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Financial News

Oct 25, 2021

The Weekly Scan October 25, 2021

By Stash Team

Find out what’s happening in the world of business this week

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Welcome to the Weekly Scan. Here’s what we’re following for the week of October 25, 2021.

Enjoy your stay. Hotel chain Marriott International reportedly collected more than $200 million in potentially deceptive fees from customers over the last ten years. The so-called resort fees came to light last week as part of a lawsuit filed by the attorney general for the District of Columbia, who first sued the hotel chain in 2019 for potentially misleading pricing tactics. The charges are purportedly for things like internet access and other room amenities, but guests reportedly have no choice but to pay them when booking online, and they can range from $9 to $95. 

  • The takeaway: Such charges, sometimes called destination amenity fees, are widely used throughout the hotel industry as a way to make additional revenue. The Marriott lawsuit is part of a broader legal investigation by attorneys general in all 50 states who are looking into potentially deceptive pricing practices in the hotel industry. The suits allege the fees conceal the true costs of rooms from consumers. In Marriott’s case, the D.C. suit alleges that the hotel chain sometimes includes the fees at the end of a hotel stay, itemizing them in a section for taxes and fees, which can lead consumers to think they are imposed by government authorities. Marriott reportedly operates 7,000 properties in 131 countries.

Wall Street Journal

Phenomenal. Donald Trump, the former president, announced plans to launch a media company, Trump Media & Technology Group (TMTG). The company is expected to go public through a SPAC known as Digital World Acquisition Corporation. TMTG reportedly has ambitious plans to build its own social media platform known as Truth Social, in an attempt to compete with social media companies such as Facebook and Twitter, in addition to television networks such as Fox and Newsmax. Truth Social’s terms of service reportedly prohibits users not to “disparage, tarnish, or otherwise harm, in our opinion, us and/or the Site.” The company also reportedly plans to offer video-on-demand programming, including news and podcasts, as part of the TMTG+ service. 

  • The takeaway: In recent years, it’s become a popular fad for companies to go public via SPACs, sometimes called blank check companies, which are shell companies that list on an exchange and then acquire or merge with a functioning private company. By using this structure, companies can potentially save time, and millions of dollars in legal, listing, and underwriting fees to go public. Trump’s new business venture is an attempt to reclaim his media presence after he was barred from several social networks, including Twitter and Facebook. These networks banned Trump from using their platforms in response to Trump’s role in inciting the mob attack on the Capitol building in Washington, D.C. Trump’s media company could be a draw for conservative commentators and politicians, according to observers. Within hours of launching, hackers reportedly gained access to a private version of the social network and set up fake accounts for Trump and others.

AP

App update. Social media company Facebook will pay $14.25 million in civil penalties for allegedly discriminating against U.S. workers by hiring foreign workers with temporary work visas instead. As part of a settlement agreement, Facebook will pay $4.75 million to the U.S. federal government, and $9.5 million to victims of the alleged discrimination. 

  • The takeaway: Facebook, according to the suit, reportedly discriminated against American workers through tactics such as requiring them to apply by mail only, while favoring temporary visa holders under the PERM program. The temporary workers come to the U.S. with the promise of permanent worker status later. The settlement, while small, is the latest in a string of bad news for the company, including revelations by a former data scientist at the company, who testified before Congress in early October that Facebook regularly pursued profits over the safety of consumers, including by intentionally spreading misinformation. 

Reuters and U.S. News

We can work it out. Two years after a failed initial public offering (IPO) WeWork, the office-sharing company, went public through a special-purpose acquisition company (SPAC) called BowX Acquisition Corporation. BowX reportedly provided WeWork with $8 billion in equity, giving the company cash proceeds of $1.3 billion. Investing in SPACs comes with its own set of risks. SPACs used to be a last-resort way to enter public markets and were typically associated with troubled companies and fraud. Following the Stash Way, by investing regularly in a diversified portfolio, can help you combat market volatility.  

  • The takeaway: The company’s previous IPO attempt failed in 2019, after investors criticized its $47 billion valuation and mounting debts. Shortly thereafter, company founder and CEO Adam Neumann resigned and was replaced by Sandeep Manthrani. Neumann reportedly received a $1.7 billion payout to leave the company, following criticism of his leadership style, among other things. The company’s most recent valuation is reportedly about $9 billion.

 Here’s what we covered in last week’s Scan

  • A record 4.3 million people left their jobs in August. 
  • Netflix’s “Squid Game” had the biggest debut of any show on the platform.
  • The annual Social Security benefit will increase in 2022. 
  • A natural gas shortage in Europe and Asia is pushing up prices at the pump. 

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