BofI to acquire $3B of deposits from Nationwide Bank

BofI in pact to acquire $3B of deposits from Nationwide Bank, sees accretion

BofI to acquire $3B of deposits from Nationwide Bank, Stockwinners
BofI to acquire $3B of deposits from Nationwide Bank, Stockwinners

BofI Holding (BOFI), parent of BofI Federal Bank, announced that the Bank has signed a deposit purchase and assumption agreement with Nationwide Bank to acquire approximately $3B in deposits from Nationwide Bank, including $1B in checking, savings and money market accounts and $2B in time deposit accounts.

BofI and Nationwide Bank expect to receive regulatory approval and complete the deposit acquisition and transfer during the fourth quarter of 2018.

“We are excited to welcome Nationwide Bank’s nearly 100,000 deposit customers to BofI,” began Gregory Garrabrants, President and Chief Executive Officer of BofI Holding, Inc.

“Our track record of successfully completing similar transactions with Principal Bank and H&R Block provide us with a high degree of confidence that we will have a seamless transition.

We look forward to offering Nationwide Bank customers our full suite of consumer, commercial and small business banking products and services once the transaction closes.”

A deposit premium commensurate with the fair market value of the deposits purchased will be funded from excess capital at the Bank. The Company expects the transaction to be immediately accretive to earnings and tangible book value.

BOFI closed at $39.64.


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Duo Security sold for $2.35B

Cisco confirms intent to acquire Duo Security for $2.35B

 

Duo Security sold for $2.35B, Stockwinners
Duo Security sold for $2.35B, Stockwinners

Cisco (CSCO) announced its intent to acquire privately-held Duo Security, headquartered in Ann Arbor, MI.

Duo Security’s solution verifies the identity of users and the health of their devices before granting them access to applications – helping prevent cybersecurity breaches.

Integration of Cisco’s network, device and cloud security platforms with Duo Security’s zero-trust authentication and access products will enable Cisco customers to easily and securely connect users to any application on any networked device.

Under the terms of the agreement, Cisco will pay $2.35 billion in cash and assumed equity awards for Duo Security’s outstanding shares, warrants and equity incentives on a fully-diluted basis.

The acquisition of Duo Security will: Extend intent-based networking into multi-cloud environments.

Cisco currently provides on-premises network access control via its Identity Services Engine product. Duo’s software as a service-based model will be integrated with Cisco ISE to extend ISE to provide cloud-delivered application access control. Simplify policy for cloud security.

By verifying user and device trust, Duo will add trusted identity awareness into Cisco’s Secure Internet Gateway, Cloud Access Security Broker, Enterprise Mobility Management, and several other cloud-delivered products.

Expands endpoint visibility coverage. Cisco’s in-depth visibility of over 180 million managed devices will be augmented by Duo’s broad visibility of mobile and unmanaged devices.

The acquisition is expected to close during the first quarter of Cisco’s fiscal year 2019, subject to customary closing conditions and required regulatory approvals.

Duo Security, which will continue to be led by CEO Dug Song, will join Cisco’s Networking and Security business led by EVP and GM David Goeckeler.

CSCO closed at $41.86.


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Shopify little changed after Q2 results

Analysts diverge on Shopify after quarterly results

Shopify little changed after Q2 results, Stockwinners
Shopify little changed after Q2 results, Stockwinners

Following the company’s second quarter results, Piper Jaffray analyst Michael Olson downgraded Shopify (SHOP) to Neutral saying the quarter was “not good enough” and the stock’s valuation fairly reflects current business trends.

Meanwhile, his peers at Baird and Canaccord both reiterated buy-equivalent ratings and raised their price targets on the shares following what they view as a “solid” quarter.

RESULTS

Shopify reported second quarter adjusted earnings per share of 2c and revenue of $245M, above consensus of (3c) and $234.64M, respectively.

GMV for the second quarter was $9.1B, an increase of 56% over the second quarter of 2017, and Gross Payments Volume, or “GPV,” grew to $3.6B.

The company said it sees third quarter revenues between $253M-$257M, third quarter GAAP operating loss in the range of $40M-$42M and adjusted operating loss in the range of $9M-$11M.

Additionally, Shopify said it expects FY18 revenues between $1.015B-$1.025B, FY18 GAAP operating loss in the range of $105M-$110M and adjusted operating profit in the range of $0-$5M.

PIPER MOVING TO THE SIDELINES

In a research note to investors, Piper Jaffray’s Olson downgraded Shopify to Neutral from Overweight and lowered his price target to $145 from $155 as he believes the stock’s current valuation adequately reflects the long-term growth story.

The analyst argued that the company’s second quarter was “good, but not good enough,” with monthly recurring revenue below investor expectations with a deceleration from 57% to 49% year-over-year growth between Q1 and Q2.

While Olson acknowledged that Shopify is performing well, the analyst told investors he believes this performance is mostly reflected in the shares’ valuation.

‘SOLID  QUARTER’

Still bullish on the name, Canaccord Genuity analyst David Hynes told investors to not let yesterday’s post-earnings selloff in shares of Shopify confuse them on the fundamentals.

The analyst believes this was another “solid” quarter for Shopify as the company grew its nearly $1B revenue run-rate at 62% in the quarter.

Further, Hynes pointed out that he does not believe Shopify’s growth is decelerating faster than expected or that merchant churn is “going to sneak up and bite” the company.

He continues to believe that Shopify is one of the best-positioned growth stories in application software, and is confident that this business will ultimately scale to material profits. Hynes reiterated a Buy rating on the shares, while raising his price target on the stock to $165 from $160.

Meanwhile, Baird analyst Colin Sebastian also raised his price target for Shopify to $165 from $150 and reiterated an Outperform rating on the shares. While acknowledging that slowing monthly recurring revenue growth, a new shelf filing and its third quarter loss guidance weighed on the shares, the analyst said that this was another “solid” quarter for the company.

Ramping Plus adoption, international expansion, and new Merchant Solutions features should continue to drive significant growth, he contended. Sebastian told investors that he continues to like Shopify based on the significant e-commerce growth opportunity and defensible market leadership position he sees being demonstrated in the second quarter results.

PRICE ACTION

In Wednesday morning trading, shares of Shopify were fractionally down to $137.60.


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Amazon.com launches new delivery business

Amazon.com launches new offering to help entrepreneurs start delivery businesses

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Amazon.com launches new delivery business

Amazon (AMZN) announced the launch of a new offering that helps entrepreneurs build their own companies delivering Amazon packages.

Amazon will take an active role in helping interested entrepreneurs start, set up and manage their own delivery business.

Successful owners can earn as much as $300,000 in annual profit operating a fleet of up to 40 delivery vehicles.

Individual owners can build their business knowing they will have delivery volume from Amazon, access to the company’s sophisticated delivery technology, hands-on training, and discounts on a suite of assets and services, including vehicle leases and comprehensive insurance.

Over time, Amazon will empower hundreds of new, small business owners to hire tens of thousands of delivery drivers across the U.S., joining a robust existing community of traditional carriers, as well as small-and-medium-sized businesses that already employ thousands of drivers delivering Amazon packages.

The offering provides technology and operational support to individuals with little to no logistics experience the opportunity to run their own delivery business.

To help keep startup costs as low as $10,000, entrepreneurs will also have access to a variety of exclusively negotiated discounts on important resources they’ll need to operate a delivery business.

The deals are available on Amazon-branded vehicles customized for delivery, branded uniforms, fuel, comprehensive insurance coverage, and more.

Amazon is constantly looking for hands-on leaders who think big and deliver results for our customers. These principles are very familiar to those who have served our country in the armed forces.

The company is committing $1M towards funding startup costs for military veterans, offering $10,000 reimbursements for qualified candidates to build their own businesses.

AMZN closed at $1,660.51.


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Supreme Court ruling moves retail stocks

Physical retailers rise, online retailers drop after Supreme Court tax ruling

Supreme Court ruling moves retail stocks, Stockwinners
Supreme Court ruling moves retail stocks, Stockwinners

Shares of brick-and-mortar retailers are rising, while shares of e-commerce firms are slipping, after the Supreme Court ruled that online retailers can be required to collect sales taxes in states where they have no physical presence.

SUPREME COURT RULING

On Thursday, the Supreme Court sided with the state of South Dakota in a fight it brought against Wayfair (W) to require a business that has no physical presence in the state to collect its sales tax.

Supreme Court ruling moves retail stocks, Stockwinners
Supreme Court ruling moves retail stocks, Stockwinners

The Supreme Court ruled in a 5-to-4 vote that a 1992 judgement in Quill Corporation v. North Dakota regarding the physical presence rule was “unsound and incorrect,” according to a judgement posted to the high court’s website.

Justice Anthony Kennedy, in writing for the majority opinion, said the Quill decision had distorted the economy and resulted in states losing annual tax revenues between $8B-$33B.

“Quill puts both local businesses and many interstate businesses with physical presence at a competitive disadvantage relative to remote sellers,” he wrote.

“Remote sellers can avoid the regulatory burdens of tax collection and can offer de facto lower prices caused by the widespread failure of consumers to pay the tax on their own.”

WHAT’S NOTABLE:

Following the ruling, industry trade organization National Retail Federation issued a statement saying,

“Retailers have been waiting for this day for more than two decades. The retail industry is changing, and the Supreme Court has acted correctly in recognizing that it’s time for outdated sales tax policies to change as well.

This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both.”

ANALYST COMMENTARY

KeyBanc analyst Edward Yruma called the ruling a negative for Wayfair, arguing that it may reduce some of the price differential that has helped it gain share from traditional peers.

The ruling is also a negative, but to a lesser degree, for eBay (EBAY) and Etsy (ETSY), said Yruma, who views the impact on those two as more related to compliance and implementation.

He adds that the news could be a modest positive for retailers of high-ticket and branded products, such as Best Buy (BBY), Home Depot (HD), Lowe’s (LOW), La-Z-Boy (LZB), Kirkland’s (KIRK), RH (RH) and Williams-Sonoma (WSM).

PRICE ACTION

At Thursday midday, Target (TGT) rose 1.8%, Walmart (WMT) was up 0.7%, Costco (COST) rose roughly 1.1% while Amazon (AMZN) was down 0.4%, Etsy dropped about 2.5%, eBay fell 1.4% and Wayfair (W) was down 1.2%.

In addition, Avalara (AVLR), a software company focused on automated tax compliance that recently held its initial public offering, gained 17.1%.


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Oracle lower after losing business to Amazon, Microsoft

Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft

Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft , Stockwinners
Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft ,

Shares of Oracle (ORCL) are sliding after JPMorgan analyst Mark Murphy downgraded the stock to Neutral, citing negative results from a survey of Chief Information Officers about their spending.

The analyst noted that the survey showed spending contraction ahead as Oracle’s databases are being unplugged in favor of Microsoft (MSFT) and Amazon (AMZN) databases.

SURVEY SAYS

In a research note this morning, JPMorgan’s Murphy downgraded Oracle to Neutral from Overweight as specific metrics in the firm’s large-scale CIO survey have arced over into negative territory.

The analyst told investors that while Oracle’s shares have risen from the $30s into the high $40s in the last 2 years, the company’s fundamental performance has remained inconsistent. Citing his survey of 154 CIOs, Murphy noted that Oracle received the largest number of indications for planned spending contraction this year, materially more than the second-worst company, which was IBM (IBM) with 25 indications of spending contraction.

Further, while ranking the top 8 or 9 mega-vendors in terms of who will be most critical and indispensable to CIOs’ IT environment in the future, Oracle only received 6.5% of votes, down from 11% in previous surveys, the analyst highlighted.

At the same time, Murphy pointed out that Amazon AWS improved from 9.5% of votes last year to 14.9% of votes this year, creating the appearance of a “sucking sound” out of Oracle and into AWS.

The company also ranked number 8 in terms of association with Digital Transformation projects, disappointing relative to its scale and lagging behind the likes of SAP (SAP), IBM, and Cisco (CSCO), he added, noting that despite Oracle’s efforts to build a Cloud presence, it rated no better than SAP in terms of association with Cloud Computing plans, and is nowhere close to the leaders Microsoft, Amazon, and Google (GOOGL; GOOG) in this respect. Oracle was mentioned by only 2% of the CIOs as the platform that will be “most integral” to their cloud computing plans, Murphy said.

Overall, the analyst questions where Oracle’s business and stock are heading in the next couple of years if the largest-scale CIO survey shows Oracle now has negative spending intentions, is lagging in Digital Transformation projects, is trailing in Cloud Computing plans, its databases are being unplugged in favor of Microsoft and Amazon databases, its applications are being unplugged in favor of Salesforce (CRM) and Workday (WDAY) applications, and customers are weary of its unpopular commercial tactics.

Murphy also lowered his price target on Oracle’s shares to $53 from $55.

WHAT’S NOTABLE

In a research note of his own, Nomura Instinet analyst Christopher Eberle lowered his price target for Oracle to $60 from $64 ahead of the company’s fourth quarter results on June 19.

The analyst trimmed his estimates to account for currency and expectations for more modest revenue acceleration in fiscal 2019. He remains optimistic, however, on Oracle’s transition and model growth reacceleration as the year progresses. Eberle reiterated a Buy rating on the shares.

PRICE ACTION

In Wednesday’s trading, shares of Oracle dropped almost 5% to $46.14.


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Walmart to pay $16B for about 77% in India’s Flipkart

Walmart to pay about $16B for initial stake of about 77% in India’s Flipkart

Walmart to pay about $16B for initial stake of about 77% in India's Flipkart, Stockwinners
Walmart to pay about $16B for initial stake of about 77% in India’s Flipkart, Stockwinners

Walmart (WMT) announced it has signed definitive agreements to become the largest shareholder in Flipkart Group.

The investment will help accelerate Flipkart’s customer-focused mission to transform commerce in India through technology and underscores Walmart’s commitment to sustained job creation and investment in India, the company said.

Subject to regulatory approval in India, Walmart will pay approximately $16B for an initial stake of approximately 77% in Flipkart, formally Flipkart Private Limited.

The remainder of the business will be held by some of Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings (TCEHY), Tiger Global Management and Microsoft (MSFT).

While the immediate focus will be on serving customers and growing the business, Walmart supports Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary in the future.

While Walmart and Flipkart will leverage the combined strengths of both companies, they will maintain distinct brands and operating structures.

Currently, Walmart India operates 21 Best Price cash-and-carry stores and one fulfillment center in 19 cities across nine states in India, with more than 95 percent of sourcing coming from India, aiding suppliers, creating skilled jobs and contributing to local economies across the country.

Krish Iyer, president and chief executive officer of Walmart India, will continue to lead that part of the business.


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Mitel sold for $2 billion

Mitel to be acquired by Searchlight Capital Partners affiliates for $2B in cash

Mitel sold for $2 billion. Stockwinners
Mitel sold for $2 billion. Stockwinners

Mitel (MITL) announced that it has signed a definitive arrangement agreement to be acquired by an investor group led by affiliates of Searchlight Capital Partners in an all-cash transaction valued at approximately $2B, including Mitel’s net debt.

Under the terms of the agreement, to be completed pursuant to a plan of arrangement, upon completion Mitel shareholders will receive $11.15 per common share in cash.

This exceeds Mitel’s 52-week and last three-year-high price and represents a premium of approximately 24% to the 90-calendar-day volume-weighted average price of Mitel common shares through April 23, 2018.

Upon completion of the transaction, Mitel will become a privately held company, which is expected to provide the company with additional flexibility to accelerate its move-to-the-cloud strategy.

The Mitel Board of Directors has unanimously determined that the transaction is in the best interests of Mitel and fair to Mitel shareholders, and will recommend that Mitel shareholders approve the arrangement. The arrangement is not subject to a financing condition.

The transaction is expected to close during the second half of 2018, subject to customary closing conditions, including receipt of shareholder, regulatory and court approvals.

The arrangement agreement includes a 45-day “go-shop” period, which permits Mitel’s Board of Directors and advisors to actively solicit, evaluate and potentially enter into negotiations with parties that make alternative acquisition proposals through June 7, 2018.

There can be no assurance that this process will result in a superior offer.

Mitel does not intend to disclose developments with respect to the solicitation process unless and until the Board of Directors makes a determination requiring further disclosure. Jefferies LLC is serving as financial advisor to Mitel.

Paul, Weiss, Rifkind, Wharton & Garrison LLP and Osler, Hoskin & Harcourt LLP are serving as legal advisors to Mitel. National Bank Financial Inc. is serving as independent financial advisor to the Mitel Board of Directors and provided a fairness opinion to the Mitel Board of Directors on a fixed fee basis.


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Barron’s is bullish on GM and Delta

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review of stocks to buy

BULLISH   MENTIONS:

Delta, GM look cheap, with growth potential – While a solid start to earnings season helped push share prices higher earlier this week, some remain deeply discounted, Jack Hough writes in this week’s edition of Barron’s. Despite Delta Air Lines’ (DAL) pessimistic valuation, consolidation has left only a handful of key players and the company faces less competition in key markets than some of its peers, the report adds. Additionally, Goodyear Tire (GT), General Motors (GM) and Lincoln National (LNC) also made the valuation cutoff, Hough says.

General Mills shares fall to ‘bargain territory.’  – General Mills (GIS) has fallen 27% so far this year and while the drop seems deserved because earnings growth has stalled, a closer look suggests sales trends are improving, thanks in part to new-product launches, Jack Hough writes in this week’s edition of Barron’s.

Cruise operators can offer ‘nice’ yields, solid dividend growth – Cruise operators, like Carnival (CCL), Royal Caribbean (RCL) and Norwegian Cruise Line (NCLH), can offer nice yields and solid dividend growth, but economic downturns can pressure payouts, Lawrence Strauss writes in this week’s edition of Barron’s. Another option for investors looking for yield among cruise operators is Walt Disney (DIS), the report added. The entertainment company has a wide variety of holdings, and while its cruise business did not account for a large portion of its $55B of sales last year, it is not insignificant either.

Tech giants may make own custom chips to get edge on one another. – There has been a tension between the world’s largest tech companies- Alphabet (GOOG; GOOGL), Amazon (AMZN), Facebook (FB), Apple (AAPL), Microsoft (MSFT), Baidu (BIDU), and Alibaba (BABA)-and the chip companies they rely on, especially Intel (INTC) and Nvidia (NVDA), Tiernan Ray writes in this week’s edition of Barron’s. While the giants buy massive quantities of Intel’s microprocessors, and Nvidia’s graphics chips, or GPUs, to power their data centers, they are also in an arms race to have the best artificial-intelligence-based machine-learning functions, the report noted, adding that there was always the possibility they may decide to buy fewer off-the-shelf parts and make their own custom chips to get an edge on one another.

 MPL valuations look cheap – Master limited partnerships’ valuations appear cheap, and U.S. energy production is thriving, lifting cash flows for pipeline firms, Darren Fonda writes in this week’s edition of Barron’s. MLP, such as Enterprise Products Partners (EPD), Magellan Midstream Partners (MMP), MPLX (MPLX), Plains All American Pipeline (PAA), could reward investors with higher yields as cash flows rise, Fonda adds.

OTHER MENTIONS

Trump’s tweets politicize U.S. markets, Barron’s says – With President Donald Trump, both politics and business appear personal as he continues his tweets aimed at individual companies, Vito Racanelli writes in this week’s edition of Barron’s. Before and after the election, he consistently aimed arrows at Amazon.com (AMZN) and at the proposed acquisition of Time Warner (TWX) by AT&T (T), the report noted. The President is not alone in singling out companies, Racanelli points out, adding that Democratic candidate Hillary Clinton also took issue with Mylan’s (MYL) price increases for its EpiPen. Maybe it is a sign of the times, but the rise of powerful social-media platforms is the key enabling factor, the report said.


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Amazon higher on Prime members

Amazon rises as Prime reaches 100M paid members

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Amazon higher on Prime members

Amazon’s (AMZN) CEO Jeff Bezos told investors that the company has exceeded 100M paid members globally and has shipped more than 5B items with Prime worldwide.

The good news for the e-commerce giant may not end there, as Morgan Stanley analyst Brian Nowak told investors that his analysis shows that Amazon has gained 1.5% of U.S. apparel market share in 2017 and may achieve number one U.S. apparel market share in 2018 as Prime members and Millennials shift spending to Amazon and away from traditional brick and mortar retailers.

100M PAID MEMBERS

According to a regulatory filing, Amazon said that it has exceeded 100M paid Prime members globally 13 years post-launch.

In 2017, Amazon shipped more than 5B items with Prime worldwide, and more new members joined Prime than in any previous year — both worldwide and in the U.S., the company said, adding that members in the U.S. now receive unlimited free two-day shipping on over 100M different items. The company expanded Prime to Mexico, Singapore, the Netherlands, and Luxembourg, and introduced Business Prime Shipping in the U.S. and Germany.

Additionally, CEO Jeff Bezos informed shareholders that Amazon Music now has tens of millions of paid customers, with Amazon Music Unlimited expanding to more than 30 new countries in 2017.

GAINING APPAREL MARKET SHARE

In a research note to investors this morning, Morgan Stanley’s Nowak said his analysis shows that Amazon gained 1.5% of U.S. apparel market share in 2017, largely at the expense of department stores.

According to his work around Amazon’s apparel gross merchandise value, the analyst estimates the e-commerce giant continues to be the second largest U.S. apparel retailer, trailing only Walmart (WMT), as the company has grown to about 7.9% of the overall U.S. apparel market, excluding shoes, or $21.1B apparel gross merchandise value.

Further, #Nowak told investors he expects Amazon to achieve the number one spot in 2018, as Prime members and Millennials shift spending to Amazon and away from traditional brick and mortar retailers.

The analyst pointed out that Amazon’s 2017 share gains look to have come largely at the expense of department stores, estimating Sears (SHLD), Macy’s (M) and J.C. Penney (JCP) lost 0.8% share in 2017, with shareholding remaining roughly flat for Target (TGT) and Kohl’s (KSS).

L Brands (LB) lost share due to the elimination of its swimwear and apparel categories, he contended.

Additionally, his U.S. apparel market deep-dive indicated that Walmart and Costco (COST) showed “impressive gains” despite a weak industry backdrop. Among the Softline retailers, Gap’s (GPS) Old Navy, Ross Stores (ROSS) and Nordstrom’s (JWN) Nordstrom Rack also added 10-15 bps of market share in 2017, he added.

Nowak reiterated an Overweight rating and $1,550 price target on Amazon shares.

PRICE ACTION

In Thursday’s trading, shares of Amazon have gained 2% to $1,554.90.


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New tariff road kills: Acacia, Lumentum and Oclaro

Acacia, Oclaro plunge after U.S. bans sales to China’s ZTE

Lumentum to acquire Oclaro for $1.8B. Stockwinners.com
Oclaro tumbles on tariffs

Shares of several optical networking component providers – including Acacia Communications (ACIA), Oclaro (OCLR) and Lumentum (LITE) – are sliding after the U.S. Department of Commerce reportedly banned U.S. companies from selling components to Chinese telecom equipment maker ZTE Corp. (ZTCOY).

Acacia Comms tumbles, Stockwinners.com
Acacia Comms tumbles, Stockwinners.com

Loop Capital analyst James Kisner previously has noted that China’s ZTE announced it was raising $2.1B to fund the development and deployment of 5G wireless networks, which he read as a positive sign for optical component vendors. Oclaro (OCLR) and Acacia Communications (ACIA) have notable exposure to ZTE, Kisner pointed out, adding that he expected most optical component makers to benefit from 5G deployment in China.

In Monday’s trading following the news of the ZTE sales ban, Acacia shares have fallen over 18%, Oclaro has dropped 7.5% and Lumentum is down 8%.


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Zillow enters house flipping, shares decline

Zillow falls after announces house flipping plans, competitor Redfin declines

Zillow tumble on Amazon news. See Stockwinners.com Market Radar
Zillow enters house flipping, shares decline

Shares of Zillow (Z,ZG) dropped in Friday’s trading after the company announced plans to enter the home-flipping business just in time for the Spring selling season.

Zillow, which has focused on just the listing part of the real estate business, announced last night along with quarterly and yearly revenue, that it will expand Zillow Instant Offers to Phoenix this month.

With this expansion, Zillow said it plans to participate in the marketplace, buying and selling homes with Premier Agent partners in the Phoenix and Las Vegas markets.

Zillow began testing Instant Offers in May 2017 with Premier Agent partners in Las Vegas and Orlando, and will add Phoenix this month.

According to Zillow, the program “gives real estate agents the opportunity to acquire new listings by connecting them with motivated sellers who have taken a direct action to sell their home.

Across all testing, Zillow found the vast majority of sellers who requested an Instant Offer ended up selling their home with an agent, making Instant Offers an excellent source of seller leads for Premier Agents and brokerage partners.”

“Even in today’s hot market, many sellers are stressed and searching for a more seamless way to sell their homes,” Zillow Chief Marketing Officer Jeremy Wacksman said in a statement.

“They want help, and while most prefer to sell their home on the open market with an agent, some value convenience and time over price. This expansion of Instant Offers, and Zillow’s entrance into the marketplace, will help us better serve both types of consumers as well as provide an opportunity for Premier Agents to connect with sellers.

A “WASH” FOR SHAREHOLDERS

Craig-Hallum analyst Brad Berning downgraded Zillow to Hold from Buy after the company announced the expansion of the Instant Offers program to Phoenix in addition to Las Vegas and Orlando.

The program will require what he estimates to be about $3B of capital, which Zillow intends to fund using its balance sheet, while only creating what he estimates will be about $3B in incremental shareholder value, Berning told investors.

Thus, he sees the expansion as “a wash” for shareholder value, but one that comes at the price of potential added risk. Berning lowered his price target on Zillow to $50 from $58.

COMPETITION FOR REDFIN

Redfin (RDFN), an online real-estate brokerage, “began experimenting with buying homes a little more than a year ago,” said The Wall Street Journal, citing Redfin CEO Glenn Kelman.

Redfin falls after Zillow enters house flipping; Stockwinners
Redfin falls after Zillow enters house flipping;

PRICE ACTION

Shares of Zillow are down over 10% to $48.19 per share, while Redfin is lower by 2.5% to $22.15 in Friday’s trading.


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Twitter is urged to combat fake news

Twitter investors urge it to report on steps it’s taking to combat fake news

Twitter is urged to combat fake news; Stockwinners
Twitter is urged to combat fake news;
A group of Twitter (TWTR) shareholders is urging the company for an update on how it is fighting fake news, abuse, and to specify the regulatory risk it faces.

 

Twitter’s board responded that the company is “taking action.”

 

The New York State Retirement Fund and Arjuna Capital have filed a shareholder proposal that would encourage Twitter to put together a detailed report about how well it’s doing enforcing its social network’s terms of service, the company disclosed in a regulatory document on Wednesday.
The shareholders are also urging the company to include in the report the possible financial and other risks it faces from fake news and similar controversies.
“Shareholders are concerned that Twitter’s failure to address these issues proactively has created regulatory, legal, and reputational risk,” the investors said in their proposal.
“We believe Twitter has an obligation to demonstrate how it manages content to prevent violations of its terms of service. Yet, disclosures have been inadequate.”
Twitter also noted its statement of opposition, saying “Our board of directors has considered this proposal and, for the reasons described below, believes that adopting this proposal is not in the best interests of Twitter and our stockholders and unanimously recommends that you vote ‘AGAINST’ this proposal.
Our board of directors and management have devoted, and continue to devote, significant effort to ensure that we are aware of and able to properly address public policy issues of importance to our business.
Because we believe that the issues raised in the proposal are or have already been addressed as part of our ongoing business operations through our existing robust systems, structures, processes and controls, with significant oversight from our board of directors and management at the highest levels, we do not believe that establishing a separate public policy committee of the board of directors is necessary.”

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Barron’s is bullish on Google

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

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BULLISH   MENTIONS:

Alphabet a ‘bargain’ in big tech – Alphabet (GOOG; GOOGL) has the world’s dominant search engine in Google, as well as valuable businesses like YouTube, the Android cellphone operating system, and Waymo autonomous vehicles, but investor are not giving the company enough credit partly because of worries that it, like Facebook (FB), will soon face greater government regulation, Andrew Bary writes in this week’s edition of Barron’s. Alphabet trades for almost 25 times projected 2018 earnings, but its effective P/E is lower because of nearly $100B in net cash and losses in its “other bets” businesses, he adds.

AI done right may give managers ‘an edge.’  – BlackRock (BLK), Vanguard, Fidelity, and T. Rowe Price (TROW), among others, have all invested time and money setting up tech centers in major cities, apart from their headquarters, as they compete for cost savings, Crystal Kim writes in this week’s edition of Barron’s. Artificial Intelligence, done right, could also give portfolio managers an edge, and better serve investors with a wider array of financial planning tools, the report adds.

 IAC/InterActiveCorp sells at discount of assets value – Over the past two decades, Barry Diller’s IAC/InterActiveCorp (IAC) has generated a higher return than Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B), Jack Hough writes in this week’s edition of Barron’s. But the shares of IAC/InterActiveCop sell at a discount to the value of its assets, he notes.

Spotify stock could rise to five times sales. – Spotify Technology  (SPOT) made its market debut las week and while its stock price could remain volatile in the months ahead, shares could “reasonably” rise to five times sales, Avi Salzman writes in this week’s edition of Barron’s.

BEARISH  MENTIONS

Facebook bracing for Capitol Hill grilling – In a follow-up story, Barron’s notes that this week Facebook’s (FB) CEO Mark Zuckerberg will come to Washington to testify before an eager group of lawmakers. Congress has a chance to remind citizens of its watchdog role, the report noted, adding that while this week’s optics will no doubt be bad, the stock’s valuation already reflects much of the pain.

Smartphone growth sags as new models not compelling enough – People are holding onto their phones longer, on average, because what they are being offered in the new models just is not compelling enough, Tiernan Ray writes in this week’s edition of Barron’s. This does not bode well for traditional makers of chips for smartphones, including Skyworks (SWKS), Qorvo (QRVO), Qualcomm (QCOM), and Synaptics (SYNA), the report adds.


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Tariffs sink stocks

Boeing, others drop after China retaliates with 25% tariffs on U.S. products

Tariffs sink stocks. Stockwinners
Tariffs sink stocks.

Shares of companies including Boeing (BA) and Tesla (TSLA) dropped in Wednesday’s pre-market trading after China retaliated against President Donald Trump’s proposed penalties on Chinese goods with plans for 25% tariffs on American products, including airplanes, automobiles and soybeans.

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Tariffs sink stocks

BACKGROUND

On Thursday, U.S. President Donald Trump signed an executive memorandum imposing retaliatory tariffs on up to $60B in Chinese imports, according to CNBC.

The new measures are designed to penalize the country for trade practices that the White House says involve stealing American companies’ intellectual property, the report noted, adding that the tariffs will primarily target certain products in the technology sector.

Trump’s plan levies 25% tariffs on a wide range of goods — about 1,300 categories in all — and includes steel, Chinese-made solar panels, dishwashers, medical equipment and machine tools.

Shares of Alibaba (BABA), Tencent (TCEHY) and Baidu (BIDU) were under pressure following the news.

CHINESE TARIFFS

On Tuesday, China’s Ministry of Commerce announced plans to levy 25% reciprocal tariffs on critical U.S. exports, covering over 106 categories of products and impacting around $50B of Chinese imports of U.S. products.

China has targeted the largest American exports to China, airplanes and soybeans, as well as automobiles, chemicals, wheat, corn, cotton and tobacco.

People familiar with the plans tell The Wall Street Journal that many of the other goods on the list, including beef and sorghum, “intentionally affect the U.S. Farm Belt, where voters supported President Trump.”

Neither the U.S. nor Chinese tariffs will take effect immediately.

“Those who attempt to make China surrender through pressure or intimidation have never succeeded before, and will not succeed now,” Foreign Ministry spokesman Geng Shuang told reporters.

PRICE ACTION

Boeing is down 6.6%, Tesla dropped 5%, Ford (F) is down 3.4% and General Motors (GM) is down 4% in pre-market trading.


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