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Commercial Awareness Discussion
Commercial Awareness Update - July 2018
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<blockquote data-quote="Coralin96" data-source="post: 1216" data-attributes="member: 15"><p>Commercial Awareness Update 13 July to 17 July</p><p></p><p><u>The Netflix gamble</u></p><p></p><p><strong>The Story: </strong>Over $20bn was wiped off the valuation of Netflix after the company reported disappointing growth in its subscriber numbers. The company had forecast 6.2 million subscribers in the second quarter, but it only gained 5.1 million, leading to speculation that Netflix has lost its growth momentum.</p><p></p><p><strong>Impact on businesses and law firms:</strong></p><p></p><p>For most companies, a fall in customers would not have such a drastic effect on share price. But Netflix is different. Netflix’s stock has more than doubled its value this year, valuing the company at almost $180 billion. This is remarkable considering the company is yet to post a profit, spends $8bn a year on content and is loaded with a lot of debt.</p><p></p><p>So far, investors have been content as Netflix has grown its subscribers at a record rate. Netflix had also been doing well at a time when tech companies like Amazon, Google and Facebook were under fire for privacy issues. But, now, the company’s second quarter results raises doubt as to whether Netflix can keep up its rate of growth.</p><p></p><p>However, there may be a solution. The company has decided on global expansion as a way of maintaining its growth rate. Its next market is India, a country with a GDP that is growing faster than any other major economy at over 7.7%. India is also becoming more open the foreign investment compared to countries like China, and its internet users have doubled in the past four years.</p><p></p><p>But there are also challenges to investing in India including regulations on foreign companies operating in the market and corruption. Some companies have also failed to understand the Indian market, which will be a big test for Netflix. </p><p></p><p><u>Booming private equity firms</u></p><p></p><p><strong>The Story: </strong>According to Pitchbook, the average time it takes for private equity firms to raise money has fallen from almost 2 years in 2010 to 12 months. This is the fastest pace of fundraising for private equity firms in over a decade.</p><p></p><p><strong>Impact on businesses and law firms:</strong></p><p></p><p>The llow-interestrate environment has raised demand for private equity as investors, such as pension funds and insurance companies, chase higher returns. Private equity firms are also trying to raise as much money as they can while interest rates are low, which has led to rising valuations and intense competition.</p><p></p><p>According to The Lawyer, Eversheds was the most active UK firm buy number of private equity matters in 2017 with 99 deals, whereas Weil Gotshal & Manges was the most active US firm with 118 deals.</p><p></p><p><u>Uber gender discrimination</u></p><p></p><p><strong>The Story: </strong>Uber is under investigation by the US government’s Equal Employment Opportunity Commission after a complaint about gender inequality.</p><p></p><p><strong>Impact on businesses and law firms</strong></p><p></p><p>Uber has faced a long battle with regulators over the years. Currently, it is facing investigations into surge pricing and foreign bribery. It faces a lawsuit from Google for alleged intellectual property theft and patent infringement in relation to its self driving technology. TFL has also revoked its London licence in September last year and the company has turned to Hogan Lovells to appeal the decision.</p><p></p><p>The company has been trying to fix its brand after Susan Fowler, a former Uber engineer publicly spoke about a culture of discrimination and sexual harassment at Uber.</p></blockquote><p></p>
[QUOTE="Coralin96, post: 1216, member: 15"] Commercial Awareness Update 13 July to 17 July [U]The Netflix gamble[/U] [B]The Story: [/B]Over $20bn was wiped off the valuation of Netflix after the company reported disappointing growth in its subscriber numbers. The company had forecast 6.2 million subscribers in the second quarter, but it only gained 5.1 million, leading to speculation that Netflix has lost its growth momentum. [B]Impact on businesses and law firms:[/B] For most companies, a fall in customers would not have such a drastic effect on share price. But Netflix is different. Netflix’s stock has more than doubled its value this year, valuing the company at almost $180 billion. This is remarkable considering the company is yet to post a profit, spends $8bn a year on content and is loaded with a lot of debt. So far, investors have been content as Netflix has grown its subscribers at a record rate. Netflix had also been doing well at a time when tech companies like Amazon, Google and Facebook were under fire for privacy issues. But, now, the company’s second quarter results raises doubt as to whether Netflix can keep up its rate of growth. However, there may be a solution. The company has decided on global expansion as a way of maintaining its growth rate. Its next market is India, a country with a GDP that is growing faster than any other major economy at over 7.7%. India is also becoming more open the foreign investment compared to countries like China, and its internet users have doubled in the past four years. But there are also challenges to investing in India including regulations on foreign companies operating in the market and corruption. Some companies have also failed to understand the Indian market, which will be a big test for Netflix. [U]Booming private equity firms[/U] [B]The Story: [/B]According to Pitchbook, the average time it takes for private equity firms to raise money has fallen from almost 2 years in 2010 to 12 months. This is the fastest pace of fundraising for private equity firms in over a decade. [B]Impact on businesses and law firms:[/B] The llow-interestrate environment has raised demand for private equity as investors, such as pension funds and insurance companies, chase higher returns. Private equity firms are also trying to raise as much money as they can while interest rates are low, which has led to rising valuations and intense competition. According to The Lawyer, Eversheds was the most active UK firm buy number of private equity matters in 2017 with 99 deals, whereas Weil Gotshal & Manges was the most active US firm with 118 deals. [U]Uber gender discrimination[/U] [B]The Story: [/B]Uber is under investigation by the US government’s Equal Employment Opportunity Commission after a complaint about gender inequality. [B]Impact on businesses and law firms[/B] Uber has faced a long battle with regulators over the years. Currently, it is facing investigations into surge pricing and foreign bribery. It faces a lawsuit from Google for alleged intellectual property theft and patent infringement in relation to its self driving technology. TFL has also revoked its London licence in September last year and the company has turned to Hogan Lovells to appeal the decision. The company has been trying to fix its brand after Susan Fowler, a former Uber engineer publicly spoke about a culture of discrimination and sexual harassment at Uber. [/QUOTE]
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