Good morning. Andrew here. The Trump administration is reportedly looking at ways to limit the influence of proxy firms and big asset managers like BlackRock and Vanguard over corporate governance. Clearly, some of the firms have conflicts of interest — which we’ve reported on before — that should be addressed. The bigger question: Should these firms be able to vote on behalf of all clients, like people with 401(k) plans with them? The argument in favor is that most investors don’t have the time or resources to study the proxy vote for every company they own shares in. (Think about all the companies in the S&P 500.) But since most individuals don’t vote, what then? If proxy firms are unable to vote on shareholders’ behalf, does that effectively become a win for management? And does that align with shareholders’ interests? Conversely, the argument for limiting the firms from voting is that it gives them too much power and that anyone buying an index is a passive investor and simply going along. Tell us what you think. We’ll discuss this and so much more at the DealBook Summit on Dec. 3, where Treasury Secretary Scott Bessent as well as Larry Fink of BlackRock will participate. We hope you’ll join us in person. (Was this newsletter forwarded to you? Sign up here.)
Skims has a big new fund-raising roundKim Kardashian’s apparel giant, Skims, has gotten significantly more valuable. The company has raised $225 million in new financing, at a $5 billion valuation, Lauren Hirsch is first to report. It’s the latest sign of success for Skims, which has grown significantly beyond its shapewear and underwear roots — and signals what lies ahead. The news: The round was led by Goldman Sachs Alternatives, with participation from BDT & MSD Partners. The company, founded by Kardashian and Jens Grede in 2019, is profitable and expected to exceed $1 billion in net sales this year. Skims’s previous fund-raising round, in 2023, collected $270 million at a $4 billion valuation. Skims will use the new funds to add stores. The brand now has 18 locations in cities including New York, Los Angeles, Austin, Atlanta and Boca Raton, Fla. It wants to further expand that footprint internationally, starting with emerging markets. “Today’s announcement validates the hard work of our incredible team and partners who have helped us reach this exciting new chapter, becoming a global omnichannel retail brand,” Kardashian, the brand’s chief creative officer, said. The brand will also continue to expand into new products. That already includes the splashy launch of NikeSkims, a collaboration with Nike that the brands announced in February. The line focuses on women’s apparel, with plans to add footwear and accessories down the road, The Times has reported. Skims is the official underwear partner of the W.N.B.A., the N.B.A. and USA Basketball. Skims has been laying the groundwork to build up its beauty business. Earlier this year, the brand bought back the 20 percent stake in Kardashian’s beauty business it had sold to Coty. It recently tapped Diarrha N’Diaye, founder of the beauty company Ami Colé, to lead the new venture. Some hints of what that beauty business may look like came in July with the introduction of Skims’s $48 Seamless Sculpt Face Wrap. The product gave customers the chance to use the company’s “signature sculpting fabric” on their face — effectively, shapewear for the visage. Goldman Sachs Alternatives and BDT & MSD Partners are new investors in Skims. Previous investors include the asset management firm Wellington Management, Greenoaks Capital Partners, D1 Capital Partners, Imaginary Ventures and Thrive Capital. Beat Cabiallavetta, the global head of hybrid capital at Goldman Sachs Alternatives, said that Skims stood out for ”pioneering new categories and redefining everyday wear.” What about a public listing? Speculation about going public has hung around Skims for years. In an interview with WWD late last year, Grede — who previously told DealBook that the company “deserves” to be a public company — played down the prospects of an I.P.O. in the near term. “We might make that position in the future, but that’s not what I’m thinking about,” he said.
The Trump administration reportedly weighs a shake-up of shareholder voting. It is considering at least one executive order to restrict the influence of proxy advisory firms like Institutional Shareholder Services and Glass Lewis, which have drawn the ire of corporate leaders like Elon Musk, according to The Wall Street Journal. White House officials are also said to be mulling limits on how index funds are allowed to vote on shareholder measures. Could the government shutdown end today? The House is set to vote soon on a bill to reopen the government, prompting President Trump to claim a “very big victory” for Republicans. But shutdown-related flight delays and cancellations still snarl air travel, and some policy experts say Republican maneuvers on health care could cost them at the polls next year. SoftBank’s stock drops after selling off its Nvidia stake. Shares in the Japanese tech giant tumbled as much as 10 percent today, after it announced that it had divested its entire holdings in Nvidia, the chipmaker at the center of the artificial intelligence boom. While SoftBank said that the move was intended only to help pay for its other A.I. bets, some investors worried it was a sign of how pricey tech company valuations have become. The price of Nvidia shares fell 3 percent yesterday on the news. Cashing in on tariff uncertaintyBusinesses are growing more optimistic that a key component of President Trump’s trade war will be struck down by the Supreme Court, after a rough hearing for the administration last week. That has revived interest in the tariff refund trade, a long-shot gambit to cash in on some of those levies being nullified, Bernhard Warner reports. The stakes are huge: Some economists project that the administration could owe importers billions if the courts rule against the tariffs. How it works: Importers can challenge what they’ve paid in import duties if they believe the levies were unlawful or erroneous. As DealBook reported in September, some Wall Street firms have offered to buy, at a discount, the companies’ legal claims to these reimbursements. Such a deal could provide a financial lifeline for companies socked by tariff fees. Activity around the trade has risen in recent days. Trade specialists shared with DealBook a recent offer email that an arm of Oppenheimer, the asset management giant, sent to businesses. The email notes that “many importers contacted our trading desk at the end of last week” following the Supreme Court hearing. Conservative justices, including Amy Coney Barrett and Neil Gorsuch, joined their liberal counterparts in expressing skepticism on the imposition of broad levies without congressional approval. They also questioned the White House’s use of emergency powers tied to the International Emergency Economic Powers Act of 1977 as legal justification. Oppenheimer changed its terms from offers earlier this year. The firm said it would consider bids starting at 20 percent per refund claim pertaining to “reciprocal” or IEEPA tariffs and 10 percent for tariffs tied to fentanyl. Gabriel Rodriguez, the president and co-founder of A Customs Brokerage, in Doral, Fla., and a recipient of several emails from Oppenheimer, said he believed Oppenheimer was offering to pay the equivalent of 80 cents on the dollar per claim. Oppenheimer did not respond to DealBook’s request for comment yesterday. But when asked earlier this week about its involvement in the tariff refund trade, an Oppenheimer spokesman wrote in a statement to DealBook that the firm was facilitating the trades between importers and hedge and distressed-debt funds, but is not a buyer of these claims. The trade is “super risky,” Rodriguez said. He added that he’s not considering the deal — he said he’s putting his trust in the conventional reclaim process — even though his company has already had to process more than $100 million in duty payments this year, up more than fivefold from a year ago. But interest in these deals is broadly strong, according to trade experts. Some said that even if the Supreme Court were to strike down the tariffs, it might not force the government to reimburse importers. Still, that uncertainty could fuel the trade until the Supreme Court rules on the matter, which court-watchers say could happen early next year.
OpenAI’s “Immaculate Conception” hopesFor OpenAI, supersize numbers are the norm, including the recent announcement that it has 800 million active weekly users and is planning $1.4 trillion in infrastructure investments over the next eight years. And there’s speculation that it may aim for a $1 trillion valuation when it goes public. But the company is also projecting it will have mind-bendingly large losses through 2028 — and then turn wildly profitable just two years later. The big question, Brian O’Keefe writes, is whether that’s possible. OpenAI expects its operating losses to balloon to $74 billion by 2028, The Wall Street Journal reports, citing financial documents that OpenAI shared with investors. By comparison, Meta reported $68.2 billion in operating income last year. (Anthropic, a top A.I. rival, expects to become profitable by 2028, The Journal adds.) But OpenAI’s projections foresee a sharp turnaround in its finances, quickly reversing from around $50 billion in negative free cash flow to more than $25 billion in positive free cash flow in just two years. OpenAI is expecting a business turnaround unheard-of in U.S. capital markets. A screen of all public companies in the U.S. since 1950, shared with DealBook, found no company of comparable size grew revenue over five years as quickly as OpenAI is expecting to from 2024 ($3.7 billion) to 2029 ($145 billion). One venture capitalist with a small stake in OpenAI, speaking anonymously to discuss private financials, likened its ambitions for a swift turn to profitability to “hoping for the Immaculate Conception.” OpenAI is betting in large part on rapidly growing income. It’s currently bringing in about $13 billion in annualized revenue, largely from paying subscribers, who make up about 5 percent of its users. OpenAI has been racing to add new services and products that could bolster its top line, including e-commerce tools, its Sora video generating app and, eventually, an A.I.-powered hardware device designed by Jony Ive of Apple fame. OpenAI’s finances have come under increasing scrutiny in recent days. Critics have raised alarms about the circular investments the start-up has struck with chipmakers, data center operators and other business partners. More warning bells went off last week when Sarah Friar, the OpenAI C.F.O., raised the idea of a government “backstop” for A.I. infrastructure spending. Both Friar and Sam Altman, the OpenAI C.E.O., quickly played down the idea. Still, OpenAI’s spending spree might pay off. If OpenAI can dominate A.I. the way Google did search, its profit forecast starts to look more realistic, according to Jay Ritter, an emeritus professor of finance at the University of Florida who has long studied I.P.O.s. “It’s not clear whether A.I. is a winner-take-all market, but it might be,” he told DealBook. “In that case, spending huge amounts of money to have the best product that everyone wants to use can be a legitimate business strategy.” We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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