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February 2017

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Groupon’s Q1 revenue came slightly above consensus, while, EPS remained in line

Groupon Inc. (NASDAQ:GRPN) held the Q1 FY16 earnings call yesterday following the close of market. The estimates came largely true as the results were mostly in line with consensus. GRPN is currently under quite a bind as it posted a break even for EPS owing to margins pressure.

Jefferies analyst, Brian Pitz believes that the fundamentals for the company have been improving as the company posted a quarter, somewhat, better than expectations. He further explained that the lack of profitability has been driven by heavy investments during the quarter; however, the company needs to continue to improvise in order to achieve sustainable growth over the next few quarters. Groupon has streamlined its international business and is currently operated in only 27 countries with North America being the major focus of the investments. The company also saw a raise in marketing expenditure in the said region in order to expand its consumer base.

Mr. Pitz shares his analysis of earnings report and sees a 2% y/y decline in revenue, which, amounted to $732 million, beating street estimate of $718 million. Adjusted EBITDA was $31 million which was also ahead of Street’s $23 million. The company failed to post positive EPS and reported net loss of 1 cent per share largely in line with Street’s 2 cents loss per share. Revenue from NA region increased 4% y/y and was reported at $501 million, 3 million below street’s $504 million estimate. International revenue was $231 million ahead of Street’s $221 million and decelerated at a pace of 15% y/y. NA billings appreciated by 5%, but, overall billings declined by 5%.

The analyst maintained his HOLD rating but raised price target to $3.50 from $3.00 on improving fundamentals. The company reiterated the guidance for FY16 with revenue expected to be within the range of $2.75 to $3.05 billion. The analyst opinion for GRPN is largely HOLD with 14 recommendations. Apart from hold, the company has 1 strong buy, 3 buy and 3 underperform. The stock is currently trading at $3.38, down 3.15% as of today at 12:48 PM EDT.

Second generation Apple Watch component orders are to begin during the third quarter of this year

Apple Inc. (NASDAQ:AAPL) is expected to launch the new generation of its popular wearable device, the Apple Watch during the latter half of this year. The Cupertino based company appears to be already gearing itself for the much anticipated debut of the new Apple Watch. 

According to a report published on DigiTimes, the iPhone maker has ramped up the process of ordering chips an other components to be fitted in the Apple Watch. Unnamed sources in Apple’s supply chain as cited by the DigiTimes report reveal that Apple is expecting significantly high demand for the new device. The orders made by Apple are reflecting two million units of the Apple Watch being shipped every month.

The components for the new Apple Watch are set to be shipped during the third quarter of this year. Considering that the Apple Watch sales have been disappointing so far, the company’s orders look very aggressive. Apple Watch sales during the second quarter plunged by 40% sequentially according to an earlier report published by Forbes. The device that was launched last year much to the fan fare of audiences around the globe has seen its market share being trampled on by much cheaper wearable alternatives such as fitness trackers made by Fitbit Inc (NYSE:FIT). Fitbit has emerged as a the undisputed leader in the wearables world with its fitness trackers reaching a wide range of audiences across the globe.

Perhaps the primary reason the Apple Watch has failed to hit a major mark with consumers is that its overpriced for an item that more or less replicates the functionality of a smart phone in a limited capacity. Meanwhile fitness tracker sold by Fitbit are available for only a fraction of the price and concentrate mainly on health related features. Perhaps with the new Apple Watch, the iPhone maker is aiming to add new technological innovation that might turn its fortunes around.

The analyst believes Twitter will have trouble driving user growth and monetization

SunTrust Robinson Humphrey analyst Bob Peck has downgraded his rating on Twitter Inc. (NYSE:TWTR) from Buy to Neutral today. The analyst reiterated his $18 price target on the stock, reflecting 0.44% downside potential over the last close. The stock closed up 4.09% at $18.09 Friday.

The analyst said his research has showed that user engagement as well as user growth for the social media network still remained challenged through the quarter. Based on intensifying rivalry from Snapchat, limited new-product introductions, as well as challenges related to advertising, he believes Twitter’s user monetization does not have the potential to go far from where it stands right now. “With the stock at our $18 target and a lack of data points to merit increasing it, we are lowering our rating to Neutral,” Mr. Peck added.

Over the weekend, hacking group OurMine Security hacked into CEO Jack Dorsey’s Twitter as well as Vine accounts. This is the same group which previously hacked Twitter accounts held by Google CEO Sundar Pichai and Facebook CEO Mark Zuckerberg. They posted the same message via a tweet which they did in their previous hacks, which read that they were testing security. Users had then been advised to have two-factor authentication applied to their passwords for added security, to prevent such breach from happening again. Other related accounts such as Vine, Bitly, and Quora, which might have access to publish on Twitter, should also have two-factor authentication applied to their passwords.

The Street, as polled by Thomson Reuters, has four Strong Buy, eight Buy, 25 Hold, four Underperform, and two Sell ratings on Twitter. It also maintains a 12-month mean price target of $18.38 the stock, reflecting 1.67% upside potential over the last close. The stock plunged 2.32% below the last close, to $17.66 as of 7:51 AM EDT today.

BTIG has removed its price target on Facebook as part of the downgrade

Facebook Inc (NASDAQ:FB) stock remained flat despite being downgraded by investment firm BTIG in an updated research note sent out to clients and investors today. BTIG analyst Richard Greenfield started off by highlighting that when Facebook started out the firm initiated coverage with a Sell rating. He added that in 2013, the firm upgraded to Buy on the back of the social media giant’s progression into mobile.

Now that the stock has crossed the firm’s $117 price target set over a year ago, trading above the $120 mark, Mr.Greenfield has decided to brought down his rating to Neutral from Buy. The analyst believes that the risk reward ration on Facebook is not attractive anymore.

“Facebook remains one of the only ways to play the shift of legacy media ad dollars to mobile and its advertising growth rate remains staggeringly high, especially for a $348 billion market cap company” he said.

The analyst commends the company on holding a long term approach over the progression of its business in comparison to ‘legacy media companies’ the firm covers that are otherwise aim mainly on bumping short term earnings with advertising dollars moving increasingly towards mobile. However at the same time points out that investors expectations have moved sky high . Additionally the analyst highlights that Facebook’s new mobile video experience is taking far too long to reap in profits than previously expected.

Earlier this week Facebook surpassed the 1 billion mark in terms of messenger users. This is a milestone for the company that has been operating a twin messenger service along with Whatsapp. With the company making increasing efforts to develop ways to monetize the messenger service, this could results in a whole new viable revenue stream for the company.

Chinese e-commerce platform sees increasing potential in Stadium Goods, readily joins hands to take advantage of the growing market

Alibaba Group Holding Ltd. (NYSE:BABA) shares are surging 2.12% in the market currently. Not only this, its shares are rising 26% year-to-date through September 14. Compared to this, shares of rival Amazon.com, Inc. (AMZN) are surging only 12.6% YTD. Even the Dow Jones and S&P 500 index are rising 3.5% and 4%, respectively on year-to-date basis. Thus, the group’s performance is quite remarkable in the market. It is expected to further enhance on the back of its deal with Stadium Goods.

Stadium Goods founder has finally found a way to enter the Chinese market. It signed an agreement with the Chinese group’s Tmall global platform to cater to the customers located in China. The e-commerce company decided to expand its helping hand because of the eye-popping price tags carried by the sneakers line. The prices range from under $100 and go all the way up to an attractive price tag of $23,000. These sneakers of the New York-based retailer have filled up the shelves in the US and were looking to expand their footprints outside of the country before the $252.02 billion enterprise came to aid them.

To many, it may seem like a foolish idea, however, turns out a good number of people are readily available to pay huge sums of money for online store’s sneakers. This retailer is a multi-billion dollar resale market for the sneakers in the US. It carries brands that are increasingly familiar with customers rather than sneaker fans, but are extremely hard to find. Its customers include consumers who buy sneakers as part of their collections.

The Chinese platform can benefit from this as, although the US market is only worth $1 billion, the global market has a potential to be worth $6.2 billion, according to Stadium Goods CEO John McPheters. He opened the store along with his two partners in October FY15. They expanded their footprint across the borders for the first time in August, earlier this year. They took help of Tmall and launched an e-store on its platform. This was done to reach the lucrative Chinese market. Currently, the company has only made its low-price footwear accessible to the customers, for gauging their interest in the products. If it is successful, it would soon roll out the higher end products and make them available for the Chinese customers readily.

Due to this agreement with Stadium Goods, the shares of the e-commerce platform have seen a rise in the market. The analysts once again eye their steps as bullish. The analysts of FactSet Fundamentals have given Alibaba group 33 Buy, three Overweight, and five Hold ratings currently. The company has also received the average price target of $111.23, with an upside potential of about 8.62% over the last closing price stated at $102.4.

Netflix’s recent decision is expected to bring in more than 1000 hours of original programming, up from 600 in 2016

Netflix, Inc. (NASDAQ:NFLX) was recently reported for gradually trimming its licensed TV shows and movies offerings. According to Yahoo Finance, the company had been doing so for a reason. The report suggests that the streaming service plans on expanding its original content offerings to about 60 shows in calendar year 2017 (CY17), double of what it is offering presently. Despite positive expectations, NFLX shares declined approximately 1.92% during active trading Wednesday.

Yahoo! Finance further cited Forbes report which suggests that the increase in original series offerings will expand binge-watching options for Netflix subscribers. The company’s earnings report for the third quarter of fiscal year 2016 (3QFY16) also mentioned that CY17 will represent as the fifth year of its original content strategy. It is expected to bring in more than 1000 hours of original programming, marking an increase of 83.3% year-over-year (YoY).

According to $338.23 billion company’s press release, “Among those 60 scripted shows will be “Dear White People,” based on the 2014 movie of the same name, and “Ozark,” in which Jason Bateman returns to Netflix for a series that “explores capitalism, family dynamics and survival through the eyes of (anything but) ordinary Americans.” Consequently, Netflix will boost it content budget to $6 billion, up 20% YoY.

The move is expected to prove as a money-saver from the streaming business. This is because it enables the company to move away from costly licensed movies and shows. This justifies Allflicks data that showed that the company has trimmed its selection of shows and movies by a third.

Wall Street analysts have mean price target (PT) of $125.22, implying 0.5% downside potential over last close. Moreover, Netflix’s analysts’ ratings include 21 Buy, three Overweight, 12 Hold, one Underweight, and five Sell.

Volkswagen’s subsidiary Lamborghini announced plans to introduce electric vehicles and autonomous SUV

Volkswagen AG’s subsidiary Lamborghini which is regarded as a high-performance luxury brand recently announced its entry in the electric vehicle space along with introducing a fully autonomous Sports Utility Vehicle (SUV.)

The German luxury car maker, which usually produces cars, now plans to launch a SUV by 2018, whereby it estimates to sell around 3,500 units. Furthermore, by 2019, the maker of Aventador Coupe expects to double the production of its SUVs to 7,000 a year.

Lamborghini’s long-term production plans also include the launch of a plug-in hybrid EV version of the SUV, which can be expected not sooner than four years down the lane. Moreover, a full electric SUV would also create a platform for an autonomous vehicle.

Whenever a discussion regarding electric vehicles is brought-up, it is merely impossible to leave out Tesla Motors Inc (NASDAQ:TSLA) from the talks. The Palo-Alto, California based upscale electric vehicle producer can be considered as one of the pioneers of a fully electric vehicle. The car maker started with Roadster and now has expanded its product line to a high-end Model S, an all-electric SUV Model X and the soon-to-be released Model 3 – which would be offered to the mass market.

Yesterday, Tesla’s Chief Executive Officer (CEO) Elon Musk tweeted regarding a product announcement. As per the latest plans, the electric car maker said that it is offering cars with a range of 315 miles once the battery is fully charged – an unmatched range.

New iterations of Model S and Model X were also introduced, with 100 kilowatt-hour batteries. The management at Tesla elaborated that enhancing the range of its vehicles was only possible once the energy density of its battery packs was improved. Following the upgrade, the company would be able to sell a P100 version of both Model S and Model X, accompanied by the famous “Ludicrous Mode.”

The owners of Tesla’s all-electric sedan would get the 315 mile range, while the heavier Model X would not be able to drive for as long. The P100D iteration of Model S would cost $134,500 and Model X would cost $135,500.

In a conference call, Mr. Musk said that his company would not offer the “fastest car in the world.” He backed his claim with some statistics, he mentioned that 100 kWh sedan can shoot from 0 to 60 mph in about 2.5 seconds, while the Model X would require 2.9 seconds.

Meanwhile, Tesla claims to offer the fastest car in the world, Lamborghini plans to enter the electric vehicle market. The latter being a producer of luxury sports cars since it was incorporated, it would not require much time to catch a Model S.