A Holiday Shutdown Explainer

Good morning and happy Friday.

Reubens this good ought to be illegal. Especially in New Jersey.

A father-son duo pleaded guilty yesterday to an audacious stock manipulation scam in which they artificially boosted shares in a company known as Hometown. Its only assets were a single deli in Paulsboro, NJ, which had revenue of less than $40,000 over a two-year period and some shares in a shell company.

Peter Coker Sr. and onetime fugitive Peter Coker Jr. helped drive Hometown's market cap up more than 900% to $100 million, they admitted in court. The scheme was uncovered when Greenlight Capital's David Einhorn flagged the company in a 2021 letter to investors as an example of preposterous market enthusiasm.

"The pastrami must be amazing," he wrote.

How about a Plan C?

After social media opposition from Elon Musk and President-elect Donald Trump derailed a bipartisan continuing resolution to fund the government through March, Republicans in Congress scrambled Thursday before formulating a Trump-approved Plan B… only for that measure to be voted down by members of both parties in the House of Representatives. Which means, pending a bipartisan deal Friday, the US is at risk of a government shutdown until at least January 20, starting at 12:01 a.m. this Saturday. 

Will a shutdown happen? Maybe not. 

But what if it does? What would a holiday season shutdown actually mean? And does a government shutdown actually save US taxpayers any money? Likely not, experts say.

Midnight Oil

On Wednesday, both top Republicans and top Democrats in Congress unveiled a bipartisan continuing resolution to keep the roughly $6.2 trillion federal budget running at its current level through March 14. By late Wednesday, Musk — followed soon by Trump — excoriated the deal, flagging to his X followers some of its, shall we say, peripheral provisions of pork barrel spending as well as a pay raise for members of Congress. (Some of Musk's posts were misinformed; he claimed the bill included a 40% pay raise, versus a maximum of 3.8% the bill allowed for). At Trump's urging, Republican Speaker of the House Mike Johnson drew up a new continuing resolution Thursday that slimmed down the original plan while also featuring a provision to suspend the debt ceiling for two years. Members of both parties voted against that continuing resolution, which garnered only 174 votes in support compared with 235 opposed.

All of which means Johnson will need to formulate a Plan C, one which must score support from members of both parties to pass. Which means a government shutdown starting early Saturday morning is still a possibility — which means, well, quite a lot:

• Most essential government services will continue; Social Security checks will still be sent, the USPS will continue operations, as will the military, border-control personnel, and other critical agencies such as the Department of Energy.
• Still, some 875,000 federal workers would be furloughed, according to the nonprofit Bipartisan Policy Center, which could complicate citizens' attempts to contact support staff to obtain various services still available, such as getting a new Social Security card. It also means possibly exacerbating existing issues, such as staffing shortages at the Federal Aviation Administration and TSA (just in time for the holiday travel rush); national parks would likely close.

Penny Pinching: As for saving money, existing law requires the government to provide back pay to furloughed workers, meaning a shutdown would essentially pay government workers not to work over the holidays. A Senate report analyzing the costs of previous government shutdowns in 2014, 2018, and 2019 found the cumulative furloughed days amounted to some 56,938 years of lost federal worker productivity. A Congressional Budget Office report on the 35-day shutdown in 2019 found it reduced national GDP by $11 billion over the following six months, at least $3 billion of which was unrecoverable.

Written by Brian Boyle

When The Motley Fool slapped their "Ultimate Buy" recommendation on Netflix stock in June 2007, even their seasoned investing experts could never have guessed it would skyrocket by 33,097%.*

(No, really. If they had, they probably would've bought more and would finally have that villa on Lake Como… but we digress.) 

Cut to today, and both "Ultimate Buy" and "Netflix" are on the tip of their tongues again – but for very different reasons.

Because they think their latest pick might just dethrone the streaming giant. 

The company they're betting on may only be a fraction of the size of Google, but it has everything in place to capitalize on the mass cable-cutting migration going on. 

Interested? Us too. 

Get their full report on this "Ultimate Buy" right here.

One ring to rule them all… at least, Oura hopes so, if not quite in the Tolkien sense.

Where once the wearables market was totally dominated by oddly pushy smart watches telling you to get up and exercise more, now there's a new garment hitting the scene. Smart rings are starting to pick up momentum as a product category, and industry leader Oura drove that point home on Thursday when it announced it had completed a new $200 million funding round, taking its valuation to $5.2 billion, up from $2.6 billion in 2022. 

Rings of Power

The smart ring market is still something of a minnow in the consumer healthtech pond, but at least one big tech player in the wearables space is taking notice of Oura's success as Samsung released its own smart ring in July of this year.

Much like smart watches, smart rings track by-now familiar biometrics like your heart rate, workouts, and sleep patterns. Finland-based Oura is a private company, so we can't take a forensic look at its term sheet, but the company said in a statement that it's in rude financial health: 

• Oura said it's managed to double its revenue over the past year, partly through ring sales and partly through the $5.99-per-month subscriptions it offers to customers to let them use its bio-analytics. Rings as a service: Sauron never thought of that one.
• CEO of Oura Tom Hale also seems bullish that the company won't get squeezed out by the Big Tech company most associated with high-status wearables, as he told CNBC last month that he doesn't think Apple will produce a smart ring. "I think they [Apple] are unconvinced about the value of having a ring and a watch together and they're not interested in undercutting the Apple Watch as a business," Hale said.

Patently Untrue: In August, Patent Drop reported that Apple did in fact submit a patent application for a smart ring device that would be able to track a host of biometrics. That could be a sign that the iPhone and Apple Watch giant is eyeing up a ring of its own, but Big Tech companies are also famous for filing patents that never see the light of day, simply to block off competitors from the newest, shiniest tech.

Written by Isobel Asher Hamilton

It's not a news exclusive, it's exclusive news: One of the world's best known private members' clubs could soon be leaving publicly-traded markets.

Soho House — the international club that counts A-list stars and financiers among its ranks and which has rejected CEOs seen as not cool enough — announced Thursday that it's considering a buyout offer from a third-party consortium. The offer would put an 83% premium on Soho's Wednesday closing price and comes a year after it had to close off admissions in three cities over concerns it was no longer exclusive enough.

Appeal or No Appeal

Founded in 1995 in London, where it has several locations, and with more than three dozen "houses" across the world in power cities including New York, LA, Miami, Paris, Berlin, and Hong Kong, Soho House forged its white-hot appeal on a less traditional criteria that set it apart from the private members clubs of old. This was one you couldn't merely buy your way into, with a loosely defined judgement of "creativity" placed on applicants.

Care was even taken to cull some financial elites who weren't cool enough for the vibe: Soho's former membership director told The Hollywood Reporter in 2015 that 400 members were purged after complaints that too many Wall Street suits had infiltrated the New York outpost. That bravado made membership all the more desirable among those with status and those seeking it — Prince Harry and Meghan Markle met at one of the London locations, for example.

Going public meant greater pressure to scale up the business, which led to both its appeal as a takeover target and its struggles to maintain its exclusive reputation:

• On Thursday, Soho House said its membership grew 4.8% year-over-year to 267,494 in the quarter ending September 29, as revenues rose 13.6% to $333 million in the same period. Revenues from memberships alone rose 17% YoY to $107 million.
• But earlier this year, Soho House suspended new admissions in London, New York and Los Angeles after members complained the place was getting too popular — the phenomenon was perhaps best exemplified by a wildly popular Instagram meme account that harps on overcrowding and increasing fees, while throwing in some shade at poseur non-members still waiting to get in. That's the price of trying to grow a business whose cachet is somewhat antithetical to growth.

The Offer They May or May Not Refuse: The third party offer requires executive chair Ron Burkle and his private equity firm Yucaipa to hand over their equity — he supports the deal — and values Soho House at $1.7 billion. Shares in Soho House rocketed 52% Thursday, suggesting enthusiasm for the offer.

Written by Sean Craig