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COVID-19 Was Powerless Against FAANG Stocks- But There Are More Battles to Be Won!

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Facebook Earnings News

FAANG is an acronym that stands for the five most popular and best-performing US technology stocks in the market. They are Facebook Inc (NASDAQ:FB), Amazon.com Inc (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX) and Alphabet’s Google (NASDAQ:GOOG). Well, Facebook, Amazon and Netflix hit record highs recently but this doesn’t mean all is bright.

Alphabet Trails Behind Facebook. But Despite Hitting Highs- Controversies Remain.

Facebook’s stock (NASDAQ:FB)  is up by about 16% since early 2018 which is below 28% gain for Google’s parent Alphabet’s stock (NASDAQ: GOOGL) over the same period. Facebook’s revenues have expanded 74% between 2017 and 2019. This is 1.6x those of Google in the same period. Facebook’s higher revenue growth over recent years and its higher multiple imply higher potential earnings growth in the future. The hype is led by its big push into e-commerce with the launch of Shops.  And it took Shopify Inc (NYSE:SHOP) for the ride as well, which became Canada’s most valuable company. But controversies remain at Facebook’s side as Zuckerberg recently refused to act against President Trump’s posts.

Alphabet’s Potential Could Be Stronger Than We Realize

It can be argued that the company has a higher quality revenue mix, especially due to its highest-growing segment, Google’s Cloud business that gives more resilience to Google’s revenues. Google has very large advertising exposure but unlike Facebook that earns 98% of revenues from it, ads contribute 80% to Google’s revenues. So Google’s pay per click advertising, for which marketers only pay when their ads get results, could hold up stronger than anticipated. While many of Google’s offerings don’t make much money yet, they could imply that Google is being undervalued.

Amazon Stock May Have Soared With Restarted Non-Essential Deliveries But Its Biggest Weakness Remained

The company is at a crossroads as it is facing sharp criticism over its treatment of employees – and the way the company responds to the objections may well determine its future.

The e-commerce giant made it easier for employees to juggle day care amid the COVID-19 pandemic. It announced ten days of subsidized emergency backup child or adult care. By covering more more than 90% of the cost of care, the e-commerce giant will invest several million dollars to offer this benefit during the next few months. What we don’t know is if the spending is part of the $4 billion Amazon took aside for its COVID-19 response during the current quarter.

But it is unclear whether the importance the company now seems to be placing on its employees is just a forced response to the criticism or if it truly reflects its commitment to the wellbeing of frontline employees. After all, the company was known for its poor working conditions long before the pandemic.

You could think that Amazon performed well anyway but workforce management also matters to investors. In last week’s shareholder meeting, they showed concern for the company’s reputation to be permanently damaged by this increased scrutiny. Bezos is being pressured to improve the treatment of Amazon’s workforce.

Apple

Shares of Apple have been on a good track for a while. Investors have applauded the company’s shift from a business model that is dependent on hardware revenue to a more services-based structure. As a reward, its stock went up 80% over the past year. Since surpassing a $1 trillion market cap in 2019, shares of Apple have continued to climb sharply. The company’s value has come near $1.4 trillion. Further robust growth in Apple’s services and wearables businesses and strong operational tailwinds over the next for years will help the tech company go forward. But with sales of the iPhone having hit a saturation point, which is why Apple has only grown its revenue by a total of 20% over the last three years, the switch or innovation is a must.

Netflix Achieved Record Figures but Analyst Fear Collapse

Despite short term headwinds, Netflix gathered a fast-growing member base of 182.86 million. It blew away expectations by adding 15.77 million new subscribers in the first quarter. But sceptics are not a fan of its high cash burn as Netflix is heavily spending on content. It burned more than $3.2 billion in cash last year. Also, whether Netflix will continue to be able to raise prices to offset its rising costs in light of this increased competition.

Outlook

The overall performance of the FAANG stocks is optimistic for the global economic recovery. No one seems to be afraid of holding any of FAANG stocks right now. But that doesn’t mean each doesn’t have its own concern.

The most ‘threatened’ seems to be Amazon. Amazon should direct all its resourcefulness and superior operational capabilities towards employees.  Bezos must see Amazon’s workforce as an energizing wheel that propels the company’s productivity and not as a hit to the bottom line. In other words, Amazon must give the same attention to its employees as it did to its customers.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

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Bed Bath & Beyond – Bouncing Back or Going Further Down?

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Bed Bath Beyond

Bed Bath & Beyond (NASDAQ:BBBY) surprised many with its stock bouncing back a bit by jumping nearly 5 percent during Monday’s premarket trading but can the troubled retailer indeed pull out a comeback in 2020? Under its new CEO Mark Tritton, it pulled out some rather dramatic moves but many don’t feel optimistic about the company’s third quarter earnings that are scheduled to be released on Wednesday.

$250 million real estate deal

After the retailer announced a sale-leaseback transaction which resulted in proceeds of $250 million. Many enterprises have come down to this in an effort to pay off its debt but Target Corporation (NYSE:TGT) resisted such a shift and even though Macy’s Inc (NYSE:M) had its share of limited asset sales, it resisted this widespread trend. The raising concern is whether the company is mortgaging its future after suffering from its first ever quarter loss last year.

December storm

Tritton has been in the CEO seat for only a short while after leaving Target but is surely wasting no time in executing a turnover strategy. In December, he wiped out C-level management, leaving the company lighter by six executives. But Target, Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT) are luring customers by selling pretty much the same items with more appealing internet presence and speedier shipping.

Third quarter expectations

Analysts are estimated a 6% decline in revenue $3.03 billion a year ago, coming down to $2.86 billion. Earnings forecasts are at $0.03 per share which is a dramatic 84% plunge from last year’s third-quarter results of $0.18 per share. The company didn’t provide quarterly guidance, but it did reiterate its full-year outlook for sales of $11.4 billion, which would be down 5% year over year. With the cleaning being implemented by the head of the house, it wouldn’t be surprising for the retailer to further drop its expectations. A bounce-back is unlikely, but the recent transactions could somewhat ‘protect’ the stock from a consequent tumble.

Outlook

The retailer has outpaced the the S&P 500 index that reached 27.8% by gaining 34.6% over the past 12 months. Since Tritton was appointed CEO in October, shares went up over 40% and more than doubled from the lows they were hit by in August, but it is unlikely for this positive trend to be sustained in the near-future. Serious matters definitely need to be fixed but the results of the turnover strategy and whether this indeed is the first step toward unlocking valuable capital as according to the CEO, are yet to be seen. How bad things truly got and the extent of damage Tritton is set out to remedy will be at least clearer after the company reports its third quarter earnings on Wednesday. But one thing is certain: removing half a dozen of executives who executed the turnaround strategy implies things aren’t going according to plan.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com

Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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Comtex

YTD Returns 95 %: This US Automotive Retailer is Expanding

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“Our revenue has increased at a compounded annual growth rate of 24% and earnings have increased at a compounded rate of 33% since 2010.” said Bryan DeBoer, President and CEO Lithia Motors, Inc.

A $3.5 Billion market cap company, Lithia Motors (NYSE: LAD) reported its highest quarterly revenue in the company’s history. The Lithia Motors stock closed at a lifetime high levels of 152.85, up from 17.29% from previous days closing and up 95% YTD.

Overview of Q3 FY2019
Lithia Motors reported the highest Q3 adjusted EPS of $3.39 (+20% YoY). The company managed to provide these strong numbers on the back of consolidated record revenues. LAD managed to provide positive same-store revenue growth in all business lines. Total revenue and gross profit grew by 8% and 9% respectively.

Out of six reported distinct business lines, revenue mix majorly consisted of New Vehicle Sales (54.8%), Used Vehicle Sales (27.5%), and Service, Body and Parts (10.2%).

Strong Operational Performance
The company has managed to continue its inorganic growth strategy. For the year, LAD has acquired seven stores so far and anticipated revenues of over $475 Mn. Lithia Motors remains vocal on its capital allocation priorities. LAD has provided Target %s Uses of Capital (and Actual 5-year average %) – 65% Acquisitions (56%); 25% Investment and Modernization (19%); 5% Share Repurchases (19%); 5% Dividends (6%).

LAD’s announced $0.30 per share quarterly dividend is having a record date on 8 Nov 2019.

Cause of Concerns
For Lithia Motors, the aggressive growth plans have resulted in very high debt levels. For Q3 FY2019, the Net Debt-to-Ebitda remains at 2.0x which is at the lower end of the LAD’s 2.0x-3.0x Target Range levels. LAD has kept aside the 2,600 specific acquisition targets. This means any further acquisition will worsen the Net Debt-to-Ebitda ratio translating into the elevated riskiness of the business. This situation may get even worse with the possible expected cyclical downturn in the automotive industry.

The rapid change in the automotive industry, including increases in ride-sharing services, advances in electric vehicle production and driverless technology, poses a threat to the LAD’s overall operations.

Conclusion
Lithia Motors remains fundamentally a strong growth company with decent operational performance. The probable elevated debt levels risks can be managed if the company creates strong operational cash flows and pay off its existing debt; plus cautiously carrying the acquisition activities with the gauging the dynamics and trend of the US automotive sector.

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