College dropout Bill Gates has purchased a 3.8% stake in brewing behemoth Heineken. To celebrate, we recommend doing the same – skip your boring CPD class and maybe buy a little bit of Heineken yourself. It is the ‘prekend’ after all.

The lowdown

• 🍻 Bill Gates purchases ~3.8% stake in Heineken for $902 million.

• 🚗 Mercedes Benz and Google form partnership that will see ‘supercomputers’ in cars.

• ✂️ Meta preparing for fresh round of layoffs along with other ‘efficiency’ measures.

Flex your finance muscle

Channel stuffing

On Tuesday, we discussed cyber security firm Darktrace’s decision to bring in EY after a short seller accused the company of inflating its revenue by channel stuffing.

Essentially, channel stuffing involves a company pushing more products into its distribution channel than it can realistically sell, with the intention of boosting revenue and earnings in the short term.

The excess inventory is typically sold to distributors or retailers on credit or with other incentives, such as extended payment terms or promotional allowances. This can lead to an accumulation of inventory in the channel, which can create problems for the distributors or retailers who are stuck with excess inventory that they may have difficulty selling.

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Featured stories

Stock-based remuneration a drag for tech

Adjusted profit figures will often exclude stock-based compensation (SBC) on the basis that it is a non-cash expense. But as Warren Buffett, and more recently Bill Gurley, will tell anyone who will listen, SBC is a real cost to shareholders. 

To very briefly outline why, SBC dilutes ownership, reduces earnings per share and represents an opportunity cost – foregoing the opportunity to use those shares to raise capital or use them for an acquisition.

Alas, SBC has become an expectation among employees in tech but with tech valuations having fallen, the value of employees’ SBC has also fallen. Tech companies are now deciding whether to hand out more equity, pay more compensation in cash or grapple with increased resignations ($) – complications of SBC.

The content we're consuming today

• Gamecraft podcast: The new gold rush (Ep.8).

• FT: Reddit: chatbots may be answer to post-float growth question ($).

• Bloomberg on YouTube: Tesla to Establish Global Engineering HQs in California.

Off-balance sheet items

• Now seems like a good time to look back on the history of Heineken and how it grew into a €56 billion company. This interview also explains how the company chooses which sporting events to sponsor.

The bottom line

Apologies to our US readers.