A Tough Day In Court For Bayer
PLUS: Fisker loses another Chief Accounting Officer
Round Up Does It Again
It was a tough day for Bayer, A.G., whose Monsanto unit’s Round Up product was again placed on the hook for a hefty chunk of change by jurors to the tune of $1.5 billion.
Bayer AG’s Monsanto unit was ordered by a Missouri jury to pay more than $1.5 billion to three former users of its Roundup weedkiller who blamed their cancers on the controversial product.
Jurors in state court in Jefferson City, Missouri late Friday awarded James Draeger, Valerie Gunther and Dan Anderson a total of $61.1 million in actual damages and $500 million each in punitive damages over their claims that years of using Roundup on their lawns and gardens caused their non-Hodgkin’s lymphomas.
While this is news, it’s not exactly new. The legal fallout around Round Up has seen the manufacturer doling out settlements for several years now. The impact on Bayer, its German parent company, isn’t hard to see.
Over the last five years the conglomerate’s stock has essentially stayed put on a total return basis (though its down 33% in the same time frame on a price return basis).
It’s not difficult to see the connection between Bayer’s flagging stock price and the direct correlation to the Round Up lawsuits—the Lawsuit Information Center estimates that the company has had to settle more than 100,000 cases at a price tag of roughly $11 billion. Given the award-happy nature of American juries (remember, the most recent $1.5 billion was awarded to three people!), it’s not difficult to envision the pain for Bayer only getting worse.
Of course, being found liable doesn’t necessarily mean that a company has to pay—it only means that the legal struggle presses forward. After a failed attempt to lobby the U.S. Supreme Court to activate a claims program, the company has publicly stated that many of the jury awards in the individual cases are “unconstitutionally excessive” and plans to appeal them.
At some point, though, the lawsuits will eventually end. When that time will come is anyone’s guess, but after a five-year onslaught of litigation investors are sure to be weary of the never-ending headaches (Bayer makes aspirin for that, however!).
At any rate, the stock is trading about as cheaply as it ever has as a result of all the bad news, which means that when the clouds do begin to clear, things are likely to turn up in a hurry for the beleaguered company.
Accounting Problems
The Wall Street Journal reported today that the second (second!) Chief Accounting Officer at the troubled EV company Fisker FSR 0.00%↑ in two (two!) months has resigned.
In the industry, we call that ‘bad.’
It’s been a tough year for the carmaker. 2023 has seen the value of the stock fall by almost 70%.
To be fair, though, the underwhelming performance of this stock was not hard to see coming. Like other startup EV makers, Fisker has been, let’s say, heavy on promises and light on delivery.
While the company hasn’t publicly announced the departure of the latest CAO, it did file an NT 10Q with the SEC, which is the way companies let the regulator know ‘hey, sorry, we’re gonna be filing late.’
Those in the know will immediately scroll down through the document to a sentence which reads:
Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof?
Following this statement are a ‘yes’ and ‘no’ checkbox. ‘No’ is the best box to check. You don’t want to have to check ‘yes.’ But Fisker checked ‘yes.’ And now the big question is just how big of a restatement it will be. Judging from the sudden departure of the CAO, it might be… you know, I’ll just let you fill in your own sentiment there.
Sigh. Where to start? There are lots of ways to go here with this company, and plenty of things that make one tilt their head and give the quizzical-dog look at their computer screen. For one, get a load how the company describes its mission in a September press release:
Fisker Inc. (NYSE: FSR) (“Fisker”), driven by a mission to create the world’s most emotional and sustainable electric vehicles, today announced that the company is ramping up production capacity of the Fisker Ocean all-electric SUV in September, as well as expanding retail, delivery, and service operations across multiple markets in North America and Europe.
Now, I don’t know about you, but I want to keep my car’s emotions to be generally pretty steady. I can’t begin to articulate what the IR team was trying to convey here, but it’s over my head, that’s for sure.
Sometimes the little things really matter when analyzing companies, especially when they start to add up.
Final Thoughts…
OpenAI’s staff isn’t down for all this Altman being fired stuff. It looks like ‘the Ozempic factor’ has now entered the lexicon of annoying investor sayings. Things at GM’s self-driving unit are… not going well. The S&P 500 is out of correction territory. I can’t believe this, but NFTs are making a comeback. Retailers are worried about the ability of the consumer to shop till they drop this holiday season.
Damn, constant headaches for Bayer.