Friday, 07 September 2018 09:57

Apple’s Got a Big New Plan

(San Francisco)

Apple is reported to be set unveil some big changes in the coming weeks. In what many see as Apple’s third phase, the company is set to release brand new iPads and watches. If personal computing was phase one, and iPhones were phase two, then phase 3 will be wearables, say analysts. The company has seen sales in those divisions soar recently, and they have slowly stolen wallet share from the iPad’s sales. Accordingly, Apple is putting more resources into wearables, but also debuting a new iPad and trying to redefine its purpose for customers.


FINSUM: The iPad has slowly been shrinking from the limelight at the same time as the Apple Watch and Beats have steadily grown. It is hard for us to imagine that either category will be Apple’s main sales driver in the future.

Published in Eq: Large Cap
Tuesday, 04 September 2018 10:34

The Regulatory Crackdown on Tech Starts Now

(Washington)

Investors in tech have reason to worry. Not only is Trump saying that they should possibly be subjected to anti-trust regulation, but the tech sector is heading to Washington today to meet with the Senate. Top executives at Facebook, Google, and Twitter, are set to face questions and scrutiny about their practices, including on trust concerns, political content, and consumer privacy. The tide of public opinion has turned against tech over the last year, and congress has followed suit, with Senate GOP leader Orrin Hatch calling Google’s anti-trust behavior “disquieting” despite the fact that he used to staunchly defend the sector.


FINSUM: The big problem for tech is that a regulatory crackdown now seems to have bipartisan support. We think there will be some regulations imposed on tech, but the depth of the forthcoming rules will be the deciding factor. In other words, will it be something along the lines of GDPR (relatively light) or more like Glass-Steagal?

Published in Eq: Tech
Tuesday, 04 September 2018 10:28

Tech Stocks to Win Big in Sector Shakeup

(New York)

The long-awaited (long-feared?) shake up of the S&P 500’s sectors will occur soon, and there is a lot of focus on how the tech sector, as traditionally defined, will change. Google and Facebook will be making the switch out of tech and into the new communications services sector. Netflix, as well as Walt Disney, Ford, and Nike will be joining them. There is some fear about the volatility that will be caused as big index trackers have to change their holdings on September 21st. Overall though, it seems like tech stocks (as traditionally thought of) will be winners, as having them distributed across multiple sectors will avoid the sector-weight limits many asset managers face.


FINSUM: Tech stocks will likely do well, but so will the companies getting grouped with them. As one analyst pointed out, AT&T and Verizon joining Google and Facebook is kind of liking outsiders getting invited to the cool kids’ party, which may help their share prices.

Published in Eq: Large Cap
Wednesday, 29 August 2018 08:49

Short Bets on Tech are Surging

(San Francisco)

Faangs and the tech sector more generally have had a tumultuous year. There have been a lot of fears over regulation, valuation, and data breaches. Yet, on the whole, the performance has been strong. However, many investors are now turning against the faangs in a big way, as short bets against it have soared recently. There is now a $37 bn short position against the group of companies, up 40% in the past year. Amazon is the most shorted single stock, with around $10 bn of short interest against it. Faangs have accounted for almost half of the Nasdaq’s rally above 8,000.


FINSUM: The short interest is understandable given the lofty valuations, but the issue is that the underlying businesses look quite strong, which makes us doubtful there is going to be a coordinated faang crash of any grave magnitude.

Published in Eq: Large Cap
Tuesday, 21 August 2018 09:18

Big Risks Lurk in Apple’s Stock

(San Francisco)

Apple just crossed the trillion Dollar threshold. Shares have been rising, up over 27% this year, on strong sales figures. Everything seems good, right? Think again, says Barron’s, as it believes the stock could be in for a “clobbering”. The reason why is that Apple’s recent success with the iPhone X may have weakened its prospects for 2019. Because there is a longer and longer timeline between phones that have the dazzle to get customers to actually trade up, currently good iPhone X sales may be sapping demand for 2019, meaning the next few quarter’s earnings might be quite disappointing.


FINSUM: This makes sense to us. Customers only have so much wallet share for smart phones, and the iPhone X took a lot of that this year, which means the next several quarters could be lean.

Published in Eq: Large Cap
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