Paramount’s $16M Trump Settlement, Tesla’s Worst-Ever Delivery Drop & Figma’s IPO
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Today's number? 0.2. That's how many milligrams of gold exist inside of the human body. Put another way, at current gold prices, I would be valued at roughly two cents. That checks out. Money markets matter. If money is evil, then that building is hell. The show goes on! The folks in there are watching. Show! Show!

Welcome to Property Markets. I'm Ed Elson. It is July 3rd. Let's check in on yesterday's market vitals.

The S&P and the Nasdaq both closed at record highs after Trump announced a trade deal with Vietnam. Vietnamese exports to the U.S. will face a 20% tariff, down from the original 46% rate in April. In return, Vietnam will not tariff U.S. goods. That is according to President Trump. Meanwhile, the dollar rose but still remains near a three-year low, and the yield on 10-year treasuries ticked up.

Okay, what else is happening? Figma, the popular design software company, has filed to go public in an IPO that will trade on the New York Stock Exchange under the ticker symbol FIG, F-I-G. The IPO price has not yet been determined.

However, analysts expect a valuation of roughly $20 billion. This is set to be one of the biggest IPOs of the year. It's expected to raise $1.5 billion. That would match Corweave's IPO, which has been the biggest in America so far. Now, some interesting context about this IPO.

This is coming less than two years after it was agreed that Figma would be bought by Adobe for $20 billion. We discussed that in one of the very first episodes of ProfitG Markets. However, that acquisition was ultimately scrapped, not because of the FTC or the DOJ, but actually because of antitrust regulators in the UK and in Europe.

The company said in a joint statement in 2023, quote, there is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority. And as a result, the Adobe Figma acquisition was called off. So here we are two years later, and instead of being sold to a much bigger competitor in Adobe, Figma has now found its feet and it is going public on its own.

Now, I just want to say this. I love this story. And I love it for two reasons. Number one...

We've talked before about how the IPOs that we've seen this year have been kind of underwhelming and unimpressive, not in terms of the stock performance, but in terms of the underlying business, whether it's Circle or Chime or soon Klarna. The fundamentals of these companies are pretty precarious. And if you want more on that, go check out our episode from June 23rd, where we discuss this at length. But TLDR, all the great companies are staying private,

And all the not-so-great companies are going public, which leaves retail investors with, quite frankly, shitty offerings. This, however, is very different.

This is a high quality, high value, long term company with great fundamentals and a great product. This is a company that I want to invest in. Now, for those of you who aren't familiar with Figma, this is a very popular design tool that people use to build websites and apps and products.

All sorts of digital products. Basically, every developer I know uses Figma in some capacity. If you're building UI, if you're building UX, you're probably using Figma. Highly valuable tool. That is the product side. Now let's look at the financial side. Again, rock solid. The company grew revenue last quarter 46% to $228 million.

Net income tripled to $45 million. Trailing 12-month revenue hit $821 million with 91% gross margins. Meanwhile, 78% of the Fortune 2000 are using Figma with a 132% dollar retention rate. In other words, great customer loyalty. And once you're a customer, you spend more.

Net burn has been effectively zero, i.e. great operational efficiency, highly disciplined management for comparison. Uber burned about $2 billion in the year before its IPO. And finally, just look at market share. Figma now controls 40% of the design software market, outpacing Adobe. So this is a great company with great products and great fundamentals. Now, the second reason I love this story

This IPO would never have happened if it weren't for antitrust. If the UK and the EU hadn't stepped in here and said, actually, no, this is going to suppress competition, then Adobe would have swallowed up Figma in the same way that all these other big tech companies are swallowing up AI. Figma would have never gone to the public markets, and regular investors would never have had the opportunity to invest.

Now, someone might say, "Well, if Adobe had acquired Figma, why couldn't you have just invested in Adobe?" And my response to you is, one, I don't want to invest in Adobe. I want to invest in Figma alone.

Two, I would have had to pay an insane acquisition premium that Adobe wanted to pay basically just because it wanted to get rid of the competition. And three, simply put, I don't think Adobe would have unlocked the value of Figma. I think Figma was better off unlocking value on its own. And that is what it did. After the acquisition was called off,

Figma decided to increase R&D with nearly five times more investment. And what did they decide to invest in before it was cool? AI. AI is now a part of everything the company does, and it's a big part of why they've been able to grow revenues at a near 50% clip. In sum, they have crushed it.

So do we really think that Figma would have been better off as a corporate subsidiary of Adobe? Would they have taken these risks? Would they have been as aggressive, as innovative, as bold? I know where I stand on this.

So I think this is a big win for Figma. I think it's a win for the founder, Dylan Field. I think it's a win for Antitrust. But most importantly, I think it is a win for retail investors because finally, retail investors are being offered direct and early exposure to a genuinely great company. And if those valuation projections are correct, then the good news is also this IPO is not overpriced. So this is a great opportunity for

I'm very optimistic about it. And this to me is exactly what an American IPO should look like. So congrats to Figma.

Paramount has agreed to pay $16 million to settle a lawsuit with President Trump. Trump had filed the lawsuit over a 60 Minutes interview with Kamala Harris, which he claimed was deceptively edited to favor the former vice president. Trump originally sought $10 billion in damages. He later upped his claim to $20 billion, and he also asked Paramount to issue an apology. Paramount did not issue an apology. They also denied any wrongdoing.

However, they are now settling at $16 million, which they will pay to cover Trump's legal fees and also to contribute to Trump's future presidential library. So a lot going on here.

I mean, first, you've got Trump, again, antagonizing companies with lawsuits. We can argue whether or not the lawsuit is warranted, but the legal experts agree Paramount's defense here would have been pretty much bulletproof. I mean, tightening and editing footage, that is completely standard, and there is no evidence that they did anything to change the meaning of the interview or that there was any malice behind it. So it's

To put it nicely, a very flimsy complaint from Trump.

We also have another instance of a media company caving to Trump. This is the same thing that happened last year with ABC, who also settled to pay Trump $15 million in a defamation lawsuit. Meanwhile, both companies were expected to win those suits. But instead of fighting them, they both settled, and they decided to give him millions of dollars. And the final question here is why they settled. And the obvious answer would be, well,

Maybe they just didn't want to fight with the president, and I'm sure that's true. But in the case of Paramount, there is an interesting wrinkle which makes this all the more relevant, and that is that Paramount, as we have discussed, is in the middle of trying to merge with Skydance Media for $8 billion. The terms have been signed. The deal is ready to go. The only thing that is standing in the way of this deal right now

is approval from the government, specifically from the FCC. So you can probably see where I'm headed here. This is starting to look eerily similar to a company bribing the president to approve an M&A transaction, a transaction that, by the way, would give the owner half a billion dollars. Now, I'm not saying that's what it is.

I'm just saying that is definitely what it looks like. Now, Paramount would argue otherwise. According to the company, this settlement with Trump is, quote, completely separate from and unrelated to the Skydance transaction and the FCC approval process. So we know where Paramount's PR department stands on this.

But let's see what others have to say. Bill Cohen has been covering the Paramount drama very closely. He is a New York Times bestselling author and founding partner of Puck. Our producer Claire spoke with him earlier. So this settlement is reprehensible in every way. There is nothing commendable about it. There's nothing logical about it. There's nothing right about it, uh,

There's nothing fair about it. It should never have happened. There should never have been a lawsuit to begin with. I don't see where Trump has standing even to bring this lawsuit because obviously the segment in question on 60 Minutes was about Kamala Harris, not about Donald Trump.

So I'm not sure how he was disadvantaged in any way. I don't know how he was damaged in any way. I don't know what the damages would be that might have allowed him to even think to ask for $20 billion, let alone settle for $16 billion. So to me, this...

has extortion written all over it. It's, you know, embarrassing for Sherry Redstone and Paramount Global to settle this. I know the CEO of Paramount Global said, you know, companies settle lawsuits all the time. Yes, that's true when there's standing, when there is some legitimacy to the lawsuit. The

This lawsuit never had any legitimacy. It was all about extortion. It was all about being tied to the pending approval of the Paramount Global recapitalization, under which Sherry Redstone would sell her controlling interest in Paramount Global.

My understanding is that the chairman of the FCC was told not even to consider approving the deal or not until the lawsuit got settled. And so the idea that there was no linkage between the two is laughable. Nobody thinks that there was no linkage between the two. You know, the FCC commissioner is right that as a result of this settlement,

There is a certain taint now around the transaction, which is, you know, really unfair to the people who are trying to do the deal. You know, Sherry Redstone should have fought this in court. It would have gone thrown out and...

Yeah, there might have been a risk that the FCC, that Trump would have forced the FCC to not approve the deal as a result of her potentially winning the lawsuit or getting it thrown out of court, which obviously would have happened. I don't think there's any lawyer who thinks this lawsuit had any legitimacy. And, you know, he tried to stop the

AT&T-Time Warner deal back in the day. That was an embarrassment for him. It didn't work. So honestly, it's a sad day for corporate America. It's a sad day for Paramount Global. It's a sad day for Sherry Redstone. It's a sad day for the press and the First Amendment.

And, you know, once again, this is a consequence of, you know, a shameless president of the United States. I mean, and shamelessness is his superpower, who is willing to use the power of his office and the levers that he has across the federal government to benefit himself and

which is an outrage, and to get in the middle of evaluating the merits of a transaction that should have nothing to do with the Oval Office.

and everything to do with the merits of whether the deal, you know, makes sense to transfer the broadcast license. Was this the last thing standing in their way to finally get over the finish line? It seems like they're trying to finalize in the next 10 days. My understanding is that Trump told Brendan Carr, you know, not even to begin studying the transaction until this was resolved. So, I mean, you know...

Depends on how seriously they're going to study the transaction. Obviously, the transaction has been agreed for almost a year now. They have until October 7th to get it done, or else the buyers can walk away without penalty. I suspect that they're going to use most of the time between now and October 7th.

to review the deal and keep everybody on pins and needles. Again, I don't really see what the issues are that would hold it up. In fact, it could probably be, if in fact they have been looking at it and studying it, it could probably be approved tomorrow because I don't think there's any reason to hold it up. But we're dealing with a very performative administration that loves the showmanship of

these things and loves to make a news event out of all of these things. And so they'll probably make a cliffhanger out of this. You know, we know the deadline's October 7th, and who knows whether this will go to October 6th or not.

Reprehensible. Well, I'm happy to hear that Bill sees things the way I do. The idea that this settlement doesn't have anything to do with the merger is just so blatantly untrue. And in a funny way, the fact that Paramount had to say that out loud makes it all the more obvious. They recognize how embarrassing and how cowardly this is.

And so now they're in damage control mode. They're out there saying, no, no, no, I know what you're thinking. It's not that. This isn't bribery. This isn't cowardice. This was an independent and rational legal decision that we came to on our own. But I don't buy it. Bill clearly doesn't buy it. And he's been studying this for a long time. And I doubt the shareholders will buy it either. After the break, more trouble at Tesla. Stay with us.

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We're back with Prof G Markets. Tesla reported their Q2 delivery numbers yesterday, posting their largest year-over-year drop of all time. They reported delivering 384,000 vehicles, down 14% from last year. This is the second consecutive quarterly decline for Tesla. In Q1, deliveries dropped 13%. However,

These numbers were actually better than expected. Analysts projected a drop closer to 20%. So naturally, Tesla stock closed up 5% yesterday.

Okay, so more trouble for Tesla. As we've discussed, they're behind on the Robotaxi, behind Waymo, they're behind BYD, which is winning both on sales and on profits. The Cybertruck is flopping. Nearly every Cybertruck has been recalled and sales have missed Elon's projections by almost 90%. Meanwhile, he's making enemies over at the White House. And now...

overall deliveries continue to decline. So all around bad news for Tesla. And yet, in spite of all of that, Tesla still trades at 125 times earnings, the 11th most valuable company in the world. I know we've beaten this horse to absolute death.

But I still just can't really wrap my head around this. There have been so many moments where the valuation could have and should have corrected into just more rational territory. I would have thought that a double-digit percentage drop in the deliveries of your core product would have probably been that moment. I especially would have thought that if it happened twice in a row, that would have been the moment too, as it has happened here. But no.

Wall Street loves this stock, and they won't let up. Now, just to give you some comps, as I said, 125 times earnings. Let's compare that to the average of the auto industry, which is roughly 30. Now, many of you might say, no, no, no, Tesla's not a car company. You can't compare them. Even though I disagree, I'll let you have that for a moment, and let's compare it to the tech companies, the growth companies. Let's look at NVIDIA, for example, which trades at 48 times earnings.

Let's look at Oracle at 36, Meta 28, Google 21. This is a totally different universe. This is beyond a growth valuation. This is a supernatural valuation. This defies the laws of physics. Well, how could this be?

Let's hear from Tim Higgins, columnist at The Wall Street Journal. He and Claire discussed this new delivery report. The valuation is dramatic, right? It is unlike any car company in the world, its valuation. There is no trillion-dollar car company other than Tesla, and not even close. And so if it was looked at as a traditional car company, if you will, you would expect it to be valued much less, right? Yeah.

But investors who are buying into this are seeing it much more than that, really kind of a vehicle into the future. And that gets back, and this isn't a new thing. This goes back many years. It really, kind of at the point, you really started to see that separation when investors were gaining confidence in Elon Musk's ability to execute. That's the real game changer for Tesla and its valuation. It's always a company that had huge valuation. It's

that people in the auto industry would scratch their head at and say, I don't understand this. But really, things started to get really dramatic when Musk started to show that he could not only build the Model 3, do it profitably, but also expand into China and see that kind of growth. And then, so when he's talking about

1.20 million annual deliveries for Tesla vehicles. That really enthused the market, enthused investors, because he had this kind of credibility at that point. He's kind of given up on that projection. Now he's pivoted the company into robots.

And some people are frustrated with that idea. And some people are having a hard time believing it. But there are still those who believe in this ability of Musk to execute on the impossible and are buying their ticket for that ride. And these are not necessarily always traditional investors. These are small retail investors who are almost like picking a team, if you will. And

The fact that it has become so big, the fact that it's part of the S&P 500, it means that a lot of funds out there have to have a percentage of it in their indexes. And so, you know, it just kind of a self-perpetuating kind of virtuous cycle here that keeps the company going. But the thing is that it's a growth story, and it's unclear how much patience, patience

broader investors are going to have for Tesla if there's not growth. So I think my takeaways are we have to see growth from Tesla. We can't continue to see these declines or else the story with the stock will change. And also Elon has to stay in the driver's seat. Would you say those are the two big things? Those are the things that it appears to be at the market right now. The question is, what is growth?

And this is what we don't know yet. Traditionally, growth is in its sales. Can Tesla convince the world that growth of the robot taxi service is enough? And that's kind of the dilemma that we kind of see right now.

In the history of Tesla, Musk has been able to convince investors in the market that the potential of growth, the potential of the future is so great and so grand that investors should overlook the mess of the now. And it seems like we're in one of those moments again. Musk is out there trying to convince the world that the robot future works.

will be so great that to kind of ignore the issue of the now with the business of selling sheet metal to customers on the day-to-day. Well, I think Tim is definitely right about how Wall Street views this company. Wall Street is

seems to believe that, you know, yeah, deliveries are down, but it doesn't matter that much because, you know, this isn't a car company. This is an autonomous vehicle company. This is an AI company. This is a robot company. And so I'll end this episode with the same plea that I have made to Tesla investors and to Wall Street in the past, and that is, show me the revenue.

Show me the revenue on the Robotaxi. Show me the revenue on the humanoid robots. As soon as you've done that, we can talk. And by the way...

To your credit, yes, robo taxi revenue is now coming in. But last I checked, rides are selling for $420 a pop and the only riders are influencers who are being invited in to talk about it and to create live streams about it. So if that's the revenue we're talking about here, okay, so be it. We can have that conversation.

But until then, I want to be clear about where I stand on this. This is a car company, plain and simple. And it's a car company whose deliveries just fell by 14%. Okay, before we sign off, we want to check in on the state of the tax bill. And for that, Claire jumped on the phone with Scott earlier today.

Hey, Scott. Hey, Claire. How are you? I'm good. How are you? Where are you right now? Well, first off, I'm good, although I'm a little, I'm both proud and a little pissed off at the success of this program without the involvement of me. I like how last night you said, oh, you're good. Don't worry. We don't need you. I'm a little bit like Sofia Coppola at the Oscars in the 90s when I've been told I can stay home, that I don't need to go to the Oscars. Anyways, but

I'm good. I'm in Ibiza, which in times like this, I'm self-conscious saying that, given how many people are struggling and what's going on with our government. But yeah, I'm off the coast of Spain with my family. Well, good. I'm glad you're enjoying your time with your family. That's the only reason we're letting you off the hook here the past couple days. Let's get your take on the tax bill because it's been moving through Congress. It's currently back with the House.

As it stands, we're recording around 345 Eastern Time on Wednesday. Seems like the House has enough votes to block the bill. That could change. What's your take on the Senate's version of this bill and how its future is looking? I think we've been to this movie before, that a bunch of moderate Republicans who realize a ton of people in their district are about to lose their health care for a tax cut and additional deficits.

uh, that they will pretend to have angst and wring their hands over it. And then ultimately they will fall in line and vote for this thing. And it will be, it will be law. I just think we've been to this movie before. And that's kind of what I call the Susan's Collins thing of pretend to give a flying fuck about something. And you're concerned and you have real issues. And then at the end of the day,

You grab your ankles and you do whatever the fuck the president wants you to do. So I think this is going to become a law. There'll be some humming and some hawing and some backroom deal cutting. But at the end of the day, I believe that the Republicans will fall in line and this will become law. So what do you think of the bill more generally? Well, you're still exceptionally young, Claire. And the good news when you get older is you become more thoughtful. The bad news is you get more thoughtful. And when you're

When I was in elementary school, I didn't get free lunch, but I got assisted lunch. There were different tiers of assisted lunch. And I wasn't, my family wasn't, or my mom and I didn't qualify for free lunch, but we qualified for assisted lunch. So I got lunch and breakfast at my school for 50 cents. And at the time I didn't know it, I was nine years old, but that made a difference for us. When I was 17 and I've spoken openly about this and my mom who passed away 20 years ago would be fine with this.

My mom accessed family planning. She became pregnant at 47 when I was a senior in high school. And had we not had access to safe, affordable family planning, I would have done the right thing. I would have dropped out of school and helped take care of

my mom and an unwanted pregnancy. So that's why I got to go to college. When I got to college, the only way I got through my freshman year and subsequent years is with Pell Grants. And now they're talking about a substantial reduction in Pell Grants. So I feel as if a lot of the wonderful things that gave me the incredible blessings I have are directly under attack. And I think it's disappointing that more people in my generation aren't

being louder and putting up more resistance to what will, there's no doubt about it, be the largest transfer of wealth from young to old, from poor to rich, and from the future to the past. So I find this really distressing. The silver lining here is I think this is going to be so brutal on so many people.

That I just got to think it's really going to come back to haunt the administration at the midterms. But this is very distressing for anyone who is at all thoughtful and reflecting honestly on the prosperity they enjoyed.

my generation. All of those things that got us here, you know, those ladders are being pulled up behind us. It's quite frankly, it's just very upsetting. Well, thank you, Scott. I appreciate your thoughts and appreciate you joining us on your time off. Thanks, Claire. I wish you guys the best. I wish you a lot of success, but not too much success. Of course not. So just enough success, but not too much. So if you could kind of like, I wish you success-ish. We'll dial it back a little. Ish. Ish, Claire.

All right, Scott. Take care. Bye-bye. Okay, that's it for today. We are off tomorrow for the fourth, but tune in on Monday for a very special episode featuring Robert Armstrong as my guest co-host. Till then, thanks for listening to Property Markets from the Vox Media Podcast Network. I'm Ed Elson. Have a great weekend.