We have an amazing team here at BlueOrange. Kaspars is on a well deserved vacation, and Krista and our summer intern Renārs do a great job keeping everything in order, while also providing thoughtful and fresh insights into making us a little bit better every day.
Here are some links that they found interesting this week:
Tesla manages to raise $1.8b through junk bonds yielding 5.3%
Earlier this month, Tesla came out with a statement saying that the money required to fund the projected production ramp of its recently released Model 3 is going to be raised through a bond offering. At first, the electric carmaker wanted to raise $1.5 billion, a number that, due to high demand, was later increased to $1.8 billion.
People are keener on buying Nike on Amazon than at Foot Locker
According to a report by UBS, more US consumers prefer to purchase Nike products on Amazon (13%), rather than making the purchase at Foot Locker (9%). The recent findings indicate a significant switch from a year ago, when Foot Locker was the option more people chose.
Nike was wary of opening a store on Amazon over concerns of counterfeits being sold and the customer experience being poor, but the sports apparel manufacturer caved and announced a deal with Amazon, which sent the shares flying 7%.
Facebook posts astounding results
The stock price of Facebook surged more than 3% in after-hours trading, after posting better than expected quarterly results. The social media giant reported diluted earnings per share of $1.31 versus the estimates of $1.13, marking a 71% increase from the same period last year. Revenue was reported at $9.3 billion, which is 47% higher than a year ago.
The CFO of Facebook, David Wehner, said that ads are going to contribute less to growth in the following quarter. Facebook is looking to generate more revenue out if the news feed with Facebook TV – a long form video service is set to launch mid-August and ads placed in Facebook Messenger, messaging service with 1.2 billion daily users, is still in “early stages”.
Facebook TV coming in mid-August, maybe..
Reportedly, Facebook is finally coming out with its iteration of on-demand TV. The company has reached out to its partners, asking them to turn in the first episodes of their inexpensive, short-form programs.
According to undisclosed sources, Facebook is funding some higher-end content. The newly released content is going to be accessible separate from the news feed, in a new “Video” tab, alongside user-generated content.
Facebook is looking to make something higher-end than Google’s YouTube, yet is not willing to compete with other original content providers such as Netflix, HBO and Showtime.
With the general population becoming more and more conscious about their internet privacy every day, some seek anonymity in the “dark net”. The dark net, which is the decentralized version of the world wide web, mostly associated with illegal activities and cryptocurrency transactions, according to data, receives around 440 thousand daily users from the US alone.
“How is this relevant?” you might ask.
Well, according to Goldman Sachs – two reasons:
- Firstly, due to the fact that the dark net enables individuals to browse the internet anonymously, out of the reach of traditional search engines, data-collection for advertising revenue reliant websites could take a significant hit to their top-line.
- Secondly, because the dark net is used to conduct various illegal activities, a more direct regulation of the internet could be called for, which in turn has the ability to slow the innovation of large internet companies such as Google, Amazon and Facebook.
With the goldmine, that online advertising is, slowly getting depleted of its resources, it only makes sense for companies to look for ways to cash in on the ever-growing customer base. Facebook is set to launch a premium subscription news service.
After hearing the concerns of several newspapers of having little control on how their stories were being exhibited and how fake news were affecting the overall landscape of the news industry. Additionally, the News Media Alliance, which represents over 2000 newspapers and digital publishers, accused Facebook and Google for benefiting from news stories without properly compensating publishers.
Here’s a link to an article from ABglobal.com that shows how exceeding expectations can actually make ‘expensive’ stocks seem very cheap in retrospect:
This chart that illustrates the differential between Facebook’s earnings expectations and actual earnings is quite enlightening and goes to show the degree to which analysts can underestimate new business models:
We have been taking some profits on big tech recently, but the numbers in this link show why big tech share prices have done extremely well over the past year:
Are you surprised that Facebook grew its profits the most? We’re not. It validates the point that their network is a brilliant platform that has only begun to be monetized.
Thinking about participating in Snapchat’s IPO?
Here’s an infographic by mediakix