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JP Morgan has teams to support you at every stage of your growth. As former founders who have worked in local markets themselves, the bankers at JP Morgan bring deep sector knowledge and lived experience to their clients. JP Morgan can help you navigate complexity with confidence, backed by real world insights and an entrepreneurial perspective. Get what your startup needs now@jpmorgan.com growwithoutlimits. JP Morgan is the bank of the innovation economy. Paramount and Warner Brothers the saga continues with today a dozen states suing to block the mega merger. We have the latest on the unfolding Hollywood drama WD40. We dig into the mythology and the sales numbers that have greased the company's stock price up over 25% this year. And she in After a few false starts, the fast fashion giant is heading toward an IPO. Will the third time be the charm for Monday, July 13th? It's Brew Markets Daily and I'm Ann Barry. Three. More market details to come. But first, fast fashion giant Sheehan is one step closer to going public. That's after Chinese regulators approved a Hong Kong ipo, a sign of the opening of a key global market that we're watching closely. Well, the news comes as a major breakthrough for she in after the company's own earlier plans to list in either New York or London fell apart. The e commerce giant, with revenues estimated to be $40 billion a year, first explored a US listing in 2020. But the company abandoned those plans amid rising tensions between Washington and Beijing. So Chian tried this path again in 2023, having moved its headquarters to Singapore in a bid to downplay its Chinese roots, confidentially filing paperwork with the securities and Exchange Commission to float on the US stock market, aiming then for a potential valuation of 80 to 90 billion dollars. But increased scrutiny over its supply chain, which included alleged use of forced labor plus onerous disclosure requirements, put an end to all that. So next she in shifted its sights to a London listing, but that effort stalled as UK Regulators pushed for more detailed disclosures again on supply chain risks. And in this case, as Chinese regulators looked reluctant to let a Chinese company, still one in their mind, go overseas for a list. Now, just to put that in context, a bit of a story here. In June 2021, the ride hailing company Didi listed on the New York Stock Exchange. I remember this well. Shortly after that $4.4 billion IPO, China's cybersecurity regulators launched probes into Didi's data practices and ordered the removal of its app from Chinese app stores, ultimately pushing the rideshare company to formulate a plan to exit the United States, which Didi did, delisting just 11 months after that IPO. And by the way, IPOs are expensive. And in the process, the company sent a chilling message to other Chinese companies considering overseas listings. Well, now Shein is expected to face its Hong Kong Stock Exchange listing hearing later this week, maybe on Thursday, with the IPO of up to 8% of the company potentially following as quickly as in this August. Well, the offering is expected to value the company at between 40 and $50 billion, which is well below its roughly $100 billion private valuation in 2022, reflecting just a tougher market for IPOs with tariff uncertainty when it comes to being an apparel retailer, which Shein is in a big way and also in the face of growing competition from rivals like Temu. So for US Investors, this IPO matters for a couple of reasons. First of all, it could become one of the biggest global IPOs of the year and serv important test of investor appetite for consumer and e commerce companies. And second, it does offer access to a major player in that major Chinese market, an all important one and a way to diversify as tech sentiment in the United States remains hot. Going to keep on watching. Coming up in a moment, we survey blowout earnings from WD40 and ask how one product can power a multi billion dollar business. But first, a few headlines from the day's trading session. Kicking things off in Hollywood with the development in Paramount's purchase of Warner Brothers. Because today a coalition of 12 states sued to block the mega merger, arguing it would reduce competition in the film and television industry and as a result harm consumers. Well, the Justice Department had approved the merger relatively quickly and regulators in many international markets have already signed off as well. So this antitrust case marks the biggest obstacle that the deal has faced so far. Other, of course, than the fight with Netflix to win it in the first place.
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Right. And speaking of Netflix, in a published response to today's lawsuit filing, Paramount reiterated its argument that scaling up is the only way for those legacy studios to compete with the streaming giants. Paramount saying, quote in a press release, the practical effect of this lawsuit is to shield those dominant streaming platforms like Netflix and technology companies from much needed competition.
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Another interesting detail in amongst all this. If the deal is delayed beyond the end of this year, there could be meaningful financial consequences for Paramount because under the merger agreement, the company would owe Warner shareholders a quarterly ticking fee which is roughly 650 million bucks every three months. While investors, at least for now, don't appear to be Overly concerned. Shares up in both companies around 3% today. Well, moving over to chips. And a blockbuster revenue report out of Taiwan's semiconductor manufacturing company. That's ticker TSM and the world's largest contract chip maker. The company is set to report more fulsome earnings later this week. But it did release a sneak peek at C sales results and the numbers are pretty striking. June sales up 68% from the prior year and its first half revenue surged 35% to hit roughly $75 billion.
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And you know Ann, I always want to emphasize that TSMC's unique position as a foundry doesn't design or sell its own branded chips. Instead it manufactures chips for customers including Nvidia, Apple and AMD. Overall, TSMC controls more than 70% of the global chip making market. And shares in the company initially rose today after the but are now down around 2 1/2% as the day went on. Again, just shows how results of AI related results have to impress investors. The bar seems very high for these numbers.
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And finally, Shein isn't the only company going public that we're tracking today. General Fusion started trading via SPAC on the NASDAQ today, becoming the first nuclear fusion company to go public. Trading under the ticker gfuz.
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Right. The company is trying to recreate the same reaction that powers the sun in an effort to generate clean energy energy and eventually build commercial fusion power plants. It's an ambitious goal. While there have been advances in the science experts project that commercial employment could still be decades away.
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And this company already has some interesting history behind it. General Fusion was founded in 2002 and through the years raised over $600 million from private investors including Amazon's Jeff Bezos. While investors in this case are now betting on a long term solution to growing AI related energy demands. Shares in the company surged over 40% in its Nasdaq debut. Well, let's take a break. And when we come back, it took 39. Yes, 39 unsuccessful attempts to formulate WD40. Now we know what that 40 is referring to. And 70 years later, the final product is still breaking sales records. Take a look inside the company behind the lubricant. John, have you ever captured anything in a bottle?
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I once tried to make one of those little ships in 1.
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Well, earnings season has arrived, getting into full swing this week when we hit quarterly results coming from the biggest banks. But John, before we get into that Sprint, there was a mid cap company that you flagged reported earnings at the end of last week. Stock popped 12% and that company is WD40. Well this is a little quirky, which I guess is why it caught your eye. And that's because the vast majority of its revenue comes from just one product, the petroleum based solvent and lubricant that comes in that blue and yellow aerosol can with the red cap. And it's famously known for stopping squeaks on doors, loosening rusted bolts and cleaning off adhesives. In fact, we're going to get into some, just some of those 2,000 plus uses for the product, as well as the mythology of the secret formula and how the company's blowout earnings may have been helped by a little bit of stockpiling before an upcoming price increase. So let's start with some details about the recent quarter.
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Right the ticker wdfc. It's not a football club. You know, the World cup going on. Everything with the FC makes me think of that it is market cap near $3.5 billion and for Q3 2026 that they just reported revenue of $195 million was up 24% year over year. Adjusted earnings per share of $2.33 beat by $0.76. Those were up 51% year over year. Additionally, the company authorized a $100 million share repurchase, maintained its dividend, and raised its guidance for the year. And in response to analysts up their price targets, saying that the report was solid, one did express concern about the high input costs expected to come throughout the year. Of course, those input costs being the ingredients of WD40.
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So $100 million share repurchase program maintaining its dividend, all of it a sign that free cash flow generation is expected to continue to be strong. And the company is looking at ways to get that cash back in the pockets of its shareholders. But to your point, these input costs do remain top of mind. Management did flag John, that the war in the Middle east, this is not a surprise, but it's one example of how it's really coming to life, that the war in the Middle east has caused specialty chemical and base oil costs to increase by 40% plus. So the company is doing something interesting about it. It's already announced that a price increase is coming in international markets to mitigate these costs. And as a result of that announcement, we're seeing something that's very intuitive, but actually seeing it happen and then hit the numbers as profoundly as it is for this business is a fascinating way to the impact of supply chain hits, the likes of which we're seeing around the situation in Iran. So in this case, some of that big bump we saw in revenue. So just to put it back, top of mind again, revenue was up 24% year over year for the latest quarter. We do think that this may be evidence of something called front loading, which is when a company announces a price increase is coming and do all of its customers as a result go and try to stockpile before that price increase takes effect? We sometimes call it pulling forward demand, in this case into Q3. So interesting here that we saw that revenue bump across the board. 29% up in the Americas, just under 25% up in Asia Pacific, and 17% up across Europe, India, the Middle east and Africa. So lots of very quick reactions to the announcement of this price, Jack. Right.
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And the price had gone up in the United States last year. So they've already been signaled and now we're seeing this happen internationally. Well, let's talk about their business model, because in a lot of ways, WD40 is betting on one product. Their website says the WD40 brand offers more than 30 innovators quality products. But four out of every five dollars in revenue comes from that classic WD40 product that you described at the top of the show. Less than 3% comes from home care and cleaning brands. In fact, the company had been looking to jettison even that whole division. It had reportedly been up for sale in the last earnings call. Last week the company announced that it's no longer actively marketing those items for sale. They're holding on to those assets for use. But, and I don't know, can you think of other companies that rely so heavily on one product? I find this curious, but I can
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think of companies that at different points in their life cycle, sort of earlier have. So if I think about the post it note, for example, at some point in time, post it would have been absolutely the primary product for that brand. I'm trying to think of other ones that are out there. You know, Yeti does have dozens of products, but it really got its start with coolers.
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Right.
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So you could diversify over time. There's one company I was fascinated by and about 12 years ago I really hope to invest in and that was Impurel, which at the time, you know, it's the OG hand sanitizer product that really dominated revenue. And the business at the time, family owned, was trying to think about how they could use the brand name to try and touch other categories now owned by Clorox.
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And if they had seen the pandemic coming.
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Right, well, well, exactly. And then you got GoPro has got multiple camera models still variations of the same theme. And then I guess the ones you think about would be Coke like Coca Cola and Pepsi. Although of course Pepsi's gone on as has Coke and diversified into other things like snacks. So it sort of depends on where these businesses are in their life cycle.
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I was thinking of Crocs earlier today because they bought the company that make the charms that make Crocs so popular. But for a while it was just those shoes that were those shoes.
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Those shoes.
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All right, well, WD40 may be based on one product, but the company, and this is part of its folklore, has a lot of fun with its uses. On its website. It has 2000 uses that have been user submitted by people. And so I just took a quick look. I found the first three that caught my eye over the thousands. It prevents rust on handsaws. Okay, we know that WD40 also lubricates vinyl records to prevent skipping.
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Is that a thing? Doesn't it stop the vinyl record from
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being read I would think that it would get into the gaps, but apparently maybe you put it on the plates, the platter of the turntable, and then you can remove. I don't know who's cj?
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John has spoken. Okay. Okay. That makes sense to me, actually.
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Stops, squeaks on stilts.
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Very important.
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Oh, sure. For acrobats, that's critical. And then this is real on the website. Removed a boa constrictor stuck in an engine compartment.
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I love that. So this is really triggering the thought of me. I would love for our listeners to write in. I want 2,000 use cases for when people listen to Brew Market. Right. Are they listening on their way to football practice since we're in World cup season? Are they listening on the way to getting their groceries? Are you guys listening and girls listening to us on your commute? So, like, 2,000 ways to listen to Brew Markets is something we need to aspire to for our website.
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Even better than 50 ways to leave your lover.
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Yes, yes. Good tune, though.
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So on the earnings call, the company highlighted the success of one of its largest promotions to date. This was a big part of the earnings call. A limited edition WD40 can that's being sold right now in Home Depot. That's a collaboration with King of the Hill. So anyone listening? In 1998, there was an episode of King of the Hill where Hank Hill was having a hard time. It's an animated series opening his can of WD40 and humorously, he pulled off a smaller can of WD40 from his utility belt and sprayed it onto the lid of the WD40 can to open it up. Just a joke that he was using it to open itself. And this has been a meme. This has been on the Internet for years. And so the company finally leaned into this. And so now, starting June 1st, you can apparently buy these cans of a King of the Hill WD40 at Home Depot. And the CEO on the earnings call said just how fantastically well this is doing that. It's tracking at 75% incremental with, quote, very little cannibalization, saying that most of the people that are buying these cans didn't necessarily go in to buy WD40 anyway. They were just struck and wanted to have this collector's item.
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So I have so many questions. I have so many questions. So paint a picture of the visual for me. What does the King of the Hill special edition of the actual WD40 can look like?
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To me, it was very underwhelming. It is basically the fence logo that I'm familiar with, with King of the Hill. From what I saw online, there wasn't a picture of Hank or anything like that. It just said King of the Hill with the logo in the fence and
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it's on the can. That's question number one. Great answer. Question number two, it's a 1998 episode. Right. So I hate to break it to us, but many people listening weren't born, may not have watched that episode. So what do we think is going on? Do we think that this is sort of an elder millennial thing? Is this a boomer thing? Like who going and buying this special edition? Do we know?
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I'm going to say Elder Millennial.
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Elder Millennials.
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Well, I figure people that were around to watch that five years ago, they might be in their 40s or 50s now. Maybe they're homeowners for the first time and they're excited for this bit of nostalgia.
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Okay, so CEO of WG40, Steve Brass, if you're listening, or if we can find a way to Steve and have him come on. Note to self, we need to ask how this is going to and also talk about how they want to diversify. There's a lot of conversation. They want to have a WD40. Well, let's just talk about other sort of secret clubs and companies that are really based on one product and guard that product with their life. And so one of them is, of course, Coca Cola, because just like Coke, WD40 plays into fat that has a secret formula that very few people can get their mitts on. Yes. And there was a fun article in the Wall Street Journal earlier this year, and the title was the Secret Society of People who Know the formula for WD40. And the opening paragraph of the article says the following. I'm just going to read it to you. Quote, there's a club in San Diego that's perhaps more exclusive than Soho House and harder to get into than some of the most elite colleges in the country. It requires a special key, non disclosure agreements, passage through a bank vault, and typically an executive title. I Bet there isn't 100,000 person waiting list for this one, though. That's my guess.
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I think every employee, based on this article of WD40, wishes they were on
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the list to get does they have fomo?
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They have executives there that have worked there for decades who have not been granted access. It's usually the people that are in the safety side of the house. So they claim that in this vault, there's the notebook with the only version of the actual original formula and it also has the previous 39 failed attempts to get it right. And I just like what the company does here. Also thinking about that King of the Hill thing. If you go on Reddit, there are many subreddits over the years of people who are speculating, what is that formula? It's really gripped a population, maybe those folks that are buying the King of the Hill.
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And is this what you meant by the unique culture? Yes, this is it. So we've, we've got to meet, we've got to meet the folks who are dying to get in there. So look, somewhere in here there is an Ocean's 11 or 12 or 13 or 14, 16 or there's an Ocean's 40 movie in here somewhere. So all, all eyes on this one. Shares of the company up 27 year to date. They are flat, though, over the past five years. Always fun to find these sort of hidden gems in these nuggets. So send us your ideas. We want to hear from you. If there are companies like WD40 where you think they signed a cookie, you've got an interest in it for whatever reason, it's caught your eye, send it in. You can email us, you can put a comment on any of the podcast platforms that you listen to us on or drop us a note on YouTube. We read all of them, we love all of them. And we're trying to get back to you. Well, it's 4pm on the east Coast. There it is, the closing bell. The market's wrapping up for the day and we don't have a ticker tape, but as always, going to throw it instead to our human ticker, our producer John.
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The major indices finished down today after word from President Trump that the US Will reimpose the blockade on the Strait of Hormuz and begin charging a 20% fee on any cargo shipped through that waterway over the weekend. Transits through the strait had already sunk to their lowest level in a month. And today's White House announcement sent Brent crude futures up 9.5% to $83 a barrel. That represents the biggest single day jump since 2020. As for stocks, the S&P 500 finished down three quarters of a percent, the Dow was down a quarter of a percent, and the NASDAQ finished the day down over one and a half percent.
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Well, just one thought related to that, we would be remiss if we didn't mention what happened with SK Hynix today. We saw that ADR go out on Friday, a 15% pop on the day of its US debut dropping high single dig and then a little bit over the course of today with a reversal as folks looked at that and said the win that SK Hynix has seen in the demand for memory was priced in giving back some of that share price pop. Well, looking ahead, it's a busy week for macro data and frankly the news today with respect to the Strait of Hormuz is just going to add even more noise to a very complex inflation situation. The Consumer Price Index is scheduled to be released tomorrow, with the Producer Price Index slated to come out on Wednesday. That's along, by the way, with comments being expected as Fed Chair Kevin Walsh goes before Congress with some of his observations. We'll also, of course, be getting earning results from the major banks and probably getting some insight there into what's going on with consumer borrowing as a result of consumer incomes and the impact there of US Inflation. That's it for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Anne Barry and produced by John Curto, Tarka Bellatif Avenue, Laroya and Emily Milliard. Our technical director is Uchenwa Ogu, Brittany Dotako is our audio engineer and the president of Morning Brew Inc. Is Devin Emery.
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Wake up tomorrow with the Morning Brew newsletter and we'll see you back here tomorrow, same time, same place.