The company

Union Bancaire Privée (UBP SA) was founded in 1969 by Edgar de Picciotto in Switzerland. With CHF 161.1 billion in assets under management, UBP is one of the largest private banks in Switzerland, as well as one of the best capitalised banks in the country. UBP specializes in the fields of wealth management on behalf of private and institutional clients. The bank’s head office is in Geneva, Switzerland, and it employs 1,827 people as of November 2021 according to LinkedIn.

Source: Union Bancaire Privée.

My internship at UBP

In the autumn of 2018, I worked in the Sales & Marketing department of Union Bancaire Privée (UBP), London. At the private bank, I helped support a multi-national team using my command of French on a daily basis, particularly as regards frequent communication with the UBP head office in Geneva. During this time, I also developed familiarity with the commercial applicability of SalesForce and LinkedIn, which allowed me to identify and send newsletters to potential clients.

While with UBP, I also helped organise a roadshow for departmental seniors and this allowed me to meet other company managers which developed my understanding of both finance and marketing within a client facing environment.

Key concepts related to my work

The Law of Averages

The principle holds that future events are likely to occur as to balance out past deviations from an expected average. For me this was important as it related to the likelihood that my leads (potential clients) would reply to newsletters and convert into clients. It also allowed me to manage my expectations and remain positive in an environment that required a strong willingness to succeed.

Work hard, play hard

One of the benefits of working in a client-facing role was that I often met prospective clients in social settings like restaurants, bars, or conferences. This was a fantastic biproduct of the team I worked with, which allowed me to learn more about the industry in a more informal manner. It also allowed me to witness first-hand the connections that I created between the bank and prospective clients. On a sidenote, all bills were also expensed to UBP which made the whole ordeal rather merry.

Money

“Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.” The quote by Franklin D. Roosevelt really echoes with me as through multiple internships and work placements, I’ve learnt that the people you work with and the genuine appreciation for the job you’re doing outweighs the benefits of a higher salary in worse conditions. From cleaning out storage rooms to drinking with clients at the Ritz, the enjoyment and passion for one’s work and comradery between colleagues affects my work ethic and drive to succeed. Money can rarely be the ultimate objective, it is a biproduct of a passion and acts as compensation for your time and expertise.

Peloton’s uphill battle with the world’s return to order

In this article, William ANTHONY (ESSEC Business School, Global Bachelor of Business Administration, Exchange Student from the University of Bath, 2021-2022) discusses the market reaction to Peloton’s quarterly results.

Description of the firm

Peloton is an American company which produces exercise equipment and media streaming. Its best-seller ‘Gen 3 Peloton bike’ is available in the US, UK, Germany, Australia, and parts of Canada. With significant increases in sales during the COVID pandemic, Peloton became a public company via IPO on September 26th, 2019. At the time of writing, the company is currently valued at $16.85Bn (Market Capitalization as of 07/11/2021).

Source: Peloton.

Description of the event

Peloton reported weakening sales on the 4^th of November 2021 and a larger loss than expected for its first fiscal quarter. As consumers begin to return to gyms, a step closer to a pre-pandemic environment, John Foley, Peloton CEO, admits to ongoing “supply chain constraints” and “demand uncertainty amidst re-opening economies”. The fall in demand growth for Peloton’s exercise equipment has subsequently lowered the demand for its subscription-based products which has also contributed to lower profit margins.

My explanation of the market reaction to the event

The weaker than expected sales growth report led to a decrease in Peloton’s share price by nearly 40% from $86 to $60 as illustrated in Figure 1 below. In their fiscal first quarter, Peloton’s loss per share was expected at $1.07 but was instead $1.25; revenue was expected at $810.7 million but was instead $805.2 million. Despite a surge of 148% in sales and marketing expenses to $284.3 million, which represents around 35% of Peloton’s revenue, the firm was still unable to show strong growth figures coming out of the Covid-19 pandemic. This is extremely worrying and underlines Peloton’s “challenged visibility” (John Foley, 2021).

CNBC’s Jim Cramer advised his audience to sell Peloton on the next bounce after what he called a “disastrous” quarterly result. When looking at gyms like Planet Fitness Inc which have increased by nearly 20% in the last 5 days in share price, I believe there is reason for worry for Peloton shareholders. The lack of direction from Peloton management regarding a post-pandemic market and ongoing supply chain challenges leaves Peloton with a ‘sell’ market consensus and for me justifies its cliff-diving share price.

Figure 1. Peloton stock chart.

Source: Google Finance.

Justification of my choice of the event and the firm

I chose this event because it is very recent, it is also a great example of how news regarding stagnant growth can negatively affect a company’s share price. In this example, one of the top fitness companies in the world that gained massive momentum over the global COVID pandemic, saw all its shareholders lose up to 40% of their investment in one single after-hours trading session. Here we have witnessed how ruthless the market can be in just a couple of hours.

My thoughts on the market efficiency

Eugene Fama distinguishes three levels of informational market efficiency:

Weak efficiency: all information contained in past stock market data (prices and transaction volumes) is already reflected in today’s price.
Semi-strong efficiency: in addition to the information contained in historical stock market data, all public information (company accounts, analyst reports, etc.) is already reflected in today’s price.
Strong efficiency: all information, public as well as private, is already reflected in today’s price.

I believe in Peloton’s case that the market has shown itself to have semi-strong efficiency. Within hours of private information being made public, the company share price reflected an adjusted rate relating to the newly released quarterly report information. As a result of the market incorporating the news into the price with such rapidity, the market was hard to ‘beat’ due to shareholders willingness to sell their shares.

Useful resources

Academic references

Fama E. (1970) « Efficient Capital Markets: A Review of Theory and Empirical Work » Journal of Finance, 25, pp. 383-417.

Fama E. (1991) « Efficient Capital Markets: II » Journal of Finance, 46, pp. 1575-617.

Business

Peloton’s website

Peloton’s financial results

About the author

The article was written in November 2021 by William ANTHONY (ESSEC Business School, Global Bachelor of Business Administration, Exchange Student from the University of Bath, 2021-2022).

Working for a Private Bank