Friday Finance Weekly 87th Edition

Greetings folks and a warm welcome to the 87TH Edition of Friday Finance Weekly. It’s been a while since I last wrote, but the last several weeks have been very hectic. Okay let’s get down to business.

Let’s start up by getting caught up on some technology news:

  • Biggest piece of news is the IPO of Twitter. The initial list price of the stock was $26/share, but it soon spiked to $50/share. Now it is around $42.53/share, giving the company a market cap of around $23B. I still don’t understand Twitter and more importantly it’s not making any money right now. The market sentiment is that one day they will figure out how to monetize Twitter. Let’s hope it doesn’t follow Facebook’s IPO where they started at $38/share and gradually fell to as low as $17.55/share. The biggest issue I have with Twitter is that I don’t see a lot of applications for it. Facebook for example can data mine your entire life and sell it to corporations. Posts (or tweets) on Twitter are random and are often re-tweets. How much information can you get for re-tweets of re-tweets? (Source: Reuters)
  • Google is in the news again as they are releasing their latest Google Nexus 5 phone. There is only one word to describe this phone: unreal. Let’s put this into perspective. A 32GB Google Nexus 5 costs $399, iPhone 5s $819, Samsung S4 $699. I will let you do the math, but suffice to say that Google has a clear pricing advantage. Even in terms of functionality the Nexus 5 easily competes with the iPhone. The Google news keeps on rolling as they announced details on their mysterious barges that are appearing on the waters of coastal cities such as San Francisco. Yes you read that right, there are opening up floating interactive spaces where people can learn about their technology. Is that cool or what? Shares have performed extremely well over the last 30 days as there was a gain of 18.99%. Currently the shares are trading at $1,015.80/share. For the love for Christ, Google, please do a stock split! (Source: Google Finance, Gizmodo, BBC)
  • The Alibaba Group out of China is about to go through an IPO and this is one worth getting in on. For those of us in North America, Alibaba is a Groupon, Amazon, eBay and PayPal all combined in one. Company is offering $18B – $25B with a projected market valuation of $110B. Expected IPO in late January to mid-February. Company has a healthy gross margin of around 74% and is very profitable. All I can say is ‘Open Sesame’. (Source: Privco)

Things in the US economy appear to be picking up. Home prices posted the largest annual gain since housing bubble days in August, although the month-over-month gain slowed for the fourth straight month.  The closely watched S&P/Case-Shiller home price index increased 12.8% from a year earlier, the biggest 12-month gain since February 2006. But with mortgage rates significantly higher in recent months, the pace of increases is slowing. The 1.3% rise compared to July is only half the monthly increase posted in April when mortgage rates were near a record low. Still, the recovery in the housing market continues to be strong, helped by a drop in foreclosures that were weighing on overall prices. A drop in the unemployment rate is also helping to support the housing recovery. If the US government can keep the tea party militants at bay, things may continue to improve. (Source: CNN Money)

A quick retail snapshot:

  • Walmart is promoting 25,000 employees in the fourth quarter as it wraps up a year-long campaign highlighting opportunities for career development and financial stability at the company.  The world’s largest retailer and the nation’s largest private employer kicked off the on-the-spot surprise promotions at ceremonies in its Secaucus, N.J., store and about 15 other markets including Atlanta and Denver. It’s dispatching top executives to stores nationwide for similar events for the rest of its fiscal year, which ends in late January.  The mostly hourly workers will be promoted to different jobs – some to store management positions – and will receive higher pay and increased responsibility. The promotions are going to employees who have already applied and interviewed for the positions, says spokesman Kory Lundberg. This is basically a publicity stunt and I wonder if they simply reallocated their marketing budget. Regardless, I am happy that 25,000 employees will be getting a salary bump. Shares this week have barely moved and the stock is up 0.71%. (Source: USA Today)
  • The Container Store, long a favorite of crafters and obsessive organizers, now appears to be a hit with investors as well.  In the company’s first day trading on public markets last week, its share price has already doubled. Container Store packaged its IPO late on Oct. 31, selling 12.5 million shares for $18 each, the high-end of its expected range. The deal valued the retailer at $828 million, slightly more than its $707 million in sales last year.  But even at that price, Container Store, which is headquartered in Coppell, Tex., near Dallas, appears to have left quite a bit of money on the table, given the swift doubling of the IPO price. I am always amazed by the simple philosophy of doing one thing really well. These guys only sell boxes and bins! (Source: Business Week)

While Congress struggled recently to pass a budget or an increase to the national debt limit, one program made it through rather easily, according to a September New York Times report: farm subsidies for inactive “farmers.” The subsidies were renewed, based on a 2008 law, virtually assuring that more than 18,000 in-name-only farmers (who received $24 million last year) will not be cut off. Included, according to a 2012 Government Accountability Office report, were recipients at 2,300 “farms” that had not grown a single crop in five years (including 622 without a crop in 10 years). (Source: NY Times)

Have a fantastic long-weekend folks and please don’t hesitate to forward this newsletter. I will do my best to keep up the Friday newsletters.

Cheers,

Sam