Twitter Buyout Hoax Sends Shares Up; Colorado’s Schools Getting Built on Pot; June Consumer Spending Blues

Nothing to get all tweeted up about…

Image courtesy of  winnond/FreeDigitalPhotos.net

Image courtesy of winnond/FreeDigitalPhotos.net

It’s the big news that wasn’t. A story about a $31 billion Twitter buyout made its way online on a website that looked suspiciously like it came straight out of Bloomberg headquarters. Except that it didn’t. A Bloomberg spokesperson said that the story was “fake and appeared on a bogus website that was not affiliated with Bloomberg.”In fact, the website was created just a few days ago, was rife with typos and referred to Twitter’s former CEO Dick Costolo as “Richard ‘Dick’ Costello.”  Talk about rookie mistakes. It’s too bad the story was false as the news caused shares of Twitter to spike more than 8%. I guess this means Wall Street digs the idea of a Twitter buyout. It’s not the first time a bogus story caused a stock to artificially inflate. Avon Products had a similar situation months back when a company calling itself PTG Capital Partners filed a bid to buy the company for $8 billion. Now, Avon’s great and all but that price seemed a bit too high for a company that hadn’t had a good quarter in too long of a time. This, of course, raised some red flags and now the perp behind the phony filing is facing the legal wrath of the SEC.

High-er education…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

Ever since Colorado decided to legalize recreational marijuana, schools in the Rocky Mountain State have been emerging victorious. A special fund from marijuana sales, set aside for Colorado schools, has been setting records thanks to a 15% excise tax. In 2014, $13.3 million in pot taxes for school construction was raised. But in just the first five months of 2015, that fund already surpassed $13.7 million. Part of the reason for the huge price increase is because marijuana businesses received a one time tax exempt transfer of medical plants. But it also helps that there are three different taxes imposed on marijuana, including a 2.9% sales tax, a 10% special marijuana sales tax and a 15% excise tax on wholesale marijuana transfers. Unfortunately, pot still has its haters and those opponents are coming out in full force using a racketeering law – that was initially established to bring down organized crime – by suing not just pot businesses, but their banks, their bond companies and even their accountants. Now if only there was a way for marijuana businesses to sue the pot opponents and level the playing field.

June gloom…

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Well it looks like the Fed won’t be rushing to hike rates anytime soon all thanks to the Commerce Department’s latest report for June. In case you missed it, consumer retail sales were pretty depressing. The numbers were weak and that is a problem since consumer spending accounts for 70% of the economy, suggesting that the economy isn’t growing as it should. Sales of automobiles and other goods took quite the hit as would-be spenders are playing it cautiously about spending their hard-earned cash lest they need it for a rainy day. The fiscal crisis of 2008 is still managing to spook a lot of people even though hiring is pretty decent and the labor market is fairly healthy. To be fair, though, wages are kind of flat and everyone would appreciate a little rise on that front. Even the revised growth rate for May was disappointing coming in at 1.0% as opposed to the 1.2% that was first reported. Here’s hoping July brings better fiscal news.

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Subway Follows the Crowd; Sale Away: Cheap Southwest Fares Extended; SEC Wants to Take Down the Avon Pranker

Namaste no more…

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Subway doesn’t just want you to eat fresh. The sandwich chain now wants you to eat au natural. The company jumped on the healthy ingredients bandwagon finally announcing that it will be unceremoniously dumping yellow number 5, and other ingredients you have come to love and rely upon for all your unhealthy needs. McDonald’s, Taco Bell and a host of other fast-food chains already announced their plans to ditch the edible offenders that also include artificial flavoring and preservatives. But Chipotle reigns supreme boasting cuisine that is non-GMO, a tough act to beat in the fast-food universe. Oh well, they can’t all be king – of fast food, that is. It’s a wonder Subway waited this long to make the switch seeing as how it took a 3.3% sales hit last year. The sandwich maker also had to deal with a smear campaign over its use of azodicarboamide, an ingredient that Subway used to make its tasty bread, but one that is also found in…yoga mats. How anyone even discovered that azodicarbonamide would be a great bread ingredient is beyond me, but I digress. If you’re dreading the day when artificial ingredients make their hasty retreat from Subway’s 27,000 U.S. locations, then fear not. The complete changeover is expected to take eighteen months.

Who doesn’t love a sale?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Some sales are just better than others, especially when there are airplanes involved. So, what was supposed to be a 72 hour sale over at Southwest Airlines, has now been extended another 24 hours to give would be trippers more time to book some wallet-friendly travel. Apparently the airline couldn’t handle the volume of traffic that flocked to its website for the sale, hoping to score some cheap fares for flights all over the country. Many enthusiastic travelers, eager to score these thrifty seats were receiving error messages when attempting to book their tickets while other bargain hunters had to deal with a slow moving site. But Southwest has beefed up their tech resources to handle the sale traffic so you still have until the end of day Friday to score a $49 (one) way trip…to somewhere.

Faking it…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Perhaps you recall the phony bid for Avon several weeks ago where a “company”  that went by the name PTG Capital filed a bid with the SEC to buy Avon? The “bid” was for more than three times the price of its stock and news of the offer sent shares up more than 20%. Turns out that the credit for the incredibly stupid prank goes to Nedko Nedev, possibly one of Bulgaria’s most embarrassing residents. Except it wasn’t so much a prank but rather a scheme that allowed Nedev to sell off his shares of Avon at a much higher price than he might have gotten for them had he done so legally. This scheme was nothing new for Nedev, who along with some other conniving associates, pulled this shtick with a few other companies including Rocky Mountain Chocolate Factory. Even though Nedev probably made a few extra bucks, he probably won’t get to spend any of it seeing as how the SEC intends to get its hands on the proceeds, not to mention, slapping Nedev with a few extra fines. However, the scheme also exposed flaws (gasp) in the SEC’s filing system which companies can actually access following certain procedures. So in a way it’s a good thing. Sort of. Okay maybe not.

Avon and Wall Street Get Punk’d But Ashton Kutcher’s Not Behind This One; Shake Shack Nails Some Juicy Earnings; Kohl’s is Just Not Good Enough

It’s not the Avon Lady…

Image courtesy of winnond/FreeDigitalPhotos.net

Image courtesy of winnond/FreeDigitalPhotos.net

So here’s a weird thing that happened on Wall Street today. Trading for the Avon company, based in the U.K. (no that’s not the weird thing) was halted three times all because of a prank filing. It’s like a prank call. Only incredibly stupider and much more serious. Like the kind of serious that is going to require legal representation once the moron who did it is caught. Some person/entity group, calling itself PTG Capital Partners, filed an $8 billion takeover bid with Federal regulators for the company, once famous for its now defunct door to door sales ladies. If you thought $8 billion seems like a lot for Avon, you aren’t the only one, because that comes out to more than triple its stock value. When the SEC posted this filing to its website, shares became volatile and trading stopped – more than a couple of times. Beside the fact that the filing was one big grammatical mess – a major red flag – calls made to the phone number listed went unanswered – another major red flag. A Texas address for the firm’s attorney, Michael Trose, was also listed and while the address is real, the building’s manager said there was never any tenant by that name – yes, red flag number three. Even though Avon has had three straight years of losses, the stock was a bit higher, presumably from all the drama surrounding it today.

Would you like fries with that?

Image courtesy of rakvatchada torsap/FreeDigitalPhotos.net

Image courtesy of rakvatchada torsap/FreeDigitalPhotos.net

After brutally beating its earnings, Shake Shack shares (alliteration, anyone?) are up today and at one point took a 10% leap. The burger un-joint pulled down revenues of $37.8 million, a 56% increase with a 4 cent per share profit, when analysts only expected the company to pull in 3 cents per share and $34 million in revenue. Maybe those “analysts” should start taking their lunches at Shake Shack and see for themselves. If you recall, the Shake Shack IPO was priced at $21 and as of today, the stock is more than triple that, coming in close to $70. While the naysayers scoff at the high value of the stock, its earnings seem to justify the price of the shares. So there. Even diners outside of New York City are digging the grub at the eatery as evidenced by a 12% increase in same store sales. But it wouldn’t be right if we didn’t mention how some of those impressive earnings were helped by the fact that Shake Shack raised its prices on a few “select” items. Expect to see more “Shacks” as the company has plans to open up 15 more locations, with five of those outside of the U.S. So I guess you could say Shake Shack nailed it. This quarter anyway.

On the other hand…

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Kohl’s took a Wall Street beating today on the news of its earnings miss. Shares of the retailer tumbled all the way down 10% at one point.  The company, which has over 1,100 stores, actually made a lot of money this quarter. Way more money than Shake Shack, in fact. The company pulled down $4.12 billion in sales and took home a $127 million profit at 63 cents per share when analysts only called for a 55 cent profit. Sounds impressive, right. But for those finicky analysts, those numbers, like my grades in high school, were just not good enough. You see, all those billions and millions that Kohl’s raked in were not enough to offset the fact that its sales were up only 1.3%. The harsh reality is that those very same finicky analysts expected the company to earn sales of $4.19 billion. Hence, the drop in price of shares.