No bank branch, no problem

No bank branch, no problem

Several of us here at Tematica have been waiting for the day when banks would recognize that if they embraced our Digital Lifestyle investing theme, the bank branch would one day go the way of the cassette tape – a fond memory of a bygone era. While banks have made strides over the years between direct deposit and ACH payments that have shrunk the need to visit a bank branch, the debut of online-only banks, such as Chase’s Finn, and mobile payment platforms such as Apple Pay and PayPal’s Venmo have eliminated a number of reasons people used to go to the physical bank. We’ve even seen Capital One partner with Peet’s Coffee & Tea as well as other coffee shops and other non-branch locations.

To us, the long-term question is what will these banks and related institutions do with all of the existing bank branches? You may want to see what kinds of properties your REIT investments are holding.

While Bank of America Corp. and JPMorgan Chase & Co. were gobbling up cheap deposits at their thousands of branches around the U.S., Citigroup was shrinking its footprint, focusing on a handful of big cities to right itself after its near-collapse.

Now the bank’s executives are convinced that many U.S. consumers are finally ready to leave the branch behind and fully embrace digital banking. Citigroup added roughly $1 billion in digital deposits in the first quarter, more than all of last year. About two-thirds of that total came from new customers, and a little more than half came from people who don’t live near any of the bank’s roughly 700 branches.

In recent months, the bank has reorganized its consumer unit, knocking down walls between banking and cards. It rolled out a new account through its mobile app aimed at credit-card customers. And it is targeting potential customers with mobile-banking offers tied to the rewards they get for cards.

“For the 21st century, we are glad we never got the ballast of an extra 4,000 branches,” said Stephen Bird, the bank’s chief executive of global consumer banking. “I’m certain it’s going to turn out to be a very fortuitous thing.”

Other big banks are ramping up their digital offerings too, but they are doing it alongside their giant branch networks. Citigroup is wagering that many of those locations—more than 4,000 each for JPMorgan and Bank of America—will become burdensome.

Source: No Branch, No Problem. Citigroup Bets Big on Digital Banking. – WSJ

Special Alert: Closing out our SH call position with another hefty gain

Special Alert: Closing out our SH call position with another hefty gain

Key points in this issue

Following yesterday’s tumultuous second day in the stock market that sent all the major market indices lower, I’m opting to “take the money and run” with the second half of our ProShares Short S&P500 Calls position given not only the outsized gain in a relatively quick manner, but also because we are getting favorable bank earnings from JPMorgan Chase (JPM), PNC (PNC) and others this morning. The good news is they confirm the domestic economy is on firm footing, and that is leading to a reprieve from the last few days for the stock market.

As I mentioned yesterday when I issued a sell on half of our SH calls as we enter the September quarter earnings season in force next week, we are likely to see the stock market trade day to today odds are this means our SH calls will bounce around, but the risk is they trade off from this week’s pronounced move. Let’s be prudent and book the win while we have it is my thinking. We’ll tabulate the actual exit price based on market open, but as it looks now we stand to have a blended return near 400% for this SH call option position in full. Not bad for a few weeks of work, and a solid reminder to listen to the data and our thematic lens.

 

JP Morgan’s Jamie Dimon says cyber is the biggest vulnerability the financial system

JP Morgan’s Jamie Dimon says cyber is the biggest vulnerability the financial system

When Jamie Dimon, CEO of JPMorgan Chase one of the largest banking entities, speaks investors and the markets tend to listen and digest what he is saying. This week, Dimon reminded that cybersecurity, one of the tentpoles of our Safety & Security investing theme, is an area that individuals, institutions and the government need to “focus on.” Intermixed with his comments was that JPMorgan has spent “a lot of money” and is “secure” but as we know this is an evolving landscape that likely means cyber spending should be considering an ongoing aspect of capital spending plans rather than a “fix it and forget it” type of spend. We’re already witnessing the shift in spending categories at the Pentagon, and odds are it will only be a matter of time before we see the same at more of Corporate America as well. All it will take is another high profile cyber attack or two, but that will be reactive (defense) rather than proactive (security).

 

Banks may be in sound condition post-Lehman Brothers, but the financial system could crack again if hit with a devastating cyber attack, J.P. Morgan Chief Executive Jamie Dimon warned on Thursday.

“I think the biggest vulnerability is cyber, just for about everybody” he told CNBC’s Indian affiliate CNBC TV-18 on Thursday. “I think we have to focus on it, the United States government has to focus on it.”

“We have to make sure because cyber — terrorist and cyber countries — they could cause real damage. We’re already spending a lot of money and J.P. Morgan is secure but we should really worry about that,” Dimon told CNBC-TV18’s Shereen Bhan in New Delhi.

Source: JP Morgan’s Jamie Dimon says cyber is biggest risk to the financial system

Weekly Issue: Adding Two New Positions As We Pass the Summer Doldrums

Weekly Issue: Adding Two New Positions As We Pass the Summer Doldrums

 

Key points in this issue:

 

Over the past couple of weeks, we saw a number of our Tematica Options+ positions get stopped out. These included:

  • Discovery (DISCA) October 2018 30.00 calls (DISCA181019C00030000)
  • Utilities SPDR ETF (XLU) August 17, 2018 53.00 calls (XLU180817C00053000)
  • JPMorgan Chase & Co. August 110.00 calls (JPM180817C00110000)
  • ProShares Short S&P 500 (SH) August 17, 2018 30.00 calls (SH180817C00030000)

Stop outs are never easy nor are they fun — especially if the underlying strategy pays off in the longer-term — but they speak to the importance of being a disciplined investor and managing risk. Those qualities will serve us well in the coming weeks as thousands of companies serve up their quarterly results, updating investors as to their views on how a slowing global economy, rising dollar, climbing interest rates and input costs, as well as tariff implications, will impact their business in the coming months. While we’ve heard from more than a handful of companies over the last several days we still have more than 85% of the S&P 500 companies to go. As baseball great Yogi Berra said, “It ain’t over till it’s over” and that means we will have several weeks of earnings fun and potential disruption in the market.

This will make trading options a tad more difficult than usual, and while we may get stopped out in the short-term, I go back to what I said above – it’s all part of being a disciplined investor and managing potential downside risk. I agree, it’s not optimal but we can look for opportunity where it is present and that brings two new call option trades to the Select List today. Here we go…

 

Adding a call position on Netflix shares

As I reminded you in yesterday’s issue of Tematica Investing, last week we added Netflix (NFLX) shares to the Tematica Investing Select List and also yesterday I shared my view on the company’s 2Q 2018 earnings results. To quickly recap those comments, I saw that earnings report as a bump in the road and the combination of stock rating upgrades as well as the share price recovery vs. the 14% post-earnings drop in after-market trading on Monday tells us we’re not the only ones remaining bullish on the shares.

One of the criticisms of the second quarter for Netflix was its lack of breakout content, and while that was a fair criticism of the quarter, CEO Reed Hastings reminded investors there is much more content coming in the back half of 2018 and even more in 2019 given the next few quarters are big content spending ones. We also have the benefit of pending price increases that should help with year over year revenue comparisons.

As we remain patient with NFLX shares over at Tematica Investing, the recent pullback in offers us an opportunity at Tematica Options+. To capitalize on that as well as the likely strength as we head into a seasonally stronger period for Netflix, I’m adding the Netflix (NFLX) December 2018 400.00 calls (NFLX181221C00400000)that closed last night at X to the Select List. As we do this, be sure to set a stop loss at 20.00, which is a little wider than we’ve been setting them of late but the duration on this position is also on the longer end of the spectrum.

 

Adding Dycom calls following positive 5G comments from Ericsson

Yesterday, leading mobile infrastructure company Ericsson (ERIC) reported its 2Q 2018 results, and while we are not involved in the shares, its comments on the 5G market bode very well for the shares of specialty contractor Dycom Industries (DY) and compound substrate company AXT Inc. (AXTI) as well as mobile infrastructure and wireless technology licensing company Nokia (NOK).

More specifically, Ericsson called out that its sales in North America for the quarter increased year over year due to “5G readiness” investments across all of its major customers. This confirms the commentary of the last few weeks as AT&T (T) and Verizon (VZ) – both of which are core Dycom customers – move toward commercial 5G deployments in the coming quarters.

While one could consider call option positions in AXT and Nokia, the former has very thin call option volume while Nokia’s customer mix is far more global in nature compared to Dycom’s US heaving business. For that reason as well as being in the middle of the seasonally strong period for construction activity as well as Ericsson calling out the North American 5G market, in particular, I’m opting to add the Dycom (DY) December 2018 110.00 calls (DY181221C00110000) that closed last night at X to the Select List. Again, given the time frame, we’re going to set a wider than usual initial stop loss at 3.00 for this position.

Signposts for this trade will include earnings results and 5G commentary on both spending and deployment from AT&T and Verizon both on Tuesday, July 24.

 

 

Housekeeping on AMC Network calls

After long last, it certainly looks like Disney (DIS) is poised to acquire 21st Century Fox (FOXA) although the Justice Department is looking to appeal the federal court ruling that paved the way for that transaction. I still suspect that means Comcast (CMCSA) will be on the acquisition hunt to bulk up against the post-acquisition Disney, and that is keeping the AMC Networks (AMCX) calls on the Select List.

I would share that it hasn’t gone unnoticed that trading activity in our AMCX calls has ground to a halt over the last few trading sessions across the board for September 2018 calls. While it could be the summer doldrums, the reality in any market is there needs to be a matching up of willing buyers to willing sellers and there has been an absence of that. I expect that to change as we near the company’s June quarter reporting date of Aug. 2. For now, let’s hold tight with the AMCX calls and we’ll revisit the situation based on that report and any other new media merger news.

 

WEEKLY ISSUE: Putting Some Defensive Calls in Play

WEEKLY ISSUE: Putting Some Defensive Calls in Play

Key Points From This Issue

 

Given the way the Fourth of July holiday falls this year, we strongly suspect the back of the week will be quieter than usual. For those reasons, we’re coming at you earlier than usual this week. And while we have your attention, Tematica will be dark next week as we recharge our batteries ahead of the 2Q 2018 earnings onslaught that kicks off on July 16.

 With the housekeeping stuff out of the way, let’s get to this week’s issue…

 

Putting some defensive calls in play ahead of earnings season

With trade, tariffs and uncertainty taking the pole position in investor conversation, which comes as no surprise given that more companies are sharing the negative impact that might result if these tariffs go through. I go through that in far greater detail in this week’s issue of Tematica Investing, which will be hitting your inboxes and the website later this morning.

The nutshell view is we are starting to see companies warn about the potential impact of these various tariffs and right so investors are growing increasingly uncertain about the expected rate of earnings growth to be had in the back half of 2018. With it looking like neither side is going to back down — Commerce Secretary Wilbur Ross told CNBC on Monday that there’s no level on the downside in the stock market that would alter the way President Donald Trump approaches trade – it looks like we are in for an earnings recasting lower that could make what seems like a moderately priced stock market that much more expensive.

To prepare ourselves, we’re going to add two positions to the Tematica Options+ Select List. The first one is a call option on the inverse ETF for the S&P 500 that is ProShares Short S&P500 (SH). Given the timing of the 2Q 2018 earnings season, I’m selecting the August 17 strike date, which will allow us to capture the majority of quarterly earnings reports. Based on the current share price for SH shares and my preference for out of the money calls, I’m utilizing a 30.00 strike price. In sum this means we are making the following trade:

The second trade is also a defensive one in nature, but it is also one that factors in the sweltering temperatures sweeping the country. The National Oceanic and Atmospheric Administration’s Climate Prediction Center has updated their July forecast and more heat is expected for the month ahead over most of the nation.  While some may see that as heading deeper into summer, the reality is many will be facing higher electric bills as they look to keep cool and that has me adding a Utilities SPDR ETF (XLU) call option play to the Select List.

Breaking down the selection process as I did above for the SH call trade, we’ll use the same strike date – August 17, 2018 – but given where XLU shares are trading it means selecting the 53.00 strike price. Putting it all together:

 

JPMorgan upsizes dividend and buyback program

Last week we added a call potion in JPMorgan Chase & Co. (JPM), the world’s biggest investment bank by revenue, ahead of the Fed’s annual “stress test” results for U.S.-bank holding companies. Last Thursday night, following the results of the Comprehensive Capital Analysis and Review (CCAR) that is part of the Fed’s annual financial “stress tests” JPMorgan announced it would boost its quarterly stock dividend to $0.80 per share from $0.56 cents and authorized gross common equity repurchases of up to $20.7 billion from July 1, 2018 to June 30, 2019. That dividend hike is in line with expectations for a 3.0% dividend yield at or near the current share price.

While the JPM calls have traded off with the market, we expect the company will deliver a favorable earnings report on July 13 as it discusses this latest move to return capital to its shareholders.

 

Sticking with our media call plays

Recently, Walt Disney (DIS) upped its bid for assets of Twenty-First Century Fox (FOXA) and last week the Department of Justice made its sign-off official on Disney’s $71.3 billion of those assets, which provides for the divestment of 22 Fox regional sports networks within 90 days after closing the deal. It was then announced Disney and Fox would each hold a special meeting on July 27 to hold a definitive shareholder proxy vote to approve the transaction.

I continue to think the bidding war is not yet finished, and while I see Fox’s assets offering many synergies with Disney, I will monitor how far Disney is willing to stretch to win the deal. Here’s the thing – if Disney wins the bid, it means Comcast (CMCSA) loses; if Comcast surprises with a new winning bid, it means Disney loses. Either way, the race to add content is on and it likely means additional M&A activity will soon be had. For that reason, we are keeping our AMC Networks (AMCX) and Discovery (DISCA) call options in play. I am, however, boosting our stop loss on the AMC Network call options to 2.00 from 1.25. In sum:

 

Procter & Gamble – Not innovating where it counts

Procter & Gamble – Not innovating where it counts

The votes are in … at least the preliminary ones, and they are indicating that activist investor Nelson Peltz lost his bid to win a board seat at Rise & Fall of the Middle-Class contender Procter & Gamble (PG).

As background, Peltz has been calling for further change at Procter, including streamlining its operations and bringing in outside talent. Resistant Procter management has countered, saying doing so would disrupt a turnaround that is already in process and that focuses on strengthening and streamlining the company’s category and brand portfolio. The thing is even in the company’s June 2017 quarter, its organic growth lagged behind underlying end-market growth and its presence in the increasingly consumer-favored online market was a paltry 5% of total sales for the quarter.

Following an expensive proxy fight over the last few months and with the vote ending rather close, it appears Peltz is not going to give in easily. According to reports, Peltz’s firm, Trian Fund Management, is waiting for the proxy vote tally to be certified and then plans to challenge the vote. All in all, this is a process that will extend the story that has taken over the potential fate of Procter & Gamble for at least several days more, if not a few weeks, as the final vote tally is certified.

To put it into investor language, the overhang that has been plaguing the shares over the last several weeks is set to continue a little longer. We’re also soon to face earnings that are likely to see some impact from the September hurricanes that put a crimp in consumer spending. Despite the initial post-hurricane bump to spending that benefitted building materials and auto sales during the month, overall September Retail Sales missed expectations. And before we leave that report, once again the data showed that digital commerce continued to take consumer wallet share as it grew 9.2% year over year vs. overall September Retail Sales excluding food services that rose 4.6% compared to year-ago levels.

Let’s also keep in mind the upward move in oil prices of late, which led to a 5.8% month over month increase and an 11.4% year over year increase in gasoline stations sales in September. That same tick up in oil prices does not help P&G given that one of its key cost items is “certain oil-derived materials.”

This has me cautious on PG shares in the near term, especially with the shares just shy of 23x consensus 2017 expectations vs. the peak P/E valuation over the last several years ranging between 22x-24x. To me, this says a lot of positive expectations have been priced into the shares already, much like we have seen with the overall market over the last several weeks. As we saw this week, even after delivering better than expected bottom line results, shares of Domino’s Pizza (DPZ), Citigroup (C) and JPMorgan Chase (JPM) traded off because the results weren’t “good enough” or there were details in the quarter that raised concerns. We continue to think the upcoming earnings season is bound to add gravity back into the equation and could see expectations reset lower.

Here’s the thing: I think P&G has a bigger issue to contend with. I’ve been thinking about this comment made during the June 2017 quarterly earnings call by Proctor & Gamble’s CEO David Taylor:

“We’re working to accelerate organic sales growth by strengthening and extending the advantages we’ve created with our products and packages, improving the execution of our consumer communication and on-shelf and online presence, and ensuring our brands offer superior consumer value in each price tier we choose to compete.” 

There was the talk of innovation, but it centered on packaging innovation and product innovation of yore, but little on new product innovation. There was also much talk over advertising prowess, but as someone who has watched many a Budweiser (BUD) commercial and chuckled as I drank another adult beverage, I can tell you advertising can only cover for a lack of product innovation for so long.

I’m a bigger fan of companies that are innovating and disrupting like Amazon (AMZN) and Universal Display (OLED) — both of which are the Tematica Investing Select List. In my book, packaging is nice to have on the innovation front but isn’t always needed. Perhaps this lack of innovation and disruptive thought explains why the company has been vulnerable to the Dollar Shave Club as well as Harry’s Razors, both of which have embraced digital commerce as well as cheaper-by-comparison subscription business models while also expanding their product offerings.

If that’s the kind of transformation Nelson Peltz is talking about, that is something to consider. And yes, I get my razors from Dollar Shave Club, not P&G.

Post IPO Thoughts on Snap Shares and the $34.7 Billion Market Cap Question

Post IPO Thoughts on Snap Shares and the $34.7 Billion Market Cap Question

Last Thursday, March 2, shares of Snapchat parent Snap Inc. (SNAP) went public at $17, well above the $14-$16 initial public offering range. The shares hit a high of $29.44 on Friday morning before closing the week out at $27.09. That quick gain of just under 60 percent was great for investors that were involved with the IPO, but it wasn’t quite the same for investors that entered into SNAP shares after the shares started trading on Thursday morning.

With SNAP shares now trading in the secondary market and the buildup of the IPO now behind us, the question to us is are SNAP shares really worth the current $34.7 billion in market capitalization? At that market valuation, the shares are trading at about 37 times EMarketer’s estimate for Snap’s 2017 advertising sales. As spelled to out in the S-1 filing, Snap’s Snapchat is free and the company generates revenue “primarily through advertising,” the same was true of Facebook (FB) and Twitter (TWTR).

Actually, that’s not THE question, but rather one of the key questions as we contemplate if there is enough upside to be had in SNAP shares from current levels to warrant a Buy rating? Odds are the IPO underwriters, which include Morgan Stanley (MS), Goldman Sachs (GS), JPMorgan Chase (JPM), and Deutsche Bank (DB), that made a reported $85 million in fees from the transaction, will have some favorable research comments on SNAP shares in the coming weeks.

While SNAP shares fit within the confines of our Connected Society investing theme and are likely to benefit from the shift in advertising dollars to digital and social media platforms like Facebook and Alphabet’s (GOOGL) Google and YouTube, our charge is to question using our thematic 20/20 foresight to see if enough upside in the shares exists to warrant placing them on the Tematica Select List?

Boiling this down, it all comes down to growth

The question when looking at Snap is, “Can it grow its revenue fast enough and deliver positive earnings per share so we can see at least 20 percent upside in the shares?”

Well, right off the bat the company’s user base of 158 million active daily users was relatively flat in the December quarter and grew just 7 percent between 2Q 2016 and 3Q 2016.  Assuming the company is able to continue to grow its user base, something that has eluded Twitter for the most part, it will still need to capture a disproportionate amount of the mobile advertising market to hit Goldman Sach’s forest that calls for Snap to increase its revenue fivefold by 2018.

Snap recorded $404.5 million in revenue last year, up from $58.7 million in 2015, so a fivefold increase would put 2018 revenue at more than $2 billion. IDC projects that mobile advertising spend will grow nearly 3x from $66 billion in 2016 to $196 billion in 2020, while non-mobile advertising spend will decrease by approximately $15 billion during the same time period.

While a fivefold increase in revenue catches our investing ears, we have to question Snap’s ability to garner such an outsized piece of the mobile advertising market when going head to head with Facebook and its several platforms, Google, Twitter and others. The argument that a rising tide will lift all boats will only go so far when all of those boats are vying for the same position in the monetization river.

There are other reasons to be skeptical, including users migrating to newer social media platforms or ones that have been updated like Facebook’s Instagram that launched Stories to better compete with Snapchat. Snap called this out as a competitive concern in its S-1 filing — “For example, Instagram, a subsidiary of Facebook, recently introduced a “stories” feature that largely mimics our Stories feature and may be directly competitive.” With good reason, because as Instagram Stories reached 150 million daily users in the back half of 2016, Snapchat’s growth in average daily user count slowed substantially. Part of that could be due to Snap’s reliance on the teen demographic, which even the company has noted is not “brand loyal.” We’re not sure anyone has figured out how to model teen fickleness in multi-year revenue forecasts.

 

Making things a tad more complicated is the recent push back on digital advertising by Proctor & Gamble’s (PG) Chief Marketer Marc Pritchard, who publicly expressed his misgivings with today’s digital media practices and, “called on the media buying and selling industry to become transparent in the face of ‘crappy advertising accompanied by even crappier viewing experiences.'” As Pritchard made those and other comments, a survey from the World Federation of Advertisers showed that large brands are reviewing contracts related to almost $3 billion of advertising spend on programmatic advertising, which automates digital ad placement. The question to be answered is whether ads are actually seen and this has led to a call for companies like Snap to follow Facebook, YouTube and have Snapchat’s ad metrics audited by the Media Rating Council.

 

One other wrinkle in the Snap investing story is the company has yet to turn a profit.

In 2016, while Snap’s revenue was just over $400 million, it managed to generate a loss off $514.6 million and per the S-1 it will need to spend a significant amount to attract new users and fend off competition. In reading that, the concern is user growth could be far slower — and expensive — than analysts are forecasting, which would impact advertising revenue growth like we’ve seen at Twitter. The thing is, new user growth for Snapchat already slowed in the back half of 2016 as newer messaging apps like Charge, Confide and Whisper have come to market.

When Snap finally does turn a profit, we could see the outsized P/E ratio lead value and growth at a reasonable price (GARP) investors to balk at buying the shares, which means Snap will be relying on growth investors. It amazes us how some investors love companies even though they are not generating positive net income, but balk at P/E ratio that is too high the minute they start to generate positive albeit rather small earnings per share. We get around that problem by using a multi-pronged valuation approach to determine upside and downside price targets.

 

Is Snap the Next GoPro?

While all those numbers and forecasts are important to one’s investment decision making process (we make that point clear in Cocktail Investing: Distilling Everyday Noise into Clear Investment Signals for Better Returns), we have a more primal issue with Snap. Back in late 2015, we shared our view that GoPro (GPRO) was really a feature, not a product. As we said at the time, we saw Yelp (YELP), Angie’s List (ANGI), Groupon (GRPN) and others as features that over time will be incorporated into other products — like Facebook’s Professional Services, those at Amazon (AMZN) or others from Alphabet’s Google, much the way point-and-shoot cameras were overtaken by camera-enabled smartphones and personal information management functions were first incorporated into mobile phones and later smartphones, obviating the need for the original Palm Pilot and other pocket organizers.

When GoPro shares debuted in June 2014, they were a strong performer over the following months until they peaked near $87, but 15 months after going public GPRO shares fell through the IPO price and have remained underwater ever since.

What happened?

We recall hearing plans for a video network of user channels at GoPro as well as the management team touting the company as an “end to end storytelling solution,” but over the last few quarters, we’ve heard far more about new product issues, layoffs, facility closures and falling unit sales.  In 2016, GoPro saw camera unit sell-through fall 12 percent year-over-year to 5.3 million units from approximately 6 million units in 2015.

In our view, what happened can be summed up rather easily — GoPro was and is a feature, not a standalone product. It just took the stock market some time to figure it out once the IPO blitz and glory subsided. While we could be wrong, we have a strong suspicion that Snap is more likely to resemble GoPro than Facebook, which is monetizing multiple platforms as it extends its presence with new solutions deeper into the lives of its users and has changed the way people communicate.

As investors, we at Tematica would much rather own innovators of new products and solutions that are addressing pain points or benefitting from disruptive forces and changing economics, demographics, and psychographics in the marketplace than companies that offer features that will soon be co-opted by other companies and their products. Following that focus on 20/20 foresight, we avoided GoPro shares that fell from $19.50 in December 2015 to the recent share price of $8.84.

GoPro 2-year Share Price Performance

 

And then there’s this . . . 

There is another consideration which is not specific to Snap, but is rather an issue that all newly public companies must contend with — the lock-up expiration. For those unfamiliar with it, the lock-up period is a contractual restriction that prevents insiders who are holding a company’s stock, before it goes public, from selling the stock for a period usually between 90 to 180 days after the company goes public. Per Snap’s S-1, its lock-up expiration is 150 days, which puts it in 3Q 2017. Given the potential that insider selling could hit the shares, and be potentially disruptive to the share price, we tend to wait until the lock-up expiration comes and goes before putting the shares under the full Tematica telescope. This isn’t specific to Snap shares, but rather it’s one of our rules of thumb.

We have a strong suspicion that Snap is more likely to resemble GoPro than Facebook, but we’ll keep an open mind during the SNAP shares lock-up period, after all, companies are living entities that can move forward and backward depending on the market environment and leadership team. Let’s remember too that it took Facebook some time to figure out mobile.

Finally, we aren’t so thrilled that none of the 200 million shares floated came with voting rights, leaving the two founders Evan Spiegel and Robert Murphy with total control of the company. We prefer seeing more direct shareholder accountability… but hey, that’s us.

 

First disappointing May auto sales, now Jamie Dimon sounds the alarm on auto loans 

First disappointing May auto sales, now Jamie Dimon sounds the alarm on auto loans 

While some see a booming auto market, there are reasons to be concerned as subprime loan volumes mount. Yes, those two dirty words are once again back in vogue, kicking up memories of the housing crisis and giving rise to thought the automotive market could be over inflated at best and at worst preparing for a pop. Following May sales declines at  Ford, GM, Volkswagen of America, Honda, Toyota and Nissan, Dimon’s comments are likely to question the vector and velocity of the domestic automotive market in the coming quarters.

 

Auto-loan balances surpassed $1 trillion in the first quarter, a record, growing 11% from the year-earlier period, according to credit reporting firm Experian. That is fueled by the growth in car sales in recent years as well as loosening underwriting standards that also have made it easier for subprime borrowers to get financing.

The volume of car loans held by subprime consumers increased by 11%, outpacing the 9% increase for prime customers, according to Experian.

“Auto is clearly a little stretched, in my opinion,” the JPMorgan Chase CEO said Thursday morning, speaking at the AllianceBernstein Strategic Decisions Conference in New York. “Someone is going to get hurt. … We don’t do much of that.”

Source: Jamie Dimon just sounded the alarm on auto loans