Investors Dump Timeshare Companies After News Of Federal Inquiry

David Manning / Reuters

Investors are dumping stock in timeshare operators in the wake of news that federal regulators are taking a close look at the largest player in the industry.

On Friday, BuzzFeed News reported that the Consumer Financial Protection Bureau is looking into the sales, marketing, and financing practices of Westgate Resorts, the country's largest privately held timeshare operator. On Monday, the share prices of its publicly traded competitors dropped sharply.

Diamond Resorts International, the subject of two recent extensive media investigations, closed the day down more than 11%, while Marriott Vacations and Wyndham Worldwide both fell over 4%. A Wyndham spokesperson declined to comment, while Diamond and Mariott Vacations did not respond to requests for comment

At one point on Monday Diamond shares were down 16%, the biggest drop since the New York Times published a lengthy report on its sales and marketing practices, in late January.

BuzzFeed News was first to report on Friday that the CFPB had denied Westgate's request to modify or set aside its civil investigative demand. Such demands, which are similar to a subpoena, do not necessarily mean the recipient is under investigation; the CFPB could be looking at the industry more broadly, or at a company that does business with Westgate.

Carlo Santarelli, an analyst at Deutsche Bank, said in a note Monday that he "expect[s] the investigation to be lengthy" and that it will be an overhang on the entire industry. Santarelli also said that the CFPB inquiry "appears broad" and described the information requested as "abundant."

A Westgate attorney told the Orlando Sentinel: "Westgate cannot comment on the pending investigation except to say that it believes that it is in compliance with all consumer protection finance requirements under the CFPB's jurisdiction.”

The company's petition to the CFPB said the regulator was looking at “information and documents that go to the heart of non-financial matters in what is, in essence, a real estate development and management company," and said that the financial elements of its business are "merely a piece of a much larger vertically integrated operation.”

Isaac Boltansky, an analyst at Compass Point, described Westgate's response to the regulator — which included claims that the CFPB was unconstitutional — as "both inflammatory and unsuccessful."

Boltansky suggested that Siegel, best known outside the timeshare industry for his appearance in the documentary Queen of Versailles and for a strongly worded letter where he encouraged Westgate employees to vote for Mitt Romney in 2012, "suggests that a protracted and public enforcement battle between the bureau and Westgate may lie ahead which could ultimately weigh on the whole space."

An investigation into the timeshare industry isn't a complete surprise. In a February regulatory filing, Diamond Resorts International said "certain third parties have indicated that the Consumer Financial Protection Bureau (“CFPB”) might increase their oversight of the vacation ownership industry," but said that it would not be affected by rules that concern real estate financing and mortgages.

According to data cited by Diamond, there are 1,600 resorts that make up the timeshare industry, with 198,000 individual units and 8.7 million "ownership week equivalents." Timeshare sales peaked in 2007, right before the financial crisis and have not yet made back to pre-crisis levels, following a construction slowdown and less credit availability. Diamond Resorts said in a regulatory filing that 80% of its revenue comes from sales and financing of timeshares.

While Westgate does not disclose what portion of its revenue comes from sales and what comes from interest on loans — at rates that run around 15% — it regularly bundles loans and sells them to investors as securities and has raised almost $3 billion from investors since 1992.

Westgate itself has 28 resorts and its parent company, Central Florida Investments, has a 10,000-strong staff.

SOURCE: BuzzFeed

Apple's (Small) iPhone Event By The Numbers

The shortest Apple event ever (probably).

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SOURCE: BuzzFeed

Financial Regulators Are Looking Into America's Largest Timeshare Seller

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The federal government is looking into Westgate Resorts — the largest privately-held seller of timeshares in the United States.

The Consumer Financial Protection Bureau demanded reams of information on Westgate's sales and marketing practices in October, documents posted online by the regulator show. BuzzFeed News is first to report on the legal order.

Westgate, like other timeshare companies, aggressively markets its properties. Tactics include free information sessions at vacation destinations where Westgate employees put on the hard-sell. The regulator is also looking into the financing for the purchases, which is provided by Westgate.

The Orlando-based Westgate contested the CFPB's legal order for documents — also known as a civil investigative demand — claiming the regulator did not have constitutional authority to investigate, that its document demands were too burdensome, and that the CFPB were looking at parts of the company that didn't relate to the selling of a consumer financial product. Westgate did, however, partially comply before requesting to modify the demand.

A civil investigative demand does not necessarily mean the company receiving it is the target of an investigation — the CFPB also uses them to gather information from companies related to another company being investigated. The scope of the demand contested by Westgate, however, shows that the CFPB is looking into many aspects of its operations.

Westgate said the CFPB is demanding "information and documents that go to the heart of non-financial matters in what is, in essence, a real estate development and management company that develops, markets, sells and operates timeshare resorts, where financing a consumer transaction is merely a piece of a much larger vertically integrated operation."

Westgate's core business is selling timeshares in its 28 resorts, many of which it built and developed. Westgate then markets partial ownership to buyers and finances the purchases by lending them money to buy the timeshare. Westgate also manages the resorts. Westgate has locations in popular vacation areas like Orlando and Las Vegas.

A CFPB spokesperson declined to comment, saying the Bureau could not comment on potential enforcement matters. Westgate's chief operating officer, Mark Waltrip, did not immediately respond to a request for comment.

Westgate has run into trouble with federal regulators before for its marketing practices. In 2009, Westgate and companies affiliated with it settled with the Federal Trade Commission for over $1 million for violating Do Not Call rules with its telemarketers. Last April, Westgate lost a lawsuit in Tennessee over its high pressure sales tactics resulting in a $500,000 judgment. A couple sued Westgate claiming that commitments made during the sale of a timeshare were not followed up on after they bought a unit in the Tennessee mountain town Gatlinburg — the couple won $500,000. Westgate claimed that the case was not representative of the company's operations.

Another timeshare operator, Diamond Resorts, has come under scrutiny recently, with a long New York Times article questioning aspects of its sales and marketing practices.

Westgate's founder and chief executive officer David Siegel became widely known outside the timeshare industry when he wrote a memo to his employees saying that "our present government believes that taking my money is the right economic stimulus for this country" and that if taxes were increased in a second Obama term "I will have no choice but to reduce the size of this company." Siegel founded Central Florida Investments, Westgate's parent company, in 1970.

Westgate says that its timeshares are a better value for vacationing families, claiming that timeshare buyers can get 25 years of one-week vacations for $25,000 along with the value of its timeshare ownership, while it would cost $84,000 at hotels

Siegel also appeared in the critically acclaimed documentary Queen of Versailles, which follows he and his family as they construct the largest residential estate in the United States in the midst of the 2008 financial crisis.

While Westgate is a privately held company, it is active in selling off its timeshare receivables as securities to investors. In November, Westgate sold $156 million worth of securities and has sold $2.75 billion since 1992. Loans included in a 2013 securitization deal had an average mortgage rate of 15% with a term of almost 10 years. Rates for ten year mixed residential mortgage loans are closer to 3%.

In October, Westgate sought to modify or even set aside the CFPB's subpoena, claiming that it was too broad, burdensome to comply with, and rested on uncertain constitutional authority.

Westgate's petition gives an idea of how broad the CFPB's inquiry is. Westgate said the CFPB "seek[s] a list and description of all methods of advertisement employed to solicit buyers of its timeshares," as well as data on the compensation of its sales staff and data on how often borrowers refinanced their mortgages.

The company claimed that the CFPB wanted to look into non-financial aspects of its operation, including the marketing, which Westgate says is mostly taking prospective buyers on tours of the resorts.

The CFPB said in a response to Westgate's petition that it had requested the identities of everyone who worked at Westgate since September 1, 2012, except for greeters. The regulator said that Westgate only then "provided the identities of those employees who processed mortgage applications, but withheld the identities of its sales employees who engaged in the offering and sales of the timeshare properties."

"Westgate has various means of marketing its timeshares, in most cases—
especially at the stage of simply bringing consumers to a property to take a tour—such marketing would not touch upon any financial aspects of the transaction," the company said in its request to the CFPB.

Westgate said the CFPB had requested "documents and information that precede the first contact with a consumer," and thus are not strictly related to financing the timeshare purchase.

Consumer complaint websites abound with accounts of tourists being invited to Westgate presentations with inducements like casino chips and free flights and then going through a mutli-hour, intense sales process.

The CFPB, in its denial of Westgate's petition, said that "Westgate has not shown that the sales process is completely separate from the financing of the timeshares," and the CFPB said it has obtained complaints that "suggest that sales representatives made statements directly relating to financing." The CFPB also argued that Westgate couldn't show its demands "would unduly hinder its day-to-day operations."

The CFPB also said that Westgate had withheld consumer complaints "that it deemed to be unrelated to its financing of timeshares."

In its decision to deny Westgate's request, the CFPB said that its enforcement staff had met with Westgate's lawyers in October and narrowed some of its requests.

Westgate's petition:

CFPB's denial:

SOURCE: BuzzFeed

Chipotle Gave Away More Than 3 Million Burritos To Prove They're Safe

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Chipotle handed out around 3.5 million free burritos to prove their food was safe amid health concerns and to make its restaurants less "eerie" to customers, the chain's executives said Wednesday.

After outbreaks of norovirus, salmonella, and E.coli at Chipotle locations all around the country last year, sales tanked and the company closed all locations on February 8th to have an all-employee safety meeting.

The revamped safety guidelines were accompanied by an ongoing massive marketing push centered around sending out coupons for free burritos. Mark Crumpacker, Chipotle's chief creative officer, said at a Bank of America Merrill Lynch conference that the company had expected the promotion to "go viral" and that 2.5 million would redeem the coupons.

Over about five hours, he said, 5.3 million people requested coupons, and about two thirds of them actually used them — "an extraordinarily high number." Crumpacker said that Chipotle was planning on sending out 21 million pieces of direct mail, and that between six and 10 million had already been sent out.

Hartung said that another benefit of the coupons was that it made Chipotle locations — many of which were nearly empty before the Center for Disease Control declared the E.coli outbreak — feel less “eerie.”

“We also wanted to show that this is what Chipotle looks like and it was kind of eerie, and we've heard this from customers, they would walk by our restaurant and see, God that was always busy and now there is no line whatsover, that's not the case anymore,” Hartung said.

Chipotle's sales are still falling this month, but are starting to climb back this year overall after plunging 40% in January, the company's co-chief executive officer, Steve Ells, added at the conference.

Ells's comments came after Chipotle announced on Tuesday that it was anticipating its first quarterly loss ever as a public company — and that its comparable sales in February had declined 26%.

Ells said sales had gotten back to a negative 20% decline at the beginning of March before dipping again after a suburban Boston location closed after employees called in sick on March 8.

"Our teams did an awesome job, they followed the protocol fully. And as a result, they protected our customers and no customers were affected. So, this was a really good thing," he said.

Chipotle put a brave face on what otherwise looks like sobering data, saying in a presentation that a "comparable sales recovery [is] underway." After the Boston area closing, Chipotle chief financial officer Jack Hartung said, "our comps declined..to about (negative) 27%."

Chipotle Mexican Grill / Via file:///Users/matthewzeitlin/Downloads/Chipotle_BAML_Final.pdf

But since Chipotle previewed its quarterly earnings and reported its monthly sales, the company's stock is still down slightly and has fallen over 26% in the last year.

"Our earnings and margins are not going to be very impressive in the short term," Hartung said, pointing not only to the poor consumer perception of the chain, but also supply chain issues introduced by the burrito coupons that led to more food waste, along with higher marketing and legal costs spurred by a Department of Justice investigation into its food safety practices. Ells said that the company has gotten closer to identifying the source of the E.coli outbreak.

"We have many more fresh ingredients in the typical fast-food restaurants. And so, there are potentially a lot of sources for such an incident," Ells said. "We have been looking with the CDC, with our epidemiologist, with food safety experts, with local health departments and nobody initially could identify what the source was. We think we have a pretty good idea, but not definitively are we going to say what it was."

Ells said the changes, despite being costly and time-intensive, have been good not just for the safety of the food, but for how it tastes. "Every single ingredient now that we bring in has been scrutinized, every single cooking technique has been scrutinized and we've made a number of changes and a lot of these changes also have been for the better, I mean the food actually tastes better."

SOURCE: BuzzFeed

"Good Job, Corey," Trump Tells Embattled Campaign Manager After Tuesday Victories

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From his Palm Beach, Florida Xanadu, Mar-a-Lago, Trump spoke about his victory in the state — with his embattled campaign manager Corey Lewandowski at his right and his son Eric Trump at his left.

Trump and Lewandowski have pulled off a near sweep of today's primaries and caucuses — winning Florida, Illinois, North Carolina, and the Northern Mariana Islands, while Ohio's governor John Kasich won his home state.

"Good job Corey," Trump said, "and Hope (his spokesperson Hope Hicks) and our whole squad."

Lewandowski has been accused by former Breitbart News reporter Michelle Fields of roughly grabbing her while she tried to ask Trump a question, leaving bruises. Fields and Breitbart editor-at-large Ben Shapiro left the site, criticizing it for being a partisan pro-Trump outlet. Trump has suggested Fields was making the story up, while Lewandowski called her "delusional." Fields filed a police report that alleges Lewandowski assaulted her. Some viewers took notice of Lewandowski's appearance on Trump's stage.

Otherwise, Trump gave a version of his standard stump speech, lambasting trade deals, talking about his poll numbers, and promising to win for America.

"More importantly than anything else we’re going to start winning again, this country doesn’t win anymore, we don’t win with our military, we don’t win with trade."

The only other candidate Trump acknowledged was Florida senator Marco Rubio, who earlier tonight suspended his campaign following Trump's Florida victory. "I want to congratulate Marco Rubio on having run a really tough campaign. He’s tough and smart and he has a really great future."

Despite establishing and maintaining a solid lead in all polls, Trump depicted his victory in Florida as having come in the face of a wave of negative advertising that "no one has ever in the history of politics has received." Trump said that the ads were "90% false, vicious and horrible."

He even said that he was imploring guests at a recent golf tournament at the Trump National Doral in Doral, Florida to look away from the TV, knowing they would be faced with negative ads. "Look over there, don’t watch this! Isn’t the grass beautiful?" he recounted telling his guests.

Trump lambasted reporters, saying there were "some really disgusting people back there," and lamenting that he had to deal with "lies, deceits, viciousness, disgusting reporters."

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However, he assured his guests: "We’re going to win for the country. We’re going to win and we’re not stopping thank you very much everybody."

SOURCE: BuzzFeed

Marco Rubio Drops Out Of Presidential Race

Marco Rubio has dropped out of the presidential race, he announced during a speech after he lost his home state of Florida to Donald Trump on Tuesday night.

This is a developing story. Check back for updates and follow BuzzFeed News on Twitter.

SOURCE: BuzzFeed

Kellogg Says There Is A Criminal Investigation Into Assembly Line Peeing Incident

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Cereal maker Kellogg said Monday that a criminal investigation has been launched into a video that appears to show a man urinating on a company assembly line.

Kris Charles, a Kellog spokesperson, said in a statement that the video, which appeared on WorldStarUncut.com on Friday, was recorded at Memphis facility in 2014.

The graphic video shows a man urinating in the factory and then pans to a Kellogg's logo. It appears to be shot by the urinating man himself.

Via worldstaruncut.com

Via worldstaruncut.com

Charles said that the products that could have been contaminated "include Rice Krispies Treats, granola clusters used in a couple of products, and a few other puffed rice treats that we no longer make."

Charles said that "any products that could have been potentially impacted would be very limited and past their expiration dates."

The company's stock was down about .5% in early afternoon trading on Monday.

"Food quality is of the utmost importance to Kellogg Company," Charles said. "We are outraged by this completely unacceptable situation, and we will work closely with authorities to prosecute to the full extent of the law.”

SOURCE: BuzzFeed

Volkswagen America Chief Michael Horn Resigns

Michael Horn

David Mcnew / Getty Images

The head of Volkswagen's U.S. business Michael Horn will leave the company "to pursue other opportunities," the company said today.

The statement did not mention Volkswagen's emissions cheating scandal, but Horn is just the latest senior executive to leave in the wake of the discovery. The company's chief executive officer Martin Winterkorn resigned in September after it emerged that Volkswagen engineers had installed software on millions of cars that allowed them to pass emissions tests despite far exceeding regulatory guidelines while actually on the road.

Volkswagen USA said that, effective immediately, the chairman of Volkswagen USA, Hinrich Woebcken would take over as interim CEO. While Horn has not been directly linked to any wrongdoing, he testified in front of Congress in October to explain Volkswagen's behavior.

Alexander Koerner / Getty Images

Horn told lawmakers that almost 500,000 cars on the road in the U.S. would require some kind of fix. He described the installation of the "defeat device" as "not a corporate decision" and that internal and external investigations would "find out what drove those people into these decisions and those actions." At a product launch soon after regulators revealed the emissions cheat, Horn said "we have totally screwed up." Volkswagen has said that up to 11 million vehicles have the cheating software.

Horn had worked at Volkswagen for over 25 years, the company said, and took over as head of Volkswagen's U.S. division in 2014.

SOURCE: BuzzFeed

Square Is Growing Quickly, But Still Losing Money

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Tech mogul Jack Dorsey's other public company is having some trouble making money. After a rough few quarters at Twitter, Dorsey's Square, which processes payments for merchants and sells software to small- and medium-sized business, reported its earnings for the first time as a public company on Wednesday.

Despite Square's quarterly loss, investors liked what they saw in the earnings report, sending the stock up almost 3% in after-hours trading.

Square had total revenue of $374 million in the fourth quarter, above analysts' expectations of $345 million and a 49% increase from a year ago, while it recorded a net loss of just over $80 million. All told the company processed some $10.2 billion in payments in the last three months of 2015, a 47% jump.

Square IPOed for $9 a share in November, with the stock surging to $13 on its first day of trading. By early February, however, Square shares dropped below the initial price and became a representative of the post-IPO doldrums of technology companies. Since then, however, the stock has surged, closing at just over $12, rising over 4% just on Wednesday.

Mark Palmer, an analyst at BTIG Research, said in an note last week that today's earnings report was "its first opportunity to change the narrative."

Square is best known for its payments service, a fiercely competitive business that requires Square to give up a big chunk of its fees to credit card networks (a little more than half of Square's annual revenue is coughed up in transactions costs). Its other businesses, including scheduling software, analytics software, and even cash advances, are growing faster than payments but still represent a small fraction of overall revenue.

Square's Non-Payment Business Is Growing Quickly

The red line represents software and data product revenue as a share of revenue excluding Square's Starbucks business.

Square/BuzzFeed News / Via square-production.s3.amazonaws.com

"From payment processing to point of sale, hardware to software, business financing to payroll (and more), we have built a cohesive commerce ecosystem that helps sellers start, run, and grow their businesses," the company said in an investor letter.

Analysts at Royal Bank of Canada called Square Capital, the merchant cash advance business, "arguably one of the more important drivers to total revenue growth." As a whole, however, all the software and analytics revenue, some $22 million, made up only 6.7% of all the company's revenue, excluding revenue from Starbucks, in the last three months of year. (Payment processing at Starbucks locations makes up about 13% of Square’s revenue, but the companies’ payments deal expires later this year.) The $22 million in revenue, however, was a 272% jump from a year ago.

As for its cash advance business, which generates revenue from interest, the company said that it had extended over $400 million to merchants through more than 70,000 advances in 2015, with $150 million of that coming in the fourth quarter.

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SOURCE: BuzzFeed

Chipotle Just Closed A Restaurant In Massachusetts Due To Norovirus Concerns

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A Chipotle restaurant in Massachusetts has voluntarily closed for a cleaning because of norovirus concerns after at least one employee contracted the illness, according to the local news station WHDH.

"After learning that four of our employees were not feeling well, our restaurant in Billerica, Mass. was closed for a full sanitization," a Chipotle spokesperson told BuzzFeed News. "No customers illnesses are connected to this restaurant."

It is not clear when the Billerica restaurant will reopen.

The closure comes just a month after the restaurant chain closed all of its restaurants for a morning meeting to discuss new food safety protocols with its employees, which include testing for pathogens, new cooking methods, and changes with suppliers. The chain also emphasized the need for workers to stay home if they are ill.

A norovirus outbreak at a Chipotle restaurant in California last year prompted a criminal investigation, where federal prosecutors subpoenaed the company's food safety records. There was also a norovirus outbreak in Boston in December.

A series of norovirus, E. coli, and salmonella outbreaks in 2015 also caused the company's sales to drop sharply: Chipotle said its sales fell almost 15% in the last three months of 2015.

The company's stock fell 4% in after hours trading on Tuesday.

Brian Wilkins / Via Flickr: brianwilkins

The Federal Criminal Investigation Of Chipotle Has Expanded

Lawsuit Claims Chipotle Tried To Cover Up A Norovirus Outbreak Last Year

Chipotle Will Close Restaurants Nationwide On Feb. 8 For Employee Meeting

Chipotle Has A Plan To Woo Customers Back Into Restaurants. Will It Succeed?

Why Is Chipotle Having So Many Food Safety Issues?

SOURCE: BuzzFeed

Big Banks Made 8% Of Their Profits Last Year From Overdraft Fees

Wells Fargo ATM bank machines are shown at one of their new retail banks in Carlsbad, California January 25, 2016. REUTERS/Mike Blake

Mike Blake / Reuters

America's big banks collected over $11 billion in overdraft fees in 2015, according to a new report from the Consumer Financial Protection Bureau, with the charges making up about 8% of their total profits for the year. The banks covered in the report — the 628 U.S. banks with assets of over $1 billion — have a total of $3.9 trillion deposited in consumer checking accounts.

Overdrafts are essentially short-term loans that allow users to access money even if their accounts are at or near zero, and can have incredibly high interest rates.

Regulators have pushed banks to reform their approaches to charging such fees, which are levied in large part on low-income consumers. But they still account for almost two-thirds of all fee revenue from consumer bank accounts, the CFPB said.

New regulations have required banks to have their customers affirmatively opt-in to overdraft services and the fees that come with them, but CFPB is still considering further rules. The Bureau said it was "looking closely at overdraft practices and will continue to analyze this data to better monitor and understand overdraft programs in the market and the consumer experience."

In 2014, a CFPB report found that overdraft and insufficient fund fees were on average over $250 a year, but that only 8% of customers incurred three-quarters of all the fees. The typical overdraft fee, the CFPB found, was $34, while the median transaction size that results in the fee is about $50, while for debit cards it's $24.

A survey by the Pew Charitable Trusts found that overdrafters were disproportionally likely to be young, low earning, and non-white. 25-year olds, the survey found, were 133% more likely to pay an overdraft fee than 65-year olds, while nonwhites were 83% more likely to pay the fees than whites.

Most worryingly, the Pew survey found that in 2012 and 2013, over 50% of overdrafters did not recall opting into an overdraft program.

SOURCE: BuzzFeed

SeaWorld Bans Employees From Posing As Animal Rights Activists

Handout / Getty Images

SeaWorld chief executive officer Joel Manby said today on a call with analysts to discuss the company's financial results that it would no longer allow employees to pose as animal rights activists.

"Our board of directors," Manby said, "have directed management to end the practice in which certain employees pose as animal rights activists. This activity was undertaken in connection with efforts to maintain the safety and security of employees, customers, and animals in the face of credible threats." A SeaWorld spokesperson did not respond to a request for comment.

In July, People for the Ethical Treatment of Animals, or PETA, accused SeaWorld of having an employee named Paul McComb, who worked in human resources for the company in San Diego, pose as "Thomas Jones" and sign up for PETA's Action Team.

PETA said that Jones "repeatedly tried to incite animal advocates to act illegally" and said he encouraged protestors to “get a little aggressive" and “grab your pitch forks [sic] and torches." PETA did not immediately respond to a request for comment.

Manby said that "all personnel matters pertaining to those involved had been handled internally" and that McComb "remains an employee of SeaWorld and has returned to work at SeaWorld in a different department and is no longer on administrative leave."

The announcement came at the end of a call to discuss another disappointing quarter for the company, whose public image took a hit from the CNN documentary Blackfish, which accused the company of mistreating the orcas it keeps in captivity. SeaWorld has phased out orca performances at its California locations and the state has banned the breeding of Orcas in captivity. SeaWorld has challenged the Commission's decision.

The company's chief financial officer Peter Crage said the company had seen reduced attendance in California which "primarily relates to continued SeaWorld brand challenges at this location." Crage also said, however, that earnings and revenues started to turn around in the second half of last year, specifically that the rate of decline had slowed.

For all of 2015, SeaWorld had total attendance of 22.5 million, up slightly from 22.4 million in 2014. Its revenue was roughly flat at $1.4 billion, while its earnings fell slightly. The company recorded a net loss of $11 million in the last three months of this year. The company's total attendance in 2013 was 23.4 million. The company’s shares are down almost 12% following the weak earnings report.

Blackfish premiered on CNN in October 2013 to an audience of 21 million, one of the most successful film airings in CNN's history. SeaWorld was taken public on the New York Stock Exchange by its private equity owner Blackstone in April 2013, raising over $700 million.

SeaWorld said that its sales and administrative expenses had gone up this year thanks to consulting fees and "an increase in marketing costs associated with the company's reputation campaign and an increase in legal fees when compared to the prior year."

SOURCE: BuzzFeed

Former CFPB Lawyer Joins Goldman Sachs Online Lending Unit

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A former attorney for the Consumer Financial Protection Bureau has joined Goldman Sachs as the head of compliance for its new online consumer lending business.

Mitch Hochberg was a senior counsel at the CFPB from mid-2011 to mid-2013, working on new mortgage regulations tied to the implementation of the Dodd-Frank financial reform laws. He left the regulator to join Fenway Summer, a consumer finance investment and advisory firm founded that year by former CFPB deputy director Raj Date. He joined Goldman last month, according to LinkedIn; a Goldman Sachs spokesperson declined to comment.

Web-based financial services companies have taken off in recent years, with billions poured into the sector by venture capitalists. The industry exists in a regulatory niche, as the companies make loans to consumers but are not treated as banks by authorities. Startup lenders like SoFi, Lending Club and Prosper have originated billions of dollars of loans over the past few years, and regulators are still working on their approach to the fast-growing market.

Last summer the Treasury Department put out a request for information on the industry; the CFPB's interest in online lenders has so far been focused on internet companies offering so-called payday loans. Goldman’s online business will be run through its chartered bank, GS Bank.

Hochberg is one of many new hires made in the past few months as Goldman Sachs builds up its online lending program. In May, the bank hired Harit Talwar from Discover to run the new business. It has since hired employees from companies like Lending Club, the publicly traded online lender, American Express, and Citi. A source familiar with the matter told BuzzFeed News that Goldman has hired dozens of people to work on the lending business.

In a memo last year announcing the hiring of Talwar, Goldman's chief executive Lloyd Blankfein and president Gary Cohn said that they had "identified digitally led banking services to consumers and small businesses as an area of opportunity" for the company. Goldman Sachs analysts said in a separate report that $4.6 billion worth of bank profits were at risk of being lost to online lenders, and that digital upstarts could capture up to 15% of the $843 billion worth of outstanding consumer loans.

For nearly its entire existence, the CFPB has been criticized by conservative groups and the financial industry, saying the regulator is stifling the growth of financial services and introducing rules that make it harder for people to get loans. Last year, the American Action Network, a conservative non-profit, ran an ad depicting the agency as an officious, Soviet-style bureaucracy dedicated to denying loan applications.

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When Date and other CFPB employees left the Bureau to found Fenway Summer — which says it invests in business that "drive consumer-friendly innovation in financial services" — several Republican House members wrote a letter raising questions about the move. The letter expressed concerns that the CFPB under Date's leadership had written new rules on consumer finance, and Date and others now planned to work on lending businesses that could operate around the regulations written by the CFPB.

Just last week, the CFPB rolled out a process intended to reduce regulatory uncertainty for newer financial services products and companies.

SOURCE: BuzzFeed

A Billion Dollars Was Transferred Over Venmo In January

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People transferred $1 billion over Venmo in January, the company said today, showing that usage of the mobile money app is still growing fast. The $1 billion in transfers is more than 2.5 times the volume seen in January 2015, and ten times as much as January 2014.

In all of 2015, about $7.5 billion was transferred using the app. That looks set to grow to at least $12 billion in 2016 if the January numbers are sustained throughout the year, but could go even higher: Venmo says one-third of its 2015 transfers happened in the final three months of last year, as the holiday season kicked in.

The payment startup has been lauded by its parent company PayPal, which recently split from eBay. PayPal chief executive Dan Schulman said a conference that the app "really is almost ubiquitous in the under 30 marketplace and it is how they manage and move their money."

Schulman told CNBC in December that Venmo is "is one of the jewels of Paypal," and in a call with analysts last month, said the app "is not just another buy button...It is the most beloved way to pay for millennials." Building on that popularity, Venmo started allowing some apps, including Munchery, to use the service to make in-app purchases, a move that, if expanded, will put it in direct competition with payment services like Apple Pay.

SOURCE: BuzzFeed

Twitter's Revenue Is Booming, Unlike Its User Numbers

Twitter Co-Founder and CEO Jack Dorsey.

Kimberly White / Getty Images

Twitter is doing fine when it comes to making money: the company pulled in $710 million in revenue in the final three months of 2015, right in line with what analysts expected at the high end of the guidance the company provided three months ago.

The 48% year-on-year increase in revenue was impressive, but as usual investors were more focused on the company's user growth numbers, which have been stalling.

The company said it had 320 million total users by the end of 2015, up 9% from a year prior, but exactly the same as it was three months earlier. If you cut out a group of users that access the service through SMS messages, Twitter's user count actually went down to 305 million, from 307 million in the prior quarter.

"We saw a decline in monthly active usage in Q4, but we've already seen January monthly actives bounce back to Q3 levels. We're confident that, with disciplined execution, this growth trend will continue over time,” the company said in a letter to shareholders

The company reported a "total audience," including people who see tweets without being signed into the service, of 800 million.

Bloomberg/Twitter/BuzzFeed / Via Google

Three months ago, in his first call with analysts after becoming the company's permanent CEO, Jack Dorsey said he and Twitter needed to focus on three things: "a more disciplined execution, simplifying our services, and better communicating our value."

Since then, the company's stock has tanked, along with much of the tech industry. Twitter is down just over 50% in the last three months, and the company's shares have been below its initial public offering price of $26 since last November. The stock was down about 9% in after-hours trading following the earnings announcement.

The company, as usual, lost money — $90 million — but its adjusted earnings per share of 16 cents exceeded analysts' expectations.

Twitter/Bloomberg/BuzzFeed

In an ominous signal, Twitter's San Francisco headquarters were evacuated for a fire drill a few hours before its results were announced. Hundreds of Twitter employees were seen milling around its Market Street offices in downtown San Francisco. Here's what one venture capitalist overheard:

SOURCE: BuzzFeed

Disney Profits Hit All-Time High After Star Wars Release

Lucasfilm / Via youtube.com

There's no business force like the force. The Walt Disney Company's earnings for the first quarter of its fiscal year showed a massive 46% jump in revenue from its movie studio to $2.7 billion, thanks to the success of The Force Awakens.

"The increase in theatrical distribution results and higher revenue share with the Consumer Products & Interactive Media segment were due to the strong performance of Star Wars: The Force Awakens in the current quarter," the company said in a statement, also noting greater revenue from streaming older Star Wars films.

The power of Star Wars was also felt on its consumer products division, where revenue grew 8% to $1.9 billion. While the rise was not as stark, that's because at this time last year, Disney's toy business was riding high on the juggernaut that was Frozen.

But even the return of Luke Skywalker couldn't distract analysts and investors from the action at Disney's largest business: its TV networks, particularly its cable networks and especially ESPN.

The TV networks typically make up around 45% of Disney's revenue, and in its last fiscal year they brought in just over half of its operating profit. In 2011, the networks brought in 70% of Disney's operating profit.

Disney/BuzzFeed

This quarter, the entire networks business saw its revenues increase 9%, but operating profits fell 6%, and fell 5% in cable networks. Disney attributed the decrease to ESPN and A&E.

Specifically, ESPN had higher programming costs — meaning it spent more to buy the TV rights for all those games. It was also hit by a matter of timing, with some college football playoff games coming in the second quarter of the fiscal year (the first quarter ended January 2, and the college football national championship was played on January 11).

Late last year, Nielsen reported that ESPN has lost just over 3 million subscribers from viewers both abandoning cable entirely and buying so-called "skinny bundles" — cable packages that don't include expensive channels like ESPN. Disney has disputed the accuracy of the Nielsen numbers, and CEO Bob Iger addressed subscriber numbers in an earnings call on Tuesday afternoon.

"We’ve actually seen an uptick in ESPN subs, which is encouraging,” Iger said. He noted Dish Network’s Sling TV package, which includes fewer channels than a typical cable package, but includes ESPN, and is available exclusively online. “The service appears to be growing nicely and is proving very attractive to young consumers in particular,” Iger said, indirectly referencing speculation that young people are less interested in paying for sports content than older generations.

“In any market, we believe ESPN is well positioned to continue to thrive for many reasons, including that the demand for sports programming, especially live sports, is undiminished and consumption is at an all-time high,” Iger said. He also cited statistics showing that 95% of bundle owners watched some sports and 81% watched ESPN.

Many believe it's inevitable that Disney will eventually take some of its most popular brands — like ESPN, Star Wars, and Marvel — directly to consumers over the internet, rather than through cable companies. Iger said such brands "are tailor-made for over the top direct to consumer” and that we should "expect innovation and continued pursuit of new distribution opportunities." This is not the first time Iger has dropped these hints. A year ago, he said the company "may have an opportunity to bring out a Marvel-type product and possibly even Star Wars."

Going directly to consumers could weaken the appeal of the cable bundle, and declining cable subscriber numbers worry investors. A channel like ESPN, Disney's star asset, could end up in a squeeze: earning less revenue from subscribers while having to pay the same high, fixed costs for sports rights, like a recent NBA deal that costs a reported $1.5 billion.

But, Iger said, “the expanded basic bundle will remain the dominant produce for consumers for the foreseeable future."

All told, Disney made a $2.9 billion profit for the quarter, its largest quarterly profit ever, beating expectations from analysts. The company's revenue of $15.2 billion was 14% higher than the first quarter of the last fiscal year and also higher than what analysts expected.

GLENDALE, AZ - JANUARY 11: Head coach Nick Saban of the Alabama Crimson Tide celebrates after defeating the Clemson Tigers in the 2016 College Football Playoff National Championship Game.

Christian Petersen / Getty Images

Disney reported its earnings after Viacom, whose shares crashed 21% on Tuesday after the company missed revenue expectations. Viacom, which owns channels like MTV and Comedy Central and the movie studio Paramount, has experienced ratings declines and is going through a tricky leadership transition.

Philippe Dauman, who was recently elevated to chairman, replacing the 92 year old Sumner Redstone, said the company's outlook had "been distorted and obscured by the naysayers, self-interested critics, and publicity seekers." Viacom shares have fallen 51% in the last year.

SOURCE: BuzzFeed

LinkedIn Lost Close To Half Its Value Today

Via wsj.com

LinkedIn shares lost close to half their value on Friday, in a gut-wrenching plunge that suggested investors are reevaluating their expectations for the social network.

The company's stock price fell as much as 46.5% during the day, to trade as low as $102.81 a share, after LinkedIn announced that it had lowered its projections for its own financial performance. LinkedIn shares had closed at $192.28 on Thursday.

The stock was down about 44%, at $108.38, by the close of trading Friday. The day's session erased $10 billion from the company's market capitalization.

AMC Networks / Via media.giphy.com

LinkedIn, in a quarterly earnings report Thursday evening, released financial forecasts for the first quarter of this year and for full-year 2016 that fell short of what analysts had expected. Even though the company said its results for the fourth quarter of 2015 were better than expectations, the revised forecast was enough to spook Wall Street.

In explaining the lower forecast, LinkedIn pointed to several factors, including an expected slowdown in the growth of its talent solutions division, which makes software for recruiters. LinkedIn said it expected to generate about $820 million in the first quarter, short of analyst expectations of $867 million. For all of 2016, LinkedIn projected $3.6 billion to $3.65 billion of revenue, short of expectations of $3.9 billion.

In the past, LinkedIn has tended to give conservative projections of its performance, Nomura analysts said in a note on Friday. The actual numbers could very well turn out to be better.

Warner Bros.

"While the magnitude of the current guidance deceleration gives us pause, we believe it is possible management is executing a similar playbook to prior years," the analysts wrote.

One analyst, Robert Peck of SunTrust Robinson Humphrey, apologized for not appreciating how far the stock could fall in response to poor guidance from the company. "We were wrong - we hope to do better in the future," he wrote in a note this morning downgrading his rating for the company from Buy to Neutral.

As for why the shares dropped so much in after-hours trading and again today, Peck wrote "the weakness in the shares is related to not only the magnitude of miss but also lack of a concrete catalyst to point to in 2016 in a difficult tape and macro backdrop."

LinkedIn had been flagging for much of the last year, falling about 17% in the 12 months running up to yesterday's earning report, while the Nasdaq had fallen over 4% and the S&P 500 had fallen 3%. The company's stock is now trading near levels that it hasn't hit since November, 2012. The company first sold shares to the public in May, 2011, when the stock more than doubled to $94 after pricing at $45.

SOURCE: BuzzFeed

Yahoo Says It's Up For Sale, Cutting Costs And Firing Staff

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Yahoo is promising another turnaround, this time saying it will slash its workforce by 15%, close some international offices and cut its expenses by $400 million a year. And while all that is going on, its board will be entertaining offers to sell the company.

Yahoo's board "believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders," the company's chairman Maynard Webb said in a statement. He specifically said that while he wants to be able to spinoff its valuable stake in Chinese e-commerce giant Alibaba, "we will engage on qualified strategic proposals" — corporate speak for selling the company.

The job cuts could amount to about 1,500 people being let go. Staff had an awkward preview of the looming cuts in January when, The New York Post reported, CEO Marissa Mayer told employees in a meeting that there would be no layoffs “this week.”

In quarterly results announced today, Yahoo reported $1 billion in revenue, excluding traffic acquisition costs, slightly above what analysts expected. Revenues are down about 15% decrease from a year ago.

In its efforts to cut costs and sharpen its focus, the company said it would jettison some other business, including shutting down some digital magazines, games, and its smart TV businesses. Yahoo has also "begun to explore divesting non-strategic assets of value," like patents, real estate "and other non-core, non-strategic assets," it said. These sales "could generate between one and three billion dollars in cash."

What will the plan achieve, if everything goes right? "As a result of this four-point plan, Yahoo is expected to return to modest and accelerating growth in 2017 and 2018."

Some of the investments Yahoo has made haven't turned out as well as they expected. Yahoo wrote down about $4.5 billion of unites when they determined that the value on its balance sheet was above their estimates for their fair value. Yahoo's chief financial officer Ken Goldman said that the decrease was driven by Yahoo's falling value as a company, lower projected cash flows, and a decline in public market prices for technology companies across the board.

Goldman said that Tumblr's value was written down by $230 million and $3.7 billion in the U.S. and Canada business units. Yahoo acquired Tumblr for $1.1 billion in May, 2013.

Yahoo stock fell about 2% in after-hours trading, and has dropped 34% in the last year.

The dilemma for Mayer and Yahoo's management is twofold: its core business — advertising on its apps and websites — is not growing, while its stakes in two Asian internet giants, Yahoo Japan and Alibaba, are responsible for most of the company's market value. The company originally planned to spin off its stake in Alibaba, in a deal that would give its shareholders the Alibaba stake along with a small Yahoo business unit.

Yahoo's revenue is declining

Yahoo scrapped its initial plan late last year after the IRS declined to give a guarantee regarding its tax implications. At today's market prices, Yahoo's stake in Alibaba is worth $25.4 billion before taxes, or $17.3 billion at the 38% corporate tax rate. Its Yahoo Japan stake would be worth about $3 billion after taxes.

The company is currently valued at about $27.8 billion, including several billion dollars of cash and other securities. The numbers imply that Yahoo's actual internet business is a marginal part of the company's overall value, valued by the market at perhaps $2 billion.

SOURCE: BuzzFeed

Google — Sorry, Alphabet — Is Set To Become The World's Most Valuable Company

When markets open Tuesday, the impact of after hours trading is set to push the company above Apple into the number 1 slot.

Justin Sullivan / Getty Images

Google is now set to become the world's most valuable company when markets open on Tuesday morning, after its stock rose more than 5% in after-hours trading Monday in the wake of its quarterly results.

Last August, Google dropped a major surprise, restructuring the company into new divisions under a parent company named Alphabet.

Today, for the first time, the Artist Formerly Known As Google reported financial results that distinguish between its core "Google" business (search and advertising, along with things like Maps, Android, YouTube, and Chrome) and the experimental businesses — think self-driving cars — that Alphabet is calling "other bets."

Yes, bets. That's the name of the category, and the numbers show why: Those other businesses lost $3.6 in 2015 and $1.9 billion in 2014. It sounds like a lot, but Google is one of the few companies capable of making losing bets for a long time: with just the $73 billion in cash and other securities it has on its balance sheet, Alphabet could pay for the Other Bets' losses at this level for 20 years.

"We believe that the trajectory of those losses in recent years is perhaps more important to investors than the actual level of those losses," Nomura analysts said in a note last week.

The total Alphabet business grew its revenues by 18% to $21.3 billion in the final three months of 2015, and made an operating profit of $4.4 billion. Like many big U.S. companies, Alphabet's revenues took a hit from the rising value of the US dollar, which reduces the value of revenue earned in foreign currencies. Had currency values stayed the same, Alphabet's revenue would have grown 24%, a difference of about $1 billion.

But the company also reported clouds on the horizon: the amount Google was able to charge advertisers for each click on an ad fell 13% in 2015 compared to 2014. While prices were down, the ad business was still roaring in 2015, with 31% more clicks on ads, in total, than the previous year.

Michael Nagle / Getty Images

The "other bets" include all the far-flung business Google (sorry, Alphabet) has acquired or invested in. Most have little to do with the world's largest advertising operation that Google runs, and which generates the overwhelming majority of the company's revenue. It includes life extension (Calico), glucose-monitoring contact lenses (Verily), two venture capital operations (Google Ventures and Google Capital), internet-connected home devices (Nest), and high speed internet (Fiber and Access).

"We're excited about the opportunities we have across Google and Other Bets to use technology to improve the lives of billions of people," Ruth Porat, Alphabet's chief financial officer said in a statement.

This new structure is supposed to give investors a better idea of how profitable Google's core business really is, without the massive spending on moonshot projects muddying the picture. It should also help reduce the uncertainty about how much Google is really investing in those businesses, which may not generate returns for years, if ever.

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SOURCE: BuzzFeed

Amazon Stock Crashes After Company Reports Record Profit

Yes, profit.

David Ryder / Getty Images

Amazon

Amazon stock had soared in the lead-up to what many expected would be a positive earnings report. It was up up almost 9% on Thursday, and its share price more than doubled in the past year.

But investors sold off the stock in after-hours trading following the earnings report, and the stock was down almost 13%. Amazon reported a $482 million profit for the quarter, which was more than double the $214 million profit in the same period in the previous year, but well below what analysts expected. It was also the largest quarterly profit Amazon has ever reported.

For the quarter covering the last three months of 2015, it had $35.7 billion worth of sales, up 22% from $29.3 billion a year ago but slightly below what analysts had expected.

One bright spot was Amazon web services, the company's cloud computing business. It reported $2.4 billion in revenue, just above what analysts expected, and $687 million in operating profit — a huge number given that all of Amazon made about $1.1 billion in operating profit for the quarter.

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SOURCE: BuzzFeed