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All Eyes Are on the Spotify IPO, but Our Better Profit Play Could Climb 28.06%

The Spotify IPO date is scheduled for Tuesday, April 3, 2018, but we have a better profit play for Money Morning readers. It’s a proven winner that could climb 28.06% over the next 12 months, and that doesn’t even include a $2.52 dividend (1.46%).

The company we’re talking about is Apple Inc. (Nasdaq: AAPL).

Spotify IPOmoneymorning.com/wp-content/blogs.dir/1/files/2018/04/spotify-app-75×50.jpg 75w” sizes=”(max-width: 300px) 100vw, 300px” title=”Spotify IPO” />

Yes, that may not sound as exciting as getting on the “ground floor” of a public offering, but Apple is the better profit play across the board.

While potential investors are attracted to Spotify’s 70 million subscribers, Apple boasts 38 million subscribers to its own music-streaming service. And while Spotify hasn’t managed to post a profit, Apple is one of the most profitable companies on the market.

On Jan. 29, Money Morning Director of Technology & Venture Capital Research Michael Robinson said current shareholders should buy more Apple stock on the dips, and first-time buyers should get shares right now.

And if you’re intrigued by the Spotify debut, it might be the perfect time to buy Apple.

We always warn our readers that IPO prices can have wild swings in the first year of trading. Retail investors think they’re going to miss out on the next big thing, buy in at inflated prices, and then demand falls.

That sends prices plummeting.

For example, just look at what happened since the March 2, 2017, Snap Inc. (NYSE:SNAP) IPO.

Shares of SNAP opened to the public at $24, but today (April 2), shares of SNAP opened at $15.67.

That’s a 34.70% decline since Snapchat went public.

Now, that’s not the case for every IPO. Some companies are so valuable it makes sense to buy in as quickly as possible, since that might be the cheapest price you’ll pay for the stock. The stock price for Alibaba Group Holding Ltd. (NYSE: BABA), for example, has climbed 168.83% since its IPO in 2014.

But Spotify simply hasn’t proven it deserves your hard-earned money.

In a February 2018 report, the music site revealed it lost $1.5 billion in 2017.

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The company simply hasn’t figured out how to translate its user base into profits, and it might never figure it out.

An astronomical 79% of its revenue has to be paid out in royalties to artists, and there’s no clear path to resolve this problem.

On the other hand, Apple raked in $88.3 billion just in Q1 2018.

The Apple stock price has also climbed 173.26% in the last five years. In comparison, the Dow Jones Industrial Average climbed just 62.15% during that same time.

And in the next 12 months, there could be 28.06% gains just down the road…

The Real Profit Play When Spotify Stock Hits the Market

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Is Facebook Inc Stock a Screaming Buy or a Portfolio Destroyer?

If I said in January that Facebook Inc (NASDAQ:FB) stock would be trading near $150, many investors would be backing up the truck. After all, it’s the premiere platform for advertising — who wouldn’t want to buy Facebook stock?

It’s easy to ask for a pullback in certain stocks or the market as a whole. But when you see the S&P 500 down 10% in 10 days like we witnessed in February or are staring at FB stock down 20% from its highs, pulling the “buy trigger” becomes a whole lot harder.

In that regard, is it time to buy FB stock?

I’m going out on a limb to say yes, it’s time to start a position. Whether you’ve been long since its $38 IPO and were looking for a pullback to buy or have been contemplating a fresh position in the social media juggernaut, 20% declines in Facebook stock don’t come around too often.

The fear with these types of situations is: How low will the pullback in Facebook stock last?

Sizing Up Facebook Stock

Facebook’s user data issue is a bad one. It’s drawing boycotts and advertiser pushback, while causing users to question the morals of the company. It’s got CEO Mark Zuckerberg heading to Capitol Hill to testify and it raises concern about potential regulations in this space.

It also raises questions about Twitter Inc (NYSE:TWTR) and Snap Inc (NYSE:SNAP). Some have reported that both Twitter and Snap have engaged in similar data-selling practices that Facebook has. Are they next to get significantly hit?

Perhaps, but so far the social media leader has been hit the hardest. At best, FB stock would have been looking at 5% decline. At worst, it will get pummeled like Chipotle Mexican Grill, Inc. (NYSE:CMG). But that would require a decline of more than 66% or in Facebook’s case, a fall to $68. I can’t imagine a scenario where that plays out.

But what about a 30% fall to $136.50? Is a 40% decline to $117 in the cards?

Only because FB stock has fallen 20%, does a decline of 30% seem possible.

In the short-term, it’s hard to imagine much more pain. What we need to see is the business impact. Facebook still connects 2 billion people per month. It still has impressive daily and monthly active user growth. And ultimately, it still has impressive ad, revenue and earnings growth. If these metrics take a hit, that’s how Facebook stock could see major declines this year.

Trading FB Stock

There’s no way to put it nicely: the charts are not good. Now below the 50-day, 100-day and 200-day moving averages, the stock’s vital uptrend has been shattered. Seeing it below $155, what seems to be a notable support level, is also discouraging. While shares bounced Thursday, it’s no guarantee it will last beyond end-of-quarter trading.

Further, we’ve got the 50-day now below the 100-day, showing that intermediate trends are no longer bullish. If the 50-day moving average crosses below the 200-day, it will form what’s known as a “death cross,” a bearish technical setup. It shows that the longer term trend is no longer bullish.

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Click to Enlarge

So why the heck would we want to buy this thing? Buying FB stock is ultimately a bet that it’s business will not suffer catastrophic consequences. It will suffer to some degree, but this doesn’t change the fact that the Facebook platforms are the best way for advertisers to reach customers.

I wouldn’t go all-in on Facebook stock yet. But nibbling a starter position now for a longer-term investment is a bet that FB is still relevant in 6 months, 12 months and 24 months.

Valuing Facebook

Estimates still call for earnings to grow 36% this year and 21% in 2019. Revenue estimates call for 35.8% and 27% growth this year and next. Shares trade at just 17.2 times 2019 earnings estimates. Even if we haircut this year’s earnings estimates of $7.35 per share by 20% (down to $5.88) and cut 2019 estimates by 10% down to $8.01 per share, FB stock still only trades at 19 times 2019 estimates.

On an earnings basis, it’s still cheaper than SNAP, TWTR and Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG). Heck, it’s even cheaper than The Coca-Cola Co (NYSE:KO) and has a valuation in line with Procter & Gamble Co (NYSE:PG).

For a company with this fat of margins — ~50% operating margins, ~40% profit margins — and this strong of growth, sub-20 times forward estimates is a good price for longer term investors.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did held a long position in GOOGL. 

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Best Clean Energy Stocks To Buy Right Now

Many of us have been forced to watch sexual harassment training videos by our employer. We often poke fun at the over-acted scenarios, or the unrealistic “right answers.”

But in the midst of a national reckoning on sexual harassment — prompted by allegations against high-powered names like Matt Lauer, Kevin Spacey, Al Franken and, of course, Harvey Weinstein — advocates are calling for a closer look at the trainings that shape so many employees’ understanding of workplace behavior.

Research shows that sexual harassment training may not be as effective as once thought.

On the one hand, the videos, quizzes and other staples of new job orientation are good at raising employees’ awareness of sexual harassment as an issue.

But on the other hand, many of the training mechanisms are shown simply as legal protection — something an employer can point to as “we tried!” should a situation arise.

In the Equal Employment Opportunity Commission’s 2016 report on sexual harassment, officials stipulated that corporate attitudes toward training need an overhaul.

Best Clean Energy Stocks To Buy Right Now: DXP Enterprises Inc.(DXPE)

Advisors’ Opinion:

  • [By Lisa Levin]

    Shares of DXP Enterprises Inc (NASDAQ: DXPE) were down 17 percent to $24.00. DXP Enterprises reported preliminary revenue of $228 million to $231 million for the third quarter.

  • [By Lisa Levin]

    Shares of DXP Enterprises Inc (NASDAQ: DXPE) got a boost, shooting up 22 percent to $40.27 after the company posted upbeat quarterly results.

    Nature's Sunshine Prod. (NASDAQ: NATR) shares were also up, gaining 28 percent to $11.35 as the company disclosed that it has received its direct selling license in China.

Best Clean Energy Stocks To Buy Right Now: bebe stores, inc.(BEBE)

Advisors’ Opinion:

  • [By WWW.THESTREET.COM]

    Just in the past few weeks, Wall Street has seen bankruptcy filings from sporting goods retailer Gander Mountain, RadioShack successor General Wireless Operations, everyday value price department store operator Gordmans Stores (GMAN) and appliances, electronics and furniture retailer HHGregg (HGG) . Last Wednesday, children’s apparel retailer Gymboree cautioned it was running low on cash and may not survive. Sears Holdings Corp. (SHLD) voiced concerns on Tuesday about its ability to stay in business, while women’s apparel chain Bebe (BEBE) is reportedly on the brink of closing all 170 of its stores.

  • [By Lisa Levin] Related HTGM 20 Biggest Mid-Day Losers For Thursday 25 Stocks Moving In Thursday's Pre-Market Session HTG Molecular Diagnostics Obtains CE Mark for its HTG EdgeSeq ALKPlus Assay EU (GuruFocus)
    Related SSH 15 Biggest Mid-Day Gainers For Wednesday 12 Biggest Mid-Day Losers For Tuesday Healthcare – Top 5 Gainers / Losers as of 11:00 am (Seeking Alpha) Gainers
    HTG Molecular Diagnostics Inc (NASDAQ: HTGM) rose 63.6 percent to $3.50 in pre-market trading after the company disclosed that it has obtained CE marking in the EU for HTG EdgeSeq ALKPlus Assay.
    Sunshine Heart Inc (NASDAQ: SSH) rose 20.3 percent to $2.61 in pre-market trading after the company issued a business update regarding execution of its strategic growth plan.
    bebe stores, inc. (NASDAQ: BEBE) shares rose 11.1 percent to $4.29 in pre-market trading after the company disclosed that it is exploring strategic alternatives.
    Cancer Genetics Inc (NASDAQ: CGIX) rose 10.3 percent to $3.20 in pre-market trading after the company posted a narrower-than-expected quarterly loss.
    Five Below Inc (NASDAQ: FIVE) rose 8.8 percent to $41.50 in pre-market trading after the company reported better-than-expected earnings for its fourth quarter.
    FireEye Inc (NASDAQ: FEYE) rose 8 percent to $12.40 in pre-market trading. Goldman Sachs upgraded FireEye from Sell to Buy.
    PVH Corp (NYSE: PVH) shares rose 7.4 percent to $97.60 in pre-market trading after the company posted upbeat earnings for its fourth quarter and issued a strong earnings forecast.
    Bitauto Hldg Ltd (ADR) (NASDAQ: BITA) shares rose 7 percent to $26.00 in pre-market trading after dropping 1.30 percent on Wednesday.
    Pingtan Marine Enterprise Ltd (NASDAQ: PME) rose 6.6 percent to $4.50 in pre-market trading after gaining 0.48 pe
  • [By Lisa Levin]

    bebe stores, inc. (NASDAQ: BEBE) shares dropped 26 percent to $3.86. bebe stores will reportedly license www.bebe.com domain name, social media accts. and international wholesale agreements to one or more third parties, according to Reuters.

  • [By WWW.THESTREET.COM]

    Not helping matters was a continued drumbeat of retail death stories such as Payless possibly closing 500 stores, Bebe (BEBE) on the verge of shuttering 170 stores and Sears Holdings’  (SHLD) CFO spreading #fakenews in a new blog post that the retailer is a “viable” entity. It’s not, especially after the language it slipped in its new annual report on Tuesday. 

Best Clean Energy Stocks To Buy Right Now: Manitex International Inc.(MNTX)

Advisors’ Opinion:

  • [By Lisa Levin]

    In trading on Thursday, industrial shares fell by 0.08 percent. Meanwhile, top losers in the sector included Accenture Plc (NYSE: ACN), down 4 percent, and Manitex International Inc (NASDAQ: MNTX), down 4 percent.

Best Clean Energy Stocks To Buy Right Now: Snap Inc. (SNAP)

Advisors’ Opinion:

  • [By Craig Jones]

    Jon Najarian noticed short term, weekly bets in Snap Inc (NYSE: SNAP). The company is going to report earnings Tuesday after the market close and the options traders are buying Friday expiration, 16 strike calls. Around 16,000 contracts were traded and traders were paying between 50 and 80 cents for them. Najarian followed the trade and he is going to close it Wednesday morning.

  • [By Motley Fool Staff]

    The Motley Fool Moneyteam shares their take onSnap (NYSE:SNAP)following the massive gains the stock has enjoyed since pricing its IPO at $17 per share. As the biggest tech company debut since Alibabawent public in 2014, investors want to know: Does Snap deserve its valuation, and if so, how can an investor tell?

  • [By Wayne Duggan]

    Many American investors were excited to get in on the Snap Inc (NYSE: SNAP) IPO last week. With more than 158 million daily active users, Snapchat is one of the most popular social media platforms in the United States. However, at the moment, the single largest global market is the world is off-limits.

  • [By Douglas A. McIntyre]

    Shares of once hot Snap Inc. (NYSE: SNAP), operator of Snapchat, fell back to $17, its IPO price. Anxiety about user growth and engagement have hurt the company’s ability to bring in advertising and marketing revenue. Snapchat also has several growing competitors, led by Facebook Inc.’s (NASDAQ: FB) Instagram.

  • [By Sreekanth Anasa]

    We all know about Instagram being the new major growth driverof Facebook stock. Further, we also recently covered about what could be the new catalysts for FB stock other than Instagram. Coming to Instagram, its growth story continues to gain strength after copying some of the features of the highly popular photo messaging appSnapchat. Facebook has seen exciting results since it started implementing most of the popular features of Snap Inc (NYSE:SNAP)owned Snapchat across its set of platforms. Facebook’s Snapchat clone features have helped Instagram to grow much faster. Mark Zuckerberg, CEO, Facebook has also defended his company’s Snapchat clone strategy strongly stating:

U.S. IPO Week Ahead: 3 IPOs To Kick Off 2018

Three IPOs are looking to raise $1 billion in combined proceeds to kick off 2018. Spun out from Select Income REIT, Industrial Logistics Properties Trust targets $590 million in the largest deal of the week. Other deals include fracking services provider Liberty Oilfield Services and tech-focused SPAC Nebula Acquisition.

16 companies have filed to go public since December 1, representing an estimated $6 billion in total proceeds. Several notable IPOs are eligible to launch in the coming week, including Brazilian payment service provider PagSerguro Digital (Pending:PAGS) and Blackstone-backed Gates Industrial (Pending:GTES), each of which could raise over $500 million.

US IPO Calendar

Issuer
Business

Symbol
Exchange

Deal Size($m)
Market Cap($m)

Price Range
Shares Filed

Bookrunners

Nebula Acquisition
San Francisco, CA

NEBU.U
Nasdaq

$250
$313

$10 – $10
25,000,000

Deutsche Bank,
Goldman Sachs

Blank check company formed by the executives of True Wind Capital to acquire a technology business.

Industrial Logistics Properties Trust
Newton, MA

ILPT
Nasdaq

$590
$1,918

$28 – $31
20,000,000

UBS Investment,
Citi,
RBC Capital,
3 more…

Industrial REIT spun out of Select Income REIT.

Liberty Oilfield Services
Denver, CO

BDFC
NYSE

$161
$1,743

$14 – $16
10,714,286

Morgan Stanley,
Goldman Sachs,
Wells Fargo,
3 more…

Provides hydraulic fracturing services for the oil and gas industry.

Industrial Logistics Properties Trust (Pending:ILPT) is being spun out of Select Income REIT (Nasdaq: SIR) in a $590 million IPO and will focus on industrial properties poised to benefit from the growth in e-commerce. Like its parent, the company will be externally managed by The RMR Group (Nasdaq: RMR). Industrial Logistics plans to pay an initial quarterly dividend of $0.33/share (4.5% yield) beginning in the 2Q18.

Now that oil prices have stabilized, Liberty Oilfield Services (Pending:BDFC) is looking to raise $161 million in its second attempt at going public. Backed by Riverstone and Carlyle, the company originally set terms for a $400 million IPO in April 2017 before cutting the range and eventually postponing the deal.

Nebula Acquisition (NEBU.U), a blank check company formed to acquire a technology business, is looking to raise $250 million. It will be the first SPAC to list in 2018, following the most active year for SPACs in a decade. The company is sponsored by tech-focused PE firm True Wind Capital and led by the firm’s Founding Partners, both former executives at KKR.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 1.0% year-to-date, while the S&P 500 is up 1.9%. Renaissance Capital’s IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Snap (NYSE:SNAP) and Invitation Homes (NYSE:INVH). The Renaissance International IPO Index is up 1.5% year-to-date, while the ACWX is up 2.1%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and ASR Nederland.

SeekingAlphaAbout this article:ExpandTagged: Investing Ideas, IPO AnalysisWant to share your opinion on this article? Add a comment.Disagree with this article? Submit your own.To report a factual error in this article, click here

U.S. IPO Week Ahead: 3 IPOs To Kick Off 2018

Three IPOs are looking to raise $1 billion in combined proceeds to kick off 2018. Spun out from Select Income REIT, Industrial Logistics Properties Trust targets $590 million in the largest deal of the week. Other deals include fracking services provider Liberty Oilfield Services and tech-focused SPAC Nebula Acquisition.

16 companies have filed to go public since December 1, representing an estimated $6 billion in total proceeds. Several notable IPOs are eligible to launch in the coming week, including Brazilian payment service provider PagSerguro Digital (Pending:PAGS) and Blackstone-backed Gates Industrial (Pending:GTES), each of which could raise over $500 million.

US IPO Calendar

Issuer
Business

Symbol
Exchange

Deal Size($m)
Market Cap($m)

Price Range
Shares Filed

Bookrunners

Nebula Acquisition
San Francisco, CA

NEBU.U
Nasdaq

$250
$313

$10 – $10
25,000,000

Deutsche Bank,
Goldman Sachs

Blank check company formed by the executives of True Wind Capital to acquire a technology business.

Industrial Logistics Properties Trust
Newton, MA

ILPT
Nasdaq

$590
$1,918

$28 – $31
20,000,000

UBS Investment,
Citi,
RBC Capital,
3 more…

Industrial REIT spun out of Select Income REIT.

Liberty Oilfield Services
Denver, CO

BDFC
NYSE

$161
$1,743

$14 – $16
10,714,286

Morgan Stanley,
Goldman Sachs,
Wells Fargo,
3 more…

Provides hydraulic fracturing services for the oil and gas industry.

Industrial Logistics Properties Trust (Pending:ILPT) is being spun out of Select Income REIT (Nasdaq: SIR) in a $590 million IPO and will focus on industrial properties poised to benefit from the growth in e-commerce. Like its parent, the company will be externally managed by The RMR Group (Nasdaq: RMR). Industrial Logistics plans to pay an initial quarterly dividend of $0.33/share (4.5% yield) beginning in the 2Q18.

Now that oil prices have stabilized, Liberty Oilfield Services (Pending:BDFC) is looking to raise $161 million in its second attempt at going public. Backed by Riverstone and Carlyle, the company originally set terms for a $400 million IPO in April 2017 before cutting the range and eventually postponing the deal.

Nebula Acquisition (NEBU.U), a blank check company formed to acquire a technology business, is looking to raise $250 million. It will be the first SPAC to list in 2018, following the most active year for SPACs in a decade. The company is sponsored by tech-focused PE firm True Wind Capital and led by the firm’s Founding Partners, both former executives at KKR.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 1.0% year-to-date, while the S&P 500 is up 1.9%. Renaissance Capital’s IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Snap (NYSE:SNAP) and Invitation Homes (NYSE:INVH). The Renaissance International IPO Index is up 1.5% year-to-date, while the ACWX is up 2.1%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and ASR Nederland.

SeekingAlphaAbout this article:ExpandTagged: Investing Ideas, IPO AnalysisWant to share your opinion on this article? Add a comment.Disagree with this article? Submit your own.To report a factual error in this article, click here