Get the DealBook newsletter to make sense of major business and policy headlines — and the power-brokers who shape them.
Airbnb wants its hosts to be shareholders. The start-up sent a letter to the Securities and Exchange Commission asking it to revise its rules on whom private companies can award equity to, Axios reported. Under federal security law, private firms can grant stock to employees but not to contractors. Airbnb wants the S.E.C. to add an exemption for participants in the so-called sharing economy. “Airbnb believes that 21st-century companies are most successful when the interests of all stakeholders are aligned,” the company said in its letter. “For sharing economy companies like Airbnb, this includes our employees and investors, but also the hosts who use our marketplace.”
The boom in corporate America’s bottom line looks set to continue. With just a few weeks until companies start reporting third-quarter results, analysts are again forecasting robust profits. Companies in the Standard & Poor’s 500-stock index are expected to report that earnings grew 19.3 percent, according to FactSet. But this year is most likely as good as it gets for earnings. Analysts expect profits to increase 10.3 percent next year.
Speaking of earnings, how much credit should last year’s tax cut get for the soaring profits? Perhaps not as much as conventional wisdom holds. Sales growth, not taxes, deserves much of the credit, according to the Leuthold Group. Profits increased 22.2 percent in the second quarter. Rising sales accounted for half that growth, while the tax cuts drove roughly a third.
Corporate America’s decade of buybacks. Since the failure of Lehman Brothers roughly 10 years ago, United States companies have repurchased $4.4 trillion of their shares, according to Bank of America Merrill Lynch. To put that in perspective, the Federal Reserve’s asset purchases totaled $3.6 trillion over that period.
A return to 2 percent growth? The United States economy continues to grow strongly — 4.2 percent in the second quarter with third-quarter forecasts at 4.4 percent. But such growth is unlikely to persist into the new year. If the trade war between the United States and China continues to escalate, it could shave one percentage point off gross domestic product growth next year and take it to 2 percent, according to Oxford Economics. That rate would be in line with the average of the past eight years.