Category Archives: Stocks

Facebook are dealing with the music industry

Facebook has a lot of DAU`s and more and more people spend time watching videos. Facebook is a young company and so far they already have billions of video views. But Mark Zuckerberg want to prosper from this industry.

There is no doubt that YouTube is the most popular video-sharing company in the world. Many artist has started their carriere at YouTube and one of them is Justin Bieber. In 2016, YouTube gave the music industry $1 billion in ad revenue, and Facebook wants to join.

 

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Streaming was a game changer on how media is bought. It changed how it`s consumed. It also changed who profits from it, and of course how much they all made in this industry. For the first time in 20 years, the music industry saw significant revenue growth in 2015.

The revenue from streaming is $2,9 billion world-wide, and revenue from video on demand rose almost 9% in 2015, and music clips can move about $50 – $70 billion from TV industry.

Facebook has nearly 2 billion users and still a growing advertising business, and a deal with the music industry can be a win-win agreement, which means billions in revenue from new sales for the music industry.

The interest in videos is growing and Facebook want to prosper from that, and that’s why they are so interested in music rights. Facebook moved billions in ad revenue from print and now many online firms have targeted TV.

Facebook are not alone on the market and they need to share some of the market with Twitter and Snapchat, but the biggest of them all is YouTube which is Faecbooks main rival. Googles YouTube channel said music is one of the most popular types of videos on their on-demand service.

TV networks and News organizations are experimenting with Facebook, just like they did with YouTube and this will continue. This is interesting because Facebook is big.

Thanks to streaming, the music industry is growing again and that is because of the paid streaming services from Apple and Spotify.

Facebook will probaby sign a deal with the music industry before the summer this year.

 

trump100_b

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Will Snapchat be the next Facebook?

Snap is going public. No, I`m not talking about the pop stars with the super hit “I got the power”. This is something different. A different power. But how powerful are Snap Inc actually? Do you really think that Snapchat will be the next Facebook?

Let`s take a closer look at some real facts. I have made a picture of some of the most loved firms in the social media universe, and this time I will compare Snap with Facebook and Twitter. As you can see from the chart below, Snap look more like Twitter than Facebook. Take a look below.

 

 

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As you can see from the chart above, Snaps cost follow Snaps revenue. Its positive to see that their revenue grew from $59 million to $405 million. Thats a whopping 590% over the same time. But the drawback is their high cost structure. Their net operating profit after-tax fell from -$344 million in 2015 to -$498 million in 2016.

You do already here understand that Snap is not the same as Facebooks business model. Revenue goes up while their profit goes down. Snaps valuation is about $20-25 billion, with a revenue of $405 million, and an operating loss of -$520 million.

Facebooks valuation when they went public was much higher with $3,7 billion in revenue, and an operation income of $1,75 billion. Facebooks valuation at that time was $90-105 billion, but as you may know, the stock traded down after the IPO.

You also may know the story of Twitter. Right up, and right down again. Will Snap follow Twitter? Take a look at the numbers. They are very similar. Revenue was $448 million, with an operating loss of -$93 million.

Twitters valuation at that time was $18-25 billion, but people said it was too much. Many investors said the right valuation was half of that; only $10 billion. Snaps trailing sales valuation was 62x, which is about the same as Twitter`s 56x.

Twitter had 100 million DAUs when they went public, while Snap has about 158 million. What is that compared to Facebooks 483? It will be hard to be a new Facebook.

Snap are going public on Thursday.

 

trump100_b

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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The parent of Snapchat are going public

Snapchat is one of the biggest favorite apps in the social media universe at the moment. Its founders Evan Spiegel and Bobby Murphy filed confidentially to go public with SEC late last year, and now they are ready to be traded on the New York Stock Exchange under the ticker SNAP.

Snap`s revenue rose to $404,5 million, which is eight times higher than their revenue in 2015. In Q4 Snap had 158 million daily active users (up 48%), and many of my friends and family members are one of them. 2,5 billion Snaps are created every day.

 

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Snap Inc is a camera company, and in the SEC filings they say: “We blive that reinventing the camera represents our greatest opportunity to improve the way people live and communicate.

Our products empower people to express themselves, live in the moment, learn about the world, and have fun together».

Worldwide advertising spend is expected to grow from $652 billion in 2016 to $767 billion in 2020. The fastest growing segment is mobile advertising, which is expected to grow nearly 3x from $66 billion in 2016 to $196 billion in 2020.

Snap belive that one of the major factors driving this growth is the shift of people`s attention from their televisions to their mobile phones. According to Nielsen, people between the ages of 18 and 24 spent 35% less time watching traditional television in an average month during the second quarter of 2016 compared to the second quarter of 2010.

A huge difference between Facebook at Twitter is that Snap Inc doesnt have their own server farm, which makes it more expensive which means Snaps earnings can look much lower that those who have their own server farm.

Snap Inc lost $514 million in 2016, which is up from about $373 million. Some of that money goes to Google because Snap Inc rents storage and server space from them. New legislation that would change U.S, or foreign taxation of international business activities or other tax-reform policies could also seriously harm their business.

Benchmark Capital owns about 10% og the company. Lightspeed Venture Partners owns 8,3%, and Institutional Venture Partners owns 4%.

Snap are looking to raise up to $3 billion, and Snaps offering is being led by Morgan Stanley and Goldman Sachs. Morgan Stanley won the desired «lead left» position on the prospectus. The bank also led Facebooks initial public offering.

 

trump100_b

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Tesla and Fiat Chrysler is up about 80% since the election

The focus now is how Donald Trumps policies are going to "Make America Great again". One of the first things Trump did was to shut down the TPP agreement, which is favoring TPPs laws before the constitution.

Trump do not blame Obama for this TPP agreement because this is something that has been negotiated in decades. Trump is a business man and he do things he belive is right for the American people.

 

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Trump can start a new global trade war and that means off for global equities, but what will happen if he starts a tax-cutting war? Countries around the world will start to compete to lower tax rates and that will probably make companies to invest and hire more, which is positive for equities.

President Trump has tweeted a lot about the automotive industry over Twitter, and after a few hours in the White house, he made a point to meet with the chief executives of Tesla and Fiat Chrysler. What Mr Trump want is to press the companies to build more vehicles in the U.S and hire more Americans into manufacturing jobs.

Reduced corporate taxes will surely please executives. If the automotive industry work together with the government, it will improve the environment and jobs creation and the competitiveness of manufacturing.

Trump`s decision to withdraw from the TPP is a largely symbolic move since it was unlikely to pass Congress. It was a strong symbol of his desire to implement policies that improve competitiveness and a new renaissance in American manufacturing.

The mother of all trade barriers is currency manipulation, and TPP failed in meaningfully dealing with that, and the automotive industry appreciate Trump`s courage to walk away from a bad trade deal.

Tesla and Fiat Chrysler combined is up about 80% since the election. Tesla has been a great rally since the beginning of December last year. It has so far been a great ride since its IPO in 2010, and now the average analyst`s recommendation is a Hold.

Fiat Chrysler look very cheap but a new scandal casting a shadow over the company. The company has doubled its value in a very few months but the scandal makes it risky for investors at the moment.

Trump met Tesla`s chief executive Elon Musk and the President told executives that he intends to eliminate a majority of regulations and «massively» cut corporate taxes, but that in return those companies must keep production domestic and preserve American jobs.

Trump told the CEO`s to device a «series of actions» within 30 days.

 

trump100_b

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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The European Commission attacks – again!

Europe are attacking big U.S companies and want more money from them. Last year Europe attacked Google. Now they are attacking Apple. Based on a two-year long investigation, the European Commission has ordered Apple to pay about $14 billion in back taxes for its subsidiaries in Ireland.

$14 billion? Wow!

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Last year, the European Commission EU said that Google was too dominant in three related markets. They also said that Google is using that position to distort competition and the EU claims that Google limits access to key aspects of the Android ecosystem by insisting that phone markers install Google search and Chrome apps.

Not only that. The EU also said that Google block phone makers from producing phones that run alternative versions of Android and that EU also believes that Google has illegally paid makers and other mobile phone companies to preinstall Google search exclusively.

This is not the first time EU has attacked big U.S companies.

In 2001, the European Commission sent a sternly worded missive to Microsoft. EU accused the software maker of having illegally extended its dominance in operating systems for personal computers (PC`s) into adjacent markets, for tying Windows to programs that play music and videos.

The European Commission said Microsoft was too dominant in the market in 2001. Last year they claimed Google was too dominant in the internet search market. Google are now ruling the smart phone market with their Android system.

Now, they are attacking Apple. Not because they are too big, but because they are having a good agreement with Ireland that allows Apple to pay less tax than other businesses. The European Commission has concluded that Ireland must recover the illegal aid.

Commissioner Margrethe Vestager, in charge of competition policy, said: «Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission`s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003 down to 0,005% in 2014.

Apple`s provisions for income taxes outside of the United States amounted to «just» about $5 billion in that period. You can imagine what the amount is if Apple paid an effective tax rate ranging from 1% in 2003 to 0,005% in 2014 on its European profits at that time?

For instance, Apple paid an effective tax rate of 26,1% in the U.S in 2014, with income taxes adding up to almost $60 billion in the period between 2003 and 2014.

But Apple has their own tax structure in Europe, which is Apple Sales International and Apple Operations Europe. Both are two Irish incorporated companies that are fully owned by the Apple group.

Apple Sales International and Apple Operations Europe make yearly payments to Apple in the US to fund research and development efforts conducted on behalf of the Irish companies in the US. These payments amounted to about $2 billion in 2011 and significantly increased in 2014.

The European Commission claims that only a fraction of the profits of Apple Sales International were allocated to its Irish branch and subject to tax in Ireland. The remaining vast majority of profits were allocated to the «head office», where they remained untaxed.

If you are too dominant, they will attack you. If you are too big, they will attack you. If you are too popular, they will attack you. If you don`t pay much tax, they will also attack you. The EU system will find something anyway.

Apple and Ireland both said they disagreed with the record penalty and would appeal against it. What is the end of this story if we face a government that don`t want the money? And is it a problem for a company that made a net profit of $53bn in the 2015 financial year?

What is the next US company to be attacked by Europe?

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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