of various hardware products - whether that is the Apple Watch, Fitbit, Amazon's Echo, GoPro, etc. While not scientific by any stretch of the imagination, the top AppStore downloads and Google searches are indicative of...well, something.... And that something seems positive for Fitbit.