Congress
The House GOP’s pick for speaker, Steve Scalise, announced Thursday he will no longer seek the gavel as he confronted a likely insurmountable vote shortage.
While Scalise had won a majority of votes in an internal GOP ballot a day earlier, he faced staunch resistance from multiple Republicans who vowed to support only his opponent, Rep. Jim Jordan, on the floor.
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Rep. Rashida Tlaib, D-Mich., should be impeached for her silence on Palestinian terrorist atrocities, former President Trump said Thursday.
In an interview with FOX News Radio’s Brian Kilmeade, Trump lit into the far-left congresswoman, who famously said she wanted to impeach him when she first took office in 2019. Tlaib went viral after she refused to answer repeated questions from a reporter in the hallways of Congress about reported Hamas terrorist acts and brutality against Israeli civilians.
“I think she’s terrible,” Trump said. “I think she’s a horrible representative of our country and frankly, she should be impeached for that. That’s what she should be. That’s barbaric. You look at what they’ve done to little children, babies, babies where they cut off their heads. It’s not even believable that we’re having this conversation. But nobody’s seen anything like this.”
“This is at a level that nobody’s ever seen, and what I’m hearing is that the number of deaths is actually far greater than what we are hearing having to do with Americans, but also having to do with Israelis and others,” he added.
Tlaib was silent Tuesday when repeatedly asked if she had any comment on a shocking report Hamas had beheaded Israeli babies during their terrorist attack on Saturday, which has left more than 1,000 Israelis dead.
FOX Business reporter Hillary Vaughn confronted the far-left “Squad” member, who has criticized Israel for the attack, as she walked through a hallway on Tuesday.
“Congresswoman, Hamas terrorists have cut off babies’ heads and burned children alive. Do you support Israel’s rights to defend themselves against this brutality?” Vaughn asked. However, Tlaib refused to respond to the reporter.
Vaughn peppered the congresswoman with similar questions but Tlaib continued not to answer.
“You can’t comment about Hamas terrorists chopping off babies’ heads? Congresswoman, do you have a comment on Hamas terrorists chopping off babies’ heads?” she asked. “You have nothing to say about Hamas terrorists chopping off babies’ heads? Do you condone what Hamas has done chopping off babies’ heads, burning children alive, raping women in the streets?”
As Tlaib and a staffer entered an elevator, the reporter asked Tlaib why she continues to have a Palestinian flag displayed outside her office.
“Congresswoman, why do you have the Palestinian flag outside your office if you do not condone what Hamas terrorists have done to Israel? Do Israeli lives not matter to you?” she asked before the Democrat exited the hallway.
Tlaib is the first Palestinian-American woman elected to Congress and is a staunch opponent of Israel. She said this week that U.S. funding of the “apartheid government” of the Jewish state would ensure violence would continue, leading critics to say she was justifying terrorist actions.
“I grieve the Palestinian and Israeli lives lost yesterday, today, and every day,” she said in the statement. “I am determined as ever to fight for a just future where everyone can live in peace, without fear and with true freedom, equal rights, and human dignity… As long as our country provides billions in unconditional funding to support the apartheid government, this heartbreaking cycle of violence will continue.”
Responding to criticism of her stance, Tlaib suggested that any notion she supported terrorism was rooted in bigotry.
“I do not support the targeting and killing of civilians, whether in Israel or Palestine,” Tlaib said in a statement to media outlets. “The fact that some have suggested otherwise is offensive and rooted in bigoted assumptions about my faith and ethnicity.”
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Tlaib’s office didn’t immediately respond to a request for comment.
For more Culture, Media, Education, Opinion and channel coverage, visit foxnews.com/media
Fox News’ Kristine Parks contributed to this report.
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Closed-door negotiations, seductive offers of weapons deals, requests for U.S. security guarantees, and even talk of supporting the Saudis with their own nuclear energy program: these were all on the table as the Biden administration worked toward clinching a Saudi-Israeli normalization agreement in recent months.
Achieving a diplomatic deal between two of America’s most important allies in the Middle East – whose ties have never formally existed – was one of President Joe Biden’s top foreign policy priorities, something he’d be able to highlight when running for re-election in 2024.
Since Saturday Oct. 7, however, and as fighting rages between Israeli forces and the Palestinian militant group Hamas, the likelihood for such a deal seems to have all but evaporated. The rapidly intensifying war is shaping up to become the worst violence of the long-running Israeli-Palestinian conflict in decades.
More than 2,000 people in both Israel and the Palestinian territory of Gaza are dead after five days of fighting, which began with a brazen terror attack carried out by Hamas into southern Israel on Saturday morning. Israel responded with heavy airstrikes and a total siege of Gaza, cutting off water, food and electricity to the already impoverished and blockaded territory.
This puts Saudi Arabia’s ambitious Crown Prince Mohammed bin Salman in a complicated position. Saudi-Israel cooperation in areas like security and intelligence has long been an open secret, and the crown prince in September said in an interview that “every day we get closer” to a normalization deal.
But a major sticking point, he said, was the Israeli-Palestinian conflict. The United Nations classifies Israel as an occupier state over the Palestinian territories, whose occupations and annexations following the 1967 Six-Day War remain in violation of international law.
“For us, the Palestinian issue is very important, we need to solve that part … We hope that it will reach a place that it will ease the life of the Palestinians and get Israel as a player in the Middle East,” he said in an interview.
Palestinians themselves express worry and skepticism over a Saudi-Israel deal, stressing that their representatives have not been involved in any negotiations about the potential future of their status.
Saudi Arabia is home to Islam’s holiest sites, Mecca and Medina, giving it a crucial role in the Muslim world where Palestinian statehood is deeply cared about.
Israel’s current government led by Benjamin Netanyahu had previously expressed no intention of giving major concessions to the Palestinians; Netanyahu in early August told Bloomberg TV that any minor gestures on his part toward Palestinians would essentially be “just a box you have to check to say that you’re doing it.”
A “big victim” of the escalating Israel-Hamas war “is efforts at Saudi and Israel normalization,” Fred Kempe, CEO of the Atlantic Council, told CNBC.
“U.S. officials have been spending a lot of time in Israel and in Saudi Arabia. There was the prospect of a deal, maybe if not by the end of this year, by the beginning of next year, people were giving a 50-50 chance,” he said.
“Right now, you have to give it zero chance. The Saudis just won’t be able to go forward with this right now. Part of the deal would have been Netanyahu reaching some sort of accommodation with the Palestinians. That’s not going to happen right now.”
Israel is currently pounding the Gaza Strip with retaliatory airstrikes pursuing Hamas targets and is carrying out a “total siege” against the densely-packed Palestinian territory of 2.3 million people. Hamas has governed Gaza since 2007, and Israel has kept it under a blockade since then, most of its population unable to leave. All of its borders have now been sealed.
Netanyahu compared Hamas to IS for its brutal tactics and attacks against civilians, and has vowed a heavy response. But the U.N. and other bodies have warned of the mounting civilian toll and stressed that “crucial life-saving supplies — including fuel, food and water — must be allowed into Gaza.”
The Saudi Foreign Ministry, in response to the Hamas attack on Israel, said in a statement: “The kingdom recalls its repeated warnings of the dangers of the explosion of the situation as a result of the continued occupation, the deprivation of the Palestinian people of their legitimate rights, and the repetition of systematic provocations against its sanctities.”
And the crown prince said in a statement Tuesday: “The kingdom will continue to stand by the Palestinian nation in its quest for its legitimate rights.”
One clear winner of the latest developments is Iran, regional analysts say.
“The leadership in Iran will no doubt be applauding an attack inside Israel,” Sanam Vakil, director of the Middle East and North Africa program at Chatham House, told CNBC. “This allows Tehran to inadvertently benefit and challenge Israel in the same way that Israeli security has attacked inside Iran’s borders.” Iran is the primary backer of Hamas, having provided it financial and military support for years.
Iran’s mission to the United Nations has denied Tehran’s involvement in the militant group’s attack on Israel on Saturaday. U.S. Secretary of State Antony Blinken said Sunday on CNN’s “State of the Union” that the U.S. had “not yet seen evidence that Iran directed or was behind this particular attack, but there is certainly a long relationship.”
“More timely for Tehran is that it is looking to slow down Israeli Saudi normalization and through the attack, it might have achieved that,” Vakil said.
With the Hamas attack on Israel, “it’s very clear that Saudi Arabia will take a more gradual approach to normalization,” she said. “The kingdom certainly does not want to be dragged into a broader regional war. And Iran is consistently messaging to its Gulf neighbors that any attack on Iran from Israel will lead to a domino attack on the Gulf. So they’re looking to prevent that kind of kinetic activity.”
Still, normalization may not be entirely dead in the water. Hussein Ibish, a senior fellow at the Arab Gulf States Institute in Washington, notes it may well depend on the extent of Israel’s response, and whether the violence spreads to other parts of Israel and the occupied Palestinian territories, as well as Lebanon.
As well as being an act of terror, the Hamas attack was “certainly an effort to scupper a U.S. triangular agreement with Israel and Saudi Arabia” that may well succeed, Ibish wrote. “But,” he added, “the three parties might recognize the attack for what it is, and move as quickly as possible to resume talks and redouble efforts to bridge remaining differences.”
Biden’s best option may be to pursue the normalization deal in his second term, assuming he wins it, Ibish said.
But for now, he contended, “If Hamas and Iran wanted to upend, and at least postpone, Mr Biden’s proposed US-Saudi-Israeli agreement, they’ve probably already succeeded.”
USA – Voice of America
Some students at a few U.S. universities blamed Israel this week for the Hamas militants’ attack on the Jewish state, drawing a sharp rebuke from academic leaders at the schools as well as from prominent alumni and potential employers.
The debate touched off at Harvard University, the alma mater of eight former U.S. presidents and perhaps the most politically influential school in the country.
A coalition of 34 Harvard student organizations said they “hold the Israeli regime entirely responsible for all unfolding violence” following decades of occupation of Gaza. They called Israel an “apartheid regime” and said it was “the only one to blame” for the war.
The statement drew the ire of prominent Harvard alumni, university President Claudine Gay, and 15 deans at the school.
In a statement, Gay and the Harvard academics said they were “heartbroken by the death and destruction unleashed by the attack by Hamas that targeted citizens in Israel this weekend.”
She added, “While our students have the right to speak for themselves, no student group — not even 30 student groups — speaks for Harvard University or its leadership group.”
A Harvard graduate, billionaire hedge fund chief executive Bill Ackman, and several other business leaders demanded that Harvard release the names of students whose organizations signed on to the letter supporting Hamas, although some students subsequently distanced themselves from the anti-Israel statement.
“One should not be able to hide behind a corporate shield when issuing statements supporting the actions of terrorists,” Ackman said in a post on X, formerly known as Twitter.
“I would like to know so I know never to hire these people,” Jonathan Neman, CEO of the restaurant chain Sweetgreen, said on X.
One prominent New York law firm rescinded a lucrative job offer to Ryna Workman, president of New York University’s Student Bar Association, who wrote in the group’s newsletter that “Israel bears full responsibility for this tremendous loss of life.”
Columbia University in New York City closed its campus to the public on Thursday ahead of a planned protest against the Israeli bombing attacks on Hamas-controlled Gaza. A 24-year-old Israeli student who was hanging flyers was beaten on Wednesday in front of a library on campus, one of several attacks in New York this week related to the Israel-Hamas war that police were treating as possible bias incidents.
At The George Washington University in Washington, a group of about 50 students held a vigil for Palestinian “martyrs.” One organizer contended that the Hamas attacks on Israel were “not unprovoked.”
There have been scattered other pro-Hamas protests in the U.S. this week, but President Joe Biden and a wide range of government officials and corporate leaders have assailed the Hamas attacks and voiced unstinting support for Israel.
USA – Voice of America
U.S. Secretary of State Antony Blinken is on a diplomatic push to help prevent a wider war in the Middle East, traveling to Israel, Jordan, Qatar, Saudi Arabia and the United Arab Emirates. Cindy Saine has the story.
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In an all-hands meeting on the evening of Nov. 9, 2022, Alameda Research employees gathered in a circle to listen to CEO Caroline Ellison, who was sitting on a beanbag.
It was 11 p.m. in Hong Kong, and roughly half of the employees — 15 people — at Sam Bankman-Fried’s crypto hedge fund were present. Christian Drappi, a former software engineer at Alameda, was one of them. Ten others joined via video from the Bahamas. The Alameda office was across the street from FTX, Bankman-Fried’s crypto exchange.
On Thursday, Drappi took the stand as a government witness in the criminal trial against Bankman-Fried, which is taking place 11 months after Alameda and FTX spiraled into bankruptcy. Bankman-Fried faces seven federal fraud charges and the potential of life in prison. He’s pleaded not guilty.
Drappi’s appearance on the stand in Manhattan came at the end of Ellison’s third day of testimony and included a recording of the Hong Kong meeting. Rick Best, a trader who had joined Alameda just days earlier, was directly to Ellison’s right and secretly recording the meeting as audio.
The prosecution played multiple clips from the recording, and the defense team played one in cross-examination.
To a packed courtroom, Drappi described Ellison’s demeanor that night as “sunken.” He said she was “kinda slouching” and “did not display confident body language.”
“Alameda borrowed a bunch of money,” which it used to make investments, Ellison said on the recording. But as crypto prices fell, “FTX had a shortfall of user funds” and then “users started withdrawing their funds” and they “realized they would not be able to continue.”
Drappi can be heard on the tape asking about FTX’s plan to pay back customers. Ellison, who has pleaded guilty to fraud charges and is cooperating with prosecutors, responded that the company would raise money to fill the hole. Drappi told the jury that he was concerned with that response because it’s not typical to raise outside money for that purpose.
Drappi asked Ellison if Alameda’s loans were collateralized through the spot margin group. She said they weren’t, and Drappi said, “That seems pretty bad.”
Drappi wanted to know from Ellison if this was a “YOLO thing.”
He was asked in the courtroom to explain YOLO, and said, “It’s an acronym for ‘you only live once.'”
“When you do a YOLO thing, it’s something that’s spontaneous and not premeditated,” Drappi said. “I wanted to have Ms. Ellison confirm that indeed, you know, they had meetings about this and there was a deliberate decision, as I suspected it would be.”
At one point on the recording, Ellison giggled. Drappi, who said he’d known Ellison for a year and a half, described that as her “nervous laughter” and said she did it quite often.
When she was asked by a staffer whose idea it was to plug Alameda’s loan losses with FTX customer money, she said, “Um, Sam, I guess,” and giggled.
“FTX basically always allowed Alameda to, like, borrow user funds, as far as I know” she said on the recording.
Drappi resigned within 24 hours.
Drappi started at Alameda on May 31, 2021. Over the next 18 months, he worked in three offices: Hong Kong, the Bahamas and San Francisco. He was in Hong Kong as the business was falling apart.
In his testimony, Drappi said he observed Bankman-Fried working at the Hong Kong office and sat about 40 feet from him there for a couple months. The two hung out some out of the office, including to play padel, a hybrid of tennis and squash.
Drappi said Bankman-Fried maintained direct communications with Alameda employees through Signal. He weighed in on large trades and had access to “pointer,” Alameda’s internal interface, as well as to the firm’s back-end data.
In regards to trading, Drappi referenced one instance in which a senior trader said “Sam wanted to do it,” referring to a trade involving selling Japanese bonds and buying the currency. Drappi said he spoke to Alameda traders every day.
The night before the all-hands meeting, Nov. 8, Drappi said he was in the office along with Ellison and two traders, Tony Qian and David Nyeste. At about 11 p.m., Bankman-Fried posted a tweet announcing that Binance was buying FTX, in what would amount to a rescue of the exchange.
Drappi said the response was “shock.”
The Binance agreement was non-binding. On Nov. 9, the rival exchange backed out of the deal, and CEO Changpeng Zhao said FTX’s “issues are beyond our control or ability to help.” Two days later FTX declared bankruptcy.
WATCH: Caroline Ellison details SBF’s involvement in running Alameda
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Haiti declined Thursday to join neighboring Dominican Republic in reopening a key commercial border crossing, leaving some trade at a standstill and prolonging a diplomatic crisis over the construction of a canal on Haitian soil.
Dominican President Luis Abinader had closed all borders including the crossing at the northern Dominican city of Dajabon for nearly a month to protest the construction of the canal, which he says violates a treaty and will take water needed by Dominican farmers. Haiti says it has the right to build the canal and that it’s urgently needed because of a drought.
Abinader’s government partially reopened the borders on Wednesday including the one at Dajabon — home to a key market for commerce between the countries — but allowed only limited trade and kept a ban on Haitians entering the Dominican Republic for work, school, tourism or medical issues. He also kept a ban on issuing visas to Haitian citizens.
DOMINICAN GOVERNMENT OFFERS FINANCIAL AID TO FAMILIES AFFECTED BY DEADLY FACTORY EXPLOSION
Haiti declined to follow suit at its gate in the nearby community of Ouanaminthe, and its government did not immediately state a reason. But Moïse Charles Pierre, a delegate for Haiti’s northeast region, told The Associated Press that the Dominican side needed to apologize and resume full border operations.
“Abinader needs to respect the Haitian people and apologize publicly,” Pierre said.
Meanwhile, the two other border gates at Elias Pina and Independencia have opened on both sides.
The spat over the canal took center stage Thursday at an Organization of American States meeting in Washington, with sharp exchanges between Roberto Álvarez, foreign affairs minister for the Dominican Republic, and Léon Charles, Haiti’s permanent representative to the OAS.
“The construction of the canal is not going to stop,” Charles said, adding that Haiti was still open to dialogue but not “under the threat of dictating a solution to the Haitian population.”
In response, Álvarez unearthed centuries-old history by mentioning Haiti’s 22-year occupation of the Dominican Republic in the 1800s and said the Dominican Republic was not taking up arms over the canal dispute.
“We are not intimidating anyone. Our intention is to protect our border, our natural resources,” he said, as he criticized Charles’s response as “a reckless position.”
During the meeting, OAS Secretary General Luis Almagro offered to send a technical team specialized in water resources and legal issues to examine the site and offered to facilitate a meeting between both sides.
The canal in Haiti aims to divert water from the Massacre River that runs along the border on the island of Hispaniola that both countries share. Haiti’s government has said farmers urgently need the water to quench a drought that has killed crops in the region.
Abinader has said that construction of the canal violates a 1929 treaty and would affect local farmers and nearby wetlands.
On Thursday, former Haitian prime minister and presidential candidate Claude Joseph issued a statement rejecting allegations by a Dominican ambassador that he had ordered work on the canal in order to provoke a crisis with the Dominican Republic.
However, Jospeh insisted that Haiti has the right to build the canal.
Since Wednesday’s partial reopening at Dajabon and other border cities, vendors on the Dominican side are limited to selling goods like food and medicine and are barred from selling construction items such as concrete and metal rods. Dominican officials maintain that sale of such items would aid construction of the nearby canal.
Pierre, the Haitian official, said that in addition to keeping the border closed, authorities are working on a plan that would allow Haitian vendors to recover their wares stuck in the Dajabon marketplace since the closure.
On Wednesday, a pre-dawn fire erupted at the marketplace in Dajabon, with 26 of 28 stalls destroyed belonging to Haitians, according to Dajabon Mayor Santiago Riverón. Authorities are investigating what caused the fire.
Meanwhile, Riverón said he met with Haiti’s consul in Dajabon and expected to meet later with the Haitian mayor of Ouanaminthe to talk about the fire and the border reopening.
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New York Gov. Kathy Hochul is supporting the city’s effort to suspend a unique legal agreement that requires it to provide emergency housing to homeless people, as a large influx of migrants overwhelms the city’s shelter system.
Hochul endorsed New York City’s challenge to the requirement in a court filing this week, telling reporters Thursday that the mandate was never meant to apply to an international humanitarian crisis.
The city has for months sought to roll back the so-called right to shelter rule following the arrival of more than 120,000 migrants since last year. Many of the migrants have arrived without housing or jobs, forcing the city to erect emergency shelters and provide various government services, with an estimated cost of $12 billion over the next few years.
MIGRANTS DEFY MAYOR ERIC ADAMS’ CALLS FOR THEM TO STAY AWAY FROM NEW YORK: ‘WE ARE GOOD PEOPLE’
The shelter requirement has been in place for more than four decades in New York City, following a legal agreement that required the city to provide temporary housing for every homeless person. No other big city in America has such a requirement.
“I don’t know how the right to shelter — dedicated to help those people, which I believe in, help families — can or should be interpreted to be an open invitation to 8 billion people who live on this planet, that if you show up in the streets of New York, that the city of New York has an obligation to provide you with a hotel room or shelter,” said Hochul, a Democrat.
Last week, New York City Mayor Eric Adams asked a court to allow it to suspend the mandate when there is a state of emergency where the shelter population of single adults increases at a rapid rate. New York state on Wednesday filed a court document in support of the city’s request, calling it reasonable.
New York City has also tightened shelter rules by limiting adult migrants to just 30 days in city-run facilities amid overcrowding.
Dave Giffen, executive director of the Coalition for the Homeless, said the city’s request to suspend the mandate would have broad impact and could lead to large homeless encampments in New York.
“Make no mistake: if the mayor and governor get their way, they will be closing the door of the shelter system to thousands of people without homes, leaving them nowhere to sleep but the streets,” he said.
New York
CNN
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A billboard truck drove near Harvard’s campus Wednesday displaying the names and photos of Harvard students whose organizations signed a statement blaming solely Israel for the deadly attacks by Hamas.
The “doxxing truck” appeared days after the Harvard Palestine Solidarity Groups, a coalition of Harvard student groups, earlier this week released a statement that held “the Israeli regime entirely responsible for all unfolding violence,” following the attacks by Hamas that have killed more than 1,200 Israelis and more than 25 American citizens. More than 1,400 in Gaza have also been killed since Israel started strikes on Gaza following the deadly Hamas attack.
Some students and their groups have since distanced themselves or withdrawn their endorsements from the statement amid an intense backlash inside and outside of Harvard. Several said they did not read the statement before they signed it.
A conservative nonprofit said it organized the truck featuring the virtual billboards with students’ names and images under a banner that reads: “Harvard’s Leading Antisemites.” It also published names online. CNN has not independently verified that the named students were associated with the letter.
The group’s president said in a post on X, the platform formerly known as Twitter, that the group “is removing the names of students from groups that withdrew but are also adding new names every hour.”
The University’s Hillel, its Jewish student organization, condemned the billboard truck and attempts to intimidate signatories.
“Harvard Hillel strongly condemns any attempts to threaten and intimidate co-signatories of the Palestine Solidarity Committee’s statement, including the bus on campus displaying the names and faces of students affiliated with the groups who have signed it,” the organization said in a statement posted on its website.
“We will continue to reject the PSC’s statement in the strongest terms — and demand accountability for those who signed it,” the statement added. “But under no circumstances should that accountability extend to public intimidation of individuals.”
Harvard legal scholar Laurence Tribe also blasted the attempts to expose the students, telling CNN in an email that naming and shaming the students, as well as “labeling them as antisemites while posting their photos to put targets on their backs” is “far more dangerous than useful.”
“We shouldn’t repeat the McCarthy era’s excesses in the interest of moral clarity,” Tribe added.
The malicious publication of personal information, such as home addresses or phone numbers, has been a tactic used by far-right groups for years to intimidate Palestinian activists and allies into silence, according to a current Harvard student, who is of Palestinian descent, and spoke to CNN on the condition of anonymity.
In the wake of the mounting backlash, at least eight of the original 34 co-signing Harvard student groups had withdrawn their signature from the statement as of Wednesday afternoon, according to the Harvard Crimson student newspaper.
The reversal from a handful of student groups also comes after billionaire hedge fund CEO Bill Ackman and several other business leaders demanded Harvard University release the names of student signatories so they would know not to hire them.
In a post on X on Wednesday, famed economist and former Harvard President Larry Summers, who criticized the statement, added that it is “not a time where it is constructive to vilify individuals.”
“Please everybody take a deep breath,” he wrote. “Many in these groups never saw the statement before it went out. In some case(s) those approving did not understand exactly what they were approving. Probably some were naive and foolish.”
Harvard referred CNN’s request for comment on the doxxing truck to a letter written to the Harvard community and shared online from Executive Vice President Meredith Weenick, which said the university “takes seriously the safety and wellbeing of every member of our community.”
“We do not condone or ignore intimidation,” Weenick wrote. “We do not condone or ignore threats or acts of harassment or violence.”
She added the Harvard University Police Department has “stepped up its security presence on campus and continues to monitor online activity for the potential of any specific threat to the campus community or individuals on campus.”
Weenick also included a link to guidance resources on cyber harassment and other electronic threats in her memo.
–CNN’s Matt Egan contributed to this report.
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Birkenstock ‘s recent initial public offering (IPO) is expected to help boost shares of British footwear brand Dr. Martens , according to Investec analysts. German shoe brand Birkenstock’s debut on the New York Stock Exchange earlier this week has given investors and analysts insight into the financials and metrics of a sizeable single-brand footwear company for the first time. Using this information as a benchmark, Investec analysts believe that there is significant growth potential for London-listed Dr. Martens and that the market may be underestimating its prospects. “Birkenstock is a good example of how big a footwear brand DOCS could become, and the profitability it could achieve,” said Invest analysts Kate Calvert and Ben Hunt, referring to Dr. Martens’s ticker DOCS, in a note to clients on Oct. 3. The analysts pointed out that Birkenstock’s sales last year were slightly higher than Dr. Martens’ projected sales this year. However, the German company sells over twice the volume of footwear as Dr. Martens, which has a higher average selling price. These figures have enabled Investec to forecast that the British company’s goal to double revenue to £2 billion ($2.45 billion) is “achievable,” compared to £1 billion currently. The investment bank expects shares of Dr Martens to rise to £2.15 over the next 12 months, indicating an upside potential of 65% from current levels. Shares of the company have fallen by nearly 40% this year. DOCS-GB YTD line Similarities and differences Birkenstock’s business model and brand ethos have many similarities to Dr. Martens, according to the analysts. Both companies have a vertically integrated production model and a multi-channel distribution strategy focused on direct-to-consumer sales. However, they also differ as Birkenstock owns its five factories in Germany , while Dr. Martens subcontracts the manufacturing of most of its products across seven countries. The analysts said Birkenstock’s scale and vertical integration likely explain its lower operating costs at 27% of sales versus 37% for Dr. Martens. Undervalued or overvalued? Investec analysts say Dr. Martens trades at an inexpensive valuation that reflects concerns over temporary underperformance in the U.S. rather than its strong cash flow generation and growth potential. The analysts say investors are not currently appreciating the company’s ability to return to double-digit annual growth as sales in Europe and Asia-Pacific regions continue to perform well. In contrast, analysts at RBC Capital Markets take a more cautious view on “luxury” stocks like Dr. Martens. RBC pointed to signs that the luxury market is above historical levels and is due to moderate. Earlier this week, shares of Europe’s largest luxury company, LVMH , dropped to their lowest level of the year after the company reported a slowdown in revenue growth below expectations. The investment bank believes aspirational middle-class consumer growth that drove the luxury sector over the past two years is fading, and companies will find that prices need to be balanced with lower volumes going forward. RBC said it has a “Sector Perform” rating, equivalent to “hold” at other investment banks, on Dr. Martens. It expects shares to rise 15% to £1.30 a share over the next 12 months.
