— One U.S. City Successfully Brings Inflation Down to 2%; Roblox Users Shrink, Stock Plunges; AI Lender Upstart Shares Crash; WeWork Warns of Possible Bankruptcy; ESPN Partners with Sports Betting Firm; European Natural Gas Prices Surge 40%; Brookfield Profits Rise on Deal Spree
1. One U.S. City Successfully Brings Inflation Down to 2%
In May of this year, Minneapolis became the first U.S. city to bring inflation back down to 2%—with “Twin Cities” inflation falling to 1.8% that month, the lowest among all U.S. regions.
Reportedly, the city government successfully tackled high housing costs, which played a major role in curbing inflation.
Well before the pandemic, the government eliminated zoning laws that restricted areas to single-family homes and began issuing $320 million in rental subsidies starting in 2018.
These policies led to a surge in apartment and condo developments, increasing supply and easing cost pressures.
In May, rent accounted for 40% of the average Twin Cities resident’s income—lower than in comparable cities.
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2. Roblox Users Shrink, Stock Plunges
Today, Roblox’s Q2 earnings report revealed a decline in active users, triggering a stock plunge of up to 20% at market open.
As of June 30, total playtime on the platform reached 14 billion hours—short of the 14.4 billion expected by analysts.
Daily active users fell 1% quarter-over-quarter, raising skepticism over the company’s ability to reach its goal of 1 billion users.
Roblox, one of the most popular gaming platforms with a 17-year history, still outpaces rivals in the metaverse space.
As the metaverse hype fades, companies like Meta, Tencent, and Microsoft have scaled back investment in the sector.
One bright spot in the report: revenue rose 1% to $780 million, exceeding analyst expectations.
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3. AI Lender Upstart Shares Crash
Today, AI-powered lending platform Upstart Holdings issued a Q3 revenue forecast that fell short of expectations, sending its stock down 36%—the steepest drop since May 2022.
Mizuho Securities analyst Dan Dolev noted that in the current market, any earnings miss is quickly seen as a red flag by investors.
Morgan Stanley’s James Faucette added that Upstart’s 2023 rally was driven by AI hype, describing the recent gains as lacking substance.
Upstart stock had surged 445% earlier this year, but the rally has now come to a halt.
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4. WeWork Warns of Possible Bankruptcy
Today, co-working company WeWork issued a statement warning that a wave of membership cancellations could disrupt its cash flow and operations.
In response, the company plans to renegotiate leases and offer more favorable terms to retain clients.
A June report showed that $7.5 billion in commercial mortgage-backed securities (CMBS) are linked to WeWork—accounting for 38% of New York City’s total.
If these properties are foreclosed, WeWork’s business could be directly impacted.
Since 2019, WeWork has renegotiated 590 leases, including cuts to rent and floor space.
With WeWork-linked CMBS comprising 38% of NYC’s total, the company’s fate is tied closely to the city’s real estate market.
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5. ESPN Partners with Sports Betting Firm
Disney-owned sports channel ESPN has signed an exclusive long-term partnership with casino operator Penn Entertainment.
Over the next 10 years, Penn’s online sportsbook will carry the ESPN Bet branding.
Before today’s market open, Penn’s stock rose 13%, while rival DraftKings dropped more than 6%.
Under the deal, ESPN will receive $1.5 billion over 10 years and $500 million in Penn stock warrants.
Though ESPN won’t engage in actual gambling, it will feature dedicated sports betting content.
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6. European Natural Gas Prices Surge 40%
Today, European natural gas prices spiked 40% due to potential disruptions at Australian LNG export facilities.
Reports suggest that LNG plant workers in Australia may stage a mass strike, sparking fears across global energy markets.
Analysts noted that although prices remain well below last summer’s peaks, supply chain concerns still dominate market sentiment.
The EU has faced energy crises for the past two years, and fragility in the supply chain remains a major worry.
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7. Brookfield Profits Rise on Deal Spree
Canadian private equity firm Brookfield Asset Management reported $527 million in distributable earnings for Q2, up 3% from last year.
Brookfield expects to raise $150 billion this year, with $100 billion going to private equity and $50 billion to insurance products.
The firm sees plenty of opportunity in today’s market. Last quarter, it acquired Duke Energy’s wind and solar farm portfolio for $2.8 billion and bought shipping container giant Triton International for $13.3 billion.
As of June 30, Brookfield had $440 billion in fee-generating assets under management.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.