fortune--2020-08-15--The pandemic showed how volatile 401(k)s can be. Here’s how you can diversify your asset mix before

The pandemic showed how volatile 401(k)s can be. Here’s how you can diversify your asset mix before retirement

When the market descended into the fastest bear market on record in March, many watched in horror as 401(k) retirement accounts shed thousands of dollars seemingly overnight. For those at the start of their careers, there was the knowledge that time is on their side. But for savers nearing retirement age, a volatile shake-up in the markets can be more than a little jarring with less time on the clock.
“The first thing I would say is, don’t get emotional. Stay calm. Markets tend to recover, but let’s look at how not to get burned when the market dips when you’re closer to retirement,” offers Steve Kruman, a financial planner and investment adviser at Bryce Wealth Management. “When the market gets up to a level you’re comfortable with, then you have to have a volatility protection program of some sort,” he tells Fortune.
Indeed, for many soon-to-be retirees, the importance of diversifying your retirement plan is perhaps more important than ever.
Even in choppy markets, the age-old advice of “stay the course” is key for people closer to retirement—but perhaps with a twist: “I almost want to add into that comment not necessarily just ‘stay the course’ but revisit your course,” Jennifer Kruger, a CFP, vice president, and branch leader at Fidelity Investments in New York, tells Fortune. “Revisit your plan, which includes your time frame, your stomach for the market, your other financial situation, and what needs may be changing in the next five years or so.”
While watching the markets take huge dives (and post similarly dramatic recoveries) can be unnerving, Rhian Horgan, the CEO and founder of retirement and financial planning platform Kindur, suggests keeping this in mind: “There are things you can control and things you can’t. Unfortunately we all know we can’t control what’s happening in the markets, so the question is, What are the things that are actually in your control?”
Assess your risk tolerance
This is Step 1.
When you’re younger, you’re likely heavily (if not wholly) invested in the stock market. But as you get closer to retirement, it’s important to reassess your risk tolerance and how you might want to diversify for the homestretch.
In general, experts say you should start thinking about your new plan for retirement around five to 10 years out from when you’d like to retire.
“When we say, ‘Become more conservative,’ you’re shifting from assets like stocks that tend to be more volatile: more ups, high highs, low lows, and you’re shifting to things that smooth out the roller-coaster ride,” says Kruger. “We shouldn’t be making bets at this point.”
A typical retirement plan that’s more conservative will include a mix of stocks, bonds, fixed income, and cash. But, “there’s not an end-all, be-all, ‘you should be in x percent conservative and x percent growth,’” notes Kruger. Most of the experts who spoke with Fortune say that a 50/50 conservative/aggressive (or 50/50 stocks and bonds or other investments) mix is generally a good idea nearing retirement, but emphasize each person’s situation is unique and it may be more or less.
The bottom line here, say experts, is to be realistic about your risk tolerance, what kind of guaranteed income you have, and what you might need to adjust to satisfy those needs.
Diversify your assets
Diversify, diversify, diversify. The phrase may get thrown around a lot in investing, but for people nearing retirement, “that means you may have some equity and some bonds and some other fixed income and some short-term cash, because we never know what is going to happen in the market in the short term,” Kruger says.
In general, experts suggest a mix of growth, value, and large-cap stocks and lower-risk bonds. Meanwhile, other investments like certificates of deposit (CDs), cash, and annuities (more on this later) could also help ensure your money isn’t all subject to the whims of the market.
One popular option is a target date fund, which automatically rebalances and diversifies for retirees with a chosen retirement year (2030, 2040, etc.). “For those that don’t have the will, skill, and time [to do it themselves], those target date selections are a great opportunity because they rebalance for the person’s age and time frame,” Kruger points out. “It’s a set it and forget it: You’re getting properly invested for your situation, they’re rebalancing, and they often become more conservative over time.”
However, target date funds can have higher fees than regular index funds, and those like Kruman suggest weighing if the fees are worth it or if you are able to actively do it yourself.
Still, there’s only so much diversifying you can do within a 401(k) plan. “The thing I tell people very bluntly is a 401(k) has an ‘O’ in it and a ‘K’ in it, but it doesn’t mean everything’s going to be ‘OK’ if that’s the only thing you rely on,” quips Kruman. “You really cannot come up with a good volatility control plan just in your 401(k).”
That’s why other investments like annuities might make sense for soon-to-be retirees. To be sure, annuities have something of a bad reputation for their often variable and sometimes hidden fees and capped upside, but those like Kruger and Horgan note annuities could play a role in giving you a dependable stream of income, and, perhaps more important, protecting your principal. “What I would ultimately tie that up to is the word ‘protection,’” Kruger states.
With a fixed indexed annuity, if you get a lifetime income rider for a fee, you can get guaranteed income through the annuity for life, while multiyear guaranteed annuities (MYGAs), which Horgan describes as “an alternative to CDs,” basically give you a guaranteed rate of return for a set period of time. Although it varies, experts note MYGAs often have better interest rates than CDs. But be sure to read the fine print and do your research to see if the protection annuities offer is worth the downsides.
Take advantage of your 401(k) in-service distribution
For working professionals, 59.5 is a magic age.
That’s when you can begin making in-service distributions from your 401(k) and rolling the funds over to other investment vehicles (it’s important to note that plans have differing rules for how that works). Those like Kruman and Horgan favor the idea of rolling over funds from your 401(k) into an IRA, which has more flexibility in terms of investment options.
Meanwhile, experts suggest opting for a Roth (for your 401(k) or IRA) because everything is taxed beforehand, and you’re able to withdraw funds tax-free if you’ve had your Roth IRA for five years.
Keep a little cash
Experts say keeping cash on hand should be a key part of your retirement planning—and will shield your nest egg from the volatile swings in the market.
While it’s going to vary for each person, having about six months’ worth of expenses in the bank is typically the “rule of thumb,” Kruger notes, but as you get nearer retirement, you may want to up that cash pile depending on your situation, she says.
Meanwhile, Horgan notes if you have guaranteed sources of income coming in, like Social Security, a partial pension, rental income, or something like fixed annuities that “cover most of your expenses, you actually don’t need to have a lot of liquid cash,” she says. “But if there’s a gap…that’s where having six or 12 months of expenses set aside in easy-to-access cash could be really prudent.”
Factor in the unforeseen costs
The market itself may be unpredictable, but experts say one of the biggest surprises to their clients is the cost of long-term care.
“Health care in retirement is one of the biggest costs for retirees, and unfortunately it’s probably one of the biggest surprises, because their financial advisers haven’t been encouraging them to save for this cost as they approach retirement,” says Horgan. In fact, even excluding the big cost of long-term care, it’s estimated a regular couple would need $295,000 for postretirement health care costs.
And you shouldn’t wait until the last minute to think about these costs: “The best time to be assessing long-term care is actually in your fifties,” suggests Horgan. You can buy long-term-care insurance, but it typically comes with a hefty price tag.
Other options for paying for care in retirement could include the sale of a home, or even setting aside something like $300,000 in a separate account to grow with interest and “just keep that segregated for that cost someday,” suggests Kruman.
Think outside the box
It’s easy to hear the word “diversification” and think stocks, bonds, and international exposure. But for those like Horgan, having a diversified retirement plan includes your income streams, too—and those are perhaps more important to retirement than stock picking, she suggests.
“I focus on things like their spending, their part-time income, their Social Security election. I have much higher confidence these can change the outcome in a positive way than trying to make these tactical bets in the markets,” says Horgan.
Horgan says she’s hearing from her customers (in the boomer age range) that they have been able to save hundreds of dollars a month by not traveling, going to dinner, or attending live events during the pandemic. Reducing your spending by $500 or so a month could have a big impact on your retirement savings, especially if you use it to do a catch-up contribution in your retirement account or sock it away in savings, Horgan says. Meanwhile, she sees soon-to-be retirees choosing to earn part-time income (“The old days of retiring at 62…is extremely uncommon,” she says).
Plus, Horgan points out, if you can wait to start claiming your Social Security benefits once you’re 62, you’ll get a roughly 8% benefit increase for every year you delay up to 70 years old.
“Think about the things you can control: Think about some of your reduced spending: Can you keep that up? Think about part-time income or whether you’re willing to delay retirement by a year or two. All of those things tend to add two to five years to the life of your retirement income,” she argues.
What to do if you haven’t diversified
It’s clear the advice is to diversify your retirement accounts and assets as you near the finish line. But what if you haven’t done that yet, and the clock is ticking?
“If they’re running out of time at this point, I’d say increase your 401(k) contributions. If you haven’t taken advantage of the Roth 401(k), still start it now,” Kruman suggests. “Keep participating, increase contributions.”
Meanwhile, Horgan notes, “the first thing I think about is, ‘Keep being disciplined about saving.’” If you’ve been able to save an extra buck or two during the pandemic, Horgan suggests thinking about how you can keep up those savings and put that extra cash into your retirement.


fortune--2020-08-15--What a video-first economy could look like

Everything we know so far about the second round of stimulus checks

Rarely has the nature of our interactions changed so profoundly and so quickly. Suddenly, nearly all of our personal and professional relationships are being built and nurtured online—predominantly through video. Following the pandemic, our new normal will look vastly different as many of the new routines we’ve adopted solidify into long-term behaviors that far outlast the coronavirus crisis.
Video is providing a lifeline to companies, schools, and health institutions, as well as their employees, customers, students, and patients. After getting over the initial shock of sheltering in place, many employees have found that they love working from home and are more productive than ever thanks to workplace collaboration tools like Zoom and Slack. (My firm, Emergence Capital, is a Zoom investor and customer.)
Employers, too, are realizing that remote work keeps productivity high and provides an opportunity to reach talented professionals wherever they live. Meanwhile, small and midsize businesses (SMB) that used to deliver services in person are now operating over video.
No longer geographically constrained, these SMBs can scale whatever service they provide, be it tutoring, painting night, or yoga classes. Universities and K-12 schools, too, are being pushed headfirst into online education. Meanwhile, telemedicine, long dangled before us as a perk of the future, is finally coming to fruition.
In short, we’ve entered a video-first economy.
As investors, we’ve seen this kind of seismic shift before when legacy on-premise systems migrated to the cloud. In fact, that shift actually inspired the creation of our firm 18 years ago, and ever since we have witnessed how the cloud has democratized software and services for SMBs. It created a renaissance of innovation that has improved countless lives and has led to the creation of numerous iconic companies.
However, the difference between now and then is that Salesforce led the shift to the cloud to empower salespeople. (Emergence was an early investor in Salesforce.) In contrast, videoconferencing providers like Zoom have led this shift to video to empower the world. And, as before, with transformational change comes enormous opportunity.
Iconic companies are going to be built in the emerging video-first economy. As with any market shift, the first movers will gain the advantage. Here are areas we think are particularly ripe for innovation in a video-first economy:
Meeting services
Companies can’t conduct all of their business on video alone. They need functional support with marketing, contact management, and payments, among other services, in order to create seamless customer experiences.
In order to nurture the next big developer ecosystem, this past May we cohosted the Zoom Marketplace App Competition. As part of the competition, we heard pitches from many innovative startups imagining new ways for companies to integrate into the Zoom ecosystem for better business efficiency. One intriguing company, for instance, streamlines the video-based delivery of services for SMBs like yoga studios by offering listing, booking, and payment services. This is just one example of the type of business poised to benefit from the new focus on video-first infrastructure platforms.
Online learning
The pandemic has shown us that despite the investment in it to date, online learning is far from ready for prime time. Opportunities abound at the K-12, higher education, vocational, and corporate training levels to make online learning more seamless, engaging, and customized to instructor and student needs.
Today most educators are forced to cobble together multiple systems for live and prerecorded instruction that allow them to take surveys, assign and collect classwork, record student feedback, and communicate with outside stakeholders like parents and administrators. It’s no wonder that so many educators—and parents—are exhausted by the sudden transition to online learning! And with the new school year arriving, there is a very immediate need for better solutions.
Telemedicine
After decades of discussion, telemedicine has finally become mainstream, as both consumers and health care providers are suddenly prioritizing the ability to manage health remotely. Even after the pandemic, many of us will want to stick with telemedicine for nonemergency needs because of its convenience and cost savings. In addition, telemedicine will continue to be invaluable for people who live far away from high-quality or specialized care or who are limited by mobility issues.
Remote work productivity tools
The sudden shift to working from home has forced professionals to rely on consumer devices, applications, and services for enterprise use. And this shift is here to stay. Facebook, Twitter, Square, Shopify, and Nationwide are only a few of the companies that have announced their intent to make work from home an acceptable long-term norm.
Meanwhile, playing from home is here to stay as well, as streaming usage skyrockets for games, movies, and TV. As households compete among themselves for broadband access, we’re all getting a glimpse of the opportunity to create new tools and infrastructure that support the home as the central hub for work and entertainment.
An opportune moment
Despite, and perhaps because of, the unpleasantness unfolding around us, it’s an ideal time for innovative teams to build technologies that help us not only make the most of our new normal but even thrive throughout it. These video-first innovations will far outlive the pandemic and will help shape the decade to come.
Santi Subotovsky is a partner at Emergence Capital.


fortune--2020-08-16--How artisans offer lessons for us to reshape the post-COVID economy

The onset of COVID-19 prompted billions of workers to shift their work life to their home offices for the first time, introducing a new working style. Yet as a large part of society globally faces this apparently radical and sudden shift in how we live and work, we must remember that home-based work has existed in emerging economies, and right here in the U.S., for centuries.
One of the largest home-based industries is the artisan sector. It doesn’t just manufacture touristy trinkets. This is a complex web of supply chains that fulfills the needs of the world economy: The global handicrafts market was valued at $526 billion in 2017 and is estimated to be at $984 billion by 2023. Estimates are hard to come by, but according to research by Neelam Gupta, there are as many as 300 million home-based workers around the globe.
This is a world of mostly women primarily working with their hands: sewing soles on shoes, adding pom-poms to the tops of winter hats, stringing tiny seed beads onto mass market jewelry, making the tassels that adorn everything from clothing to pillow covers. But despite the prevalence of this work in our everyday consumption, the majority of us hardly know these workers exist!
All of these tasks are tended to by human hands in a supply chain that extends into their homes. As we navigate how to move forward during this pandemic, the artisan community worldwide has some valuable lessons on what the future of work can—and should—look like.
We often think of artisanship as a thing of the past. But in many ways it is the future. At a time where there is an urgent call to bring Black, Indigenous, and people of color (BIPOC) voices to the table, the cottage industry model—already perfected by Black, brown, and Indigenous communities for centuries—could help suggest a new way of work.
Our global and radical shift to remote work was prompted by a universal concern for health and safety. As workers everywhere sheltered in place, they did so in a shared effort to flatten the coronavirus curve and keep their communities healthy. Yet workplace concerns related to health and safety have been felt by the artisan sector long before COVID-19, and with good reason. In a pandemic, it’s clear that social distancing is not possible in a traditional factory setting. But these cramped quarters have led to health hazards for years.
Nest has been working with artisans for the past 14 years, connecting their handmade creations with markets and businesses that can pay them what they’re worth. When I started Nest, I visited countless communities around the world where men and women worked from home, tending to their children and to their craft. Some were compensated fairly for their creations. Most were not.
That’s why we spent the past decade helping companies not only source from artisan groups, but also create structures and frameworks for these transactions. This led us to the Nest Ethical Handcraft Program, which uses a matrix of over 100 standards to determine fair wages, safe working environments, and representation in decision-making for artisans.
As consumer demand for handicrafts continues to grow, we’ve been able to help solidify an artisan economy that works almost entirely from homes or small community workshops—and to provide the needed transparency to make sure this work is safe. For women, especially, this has been a saving grace: They can work from home, skip long commutes to a factory, and meanwhile tend to their families. This is also particularly helpful in communities where gender discrimination and abuse are still rampant.
As the world wakes up to the power of remote work, consumers and peer companies need to recognize that it’s not just a matter of convenience, but a productive and resilient approach to work that could inform international development efforts as well as community revitalization right here at home.
So what does this actually look like in practice? Nest has been working since 2017 with Jaipur Living, a company that produces rugs for contemporary brands here in the U.S. Jaipur works with rug weavers all over India where home-based work is the norm. Husbands and wives sit alongside each other working. Babies are cradled in the mother’s lap as she takes on the rhythmic movements of the loom. When the midday sun gets too hot, they take a break, eat lunch, and rest. Work resumes in the evenings in the summer months, when it’s more tolerable to sit out at the loom. These are small, simple adjustments to life. But they have a profound impact on the workforce.
Jaipur is able to manufacture without the heavy infrastructure of factories. Its team does not have to endure exhausting commutes. All of this, of course, results in a lighter carbon footprint for the artisans themselves and for the company as a whole.
For women, the benefits extend beyond family life. Working in countries where women can face harassment, abuse, or violence on their way to and from work, this option of remote work allows them to be more comfortable and in control of their safety and well-being.
Making a rug is a lengthy task, close to 100 steps from the spinning of wool to the final tassels. If Jaipur Living can do it almost entirely with a rural workforce, why can’t other companies build a similar grass-roots system?
Consumers and brands and governments need to talk about and recognize the role home-based work has in the global economy and draw it out from the shadows. For those of us in the West, we need to look at the so-called gig economy through a new lens.
In fact, during the pandemic, artisans working from home all over the world—from El Salvador to India to right here in the U.S.—were nimble and resourceful enough to be able to pivot quickly to using their skills to make masks. In Seattle, the Refugee Artisan Initiative (RAI) helps refugee and immigrant women find employment. When the lockdown went into effect, Ming-Ming Tung-Edelman, the founder of RAI, put many of the RAI women to work producing cloth masks from home. Since March, the group has made over 40,000 masks, and has also employed some of their husbands (who had seen work disappear as Uber drivers or gig workers) to transport materials to various artisans’ homes. These masks have been donated to health care workers, inmates, and low-income seniors in Seattle’s Chinatown neighborhood.
Finally, there’s perhaps the most compelling reason to embrace home-based work: Many people prefer it. More than three-quarters of the artisans interviewed reported that they preferred working from their homes, according to a study by Nest, Save the Children Germany, and CCR CSR, an anti–child labor organization. Similarly, during this pandemic, three out of five Americans say that they would rather continue to work remotely, yet labor law (here in the U.S. and around the world) and corporate policies have yet to catch up.
So is it finally time for modern economies to embrace what we’ve long known? As Nahla Valji, senior gender adviser to the secretary-general of the United Nations, aptly shared, “Our formal economy is only possible because it’s subsidized by women’s unpaid work.” Remote work can, and does, work. But it must be formalized, visible, and protected.
For women and people from minority communities who until now couldn’t get to a job because of family responsibilities, the strenuous trek to work, or fear for their own safety, the post-COVID transition could be the pathway to greater economic freedom and peace of mind. Surely there will be exceptions. But it’s finally time to look beyond the cubicle or factory floor.
Rebecca van Bergen is founder of Nest.


fortune--2020-08-16--This country banned tobacco sales to fight COVID-19. The result was a crime wave

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The COVID-19 pandemic is stressful for almost everyone, everywhere. But one country’s rules for combating the virus added a huge dollop of extra stress for smokers—and for the national treasury.
That country is South Africa, where tobacco sales have been banned since lockdown first took hold at the end of March. Alcohol sales were also banned, then allowed as the lockdown eased, then banned again as infection rates increased, and the lockdown was hardened.
But the prohibition on cigarettes has remained throughout, until today—it will be lifted from Monday at midnight, as South Africa relaxes its lockdown in response to a drop in new cases (the alcohol ban will also be lifted.)
Botswana and regions of India had already dropped their tobacco bans a couple months previously, leaving South Africa the only country in the world that still had one.
The result, according to researchers and anti-crime activists, was a classic supply-demand distortion, creating an explosion in the illicit cigarette trade that kept satisfying most smokers while depriving the authorities of much-needed tax revenue. Meanwhile, the ban on smokes did not stop South Africa from developing more than half of Africa’s infections.
“Restrictions on the sale of tobacco will be lifted,” President Cyril Ramaphosa said Saturday evening, as he announced the relaxation of many lockdown restrictions. Some media outlets had signalled the upcoming move earlier in the week, but South Africa’s 8 million smokers, and its 30 billion rand ($1.7 billion) tobacco industry, were not getting their hopes up.
After all, Ramaphosa announced in late April that the ban would soon be lifted. But then, under pressure from other senior lawmakers in his African National Congress (ANC) party, he suddenly changed his mind.
“We’ll have to wait and see when the regulations are published,” says Sinenhlanhla Mnguni, chair of South Africa’s Fair-Trade Independent Tobacco Association (FITA), on Saturday, immediately after Ramaphosa’s new announcement. “Of course, the president has previously announced the lifting of the tobacco ban only to then have the decision reversed.”
But why was there a tobacco ban in the first place?
Shifting reasons
Controversial as it was, the justification for South Africa’s alcohol ban was always quite straightforward: The country has a significant drinking problem, and alcohol consumption puts a lot of people in the hospital—both drinkers and people hurt by their actions. While the alcohol ban was devastating for one of the world’s top wine-producing countries, it eased the strain on a health care system that needs to focus on the coronavirus threat.
However, the official justifications for the tobacco ban shifted over time.
Initially, shops were banned from selling all but essential items, in order to minimize the time people spend there; cigarettes were not deemed essential.
A month later, when President Ramaphosa had to perform his embarrassing U-turn by lifting the ban, Cooperative Governance Minister Nkosazana Dlamini-Zuma—the politician in charge of South Africa’s anti-COVID efforts—explained that this was because of “health-related” reasons. Specifically, she referred to the phenomenon of people sharing cigarettes, and thus spreading the virus.
In May, the ban was intensified with a new rule directly targeting smokers. If caught with cigarettes, they would have to show receipts proving they bought them before the ban took effect. Police Minister Bheki Cele threatened people with fines or arrest if they could not produce the receipts.
Most people see Dlamini-Zuma, the ex-wife of former President Jacob Zuma, as being behind the ban.
In the mid-1990s, when she was serving as health minister in Nelson Mandela’s administration, Dlamini-Zuma was responsible for legislation that regulated smoking in public places—a move that successfully slashed the country’s smoking rates. This year, many allege, she was continuing her anti-smoking crusade under the guise of coronavirus regulations.
“Nkosazana Dlamini-Zuma has always been a vocal anti-tobacco campaigner. This is pretty much in line with her views on the topic,” said FITA chair Mnguni.
Yusuf Abramjee, whose recently launched Tax Justice SA organization opposes the ban, accuses Dlamini-Zuma and her colleagues of “pushing their own anti-smoking agenda.” He called this “against the constitution and the right for people to choose.”
Dlamini-Zuma’s department disagrees that she was the driving force behind the ban.
“This is nothing to do with any crusade,” said spokesman Lungi Mtshali, who stresses that the cabinet was collectively responsible for the ban, and says the tobacco and alcohol bans have both achieved the aim of protecting South Africa’s health care system.
Legal challenges
The question of the tobacco ban’s constitutionality is an open one—as is the tightly linked question of its effectiveness in protecting the health care system.
Pierre de Vos, a professor at the University of Cape Town’s law faculty and one of the country’s foremost constitutional scholars, does not see the ban as lawful.
South Africa’s Disaster Management Act gives the government leeway to do whatever is needed to combat a declared disaster, which, de Vos explained, in this case means anything that can limit the spread of the coronavirus or lower the death rate.
“The problem with the tobacco ban is that there doesn’t appear to be an immediate link between the ban and either stopping the spread of coronavirus or lowering the death rate,” de Vos said. “The government has conflated that argument with a general public health argument. They made the argument—which is obviously a good argument—that it is bad for your health to smoke. But that is irrelevant for the coronavirus. [Banning tobacco] doesn’t mean it will stop people from getting it or, even if they get it and had stopped smoking for a month or two, that they’d survive. There’s no evidence for that.”
Dlamini-Zuma insists the medical evidence is there. But she has been hit with multiple legal challenges from the tobacco industry.
The first was a lawsuit from FITA, the group representing South Africa’s domestic tobacco producers, which argued that the ban was irrational and therefore unlawful. In what de Vos sees as a bad call, the Pretoria High Court decided in Dlamini-Zuma’s favor in late June, ruling that the decision to implement the ban had been rational—even if it was unreasonable. It also rejected FITA’s argument that tobacco is an essential product.
FITA was granted leave to appeal on Friday, the day before Ramaphosa announced the ban would be lifted—Mnguni said the organization has not yet decided its next move. Meanwhile, the Western Cape High Court was due to soon give its ruling in a similar suit, this time brought by the South African arm of British American Tobacco (BATSA).
BATSA, which got a British respiratory expert to testify that scientific evidence does not support the ban, did not respond to requests for comment on its case.
Illicit trade
A common element of both cases was the argument that the tobacco-sales ban simply pushed the trade underground. This is backed by both statistical and anecdotal evidence.
According to a June survey by the University of Cape Town’s Research Unit on the Economics of Excisable Products (REEP), around 27% of smokers tried to quit during the lockdown, a third successfully. But of those who continued to smoke, 93% managed to keep buying cigarettes despite the ban.
The main difference was that the illicit market was charging almost 250% more than official sellers were charging pre-lockdown. And what’s more, the survey pointed to a 430% increase in people regularly sharing cigarettes, because of those inflated prices.
“People are smoking whatever they can get their hands on,” said Zanyiwe Mavubengwana, a community member in the Masiphumelele township south of Cape Town. “Those things, you’re not sure if they are good for your lungs. It’s even worse for families, because more money is going out.
“Sharing will never end in our community,” she continued. “They can ban cigarettes or alcohol, but we will always share whatever we have…People will put in a rand or two rand each for that one cigarette.”
The market’s shift underground has horrified Yusuf Abramjee, a veteran anti-crime campaigner, and his Tax Justice SA group. “With the ban, the government has played right into the hands of organized crime syndicates,” he said. “We know you can buy cigarettes on social media platforms, at traffic lights, on corners.”
Tax Justice SA, which backed BATSA in its case against the government, estimates that the tobacco ban has cost the tax authorities around 35 million rand ($2 million) each day—a figure that fact-checkers found to be mostly accurate. Overall, that means around 1.4 billion rand in lost tax revenue.
“We need that money for the health system,” Abramjee said. “The money is going directly into the pocket of criminals.”
As for the source of the cigarettes people continue to buy, REEP said in its survey report that South Africa’s independent producers—specifically, FITA’s members—had “benefited disproportionately from the sales ban. They have greatly increased their share of the market within our sample, and sold their cigarettes at hugely inflated prices.”
“The multinationals have been the biggest losers during the lockdown period. Their markets have been captured by local companies and, to a lesser extent, by imported cigarettes, significantly reducing their market share,” the report read.
Mnguni, FITA’s chair, claims the REEP study was inaccurate.
“There’s no such thing as brand loyalty in the lockdown period,” he said. “Cigarettes are being exported from the country, and the fact that some find their way back in doesn’t necessarily mean the manufacturers are benefiting. We know once the ban is lifted, people will smoke their regular brands.”
“Post the lockdown, it’s going to take years to recover from the illicit trade,” said Abramjee.


fortune--2020-08-16--The one major metric missing from ‘Best Hospital’ rankings

When it comes to “Best Hospital” rankings, there’s one key metric that’s historically been missing from the equation: equity.
Kyu Rhee, IBM vice president and chief health officer, said that in a study the company conducted comparing all of the rankings—including IBM’s own—there were no individual measures that considered the work hospitals do to mitigate disparities in care and outcomes.
But that could soon change. COVID-19 is shining a light not just on infectious disease but also mental illness, chronic illness, and inequities, Rhee said. “This is a visibility moment,” Rhee explained during a Fortune Brainstorm Health virtual conversation on Thursday. These issues are “becoming more accentuated with COVID,” making this a key moment to rethink and reinvent hospital and health systems and “what measures matter,” he said.
The pandemic is not the only factor sparking this new line of thinking, said Josh Sharfstein, vice dean of public health at John Hopkins. “It’s both COVID and the reawakening of the understanding of racism—that crisis, too—that is fueling this,” he said. “This is a moment for every kind of institution in healthcare and beyond, including hospitals, to say what can we do to be part of the solution to the challenges facing this country.”
Sharfstein said the university has been examining what it would take to have hospitals orient their work toward preventing illness in the first place, rather than just taking care of sick patients. It’s a question that John Hopkins Center for Health and Equity has teamed up with IBM Watson Health to help answer. Together they’re working to come up with new metrics that could help assess hospital contributions to community health and equity.
Rachel Thornton, associate director for policy at Johns Hopkins Center for Health Equity, said some of those metrics include the change in life expectancy and hospitalization trends over time in the hospital’s county. Since hospitals offer a chance to intervene on underlying health issues when a patient is admitted, measurements like tobacco cessation programs, screening for intimate partner violence, and infant safe sleep education are also key.
Thornton said the new framework also takes into consideration how a hospital partners with local organizations and community-based programs, as well as how it behaves as an employer and economic engine—the diversity of its board and management, the hourly rate it pays employees, whether it provides high-quality affordable child care for workers.
Thornton said that for every metric, they considered “existing evidence, best practices, and examples of what hospitals are already doing.”
Barbie Robinson, director of the Department of Health Services in Sonoma County, Calif., pointed to her district as a case in point of what happens when hospitals and healthcare systems integrate social determinants of health into their work: “We’re going to achieve reduction in disparities we want to see in the community.”
Robinson said Sonoma County worked with U.C. Berkeley this past year to examine its most vulnerable population. The findings: 1% of the county population accounts for 20% of jail time, 28% of annual behavioral health costs, and 52% of nights in housing and shelter provided by homeless providers. She noted that this population is three times more likely to be African-American, even though African-Americans make up only 3% of Sonoma County.
Jack Westfall, director of the Robert Graham Center, said one of the barriers to implementing this mode of thinking comes down to financial incentives. He recounted a conversation with a hospital CFO who told him he loved the idea of focusing on community health, “but until population health pays, I need butts in beds. I need people in the hospital.”
“One of the barriers in my mind is: How do we pay for health in America?” Westfall posited. “How do we shift our thinking to investing early in healthy living?”


fortune--2020-08-17--Katie Hill on refusing to disengage from politics: ‘Change is too important to step out of the arena

Katie Hill on refusing to disengage from politics: ‘Change is too important to step out of the arena’

Katie Hill is an open book. It’s not a quality the former congresswoman took on by choice, but one she learned to embody after intimate details of her life were published online.
In the fall of 2019—less than a year after she was elected to Congress in 2018—nude photos of Hill were published by conservative media outlets; Hill has said she believes the photos were leaked by her husband. (He has denied those allegations, including recently to the New York Times.) In her new book, Hill explains the photos’ relationship to her affair with a female campaign staffer. The situation—nude photos released, and the threat of more—led Hill to resign from Congress in October of last year.
“The vast majority of people who know who I am, if I encounter them on the street and they recognize me, I have to hold it within my mind that there’s a very good chance they’ve seen my naked pictures,” Hill explains. “That’s a really shitty thing to think about.”
In the wake of that level of violation, Hill seems impossible to rattle: Ask her almost anything, and she’ll tell you the answer straight. In her book, She Will Rise: Becoming a Warrior in the Battle for True Equality, Hill does just that, explaining exactly what is so violating about cyber-exploitation (known by some as revenge porn, which Hill says is a problematic misnomer) and how domestic abuse works.
That’s not to say that the book focuses entirely on the painful end of Hill’s tenure in D.C. She also reflects on her many positive experiences on Capitol Hill—including how closely she, as a member of the freshman class’s leadership, worked with House Speaker Nancy Pelosi and her tight relationships with the other women who transformed Congress after the 2018 elections. In fact, she frets that her story might dissuade younger women and girls from running for office and urges them not to be cowed.
Hill hasn’t yet been able to officially divorce her husband; she says he has refused to sign divorce papers, and her trial over the issue has been caught up in coronavirus postponements. She’s worried that her heightened visibility as an author and as the founder of Her Time, a PAC working to elect women and young people to office, could lead her to be targeted again.
Hill spoke to Fortune about the tough experiences she details in her book, her vision for her future—“Never say no” to returning to political office, she says—and the lessons her history holds for future candidates. This interview has been edited and condensed.
Fortune: Before you entered politics, you worked in the nonprofit sector, including with women fleeing domestic violence. Did you ever compare or connect their own experiences to yours at the time? Have you reflected on any similarities in the years since?
Katie Hill: I fell into the category of people who thought, “If it’s not physical, it doesn’t count.” Or, “I’m a strong, independent woman, and I should be able to stand up for myself.” This ongoing justification to yourself, a failure to recognize these behavioral patterns when it comes to your own relationship, a total denial. Occasionally I would say, “There’s a red flag,” but I pushed it off to the side. It wasn’t until later when I started to look at it from the coercive control side of things rather than bruises on your face that it started to make sense to me. As things devolved over the course of my relationship and got worse and worse, it became more obvious.
You mention in an aside that you’ve swapped stories about being the target of late-night talk-show jokes with Monica Lewinsky. What were those conversations like?
She reached out in the aftermath of what happened to me, saying she was thinking about me. She was doing projects on public shaming. It was nice to be able to talk to her a few times through the course of it all. Having been through the entire journey of it, she talks about how she’s now able to laugh about it, but at the time how traumatizing it was for her. She was even younger. She wasn’t a political figure. She was simply the victim of it. And she was blamed as the villain by the left. That’s not my experience. Her ability to heal over the years and transform that into someone who’s doing good work for people who have been through similar experiences is really powerful and something that inspired me too.
In the book, you write that your grandfather was an influential figure who supported you as a young girl and said you could achieve anything. Then, late in the book, you reveal that a woman whose history of domestic abuse you’ve described in the text was actually your grandmother—and that the man abusing her was the grandfather you looked up to. Why did you frame that story that way?
It is absolutely true, when I think about how I was raised to be strong and the kinds of role models who were important figures for me—he was one of them. I’d heard a little bit from my mom and grandma about how maybe my grandpa wasn’t that great when he was married to her. It was never in any real detail. During the course of writing the book I found out more than I’d ever known before. The reveal was intended [to mirror] my own reveal—to do it in a way that shows people are complicated. There’s not just a single black-and-white way of looking at things. Neither experience is invalidated by the existence of the other.
Could or would you have shared any of this—these detailed allegations of abuse by your ex-husband—if you were still in Congress?
I don’t know. It’s hard to say. You have a different calculus when you’re in political office. I feel much more freedom now to be totally open about anything. I don’t have to worry about reelection, I don’t have to worry about all the different parties who might be impacted by my decision to talk about something or share details. I would’ve not wanted that to be as publicly discussed if it weren’t for the fact that my life had already been kind of ripped open. To me it felt like important context to share.
My mom was a big inspiration for me talking more about domestic abuse. She said, “A lot of people think women are weak for being in these kinds of relationships. So the fact that you were this powerful woman who got elected to one of the highest offices in the country, and yet you still went through that for so long, and it took this much courage to leave, that’s something people should know.”
In the book, you describe intense abuse and controlling behavior going on at home while you were running for office. How were you able to focus on the campaign?
That was a coping mechanism. My work was my freedom. That was the space away from home where I was able to have respite, to feel like I was in charge, and to actually be in charge. To have power and control over my own destiny. I knew the only place I could do that was outside the home. It is incongruous to think about it. I used to rationalize it: I have big important jobs where I’m making decisions all day, so I like that I’m not doing that at home. But those were the kinds of things he told me too, and I believed.
You write a lot in the book about the “gray areas” of workplace relationships and sexual encounters that have been part of conversations related to the #MeToo movement, including in reference to the relationship you had with a member of your campaign team. Do we need another reckoning like #MeToo to happen before we’re really ready to discuss these the gray areas?
I think we’re going to have to have a real meaningful discussion about the gray areas. We’re going to have to have a real, open conversation that a much bigger percentage of people than we ever would like to admit have done things that would now be considered totally inappropriate or even illegal or unethical. Anyone who was teenaged to adulthood up until pretty recently has likely had some kind of experience where they’re wondering, “How bad was that?” Or, “I know that that was over the line, but how far?” I’ve had guys who’ve said, “I don’t know, looking back on it, if she was too drunk, if I interpreted it right.”
Finding some way of coming to a reckoning—when we have somebody who’s made a mistake or done something bad, what do we want from them? What are we looking for in terms of redemption? What makes an apology genuine or acceptable? What kind of amends need to be made? Working in the social services sector, I believe in recovery in general. Unless we’re planning on locking everybody up and excommunicating them from general society, then we are going to have to figure out a way that people, and men in particular, can learn from mistakes of the past and change their behavior moving forward. And also have genuine compassion and have asked for forgiveness from people they’ve hurt.
How do you create policy that takes these subtleties into account?
That’s really challenging. The policy aspect around all of this is really difficult. Just around sexual assault—out of every 1,000 cases of rape, 995 of the perpetrators just walk completely free. Laws are going to be difficult to capture the extent of this. You are often left in these “he said, she said” situations. Just like you saw with Christine Blasey Ford and what’s-his-face—Kavanaugh. A bigger impact is going to be had by us talking about it more. That’s the part that’s going to have to change before we can remotely expect laws or lawmakers to change.
What responsibility do you think tech companies hold in the kind of cyber-exploitation you experienced?
Tech companies have really been let off the hook. They’ve made some lip service toward it. The Communications Decency Act—Section 230—has really allowed for total blanket immunity for tech companies for users’ content on their platforms. For them not to have any responsibility to enact systems that do track for these abusive images—then they’re failing at their jobs, and they’re hiding behind this immunity granted to them in the CDA. This is something we’re going to be fighting for a long time.
What are your relationships like today with the women who were part of your congressional freshman class? Including those who, for whatever reasons, as you describe, didn’t speak out in support of you at the time of your resignation?
They’re good. We text fairly regularly. I live in D.C. now; before coronavirus it was easier to see people. I feel a lot of compassion and empathy for them and what they’re going through—trying to be there for their constituents and run these tough reelection campaigns and do so in the time of COVID. So many of them are in these tough seats—we have no idea how it’s going to play out with voting disrupted. It’s a hard time for a lot of them. I know how hard they work and how little credit they get for it all. I’m sending them my love, wishing them strength, and grateful for their leadership.
You say you don’t regret running for office and don’t want your experience to discourage young women from running. But how has your story affected young women so far? What have young women you’ve come across said to you? What do you want to say to them?
Many of them have said they were so mad about what happened to me that it further steeled them and made them want to run. There are others, especially younger ones, who said, “Based on what happened to you, I’m afraid of that happening to me.” I’ve said to them: “What happened to me is basically the worst-case scenario.” I’m trying to show them that by surviving, making it out of it, raising the question—could I have politically survived if I’d stayed in?—that might make young people feel like this isn’t something that would be career-ending to them.
You certainly don’t want this to happen, but if it does, you can be mentally prepared for it. It’s something that’s going to have to be addressed as we move into an age where nearly everyone who is running for office has had these kinds of photos.
You write that we need to allow women to be “flawed.” What does it mean to allow women to be flawed in public life and as our leaders?
People are human. Women are humans. Women have been held up to a higher standard historically. Bad behavior is to a certain extent expected of men. Men cheat on their wives, and no one bats an eye. Especially political figures. Men are able to come back and say, “I did this wrong, I’m praying for forgiveness.” They go away for a little and they’re able to make their comeback.
I don’t think that changes the standards we need to hold people to as to their behavior in public office. If you’re using the power you have in your position to do illegal trading or to work against the interests of your own constituents, that’s the kind of corruption and behavior we need to be going after people for. There’s a personal life element that should be off the table to a certain extent.
Would you ever return to a life in politics?
I’ve thought about that a lot. I know enough about myself and about how life works to not rule it out completely. I also feel like it’s too early for me to start thinking about that. In the meantime I’ve started Her Time to help other women get elected, and I’m having an impact in that way.
I don’t want to leave politics altogether. It’s not like I want to become a writer and hide in a cabin somewhere. I do want to be involved in this. Change is too important to step out of the arena.
If there were stricter protections in place against cyber-exploitation, would that change your thinking about whether to run for office again?
It’s certainly a possibility. I know if I were to run again, it would completely open it up. Right now, my biggest fear has been with the book coming out, being more visible with the PAC—it’s opening yourself up to this attack not only from my ex but from the people who tried to take me down in the first place. They want me to stay down. They do not want me to be loud or continue to be relevant at all. It’s an act of defiance for me to do so.
What have your concerns been for women experiencing domestic abuse during coronavirus lockdowns?
Huge. There are fewer women who are going to be able to call into these hotlines because they’re stuck 24/7 with their abusers. You usually have to wait for an abuser to leave to even come up with any way of calling for resources or help. The shelters are full. Now you have the second factor of people who are unemployed, struggling financially, or don’t have childcare. Financial, childcare, being stuck in close proximity, employment-related concerns—these all factor into this toxic dynamic within bad relationships or with an abuser.
You mention briefly in the book that you have endometriosis. Were you involved with Rep. Abby Finkenauer’s efforts on this issue in Congress? And what have you thought of her recent successes securing funding for endometriosis research?
We’d never talked about it. That was happening mainly after I was gone. I’m really proud that she’s doing that. I think it’s amazing that she’s speaking about an issue that affects so many women. Additional research is absolutely needed, like so many issues that specifically affect women. We don’t know the cause of endometriosis, and we don’t know why some women get it and other women don’t. We don’t know good treatment for it. I’m glad she’s pushing for the resources. That could potentially help a lot of people.
You write that longtime officeholders don’t quite understand the kinds of campaigns you and your peers ran in 2018. What about in 2020?
Trying to run a campaign during coronavirus is a completely different landscape. Everyone has had to change their tactics completely. In a lot of ways, people running for the first time now are going to be better equipped than those who have run traditional campaigns. When you know one way of doing it, it’s really hard to imagine. If you’ve never done it before, you’re a bit more nimble.
What don’t people understand about domestic abuse and cyber-exploitation that they need to?
For domestic abuse, there are two myths or commonly held beliefs: that it’s not real abuse if it’s not physical and that someone’s weak if they stay in a relationship. The truth is even somebody who’s incredibly powerful and strong—there are countless reasons, including deeply psychological ones, that cause people to stay in relationships.
My hope is that younger readers or anyone might be able to read some of that and say, “That is happening to me” or “That has happened to me.” Or if they experience it later they can recognize that that’s a toxic behavior.
Cyber-exploitation—we need to dispel the myth that the victim has done anything wrong. When you hear, “She shouldn’t have put herself in that position,” or “She should never have taken those photos”—we’re talking about photos in many cases that were not even taken consensually, let alone distributed consensually. It’s one of the reasons the term “revenge porn” is problematic. “Revenge” implies the woman has done something the guy has the right to avenge. There’s nothing she could have done that deserves that. And porn implies it is acceptable for sexual enjoyment—neither of those is okay.
One of the most overwhelming feelings is knowing that the vast majority of people who know who I am, if I encounter them on the street and they recognize me, I have to hold it within my mind that there’s a very good chance they’ve seen my naked pictures. That’s a really shitty thing to think about. And to know I’m never going to be able to get those pictures completely gone.
What would you say your biggest accomplishment has been as a national politician, whether in Congress or afterward?
As part of the freshman class and leadership within the freshman class, we passed landmark legislation very quickly. I was part of helping to advocate for it among my class and to advocate for it to the American people. Things like passing the Equality Act, passing the For the People Act, the Raise the Wage Act. Back-to-back-to-back we had these amazing accomplishments. While they’re stuck in the Senate, we now have the precedent that they’ve passed the House and the pressure from the American people to push on to the Senate and the White House to make these things happen in the next term.
I’m proud that I was part of that and part of the freshman class that made so much history. Those don’t go away. The next part is figuring out where my legacy goes from here.


fortune--2020-08-17--The founder of dermatology spa Ever/Body on expanding cosmetic services during a pandemic

This is an installment of Startup Year One, a special series of interviews with startup founders on the major lessons they have learned in the immediate aftermath of their businesses’ first year of operation.
Kate Twist has spent her entire career in and around powerful consumer brands.
Twist moved to New York City after obtaining a degree in economics from the University of Pennsylvania in 2002, initially working in investment banking with consumer retail clients, including luxury brands such as Oscar de la Renta, BCBG, and Badgley Mischka.
After getting her MBA at Harvard in 2008, Twist joined Estée Lauder–owned Clinique to get more classic brand management training in a big corporation.
“Developing new skin care products and launching global campaigns let me indulge my fascination with skin care and spend hundreds of hours doing consumer research around the world to understand what people hoped their skin care products could do,” says Twist. It was at Clinique that she also had access to world-class dermatologists as well as research and development specialists who could explain active ingredients in a way Google could never match.
While Twist says she’s “far from an influencer,” she admits many people did ask what she would be working on at Clinique and what they should be using—all the time. “This later became part of the inspiration for Ever/Body in terms of demystifying a category [that] can be incredibly confusing,” Twist says.
By the time she decided to start Ever/Body, a boutique medical spa specializing in cosmetic dermatology services, in 2018, Twist says she knew how to connect with consumers and create a modern digital experience. “I saw how the next generation of powerhouse brands are being built around consumer health care. And I saw a need for the delivery of health care services to evolve to fit into our lives in a more modern way,” she explains.
Fortune recently spoke with Twist, also CEO of Ever/Body, to learn more about the startup’s first year in business, the lessons learned, the hurdles overcome, and plans for the next year.
The following interview has been condensed and lightly edited for clarity.
Ever/Body cofounder Kate Twist. Courtesy of Ever/Body
Fortune: What inspired the launch of Ever/Body? What makes it stand apart from other cosmetic services and spas?
Twist: Ever/Body exists at the intersection of health care and beauty, acting as the refreshingly honest leader to educate consumers on the modern way to take care of your skin. It’s designed to be a more inviting and accessible experience for minimally invasive cosmetic dermatology treatments, like laser facials, Botox, fillers, and body contouring. We are democratizing a space that’s historically been opaque and confusing, as well as full of misinformation and false promises. We offer a curated collection of the safest, most effective, and affordable services for the most common skin and body concerns, and our clients enjoy personalized beauty regimens delivered by trusted medical professionals as part of a modern self-care routine. We believe in natural-looking, nonobvious results to help you look and feel like your best self.
Ever/Body’s first storefront location, on West Broadway in New York’s fashion-forward SoHo district. Nadav Havakook
You had already been planning to expand beyond your initial location before the pandemic, but how did the outbreak of COVID-19 alter those plans? And what was it like to bounce back and push forward with opening a second location during phase 3 of New York City’s economic reopening?
We were four days away from opening our new Flatiron location when we shut our corporate headquarters on March 9 due to an abundance of caution around COVID-19. At the time, we thought we’d be delayed two, maybe three weeks, though that eventually turned into a three-month closure. Many young companies suffered disproportionately in comparison to more established businesses during the New York State on Pause order, but at Ever/Body, we quickly rallied to leverage the inherent strengths of a startup: flexibility and resilience in the face of uncertainty.
With our stores closed, we pivoted to our digital expertise and in the span of two weeks launched a telemedicine practice followed quickly by the introduction of a best-in-class e-commerce experience. Both of these projects had been part of our original strategic plan, and our dedicated engineers, designers, store operators, and, of course, our amazing medical professionals pitched in to bring them to life while connecting virtually from living rooms, bedrooms, and even a well-appointed laundry closet converted to home offices. It felt like the very earliest days of launching the business: scrappy, full of enthusiasm, with a determination to make things happen.
Reopening Ever/Body was a highly celebrated event for the entire team—the product of weeks of meticulous planning around being able to do so safely for both our clients and staff.
The name “Ever/Body” was inspired by the word “everybody” and meant to convey that the spa’s skin care and cosmetic treatments are intended for customers from all backgrounds. Nadav Havakook
Ensuring clients feel safe and comfortable as the pandemic continues is top of mind for every retail and services business. What precautions did you put in place at Ever/Body?
We spent weeks researching best practices and government guidelines for a safe reopening. Along with the standard precautions of industrial cleaning, social distancing, limiting occupancy, sourcing masks and face shields, checking temperatures, and locating an impressive stock of hand sanitizer, we again leaned into the Ever/Body team’s digital expertise to elevate our experience.
We completely redesigned our client check-in process so that it could be done at home for maximum safety, and we added mandatory safety questions related to COVID-19, such as recent travel history, possible exposure risk, and general health questions. We have had great feedback from our clients about the new interface, and when we’re safely in a post-COVID era the remote check-in will still be a time saver for anyone running a little behind for their appointment.
The modernized waiting room at Ever/Body. Nadav Havakook
Obviously, amid the economic slump, consumers’ cosmetic and purchasing practices are going to change. How does Ever/Body plan to adjust its business plan for the immediate future?
Fortunately, it seems that the skin care industry overall has thrived during COVID as consumers focus less on color cosmetics and apparel and more on natural beauty and health and wellness. Skin care is an affordable luxury that simply makes people feel better about themselves.
Since our SoHo store reopened, we actually saw some of our busiest days ever, due in part to pent-up demand for services. Our clients tell us that a lot of time spent checking out their reflections on Zoom the last few months prompted them to book appointments. We predict this trend will continue as people ditch their time-consuming pre-COVID full makeup routines and opt for achieving their best natural skin. We also believe consumers recognize the value inherent in minimally invasive cosmetic dermatology; they can achieve significantly advanced results beyond what they would see with prestige cosmetic skin care products.
Inside one of the treatment blocks at Ever/Body. Nadav Havakook
At the same time, how does a shutdown of this nature affect the future of the business, from services offered to raising capital?
Ever/Body was well positioned to weather the shutdown, and in many ways it strengthened our business as much as it was an unwelcome black swan event. We were fortunate to complete our Series A financing in the summer of 2019, almost concurrent with the opening of our first official Ever/Body location in SoHo. To date, we have raised $17 million from ACME Capital, Tiger Global Management, Redesign Health, and Declaration Capital as well as from the founders of digitally native brands we admired, like Rent the Runway, Warby Parker, Harry’s, and Allbirds, so we are well capitalized.
As the shutdowns started, we had already built a cohesive 15-person team at our Chelsea headquarters, including a robust internal engineering team, and a 20-plus–person team at our Ever/Body locations. We also had a year of operating history by the time we closed, including the months we’d spent operating a stealth concept in the Financial District, which became the precursor to Ever/Body. We’re clearly being more conservative now with our use of capital, but we’re confident that with our stores open we’ll be able to meet our goals and execute on our original plan. One silver lining is that we expect it to be easier to find attractive real estate opportunities for our future Ever/Body locations.
With encouraging initial results from the launch of telemedicine and e-commerce, the pandemic helped us lean in sooner to the digital aspects of the business which we knew would be part of Ever/Body’s competitive advantage. In particular, we found our virtual consultations allowed us to develop relationships with new clients who are still deciding which of these treatments are right for them and to strengthen our relationships with existing clients.
All of the private rooms at Ever/Body are actually pre-built and designed as blocks that can be moved not just within one space but from building to building. Nadav Havakook
Looking beyond the post-pandemic era—which could be anywhere from a year to a few years from now—how do you plan to grow Ever/Body and what do you want the business to look like five years from now?
We launched Ever/Body with the intention of becoming a category-defining national brand that stands for trusted care, vetted technology, and wellness. Our number of physical locations will grow over the next five years as we expand outside New York, though we will see a much broader geographic reach via our digital platform. One thing the pandemic has shown us is the demand for telehealth services, and Ever/Body is uniquely positioned to grow within that vertical. The trust we build in person at our physical locations lends further credibility to our virtual offering, where clients can get a telemedicine skin care assessment by an expert medical professional with personalized regimen recommendations and skin care prescriptions sent directly to a pharmacy. We also are working on our own line of prescription products formulated for our clients’ most common skin care concerns.
No matter how large we grow, it’s my goal for Ever/Body to maintain the sense of warmth and inclusivity that makes all of our clients feel welcome, first-timers and veterans alike. We don’t believe in helping anyone look like a different person; we want everyone to feel like the best versions of themselves.


fortune--2020-08-17--Is a mutated strain of the coronavirus more infectious? The Philippines wants to find out

Southeast Asia is facing a strain of the new coronavirus that the Philippines, which faces the region’s largest outbreak, is studying to see whether the mutation makes it more infectious.
The strain, earlier seen in other parts of the world and called D614G, was found in a Malaysian cluster of 45 cases that started from someone who returned from India and breached his 14-day home quarantine. The Philippines detected the strain among random Covid-19 samples in the largest city of its capital region.
The mutation “is said to have a higher possibility of transmission or infectiousness, but we still don’t have enough solid evidence to say that that will happen,” Philippines’ Health Undersecretary Maria Rosario Vergeire said in a virtual briefing on Monday.
The strain has been found in many other countries and has become the predominant variant in Europe and the U.S., with the World Health Organization saying there’s no evidence the strain leads to a more severe disease. The mutation has also been detected in recent outbreaks in China.
There’s no evidence from the epidemiology that the mutation is considerably more infectious than other strains, said Benjamin Cowling, head of epidemiology and biostatistics at the University of Hong Kong. “It’s more commonly identified now than it was in the past, which suggests that it might have some kind of competitive advantage over other strains of Covid-19,” he said.
As Southeast Asian countries take various steps to prevent a resurgence while reopening limited travel, they struggle with people breaching quarantine rules after returning from overseas as well as false negative test results at borders.
The man who returned from India had tested negative when he arrived in Malaysia. He has since been sentenced to five months in prison and fined for breaching quarantine.
People’s Cooperation
“People need to be wary and take greater precautions because this strain has now been found in Malaysia,” the country’s Director-General of Health Noor Hisham Abdullah wrote in a Facebook post, saying the strain can make it 10 times more infectious without citing a study. “The people’s cooperation is very needed so that we can together break the chain of infection from any mutation.”
The strain “might be a little bit more contagious. We haven’t yet got enough evidence to evaluate that, but there’s no evidence that it’s a lot more contagious,” University of Hong Kong’s Cowling said.
Noor Hisham warned that the strain could mean existing studies on vaccines may be incomplete or ineffective against the mutation. That’s even as a paper published in Cell Press said the mutation is unlikely to have a major impact on the efficacy of vaccines currently being developed.
While Malaysia has largely managed to prevent a resurgence of the virus seen elsewhere in the world, the number of new cases found in the country has been picking up. The country reported 26 new cases on Saturday, the most since July 28.
Confirmed cases in the Philippines have surged 76% from the end of July to a total of 164,474 as of Monday. It overtook Indonesia more than a week ago to become the country with the largest outbreak in Southeast Asia.


fortune--2020-08-17--What the U.K.’s pandemic exam-results fiasco tells us about algorithms and the future

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning. David Meyer here in Berlin, filling in for Alan.
This pandemic is devastating in many ways, but its long-term impact on children will be one of the most terrible. That much is becoming apparent in the U.K., thanks to a fiasco around pupils’ end-of-schooling “A-level” results.
In the U.K., A-level exam results are the big determinant of university placements. Due to the pandemic, this year’s exams could not take place. So the government introduced a complex grading system that took a variety of factors—teachers’ estimates of how their pupils might have performed in the A-level exams; plus the pupils’ results from their earlier “mock” A-levels; plus information about their schools’ past performance—and ran everything through an algorithm to come up with their final grades.
The result? Downgrading for 280,000 students including, for example, outliers who were excellent performers at otherwise poorly-performing schools—and a boost in results for lackluster pupils at schools that have historically performed well. There is an appeals process, but for many it will come too late; the university places they thought they had earned are already filling up.
In short, many kids feel right now that their lives have been ruined. The result? Legal threats and a political battering for Boris Johnson’s government, plus a revolt within the examination body Ofqual.
So, what can we learn from this?
Firstly, algorithms can have a big impact on people’s lives. And if they go wrong on a massive scale—as many argue happened here—the result can be explosive. Witness these hundreds of kids protesting the debacle with a chant of “F—k the algorithm.” Many of today’s A-level students are too young to vote, but they won’t be when the next national election rolls around, several years from now.
Secondly, algorithms can entrench existing biases and inequalities. (See also: the now-scrapped algorithm that was being used by the U.K.’s immigration authorities—whether deliberately or not—to prioritize visa applications for white people.) As the political philosopher Annette Zimmermann wrote about the A-levels furore: “Statistical models often pick up on large-scale historical patterns or racial, gender and class inequalities and replicate them as data patterns, while simultaneously endowing these patterns with an air of certainty, neutrality and objectivity.”
Thirdly, if an algorithm is going to be used for automated decision-making, it has to be easy and meaningful to appeal that decision. That rule is part of the EU’s General Data Protection Regulation (GDPR) and it may have been broken in this case.
And finally, a return to the start of this essay: kids may be less likely to die as a result of COVID-19, but the pandemic is messing up their lives in ways we cannot yet fathom. Many will come out of it with damaged faith in our institutions and establishments—a trend that’s already had plenty to fuel it in recent years.
There really will be no return to our old normality. More news below.
David Meyer
@superglaze
david.meyer@fortune.com
TOP NEWS
Japanese plunge
All of Japan's Abe-era economic gains have now been wiped out by the pandemic. In Q2, the country's GDP had its biggest quarterly drop on record—27.8% on an annualized basis. By comparison, Japan's slump in Q1 2009, at the height of the Great Financial Crisis, was 17.8%. Now, Japan has had three consecutive quarters of contraction. Economists hope the current quarter will break that trend. Reuters
Pandemic latest
New Zealand, which turns out not to be as coronavirus-free as recently hoped (the source of the latest outbreak remains a mystery), has delayed its national election for four weeks as a result. Meanwhile, South Korea has experienced new church-related infection clusters, Australia has had its deadliest day yet, and Italy and Spain are closing nightclubs because of a resurgence in infections. In the U.S., fatalities have topped 1,000 for five days running now. Bloomberg
Sanofi buy
Sanofi is to pay $3.4 billion to bolster its autoimmune-disease roster, by buying San Francisco-based Principia Biopharma. Principia has a pipeline of BTK inhibitors—drugs that could help treat multiple sclerosis. Sanofi has already had a licensing deal with Principia since 2017, which entails future payments of up to $765 million that could be obviated through the purchase. Financial Times
Belarus and Russia
As protestors continue to call for the ouster of Belarusian President Alexander Lukashenko, following what looks to have been a very rigged election, Russia has offered to send Lukashenko troops on the basis that Belarus is under "external" pressure. Lukashenko claims NATO has been building up a military presence on his border, though NATO denies this. CNBC
AROUND THE WATER COOLER
Tobacco ban
South Africa has today lifted a tobacco-sales ban that has been in place for four and a half months, ostensibly as a measure to fight the COVID-19 pandemic—critics say the ban was really part of an anti-smoking drive. Whatever the motivation, it mostly succeeded in driving the tobacco trade underground, with most smokers still able to illicitly purchase cigarettes, and without those sales putting much-needed tax in the state's coffers. Fortune
Google Australia
Google has told its Australian users that their data is "at risk" due to the looming introduction of new measures that will make the company pay news outlets for their content. The company is telling its users that it would be forced to give their search data to the news publishers. "The law is set up to give big media companies special treatment and to encourage them to make enormous and unreasonable demands that would put our free services at risk," it claims. Bangkok Post
Gold price
What has motivated the recent surge in gold prices? While goldbugs say it's about the fear of looming inflation, Fortune's Shawn Tully explains that a speculative frenzy is underway (or at least, was until the last week or so.) He writes: "Gold does sometimes outperform equities and fixed income in turbulent times such as in the mid- to late 1970s when the OPEC oil shock pummeled the world economy. In those years, it also temporarily fulfilled the role that fans praise it for, as an inflation hedge. But gold fails in that role more often than it succeeds. It shows no consistency either in anticipating periods of fast-rising prices or in keeping investors whole when inflation takes charge." Fortune
Latest polls
A Wall Street Journal / NBC News poll shows half of registered voters would vote for Joe Biden if the election were to take place now, and just 41% would vote for President Trump. However, the poll found Biden is still viewed more negatively than positively among the broader electorate—it seems his backers are more anti-Trump than pro-Biden. WSJ
This edition of CEO Daily was edited by David Meyer.


fortune--2020-08-17--This tiny, overlooked part of the market is beating Big Tech and gold—by a wide margin

Tech behemoths have been Wall Street’s obsession all year. But the tiniest of stocks have surreptitiously been making a comeback—in a big way.
The Russell Microcap Index, whose members have a value of $300 million on average, is up more than 60% from this year’s stock-market lows, outperforming both the tech-heavy Nasdaq 100 and the S&P 500. The tiny-stock gauge is having its best month relative to the U.S. equity benchmark since September 2017.
“The good-looking big boys and girls have been touted as the only game in town this year. These large, domestic, safe, easily recognized, fast-growing, and sexy stocks have been the ticket,” wrote Jim Paulsen, chief investment strategist at the Leuthold Group. “But, like the S&P 500 this year, the really tiny—those Mighty Microcaps—have shown their ‘FAANGs!’” he said, referring to the popular Facebook Inc., Amazon.com Inc., Apple Inc., Netflix Inc. and Google-parent Alphabet Inc.
It’s a demonstration of the market weirdness this year, with the most beaten-down stocks recovering toward pre-pandemic levels even as unemployment remains around 10% and signs mount the recovery is slowing. Unprecedented support from the government and central bank has given a lifeline to small companies. At the same time, retail investors have rushed in, chasing momentum names without always scrutinizing their balance sheets.
Stocking up on Overstock.com
It’s little wonder the microcap index’s advance has stayed under the radar. The gauge is stuffed with stocks like Biglari Holdings Inc., which has more than doubled since March 23, as well as Daily Journal Corp., a news publisher that’s advanced roughly 37%. Another big gainer in the span was Overstock.com Inc., with a 1,925% surge.
Tiny companies, which often swing at a higher velocity during times of turbulence than their larger brethren, were among the most punished during the coronavirus crash. They tend to be more indebted and have less cash on hand. But many analysts see potential for them to outperform once a recovery begins.
That’s because their profits are often depressed in a recession and the companies have more room to improve during a rebound, said Michael Sheldon, executive director and chief investment officer at RDM Financial Group Inc. “We are starting to see a little bit broader participation in the market, which would be a healthy thing.”
But the performance in micro-caps is remarkable given that more than half of the members didn’t make any profit in the latest quarter. More intriguingly, unprofitable ones have seen their shares outperforming, rising an average 13% this year. That’s triple the 4% gain from those that made money.
Data from website Robintrack.net suggested retail investors have been part of the forces behind some of the parabolic gains. Robintrack.net had up until this month aggregated data from brokerage platform Robinhood before shutting down due to curtailed access to the data.
Vaxart Inc. has soared 2,500% this year as it was selected to take part in the Trump administration’s Operation Warp Speed, meant to crank up development of a vaccine for COVID-19. The price explosion coincided with a surge in ownership on Robinhood. Starting at fewer than 2,000 owners in January, the number of shareholders on Robinhood has jumped to near 90,000 this summer.
A chart plotting Overstock.com’s share move and its Robinhood ownership showed a similar picture. Shares of the online discount retailer traded for less than $3 in March and have since soared above $90. Along the way, Robinhood users more than doubled. With demand from online shoppers soaring, sales at Overstock’s retail business have helped the company return to profits in the second quarter.
But it’s not just retail investors fueling Overstock’s gain. Hedge fund Renaissance Technologies took a new position in the second quarter, buying 3% of the company’s stock, regulatory filings showed.
“If the Micros truly can keep up with the Bigs, investors should consider diversifying some of their S&P 500 allocation,” said Leuthold’s Paulsen.


fortune--2020-08-17--The S&P 500 is up 50% since March, and Goldman thinks the rally is far from over

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning. Politics is front and center today with the Democratic Party staging its virtual convention, followed by the GOP next week. Meanwhile, U.S. futures are trading higher after Goldman Sachs raised its year-end price target on the S&P.
Here’s what’s moving markets.
Markets update
Asia
The major Asia indexes are mixed in afternoon trade with the Shanghai Composite leading the way higher, up 2.3% .
are mixed in afternoon trade with the Shanghai Composite leading the way higher, up . Japan’s Nikkei is slumping 0.8% after the country reported a record 27.8% Q2 GDP drop on an annualized basis. If you calculate it on a fairer QOQ basis, it contracted by 7.8% , one of the better showings among G7 economies.
is slumping after the country reported a record drop on an annualized basis. If you calculate it on a fairer QOQ basis, it contracted by , one of economies. U.S.-China relations continue to deteriorate. A weekend video call to discuss the Phase 1 trade deal was “rescheduled indefinitely.” Perhaps it had something to do with the sale of F-16 military jets to Taiwan.
Europe
The European bourses were mixed, with the Europe Stoxx 600 up 0.5% 30 minutes into the trading session, before falling.
were mixed, with the up 30 minutes into the trading session, before falling. Sanofi shares climbed 0.2% at the open after announcing an all-cash $3.4 billion acquisition of U.S. biotech company Principia Biopharma .
shares climbed at the open after announcing an all-cash acquisition of U.S. biotech company . While other countries dither over wage supports for its pandemic-stricken labor force, Germany is thinking big. German Finance Minister Olaf Scholz proposed extending to 24 months wage-subsidies at an additional price tag of €10 billion.
U.S.
Last week, the major indexes scored a third consecutive week of weekly gains, with the Dow the best of the bunch, up 1.8% . The U.S. futures are solidly higher, as I type.
. The are solidly higher, as I type. Warren Buffett ‘s Berkshire Hathaway is losing faith in Big Finance . The famous investor dumped his bank stocks, closing his position in Goldman Sachs completely.
‘s Berkshire Hathaway is losing faith in . The famous investor dumped his bank stocks, closing his position in Goldman Sachs completely. Speaking of Goldman Sachs… Goldman is the latest Wall Street firm to increase its end-of-year price target on the S&P 500 to 3,600 , up from 3,000.
to , up from 3,000. What’s on the calendar this week? It’s a somewhat quiet week for corporate results, but we do have the DNC convention kicking off today. The Republicans hold theirs next week.
Elsewhere
Gold is climbing, up above $1,960/ounce , even though it is (or perhaps, because it is) getting harder to mine the stuff.
is climbing, up above , even though it is (or perhaps, because it is) getting harder to mine the stuff. The dollar is down.
is down. Crude is higher with Brent up 0.8%.
***
100 days
On Friday, I touched briefly on the fact that the S&P 500’s bull run is on an historic run. How historic? Some are calling it the best 100-day run since the 1930s. Others are saying it’s the best stretch ever for the benchmark index.
LPL Research is in the latter camp. According to its researchers, the S&P gained 50.8% in the 100-day period that closed on Thursday, Aug. 13, besting the previous record by an impressive 4.9 percentage points, as today’s chart shows:
It’s a startling bull run, particularly when you consider that during this same period the economy crashed into a devastating recession, millions of jobs were lost and tens of thousands of Americans died of a virus we still don’t have a vaccine for.
What do the next 100 days (and beyond) have in store for the markets? LPL ran the numbers and found that, after such rallies, most of the time the momentum continues into the months ahead, “with stocks higher a year later 17 out of 18 times.”
The last time the markets weren’t higher a full year later was 1987, one of the most volatile years on record.
There’s a lot of optimism the current markets rally has yet to run its course. Much of that optimism is fueled by the hopes for further fiscal stimulus, continued loose monetary policy and record amounts of cash looking for big returns (equities) when traditional safe-havens (Treasurys) are yielding a pittance. This goes a long way towards explaining why Goldman over the weekend upped its end-of-year price target on the S&P 500.
If Goldman is correct, the S&P will climb a further 10% this year.
So much for all the talk of haywire markets amid a brewing political crisis.
***
Have a nice day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
Stay calm. "Don’t get emotional," advises Steve Kruman, a financial planner and investment adviser at Bryce Wealth Management. Kruman talked to Fortune's Anne Sraders about how volatile markets can mess with your strategically devised retirement plans—and how not to lose your cool, or your nest egg.
Shorting the election. Stock traders are always looking for an edge, and they see one this autumn in the form of a constitutional crisis on U.S. soil. A disputed, drawn-out and divisive election could be just the thing that sinks the markets, some traders are betting. One CIO tells the Wall Street Journal his firm has devised a trade that "would profit if the S&P 500 drops up to 25% from its current level through early next year." It's all based on fear and uncertainty.
An autumn surprise. Speaking of disastrous events this fall... One of the biggest questions hanging over the billion-dollar business of American sports is whether more universities will drop out of the upcoming college football season. With that in mind, Fortune's Rey Mashayekhi crunches the numbers for the big broadcasters—those who've splashed out huge investments in broadcast rights—and finds there may be the odd silver lining for some of these publicly-listed companies should there be no college gridiron clashes starting next month... Not that Bull Sheet is advocating for such a thing.
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Market candy
Quote of the day
"It’s difficult not to be a goldbug right now.”
That's Ruchir Sharma, chief global strategist for Morgan Stanley, writing in a recent New York Times editorial, arguing that the shiny yellow stuff is a sound investment in these uncertain times. Fortune's Shawn Tully disagrees, detailing the history of gold rushes, and concluding this one is little more than a "speculative frenzy."


fortune--2020-08-17--A key indicator of Tesla’s China business fell 24% last month

Registrations of locally made Tesla Inc. vehicles in China fell in July from the previous month as competition intensified in the world’s largest electric-car market.
In July, 11,456 China-built Teslas were registered in the country, according to data from state-backed China Automotive Information Net. That’s a 24% decrease from June. Tesla doesn’t report monthly sales numbers for China.
The world’s most-valuable carmaker is ramping up output after starting deliveries from its multibillion-dollar Shanghai plant around the beginning of the year. China is a crucial part of Elon Musk’s plan to expand beyond the U.S., and long-term success will require keeping local contenders such as NIO Inc. and global giants BMW AG and Volkswagen AG at bay.
Rising sales in China are a major contributor to the Palo Alto, California-based company’s soaring market capitalization, which surged past Toyota Motor Corp. in July. China’s car market is recovering from a two-year slump, helped by a reopening of showrooms and an improving economy.
Yet competitors are stepping up product introductions. NIO’s deliveries more than quadrupled in July to 3,533 vehicles, and the company is preparing to launch a new crossover coupe, followed by a sedan. BMW and Mercedes-Benz maker Daimler AG are bringing out electric models.
Cars built at Tesla’s Shanghai plant — its first outside the U.S. — have made up the vast majority of Tesla registrations in China since opening. The company is building Model 3 sedans at the site and also preparing to assemble Model Y compact SUVs there.


fortune--2020-08-17--Why Malaysia keeps minting billionaires

Why Malaysia keeps minting billionaires

Malaysia has long been a place where vast fortunes have been amassed over time. The Kuoks, Tehs and Queks are custodians of palm oil, property and banking empires that stretch back decades.
That was until COVID-19, when the country’s low-key rubber industry — or more precisely, glove making — became one of the hottest on the planet.
Wong Teek Son, who co-founded Riverstone Holdings Ltd. in the 1980s after working as a research chemist, last month became the fifth billionaire in the country from manufacturing gloves. He’s now worth $1.2 billion as shares of his company rallied almost sixfold from a low in March, thanks to growing demand for protective products during the coronavirus pandemic.
A Riverstone spokesman declined to comment on Wong’s net worth.
The speed and strength of the gloves boom has been extraordinary, but there are signs the rapid rise could reverse, especially as research for a COVID-19 treatment and vaccine progress.
Glove companies were hammered last week when Russia’s president said his nation had cleared the world’s first COVID-19 vaccine for use, while Moderna Inc. and Johnson & Johnson are among those reaching deals with governments to supply their shots. Riverstone slumped 13% in its worst week since March and slipped another 2.2% by 9:25 a.m. in Singapore on Monday.
Even though a vaccine may not result in lower demand for gloves, investors may sell their shares in anticipation that it’ll reduce the number of cases, RHB Research Institute analyst Alan Lim noted in an Aug. 13 report.
Malaysia King
When it comes to gloves making, Malaysia is king: It produces about 65% of the world’s supply for rubber gloves, and the Plantation Industries and Commodities Ministry estimates exports will climb 45% this year.
Riverstone peers Top Glove Corp. and Hartalega Holdings Bhd. are now among the five most-valuable companies on Malaysia’s equity benchmark index. Their shares have jumped more than 192% this year, lifting the net worth of their billionaire founders, according to the Bloomberg Billionaires Index.
Fortunes in the country are booming even as the economy contracted by the most since the Asian financial crisis. That’s exacerbating already wide inequality. Knight Frank estimates wealth creation is the 10th fastest in the world — while the mean income was 7,901 ringgit ($1,882) last year. The firm’s 2020 wealth report projected that the number of Malaysians with more than $30 million will swell by 35% between 2019 and 2024, compared with 2% between 2018 and 2019.
The glove industry’s rise to global dominance has created a huge need for foreign workers, leading to controversy over their treatment. The U.S. last month barred imports of the products from two Top Glove units due to “reasonable evidence of forced labor.”
The world’s largest glove producer said last week that while it’s continuing discussions with the U.S., demand is picking up in many other countries where the outbreak is resurfacing.
Singapore Listing
Unlike its rivals, when Riverstone decided to go public in 2006, it picked neighboring Singapore. That’s because Malaysia had stricter currency controls and the funds raised in the city-state were more easily transferable to China and Thailand, where the company was expanding, according to its spokesman.
Riverstone has an annual production capacity of about 9 billion gloves, according to its latest annual report. Its profit more than doubled to 137.5 million ringgit in the first half of the year.
Wong co-founded the maker of nitrile gloves in 1989 after working as a research and development chemist in a company that supplied cleanroom products. He hadn’t planned to venture into building his own business.
“The opportunity presented itself only because the company I worked for shut down, and we were able to use their production lines,” he said in an interview with the Singapore Exchange in 2016. With the competition being strife, many peers in Malaysia had to close down. “We realized we needed to provide a service to our customers.”


fortune--2020-08-17--Tesla’s market value roars past consumer giant P&G. Walmart may be next

The relentless rally in Tesla Inc. shares has driven its valuation beyond consumer product behemoth Procter & Gamble, as investors bet on the electric vehicle maker’s ability to dominate the automotive market of the future.
The stock closed up 11% at a record $1,835.64 in New York on Monday, despite reports of a drop in the registrations of Chinese-made Tesla cars in July. China is a key market for Tesla, and the Elon Musk company is ramping up production there after starting deliveries from its massive Shanghai plant around the beginning of the year.
Tesla shares are now up 339% this year, fueled by growing anticipation that the company will be included in the S&P 500 Index. The carmaker’s plan to split its stock 5-for-1 to make shares more accessible for individual investors is also expected to drive up demand. Tesla was the eighth most popular stock on the Robinhood app on Monday, according to data from Robintrack.net.
Meanwhile, Wall Street has warmed to the stock, as evidenced by a steady stream of upgrades and price target boosts. The latest came from Wedbush analyst Daniel Ives, who raised his target to $1,900 from $1,800, saying Tesla has seen strong demand in Europe and China so far in the third quarter, with the U.S. market softer.
“The China growth story is worth at least $400 per share in a bull case to Tesla as this electric vehicle penetration is set to ramp significantly over the next 12 to 18 months,” Ives wrote. He kept his bull-case target at $2,500.
Tesla’s market value is now around $342 billion, surpassing P&G’s $337 billion. The maker of Pampers and Crest is the 10th largest stock in the S&P 500, according to Bloomberg data. Walmart has the ninth largest market capitalization in the S&P 500 at $384 billion.