🔐 Feds Arrest Executives of Telehealth Company

MARKET UPDATE

Good Morning Investor! Shares of Autodesk ($ADSK) rose over 6% on Monday, after news emerged of Starboard Value taking a roughly $500 million activist stake in the company. Meanwhile, shares of the recently debuted Raspberry Pi ($RPI.L) rose a further 4%, continuing its brilliant start to life as a publicly-listed company.

TODAY’S BIG HEADLINES

Feds Arrest Executives of ADHD-Focused Telehealth Company

Info Wars & Alex Jones are Still in Business

The Nationwide Zyn Shortage

HEALTHCARE & TELEHEALTH

Feds Arrest Executives of ADHD-Focused Telehealth Company🔐

Adderall-gate: Last Thursday, the Department of Justice (DoJ) dropped a bombshell: Ruthia HeDavid, CEO, and Brody David, Clinical President of ADHD-focused telehealth startup Done Global, were charged in a $100 million fraud case. The dynamic duo allegedly conspired to defraud pharmacies and the US Medicare program by distributing controlled substances—mainly stimulants that weren't medically necessary.

• Done Global is accused of exploiting pandemic-era flexibilities to push Adderall prescriptions, creating a fast track for stimulants without pesky medical prescriptions.

• Customers could simply hop online, sign up for a subscription, and voila—Adderall at their doorstep. No doctor’s note needed. It's like an all-you-can-eat buffet, but for ADHD meds.

Newton’s Third Law: The fraudulent scheme turned into a lucrative $100 million monthly subscription empire, but now He and David are facing the music. They've been arrested and indicted, staring down the barrel of a potential 20-year prison sentence for their unlawful enrichment escapade. The company managed to generate a whopping $100 million in monthly subscription revenue through this scheme, after raising their subscription prices. This marks the DoJ's first criminal drug distribution charge involving a telehealth company.

• Since the pandemic began in 2020, Done Global has issued over 40 million prescriptions. That's more prescriptions than Netflix has original shows!

A Close Call for Tickergeek’s Darling: Here at Tickergeek, this case hit close to home because of our investment in Hims & Hers Health ($HIMS), another telehealth company we backed in March. Unlike Done Global, Hims steers clear of the ADHD medication scene, focusing instead on weight-loss, hair loss, sexual health, mental health, and skincare. So far, they've managed to stay out of the DoJ’s crosshairs. Phew!

MEDIA & LAWSUITS

Info Wars & Alex Jones are Still in Business✅

Jones' Fortune Fades: On Friday, a federal bankruptcy judge dropped the gavel on conspiracy theorist and infamous “Infowars” host Alex Jones, ruling that he must sell his personal assets to pay off the massive defamation debts he owes to the families of the Sandy Hook shooting victims. The judge also dismissed the bankruptcy filing for Jones' company, allowing him to keep his Infowars platform running for now.

• The judge also ended up dismissing his company’s bankruptcy, thus allowing Jones to continue the operations of his Infowars platform for the time being.

Lies, Lawsuits, and a $1.5 Billion Bill: Alex Jones repeatedly claimed on his Infowars show that the Sandy Hook mass shooting was a hoax, a conspiracy theory that led to over 15 families suing him. These families testified that Jones' outrageous lies caused them severe emotional trauma and subjected them to threats and harassment from his followers.

• In 2022, Jones was hit with a staggering $1.5 billion in damages, prompting him to file for bankruptcy soon after.

Current Situation: Friday’s court ruling converted Jones' personal Chapter 11 bankruptcy to a Chapter 7 liquidation, meaning his assets will be sold to pay off his debts. However, the judge rejected a bid by some families to liquidate Free Speech Systems, the parent company of Infowars, which also filed for bankruptcy at the same time as Jones did.

• This legal saga has led to some bizarre financial twists, including Jones' reported negative net worth of -$9 million. Despite this, the families are now entitled to Jones' future earnings, which he can continue to generate through his Infowars business. It’s a strange turn of events, where Jones remains on air, but his profits are earmarked for the very people he wronged.

CONSUMER DISCRETIONARIES

The Nationwide Zyn Shortage 😮‍💨

Zyn Goes into Hiding: It seems Phillip Morris’ ($PM) popular nicotine pouch, Zyn, is playing a disappearing act. Overwhelming demand has left the tobacco giant struggling to produce enough of these smokeless wonders for its nicotine-craving fans, causing a nationwide shortage in the US.

• With Zyn in short supply, nicotine pouch aficionados are turning to alternatives like Rogue, Velo, and On!, which have all seen a boost in market share recently. It’s a nicotine pouch free-for-all, and the competition is loving it.

Quarter zips and Nicotine Pouches: The surge in demand for smokeless nicotine products is largely fueled by tech and finance workers. These desk jockeys are seeking a performance boost, and nicotine fits the bill perfectly. Now that they can get their fix discreetly at their desks, the demand has shot through the roof.

• Nicotine, often dubbed a “nootropic,” is being hailed as the new Adderall, serving as a handy substitute for the ADHD medication.

• According to Goldman Sachs ($GS), Zyn’s market share has dipped from 26.8% to 25.4% in just two months. It seems Zyn’s fans are finding other ways to get their buzz.

Zyn’s Future: Phillip Morris has a clear mission: ramp up production, and do it yesterday. Currently, their lone factory in Kentucky is working overtime, but relief isn’t expected until the end of the year. Next year looks more promising, with plans to open a second facility to keep up with the booming demand. So, while Zyn fans might be feeling the pinch now, rest assured, more pouches are on the horizon.

MORE NEWS

Additional market-moving events🌎

Jumping the Fence: OpenAI CEO Sam Altman claims the firm could potentially transition from non-profit to for-profit and replace the company’s board as a results. (TheInformation)

Well Fargo’s Regrets: The Bilt rent credit card is costing Wells Fargo dearly, and is now renegotiating its deal with the startup after incorrectly forecasting key revenue drivers. (WSJ)

Shifting Focus: Toyota is making a big bet on smaller, hybrid engines. (Financial Times)

Rife with Bribery: Adidas is currently investigating bribery in its Chinese operations. (Bloomgberg)

OUR PICKS

Our selections performance👾

On Monday the 11th of March, we released our “two superperformers” stock picks which we believe will provide significant outperformance compared to the S&P 500. Then on the 10th of June we released our next stock selection.

Here’s how the three stocks have performed since:

• Evolution AB: 1,066.50 SEK (📉-18.70%)

• Hims & Hers Health: $24.15 (📈+66.90%)

• PayPal: $60.13 (📉-7.16%)

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