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First Move with Julia Chatterley
Robinhood Set for a $32 billion IPO, DiDi, the Chinese Firm Denies Rumors it is Going to Go Private Just Weeks after its IPO; Corporate America Tells Employees to Get Vaccinated if they Want to work. Aired 9-10a ET
Aired July 29, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:14]
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Live from New York, I'm Alison Kosik. I'm in for Julia Chatterley today and this is FIRST MOVE and here is
your need-to-know.
Heading onto the market. Robinhood set for a $32 billion IPO.
DiDi denial. The Chinese firm denies rumors it is going to go private just weeks after its IPO.
And vaccine mandate. Corporate America tells employees to get vaccinated if they want to work.
It's Thursday. Let's make a move.
Welcome to FIRST MOVE. Great to have you with us. We're going to take you live to the NASDAQ for the launch of the eagerly awaited Robinhood IPO in
just a moment.
But first some breaking economic data. New numbers showing the U.S. economy expanding at a 6.5 percent annual rate in the second quarter. That is
weaker than expected. We were looking for growth to top eight percent.
The numbers are sure to raise fears that U.S. growth may have stalled in recent months. The data could also impact the Fed's thinking on stimulus.
The Fed saying in its policy statement Wednesday that it is getting closer to making a decision on whether to cut bond purchases. Growth concerns
could force the Fed to delay the start of tapering.
Lots for global investors to take in. U.S. futures looking higher overall right now. Europe is rising for a second day as Volkswagen reports record
results. Royal Dutch Shell and Airbus are out with market friendly earnings, too.
Asia finished higher with the Hang Seng jumping three percent as Beijing attempts to ease investors' fears over its recent tech crackdown.
A busy day here on FIRST MOVE. Let's get right to the drivers. Let's get to that Robinhood IPO and Clare Sebastian joins me from the NASDAQ. Clare,
great to see you. I know that, listen, this is a hyped up IPO, but it looks like it is priced at the low end of the spectrum.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Alison. The range was $38.00 to $42.00. Its come-in pricing last night at $38.00 a share and that
will give Robinhood a valuation of about $32 billion. So, a significant valuation for this fairly young company with such explosive growth when it
comes to the retail trading market.
But that could signal some nervousness among investors around some regulatory issues that the company has had, perhaps about that high
valuations. So, it'll be interesting to see as they build the order book over the course of the morning. How that shakes out, we expect that trading
will take a few hours to start opening here at the NASDAQ, expecting it around lunchtime. So, we're going to watch that as that order book builds.
But this is of course, the company that has really disrupted the market for retail trading, introduced the model of zero commission trading for retail
traders, and really other people have followed that, and today, I Alison, they are disrupting the IPO market as well.
They are allocating up to 35 percent of these shares to retail traders through the IPO access feature on their app that could mean more volatility
as this stock opens today. But it really will be a test case for the future as to whether more companies start to do this.
KOSIK: Yes, Clare, and you mentioned the retail investors coming in. What do you think that's going to do to the price of the stock without having
the institutional investors in there?
SEBASTIAN: Yes, so they still will have the institutional investors in there. The allocation for retail investors through the app is to be between
20 percent and 35 percent. Look, it could lead to more volatility.
I think, you know, there could be some enthusiasm among the retail investors for this stock given the impact it has had on bringing new
entrants into the market, the explosive growth we've seen of this company Alison, the revenues were up 245 percent last year, up more than 300
percent just in the first quarter of this year alone. They have 80 million funded accounts.
But as I said, there is some nervousness around this stock. They have seen some regulatory issues leading up to this, an investigation into the CEO
and why he might not be registered with FINRA, there's a probe into trades by employees around the time of the GameStop stock restrictions in January,
that meme stock frenzy.
And it's not just those individual issues. The business model itself is being looked at by the S.E.C. Eighty one percent of this company's revenues
comes from something called payment for order flow where they route those retail orders to wholesalers. So, essentially bypassing the market.
The S.E.C. Chairman Gary Gensler has been very vocal about that. Have a listen, Alison to what he said about this in May.
[09:05:00]
(BEGIN VIDEO CLIP)
GARY GENSLER, CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION: ... sort of like an iceberg, but most of the iceberg is below the surface. The costs
are below the surface. Payment for order flow is one of the costs, the data, that someone else in the market gets, enough data to trade that
market better for them and a little less well for everybody else.
(END VIDEO CLIP)
SEBASTIAN: His point being that these are zero commission, but not free apps, just like we've seen with other sort of Silicon Valley companies like
Facebook, consumers and customers are paying with their data. Gary Gensler worried that this creates conflicts of interest and it leads to
concentration in the market and this is a risk for Robinhood considering that so much of their revenues comes from this business model -- Alison.
KOSIK: Okay, Clare Sebastian live for us from the NASDAQ, thanks.
Chinese ride-hailing company, DiDi has denied that it is planning to go private just weeks after its U.S. IPO. "The Wall Street Journal" reported
earlier that DiDi was considering delisting again to appease the Chinese authorities. Beijing has been making life hard for DiDi ever since it
listed shares on the NYSC last month. Paul La Monica joins me live now.
So, we have this report. Now DiDi is denying it.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, DiDi saying it is not true that they are not looking to go private, I think investors are still
dubious. The stock is up by nearly 20 percent premarket here in the United States. That is down from the levels it hit earlier. But I think, Alison
that because of all of the controversy with this company, the cybersecurity review that is taking place now that, you know, came into effect just right
after they went public. You've seen how it has impacted DiDi shares.
They went public at $14.00, they went up a little bit on their first day of trading, but they have since tumbled sharply. You know, down below $10.00 a
share, although with premarket action, they might get back above, you know, double digits this morning. But still, it's a colossal flop for this IPO,
and I think it's leading a lot of people to wonder, you know, there are many Chinese stocks that trade in the U.S. that investors are skeptical of
now because of these regulatory concerns.
KOSIK: And not just investors skeptical, but I would imagine Chinese companies skeptical to even try to list on U.S. exchanges now, right?
LA MONICA: Exactly. I think you might see a bit of a slowdown in companies that had been thinking about a U.S. IPO and they will consider whether or
not they should trade maybe in Hong Kong or Europe or other international markets instead. And Alison, I think with DiDi, what remains to be seen is
if the reports are true, despite DiDi's denial, and they eventually do go private. Could they go public, again, in Hong Kong, maybe in a more
favorable way that Chinese regulators would approve?
I think that this is a big factor here that Beijing is not just trying to crack down on potential abuses by some of these tech companies, because
again, it's a cybersecurity review. I think China wants to keep a lot of their homegrown tech companies closer to home and exert more control that
way.
KOSIK: They want to keep those companies closer to home, but those companies want to venture out. Interesting conflict. Thanks for breaking
all that down for us, Paul La Monica.
Facebook won't be friending Apple CEO Tim Cook anytime soon. The social media giant warning that its growth could slow due to Apple's new privacy
rules. The announcement overshadowing another strong quarter for growth for Mark Zuckerberg and company.
Matt Egan joins me live now. Matt, take us through the earnings and what popped out for you.
MATT EGAN, CNN BUSINESS SENIOR WRITER: Well, Alison, Mark Zuckerberg and Tim Cook weren't exactly BFFs before this earnings report and the latest
numbers are not going to help that relationship.
Now, the actual numbers that Facebook reported were really strong in profit, doubled the Blue Way estimates, revenue beat estimates by more than
a billion dollars. It was Facebook's fastest growth since 2016, but the company is warning of slower growth ahead. And the CFO specifically pointed
to some app rules that were instituted by Apple in April.
Now, these new changes require users to give explicit permission for apps to track and sell personal data to advertisers. That includes everything
from personal health information to age, and location, and spending habits.
Now, that of course would not be good news for Facebook, which makes most of its revenue from advertising, and Facebook has said that if a lot of
users end up opting out, that its business could suffer.
Another key factor, another key headwind that Apple cited was regulation. We know that Facebook is in the crosshairs of Washington, both regulators
and lawmakers on the antitrust front, so for those two reasons that's why Wall Street is wondering how long Facebook can keep up this rapid growth.
[09:10:07]
KOSIK: Yes, during the conference call with analysts, CEO Mark Zuckerberg, he also talked about the company's goals to help develop the metaverse,
which he described as, and I'm quoting here, "A virtual environment where you could be present with people in digital spaces." Can you translate that
for us, Matt?
EGAN: You can't accuse Mark Zuckerberg of not trying to evolve with the times. He actually mentioned metaverse 20 times during the earnings call,
which has got to be a record. And you know, if you're not familiar with the metaverse, what it is, it's a set of virtual and augmented reality
technologies. And the goal would be to let people interact in 3D in a virtual setting online.
If it sounds futuristic, I guess that's because it is. Now, what was really interesting is that Zuckerberg said during the earnings call that he thinks
in the coming years, people will transition from seeing Facebook as primarily as a social media company to seeing it as a metaverse company.
So there you go, Alison, coming soon, Facebook will be I guess, the world's largest metaverse company.
KOSIK: And he sees that as a revenue driver, I'm assuming.
EGAN: Absolutely. And it is connected to Facebook's big bet on Oculus Virtual Reality. It is a way for him to incorporate all of that and
presumably advertising would also play a role in the metaverse.
KOSIK: Okay, thank you, Matt Egan for translating all of that.
EGAN: Thank you.
KOSIK: And more major businesses in the U.S. mandating COVID-19 vaccinations for employees as a highly contagious delta variant continues
to spread. Google and Facebook are among the companies that now require vaccinations.
Christine Romans joins me now with more. Christine, great to see you. You know, it was interesting to see how this sort of built up. We didn't hear
anything from companies, and now, as we get closer to sort of September and August when companies were having people back, we're seeing the momentum
build. What companies are speaking out and saying you must be vaccinated before you walk in our offices?
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: So for so many months, we've been hearing companies say they strongly encouraged
their employees to get the vaccine, the safe and effective vaccine. And now, you're to this point where they're looking at actually returning
people to the workplace, to the office space, and they want to make sure that their workers are vaccinated.
So, it's a real change in tone from companies, a real leadership here, and a few reasons here. You're seeing it from Silicon Valley, even as they are
pushing back their return to the office dates because the delta variant they are saying, when you come back, you must be vaccinated.
Also Wall Street, those offices have been filling up for weeks now. They are saying you must be vaccinated and in many cases saying, clients and
customers must be vaccinated if they are on the premises as well.
And one of the big drivers here is the delta variant. There are big concerns that this pool of unvaccinated, the unvaccinated public is
spreading these strains and these strains are evolving in the public, and that will hold back the recovery. That's not good for business.
I'll say something else, too. I've been talking to human resources professionals. And Alison, Johnny Taylor from the Society of Human Resource
Management tells me that almost 70 percent of employees they survey say they want vaccine mandates. This is something employees wan.
There is patience wearing thin on the vaccine hesitant. This -- I read something scary on Facebook, "I don't want to get the shot." It's not going
to fly anymore, especially as these businesses are starting to reopen.
Now, there is mitigation in some cases. You have Disneyland and Disney World requiring masks indoors. So, they're not requiring vaccinations, but
they're saying if you are here, you must be wearing a mask indoors. Apple is requiring mitigation masks to be worn in all of its stores. MGM Grand,
that is the big casino company hotel company, its CEO is begging its employees to get the vaccine. They're having vaccine pop ups.
It's not a mandate, but they are begging to get the vaccine. And he points out, look, we could have social distancing and capacity requirements if
more people don't get the vaccine. That hurts business, that hurts jobs. So again, it's so important. The vaccine is the armor for the American public,
for the global public to be able to have an economy that recovers.
KOSIK: How ready do you think are companies to let employees go who are unwilling to be vaccinated? I give you a case and point, I had this news
alert yesterday The Durst Organization, which is a real estate development company basically said to its employees, you will be fired if you are not
vaccinated after Labor Day and you think you're going to walk into our offices.
ROMANS: Yes, and that is a really telling, telling statement from a company. We haven't seen the mask firings yet. We know that these companies
say that they will have exemptions for health and for religious reasons. I will point out there are very, very rare religious exemptions for vaccines
in general. So that's going to be hard, I think for many employees to try to prove.
The question will be, is it a true mandate? Is it a requirement with mitigation? Will these companies be able to enforce it? That's the next
part of the story that will come later.
[09:15:12]
ROMANS: I know that Union Square Hospitality CEO, Danny Meyer this morning said, they're requiring all of their employees to be vaccinated. They are
giving them 45 days' notice here, if they would like to accept their position. That's sort of how they've cast it as you can keep working here
if within 45 days you are vaccinated, and he points out that you can't really go back to normal in the restaurant industry or in the hospitality
industry if both customers and employees aren't vaccinated. That's how you keep restaurants full and casinos full. Right?
So, this is an economic imperative for many of them. It's about good business here.
And a reminder, the vaccines are safe and effective. There's a lot of terrible misinformation out there. Companies have been very, very patient
with the vaccine hesitant. That patience is gone.
KOSIK: Yes, we're seeing that now with momentum of the number of companies stepping forward now. Christine Romans, thanks for breaking all that down.
And these are the stories making headlines around the world. Breaking news out of Tokyo. American Sunisa Lee just won a historic gold medal in the
women's all-around gymnastics competition today. That seals a record equaling six victory in the event for the U.S. team.
CNN's Selina Wang joins me now live from Tokyo. Great to see you.
SELINA WANG, CNN CORRESPONDENT: Great to be with you, Alison. Talk about a historic win, talk about grace under pressure for Suni Lee after Simone
Biles was out citing mental health issues. She really stepped up to the plate securing gold for the United States and she was also the first Hmong-
American to be part of a U.S. Olympic team, an incredibly inspiring story from her especially after a year of many, many setbacks from Suni Lee
including an injury.
But there were also some scares today in Olympic news especially for the Australian track and field team which 54 members of that team were briefly
in quarantine after three members of that team had come into contact with a U.S. track and field athlete who had tested positive for COVID-19. We know
that U.S. pole vaulter, Sam Kendricks is out of the game after testing positive for COVID-19.
Now, after those three members who were fully vaccinated, tested negative, the entire team is now in the clear, but it did send shockwaves throughout
the track and field athletic community, and it was just a reminder of how precarious these Games are, the knock-on effects that just one positive
COVID-19 test can have.
Now a big miss with Sam Kendricks out is a duel that people were waiting to see him go head to head with Armand Duplantis, who is a world-record
holder. Take a listen to what Armand Duplantis had to say about Sam Kendricks testing positive.
(BEGIN VIDEO CLIP)
ARMAND DUPLANTIS, POLE VAULT WORLD RECORD HOLDER: I've been super lucky just not to have come in contact with him -- Lightfoot or anybody. So, I
think all of the pole vaulters are pretty, pretty spooked out right now.
I was -- I mean, I was going to possibly meet up with Sam yesterday, but I got a phone call from, Desiree, my girlfriend and then I ended up not
meeting up with him. So, that was -- I think that was a pretty lucky, lucky dodge right there. And yes, so right now I've been good, and so we're all
pretty spooked out right now.
(END VIDEO CLIP)
WANG: There are now at least 198 COVID-19 cases in Tokyo in Japan linked to these Tokyo games. And this is as COVID-19 cases are surging in the host
city reporting three straight days of record high COVID-19 cases surpassing 3,800 on Thursday, and the Japan Medical Association has put out an
emergency statement saying that the medical system could reach the point of collapse if infections continue to increase -- Alison.
KOSIK: Okay, CNN's Selina Wang in Tokyo, thank you.
Other parts of Asia are seeing new coronavirus infections. Beijing is reporting two new COVID cases. The first to be reported in the Chinese
capital in nearly six months following an outbreak in one of its eastern cities.
Cases are also rising in Vietnam and Myanmar. While in Thailand, COVID patients are being sent by train to their hometowns as hospitals in Bangkok
run out of beds.
You're watching FIRST MOVE. More to come.
(COMMERCIAL BREAK)
[09:22:03]
KOSIK: Welcome back to FIRST MOVE, I'm Alison Kosik live from New York where it is looking like a mostly higher start to the trading day despite a
weaker than expected read on second quarter U.S. GDP.
The Dow is set to outperform in the early action. Blue chip investors heartened by news that Congress will soon begin debate on a multibillion
dollar U.S. infrastructure bill. Lots of political hurdles, though remain, but passage of it would mean a fresh shot of fiscal stimulus at a time when
the Fed is mulling a cut to monetary support.
Ford, one of the big gainers in the premarket after reporting a surprise second quarter profit. The carmaker also raising its full-year guidance and
saying the supply bottlenecks that have crimped auto production are easing.
Robinhood making its much anticipated public debut today after raising about $2 billion in its initial public offering.
Joining us now is Bradley Tusk. He is the founder and CEO of Tusk Holdings. Great to have you with us on this great day for Robinhood, at least. But I
want to get your take because Robinhood actually pricing on the lower end of the spectrum at $38.00 a share. What do you think about that?
BRADLEY TUSK, FOUNDER AND CEO, TUSK HOLDINGS: You know, look, at the end of the day, I'm a venture capitalist, and while everyone tries to be
relatively precise and methodical about valuations, if you look at private sector valuations, it's some math and it's some pixie dust, right? To a
certain extent, it is based on what a VC thinks she or he needs to bid to win. It is based on lots of other factors purely than just sort of what the
economics may dictate.
And so when you're trying to decide whether or not a company that was private going public is now all of a certain kind of meeting expectations,
because it is trading at the lower end of the range, the range was kind of variable. And not that scientifically sort of done in the first place, and
that's true for all private tech companies that then IPO, so I wouldn't worry too much about it.
KOSIK: Now, your firm backed Coinbase, which went public in April. And now Robinhood is having its moment in the spotlight, which is looking to
democratize trading and it is seen as a formidable competitor to Coinbase.
How do you see the comparisons between the two?
TUSK: Yes, I mean, look, I think that they are similar in the sense that they are both bringing access to the markets, different types of markets,
but still to the markets, to retail investors, right? And the part of the overall fight, whether it's Coinbase or Robinhood or anything else
interactive is, you know, the internet has really opened up the world in a lot of ways. You know, you and I are talking online right now.
And as a result, a lot more people are going to have access. I think in some ways that is the democratization that these companies are talking
about, and that's really good.
At the same time, it creates all kinds of new regulatory headaches that hadn't existed before. But I think ultimately it's a good thing and both
companies want to go through growing pains and FINRA and the other regulators are going to have to figure out sort of how to do this in an
intelligent way.
But fundamentally, one, I think both companies are adding real value to the marketplace; and two, as an investor on Coinbase, I don't see any
particular problem with Robinhood also succeeding.
[09:25:21]
KOSIK: Now, there were some investors who felt wronged by Robinhood's decision to restrict trading in some securities during the GameStop frenzy,
that -- who can forget?
You were quoted as actually saying that that movement, exposing short sellers may not have been possible without Robinhood in the first place,
and that movement may actually turn against Robinhood and that could put some downward pressure on the stock when they do go public. Do you still
feel the same way? Could we see this kind of cruel twist of fate?
TUSK: Yes. There could be some revenge selling or short selling or something like that. That's definitely possible. And look, you live by the
sword, you die by the sword. If you're going to run a brokerage effectively based on kind of memes and public sentiment, you're going to ride that wave
up, and you're going to ride that wave down.
So, I think there will be some potential ramifications for Robinhood. But overall, the underlying question is, will payment for order flow go away or
not? If you think it's going to go away, then I think it's hard to invest in Robinhood, because that's effectively where so much of their revenue
comes from.
If you think that it will be fine, then there's no reason if you like Robinhood as a company not to invest in it. I do think politically
speaking, at least, it's not going to go anywhere, simply because if you were to get rid of PFOF, then you would have to allow companies like
Robinhood to start charging fees again, and I think that no politician wants to be blamed for that.
KOSIK: Quick final question for you, do you have any concerns at all about Robinhood and its role in the gamification of trading?
TUSK: No. I mean, I think that, look, Robinhood has to be regulated, just like any other brokerage is regulated. And so -- but with that said,
because they are coming up with sort of new ways to reach consumers, reach investors, get them interested in things, that's a good thing. It may be a
certain gamification or memes cause more problems than they solve and we should regulate those, but overall, you know, bringing more people into the
process and getting them interested in it and making it less complicated, I think is a good thing.
KOSIK: Okay, Bradley Tusk, CEO of Tusk Holdings. Great to have your perspective today. Thanks for coming on the show.
TUSK: Thank you for having me.
KOSIK: And we'll be back after the break.
(COMMERCIAL BREAK)
[09:30:36]
KOSIK: Welcome back to FIRST MOVE. U.S. stocks are up and running this Thursday. A big day for the U.S. IPO market as Robinhood goes public on the
NASDAQ. More on that later in the show.
For now, U.S. stocks have opened mostly higher despite a weaker than expected read on second quarter U.S. GDP. The U.S. economy growing at a six
and a half percent annual rate in the spring. We were expecting growth of over eight percent.
Major tech earnings are also in focus. Facebook shares are lower after warning that growth could slow later this year. Amazon reports results
after the closing bell today.
Shares of Didi Global are sharply higher in early trading despite denials from the company that it is thinking about going private. But Uber is
pulling back sharply. Reports say SoftBank may be forced to sell a big chunk of its Uber stake to cover its losses after DiDi's recent selloff.
And shares of EV firm Nikola are slumping as well. U.S. prosecutors have charged the company's founder and former chairman for allegedly making
false statements about the firm.
There are encouraging signs in the U.K. New coronavirus cases there are plunging just a few weeks after an alarming spike in the numbers driven by
the delta variant. Phil Black has more.
(BEGIN VIDEOTAPE)
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT (voice over): In the first week of England's hands off, mostly unrestricted policy of living with the
coronavirus, something extraordinary has happened. The U.K. is growing wave of cases has suddenly unexpectedly fallen away. The drop has been quick and
dramatic.
Compared to the previous week, the total number of confirmed cases is down 36 percent. Scientists admit no one saw this coming.
UNIDENTIFIED FEMALE: It's not something that I expected or predicted.
UNIDENTIFIED MALE: I think it surprised a lot of people to see something that's come down this quickly. This much in synchrony.
BLACK (voice over): So, they only have theories on why this is happening. The end of the European soccer championships means no more big emotional
crowds, a recent stretch of good weather encouraged people to stay outside, schools around for summer closing what some scientists believe is a
significant environment for transmission, awareness of certain cases may have inspired more cautious behavior, and there is also the possibility,
vast numbers of people are still being infected, they are just not following up with tests because they don't want to cancel plans and stay at
home.
UNIDENTIFIED MALE: So the issue is, is what we're seeing in terms of a reduction in cases a true reflection of the community levels of infection?
BLACK (voice over): Scientists feel confident on one point, vaccines are helping, but it's too soon to attribute the drop to herd immunity.
UNIDENTIFIED FEMALE: We need to remember, only 55 percent of our population are fully vaccinated. The rest are the partially vaccinated are
not vaccinated at all.
BLACK (voice over): The delay between infection and symptomatic illness means the figures don't yet reflect the consequences of England throwing
away its pandemic rules on July 19th.
BORIS JOHNSON, BRITISH PRIME MINISTER: It is very, very important that we don't allow ourselves to run away with premature conclusions about this.
BLACK (voice over): But the sudden changes are fueling hope the U.K. will not experience the grim, difficult summer many predicted.
(END VIDEOTAPE)
KOSIK: Our thanks to Phil Black for that.
Shares in online retailer, Overstock, are down sharply at the open. The home furnishings company reported second quarter revenue growth as the e-
commerce sales continued even as lockdowns lifted. The company says it expects demand to remain strong.
Joining me is Jonathan Johnson. He is the CEO of Overstock. Great to see you.
JONATHAN JOHNSON, CEO, OVERSTOCK: Thank you. Thanks for having me on.
KOSIK: It looks like you had a solid quarter. Walk us through what worked for Overstock?
JOHNSON: Well, we did have a great quarter and it was comparing against our toughest quarter, best quarter in the history of the company from last
year. Demand continued to be high, particularly in the outdoor and patio furniture areas, as people try and expand their living areas beyond the
four walls of their home to the four corners of their property.
There is a lot of demand in the furniture space. We had a great quarter.
KOSIK: How sustainable though is this momentum? I mean, I get that everybody was home during the pandemic. They bought their furniture, they
upgraded their desks. All that stuff is done, so will they go out and buy more things? Plus you've got the intense competition from you know Amazon,
Wayfair, Walmart and Target.
[09:35:09]
JOHNSON: Well, great questions. We are taking market share from each of those. We think we will continue to grow. We think there are macroeconomic
trends that are in our favor as the home furnishings purchases shift from brick and mortar to online.
We also think that the great shuffling of the American workforce, as people move to the suburbs in the exurbs to work from home, that strong housing
starts, all of these bode well for the home furnishing business, which is our businesses as we provide dream homes for all.
KOSIK: I know retailers across the board are being hit by supply chain disruptions and having to raise prices. What are you encountering in that
realm? Is Overstock having the same issues?
JOHNSON: There's no question that supply chain is difficult. Labor costs are up. Product, raw materials are up. We've been able to either absorb or
have our suppliers absorb most of that. We have had to pass a little bit along to our customers.
But because we have such a distributed network of suppliers, over 3,000 suppliers, we've been able to keep costs down for the most part, and our
suppliers have been able to move to less expensive manufacturing. They're a very savvy group that's helped us avoid some of the troubles that others
have had as supply chains have been congested.
KOSIK: Okay, switching gears a little bit to tZero, which is your blockchain crypto business which is outsourced to a venture capital firm.
I'm curious if tZero is being shopped around in search of the right buyer?
JOHNSON: Well, tZero has disclosed that is trying to raise capital. It would love to find a strategic investor. We think the tZero business is
promising. And, you know, if the right buyer came, I guess anything and everything is for sale. But today, it is running well and looking for a
strategic investment, not a purchaser.
KOSIK: Is Overstock's overall plan though to eventually exit its blockchain related investments?
JOHNSON: Well, we have 21 investments. We've created a limited partnership and we've got a great venture capitalist, Pelion Venture Partners, managing
those, like you know, all venture investments, ultimately you'd like to see them have a payoff and exit of one sort or another.
We're letting Pelion determine what routes of financial events is best for each of those 21 companies in the portfolio.
KOSIK: Now, I know you've been CEO for around two years now. You came in during difficult times. You cut ties with your founder. How difficult was
that? And what changes have you made?
JOHNSON: Well, I have been in the CEO seat for two years. We've become more focused on our e-commerce business. Our e-commerce business is more
focused on the home furnishing and furniture market.
We've limited the number of initiatives and projects we're working on. When I took over we had 27, having 27 initiatives is almost like having none. We
have four that we work on now that we think, you know, have great promise.
I think our focus is what got us in a position that when the pandemic hit, the pandemic was a tailwind instead of a cross or a headwind for our
business. We remain focus and as we lean more in to the home furnishings market, I think you'll see us continue to grow and take market share.
KOSIK: All right, Jonathan Johnson, CEO of Overstock, grateful for your time today. Thank you.
JOHNSON: Thanks so much. I hope to talk to you again.
KOSIK: Me too.
And you're watching first move. I'm Alison Kosik. Stay with us.
(COMMERCIAL BREAK)
[09:41:55]
KOSIK: Before the pandemic, heatstroke was the biggest risk to athletes. The Olympics are held during the hottest time of the year in Japan and
temperatures are soaring to record levels. CNN's Selina Wang has more.
(BEGIN VIDEOTAPE)
WANG (voice over): Sweaty, hot, and humid. That's a Tokyo summer. Before the pandemic, heatstroke with the biggest health risk for the Tokyo Games
held during the hottest time of year in Japan.
Natsue Koikawa knows the risks of heatstroke all too well. A former professional runner, she passed out during a 1995 marathon in Japan and
almost died. It took her more than a year and a half to recover, and she never returned to a major marathon race again.
Now, a Professor and track coach at Juntendo University, she's been researching the dangers of competing in the heat.
NATSUE KOIKAWA, PROFESSOR AND TRACK COACH, JUNTENDO UNIVERSITY (through translator): Heatstroke can happen to anyone and it is a very common cause
of death. It may be extremely difficult for athletes to give up competing in the middle of the game because the athletes are representing their
country on the stage of their dreams. So, I tell athletes that having the courage to quit is the best way to prevent heat stroke.
WANG (voice over): Back in 1964, the Tokyo Games were actually held in October in order to beat the heat, and it has only gotten hotter since
then. According to a report from the British Association for Sustainable Sport, temperatures in Japan have increased three times as fast as the
world average since 1900.
MAKOTO YOKOHARI, PROFESSOR OF ENVIRONMENT, UNIVERSITY OF TOKYO: When you take into account not only the temperature but also humidity, I would say
that the Tokyo Summer is the worst in the history of the Olympic Games.
WANG (voice over): In a statement to CNN, the IOC said it provides shade and water supplies at venues because the health of athletes is quote, "at
the heart of our concerns." Still, we have already seen athletes struggle under the sun during these Games with Russian archer, Svetlana Gomboeva
being treated for heat exhaustion.
KIT MCCONNELL, SPORTS DIRECTOR, INTERNATIONAL OLYMPIC COMMITTEE: All of the competition schedule has been built, where possible, depending on the
sport to accommodate -- or avoid the hottest part of the day, but that's not possible with every sport.
WANG (voice over): On Wednesday, Russian tennis player Daniil Medvedev was visibly struggling. When the umpire asked if he could continue, he replied,
"I'm a fighter. I will finish the match, but I can die." Later in comments posted by Tokyo 2020, he added, "I couldn't breathe properly. I think that
was the most humid day we have had so far."
Later that day, Spain's Paula Badosa retired from her match with heatstroke. She had to be escorted off the court in a wheelchair. In
response, the International Tennis Federation said that matches will now begin later in the day due to these weather conditions.
But Yokohari says that isn't enough.
YOKOHARI: Having Olympic Games in midsummer in Tokyo is not something that you should do. And we should postpone it until like October or November.
[09:45:00]
WANG (voice over): But in the future, it might not just be Tokyo. According to a commentary published in "The Lancet," by 2085, the number of
large cities that would be considered low risk to hold the Olympics in summer months would be extremely limited.
In the meantime, Koikawa says athletes must stop if they feel the onset of heatstroke, as it is better to put their Olympic dreams rather than their
lives on the line.
Selina Wang, CNN, Tokyo.
(END VIDEOTAPE)
KOSIK: Recent public demonstrations against the Cuban regime have provoked a harsh crackdown of alleged dissidents. Among those detained, tried, and
even sentenced, people who uploaded video of the July 11 protest to social media. CNN's Patrick Oppmann has more from Havana.
(BEGIN VIDEOTAPE)
PATRICK OPPMANN, CNN CORRESPONDENT (voice over): In the largest protests since Fidel Castro's revolution swept Cuba, the Cuban government quickly
struck back carrying out mass arrests. Some protesters were forcibly detained as they chanted "Patria y Vida" or "Homeland and Life." The song
that has become the anthem of frustration with the communist state.
One of those arrested was photographer, Anyelo Troya who filmed a part of the music video for "Patria Y Vida" in Havana. Less than two weeks after
the protests, Troya was tried, convicted, and sentenced to a year in prison. His mother says he told the court he did nothing wrong.
"He said, 'How is this just when I haven't even seen a lawyer and I'm innocent,' he says. Immediately one of the police in civilian clothes came
and handcuffed him. I said, 'My love, be calm. You're not alone.'"
The Cuban government refuses to say how many people have been arrested or face trial for taking part in the unprecedented protests. An activist group
put the number at almost 700.
The government maintains those arrested are detained for attacking police, like in this video where protesters pelted cars with rocks, and not just
for challenging the rule of the Communist Party, the only political party allowed on the island.
Having different opinions including political one these doesn't constitute a crime, he says, thinking differently, questioning what's going on, to
demonstrate is not a crime, it is a right.
But on the streets of Cuba, elite Special Forces commandos, known as the Black Berets were recently placed on the sanctions list by the Biden
administration for alleged acts of repression prevent further protests from breaking out.
OPPMANN (on camera): Many of the relatives of the people who were arrested would not talk to us on camera. They were too afraid. But some did tell us
that their loved ones had done nothing other than peacefully demonstrate, or simply record and upload videos of the historic protests as they took
place.
OPPMANN (voice over): Odette Hernandez was arrested days after the protests, her relatives say, for posting this video of the demonstrations
to Facebook that have now been viewed over 100,000 times.
Among the charges she and her husband face is instigation of delinquency. Odette's cousin spoke to several people who were around Odette during the
protests and told us their accounts from his home in Paris.
"They weren't violent. They didn't throw rocks at anyone," he says. "Then Special Troops came to get them at their home, a Commander unit with many
police."
Many of Cuba's top artists have criticized the government crackdown, and called for an amnesty for nonviolent protesters.
Amidst the mass trial, some signs of leniency as a day after we visited his home, photographer Anyelo Troya was released on house arrest while awaiting
appeal. The government here though says it has only just begun to prosecute those who broke the law as all of Cuba seemingly holds its breath and waits
to see what comes next.
Patrick Oppmann, CNN, Havana.
(END VIDEOTAPE)
KOSIK: Popular trading app Robinhood making its public debut today, will soon be selling its own stock on Wall Street. We've got a live report from
the NASDAQ coming up.
(COMMERCIAL BREAK)
[09:51:10]
KOSIK: Robinhood has made its market debut under the ticker symbol HOOD. Clare Sebastian is back with us live from the NASDAQ. Clare, so do you know
when Robinhood will hit the market or when we'll start getting indications?
SEBASTIAN: Yes, Alison, so here at the NASDAQ, IPOs are actually not eligible to start trading before 10:00 a.m. We've been told that it could
take a couple of hours beyond that. The underwriters and the officials here at the NASDAQ have to sort of build the order book, match buy and sell
orders and come up with a price that they think will ensure minimum volatility when it starts opening.
But we are hearing from the NASDAQ that the syndicate, as it's called, is broken that that indicates that they have enough orders to cover the
allocation. They said, "We're good to go." So, that should mean that they can start trading as planned. But of course, it can still take some time to
build up that order book.
This is, of course, a really interesting IPO not just because of the disruptive nature of the company itself, the way it sort of brought the
zero commission model to all different kinds of brokerages, bringing retail investors into Wall Street, but because they intend to sort of disrupt the
IPO model itself.
They said before that they want to allocate between 20 and 35 percent to retail investors. That is very different from usual. IPOs are usually
reserved for the sort of institutional investor, the banks, because that ensures minimum volatility. It's much easier for the company's listing.
This is something that Robinhood is trying to stay true to, its mission of democratizing finance. I think this will be a test case, Alison, as to
whether you can democratize IPOs.
KOSIK: Yes, but amid all the pomp and circumstance, there's a lot of litigation hanging over this company. There are regulatory risks as well,
right?
SEBASTIAN: Yes, this is something that has really sort of come to a head in the past week. It was just a month ago that FINRA, the Wall Street
regulator slapped them with a record fine for mislead -- giving misleading information to customers.
On top of that, we've seen in the past week that they are investigating where the CEO, Vlad Tenev, should actually be registered with FINRA,
something that's often required of CEOs of broker dealers. They're also looking into trades by employees around the time of the meme stock frenzy.
The meme stock frenzy back in January when Robinhood put those restrictions is very controversial, restrictions on trading in GameStop stocks.
So, these are headaches to Robinhood, that along with the fact that the S.E.C. is looking into their business model as a whole, 81 percent of this
company's revenue comes from what's called as payment for order flow where they route these retail orders to wholesalers, to market makers on Wall
Street, who then pay them a fee.
This is something that that's highly controversial. The S.E.C. worries that leads to market concentration that it can lead to conflicts of interest.
They could end up cracking down on that. That is a major risk for Robinhood, but still a great deal of excitement here at the NASDAQ this
morning -- Alison.
KOSIK: Yes, but even with all the headaches, Vlad Tenev, the CEO of the company becoming a billionaire if this thing goes even at $38.00 a share.
Clare Sebastian, thanks so much.
And coming up on "Connect the World," Julia Chatterley will be speaking with the CEO of Robinhood, Vlad Tenev, so don't miss the interview.
Great Britain's Tom Dean is getting used to life as a double Olympic champion just after months after battling COVID-19 not once, but twice.
It's been quite a journey for the 21-year-old to success, and his family back at home certainly enjoyed their moment this week.
Tom has been speaking to CNN's Will Ripley in Tokyo.
(BEGIN VIDEOTAPE)
TOM DEAN, GREAT BRITAIN'S DOUBLE OLYMPIC CHAMPION IN TOKYO 2020: I cannot stop watching that video. My flat mates showed me when I got off the race
and you know, they were welling up watching that. I was welling up watching it.
You know, I saw all my family and friends there. It just makes me so emotional knowing that that's the kind of support I've got behind me. It's
a real honor. And hopefully I've done all the people that can be out here proud.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Did you think that this was going to happen like six months ago, a year ago?
DEAN: Six months ago, definitely not. Six days ago, I would have been questioning it if you'd asked me this. I mean, when I was ill with COVID
and not, you know, I would have thought you were crazy if you told me this was going to happen.
RIPLEY: What did COVID feel like the first time versus the second time?
[09:55:06]
DEAN: The first time wasn't terrible. I was more frustrated about the isolation and the 10 days out of the pool. The second time was really
tough. The second time, I was really ill for quite a long period of time.
Cough and wheezing, thinking how am I going to get back into training? My heart rate was high. You know, it was all the signs that an athlete doesn't
want to be diagnosed with. It's an athlete's worst nightmare especially during an Olympic year.
So, I'm glad I was able to come back from it.
RIPLEY: What tips could you offer others to be able to focus, but also stay mentally fit as well?
DEAN: Yes, I think, it is kind of a perfect storm of awful things because I couldn't train. I couldn't leave my flat, and I was really ill. It is
hard, and fortunately enough, we have got psychologist's help at Bath and the British government provided a lot of support for us and they know I am
poor with mental health, as now my coach is very much aware of that.
But I think just having faith in the work you've done in the past and knowing that you can come back from this and you know, you may feel awful
when you get back in the water initially, but you will build back into it and you know, you put in the hours in the past and that will be able to
carry you through.
(END VIDEOTAPE)
KOSIK: That's it for the show. I'm Alison Kosik. Thanks for watching. "Connect the World" with Becky Anderson is next.
(COMMERCIAL BREAK)
[10:00:00]
END
