Before we begin, I wanted to ask if any readers recently lost a rule of one hundred dollar bills wrapped in a rubber band. Well, we found the rubber band and would love to return it to you.
Was it yours? Oh, well, here’s a special edition of what you missed from the news over the weekend.
Goodbye, Old Friend
Sears has officially said, “farewell,” filling for Chapter 11 bankruptcy early on Monday. After 132 years, the once-dominant retail store is no more. The original department store came to life at a time when rural American demand for goods was met with unaffordable retail costs, and Sears built its entire business around affordable, quality, wholesale product. With the advent of stores like Target, Ikea, Nordstroms, and so on, Sears couldn’t compete.
As of the filing, about 700 stores remained open and the company employed 68,000 workers. That’s down from 1,000 stores with 89,000 employees that it had recently as of February, CNN reports.
Although retailers typically file for bankruptcy to save their businesses, some companies pass the point of no return and end up going under. Stores like RadioShack, Toys “R” Us and Sports Authority are several examples of this fate.
Where In The World Is Jamal Khashoggi?
For those of you unfamiliar with the name in the catchy header above, let me briefly fill you in. Jamal Khashoggi is a Saudi Journalist who moved to the US to work as a columnist for The Washington Post. Up until recently, he was practically family with the Saudi royals but has since become a harsh critic. About two weeks ago, Khashoggi visited the Saudi consulate to file paperwork to marry his new fiancee, whom he said: “just chill in the car, I’ll be right back.” He has never returned.
Reports have been released, by Turkey, that Khashoggi was killed by a “15-person Saudi hit squad” while inside the consulate. The Saudi Government says that Khashoggi picked up the paperwork and walked out the front door.
The US, the person at the party who always seems to have an opinion, threatened “severe punishment” if Saudi Arabia ends up guilty for the alleged murder of Khashoggi.
How is Jared Kushner Similar To A Kilt?
Both are trying to skirt. Budum, pshh. This weekend, reports came out that Kushner has figured out how to “skirt” federal income taxes because of depreciation. To make it simple, you can report a property-related loss as a deduction for your tax filings, and if you make “less” than the loss, you may even be refunded. In the case of Kushner, in 2015, he reported $1.7 million in salary but listed $8.3 million lost to “significant depreciation” to the owned real estate, thus decreasing taxes owed.
What Kushner has managed to do is legal. Where it gets a bit fishy is this report comes less than two weeks after his daddy (in-law), President Trump, allegedly committed tax fraud.
A School Founded In 1683 Is Racist? What? No….
Well, yes. Harvard University, perhaps the most iconic university in the world, is on trial for whether the institution is illegally discriminating against Asian-American applicants. The group, Students for Fair Admissions, has accused the school of holding the Asian-American population to higher standards than students of other races.
The lawsuit alleges that Harvard practices “racial balancing,” essentially working to maintain a certain distribution of each race on campus, Associated Press reports. Harvard, naturally, denies the accusations and insists the plaintiffs have yet to provide any concrete evidence of this discrimination.
“Look, if you were the inventors of Racebook, you’d have invented Racebook.”
– Mark Zuckerberg (Jesse Eisenberg) The Social Network
The Roller Coaster Ride On Shutterfly (SFLY) Stock
Shutterfly (SFLY) has been one of the most important companies in the photofinishing industry with the range of services that it offered. Over the past twenty years, the company had been involved in services like digital photo storage, customized merchandise, and print processing among others. However, the company is now all set to make an exit from the business that they have built up over the years by selling it to Apollo Global Management.
Last week, the company announced that it had accepted the offer that had been made by Apollo and some experts claim that the investors in Shutterfly might not be entirely happy with the final payout.
Apollo is going to fork out $51 per share for the acquisition and that might not make many investors happy, considering the fact that it is just 1.5% higher than the closing price of the Shutterfly stock on Monday. However, there is another way of looking at it.
The news of a potential acquisition by Apollo had first been reported back on 23 April and it was then that the stock started climbing. If the price prior to that surge is taken into consideration, then the shareholders are looking at a 31% premium on their shares.
What Are Investors Saying?
That being said, the investors still have a lot to be upset about, since Shutterfly stock had been trading at $100 on June 5 last year. However, it is quite clear that the price offered by Apollo is the best deal since no other bidder has come forward with a counteroffer. Apollo will be paying out $2.7 billion for the acquisition.
Shutterfly’s business started showing weaknesses towards the end of last year and the company’s acquisitions at the time did not really make a big dent in the revenues. Although the business has shown weaknesses, it is important to note that Apollo clearly sees a future in the company; otherwise, it would not have forked out $2.7 billion for the company.
While the company will continue to be in business, it has been a pretty harrowing experience for people who had invested in the company.
Amazon’s Ad-Biz On A Roll Amid Increased Competition
Amazon.com, Inc. (AMZN), the giant e-marketer, the third-largest digital advertisement seller seems to be on the way of making it to the top. The Q1 advertising revenue, although not specifically mentioned in the annual reports, stood at $2.72 billion.
There has been a 36% increase in the income generated through these ad services from the previous year. However, the growth rate seems to be increasing at a diminishing rate, with last year’s quarterly growth figuring to 95% to 138% and revenues 57% more than that in 2016. But, the declining growth rate does not imply that the market might fall for Amazon.
Tough Competition For Google And Facebook
While on one hand, the Amazon ad-biz is soaring high, the same cannot be said for Google (GOOG). The company along with Alphabet, its parent, saw its all-time low growth rate of 15% in 2019 Q1 since 2016. This might be a result of Amazon’s expanding market share. Even though Amazon still holds little market share as compared to the top-two giants – Google and Facebook (FB) – but, it seems to be gaining a popular reputation among the CPG retailers. With more and more retailers keeping an increased budget for advertising with Amazon, things sure are looking bright for the company.
With Amazon being a shopping site as well, the consumers find it quicker and easier to search for the desired product and buy it on just a few clicks, even less with saved bank account details. Not to forget the exceptional heavy discounts and offers provided by Amazon, sparsely luring in customers. These incline retailers all the more to advertise their products on Amazon.
The Digital Age
The Amazon advertisement business seems to be quite appealing in today’s digitalization age. Google and Facebook are at the risk of losing their business to this giant. But, this does not mean that Google is at a stance of losing its prime position. Google, with its large customer base, unlike Amazon, incorporates not only a few select retailers but other business scopes as well, like that of financial service providers, realtors, etc. This puts Google a step ahead of Amazon, making it unlikely to be overthrown by the latter.
Facebook, on the other hand, has little to worry about. Its advertising model is quite different than that of Amazon or Google, which has a search-based model. Facebook takes into account the demographics, interests and online habits of its users offering them a wider range of advertisers. But, the biggest threat looms over the traditional advertisement media which might go extinct in time.
ROKU Stock Up 210% in 2019, Time To Sell?
Roku (ROKU), which is one of the world’s largest online media players, has grown at a breakneck pace over the past half a decade. Much of Roku’s growth is due to the expansion of online streaming. It is one of the most popular services in the world and it had grown at a much faster clip over the course of 2019 so far.
ROKU Stock Gains 210% So Far In 2019
From the beginning of the year up until last Friday, ROKU stock has surged by as much as 210% and has outperformed the growth in the S&P 500 index which has gained by only 13%. Moreover, the stock made an all-time of $95.10 in Friday’s session.
The primary reason behind the remarkable upsurge has been the growth in the number of users in addition to rising streaming hours and income from each user. However, despite the hyper growth in the company and the stock, ROKU stock went down by as much as 6% in Tuesday’s session. Due to that fall, old worries about the company having grown too fast have resurfaced and there is a compelling case to be made.
Stephens’ Analyst Downgrades to Overweight
An analyst at Stephens named Kyle Evans has stated in a note that the company may have grown too fast and that could create risks for investors in the near term.
The note in question was written by Evans on Tuesday and he stated, “We believe the recent run and higher valuation … combined with raised expectations … creates increased [near term] risk.” He did not lower his 12-month target price of $84 but changed the rating for the stock to overweight from equal weight. Following the drop on Tuesday, the shares were trading at $90.
The analyst stated that the recent rally in the stock may have been impressive but even last year, the stock had nosedived after reporting its earnings for the third quarter. At the time, it went down by as much as 22% and the reason for the decline was the disappointing platform revenue.
Hence, a case is being made that the dizzying highs could just as easily trigger a big selloff if the company underperforms in any of the quarters.
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