Category Archives: Stocks

by | June 17, 2014 · 2:00 pm

Tesla Model X could be delayed until early next year

 

Green energy like solar and battery driven automotive cars are great business, and Tesla Motors is one of the most interesting and exciting automotive companies in the U.S to watch right now. The company lost $50 million in Q1 and they will probably continue to lose money, so their new  Model X could be delayed until 2015.

tesla_model_x-wide

They produced 7,535 new cars in the first three months of this fiscal year, and lost $50 million on GAAP basis, using the non-GAAP method that Tesla prefers, it saw $17 million in net income. EPS is $0,12, and that was less than some of the rosier forecasts.

 

The demand for Tesla is rising and their demand rose 10 percent in the quarter. China can become the biggest market, and Elon Musk said he is «blown away» by the level of enthusiasm in China. There is a five month wait for the cars and some customers are frustrated.

 

It`s Fremont factory will be shut down for ten days in July whilst it installs a new, more efficient production line with more automotive. If the Gigafactory and Gen III production aren`t well synchronized, Tesla will be in big trouble.

 

Things never run perfectly smoothly and there is some bad news for waiting Model X customers. CEO Elon Musk said Model X will be delivered in the second quarter of 2015, pushing back the expected date by a couple of months.

 

guidance for Model S is 7,500, up from 6,457 delivered in Q1. Tesla have started to deliver in U.K and China, which is two new markets with great demand. It`s hard to be negative about the numbers in light of the two new markets and Q2 production already having been sold. So, why does the quarter look like it will go down to the wire?

 

It`s estimated that Tesla`s May deliveries will come in at 1,000, and this is down from 1,100 in April. It`s also down from 1,700 in May last year. It looks like the delivery in U.S has peaked for a long time, and that stagnation is the result right now. This will be interesting for Q3 and Q4, since Tesla will run out of large new markets except for Japan.

 

The biggest market is U.S, and the second largest market is in terms of population, is Norway, which had a massive month of March, but at this point it is looking peaked. This is just how the automotive market work.

 

On june 12, CEO Elon Musk wrote a blog stating that Tesla would not initiate lawsuits against anyone who wishes to use their technology in good faith. They are not anti-competitive and do not entrench the power of dominant firms in their respective markets. The terms must be applied in a non-discriminatory manner, and rights are licensed at rates that if aggregated would not make the industry uncompetitive.

 

CEO Elon Musk wrote:

“Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor…”

 

Tesla`s move to open its patents is about hardcore strategic thinking. They simply try to remove obstacles to EV industry growth by helping develop homogeneous solutions. Tesla can use this as a Trojan horse to become a toll collector on all EV revenues in the future.

 

It`s a growing concern among different investors that Tesla would not be able to repay $2,2 billion in debt in the next four to seven years. Bonds were assigned a junk rating in May by credit rating agency Standard & Poor`s.

 

Tesla is in partnership with other vehicle manufacturers like Toyota and Daimler. Toyota bought $50 million worth of stock when Tesla went public in July 2010, and Daimler spent $50 million for a 10 percent stake in 2009. Both companies relied on Tesla for help in the development of electric vehicles.

 

Daimler uses a Tesla battery in the electric version of its Smart City car, and its Mercedes B-class EV features a Tesla power train. Toyota signed a $100 million-contract with the company to supply power trains, gearbox and software for the RAV4 EV, and the deal ended in May 2014.

 

Model X reservation confirmations went out early and so far Elon Musk hasn`t given shareholders a reason not to trust him. No doubt that Tesla longs are a cultish, giddy group of investors. Tesla is a revolutionary green company that belongs to the future.

 

Reports today:

08:30 a.m EST Building Permits

08:30 a.m EST Core CPI m/m

08:30 a.m EST CPI m/m

08:30 a.m EST Housing Starts

 

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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by | June 16, 2014 · 2:27 pm

Food prices are up – so are Giggles N Hugs

 

It`s not going to be easy for the restaurants if the cost is rising. A beef is 25 percent higher now than at the end of last year. If this continue, the restaurants need to rise the prices on the products they have on the menu. Or they can simply change the menu.

Giggles N Huges logo

What does that mean for the customers? It means it will be more expensive to eat out, so it will be a question about eating out or going the long way to the refrigerator. This is not good news for the restaurants as the industry is grappling with excess capacity and declines in foot traffic.

 

This is why it makes it difficult for the restaurants to rise their prices because they can lose a lot of customers. In addition; disposable income growth as the primary driver of consumer spending hasn`t improved in this slow recovery since the financial crises started in 2008.

 

According to the Bureau of Labor Statistics monthly consumer price index, the cost of eating at home rose 1,7 percent in April, while consumers paid 2,2 percent more at U.S eateries. Food-at-home inflation has been accelerating, and May data on retail prices will be released tomorrow.

 

It`s not a good ting when prices are increasing as the wages remains low or declining, but there are one out there that is waiting for the prices to increase; the Fed. Their inflation goal is about 2 percent, and they are now looking for signs that companies are able to pass along higher costs to their customers.

 

According to the Beige Book from June 4, policy makers said price pressures are «contained», some are reporting rising food costs and that is particularly meat and dairy products. For example beef and pork is now more expensive at grocery stores, so restaurants will probably boost prices of certain menu items.

 

McDonald`s is up 3,6 percent YTD, while Chipotle Mexican Grill is up 10,4 percent YTD. This big companies, but what about a smaller one; Giggles `n` huge, which is up 20,69 percent in one day! This can be a growth company in the future.

 

The company operates a kid-friendly restaurants in California. They are known for its own creation called Mom`s Tricky Treat Sauce, which hides pureed vegetables in kid`s favorite meals, such as pizza, pastas and macaroni and cheese.

 

Its restaurant features kid-size castles, giant climbers, a pirate ship, and a walk-on dragon, as well as tricycles, swings, bouncies, and an abundant selection of toys in each location. Their stock price rose 20,69 percent on friday, closing at 0,700. When was the last time McDonald`s made jump like this?

 

Reports today:

08:30 a.m EST Empire State Manufacturing Index

09:00 a.m EST TIC Long-Term Purchases

09:15 a.m EST Capacity Utilization Rate

09:15 a.m EST Industrial Production m/m

10:00 a.m EST NAHB Housing Market Index

 

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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by | June 13, 2014 · 1:39 pm

Uber – a Taxi killer?

 

Uber is a venture-funded startup and transportation network company based in San Fransisco, California, that makes mobile apps that connects passengers with drivers of vehicles for hire and ridesharing services. The company arranges pickups in dozens of cities around the world.

Uber logo

Uber drivers had cars such as Lincoln Town Cars, Cadillac Escalades, BMW 7 Series and Mercedes-Benz S550 sendans. After 2012, Uber added a wider selection of cars to market to a broader cross-section of the market, called UberX.

Cars are reserved by sending a text message or by using a mobile app. Using the Apps, customers can track their reserved car`s location. The company has not released the names of its investors, but it has been widely reported that Fidelity Investments leads the investment.

Uber is probably the biggest Taxi-killer in history. Three days ago, in a concerted action, taxis blocked roads in major European cities in protest against what they perceive as a threat to their livelihood by companies such as Uber.

The cabbies contended that Uber and similar smartphone app-based services have an unfair advantage because they`re not subjected to the same kinds of fees and regulations placed on taxi’s. Uber is controversial.

Uber`s pricing is similar to metered taxis although all hiring and payment is handled exclusively through Uber and not with the driver personally. If the Uber car is travelling at a speed greater than 11 mph, the price is calculated on a distance bases.

Otherwise, the price is calculated on a time basis. At the end of a ride, the complete fare is automatically billed to the customer’s credit card. Uber has said that its high prices are the premium that the customers pay for a cab service that is not only reliable but also punctual and comfortable.

During holiday times, Uber increases its prices to «surge price» levels to reach an economic equilibrium by attracting more drivers. During New Year`s Eve 2011, prices were as high as seven times normal rates, causing outrage in response.

Uber was founded as UberCab by Garrett Camp and Travis Kalanick in 2009. One year later they received venture funding from a group of super angel investors in Silicon Valley, California, including Chris Sacca.

In 2011, Uber raised more than $11,5M in Series A funding led by Benchmark Capital. In later 2011, Uber further raised $32 million in funding from several investors that include Goldman Sachs, Menlo Ventures and Bezos Expeditions bringing their total funding amount to $49,5M.

The company entered the London market in July 2012 with an initial staff of about 90 drivers of Mercedes, BMW and Jaguar. One week ago, Uber announced $1,2 billion in funding in its latest round. The round values Uber at around $17 billion pre-money.

Several drivers have credited Uber for increasing their potential earnings by 30%. The company faces competition from lower-cost real-time ridesharing startups such as Lyft and SideCar. To compete at lower price levels, Uber has introduced UberTaxi (partnerships with local taxi commissions) and UberX (non-luxury cars such as Toyota Prius Hybrids).

Last month, London black-cab drivers, members of the Licensed Taxi Drivers Association, threatened to disrupt traffic in June if Transport for London (TfL) refuses to ban Uber in London. The New York City Taxi and Limousine Commissions has discouraged drivers from participation in Uber, resulting in suspension of Uber`s New York taxi service in October 2012.

Uber has been accused in several jurisdictions of illegal taxicab operation. It`s understandable that they changed their name from UberCab to Uber. Following a social media campaign by Uber`s users, the D.C City Council voted to formally legalize Uber`s service, with no minimum fare.

They have more competitors to come. China`s biggest taxi app is Didi and they books over 5 million rides a day! The company which is registered in the Cayman Islands, will do an IPO in three to five years in the U.S. Didi`s app is backed by Asia`s largest Internet company Tencent Holdings Ltd and their biggest competitor in China is Kuaidi, which is backed by Alibaba Group Holding Ltd.

Didi is owned by Beijing Xiaoju Keji Didi Dache Co and they are planning to have 1,500 employees at the end of this year. Kuaidi is owned by Hangzhou Kuaidi Technology Co., operates in a similar way and allows payments and rebates through Alibaba’s mobile-payment system, Alipay Wallet.

It`s gonna be a great battle between those apps in the future, and the largest player will win greater support when it comes to raising capital and that will in turn help them to grow and be bigger than their competitors.

 

 

Reports today:

08:30 a.m EST PPI m/m

08:30 a.m EST Core PPI m/m

09:55 a.m EST Prelim UoM Consumer Sentiment

 

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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by | June 11, 2014 · 1:46 pm

McDonald`s is growing

McDonald`s (MCD) is growing but that is slowly. It`s share price moved only 8% in 2013, and McDonald`s rewarded its shareholders with a 10% increase to its dividend. The surged 4% YTD. They delivered a high return on equity and their growth in its top and bottom lines was decent.

MCD

McDonald`s holds a market share of 31% in the fast food industry. How can McDonald`s continue to grow? Because the domestic market is saturated, they are now expanding in emerging markets, particularly China, where they have a great opportunity.

The U.S fast food industry is expected to grow 10% during the period of 2013 – 2018. Emerging markets are attractive to fast food players due to their large populations, fast population growth, concentration of younger consumers and growing demand for Western diets.

China is important for McDonald`s and it is the third largest market for the company after the U.S and Japan. They holds a 15% market share of China`s fast food market. They experience a strong growth in the region.

China`s fast food & takeaway market grew 80% from 2007 – 2012 to RMB 1 trillion ($162 billion). The market is expected to hit RMB 1,8 trillion ($292 billion) by 2017. All this is driven by economic growth in China, and McDonald`s is investing heavily in China to benefit from this growing market.

McDonald`s will open 1,600 new restaurants around the globe and spend $3 billion this year. China will get one of the biggest shares. They will open 300 locations in China, and that`s up from 250 last year and quadruple the number in 2004. Their goal is to have more than 2,000 restaurants in China by the end of 2014.

McDonald`s share price and earnings have underperformed relative to the S&P 500 and restaurants peers over the last 12 months. Have a look at the chart below. I have compared McDonald`s and S&P 500 so you could see by yourself.

MCD vs SPX

(Picture: McDonald`s vs S&P 500)

In my opinion; both McDonald’s and Burger King is now trying to be everything for everyone. Can you imagine Burger King selling you a salad? Or a wrap? Come on; what`s next? For all I know, they will start to sell sushi next week. In-N-Out Burger, Chick-fil-A and Five Guys haven`t changed their menu in years. A big menu is making McDonald`s slower.

Many switch to restaurants perceived as more natural, simple and healthy, like Chipotle Mexican Grill (CMG) or Taco Bell which is built on this trend. McDonald’s franchisees lose out and this will be a slowly process as franchisee satisfaction is driven so largely by cash flow. McDonald’s need to take drastic action on their meny complexity and food integrity. Before that I expect the share price to languish.

Reports today:

10:30 a.m EST Crude Oil Inventories
01:01 a.m EST 10-y Bond Auction
02:00 a.m EST Fedral Budget Balance

 

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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by | June 4, 2014 · 1:37 pm

GoPro IPO

Selfie here and Selfie there. Selfie everywhere. People want to share with the rest of the world what they are doing on social media platforms like Facebook, Instagram and Snapchat. In addition people now tend to take action films and one of the most popular cameras right now is GoPro.

white-edition

The founder and CEO in GoPro is 38-year-old Nicholas Woodman, who started the company with $65,000 of his own capital. His father invested $100,000. The company has been profitable since day one, Woodman said in an interview on TV. Nicholas Woodman own a 48,8% stake, while his father Dean Woodman has a 6,4% stake.

The company has grown and in December 2012, Foxconn International Holdings invested $200 million and valued the company at $2,25 billion. What a jump! GoPro is probably one of the most successful wearable electronics company right now.

CEO Terry Gou is mentioned during the IPO and he is from the Chinese electronics manufacturer Hon Hai Precision Industry Co. That company is better known as Foxconn. It’s expected that the Taiwanese billionaire would take a seat on the board.

Surprisingly, Terry Gou is not listed as a director on the list. Other names on list is the former Flextronics CEO Michael Marks and current Yahoo CFO Kenneth Goldman.

The California-based company is registered to go public, but the company is the latest to file for a «secret» initial public offering. New rules, under the 2012 JOBS act, allow companies to keep much of their information out of the public eye until shortly before the shares begin to trade.

That`s probably why you don`t here so much about the company in the media at the moment. The act allows companies with annual revenues of less than $1 billion to file with the SEC confidentially.

JPMorgan is the lead banker on the offering, but the date for GoPro`s IPO hasn`t yet been set. As I know so far, the IPO will be at the end of the second quarter of 2014. GoPro may raise $100 million in an initial public offering.

It`s probably not the best time go public right now with all the tech bubble talk around the world. Other companies have delayed its IPO plans due to the market conditions. Companies that have decided to enter the market has not succeed. King Digital is trading well below its IPO price.

Woodman say GoPro plans to list on the Nasdaq under the symbol «GPRO». Revenue for 2013 came in at $985 million and that`s up 87% from the year prior. Net income clocked in at 61 million, up from $32 million in 2012.

So far in 2014, growth is down 7% from $255 million. Net income is down from last year`s first quarter as well. It`s down 52% to $11 million. The company’s revenue has doubled year-over-year up to 2012, but that trend has since ceased.

The company shipped fewer units in the first quarter of 2014. 852,000 cameras compared to 954,000 in the same period last year. They shipped 3,85 million units of its cameras last year, and that is up 66% from the year prior.

As usual, it will be difficult to grab some stocks during the IPO, but there is always a backdoor. GoPro didn`t succeed alone. Another growth company is Ambarella Incorporated (AMBA). GoPro wouldn`t be much without them.

AMBA is a leading developer of low-power, high-definition (HD) video camera systems-on-a-chip. I assume you haven`t heard of the company, but thay are everywhere. You just don`t know, because you can`t see them, but they can see you.

If you walk into a secure area like a bank, airport or a government building, there`s a strong chance that you are being watched by a camera using Ambarella technology. When you watch cable or satellite TV, you`re watching the end result of a signal compressed by Ambarella`s proprietary algorithms.

Ambarella has a key position in the wearable technology market and act as a backdoor into the GoPro IPO because it exclusively manufactures the internal systems-on-chips that power the entire lineup of GoPro`s Hero wearable cameras.

Ambrella`s system helps GoPro make a miniature $300 cameras with the same 4K video quality as a $20,000 camera. That`s not bad! GoPro monopolize about 70% of the wearable sports camera market. It`s expected to see that market to rise by 50% each year. Ambrella will capitalize on this growth.

AMBA dropped -1% yesterday and the stocks is down -27,3% so far in 2014, but it`s up +56,9% (1 YR). I think AMBA has a big opportunity as the market for wearable and action cameras improves. Their relationship with Google and GoPro gives them a great chance to improve sales.

According to Cisco (CSCO), mobile video is set to grow at a whopping 90% annual rate, reaching 71% of total mobile data traffic by 2016, and AMBA want a piece of the action I think. Google Helpouts and GoPro`s IPO can push Ambarella`s stock higher in a fast growing new market.

Be careful, because other big brands are coming into the market. I`m talking about brands like Panasonic (PCRFY), Texas Instruments (TXN), Fujitsu Limited (FJTSY), Sony (SNE) and Canon (CAJ). Others companies are forging their way into this growing new market. That`s Qualcomm (QCOM), NVIDIA (NVDA), Broadcom (BRCM) and Samsung (SSNLF).

They will all fight in the same market and all of them want a share in the market. This will be a huge challenge in the growing new market.

Reports today:

08:15 a.m EST ADP Nonfarm Employment Change
10:00 a.m EST Factory Orders m/m

 

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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