This chart shows how ‘depressing’ life has been for stock pickers

While savvy stock picking used to make money managers billions of dollars, the likelihood of beating passive investors these days is slimming. Investors have a 22% chance of picking a stock that will perform better than the S&P 500, according to Societe Generale. In a universe of 16,000 global and emerging market stocks, 78% have underperformed the S&P 500 in the past two years. Further, only 34% have performed better than the S&P 500 in the last year, said Societe Generale in a note titled “the


While savvy stock picking used to make money managers billions of dollars, the likelihood of beating passive investors these days is slimming.
Investors have a 22% chance of picking a stock that will perform better than the S&P 500, according to Societe Generale.
In a universe of 16,000 global and emerging market stocks, 78% have underperformed the S&P 500 in the past two years.
Further, only 34% have performed better than the S&P 500 in the last year, said Societe Generale in a note titled “the
This chart shows how ‘depressing’ life has been for stock pickers Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, passive, lapthorne, life, pickers, depressing, stock, investing, 500, investors, global, money, shows, chart, active


This chart shows how 'depressing' life has been for stock pickers

It certainly doesn’t pay to be an old-fashioned stock picker anymore.

While savvy stock picking used to make money managers billions of dollars, the likelihood of beating passive investors these days is slimming. Investors have a 22% chance of picking a stock that will perform better than the S&P 500, according to Societe Generale.

In a universe of 16,000 global and emerging market stocks, 78% have underperformed the S&P 500 in the past two years. Further, only 34% have performed better than the S&P 500 in the last year, said Societe Generale in a note titled “the most depressing chart ever!”

“The strong performance of the S&P 500 leaves everything in its wake,” Andrew Lapthorne, Global Head of Quantitative Research at the firm said in a note to clients. “This is lauded as a success and an abject failure of active fund management.”

With data like this, it’s no surprise that assets in passive investing topped those of active investing for the first time ever in August. U.S. index funds and ETFs assets reached $4.271 trillion, compared with $4.246 trillion run by stock-pickers, according to Morningstar. This shift has been coming for decades as passive investing consistently outperforms active over long time periods despite active management charging higher fees.

In the last five years, 82% of active funds in the United States underperformed the S&P 500, according to S&P Dow Jones Indices’ most recent global SPIVA report. And with over 12,400 stocks failing to beat the S&P 500 in the past two years its no wonder why stock-picking shops are closing their doors.

Billionaire investor Jeffrey Vinik closed his hedge fund this year less than a year after its relaunch, citing a challenging environment to raise money. Veteran money manager Louis Bacon plans to close his New York-based hedge fund Moore Capital Management and return capital to investors, the Financial Times reported last month.

This trend is also dissuading private companies from entering the public markets, Lapthorne noted.

“If the measurement of company success is outperforming the 500 largest-cap US businesses supported by the US Federal Reserve, debt-funded share buybacks, and increasingly sophisticated financial products, then you can understand why less business are going public and private equity is booming,” said Lapthorne.

— with reporting from CNBC’s Michael Bloom.


Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, passive, lapthorne, life, pickers, depressing, stock, investing, 500, investors, global, money, shows, chart, active


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Nike is a buy so long as it stays above this critical level, chart suggests

The stock also got a kick on Thursday after Goldman Sachs added it to its Conviction Buy list on confidence that strong China sales can juice earnings. You’ve got a strong growth outlook coming with China,” Bill Baruch said on CNBC’s “Trading Nation” on Thursday. So I want to see it stay above this 50-day moving average, stay above this breakout area above $92,” said Baruch. “As long as it stays above $92 it’s a buy.” “With the stock trading at 30 times earnings and 26 times operating profit, it


The stock also got a kick on Thursday after Goldman Sachs added it to its Conviction Buy list on confidence that strong China sales can juice earnings.
You’ve got a strong growth outlook coming with China,” Bill Baruch said on CNBC’s “Trading Nation” on Thursday.
So I want to see it stay above this 50-day moving average, stay above this breakout area above $92,” said Baruch.
“As long as it stays above $92 it’s a buy.”
“With the stock trading at 30 times earnings and 26 times operating profit, it
Nike is a buy so long as it stays above this critical level, chart suggests Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: keris lahiff
Keywords: news, cnbc, companies, nike, buy, times, earnings, level, stock, suggests, critical, strong, stay, long, stays, baruch, trading, chart


Nike is a buy so long as it stays above this critical level, chart suggests

Nike is sprinting higher.

Shares of the footwear brand have surged 6% in the past month, one of the best performers on the Dow Jones Industrial Average. The stock also got a kick on Thursday after Goldman Sachs added it to its Conviction Buy list on confidence that strong China sales can juice earnings.

Bill Baruch, president of Blue Line Capital, agrees that this is a stock to watch.

“It’s an iconic brand. It’s crushed the competition. You’ve got a strong growth outlook coming with China,” Bill Baruch said on CNBC’s “Trading Nation” on Thursday.

He says the charts also confirm that the trend is higher for Nike, and he sees an upward channel beginning at $84 on the bottom and $96 on the top.

“As long as it stays here, it’s constructive. But not only that, it’s also broken out. So I want to see it stay above this 50-day moving average, stay above this breakout area above $92,” said Baruch. “As long as it stays above $92 it’s a buy.”

Nike shares are currently holding 4% above $92. They dipped below that level on Tuesday.

John Petrides, portfolio manager at Tocqueville Asset Management, says the stock may have gotten ahead of itself after rushing 29% higher this year.

“There’s no question, Nike is a fantastic company but every great investment is a function of the price you pay for it,” Petrides said during the same segment. “With the stock trading at 30 times earnings and 26 times operating profit, it’s at its highest level on an absolute basis in over 15 years.”

Nike’s 30-times earnings multiple compares with the broader S&P 500’s 18 times multiple. It traded at 25 times forward earnings at the beginning of the year.

Disclaimer


Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: keris lahiff
Keywords: news, cnbc, companies, nike, buy, times, earnings, level, stock, suggests, critical, strong, stay, long, stays, baruch, trading, chart


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Wall Street set for a higher open

Wall Street set for a higher open1 Hour AgoU.S. stock index futures were higher on Friday ahead of the November jobs report and on news that China offered to waive tariffs on some U.S. soybeans and pork. CNBC’s Frank Holland reports.


Wall Street set for a higher open1 Hour AgoU.S. stock index futures were higher on Friday ahead of the November jobs report and on news that China offered to waive tariffs on some U.S. soybeans and pork.
CNBC’s Frank Holland reports.
Wall Street set for a higher open Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: michael nagle, bloomberg, getty images
Keywords: news, cnbc, companies, set, higher, stock, soybeans, waive, tariffs, wall, reports, open, street, report


Wall Street set for a higher open

Wall Street set for a higher open

1 Hour Ago

U.S. stock index futures were higher on Friday ahead of the November jobs report and on news that China offered to waive tariffs on some U.S. soybeans and pork. CNBC’s Frank Holland reports.


Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: michael nagle, bloomberg, getty images
Keywords: news, cnbc, companies, set, higher, stock, soybeans, waive, tariffs, wall, reports, open, street, report


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T-Mobile is eyeing a price cut in its merger with Sprint, sources say

John Legere, chief executive officer and president of T-Mobile US Inc., left, listens as Marcelo Claure, chief executive officer of Sprint Corp., speaks during an interview on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, April 30, 2018. T-Mobile is considering a cut to its multibillion merger with Sprint, people familiar with the matter tells CNBC’s David Faber. Shares of T-Mobile and Sprint hit new all-time highs following the summertime annoucement, with Sprint


John Legere, chief executive officer and president of T-Mobile US Inc., left, listens as Marcelo Claure, chief executive officer of Sprint Corp., speaks during an interview on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, April 30, 2018.
T-Mobile is considering a cut to its multibillion merger with Sprint, people familiar with the matter tells CNBC’s David Faber.
Shares of T-Mobile and Sprint hit new all-time highs following the summertime annoucement, with Sprint
T-Mobile is eyeing a price cut in its merger with Sprint, sources say Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: thomas franck
Keywords: news, cnbc, companies, tmobile, sprints, dish, stock, york, executive, merger, sources, price, say, mobile, officer, eyeing, sprint, cut


T-Mobile is eyeing a price cut in its merger with Sprint, sources say

John Legere, chief executive officer and president of T-Mobile US Inc., left, listens as Marcelo Claure, chief executive officer of Sprint Corp., speaks during an interview on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, April 30, 2018.

T-Mobile is considering a cut to its multibillion merger with Sprint, people familiar with the matter tells CNBC’s David Faber.

The Department of Justice announced earlier this year that it reached an agreement on the more than $26 billion merger between the two communications companies. Shares of T-Mobile and Sprint hit new all-time highs following the summertime annoucement, with Sprint rising to $8.06.

But Sprint’s stock price has since fallen under $6 as investors gradually grew confident that T-Mobile would ultimately have to curb its initial offering.

Per its agreement with the DOJ, Dish will pay $5 billion for a combination of Sprint’s assets, including its Boost Mobile, Virgin Mobile and other prepaid phone businesses. T-Mobile, in turn, will make at least 20,000 cell sites and hundreds of retail stores available to the company. Dish will also be able to access T-Mobile’s network for seven years.

The deal cannot close, however, until the companies resolve an ongoing lawsuit from several state attorneys general, led by New York and California. The trial is slated to begin on Monday.


Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: thomas franck
Keywords: news, cnbc, companies, tmobile, sprints, dish, stock, york, executive, merger, sources, price, say, mobile, officer, eyeing, sprint, cut


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Stocks making the biggest moves midday: Uber, Tesla, Ulta, Zoom Video & more

Tesla — Shares of the automaker gained more than 2% after Morgan Stanley raised its “bull case” target on the stock to $500. Ulta earnied $2.25 per share, compared to the $2.13 per share expected by Wall Street analysts, according to Refinitiv. Zoom Video Communications — Shares of the video-conferencing company plummeted more than 10% on the back of quarterly results that revealed slowing growth. Big Lots lost 18 cents per share, compared to the 20 cents per share expected on Wall Street, accor


Tesla — Shares of the automaker gained more than 2% after Morgan Stanley raised its “bull case” target on the stock to $500.
Ulta earnied $2.25 per share, compared to the $2.13 per share expected by Wall Street analysts, according to Refinitiv.
Zoom Video Communications — Shares of the video-conferencing company plummeted more than 10% on the back of quarterly results that revealed slowing growth.
Big Lots lost 18 cents per share, compared to the 20 cents per share expected on Wall Street, accor
Stocks making the biggest moves midday: Uber, Tesla, Ulta, Zoom Video & more Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: thomas franck
Keywords: news, cnbc, companies, biggest, reported, zoom, moves, quarterly, company, stock, ulta, stocks, shares, cents, street, midday, share, tesla, making, morgan, uber, revenue, video


Stocks making the biggest moves midday: Uber, Tesla, Ulta, Zoom Video & more

An Uber banner on the New York Stock Exchange on the day of Uber’s IPO, May 10, 2019.

Check out the companies making headlines in midday trading:

Uber Technologies — Shares of Uber slid 2% after the ride-hailing company said more than 3,000 sexual assaults occurred during rides last year in the United States alone. This finding was revealed as part of the company’s first-ever U.S. Safety Report, which was released on Thursday.

Tesla — Shares of the automaker gained more than 2% after Morgan Stanley raised its “bull case” target on the stock to $500. The firm said that this best case scenario could result if the recently unveiled Cybertruck is successful, and if the new factory in China tops expectations. Morgan Stanley’s “base case” price target for the stock remains $250.

Ulta Beauty — Shares of the cosmetics company surged more than 13% after beating quarterly profit estimates, driven by sales of higher-margin cosmetics products. Ulta earnied $2.25 per share, compared to the $2.13 per share expected by Wall Street analysts, according to Refinitiv.

Zoom Video Communications — Shares of the video-conferencing company plummeted more than 10% on the back of quarterly results that revealed slowing growth. Zoom’s revenue of $166.6 million represents annualized growth of 85%. That’s less growth than in the previous quarter, when sales grew by 96%.

DocuSign — DocuSign shares climbed more than 7% after the digital signature software company posted quarterly results that beat analyst expectations. The company posted an adjusted profit of 11 cents a share on revenue of $249.5 million. Analysts polled by Refinitiv expected earnings per share of 3 cents on revenue of $239.9 million.

Big Lots — Shares of Big Lots soared more than 25% after the retailer reported a smaller-than-expected loss for its third-quarter earnings. Big Lots lost 18 cents per share, compared to the 20 cents per share expected on Wall Street, according to Refinitiv. The company also reported revenue of $1.168 billion, topping the forecast $1.162 billion.

Cloudera — Cloudera popped nearly 10% in midday trading after multiple brokerages (including Morgan Stanley and Bank of America Merrill Lynch) raised their price targets on the company’s equity after the enterprise software firm reported third-quarter earnings and revenues ahead of what the Street expected.

Stifel analysts wrote that they were “pleased to see that Cloudera has seemingly stabilized its business, [but] remain cautious around the true size of the company’s long-term market opportunity.”

— CNBC’s Fred Imbert, Maggie Fitzgerald and Pippa Stevens contributed to this report.


Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: thomas franck
Keywords: news, cnbc, companies, biggest, reported, zoom, moves, quarterly, company, stock, ulta, stocks, shares, cents, street, midday, share, tesla, making, morgan, uber, revenue, video


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Ulta Beauty shares rally on earnings beat, but analysts see weak cosmetics sales ahead

Kylie Jenner visits Houston Ulta Beauty to promote the exclusive launch of Kylie Cosmetics with the beauty retailer, on November 18, 2018 in Houston, Texas. Ulta Beauty beat third-quarter profit estimates on Thursday, driven by sales of higher-margin cosmetics products, sending the retailer’s shares up nearly 13% during midday trading Friday. Ulta has attributed cosmetics lines from Kylie Jenner and YouTuber James Charles for driving customers to its stores. Ulta shares were recently trading aro


Kylie Jenner visits Houston Ulta Beauty to promote the exclusive launch of Kylie Cosmetics with the beauty retailer, on November 18, 2018 in Houston, Texas.
Ulta Beauty beat third-quarter profit estimates on Thursday, driven by sales of higher-margin cosmetics products, sending the retailer’s shares up nearly 13% during midday trading Friday.
Ulta has attributed cosmetics lines from Kylie Jenner and YouTuber James Charles for driving customers to its stores.
Ulta shares were recently trading aro
Ulta Beauty shares rally on earnings beat, but analysts see weak cosmetics sales ahead Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: ganesh setty, annie palmer
Keywords: news, cnbc, companies, kylie, cosmetics, analysts, beat, rally, stock, ulta, company, shares, share, weak, beauty, earnings, sales


Ulta Beauty shares rally on earnings beat, but analysts see weak cosmetics sales ahead

Kylie Jenner visits Houston Ulta Beauty to promote the exclusive launch of Kylie Cosmetics with the beauty retailer, on November 18, 2018 in Houston, Texas.

Ulta Beauty beat third-quarter profit estimates on Thursday, driven by sales of higher-margin cosmetics products, sending the retailer’s shares up nearly 13% during midday trading Friday.

Ahead of the earnings report, investors had been worried that the retailer would see weaker makeup sales, but the nearly 30-year-old company has capitalized on booming demand for celebrity-led beauty brands, which are usually priced at a premium. Ulta has attributed cosmetics lines from Kylie Jenner and YouTuber James Charles for driving customers to its stores.

In the latest quarter, Ulta reported net income of $129.75 million, or $2.25 per share, compared with earnings of $131.17 million, or $2.18 per share, in the same quarter last year. Analysts expected the company to earn $2.13 per share, according to Refinitiv consensus estimates.

Revenue rose to $1.68 billion from $1.56 billion a year ago but was slightly lower than the $1.69 billion analysts expected. But the company matched same-store sales growth forecasts of 3.2%.

Ulta narrowed its full-year earnings outlook to a range of $11.93 to $12.03 per share from its previous forecast of $11.86 to $12.06 per share.

Wells Fargo analyst Ike Boruchow raised his price target to $250 from $235 per share. Ulta shares were recently trading around $267. He expects the stock to trade higher in the near term but sees further challenges ahead for the company.

“We believe that slowing cosmetic trends and shifting industry dynamics will meaningfully pressure the business, even as they generate robust comps for the broader retail space,” said Boruchow in a note Thursday. He added that the stock will likely remain a “highly debated stock in the near-term.”

Nomura analyst Michael Baker similarly increased the stock’s price target to $230 from $215, saying the earnings were “not as bad as feared.” He reiterated a “reduce” rating on the stock, saying he expects sales of color cosmetics to remain weak at least into mid-2020. The category is the most important one to the beauty retailer.

As a result, Baker expects the company will be forced to cut its earnings forecast in the future.

Ulta is one of the top-performing S&P 500 components since the start of the bull market in 2009. Its shares are up about 8% year to date.

— CNBC’s Michael Bloom and Reuters contributed to this report.


Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: ganesh setty, annie palmer
Keywords: news, cnbc, companies, kylie, cosmetics, analysts, beat, rally, stock, ulta, company, shares, share, weak, beauty, earnings, sales


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Mark Cuban says President Trump calls him to ask about the stock market

Mark Cuban’s relationship with President Donald Trump has had its ups and downs. But the billionaire star of ABC’s “Shark Tank” says Trump still wants to hear his thoughts on the stock market. “He called me the other day, for real,” the Dallas Mavericks owner tells Hart about Trump. Cuban says Trump asked him. The president also reached out to Cuban in February 2019, after Cuban’s Mavericks pulled off a trade to land former New York Knicks star Kristaps Porzingis, Cuban tells Hart.


Mark Cuban’s relationship with President Donald Trump has had its ups and downs.
But the billionaire star of ABC’s “Shark Tank” says Trump still wants to hear his thoughts on the stock market.
“He called me the other day, for real,” the Dallas Mavericks owner tells Hart about Trump.
Cuban says Trump asked him.
The president also reached out to Cuban in February 2019, after Cuban’s Mavericks pulled off a trade to land former New York Knicks star Kristaps Porzingis, Cuban tells Hart.
Mark Cuban says President Trump calls him to ask about the stock market Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: tom huddleston jr
Keywords: news, cnbc, companies, york, ask, stock, market, star, trump, trade, cuban, hart, think, president, tells, calls, mark


Mark Cuban says President Trump calls him to ask about the stock market

Mark Cuban’s relationship with President Donald Trump has had its ups and downs. But the billionaire star of ABC’s “Shark Tank” says Trump still wants to hear his thoughts on the stock market.

That’s what Cuban told comedian and actor Kevin Hart in the latest episode of “Cold as Balls,” a web show Hart hosts on his Laugh Out Loud YouTube channel.

“He called me the other day, for real,” the Dallas Mavericks owner tells Hart about Trump. In the episode published Tuesday, Cuban says the president called him “two and a half weeks ago,” noting that he received a call from a private number in the Washington, D.C. area code and answered the phone to discover it was Trump.

“He’s like, ‘What do you think about the stock market?'” Cuban says Trump asked him. “I’m like, ‘Oh, hi Donald. What do you think about the stock market?'” Cuban says, laughing.

The president also reached out to Cuban in February 2019, after Cuban’s Mavericks pulled off a trade to land former New York Knicks star Kristaps Porzingis, Cuban tells Hart.

“He sent me an email,” Cuban says of Trump. “He scanned the back cover of The New York Post and he said, ‘Great trade.'”


Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: tom huddleston jr
Keywords: news, cnbc, companies, york, ask, stock, market, star, trump, trade, cuban, hart, think, president, tells, calls, mark


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If you invested $1,000 in UPS 10 years ago, here’s how much money you’d have now

On a regular day, the United Parcel Service (UPS) delivers an average of around 20 million packages. UPS’ booming year-round business, coupled with its year-over-year holiday delivery growth, isn’t just a good thing for business — it’s also helped the company’s stock performance. A $1,000 investment made in 2009 would be worth more than $2,800 as of Dec. 2, 2019, for a total return of around 176%, according to CNBC calculations. In the same time frame, by comparison, the S&P 500 earned a total r


On a regular day, the United Parcel Service (UPS) delivers an average of around 20 million packages.
UPS’ booming year-round business, coupled with its year-over-year holiday delivery growth, isn’t just a good thing for business — it’s also helped the company’s stock performance.
A $1,000 investment made in 2009 would be worth more than $2,800 as of Dec. 2, 2019, for a total return of around 176%, according to CNBC calculations.
In the same time frame, by comparison, the S&P 500 earned a total r
If you invested $1,000 in UPS 10 years ago, here’s how much money you’d have now Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: anna hecht
Keywords: news, cnbc, companies, stock, holiday, return, delivery, packages, invested, 1000, handle, heres, ups, money, total, ago, youd, million


If you invested $1,000 in UPS 10 years ago, here's how much money you'd have now

On a regular day, the United Parcel Service (UPS) delivers an average of around 20 million packages. But once the holidays set in, that number spikes. For 2019, UPS forecast that it will deliver an average of 32 million packages daily during its holiday “peak season,” which is a 5% jump from last year.

UPS’ booming year-round business, coupled with its year-over-year holiday delivery growth, isn’t just a good thing for business — it’s also helped the company’s stock performance. A $1,000 investment made in 2009 would be worth more than $2,800 as of Dec. 2, 2019, for a total return of around 176%, according to CNBC calculations. In the same time frame, by comparison, the S&P 500 earned a total return of around 250%.

However, while an investment in UPS would have earned you a profit, it’s important to note you would have been better off buying a low-cost index fund that tracks the market, since the shares underperformed the return of the S&P 500. The current UPS share price hovers around $117.

While UPS’ stock performance over the last decade couldn’t match that of the S&P 500′s, any individual stock can over- or underperform, and past returns do not predict future results.

CNBC: UPS’ stock as of December 2019.

Part of the reason UPS is equipped to handle these holiday increases is because it recently invested “billions of dollars” into expanding its network capacity, UPS CEO David Abney explained on a recent segment of CNBC’s “Squawk Box.”

In the last two years, UPS installed around 40 automated buildings for package processing and the company is now prepared to handle “more than 800,000” packages an hour, which is more than UPS could handle two years ago, Abney said.

Despite feeling prepared for the holidays, UPS has faced challenges in the past regarding its shipping practices. Back in 2015, the company was forced to pay $25 million in settlement charges after it had reportedly issued false claims to the federal government over its delivery times. According to the government, UPS allegedly did so in an effort to cover up its repeated failure to meet its guaranteed delivery times on Next Day Air Overnight packages.


Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: anna hecht
Keywords: news, cnbc, companies, stock, holiday, return, delivery, packages, invested, 1000, handle, heres, ups, money, total, ago, youd, million


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Nearly 40% of Facebook’s valuation is on the line from regulatory risk, HSBC says

HSBC said regulatory overhang is equivalent to 38.5% of Facebook’s current valuation. But HSBC said its only a matter of time before the stock prices in the real threat of privacy, regulatory and antitrust risk. The results of the regulatory crackdown, including fines and policy changes could cost Facebook almost 40% of its market value, the firm said. Trust-busting, anti-competitive fines, privacy fines, taxation, merger control and telecoms-type regulation all pose potential implications to va


HSBC said regulatory overhang is equivalent to 38.5% of Facebook’s current valuation.
But HSBC said its only a matter of time before the stock prices in the real threat of privacy, regulatory and antitrust risk.
The results of the regulatory crackdown, including fines and policy changes could cost Facebook almost 40% of its market value, the firm said.
Trust-busting, anti-competitive fines, privacy fines, taxation, merger control and telecoms-type regulation all pose potential implications to va
Nearly 40% of Facebook’s valuation is on the line from regulatory risk, HSBC says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-05  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, stock, telecomstype, regulatory, target, nearly, risk, line, share, facebook, fines, valuation, facebooks, hsbc


Nearly 40% of Facebook's valuation is on the line from regulatory risk, HSBC says

The Facebook logo is displayed during the F8 Facebook Developers conference on April 30, 2019 in San Jose, California.

Imagine $225 billion of Facebook’s $565 billion market cap was gone. That’s how much HSBC Global Strategies said is threatened by the social media giant’s dance with regulators.

The firm initiated coverage of Facebook with a reduce rating, recommending investors sell the stock. HSBC said regulatory overhang is equivalent to 38.5% of Facebook’s current valuation.

“Although it has taken time for policy makers and regulators to ready their ideas, it should now be clear they have well-advanced plans for intrusive interventions,” said HSBC senior analyst Nicolas Cote-Colisson in a note to clients.

Facebook has drawn negative attention from politicians and regulators from the U.S. and all over the world. The Federal Trade Commission, the the European Union have all announced investigations into Facebook, either on the tech giant’s practices on digital competition or concerns about its digital currency Libra. Despite the regulatory overhang, shares of Facebook are up over 50% this year. But HSBC said its only a matter of time before the stock prices in the real threat of privacy, regulatory and antitrust risk.

“In a sense, Facebook’s sheer pace of growth is becoming a risk factor in its own right, as it is likely to accelerate scrutiny and intervention,” said Cote-Colisson.

The results of the regulatory crackdown, including fines and policy changes could cost Facebook almost 40% of its market value, the firm said. Trust-busting, anti-competitive fines, privacy fines, taxation, merger control and telecoms-type regulation all pose potential implications to valuation.

“For instance, the possibility of imposition of telecoms-type regulation to make it easy for users to move to competitors,” said Cote-Colisson.

HSBC said due to the risk, growth will become more challenging, therefore consensus estimates are overly ambitious.

The average 12-month price target for Facebook on Wall Street is $238.28 per share, according to FactSet. HSBC lowered its 12-month price target for Facebook to $178 per share. Facebook’s stock closed at $198.71 on Wednesday.

—with reporting from CNBC’s Michael Bloom.


Company: cnbc, Activity: cnbc, Date: 2019-12-05  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, stock, telecomstype, regulatory, target, nearly, risk, line, share, facebook, fines, valuation, facebooks, hsbc


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Oracle shows buybacks can go too far

Oracle chief technology officer Larry Ellison speaks at a company event in Redwood Shores, Calif., on Aug. 7, 2018. Fitch Ratings cut its Oracle rating to A from A+ last year. Buybacks that were already ongoing before the tax cuts kept surging, drawing down Oracle’s cash from more than $70 billion just after the law passed. Goldman analyst Heather Bellini, who declined an interview request through spokeswoman Megan Riley, has Oracle on the firm’s Conviction Buy list. Morgan Stanley, meanwhile, s


Oracle chief technology officer Larry Ellison speaks at a company event in Redwood Shores, Calif., on Aug. 7, 2018.
Fitch Ratings cut its Oracle rating to A from A+ last year.
Buybacks that were already ongoing before the tax cuts kept surging, drawing down Oracle’s cash from more than $70 billion just after the law passed.
Goldman analyst Heather Bellini, who declined an interview request through spokeswoman Megan Riley, has Oracle on the firm’s Conviction Buy list.
Morgan Stanley, meanwhile, s
Oracle shows buybacks can go too far Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-05  Authors: tim mullaney
Keywords: news, cnbc, companies, stock, debt, oracle, billion, company, far, oracles, rating, companies, cash, buybacks, shows


Oracle shows buybacks can go too far

Oracle chief technology officer Larry Ellison speaks at a company event in Redwood Shores, Calif., on Aug. 7, 2018. Oracle livestream screenshot

Among finance types, it’s practically an article of faith that the easiest way to use cash to boost a company’s stock is to buy back shares of its stock — the more the better. The counterargument: Oracle. At the software giant, buybacks have spurred a lot of borrowing and spending. Executive chairman and co-founder Larry Ellison’s company has spent roughly $75 billion to buy back stock since its 2016 fiscal year, and $41 billion over the last five quarters, which far outpaces the company’s $19 billion in free cash flow. The multiyear buyback binge cost more than a third of today’s market value for Oracle and has pushed the company into net debt despite sporting $35.7 billion in cash and short-term investments on its balance sheet. “It’s staggering how much money they’ve spent buying back shares,” said CFRA Research analyst John Freeman, who downgraded the stock to a sell rating on Wednesday. “I’d say 90% of their earnings-per-share growth the last two years has come from buying back shares. He [Ellison] must believe the software-as-a-service companies he would otherwise want to buy are overvalued.” Oracle spokeswoman Deborah Hellinger declined to comment. Even though it is still among the 10 U.S. companies with the most cash, according to FactSet Research, its net cash (cash minus short- and long-term debt) is negative $17 billion. That’s about a $32 billion decline since 2016, as the software giant took out a lot of cheap debt to fund buybacks. For all that, the stock is up just 35% in the last five years, less than half the gain of the Nasdaq Composite, a common tracker for technology stocks, and a third of the gain of the S&P 500 Information Technology sector.

We’re not sure where this is going. The company has not provided a clear financial policy — has not said, ‘What kind of balance sheet do I want, what kind of company do I want to be.’ Brian Chang S&P bond analyst

In the short term, Oracle’s finance strategy is causing it problems with bond rating agencies. Standard & Poor’s downgraded Oracle’s debt rating to A+ from AA- in September — the new rating remains investment-grade, but S&P says the debt “is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions.” Fitch Ratings cut its Oracle rating to A from A+ last year. S&P warned of a 1-in-3 chance of another rate cut if Oracle doesn’t slow down its repurchases. At the recent pace of buybacks, its net-debt position could reach twice its annual earnings before interest, taxes, depreciation and amortization by the end of fiscal 2020, the agency said. “We’re not sure where this is going,” said S&P bond analyst Brian Chang. “The company has not provided a clear financial policy — has not said, ‘What kind of balance sheet do I want, what kind of company do I want to be?'” More on mega-cap company cash strategies: At Ford, $37 billion in the bank and strapped for cash

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Oracle issued $10 billion in debt in early November 2017, just before the passage of the tax reform act by Congress. Buybacks that were already ongoing before the tax cuts kept surging, drawing down Oracle’s cash from more than $70 billion just after the law passed. Among other provisions that benefited corporations, the law allowed cash held outside the U.S. to be repatriated without paying as much in U.S. taxes, Chang said. Other tech companies made similar moves timed to the tax cuts, but aside from the much larger Apple, peer companies didn’t buy their own stock as aggressively as Oracle, the S&P bond analyst said.

The big long-term problem is that Oracle has been slow to react to the rise of cloud computing, whose over-the-Internet applications are rapidly taking market share from Oracle’s packaged software that runs on servers controlled by Oracle’s corporate clients. In turn, this means valuations in the software business are migrating rapidly toward software-as-a-service companies like Salesforce and Workday, and toward cloud computing service managers led by Amazon and Microsoft, according to CFRA Research’s Freeman. Oracle might be in better shape if it had snagged more such companies on their way up, analysts say. By a series of metrics, Oracle ranks last among a half-dozen cloud vendors ranked in a Nov. 10 Goldman Sachs report, even though it spent $9.3 billion on cloud services provider NetSuite in 2016. Goldman analyst Heather Bellini, who declined an interview request through spokeswoman Megan Riley, has Oracle on the firm’s Conviction Buy list. Morgan Stanley, meanwhile, sees only 1.6% revenue growth in Oracle’s 2020 fiscal year, with all earnings-per-share growth coming from buybacks. “Whie a no-growth [operating expense] profile and share repurchases keep EPS growth largely intact, the lack of revenue or operating income growth keeps the [stock] range bound,” Morgan Stanley analyst Keith Weiss said after Oracle’s quarterly earnings report in September.

Putting Larry Ellison first?


Company: cnbc, Activity: cnbc, Date: 2019-12-05  Authors: tim mullaney
Keywords: news, cnbc, companies, stock, debt, oracle, billion, company, far, oracles, rating, companies, cash, buybacks, shows


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