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July 2017

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Analysts at Roth Capital bumped their rating on Etsy stock from Sell to Neutral following its second quarter results

Etsy Inc (NASDAQ:ETSY) stock jumped as much as 11% in the opening minutes of today’s trading session, after analysts at Roth Capital bumped its rating on the company from Sell to Neutral. Shares of the company has already surged more than 60% since the start of fiscal year 2016 after hitting its 52-week low of $6.04 in early-February.

The company reported the finances of its second quarter of 2016, after the closing bell of yesterday’s trading session. Etsy managed to report solid earnings for the passed quarter, while the Street’s consensus was not met for the bottomline. The company revealed $85.3 million in total revenues, surpassing its $80.55 million consensus estimates. On the other end, adjusted loss per share (LPS) came in at 6 cents, missing the Street’s estimates by 5 cents.

Analysts at Roth Capital maintained its $14.25 twelve month price target on Etsy stock, following its second quarter earnings while issuing positive comments about the company’s solid FY16 revenue view. During the quarter, Etsy managed to expand its global customers reporting 1.7 million active sellers along with 26.1 million buyers.

Etsy chief executive officer, Chad Dickerson also commented on the company’s quarterly earnings call stating, “We accelerated our GMS growth and provided high impact services to help our creative entrepreneurs start, grow and manage their businesses. This continued focus and discipline led to growth across all of our key metrics and, as a result, we are raising our financial outlook for 2016.”

Roth Capital believes that the raised guidance hints at better-than-expected profitability in the second half of current year. The research firm highlighted company’s silence pertaining to Etsy’s growth margins in the second half of 2016 and believes that the overall growth in the aforementioned time period will be driven primarily by “conservatism than business fundamentals”.

Tesla managed to increase its deliveries by 120% in Norway, despite declining demand for the Model S

Although Tesla Motors Inc (NASDAQ:TSLA) launched its all-electric SUV, the Model X, in September 2015, it recently started deliveries of the falcon-wing-door vehicle in European and Asia Pacific markets. Interestingly, it became the second best-selling vehicle in Norway by the end of the third quarter, according to Electrek.

The electric vehicle (EV) maker delivered 800 SUVs in Norway in the third quarter, with more than 600 deliveries alone in September, according to registration data. It sold seven units in June, 23 units in July, 168 units in August, and 601 units in September.

While the Model S has been among the best-selling vehicles in the country, the Model X has gotten the spotlight for the first time after its deliveries started in June. Additionally, the Model X deliveries were more than enough to offset the falling deliveries of the premium sedan, as it merely 460 units were sold over the same period.

According to registration data with Electrek, Model S shipments in Norway have declined by over 50%. However, thanks to the Model X and its reservation backlog over the last year, the automaker’s overall deliveries in the country during the third quarter grew by 120% year-over-year (YoY) to 1,252 units.

Norway had been the top European market for Tesla that was overtaken by the UK in the first half of 2016. However, the country could get back to the top by year-end and it remains one of the best markets for Tesla globally.

The Model X not only became the second best-selling vehicle in Norway behind the VW Golf; it was also the best-selling electric vehicle in the market in September. Even on a quarterly basis, the vehicle was among the best-selling vehicles in the country.

Electric vehicles are very popular in Norway due to various government incentives. It will be interesting to see Tesla’s sales performance in the country now, given that it offers two different car models.

During the past weekend, the automaker announced record-breaking deliveries in the third quarter, as well as record-high deliveries for the Model X. It seems like Norway played a critical role in those achievements.

Shares of both the companies collapsed in wake of reports stating the DoJ’s plans to end use of BoP contract private prisons

Yesterday, State Justice Department revealed plans to end the use of contract prisons. In the wake of this news, Corrections Corp Of America (NYSE:CXW) and The GEO Group Inc (NYSE:GEO) stock collapsed heavily. Corrections Corp stock was down 35.45% to close at $17.57, while GEO stock closed down 39.58% at $19.51. Cannacord Genuity analyst weighed in on both the companies and said that the stock reaction was overdone, even though the news is clearly negative.

“For GEO, at around the current price, the stock is trading at close to a 20% free cash flow yield and CXW is close to 15%. Additionally, with only ~11% BoP risk to GEO and 9% to CXW, the massive falloffs in the stocks imply that the risk will spread to other federal, state and local jurisdictions,” said Cannacord analyst, Ryan Meliker. According to him, the stock reaction is based more on fear related to cash flow risks.

Mr. Meliker highlights that the plan unveiled by Department of Justice has 13 private prisons under the authority of CXW and GEO. In his view, they do not impact ICE contracts, state contracts or US Marshall contracts. He added that Corrections Corp has 9% revenue exposure to Bureau of Prisons, while the GEO Group has 11% revenue exposure to BOP, excluding its entirely private halfway house business. Including halfway houses, GEO has 15% revenue exposure to BOP.   

The plan indicates that the contracts would not be renewed by BoP as they mature. Cannacord analyst believes that the enactment over the plan would not be overnight. Sally Q. Yates, Deputy Attorney General stated that DoJ would not end existing contracts, however, it would review the ones needing renewal over a period of next 5 years.

Free unlimited photos on an Amazon Prime account have now been extended to the family members of the account holder as well

Amazon.com, Inc.’s (NASDAQ:AMZN) “Prime Photos” unlimited storage for Amazon Prime account holders has now been extended so that the account holder can invite up to five other users to share unlimited photo storage.

Previously, only an Amazon Prime customer could store as many HD photos as he or she wants on Prime Photos, but now a “Family Vault” feature has been added where up to five other users could also benefit from free, unlimited photo storage on Prime Photos. Moreover, a smart search process has also been added on Prime Photos that allows the user to initiate searches for images by using simple keywords like dog, school, or picnic.

A similar or identical search mechanism is already employed by both Google Photos and Apple’s native Photos app on iOS. Now, Prime Photos has also updated its search process to make things easier for users. Apart from search based on items, users would also be able to search for persons and locations in their Prime Photos camera roll.

In the past, AI-powered search algorithms have been implemented by a number of services, but Amazon has just stepped into the game with Prime Photos. While its incorporation of AI-powered search is no innovation, it is a move towards achieving the standard already set so that user engagement is encouraged.

You could buy an Amazon Prime membership for $10.99 per month or $99 per year, and apart from Prime Photos, other Amazon Prime benefits include free same-day and release date-deliveries, streaming services (Prime Video and Music Unlimited,) as well as Prime Reading and 30-minute Early Access for Lightning Deals on Amazon.com.

Wedbush analyst reiterates Outperform rating for Paypal

Gil Luria at Wedbush maintained Outperform rating for Paypal Holdings Inc (NASDAQ:PYPL). He mentioned his viewpoint on the company that it would continue to dominate as leader in ecommerce payments, as its partnership with Visa presents unprecedented upside potential to the stock.

He presented his perspective after an advisor call on partnership between Paypal and Visa earlier on Monday, July 25 between former Head of Consumer Products at Paypal and former Vice President of Mobile Payment Solutions at Visa.

The panelists in the advisor call confirmed that Paypal and Visa had been in talks related to a possible partnership for many years. They also mentioned that the partnership would present benefits to both the companies. Also, the narrative related to Visa which pushed Paypal in the partnership is more or less congruent with these facts.

The analyst mentioned according to panelists, although the lower interchange rates are not possible for sure, but over time and several other aspects of Paypal and Visa partnership, such as access to reduction in fraud, tokenization, access to card and the ability for working with issuers would improve user experience for Paypal.

Also, the former executive at Visa presented his thought that the decision has stabilized position for Paypal in lieu of future of payments, which doesn’t allow any other technology companies from benefitting a preference from other networks.

Wedbush’s analyst made no changes to his Price Target of $50.00 for the stock; this presents 31.10% upside potential from its current price level of $38.14. The Price Target presented a 30x multiple on the 2017 expected earnings per share (EPS). This presents about 20% premium to Visa, which is pretty much justified by its fast, rapid and accelerating growth.

The Street analyst covering the stock has presented a price target of $44.06, much lower than Wedbush’s expectations.

Tesla Model 3’s 373,000 reservations could be a reason why Nissan Leaf has been underperforming in the US

While all the other major gasoline-powered and battery-driven cars put up a mediocre performance in the US last year, Nissan Motor Company Ltd was one of the most underperforming players. Nissan Leaf lost its dominance in the American soil to Tesla’s premium sedan the Model S, despite being less than half its price.

Thus, the Japanese carmaker planned to upgrade the Leaf’s battery pack to 30kWh, becoming the first automaker to update battery pack of a mass-market EV. Soon after, BMW and Volkswagen announced that they would intrude new packs for i3 and e-Golf, respectively.

The new 30-kWh pack should allow the Leaf to travel 107 miles per charge and improve its dwindling performance. Last year, its sales declined about 43% to 17,269 in the US, down from 30,200 in 2014 when it was the market leader.

The battery update for the vehicle should have bump up its sales but the Leaf has continued to head south in the US. During May, the company sold just 979 units, compared to 2,104 units last year. In fact, the Leaf sales at 4,697 units for the first five months of 2016, down 39% year-over-year from 7,742 units.

While the Model S remains the market leader with 8,390 deliveries year-to-month in its home soil, sales of its younger-sibling, the Model X, which has faced a recall and quality issues, stand at 4,850 units which is more than the Leaf sales.

Tesla Model 3’s reservation process led to hundreds of thousands of people outside the company’s stores worldwide. Tesla has received over 373,000 reservations for the $35,000 compact sedan.  Thus, those customers will not likely buy another vehicle in the coming few years while they’re waiting for the Model 3.

Moreover, base prices of Leaf SL and Leaf SV with the new packs are $36,790 and $34,200, respectively, which is in the same price range as Model 3; therefore, Tesla’s first mass-market EV could be the potential culprit behind the Leaf’s dwindling performance.

With its recent attack on the Model 3, it appears that the Japanese automaker is aware of the situation. In April, Nissan promoted an ad which said: “And why drop $1,000 to stand in line when you can get $4,000 cash back and the best-in-class range.”

The ad was also misleading, as it is not the “best-in-class range.” While the Leaf can provide 107 miles per charge, Model 3’s base-model will provide at least 215 mile-range.

We explain why Chesapeake’s new strategy is worth pondering upon

Earlier this month, Chesapeake Energy Corporation (NYSE:CHK) announced that it would redeem some of its notes before they become due. We believe the strategy to bode well for company as well as its investors, and reflects further optimism in the stock.

As per the company’s management, it would buy back its Senior Notes which were due on August 15, next year. These have an interest rate of 6.5%. Currently, the outstanding dues amount to $222.75 million, but were higher at $600 million at one point in time.

Chesapeake would pay a penalty for buying back these notes before they become due. However, this penalty seems to be of no worry as it would present the company with an option to mature these notes later at its own preferred time.

Chesapeake announced to purchase some of these notes at a premium, some at par, while some at discount. The tender for these notes expires on January 04, next year. The management is offering a premium of around 3.4% along with all the unpaid interest and accrued interest on them.

According to the latest update from Chesapeake, it has received a tender of around $88.97 million worth of notes from bondholders. Hence, the maximum which could be repurchased outside the tender offer is $133.75 million. The question is whether such decision or strategy is a wise one from the company?

Considering the accrued interest and unpaid interest, it amounts to 5.68%, whereas the company would have to pay around 3.72% if these notes were matured at their specified date. In dollar terms, this reflects that Chesapeake would have to pay roughly $133.75 million extra on the debt which it is purchasing back.

However, this neglects some important points. If we remove the interest unpaid and accrued, the effective premium amounts to 2.89% which would mean it would have to pay only $3.87 million for the notes which would mature with expense of $4.98 million.

Secondly, the company does have a substantial amount of cash and much more can be expected in lieu of asset sales so it wouldn’t be a big problem for the company. This could also provide Chesapeake with an opportunity to raise capital later when required with longer maturity and more convenient terms as its debt rating profile would also improve.

Microsoft is set to release a significantly upgraded fifth generation Surface Pro

Microsoft Corporation (NASDAQ:MSFT) was due to launch its fifth generation Surface Pro by the end of 2016, but that deadline has been extended to early 2017, in order to incorporate major upgrades. Numerous reports have speculated that Microsoft has intentionally delayed its plan to release its Surface Pro 5 as Intel’s next generation processor will not be mass produced until early 2017. Microsoft feels like the upgrades planned for its next generation Surface Pro will serve as a “game changer” and are completely worth the wait. Here is The Country Caller’s take on Microsoft’s upcoming Surface Pro 5.

The delay of the Microsoft Surface Pro 5 has been due to Intel’s next generation “Kaby Lake” processor which will be ready to mass produce early 2017. Microsoft intends to take its Surface Pro’s performance to the next level with the integration of Intel’s seventh generation processor. Intel has demonstrated how its Kaby Lake processor is more advanced than its predecessor processor in every way, which is why Microsoft is so determined to incorporate the upcoming processor for the Surface Pro 5. Kaby Lake will not only improve upon where the Surface Pro 4 left off but also practically terminate its sole short coming, which was the poor battery life. Kaby Lake is stated to be more efficient at power consumption which will prolong the battery life of the Surface Pro 5.

There is another advantage to Microsoft delaying the launch of the Surface pro 5 as it will be able to incorporate Windows 10 Redstone 2 operating system. The latest OS from Windows is set to be released in early 2017, along with other next generation Window devices. Hence, Microsoft might be taking advantage of the arrival of a new and improved operating system. The latest OS from Windows will further give the Surface Pro 5 performance boost and a better user interface. Overall, Windows 10 Redstone 2 OS will improve the user experience of Microsoft’s upcoming Surface Pro 5.

The rumored specifications of the Surface pro 5 include an improved 12.3 inch 4k resolution display screen, a massive 32 GB RAM, 256 GB onboard storage and a 16 MP main camera, along with an 8 MP front shooter. The Surface pro 5 is rumored to support USB Type C port which will enable fast charging for the device. Many sites are reporting a new stylus for the Surface Pro 5 which will be charged directly from the tablet/laptop itself. Users will be given an option to attach an external keyboard to the Surface Pro 5 and convert it into a fully functioning laptop. The Surface Pro 5 should be launched with a similar launch price that the Surface Pro 4 had.

Qualcomm wireless charging technology is mobile, easily installed and is being promoted through partnerships with Formula E

What better way for Qualcomm Inc (NASDAQ:QCOM) to show off its inductive charging technology, Halo, than by powering electrical cars at the Formula E motor racing championship. For now, the medical and safety cars at Formula E this year will be using the company’s Halo portable and wireless charging platform. Qualcomm’s strategy is to create a broader awareness of its technology and its power by teaming up with car makers and events such as Formula E.

The hardware for Qualcomm’s technology has been created by Chargemaster which makes charging infrastructure for electric cars. The company has a production capacity of 2000 units per month; units which are extremely portable and offer 7.2 kWh charging. The technology works by adding receivers compatible with the Halo platform to vehicles. Once the receivers are installed, these cars can just drive onto a charging pad which guides them into position and allows users to initiate charging through a mobile application. The pads are portable but can also be permanently fixed depending on user preference. Qualcomm technology’s superiority comes from Halo’s ability to wirelessly charge at considerable efficiency without direct contact with the receivers. To promote a safe charging experience, the platform has fail-safes that shutdown charging if any object or person is detected too close to the charging pad.

Qualcomm has partnerships with carmakers such as Rolls-Royce and Daimler to push its technology onto roads. These partnerships could see widespread adoption of the charging platform in the automotive industry and while it will initially be something of a luxury feature, it could work its way into being a standard. Qualcomm’s ambition is for Halo to be adopted industry wide and is especially concerned with targeting businesses such as Taxis to start off with and hopefully the mass market in the long term as more car makers turn to electric vehicles.

Wireless EarPods could be one of the few innovations that comes with the launch of the next Apple flagship

Apple Inc.’s (NASDAQ:AAPL) iPhone 7 is set to launch this fall and will reportedly do away with the 3.5mm jack in favor of connecting earphones through the lightning connector. Therefore, truly wireless EarPods from Apple have been rumored to make their bow for the first time along with the iPhone 7 this September. However, wireless EarPords from Apple will not be the first of their kind by any means, and we’ll take you through the two possible “inspirations” for Apple to look at when working on their EarPods.

The first is the Apollo 7 from Erato Audio. Apart from being a truly wireless pair of earphones that can work with an iPhone or iPad, Apollo 7 also sports a microphone built into the device for answering calls by only clicking on the buttons. Siri integration is possible on the earphones and the user may launch the virtual assistant simply by double-clicking.

Volume control can also be accessed by double-clicking when listening to music. The Apollo 7 can play your music for four hours straight after which you will have to stick them back in their case which also substitutes as a rechargeable battery case, and for $249 a pair on Kickstarter, it is a solid deal for audiophiles.

The second is Rowkin’s Mini earbud; a singular earbud for one ear that costs $60 and by coughing up an extra $10, you could get your own 24 Karat gold-plated earbud. Rowkin Mini only has an hour of battery though, but it also comes with a portable charger thankfully. Stereo sound is no good so far but there is good news on that front; Rowkin is gearing up to launch earbud pairs this Summer which could set you back somewhere between $100 to $120.

Some of the features in both of these earphones could be part of Apple’s version of wireless earphones, and we’re hoping the one-hour battery of Rowkin Mini is not one of them. Reports of a lack of innovation and that road costing Apple some serious sales numbers have landed the company in a precarious position, where it is gunning on accessories instead of the flagship iPhone to win its customers back. This is why the wireless EarPods have a lot riding on them for Apple and the company has to gotten it right in the first go.