Stock Analysis

Apple Stock iPhone 7

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apple stock outlook logo

I write more about Apple stock than I ever mean to, but people just love to talk to me about it, so here we go. New iPhone New Apple Stock Moves Apple stock is one of those stocks that gets a lot of attention, and action, from people who otherwise don’t invest in individual stocks much at all. That is, among your own friends, chances are that there are people who own Apple stock, and nothing else other than some company stock, or maybe some ETFs or mutual funds. These investors are, not surprisingly, often moved by news, other than any sort of analysis. In addition to these investors, there are a lot of very experienced investors with Apple stock in their portfolio, and they both watch the fundamentals, AND try to guess how others will reaction to Apple stock. All of this adds up to a stock that likes to move A LOT based on any single news event or earnings report. For the last several months, Apple stock has not done well. There were concerns that the company could no longer innovate, and the momentum left behind by Steve Jobs had finally run out. But, last week, Apple …

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Walmart Buys Jet.com

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walmart buys jet plan

A couple years ago, when Yahoo bought Tumblr for $1 billion, I wasn’t the only one who wondered what value Yahoo saw in the acquisition. It takes a special kind of Silicon Valley mind to think that a money losing internet business plus a money losing internet business somehow adds up to profit. It turns out that even the modest goal of $100 million in annual REVENUE, not profit, set by Yahoo, was too much for the internet property supposedly worth so much that Yahoo shelled out $1.1 billion for it. It seems that the great lesson of the internet bubble years earlier, that eyeballs and name recognition, do not equal money, still isn’t something tech companies are ready to learn. Which brings us to today’s multi-billion dollar buyout of Jet.com, a money-losing online retailer that goes head to head with Amazon. It’s just over a year old now, and it crossed the $1 billion in revenue line earlier this year. Revenue, not profit. The company, by all accounts, hemorrhages cash and funds its operations by taking on more investors. But, somewhere in there, Wal-Mart sees something worth $3 billion, plus an additional $300 million in Wal-Mart stock. I guess tech companies …

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Did He Really Recommend Stock Picks?

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“He recommended Amazon and Apple. What is he recommending now?” “He predicted the market crash of 2007. Here’s what he says now.” And so on. You may have seen ad headlines just like the ones above recently. The specifics change, but the idea is always the same. Here is a person who predicted a certain event, or recommended certain stocks at the perfect time, and if you would have followed that advice, you would have made a ton of money. That being the case, shouldn’t your find out what they are recommending or predicting now? Did He Really Predict Stock Market Moves? If you doubt that these people made these recommendations, or predictions, I admire your skepticism. However, these ads and their subjects can often back up these statements with records showing that they did, indeed, predict or recommend the perfect stock moves at the perfect time. So, should you run out and give them your money and subscribe to their newsletters? To answer that question, let’s backup for a second. There is a scam whereby a company claims to be able to predict the winners in certain sporting events so you can bet on them and make money fast. …

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Microsoft’s LinkedIn Mistake

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There is an interesting post over at Mashable about the failure of Tumblr to make any progress in righting the ship at Yahoo. The author makes the argument that Yahoo, and Marissa Meyer, somehow “derailed” Tumblr, when the reality is that Tumblr was a money burning machine about to go bankrupt without yet another infusion of financing when Yahoo rode to the “rescue” with a billion dollar buyout offer. Most analysts expect Yahoo to write off every single dollar related to the acquisition. In other words, it was a billion dollar waste of money. Microsoft’s $26 Billion Blunder This brings us to this week’s stunning blunder by Microsoft. The company announced that it would pay $26 billion to acquire LinkedIn. LinkedIn, like Tumblr, does not make a profit, though it isn’t teetering on the verge of shutdown. LinkedIn, like Tumblr, has a very specific user base that has peaked. The company reported a $66 million loss for last quarter, and a loss of $166 million for 2015. In other words, Microsoft just paid billions of dollars for a company that will cost it hundreds of millions of dollars. The truly bizarre part of this acquisition is that Microsoft’s current CEO, came on …

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Stock Market Back Up Over 18,000

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I spend a lot of time telling people not to read too much into the short-term moves of the stock market, no matter how compelling the narrative is at the time. In the past 12 months, there have been two pretty significant meltdowns attributable mainly to investors worried about China or Europe, or whatever. I plan to develop a system that takes a screenshot each day of Marketwatch and CNN Money, or others just so that you can scroll through the comings and goings of each day. I can clearly remember numerous articles as the markets were falling in January and February about how this was only the beginning of a massive collapse, and others like that. Now, just a few months later, the same website is publishing articles about the market being back up above 18,000 for the first time since July last year. The point I’m making is that with the value of a little hindsight, or just a longer term view, it is clear that a lot of the recent volatility is a result of a market that went too high, too fast, for too long without any sort of correction. A couple of correcting down blips …

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Are Oil Loans the New Subprime Mortgages

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oil drilling rig

Remember when banks got too greedy with subprime mortgages? Remember when banks (and their executives) just couldn’t say no to the massive earnings (and by extension massive bonuses) that came from building bigger and riskier portfolios of subprime loans? Well, get ready for oil loans. Oil Loans and Bank Risk If you think Wall Street and the big banks learned their lesson from the subprime loan driven banking crisis, you really don’t understand how compensation works in the financial industry. You see, bonuses are paid based on big gains. This encourages risk taking. However, there is no downside for being wrong on those big risks, not even losing some of the bonus you earned earlier in the year. As a result, risk is the name of the game at Wall Street’s big banks. This time, banks rushed to lend money to companies in the oil industry when prices where high. In addition, they extended very generous lines of credit to those same companies on pretty sweet terms. Just like with the subprime mortgage crisis, as long as oil prices didn’t fall too far, too fast, everything would be fine. Deja vu. With oil prices at low levels, and any oil …

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Model 3 Pre-Orders and Tesla Stock

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tesla stock chart model 3

Tesla has had a big weekend. At last count, according to Elon Musk’s Twitter account, there were 276,000 pre-orders for the new Tesla Model 3. An earlier tweet referenced an average order price, with options, of $42,000. Musk is Tesla’s CEO, so this counts a public disclosure of material facts of a publicly traded company. As you can imagine, there is a lot of jabbering about what this does or does not mean for Tesla. Let’s look at the facts to get an idea of just how much good news there is, or is not, going on here. First, as some have pointed out, multiplying $42,000 times 276K pre-orders comes out to over $11 billion in Model 3 pre-orders. That would be by far the biggest income Tesla has ever had. However, that is nothing more than a paper calculation. How much of that money Tesla actually sees depends upon a lot factors, including how many people decide to cancel their fully refundable pre-order. That being said, pre-ordering a Model 3 Tesla requires registering, and a $1,000 deposit. While the deposit is fully refundable, it is money paid. In other words, this isn’t a bunch of internet kids running bots to …

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Oil Drillers and Oil Industry Outlook

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There was recently a fascinating presentation regarding the state of the oil industry. The presentation is from Schlumberger CEO Paal Kibsgaard. Schlumberger is one of the biggest oil drillers in the business, so he knows what he’s talking about. The surprising candor of this oil industry outlook presentation is what makes it so fascinating. In the presentation, Kibsgaard notes that unlike previous oil price implosions that were caused by what he calls “demand events,” this one is caused by OPEC’s decision to protect its market share rather than protecting the price per barrel. This creates a very different world for the oil industry. He goes on to describe what his particular company is looking at doing in the future. For our purpose though, what is interesting the confirmation that things really are different this time. Boom and Bust in Oil The oil industry is no stranger to the boom and bust cycle. The oil bust of the 1980s hammered the local Denver economy until the internet bubble managed to rescue the city. The resulting merger and consolidation turned one-word household name energy companies into combined energy companies such as ExxonMobil (formerly two separate companies Exxon and Mobil). In the end, however, …

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What Happens When My Stock Goes Down?

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waterfall falling stock price

Yesterday I wrote about how Apple stock could be considered a dividend stock by some investors. Later that day, after the stock markets closed, Apple reported its first quarter results. (Apple, like many companies uses a fiscal year, instead of a calendar year. The first quarter for Apple runs from October to December.) The results were met with disappointment by the markets and the stock is down this morning. This triggered an email from someone asking if Apple was now a bad stock to own or buy, and that felt like the beginnings of an article I’ve been meaning to write for a while. Remember you should not be buying individual stocks until your retirement plan, college plans, and savings plans are fully funded and on track. What Happens When a Stock Price Falls? One of the most difficult things for non-professional finance people to grasp is the difference between actual losses and paper losses. An example can be helpful. Apple stock was trading at about $100 per share yesterday when I published the post about the dividend yield moving past the psychological 2 percent dividend yield mark. Although I didn’t buy any stock on that day, let’s pretend I did. …

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Buy Apple Stock for Dividends?

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Well, here’s an article I never thought I would write, but is Apple a dividend stock now? Apple’s stock price has been drifting down as of late while investors worry that the company doesn’t have any new amazing products up its sleeve. This worry is particularly curious considering the products the company does have are still market leaders in most categories. And, that those very same products, are almost religiously upgraded by a large number of users every time a new one comes out, especially the company’s most important product, the iPhone. This could be worrying to shareholders if the company was overvalued and priced to perfection, but with a P/E of 10.85, it’s not out of line with other successful technology companies by any stretch of the imagination. Of course, a lot of the concern is simply that the company has grown as much as it can and that there are no more world’s to conquer. This is always and odd fear to me, but I suppose to some it matters. In other words, maybe Apple isn’t a growth stock anymore. And, to a certain kind of investor, the only stocks worth investing in are growth stocks. Apple Dividend Here …

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