Presented by Opto

Hi John, here's what you need to know for November 22nd in 3:10 minutes.

⏳ Keep it brief

• Speaker company Sonos warned the US-China trade war could mute its earnings
• A French lottery operator raised $2 billion in its IPO – and its shares soared 14%

Pulling The Plug

What’s Going On Here?

US trade tariffs on China have hit a bum note with Sonos: the American smart speaker company warned this week that its 2020 earnings might not sound too great.

What Does This Mean?

The trade war’s made a lot of noise lately, and it’s been US companies who’ve had to face the music. That’s because American tariffs on Chinese-manufactured goods – both those already introduced and those kicking in next month – affect a host of products, including consumer electronics like Sonos’s speakers.

Those increased costs have left Sonos with a tricky choice: either the company itself covers them, or its customers do in the form of higher prices – in turn putting demand at risk. That probably won’t sit right with Sonos, which faces stiff competition from Apple, Google, and Amazon’s smart speakers. Even so, the company has its ears on the prize: it views competitors’ products as “stepping stones” to its own premium offering, and it’s now bought Snips – a French privacy-focused AI voice platform – to better compete (tweet this).

Why Should I Care?

For markets: Trade snore.
The trade war’s cast a long shadow over global stock markets lately, which are spooked by the risk of Sonos-esque profit warnings. But Asian markets fell on Thursday morning as investors weighed the impact of a US Congress bill supporting Hong Kong’s protestors. That could further hurt US-China relations and make a trade deal less likely.

Zooming out: Lucky Apple.
The US president is reportedly considering exempting tech giant Apple from the next round of China tariffs. The company’s size might explain its special treatment: as the biggest public company in the US, it’s of massive importance to the country’s stock market. The US president might also want to avoid hurting consumers in the coming holiday season – especially with his big reelection bid coming up next year.

Got a question about this article? Ask us here

Jacquespot

What’s Going On Here?

French lottery operator Francaise des Jeux held its initial public offering on Thursday, and it got lucky: its shares soared 14%.

What Does This Mean?

Until Thursday, the French government owned 70% of the lotto firm. But in an effort to raise some money to pay down the country’s debt, it decided to quit while it was ahead. The government sold 52% of the company and earned over $2 billion in the process – making this the biggest French IPO since 2005.

Investors seemed to like the look of the company’s profit growth, as well as its plan to pay 80% of its profit as a dividend next year. Its prospects for the future might be just the ticket too: there are hopes it’ll grow in Africa and online, as well as sell new services via its French retail networks.

Why Should I Care?

For markets: Fortunes turn on a dime.
Gambling is a risky business for investors, as firms’ success is dependent on regulation. But since the government still owns part of Francaise des Jeux, it’s in a stronger position than most. The same can’t be said for Britain’s William Hill: the gambling company reported a big revenue drop in its retail division on Thursday, which it blamed on new caps imposed on betting machines. Hill is shifting focus to online gambling as a result, but rumors earlier this month that online might also become more heavily regulated sent the company’s shares down 12%. It’ll pretending it’s a true-blue yank in no time, then: America’s relaxing its gambling regulations, expanding a market Hill’s already started to capture.

The bigger picture: Private doesn’t mean perfect.
A company recently sold off by the UK government saw its shares fall 14% on Thursday. Royal Mail, the British postal service, warned it might make a loss next year as it struggles to transform from a letter-deliverer to a parcel-deliverer. Analysts also blamed strong unions for its inability to modernize – a problem France famously struggles with too...

Got a question about this article? Ask us here