Game Over for Gawker; Yelp-ing With Joy; Election Triggers Record Gun Sales

 

Over and done with…

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The invasion of privacy lawsuit that forced Gawker into bankruptcy has finally come to a close. Well, almost. All Gawker needs to do is write a check to Hulk Hogan for $31 million, which is actually small potatoes considering that the original judgement against Gawker was for $140 million. Hogan’s suit was helped by the fact that PayPal co-founder Peter Thiel secretly financed the suit. He’s no fan of Gawker founder Nick Denton ever since he outed Thiel back in 2007. Of Hogan’s lawsuit, Thiel said, “I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest.” He makes a valid point. In any case, Gawker was forced to file Chapter 11 bankruptcy and the company’s assets were sold in a government auction to Univision for the bargain price of $135 million. But I guess that’s what you’d call payback.

Surprise!!!

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Yelp had a nice surprise today in the form of a profit. And who doesn’t like a surprise like that?  However, with that profit came the news that the company would be saying goodbye to 175 employees – 4% of its workforce – since the company has been unsuccessful in its attempts to expand across the pond. Yelp, which reviews restaurants and other assorted businesses, makes its money through advertising, of course, and also through other services like online reservations. The company’s third quarter net income was $2.1 million, earning the site 22 cents per share, even though experts predicted a 3 cent per share loss. The company’s revenue rose by 30% to $186.2 million, again beating expectations of $183 million. That was a major change from Yelp’s year-over-year profit loss of $8.1 million and 11 cents per share. The company saw a 29% uptick in reviews which brought its total customers to 115 million users.

Oh shoot!

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Leave it to the presidential race to send gun sales soaring. Both Sturm-Ruger and Smith & Wesson have been reporting months of record gun sales. In the meantime, FBI background checks to purchase firearms rose 16% to 2.3 million this year from last year’s 2 million during the same period. And you can expect background checks to set a new record for 2016. How’s that for a correlation?  Anticipating new gun-control regulations, gun enthusiasts are stocking up as the second amendment figures prominently in this election. As a result, Sturm-Ruger not only experienced a sales surge back in the summer, but saw net sales in its third quarter jump 34% 10 $161.4 million as consumers loaded up on such favorites like concealed-carry pistols and AR-15 rifles.  Profits also went up for the company 66% to $20 million and $1.03 per share. Sturm-Ruger took all possible political outcomes into consideration both in the White House and the Senate.  While Hillary Clinton hopes to bring back the assault weapons ban, Donald Trump wants to tweak gun legislation and focus on healthcare for the mentally ill instead. The irony is that Sturm-Ruger sales went up following incidents involving gun violence that led to politicians demanding stricter gun-control laws. If gun enthusiasts feel that it will be more difficult to purchase guns in the future, they stock up now. During Sturm’s second quarter earnings call, the company implored its customers and “all freedom-loving Americans to take action in support of the Second Amendment.” Sturm-Ruger pledged $2 to the NRA for every gun it sold and offered to match all donations up to $5 million. Incidentally, despite record gun sales, shares of both Smith and Wesson and Sturm-Ruger had been down 11%. Look for Smith & Wesson’s earnings December 6.

 

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Has Obama Lost Control with Gun Control?; Microsoft vs. China; Brainiac App Not So Smart After All

Out with a…whimper…

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As I mentioned yesterday, Smith & Wesson had a banner year for 2015 and even raised its fiscal forecast for 2016. Its stock went up today almost 10% at one point, while shares of Sturm Ruger & Co., the United States’ largest gun manufacturer, went up close to 7%. All this as President Obama announced new rules for gun control, including extending background checks and stricter requirements to purchase firearms online and at gun shows.  It’s debatable whether people are rushing out to buy these guns over personal safety concerns or because they want to get their firearms purchases in before the new laws take effect. But following the epic tragedy at Sandy Hook Elementary, there was also a surge in firearms purchases –  a chilling side note to horrifying nightmare.  However, President Obama wants citizens to know that these new rules are still “entirely consistent with the Second Amendment and people’s lawful right to bear arms.” Second amendment or not, Smith & Wesson is expected to pull down $650 million this year.

That’s so 2014…

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It’s China vs. Microsoft as China’s State Administration of Industry and Commerce (SAIC) are demanding that one of the world’s biggest companies explain itself. Apparently some “major issues” came up when digital data was obtained as part of an ongoing anti-trust investigation into Microsoft by Chinese authorities. The issues seem to involve the Windows operating system that was launched waaaaayyyy back in 2014. The probe started in July 2014 and Microsoft offices in the China were raided in a number of cities including Shanghai and Beijing. Microsoft will need to submit plenty of additional information and offer up a very convincing argument to win back over Chinese authorities, especially if it wants to make sure it keeps its presence there. And it’s a safe bet that the company will do just that. After all, China is the second largest economy in the world and there’s too much money to lose by not fully cooperating. Besides, Microsoft has a bunch of deals in the works with some of China’s biggest companies and it would be a shame to see those fall apart.

Brain drain…

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Lumosity, the app notable for its “brain training” games is now going to be notable for something else: a $2 million settlement with the FTC. The government agency took exception to Lumosity’s claims which included improved functionality at work, better performance in school, improved cognitive impairment alà Alzeheimer’s!, alleviation of ADD and even ingrown toenail elimination. I was just kidding. About the last one anyway. The FTC says Lumosity’s claims are “unfounded” and did nothing more than freak people out about potential cognitive decline. Besides, science has yet to prove any of Lumosity’s claims. FTC felt Lumosity employed poor marketing tactics in addition to churning out solicited testimonials- a big no no as far as the FTC is concerned. A bunch of neurology and psychology researchers got in on the action – about 70 in all – and called into question the whole “brain training” industry finding that the claims of its benefits are “frequently exaggerated.”  Lumosity offers a monthly subscription for $14.95 or a lifetime subscription for $299.95. But now the company has to notify its subscribers – all 70 million of them – about this new unpleasant FTC development and graciously offer to cancel all those subscriptions sans penalties. With estimated sales of over $40 billion, a slew of cancellations could deal a mighty blow to Lumosity and its parent company Lumos Labs.

GM’s Big Lyft-off; Blame it on China; Smoking Gun Stocks

Baby you can drive my car…

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GM’s gone and plunked down a whopping $500 million to get in on some ride-sharing action. The lucky recipient of this half billion dollar prize was none other than Über’s biggest competition: Lyft. Besides this being one GM’s biggest moves ever, this latest development also marks the biggest move by an automaker in the ride-sahring industry. Plus the car company gets a nice comfy seat on the Lyft board. President and co-founder John Zimmer says Lyft plans to use the $500 million to help build brand awareness, lest you find yourself unaware of Lyft and its lofty endeavors. Lyft’s valuation is now priced at a cool $5.5 billion. Nothing to scoff at, yet it still pales in comparison to Über’s mammoth $62.5 billion valuation. Lyft plans on developing a line of self-driving cars, the perfect addition, it would seem, for a ride-hailing/sharing company. The idea is to be able to call upon these driverless vehicles on demand. And apparently, the race to develop self-driving cars is all the rage right now in Silicon Valley.

Drop it like it’s hot…

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It’s all China’s fault that 2016 got off to a rocky start on Wall Street today. Lousy economic data, which included weak demand for Chinese manufacturing, set a downer of a tone for 2016’s very first day of trading.  Shares of companies all over the  world plunged, including here, where the Dow dropped taking the S&P and Nasdaq with it. U.S. listed shares of Chinese companies also took a hit, even investor darling and “It” stock Alibaba Group Holdings Ltd. But it was Chinese markets that dropped a staggering 7% with Shanghai’s Composite Index hitting its lowest levels in three months. Chinese authorities whipped out the country’s “circuit breaker” mechanism, an idea that must have sounded at good some point, but maybe not so much anymore. Basically, if the the CSI300 (a Chinese index) drops or rises 5% during the course of the trading day, then trading stops automatically for fifteen minutes. But after that fifteen minute period, if the CSI300 continues to drop or fall 7%, then trading gets suspended for the whole rest of the day. Some people think this “circuit breaker” deal is overkill and only making China’s fiscal issues worse.  Since June, Chinese authorities have been trying to figure out ways to restore investor confidence in the nation’s stocks. Analysts, however, say part of the big sell today off had more to do with a 6 month lock-up that just ended. Authorities made it so that institutional investors couldn’t sell off certain stocks for the last six months. The idea was to give a “boost” to Chinese indexes. But did it work? Hmmm.

 

And in other news…

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While plenty of stocks on U.S. indexes took a hit (because of China, as you may recall from a few sentences ago), one industry that actually surged today was guns. Whatever your position on firearms, the fact is that when tragedy strikes and calls for tougher gun laws are sounded, plenty of Americans scramble to get their hands on even more guns. It’s debatable whether the trend is because people feel safer for possessing one or because of the fear that the government attempt to limit constitutional rights. Sure, calls for stricter gun control came crashing down following attacks in Paris and San Bernardino. And sure, Barack Obama has big executive plans to curb some constitutional rights in the near future, but oddly enough, that only sends consumers out to stock up on their firearms supply. According to the  National Instant Criminal Background Check System, there were 38% more background checks this December than December 2014. Want some more numbers? Smith and Wesson Holding Corp. saw particularly strong sales towards the end of the year with its shares getting a nice boost, while Sturm, Ruger & Co. pulled down a 52 week high last week.

Mother Nature’s Allegedly Messing With Employment, Wham! Bam! Thank You Wall Street and Back Off My Guacamole, Global Warming!

Give mother nature a new job…

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Image courtesy of Grant Cochrane/FreeDigitalPhotos.net

While 139,000 might seem like large healthy figure to you, on Wall Street that number is paltry at best. Especially when we’re talking about the amount of jobs added to the private sector. Maybe you or someone you know did score a job in the last few months, but analysts on Wall Street were hoping for a much bigger number. And just like everything else this fiscal quarter, it’s mother nature who is once again being blamed – at least partly – for the villainous role she’s playing in our slowed economy. With that, unemployment is expected to hold steady at 6.6%.

Is it all about control?

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Image courtesy of vectorolie/FreeDigitalPhotos.net

No matter how you feel about guns, if you think more gun control is going to reduce the number of firearms purchases, you might want to rethink that logic. Shares of  Smith & Wesson, the hand gun maker, shot up 10%, shooting way past Wall Street’s expectations. Firearms enthusiasts stocked up on weapons because of the possibility of stricter gun control regulations on the horizon. Other firearms manufacturers had similar gains as well. The gun maker took in a third quarter profit of $20.8 million.

Holy moly…

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Image courtesy of pakorn/FreeDigitalPhotos.net

Big Chipotle fan, are ya! The mouth-watering guacamole that keeps you coming back to the tasty Mexican grill uses 70 avocados to make a batch. That translates to 97,000 pounds of the largely California grown produce. But you better get your fix in while you still can because if global warming lives up to its hype then those tangy salsas and mouth watering guacamoles might become nothing more than a dream you once had. In its annual report, Chipotle ominously suggested that “Increasing weather volatility…could have a significant impact on the price or availability of some of our ingredients.” And if that drought in California doesn’t let up soon, you can say adios to your guacamole.