Category Archives: Stocks

by | May 28, 2014 · 1:37 pm

Who is Elon Musk?

 

The mind behind Tesla, SolarCity and SpaceX is the entrepreneur Elon Musk. A man with many plans. He is also the founder of PayPal and Zip2. Widely considered a co-founder of each. He has also envisioned a conceptual high-speed transportation system known as the hyperloop.

tesla

Elon Musk met his first wife Justine Musk at Ontario`s Queen`s University. They married in 2000 and separated eight years later. They have six sons, the eldest of whom, died of SIDS when he was 10 weeks old.

 

In 2012, he ended a four-year relationship with his second wife, British actress Talulah Riley, but in a 60 Minutes interview on March 30,2014 he said he is still happy together with Talulah. In February 11, 2014, Musk was invited to attend a state dinner at the White House.

 

Most of you probably know the story of Steve Jobs (Apple Inc), but Elon Musk is often compared to Steve Jobs and Henry Ford. It can`t be better than that. I personally like people who is thinking big. Really BIG! Thinking they want to go to the moon or into the space. Just like John F. Kennedy.

 

First of all, Elon Musk is an investor. He earned his big money during the financial crises in 1998. This is how succesful investors are doing it. Earning money no matter where the market goes. The most important thing is to be on the right side of the market!

 

Elon Musk was born in Pretoria in South Africa, in 1971, to a Canadian mother and a South African-born British father. He taught himself computer programming and sold the computer code for a video game called Blaster for $500 when he was 12 years old.

 

In 1992, Elon Musk transferred to the University of Pennsylvania where he received a bachelor`s degree in economics from the Wharton School. He stayed on a year to finish his second bachelor`s degree in physics.

 

Then he moved to California to pursue a PhD in applied physics at Standford but left the program after two days to pursue his entrepreneurial aspirations in the areas of the internet, renewable energy and outer space. He became an American citizen in 2002.

 

Musk did not start his business career at Tesla. His fist company was Zip2 which is a web software company. Zip2 developed and marketed an internet «city guide» for the newspaper publishing industry.

 

Compaq acquired Zip2 for US$307 million in cash and US$34 million is stock options in 1999. Musk received 7% or $22 million from the sale, and co-founder of Zip2 was his brother, Kimbal. Now, Mush had money to start a new project.

 

He co-founded X.com, an online financial services and e-mail payment company. One year later, the company merged with Confinity, which operated a subsidiary called PayPal. The original intent was to merge the two systems, but it never happened.

 

Musk favored the PayPal brand over the X.com brand, and PayPal`s early growth was due in large part to a successful viral growth campaign created by Musk. PayPal was acquired by eBay for $US 1,5 billion in stock, in October 2002.

 

PayPal`s largest shareholder was Elon Musk and he owned 11,7% of PayPal`s shares. He pocketed $165 million from the sale, which was good for the next project. His third company was SpaceX. Musk co-founded it with rocket propulsion engineer Tom Mueller in June 2002.

 

SpaceX develops and manufactures space launch vehicles with a focus on advancing the state of rocket technology. The company`s fist two launch vehicles are the Falcon 1 and Falcon 9 rockets, and its first spacecraft is the Dragon.

 

The company was awarded a $1,6 billion NASA contract on December 23, 2008. They designed Falcon 9/Dragon with astronaut transport in mind and the Augustine commission recommended that astronaut transport be handled by commercial companies like SpaceX.

Musk revealed that he was influenced by Isaac Asimov`s Foundation series and views space exploration as an important step in expanding the consciousnes of human life. But why is Elon Musk so interested in the space?

 

He had said that multiplanetary life may serve as a hedge against threats to the survival of the human species. «An asteroid or a super volcano could destroy us, and we face risks the dinosaurs never saw: an engineered virus, inadvertent creation of a micre black hole, catastrophic global warming or some as-yet unknown technology could spell the end of us.

 

He founded SpaceX with $100 million of his early fortune, and he wants to reduce the cost of human spaceflight by a factor of 10. In an interview, he said he hopes to send humans to Mars surface within 10 – 20 years.

 

Tesla Motors was co-founded by Martin Eberhard, Marc Tarpenning, JB Straubel, Ian Wright and Elon Musk, who became involved with the company in 2004, as a Series A investor. They started with the electric car called the Tesla Roadster, with sales of about 2,500 vehicles to 31 countries.

 

They began delivery of its four-door Model S sedan on 22 June 2012. Model X is scheduled to begin production in early 2015. I think many are waiting for that SUV to be released on the minivan market.

 

In addition to its own cars, Tesla sells electric powertrain systems to Daimler for Smart EV and Mercedes A Class and to Toyota for the RAV4EV. Musk was able to bring in both companies as long-term investors in Tesla.

 

Musk provided the initial concept for SolarCity, which was then co-founded by his cousins Lyndon and Peter Rive. Musk remains the largest shareholder and SolarCity is now the largest provider of solar power systems in the United States. The underlying motivation for funding both SolarCity and Tesla is to help combat global warming.

 

Like many other investors, Musk started his own foundation called Musk Foundation, which focuses its philanthropic efforts on science education, pediatric health and clean energy. He is trusted of the X Prize Foundation, promoting renewable-energy technologies.

 

In 2011, he visited Soma City in Fukushima, Japan, which had been devastated by tsunami, and he donated a solar power project valued at $250,000 to this city. He also donated a solar-power system for critical needs to a hurricane response center in Alabama that had been neglected by state and federal aid. SolarCity is not involved in this state.

 

Elon Musk joined The Giving Pledge in April 2012, offering an ethical commitment to donate the majority of his fortune to philanthropic causes. Musk became a member of the campaign first popularised by Warren Buffet and Bill Gates with class of 12 of America`s wealthiest families and individuals. What a great story!

 

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 | May 27, 2014 · 2:21 pm

What is a stock split?

 

You probably know that Google had a stock split a while ago, and now, Apple is headed for the same on June 9. But what is a stock split and is it good or bad for the stockholders? Let`s take a closer look at a stock split and what it is.

 

A stock split is a corporate action in which a company divides its existing shares into multiple shares. The number of shares outstanding increases by a specific multiple, the total dollar value of the shares remains the same compared to pre-split amounts, because the split did not add any real value.

Apple

The most common split ratio is 2-for-1. This is called «forward stock split», which means that the stockholder will have two shares for every share held earlier. Apple have a 7-for-1 split, but there are number of «groups» impacted by the split.

 

Let`s take an example: Company A has 10 million shares outstanding and the stock price is $100. The Company A`s market cap is $1 billion. But the board of directors want to split the stock 2-for-1. The new number of stocks will double to 20 million, but the market cap is still $1 billion, as the stock price drops down to $50. Market cap is unchanged.

 

So, what is the point of doing that? They might have other things to do. Well, first of all, a split is usually undertaken when the stock price is quite high, making it pricey for investors to acquire a standard board lot of 100 shares.

 

If Company A`s price per share was $100 each, you would need to pay $10,000 to own 100 shares. If the share price was only half of that ($50), then you need to pay $5,000 for 100 shares. Second, the more shares a company have, the greater the liquidity for the stock, which facilitates trading and may narrow the bid-ask spread.

 

As you can see, the market cap is unchanged, but a split can often results in renewed investor interest, and that can have a positive impact on the stock price. Stock splits in blue chips companies like for example Apple and Google are a great way for the average investor to accumulate an increasing number of shares.

 

Many of the best companies routinely exceed the price level at which they had previously split their stock, causing them to undergo a stock split yet again. I have been following Amazon.com since its start in late 90`s.

 

I see three splits in the Amazon.com stock split history database. The first split for Amazon took place on June 02, 1998. This was a classical 2-for-1 split. It means for each share of Amazon owned presplit, you now owned 2 shares. For example; a 1000 share position pre-split, became a 2000 position following the split.

 

The second Amazon split took place on January 05, 1999. This was a 3-for-1 split. For each share of Amazon owned pre-split, you now owned 3 shares. For example; a 2000 share position pre-split, became a 6000 position following the split.

 

The third split took place on September 02, 1999. This was a classical 2-for-1 split, meaning for each share of Amazon owned pre-split, you now owned 2 shares. For example; a 6000 share position pre-split, became a 12000 position following the split. I remember all the splits very good.

 

It was exiting and it was in the beginning of a new era in the tech stock history. Keep in mind that when they split the stocks, the market cap is the same, but the number of stocks is changed, which means you own more shares, but the shares are valued at a lower price per share. Very often, we that a lower price for a stock can attract a wider range of buyers. And here is the interesting thing; when the stock price goes down, the demand for the stock is increasing. This means of course that the market cap will rise which is good for the company.

 

As always in the stock market; you can`t only look at only one metrics. You have to look at the underlying fundamentals of the business. Looking at the history of Amazon, an original position size of 1000 shares would have turned into 12000 shares today.

 

Google made its split because they want more control over the company and shares. You have different share classes in Google, and all of them have different prices. You can see Google, Google A and Google C when you search for the stock.

 

Many investors are wondering if Apple`s split will mark a peak in its shares as both Google and MasterCard declined after its two share classes split. You can`t compare Apple`s split to Google`s split, because of its different share classes, as one of which had no voting rights, so each class really became its own separate trading vehicle.

 

Right after the split in Google, the shares declined, but that was because of a poor earnings report and not because of the A class shares in Google. I just wonder if Apple will move into the Dow after this split?

 

Apple has three splits in the Apple stock split history. The first one took place on June 16, 1987. This was a 2-for-1 split. The second split took place on June 21, 2000. Also a 2-for-1 split, and the second split took place in February 28, 2005, with a 2-for-1 split. Apple`s 7-for-1 split is approaching and will take place on June 9, 2014.

 

Other key dates:

 

The record date: June 2, 2014 – determines which shareholders are entitled to receive additional shares due to the split.

 

The split date: June 6, 2014 – shareholders are due split shares after the close of business on this date.

 

The Ex date: June 9, 2014 – the date determined by Nasdaq when Apple common shares will trade at the new split-adjusted price.

 

This split means that six additional shares of stock are issued for each share in existence on the Record date, June 2, 2014. The number of shares outstanding will be multiplied by seven and earnings per share will be divided by seven.

 

Reports today:

 

08:30 a.m EST Core Durable Goods Orders m/m

08:30 a.m EST Durable Goods Orders m/m

09:00 a.m EST S&P/CS Composite-20 HPI y/y

09:00 a.m EST HPI m/m

09:30 a.m EST ECB President Draghi Speaks

10:00 a.m EST CB Consumer Confidence

 

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 | May 23, 2014 · 1:19 pm

Music business

«Love never felt so good» was released on May 1st. The song is written by Michael Jackson him self together with Paul Anka. So, this is an old song that is never released before. What makes it even better is that this song is produced by on of my favorite producers; Timbaland.

The new Michael Jackson album is called «Xscape», which is released on May 13. All songs are previously recorded and unreleased songs. The song «Love never felt so good» was premiered on the iHeart Music Awards, performed by L.A Reid and Usher.

The version performed at the iHeart Music Awards did not have Justin Timberlake`s part in it. This is a great song which is at nr 9 on the Billboard Hot 100 chart. I like the «old school» style in the song. It reminds my of the hit «Rock with you» from one of my favorite albums called «Off the wall» from 1979.

Michael Jackson became the first solo artist to have four singles from the same album peak inside the top 10 of the Billboard Hot 100. As of 2014, «Off the wall» is certified 8 x Platinum in the U.S, and has sold more than 20 million copies worldwide, making it one of the best-selling albums of all time.

That`s business! But how many copies will «Xscape» sell? Not many, because no one buy a CD album anymore. The business is streaming and the biggest music-streaming company now is the Swedish company Spotify which have 10 million paid subscribers.

Spotify has 40 million active users to its name and listeners are creating or updating 5 million new playlists every day. In March 2013, Spotify had 6 million users opted for a paid subscription. A Premium Spotify subscription includes ad-free mobile and offline listening for US$9,99.

Spotify are growing from 20 markets to 56 and by comparison, Internet radio service Pandora had 76 million active users as of April 2014. In October 2013, apple said that 20 million listeners were using iTunes Radio.

Spotify are expanding and shares its catalog with iOS DJ app djay 2. Yesterday, Spotify added its catalog of more than 20 million songs to djay 2, which is one of the most-used DJ apps. In February, Spotify integrated itself on the Pacemaker iPad DJ app.

Apple buy Beats Electronics for $3,2 billion, but the deal would go beyond headphones. Apple and Beats will challenge Spotify. Sales at iTunes is declining, so streaming seems to be the future in the music industry.

Spotify pay 70% of its total revenue back to the publishers. Music labels and publishers pay artists a portion of the royalties, an amount that varies depending on individual record contracts. Spotify doesn`t pay on a «per song stream» model like iTunes.

It’s estimated that the average song generates between $0,006 and $0,0084 per stream in royalties. This can be business, specially for big artists. Spotify says the biggest album on the service each month generates more than $400,000 in royalties.

A big start can generate about $3 million in royalty payments in one year, but that amount will increase dramatically as its revenue increase but the number of artists splitting the money remains more or less the same.
Let`s look at some artist and how they have earned money on Spotify;

Miley Cyrus – Wrecking Ball – 60 million streams ($363,000 – $508,000)
Avicii – Wake me up – 152 million streams ($913,000 – $1,3 million)
Kate Perry – Roar – 65 million streams ($388,000 – $543,000)

The picture is not as rosy for smaller acts. The total royalty payments split between record labels, music publishers, songwriters and artists. In older formats, like CD`s and iTunes downloads, artists pocketed about 10% of the retail price.

Spotify faces an ever-growing number of music streaming competitors like YouTube. Money makes the world go round, and so is it in the music industry. The audience must be convinced that todays streaming platforms is worth paying for. Michael Jackson`s album «Thriller» is the best-selling album.

Is Michael Jackson`s new album a new best seller and will the new song «Love never felt so good» reach the top at Billboard Hot 100? Michael Jackson is my number one favorite artist and will always be. Michael Jackson is still alive!

Reports today:
10:00 a.m EST New Home Sales

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 | May 21, 2014 · 1:57 pm

Tesla vs Fisker

Fisker Automotive Inc is an American automaker based in Anaheim, California. They released their first product which is Fisker Karma. That`s one of the world`s first production plug-in hybrid electic vehicles.

Fisker logo

It debuted in 2008, but production was suspended in November 2012 due to financial difficulties, with about 2,450 Karmas built since 2011. Fisker stopped production in the summer 2012, and was seeking new investment.

Matter were further complicated by the bankruptcy of its battery supplier A123 Systems. The production stopped for over five months and co-founder and CEO Henrik Fisker resigned. One of the investors in Fisher was Leonardo de Caprio, and he lost everything.

Fisker eventually declared bankruptcy in November 2013, and in February 2014 the company was bought by Chinese auto-parts conglomerate Wanxiang Group. Price; US$24,75 million, supported by the Official Creditors committee in the case.

fisker-karma-7

Wanxiang Group owns A 123 Systems (now known as B456). Fisker`s former battery supplier, and Fisker argues that Wanxiang`s conduct was partly responsible for Fisker`s business failure. As part of its bid, Wanziang proposes to restart production of the Karma.

Wanxiang received court approval on February 18 this year, to buy the assets of Fisker after a three-day auction against Hybrid with a bid of US$149,2 million, with bidding starting at US$55 million, significantly larger than the previous US$24,75 million bid.

Wanxiang claimed that it could restart production, estimating that it would sell more than 1,000 Fisker Karma cars in the first 18 months in the US and 500 in Europe. Fisker Karma is a plug-in hybrid luxury sports sedan produced by Fisker Automotive and manufactured at Valmet Automotive in Finland.

The aluminium frame was engineered by Fisker and was supplied by Norsk Hydro from Norway. The 20,1 kWh (72,36 MJ) lithium-ion rechargeable battery in each car came from A123 Systems in Watertown, Massachusetts.

By the end of 2012 Fisker claimed 1,800 cars had been delivered. They have established 45 dealerships in the US and three in Canada. They have built 2,000 vehicles and has partnered with five importers: GP Supercars (Merano, Italy), Nellemann (Copenhagen, Denmark), the Emil Frey Group (Zurich, Switzerland), BD Otomotive (Istandbul, Turkey) and Al-Futtaim Group (Middle East and North Africa).

In April 14, 2008, Tesla Motors filed a lawsuit against Fisker Automotive, alleging they stole Tesla`s tehnology and are using it to develop their own hybrid car, the Fisker Karma. Tesla`s suit claims that the design work done for the Model S by Fisker Coachbuild was substandard, and that Fisker diverted its best ideas to the Karma.

In early 2009 the suit was settled in Fisker`s favor and Tesla was ordered to pay Fisker more than US$1.1 million in legal fees. Fisker looks very similar to the Tesla cars, and if Fisker start to produce electric cars now, it will take many year to be finish and launch the new car.

So far, Tesla is absolutely the best car I have driven. It`s also one of the coolest. Tesla must expect to see competitors on the market but so far Tesla is the leader, and it will take some time for others to produce the cars and start to sell them.
Reports today:

10:00 a.m EST FOMC Member Dudley speaks
10:30 a.m EST Crude Oil Inventories
11:30 a.m EST Fed Chair Yellen speaks
01:30 a.m EST FOMC Member Kocherlakota speaks
02:00 a.m EST FOMC Meeting Minutes

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 | May 20, 2014 · 2:01 pm

Mobile ad opportunity

Vodafone`s (VOD) FY EBITDA dropped 5,4%. Their revenue also slipped 1,9% to £43,6 billion. Net profit attributable to shareholders soared to £59,25 billion from £413 million in 2013, boosted by the sale of their 45% stake in Verizone Wireless for $130 billion.

Vodafone logo

Organic service revenue declined 3,8% in Q4. Adjusted operating profit dropped 37% to £7,67 billion, mainly due to a much lower contribution from Verizone Wireless before it was sold. Vodafone expects FY 2015 EBITDA to drop to £11,5 billion.

CEO Vittorio Colao say Vodafone`s emerging markets businesses have performed strongly. In Europe, the company continues to face competitive. Vodafone declared a final dividend of 7,47 pence a share, giving total dividends of 11 pence, up 8%.

Vodafone is the world`s second-largest mobile network operator and the Pan-European FTSEurofirst 300 Indes slipped today as Vodafone fell 4% after reporting huge impairment costs. Vodafone was the biggest faller on the FTSEurofirst 300 today.

The underlying profit continuing to move in the wrong direction and it seems to be very expensive to be in this competitive markets. AT&T bought Direct-TV to diversify and continue to grow its business.

100px-AT&T_logo.svg

This makes AT&T strong, and Verizone, Sprint and T-Mobile should watch out, as AT&T has more leverage right now. Direct TV`s coverage map can reach 99% of households. Their mentions that cost savings will exceed $1,6 billion.

AT&T now have the ability to price itself lower than other competitors. AT&T`s CEO belive the deal will go through regulators in light of recent trends in telecom and communications. AT&T bought out Direct TV for $95 per share ($48,5 billion).

It`s probably better to be on the other side. Facebook are earning money on their direct ad mobile advertising. Now, Yahoo have the ability to do the same as Facebook. Yahoo is down -16,2% so far in 2014.

y_mobile

The Alibaba IPO can give Yahoo a huge opportunity as they have a potential in Yahoo`s mobile advertising. They can acquire mobile advertising firms like Millennial Media or AOL. This is what made Facebook a big growth company.

Yahoo have Yahoo Weather, Yahoo Finance and Tumblr. They have about 360 million global users and this amount of users can make Yahoo grow with a new mobile ad platform. Yahoo have the ability to buy Millennial Media cheap.

Anyway; Yahoo`s stake in Alibaba will give them a lot of cash, and you all know that Cash is King! Money is just a piece of paper. It ain`t worth something. Just the thing you can buy with the cash. So what is money? It`s just tools, and you need the tools to reach your goals.

Yahoo have a huge opportunity during the Alibaba IPO, and they can be a great growth company if they are doing the right things now. Yahoo have been on the market for a long time, and money will not be the biggest problem for them now. They need a great idea. Mobile ads can be one of them.

Read my article about Ymobile on March 28, 2014.

Reports today:
08:30 a.m EST FOMC Member Plosser speaks
08:30 a.m EST FOMC Member Dudley speaks

 
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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