When listening to the Q112 earnings call this week for Pandora Media (P), it really struck me that this company was mostly built on the old business model. Sure, companies such as Pandora, Angie's List (ANGI), and Yelp (YELP) have new relevant services, but none of them have veered much from the labor intensive model of hiring local sales reps to find advertisers.
The Pandora earnings call had one very shocking number. The company had hired 79% more sales reps than last year. Sure, the company told a great sales story of how a local car dealership found advertising on its services more compelling than terrestrial music channels since the ads could be more targeted. When, though, will these companies attract advertisers without a sales rep and large marketing budgets?
Developing a business model attracting a bunch of costly users is nice, but how about attracting paying subscribers? Sure Pandora may attract millions of users, but the real issue for media companies, including even Facebook (FB) and Twitter, is that competition for advertiser dollars is fierce.
Read the full article at Seeking Alpha.
Disclosure: No positions mentioned. Please review the disclaimer page for more details.
Monday, May 28, 2012
Friday, May 25, 2012
Consumer Sentiment Jumps To October 2007 Levels
The Thomson Reuters/University of Michigan final index of sentiment climbed to 79.3, the ninth straight increase, from 76.4 the prior month. The gauge was projected to hold at the preliminary reading of 77.8.
The ninth straight increase is a record. Interesting as it shows that Americans are finally moving past the European crisis. Cheaper gas and a better housing market is helping pull the American consumer forward while the downside risk in Europe is apparently wanning in the mind of consumers.
Even more interesting was news that German consumer confidence is expected to hold steady and France confidence increased in May to the highest levels since Nov 2010.
So does this mean the feared markets collapse in 2012 won't be a reality? Has the market got it wrong that a repeat of 2010 and 2011 is on the way? The market has a way of disappointing when everybody thinks one way. Three years in a row would be too much of a pattern.
Details from Bloomberg:
Disclosure: No positions mentioned. Please review the disclaimer page for more details.
The ninth straight increase is a record. Interesting as it shows that Americans are finally moving past the European crisis. Cheaper gas and a better housing market is helping pull the American consumer forward while the downside risk in Europe is apparently wanning in the mind of consumers.
Even more interesting was news that German consumer confidence is expected to hold steady and France confidence increased in May to the highest levels since Nov 2010.
So does this mean the feared markets collapse in 2012 won't be a reality? Has the market got it wrong that a repeat of 2010 and 2011 is on the way? The market has a way of disappointing when everybody thinks one way. Three years in a row would be too much of a pattern.
Details from Bloomberg:
- Estimates for the confidence measure ranged from 76 to 79, according to the Bloomberg survey of 60 economists. The index averaged 64.2 during the last recession and 89 in the five years before the 18-month economic slump that ended in June 2009
- German consumer confidence will be steady in June, according to GfK SE. The group's consumer-sentiment index will hold at 5.7 next month, the Nuremberg-based market research company said today.
- A separate report showed confidence in France increased in May to the highest since November 2010.
- The Michigan survey's index of current conditions, which reflects Americans' perceptions of their financial situation and whether they consider it a good time to buy big-ticket items like cars, rose to 87.2, the strongest since January 2008, from 82.9 the prior month.
- The index of consumer expectations six months from now, which more closely projects the direction of consumer spending, increased to 74.3, the highest since July 2007, from 72.3 in April.
Disclosure: No positions mentioned. Please review the disclaimer page for more details.
Thursday, May 24, 2012
Jefferies Proclaims XPO Logistics A Potentail Four Bagger
Having never heard of XPO Logistics (XPO), this proclamation from Jefferies (JEF) certainly caught our attention. It is very rare for an analyst to step out on a limb and make such a announcement. Whether realistic or not analysts very rarely provide price targets meaningfully above or below the current price.
In all fairness, Jefferies was a joint manager on a recent secondary in March that raised $137M. Maybe their report should just be written off considering the connection.
Founded in 1989, XPO Logistics, Inc. is a non-asset based, third-party logistics provider of freight transportation services that uses a network of relationships with ground, sea and air carriers to find the best transportation solutions for its customers. The company offers its services through three distinct business units: expedited transportation (Express-1, Inc.); freight forwarding (Concert Group Logistics, Inc.); and freight brokerage. XPO Logistics serves more than 4,000 retail, commercial, manufacturing and industrial customers through seven U.S. operations centers and 23 agent locations.
What is fueling this call is that XPO is on an aggressiv growth plan that could increase the revenue base to over $2B from the recent $44M quarter in just a few short years. Is this realistic and will it even create value remains the big question?
Not being a logistics expert or even having random knowledge of the industry makes this call tough to follow.
In the Q112 earnings report, the CEO proclaimed that he expected XPO to exit the year at a $500M runrate. That is a very aggressive growth rate from the expected revenue of $289M for the whole year. Analysts expect $750M for 2013.
The company plans numerous acquisitions to achieve that target so clearly execution risk is very high. This strategy can really work in very fragmented industries. Whether or not this company will be successful might be worth keeping an eye out to track performance.
The interesting part is plans to scale up the recent acquisition of Continental Freight Services in South Carolina. If the company can take a sleepy old business and add capacity and upgraded systems and turn a $20M operation into a $50M one, then maybe this business plan has some teeth.
For now though, we'll just be watching from a save distance. The stock has already had a major run since the October lows. Today's action shows a potential breakout if it can follow through to new highs.
Disclosure: No positions mentioned. Please review the disclaimer page for more details.
In all fairness, Jefferies was a joint manager on a recent secondary in March that raised $137M. Maybe their report should just be written off considering the connection.
Founded in 1989, XPO Logistics, Inc. is a non-asset based, third-party logistics provider of freight transportation services that uses a network of relationships with ground, sea and air carriers to find the best transportation solutions for its customers. The company offers its services through three distinct business units: expedited transportation (Express-1, Inc.); freight forwarding (Concert Group Logistics, Inc.); and freight brokerage. XPO Logistics serves more than 4,000 retail, commercial, manufacturing and industrial customers through seven U.S. operations centers and 23 agent locations.
What is fueling this call is that XPO is on an aggressiv growth plan that could increase the revenue base to over $2B from the recent $44M quarter in just a few short years. Is this realistic and will it even create value remains the big question?
Not being a logistics expert or even having random knowledge of the industry makes this call tough to follow.
In the Q112 earnings report, the CEO proclaimed that he expected XPO to exit the year at a $500M runrate. That is a very aggressive growth rate from the expected revenue of $289M for the whole year. Analysts expect $750M for 2013.
The company plans numerous acquisitions to achieve that target so clearly execution risk is very high. This strategy can really work in very fragmented industries. Whether or not this company will be successful might be worth keeping an eye out to track performance.
The interesting part is plans to scale up the recent acquisition of Continental Freight Services in South Carolina. If the company can take a sleepy old business and add capacity and upgraded systems and turn a $20M operation into a $50M one, then maybe this business plan has some teeth.
For now though, we'll just be watching from a save distance. The stock has already had a major run since the October lows. Today's action shows a potential breakout if it can follow through to new highs.
Disclosure: No positions mentioned. Please review the disclaimer page for more details.
Wednesday, May 23, 2012
Monetizing Mobile Ads
Ever since Facebook (FB) filed in a S-1 prior to the IPO that it was struggling to monetize mobile ads, the sector has been crushed. Both mobile ad network Millennial Media (MM) and mobile ad agency Velti (VELT) were absolutely crushed.
According to the Millennial Media CEO appearing on CNBC yesterday, mobile is monetizing just fine. The selloff was clearly over done and another example of a hot IPO that can be scalped in the after market at favorable prices for investors willing to be patient. Those chasing the initial nearly 100% surge were hammered.
Not much to tell from the chart so far, but a potential bottom occurred last week.
Disclosure: Long VELT. Please review the disclaimer page for more details.
According to the Millennial Media CEO appearing on CNBC yesterday, mobile is monetizing just fine. The selloff was clearly over done and another example of a hot IPO that can be scalped in the after market at favorable prices for investors willing to be patient. Those chasing the initial nearly 100% surge were hammered.
Not much to tell from the chart so far, but a potential bottom occurred last week.
Disclosure: Long VELT. Please review the disclaimer page for more details.
Elon Musk On Bloomberg
Great interview from Bloomberg with Elon Musk. Musk was a co-founder of PayPal and the CEO of SpaceX and Tesla Motors (TSLA). He has done some incredible stuff by developing an electric vehicle manufacturer and a space company.
Unfortunately as anybody following this blog probably knows we're just not fans of investing in a company such as Tesla that has a part time CEO. Even a CEO as talented as Musk.
Anybody paying attention probably knows that SpaceX recently launched the first private spaceship headed to dock with the International Space Station. An incredible feat considering the difficulty and expense that NASA had run into in the last decade. The more incredible stat that I read was that SpaceX has spent less money to develop a spaceship than the $1B Facebook (FB) spent on Instagram. Now isn't that a sign of the times!
Below is good interview from Bloomberg discussing the recent launch and the plans for Tesla. The interesting statement was the odds of station docking at only 60-70%.
Exactly how fast were they going in that Roadster? lol
Disclosure: Previously short TSLA, but currently no position. Please review the disclaimer page for more details.
Unfortunately as anybody following this blog probably knows we're just not fans of investing in a company such as Tesla that has a part time CEO. Even a CEO as talented as Musk.
Anybody paying attention probably knows that SpaceX recently launched the first private spaceship headed to dock with the International Space Station. An incredible feat considering the difficulty and expense that NASA had run into in the last decade. The more incredible stat that I read was that SpaceX has spent less money to develop a spaceship than the $1B Facebook (FB) spent on Instagram. Now isn't that a sign of the times!
Below is good interview from Bloomberg discussing the recent launch and the plans for Tesla. The interesting statement was the odds of station docking at only 60-70%.
Exactly how fast were they going in that Roadster? lol
Disclosure: Previously short TSLA, but currently no position. Please review the disclaimer page for more details.
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