Hey Global Investor, here’s what you need to know before the US markets open.
Market Snapshot 📈
S&P 500 (Tuesday’s Close) 4,202.04 -2.07 (0.05%)
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EEFC Account: Everything You Need to Know
Living in India and earning in another currency? You have probably realized the value of keeping your earnings in foreign currency to pay for your overseas expenses. Learn more about the Exchange Earners’ Foreign Currency account here.
⚖️ Johnson & Johnson: Class Act Or Class Action?
By refusing to hear Johnson & Johnson’s (JNJ) appeal, the US Supreme Court on Tuesday allowed a $2.1B class action settlement against the company to move forward. Is this the close of a chapter or the opening act of a new legal saga? (Tweet This)
Not The First Law Suit
In over a century, J&J has made a name for itself as a trusted manufacturer of medical as well as baby care products. So strongly is its brand associated with babycare that it’s one of the first names that comes to mind as far as baby products are concerned.
The case in question deals with the presence of asbestos in its talc powder and is not J&J’s first brush with the law. In fact, the company has faced thousands of lawsuits over the past two decades for compromising safety standards in its baby products. Just over talc powder, more than 9K women have been named as plaintiffs in various lawsuits against the company.
The legal hassles will certainly have an impact on J&J’s reputation as a benchmark of safety. Additionally, the monetary consequences cannot be overlooked. After the sales in Q1 2018 declined 14% in the US, the company relaunched babycare products, targeting millennial mothers who looked for more natural ingredients in products for their kids.
In 2019, the FDA discovered traces of asbestos – a known carcinogen – in J&J’s flagship baby product Johnson’s Baby Powder. The company recalled 33K units of the product as it tried to contain the fallout. J&J followed up the recall with a complete withdrawal of the product in the US and Canada in the first half of 2020 and termed these developments a misinformation campaign.
Last year, J&J reported revenues worth $82.6B.
Certainly Not The Last
The talc powder case gathered momentum with plaintiffs joining the fight against the company in the US state of Missouri where some of the product was being manufactured. In 2018, J&J was found guilty of misrepresenting the safety of these products for decades and awarded $4.7B in damage which was later cut down to $2.12B.
In November, the Missouri Supreme Court upheld the decision. The court sided with the women, some of whom had suffered Ovarian cancer, and highlighted J&J’s unwillingness to sacrifice profits for a safer product.
New Jersey-based J&J refused to acknowledge any wrongdoing on its part. If anything, the company reiterated the safety of its baby powder product and cited decades of independent scientific evaluation. It has maintained the product does not contain asbestos and does not cause cancer.
That stance is not surprising given J&J is facing ~22K lawsuits that are targeting its talc products. It stands to reason this is definitely not the last we’ll be hearing from the courts in the weeks and months to come.
J&J’s century-old legacy is facing some existential questions with its solid reputation now soiled! What J&J desperately needs now is much more than just band-aids to tend to its legal wounds.
JNJ ended the day at $165.53, down 2.2%.
Company Snapshot 📈
JNJ $165.53 -3.72 (2.20%)
Analyst Ratings (21 Analysts) BUY 71% HOLD 24% SELL 5%
Outlook: Zoom forecasts upbeat revenue, expects boost from hybrid work (ZM -1.15%)
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No Experience: Lazard CEO says remote work damages prospects for young bankers (LAZ +2.12%)
Later Today 🕒
- Splunc Inc Earnings (SPLK)
- Smartsheet Inc Earnings (SMAR)
- Alphabet (ex Google) Annual General Meeting
- Walmart, Comcast Annual General Meeting
- 11:30 PM IST: Fed Beige Book release
- Today: Motor Vehicle Sales (SAAR)
Fun Fact of The Day 🌞
In 2009, a small business filed for bankruptcy every eight minutes