- The Exchange14 mins ago
If the government could investigate itself for insider trading, the timing of a recent stock sale might have triggered a few alerts.
In December, the Treasury Dept. sold the last of its shares in General Motors (GM), wrapping up the controversial bailout that began when GM declared bankruptcy in 2009. Taxpayers ultimately lost about $10 billion on GM, and some critics argued the Treasury could have recouped more of its investment if it held on to its GM shares longer and waited for the price to rise. But now the timing of the sale looks superb, especially since a mushrooming safety controversy — which the government knew about for years but the public didn’t — has been pushing down the value of GM shares.
- The Exchange1 hr ago
King Digital Entertainment, owner of the world’s most addictive video game, slapped a price range on its initial public offering Wednesday, and the bottom line was a lot lower than expected.
The owner of Candy Crush Saga said it planned to sell 25.5 million shares at up to $24 each. With 315 million shares outstanding after the offering, that values the company at $7.6 billion.
Wow, crazy, insane, nuts – right?
Hardly. Mainly on the strength of Candy Crush, King brought in $1.9 billion of revenue and $568 million of profits last year. That’s $1.80 per share in profit, or a trailing price-to-earnings ratio of a whopping 13.3.
This is nothing in comparison to high-flying, bubble-icious tech stocks. Facebook’s (FB) P/E is 115 and Netflix (NFLX) sits at 235. It’s also nothing like beleaguered game maker Zynga (ZNGA), valued at $5 billion with a cool $600 million of losses in the past three years.
- The Exchange2 hrs ago
If the recent pattern holds, the negligible move in Krispy Kreme's (KKD) stock price Wednesday represents the last hours of calm before its earnings report leads to a massive shift.
In four of the past five quarters, shares of the Winston-Salem, N.C., doughnut and coffee chain have moved at least 15%, with two up days and two down, following the reporting of its results. The outlier was a relatively pedestrian 2.7% decrease in the fourth quarter of 2012. Ahead of the upcoming report, it was adding 0.8% at $19.56.
- The Exchange3 hrs ago
The first indication of a problem with the ignition switch on the Chevrolet Cobalt came in 2004, right around the time General Motors (GM) was launching the vehicle for the first time. It took nearly a decade for GM to issue a recall to fix it. In the meantime, at least 13 people died in 31 crashes that may have been related to the faulty switches. GM and federal safety regulators have known about many of those crashes for years.
- The Exchange1 day ago
Short sellers have been building an ever-larger position in pizza chain Papa John's (PZZA) over the past several months, an accumulation that measures as the third-biggest percentage increase among 42 publicly traded restaurant stocks examined.
According to data available on Nasdaq.com, the number of shares in Papa John's sold short totaled 1.64 million as of Feb. 14, up 173.7% since the middle of last March. The spike is particularly apparent back to this past October, when short interest surged from 453,903 shares to 857,568 shares in a two-week span. It's trended upward ever since for the No. 3 U.S. pizza chain by unit count, with only barbecue seller Famous Dave's (DAVE) and sandwich shop Potbelly (PBPB), public less than half a year, showing a more pronounced change of all the restaurants surveyed.
- The Exchange1 day ago
Chris Kimble is the founder of Kimble Charting Solutions, an investment research firm in Salina, Kansas. Chris is a seasoned trader and a master market technician and the charts he draws are both soundly constructed and engaging. You can follow his awesome Tumblr HERE .
Several popular U.S. stock indices are at or near all time highs.
Recently, the Russell 2000 Small Cap Index just broke above an important 15 year resistance line. Soon, we will see if the Dow Jones Industrials, the NASDAQ, the NYSE and the Wilshire 5000 can follow suit.
However, these rallies are occuring while valuations are 66% above the 114 year4 average valuation line (see charts below).
Eventually, either earnings will catch up or stocks will begin lagging.
- The Exchange1 day ago
Winter storms and a two-month deep freeze have gotten the blame for weak sales of jeans at the Gap (GPS), burgers at McDonald's (MCD), sedans at General Motors (GM) and shampoo at Walgreen’s (WAG). But companies and economists may be a bit too eager to blame every recent downdraft in the economy on bad weather.
Nobody disputes it’s been a brutal winter in some parts of the country, with a record number of canceled airline flights, a polar vortex that sent heating bills soaring and paralyzing snowstorms as far south as Alabama. Along with the lousy weather has come a string of disappointing economic reports. Job creation during the past three months has averaged a mere 129,000 per month, compared with 204,000 per month for the 11 months prior to that. At least 194 big companies cited weather in their latest earnings reports, according to FactSet. When the Federal Reserve released its latest overview of the economy, it mentioned weather 119 times — a record, as far as anyone can tell.
- The Exchange1 day ago
Setting aside all the crazy caterwauling about the alleged new tech bubble, the tech IPO market is suddenly getting a lot more interesting. Recall that it took two weeks into 2014 before the first tech-related initial public offering, babysitting site Care.com (CRCM), hit the market, and then almost another two months for the second. Care.com was a bit of a snoozer, too, rising just below 43% in its first day of trade. But that second IPO, a $220 million deal for data-management firm Varonis Systems (VRNS), was a doozy, as shares nearly doubled on day one. And so was the third tech IPO of the year, last Friday’s $168 million Coupons.com (COUP), also a near double by the close that day. Shares today are basically flat. There was some irony in the first-day success. Coupons.com CEO Steven Boal founded the company in 1998 in the midst of the first Internet bubble and planned to go public way before 2014. But the company only reached $100 million in revenue in 2012 and just turned profitable in the fourth quarter of 2013. Varonis was founded in 2005, in the post-bubble era, and is inching toward profitability itself as revenues grow wildly. But expenses, especially marketing spending, are also skyrocketing. And the stock has sold off about 10% on Monday on no obvious news (but amid a broader market pullback). Two hot deals do not equal a bubble But two hot deals do not a bubble make. Back in 1999 and 2000, tech companies going public were only 5 years old on average, and three-quarters had sales under $50 million, two warning signs in the academic literature on IPOs. Varonis and Coupons.com both came in above those bubble levels. And it wasn't just two IPOs doubling that signaled a bubble -- more like 163 in 1999 and early 2000. This week comes Castlight Health, a cloud services company focused on the healthcare industry. And next week should see three more-specialized cloud companies come public. Paylocity Holdings does payroll and benefits, Q2 Holdings does banking and Amber Road focuses on international trade. Admittedly, Castlight looks considerably frothier – revenue last year totaled less than $13 million, which was dwarfed by $34 million of marketing expenses and $15 million needed for R&D, leading to a net loss of $62 million. Still, the company talks big, with claims it can “dramatically” improve efficiency in the $3.1 trillion U.S. healthcare market. Aim high, I guess? It will list on the New York Stock Exchange with the symbol CSLT. Paylocity, listing as PCTY, is aiming for a smaller market – providing payroll, time tracking and benefits software over the Internet to businesses with 100 employees on average. It’s above the $50 million revenue level ($77 million last year) and operating at just about breakeven with a profit of $617,000. That makes last year’s 40% revenue growth all the more impressive. Q2 is also a small-market play – aiming to give better apps and Internet services to
- The Exchange2 days ago
Carl Icahn is a prominent activist investor and the chairman of Icahn Enterprises L.P. This letter originally appeared on his website Shareholders Squaretable. You can follow Mr. Icahn on Twitter here > @Carl_C_Icahn