WEBVTT - Bill Hwang's Rise and Vicious Fall 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.640 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.920 --> 0:00:32.120 YouTube search Bloomberg Global News. We are still trying to 0:00:32.159 --> 0:00:34.879 make sense of Bill Wong and what prosecutors charge at 0:00:34.880 --> 0:00:37.640 the hedge fund investor did plowing cash into a desperate 0:00:37.640 --> 0:00:41.040 buying spree to prop up his artificially inflated stocks. As 0:00:41.040 --> 0:00:43.959 our Matt Levine rights, let's get to it. Because Bloomberg 0:00:43.960 --> 0:00:47.360 opinion columnist Matt Levine covers finance. He was an editor 0:00:47.360 --> 0:00:49.800 of deal Breaker, Investment baker at Goldman and m and 0:00:49.800 --> 0:00:52.159 a lawyer at Wachtel Lipton and a clerk for the 0:00:52.200 --> 0:00:54.400 US Court of Appeals for the Third Circuit. And he 0:00:54.480 --> 0:00:56.440 joins us now via zoom in New York City. And 0:00:56.480 --> 0:00:58.160 I gotta say, Matt, we actually kind of want to 0:00:58.160 --> 0:01:00.480 talk Twitter and Elon with you as well as this, 0:01:00.680 --> 0:01:04.720 But let's start with Bill Juan because you have such 0:01:04.720 --> 0:01:08.880 a great detailed column about what this guy actually did. 0:01:08.920 --> 0:01:11.679 I mean, what strikes you as like just trying to understand, 0:01:12.200 --> 0:01:15.399 you know, his thinking and all of this. I just 0:01:15.440 --> 0:01:19.440 really don't understand his thinking. Um. Yeah, as you said, 0:01:19.480 --> 0:01:22.800 he bought he had he had a lot of money. 0:01:22.840 --> 0:01:25.160 He was a former headphone manager. He borrowed a lot 0:01:25.160 --> 0:01:27.120 more money from his banks, and he spent all of 0:01:27.120 --> 0:01:29.360 it on buying about ten stocks. And he bought so 0:01:29.440 --> 0:01:31.360 much of them that their stock that their prices went 0:01:31.440 --> 0:01:33.520 up and up and up, and like it doubled in 0:01:33.560 --> 0:01:37.360 some cases over the course of months. And uh. And 0:01:37.360 --> 0:01:39.240 then he just you know, he had profits because he 0:01:39.280 --> 0:01:41.200 had bought stocks that were going up, and he took 0:01:41.240 --> 0:01:43.280 those profits and he rolled them into borrowing more money 0:01:43.319 --> 0:01:47.040 and buying more of the same stocks. And so eventually 0:01:47.880 --> 0:01:50.080 something went slightly wrong. You know, one of these companies 0:01:50.120 --> 0:01:52.400 issued more stock in the stock went down. He got 0:01:52.400 --> 0:01:54.800 margin calls from his banks because he borrowed all this money, 0:01:55.120 --> 0:01:57.360 he didn't have any money left over, and so the 0:01:57.400 --> 0:01:59.520 bank's liquidated all of his stocks that went back down, 0:02:00.040 --> 0:02:02.680 and his fund was left with basically nothing, and some 0:02:02.760 --> 0:02:05.440 of the banks lost a lot of money. Um, this 0:02:05.520 --> 0:02:07.840 doesn't make any sense, you know, it's not a good trade. 0:02:08.200 --> 0:02:10.720 Like if you do this, if you buy billions of 0:02:10.760 --> 0:02:13.720 dollars of stock and the stock goes up and you 0:02:13.840 --> 0:02:16.120 then take money out and spend it on buying a 0:02:16.200 --> 0:02:19.040 yacht and sailing away, that makes sense. If you just 0:02:19.080 --> 0:02:21.000 do it, and you keep plowing the money into the stocks, 0:02:21.040 --> 0:02:23.639 including like on the last day when you're getting the 0:02:23.680 --> 0:02:26.680 margin calls, he's spending even more money buying even more 0:02:26.720 --> 0:02:29.280 of these stocks, all your money advantages at the end, 0:02:29.320 --> 0:02:31.639 and then you just start left with kind of nothing 0:02:31.720 --> 0:02:35.280 and and being arrested. But the thing is, as you write, 0:02:35.320 --> 0:02:38.320 he's a really smart guy. He's really he's been in 0:02:38.360 --> 0:02:42.679 the industry for years. Uh, what could I mean? Is 0:02:42.720 --> 0:02:44.640 there any other end game that could have happened here? 0:02:44.800 --> 0:02:47.040 Was this this bound to happen given given the way 0:02:47.080 --> 0:02:49.800 he traded, you know one possibilities he did take some 0:02:49.840 --> 0:02:51.600 profits out right, I mean, if you if you read 0:02:51.600 --> 0:02:54.200 the indictment, it seems like to the very last minute, 0:02:54.200 --> 0:02:57.120 Our Kagos was plying plowing all of its money into 0:02:57.639 --> 0:03:00.400 uh into buying more of these stocks. Arkego is the 0:03:00.520 --> 0:03:03.359 entity that he ran, it's his family office. But could 0:03:03.440 --> 0:03:05.239 he have taken money out of Our Kagos at some 0:03:05.320 --> 0:03:08.560 point and like buried in the backyard. That's possible. Another 0:03:08.600 --> 0:03:10.960 possibility that someone suggested to me is that, you know, 0:03:11.120 --> 0:03:13.160 a lot of the stocks that he was buying were 0:03:13.600 --> 0:03:16.640 heavily shorted stocks, and it's possible that he was trying 0:03:16.680 --> 0:03:19.600 to do a short squeeze where eventually the short sellers 0:03:19.800 --> 0:03:21.800 would have no choice but to buy back the stocks, 0:03:22.000 --> 0:03:24.240 and they buy them back from him, and even higher prices, 0:03:24.520 --> 0:03:28.640 and he'd make you know, tens of billions of dollars um. 0:03:28.760 --> 0:03:30.600 It seems like a very strange trade to do in 0:03:30.639 --> 0:03:33.840 this size and for that long. But you know, it's 0:03:33.880 --> 0:03:36.560 one thing he could have been thinking. If you could 0:03:36.560 --> 0:03:40.040 sit down with him, fly on the wall or something, 0:03:40.120 --> 0:03:42.440 or in a conversation, well, what would be the question 0:03:42.480 --> 0:03:44.720 you would ask him, because, as you said, smart guy 0:03:45.360 --> 0:03:47.560 knows how the market works, And yeah, I would ask 0:03:47.640 --> 0:03:49.200 him what he thought his end game was. The other 0:03:49.280 --> 0:03:52.200 the other possibility, by the way, and this one sort 0:03:52.200 --> 0:03:55.400 of sounds absurd but is in some ways very straightforward. 0:03:55.480 --> 0:03:57.400 The other possibility is that he just thought these stocks 0:03:57.400 --> 0:03:59.240 were really good stocks and he thought they'd go up, 0:03:59.280 --> 0:04:01.920 and so he bought as he could have them. Um, 0:04:02.000 --> 0:04:04.000 the indictment, if you read like with the SEC and 0:04:04.040 --> 0:04:06.520 the Justice Department say, they say that he had stopped 0:04:06.560 --> 0:04:08.960 talking to his investment analysts and he just spent all 0:04:09.040 --> 0:04:11.000 day with the traders to buy more and more stock, 0:04:11.200 --> 0:04:13.400 and he didn't really care about what his research analysts 0:04:13.440 --> 0:04:15.880 said about these companies. But like you know, when possibility 0:04:15.920 --> 0:04:17.560 is he thought these were just really good stocks and 0:04:17.560 --> 0:04:19.000 he wanted to buy as much as he could have them. 0:04:19.040 --> 0:04:20.640 So does that tell you in the government's eyes, he 0:04:21.320 --> 0:04:23.640 didn't necessarily think they were really good stocks because he 0:04:23.680 --> 0:04:25.600 wasn't doing that. The government thinks he didn't think that. 0:04:25.960 --> 0:04:27.520 I mean, like it's a weird thing because like he's 0:04:27.600 --> 0:04:31.000 charged with stock with market manipulation, and it's very unclear 0:04:31.040 --> 0:04:33.680 what that is. Right, Like, if you buy stocks and 0:04:33.720 --> 0:04:36.800 the stocks go up, someone could say that you manipulated 0:04:36.839 --> 0:04:39.520 the stocks. But also just anytime anyone buy stocks, they're 0:04:39.560 --> 0:04:41.560 likely to go up. Right, Buying pressure is what makes 0:04:41.560 --> 0:04:44.000 stock to go up, and so the different stock, I 0:04:44.080 --> 0:04:46.520 kind of hope it goes up. Well, you certainly you 0:04:46.560 --> 0:04:48.080 hope it goes up. But if you buy a lot 0:04:48.080 --> 0:04:50.240 of the stock, you're buying activity itself will push up 0:04:50.279 --> 0:04:52.960 the stock. What doesn't make it a crime, But yeah, 0:04:53.000 --> 0:04:56.760 exactly our June Grosso are legal analysts and who hosted 0:04:56.760 --> 0:04:58.800 Bloomberg Glass. She said, I don't understand exactly what he 0:04:58.800 --> 0:05:02.520 did wrong. He was buying shares like you understand the 0:05:02.600 --> 0:05:06.760 lying and stuff right to regulators not so good. But 0:05:07.000 --> 0:05:09.240 the different The question of whether it's market manipulation is 0:05:09.240 --> 0:05:11.680 just one of intent. Like if he was sitting there thinking, 0:05:11.880 --> 0:05:14.279 I'm going to buy these stocks to make them go up, 0:05:14.720 --> 0:05:17.640 then that is I think the government would would would 0:05:17.960 --> 0:05:21.560 successfully argue market manipulation. If he was buying the stocks 0:05:21.560 --> 0:05:23.400 because he thought they were good stocks, even though they 0:05:23.440 --> 0:05:26.960 then did go up, Um, then it's not market manipulation. 0:05:27.400 --> 0:05:31.000 And often in these cases you see like chatlogs where 0:05:31.000 --> 0:05:33.800 people are just typing to their buddies all day. I'm 0:05:33.839 --> 0:05:36.120 manipulating the market. Hope I don't go to jail, and 0:05:36.160 --> 0:05:38.480 you don't have that here, And maybe they will, right, 0:05:38.520 --> 0:05:41.080 maybe they will find evidence of his intent. But as 0:05:41.080 --> 0:05:43.719 of right now, and they have cooperators and they've you know, invested, 0:05:43.760 --> 0:05:46.560 and they've gotten some of the transcripts of his messages, 0:05:46.839 --> 0:05:49.520 it doesn't seem like there's anything like that where he's 0:05:49.600 --> 0:05:52.760 saying that he's doing something wrong. Hey, just got forty seconds, 0:05:52.760 --> 0:05:55.520 real quickly. We did get a headline earlier that Musk's 0:05:55.520 --> 0:05:59.120 Twitter share purchases under an FTC probe, according to those 0:05:59.160 --> 0:06:02.159 in the know. What are you real quick thoughts on Twitter? 0:06:02.240 --> 0:06:05.920 Elon Musk? Um? I don't know. I mean, I think 0:06:05.920 --> 0:06:08.000 that every every big merger goes through some sort of 0:06:08.040 --> 0:06:10.240 antitrust review, but I would be surprised if there is 0:06:10.279 --> 0:06:14.760 a big issue here. But I don't know. Um. Do 0:06:14.800 --> 0:06:17.600 you think he's going to ultimately finish the deal? I do. 0:06:17.680 --> 0:06:19.680 I don't think it's a dred percent probable, but I 0:06:19.720 --> 0:06:23.040 think people are underestimating how locked up the deal is 0:06:23.320 --> 0:06:25.960 and how likely he is to get the financing. I 0:06:26.000 --> 0:06:28.280 don't think it's by any means certain, but I think 0:06:28.279 --> 0:06:30.200 he is much more likely than not going to complete 0:06:30.240 --> 0:06:32.360 the deal. Well, we love reading your columns. We learned 0:06:32.360 --> 0:06:35.480 so much the way Tim said. Tim came into the 0:06:35.480 --> 0:06:38.159 studios like the way Matt lays out what Bill Wong 0:06:38.320 --> 0:06:41.039 did just really made such made sense to me. Matt, 0:06:41.080 --> 0:06:43.320 so definitely appreciate you taking the time to join us. 0:06:43.360 --> 0:06:46.800 Matt Levine, columnists for Bloomberg Opinion, joining us via zoom 0:06:46.839 --> 0:06:50.640 from New York. This is Bloomberg Business Week with Carol 0:06:50.720 --> 0:06:55.159 Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. 0:06:55.400 --> 0:06:57.719 I gotta say, Tim, it's not easy being a company today. 0:06:57.760 --> 0:07:01.000 Employees and consumers and customers, and Vester's kind of wanting 0:07:01.000 --> 0:07:04.839 you to take a stand on important issues sometimes. Yeah, 0:07:04.880 --> 0:07:07.479 and then there's the whole you know, maybe quote unquote 0:07:07.520 --> 0:07:11.320 problem of high level executives using Twitter. Yeah, it doesn't 0:07:11.320 --> 0:07:14.920 always work out. Well, Well, that's sort of uh. We're 0:07:14.960 --> 0:07:18.000 talking about this because if you recall, it's a story 0:07:18.720 --> 0:07:20.920 that centers around a Levi's executive. You might have heard 0:07:20.920 --> 0:07:23.160 of her over the last few months, who's no longer 0:07:23.200 --> 0:07:27.240 ad Levi's. Well, our own Claire said, columnist at Bloomberg 0:07:27.240 --> 0:07:29.480 Business Week who joins us now on the phone from Brooklyn, 0:07:29.640 --> 0:07:32.480 is the author of that story, Levi's finding itself thrust 0:07:32.520 --> 0:07:35.400 into the culture wars by a rogue executive joining us 0:07:35.400 --> 0:07:37.640 now is Claire along with Joel Webber, editor at Bloomberg 0:07:37.680 --> 0:07:41.120 Business Week. He joined us on the access line from Brooklyn. Joel. 0:07:41.120 --> 0:07:42.920 I think for a lot of people, they might not 0:07:43.040 --> 0:07:45.640 know the name Jennifer Say or did not know it 0:07:45.800 --> 0:07:49.600 until just a few weeks ago. Uh, despite the fact 0:07:49.600 --> 0:07:51.880 that she's been a high level executive at Levi's for 0:07:52.000 --> 0:07:55.600 quite a bit of time. Yeah, Jennifer Say rose through 0:07:55.600 --> 0:07:59.960 the ranks at Levi's for for years actually, and eventually 0:08:00.040 --> 0:08:03.760 became a brand president and was in charge of Levi's 0:08:04.000 --> 0:08:07.040 uh marketing. She was the chief marketing officer, so that 0:08:07.520 --> 0:08:10.920 it which basically set her up to to be potentially 0:08:11.000 --> 0:08:13.600 the next CEO at the company. And she was very 0:08:13.760 --> 0:08:16.760 very good at her job. And where the rest of 0:08:16.800 --> 0:08:20.000 the world. Um, maybe you've heard of Levi's and um, 0:08:20.320 --> 0:08:23.400 uh there's just since that's you know, basically an old 0:08:23.440 --> 0:08:27.480 school Americana brand that she helped turn around. Frankly. Um, 0:08:27.600 --> 0:08:30.880 but if you hadn't heard of Jennifer Say, you may have. 0:08:31.120 --> 0:08:34.880 When all of a sudden in February, um, a spat 0:08:35.160 --> 0:08:39.400 between her and the company, uh became the reason that 0:08:39.520 --> 0:08:43.560 she left, and that made us very interested in her 0:08:44.160 --> 0:08:47.320 and Claire said, us immediately started going on a bigger 0:08:47.320 --> 0:08:49.960 story and what what Um, what she found I think 0:08:50.080 --> 0:08:54.320 is pretty remarkable, and it's really this complete tale of 0:08:54.440 --> 0:08:57.720 Jennifer's sort of transformation inside Levi's. And it also gets 0:08:57.720 --> 0:09:00.480 to the bigger story that I think we're all really 0:09:00.480 --> 0:09:03.760 interested in right now in corporate America, which is this 0:09:03.840 --> 0:09:10.000 tension between um companies their images, the tension that social 0:09:10.040 --> 0:09:14.640 media creates. And you just think of Coke Disney. Now 0:09:14.840 --> 0:09:17.440 this we'll talk more about Levi's here. This is a 0:09:17.559 --> 0:09:20.920 challenge for all kinds of American companies all of a sudden. 0:09:21.240 --> 0:09:24.800 So Claire, tell us about Jennifer and what you learned. 0:09:25.120 --> 0:09:27.720 Obviously this was all over the headlines, but you dug deeper, 0:09:27.760 --> 0:09:31.920 what would you find out? Um? Well, you know, like 0:09:32.040 --> 0:09:36.600 you said, Jennifer was the head um of Levi's marketing, 0:09:36.720 --> 0:09:40.760 so all the advertising, marketing, branding Levi's, that's what she 0:09:40.840 --> 0:09:43.400 was in charge of the company for years. Was also 0:09:43.480 --> 0:09:48.160 incredibly progressive, um, you know, back way back until the 0:09:48.240 --> 0:09:51.040 nineteen thirties. You know it more recently in the past 0:09:51.200 --> 0:09:55.199 decade or so, they've come out in favook gun control, um, 0:09:55.240 --> 0:09:58.920 you know, marriage equality, transgender rights, etcetera, etcetera. UM. And 0:09:59.000 --> 0:10:01.280 she was also part of executive team that's sort of 0:10:01.320 --> 0:10:04.240 shaped that narrative and talked about, you know, when it 0:10:04.360 --> 0:10:08.760 was appropriate for Levi's to say something and in what way. UM. 0:10:08.800 --> 0:10:11.640 But then during the pandemic, you know, we've all found 0:10:11.640 --> 0:10:13.640 the pandemic really hard, and she was stuck at home 0:10:13.640 --> 0:10:17.280 with four kids, and so she started tweeting her views 0:10:17.400 --> 0:10:24.520 on covid UM. But they were, I would say, rather contrarians, UM. 0:10:24.520 --> 0:10:27.200 I would say, as early as April, she was calling 0:10:27.240 --> 0:10:30.600 for the country to open back up. Her pet topic 0:10:30.880 --> 0:10:34.679 was UM school reopenings, which you know, now kids are 0:10:34.679 --> 0:10:37.240 back in the classroom now. But in when no one 0:10:37.360 --> 0:10:40.400 really understood the virus it was, it was much more controversial. 0:10:41.200 --> 0:10:45.880 And you know, within Levi's employees started to become really 0:10:45.960 --> 0:10:50.360 upset and and saying internally to hr to legal, UM, 0:10:50.640 --> 0:10:52.600 the CEO himself, you know, why do we have an 0:10:52.640 --> 0:10:55.080 executive who's saying all this keepoff on Twitter? Some of 0:10:55.080 --> 0:10:59.800 it is in direct contradiction to company policy. UM. And 0:11:00.000 --> 0:11:02.319 it was like a two year long internal struggle of 0:11:02.480 --> 0:11:08.480 Levis trying to handle the diplomatically internally. UM. Ultimately, I 0:11:08.600 --> 0:11:11.959 told her she couldn't hold her position as brand president 0:11:12.000 --> 0:11:14.320 and she'd never be CEO, And so she quit in 0:11:14.320 --> 0:11:17.479 a very dramatic fashion and said that she had been silenced. 0:11:17.559 --> 0:11:19.800 So what's interesting clear too? I mean, as you note 0:11:19.800 --> 0:11:22.760 in your reporting, I mean Levi's is known for being 0:11:22.800 --> 0:11:26.959 a pretty progressive company for years and taking positions on 0:11:27.080 --> 0:11:33.920 controversial issues. Yeah, and that was sort of Um, Jennifer says. 0:11:34.000 --> 0:11:36.080 Argument is is, you know, if I speaks out on 0:11:36.120 --> 0:11:38.360 so many things, why was it not okay for me 0:11:38.400 --> 0:11:42.800 to speak out about covid um? But I think you 0:11:42.840 --> 0:11:47.079 know that issue is really you know, one executive going 0:11:47.120 --> 0:11:50.400 one way and all these employees to sort of rank 0:11:50.480 --> 0:11:53.920 and file employees saying we do not agree with this, 0:11:54.040 --> 0:11:56.439 we don't like this. You know, they had town hall meetings, 0:11:56.640 --> 0:12:00.600 she went on Laura Ingram's show on Fox News. People 0:12:00.600 --> 0:12:03.040 didn't like that, um, and they were saying, you know 0:12:03.080 --> 0:12:05.520 why is why is the Levice executive talking to Laura 0:12:05.600 --> 0:12:09.960 Ingram when Lama Ingram has explicitly said things that this 0:12:10.040 --> 0:12:14.000 company stands in contradiction to. You know, she can I 0:12:14.040 --> 0:12:16.000 just jump in? Didn't she know she was going to 0:12:16.080 --> 0:12:17.880 get into no friends? But she seems like a pretty 0:12:17.880 --> 0:12:21.800 smart lady and understands branding and marketing. Didn't she understand 0:12:21.880 --> 0:12:24.760 despite understanding it was a progressive company, know that by 0:12:24.800 --> 0:12:29.520 going on Fox you send pretty much a clear message, 0:12:29.559 --> 0:12:32.000 and you do because of the company you work for 0:12:33.520 --> 0:12:36.840 that it's going to come back at the company. Well, 0:12:37.120 --> 0:12:40.480 when I talked to her, she said, Um, she didn't 0:12:40.480 --> 0:12:44.400 know really anything about Laura Ingram. She never watched Fox nude, 0:12:45.200 --> 0:12:49.240 and but she was the person who oversaw Levi's advertising budget, 0:12:49.320 --> 0:12:51.720 and and and just was in charge of marketing and 0:12:51.760 --> 0:12:53.760 had her finger on the also the culture that it 0:12:53.840 --> 0:12:59.600 seemed you know, it required a leap of faith for 0:12:59.640 --> 0:13:01.760 me to take her at face value and think that 0:13:01.880 --> 0:13:04.040 that was really the case. But that was her claim, 0:13:04.120 --> 0:13:07.520 is like she didn't she didn't really know, She didn't 0:13:07.559 --> 0:13:09.600 realize why this is such a big deal. And and 0:13:09.640 --> 0:13:12.600 also she said, you know, just because she's Laura Ingram 0:13:12.600 --> 0:13:14.680 has said all these other things, why can't I talk 0:13:14.679 --> 0:13:18.160 to her about what I care about, which is pool reopening? Um? 0:13:19.040 --> 0:13:25.480 And employees were not having that excuse UM, clear, I'm interested. Um, 0:13:25.520 --> 0:13:29.719 because so many companies find themselves thrust into the culture wars. Now, 0:13:29.800 --> 0:13:34.240 what what if any were the takeaways at Levi's after 0:13:34.360 --> 0:13:36.720 this is all, you know, they get sucked into this, 0:13:36.720 --> 0:13:38.840 this fight that they maybe didn't necessarily want to have, 0:13:39.000 --> 0:13:40.800 like what are they what are the takeaways? And what 0:13:41.080 --> 0:13:44.920 our companies to do? And just got about Well, it's 0:13:44.920 --> 0:13:47.080 funny because when I talked to Levi's about this, they 0:13:47.080 --> 0:13:48.360 were like, you know, this is a kind of a 0:13:48.440 --> 0:13:54.120 unique situation. Most of the time, UM, companies cultures thrown 0:13:54.160 --> 0:13:56.319 into the culture wards or because the company did something 0:13:56.320 --> 0:13:58.760 and people get upset, and this is one person internally 0:13:58.760 --> 0:14:01.560 in the company. UM, And so it was sort of 0:14:01.600 --> 0:14:04.400 a lose lose situation. If they'd ignored their employees, maybe 0:14:04.440 --> 0:14:06.680 their employees to speak out UM and said they listened 0:14:06.720 --> 0:14:10.200 to them, and then the executive spoke out. UM. I 0:14:10.240 --> 0:14:12.959 think what the takeaway is is this is incredibly hard 0:14:13.160 --> 0:14:15.880 and one day you might find yourself based with the 0:14:15.960 --> 0:14:19.240 public scandal. Well, just talk to Bob Chapeck right now, 0:14:19.800 --> 0:14:23.320 I'm sure, yes, some thoughts on that. UM, A really 0:14:23.320 --> 0:14:26.680 great story, Thank you so much. Business Week columnists Claire 0:14:26.720 --> 0:14:28.680 set up joining us on the phone from Brooklyn of 0:14:28.760 --> 0:14:30.560 Chris Joe Webber, editor of Bloomberg business Week, on the 0:14:30.600 --> 0:14:32.880 Access line in Brooklyn. Be sure to check out the 0:14:32.960 --> 0:14:36.480 new issue of Bloomberg Business Week. It is on newsstands, 0:14:36.960 --> 0:14:39.480 online at Bloomberg dot com, business Week dot com, and 0:14:39.520 --> 0:14:41.520 of course, on the Bloomberg terminal. Yeah. One part of 0:14:41.560 --> 0:14:44.040 the story that Claire really gets into, and this is 0:14:44.200 --> 0:14:46.800 Levi's long history of being early when it comes to 0:14:46.800 --> 0:14:49.840 progressive causes, being the first company to offer same benefits 0:14:49.840 --> 0:14:53.280 to you know, same sex partners sans for women for 0:14:53.280 --> 0:14:56.240 women in the nineteen twenties, I think nineteen forties. Yeah. Yeah, 0:14:56.520 --> 0:15:02.440 it's a great read. You're listening to Bloomberg Business Week 0:15:02.640 --> 0:15:06.640 with Carol Messer and Bloomberg Quick Takes Tim Stinovic on 0:15:06.720 --> 0:15:10.640 Bloomberg Radio. Here's a Mattel. They shot up yesterday, their 0:15:10.680 --> 0:15:13.440 biggest gaining about eighteen months, ending with about an eleven 0:15:13.480 --> 0:15:17.480 percent gain. Their up again today two percent, following their 0:15:17.560 --> 0:15:20.120 latest earnings report, first quarter earnings last night that top 0:15:20.120 --> 0:15:22.640 to estimates thanks to Barbie and Hot Wheel sales that 0:15:22.720 --> 0:15:26.240 defy the usual seasonal slow down. We are delighted to 0:15:26.240 --> 0:15:28.680 have back with us, Mattel chairman and CEO, Enan cries 0:15:29.080 --> 0:15:32.400 via zoom in California. You're not so nice to have 0:15:32.520 --> 0:15:35.840 you How are you great, Carol. Thank you for having me. Well, 0:15:35.880 --> 0:15:37.360 it's wonderful to have you here. We are going to 0:15:37.440 --> 0:15:39.120 talk about the quarter, but you know where I'm going 0:15:39.200 --> 0:15:41.720 to go. Um. We all kind of sat up a 0:15:41.760 --> 0:15:44.880 little straighter when that headline crossed, uh that there could 0:15:44.880 --> 0:15:48.760 be a possible buy out private equity interested. What can 0:15:48.800 --> 0:15:52.840 you tell us about that? Well, as you expect, we 0:15:52.960 --> 0:15:58.160 don't comment on speculation and we're focused on executing our strategy. 0:15:58.680 --> 0:16:01.960 What I can say is this was the highest first 0:16:02.120 --> 0:16:06.520 quarter we have on record, both revenue and profitability. Our 0:16:06.560 --> 0:16:10.480 momentum continued across the business with double digit growth in Barbie, 0:16:10.600 --> 0:16:13.680 hot Woods and Fisher Price. We have started the second 0:16:13.720 --> 0:16:18.400 quarter with strong consumer demand. The Follier outlook is also strong, 0:16:18.880 --> 0:16:22.240 and we expect to grow market here. So all in all, 0:16:22.600 --> 0:16:25.600 an excellent start of the year and we're firmly in 0:16:25.640 --> 0:16:29.160 growth mode. And I think we highlighted yesterday. I mean, 0:16:29.280 --> 0:16:32.240 you guys have been on a tear. If I look 0:16:32.320 --> 0:16:33.960 at you know, the share price in terms of the 0:16:33.960 --> 0:16:37.280 moves that you guys have been doing specifically. Um, some 0:16:37.360 --> 0:16:39.240 would say, and I'm going to push a little bit 0:16:39.640 --> 0:16:43.440 that you are setting it up for a sale. Are 0:16:43.480 --> 0:16:48.200 you talking with people? Are there conversations going on? But 0:16:48.320 --> 0:16:52.080 I can't comment on the speculation. But we've been consistently 0:16:52.160 --> 0:16:55.440 growing the company, UH, and this has happened over the 0:16:55.520 --> 0:16:58.560 last four years. You followed the story, so you know 0:16:58.760 --> 0:17:02.480 that we took our said ida from a six million 0:17:02.480 --> 0:17:05.719 dollars in two thousand and seventeen to over a billion 0:17:07.400 --> 0:17:10.600 and guided fo yet another growth this year with higher 0:17:10.600 --> 0:17:15.160 goals three. So this is not a one quarter situation. 0:17:15.240 --> 0:17:18.840 This has been consistent delivery and execution on a on 0:17:18.920 --> 0:17:22.600 a clear strategy and a clear roadmap with tracking weale 0:17:23.040 --> 0:17:25.600 and we are in a great position to continue to 0:17:25.640 --> 0:17:27.640 grow the company. And I will point out that from 0:17:27.640 --> 0:17:32.400 the end of the stock is up almost so investors 0:17:32.400 --> 0:17:36.080 have certainly noticed that performance in those changes. On one 0:17:36.359 --> 0:17:39.199 element that you've had to UH deal with just not 0:17:39.240 --> 0:17:41.240 just over the last year, but over the last few quarters, 0:17:41.280 --> 0:17:45.120 to our inflationary pressures on the supply chain. We've spoken 0:17:45.600 --> 0:17:48.200 to you in the company in past quarters about moves 0:17:48.200 --> 0:17:50.800 that you've made to try to make sure that your 0:17:50.800 --> 0:17:53.320 supply chain remains intact. What you've been able to do 0:17:53.359 --> 0:17:55.440 ahead of time, but it doesn't mean you've been immune 0:17:55.440 --> 0:17:57.920 to higher prices. Talk to us about the pricing power 0:17:57.960 --> 0:17:59.600 that you've had and how much you've had to raise 0:17:59.640 --> 0:18:04.440 prices and how consumers are being affected by that. Yeah. 0:18:04.480 --> 0:18:09.119 We you know, given the anticipated inflation, implementing pricing action 0:18:09.480 --> 0:18:12.480 UM is one of the things we consider at times 0:18:12.520 --> 0:18:16.640 of of of inflationary pressures. Uh. We're not the only ones, 0:18:16.680 --> 0:18:19.320 and it's not unique to the toy industry. UH. And 0:18:19.400 --> 0:18:22.480 this is something that we've done, like in the second 0:18:22.520 --> 0:18:24.919 half of last year, and we expect to do that 0:18:24.960 --> 0:18:28.960 again uh in the second half of this year. It's 0:18:29.000 --> 0:18:33.440 important to say that when raising prices, we always keep 0:18:33.640 --> 0:18:37.000 the consumer in mind, and we're being very thoughtful and 0:18:37.119 --> 0:18:41.080 very strategic and remain strategically committed to maintaining the right 0:18:41.160 --> 0:18:46.520 balance between quality and value for our consumers. Well, you 0:18:46.560 --> 0:18:48.320 know what's really great is I mean, you guys have 0:18:48.400 --> 0:18:51.040 some old iconic brands. We've talked about it with you before, 0:18:51.119 --> 0:18:54.240 whether it's Barbie, whether it's Hot Wheels. I mean, it's 0:18:54.280 --> 0:18:57.040 just one brand after another. But then you have folded 0:18:57.040 --> 0:18:59.359 into the mix and embrace of all that is new 0:18:59.560 --> 0:19:02.240 through a lot aiances and partnerships. What is it that 0:19:02.320 --> 0:19:04.639 really drives growth for you? Guys, what is it that 0:19:04.680 --> 0:19:07.840 you say? Okay, this is top of mind, you know. 0:19:08.400 --> 0:19:12.520 In terms of the performance for the company overall, well, 0:19:12.680 --> 0:19:15.040 we've been growing on the toy side of the company 0:19:15.119 --> 0:19:18.760 very strongly. We expect further growth this year. We expect 0:19:18.800 --> 0:19:21.200 growth in the second quarter and growth for the full year. 0:19:21.880 --> 0:19:25.200 We expect our power brands to continue to grow this year, 0:19:25.680 --> 0:19:29.040 Barbie Hot Walls and Fisher Price, as well as American Girl, 0:19:29.520 --> 0:19:33.240 and we expect to see strong growth in the challenging categories. 0:19:33.280 --> 0:19:35.679 This is where we're not a global leader, but we're 0:19:35.720 --> 0:19:40.320 seeing tremendous momentum and growth in categories like action figures 0:19:40.359 --> 0:19:43.840 and building sets. So we are in a great position 0:19:43.880 --> 0:19:46.399 to grow in the toy side of the company. And 0:19:46.480 --> 0:19:49.520 in addition to that, we're also seeing great momentum on 0:19:49.640 --> 0:19:55.000 the I P strategy. This is film, television content in general, 0:19:55.560 --> 0:19:59.719 consumer products, digital experiences. And this week alone, we had 0:19:59.760 --> 0:20:03.159 two very exciting news to share. One is that we 0:20:03.359 --> 0:20:06.280 partnered with j. J Abrahms to produce the Hot Wheels 0:20:06.359 --> 0:20:10.040 movie that we are developing with Warner Brothers. JJ is 0:20:10.080 --> 0:20:14.320 one of the most prolific respected producers of this generation 0:20:14.760 --> 0:20:18.240 filmmakers in general is also a director, and we're very 0:20:18.240 --> 0:20:20.800 excited to have him partnered with us on Hot Wheels. 0:20:21.240 --> 0:20:25.240 And in addition, we also announced or Warner Brothers announced 0:20:25.280 --> 0:20:29.440 at CinemaCon the release date of The Barbie Movie, which 0:20:29.480 --> 0:20:36.240 will be July one, three, And this film is shaping 0:20:36.359 --> 0:20:41.159 up really well to be an iconic cultural event. We 0:20:41.200 --> 0:20:44.680 could not be more excited with the creative, execution and 0:20:44.880 --> 0:20:48.479 vision of Greta Gelwig, who is also one of the 0:20:48.480 --> 0:20:53.240 most respected and prolific creative filmmakers of this generation. And 0:20:53.320 --> 0:20:59.560 an all star cast with Margot Robbie, Ryan Gosling, Will Farrell, Simulo, 0:21:00.280 --> 0:21:04.919 America Fera and many other you know, very strong talent 0:21:05.040 --> 0:21:09.800 and exciting cast. So expect something very special, uh from 0:21:10.200 --> 0:21:12.480 the Barbie Movie as well as Hot Wheels, and as 0:21:12.480 --> 0:21:16.040 well as other twelve films that we have in development. 0:21:16.119 --> 0:21:17.399 You know, I want to go back to something that 0:21:17.440 --> 0:21:21.680