Displaying items by tag: Amazon

Friday, 14 September 2018 09:17

The Big Regulatory Push Against Tech Has Begun

(San Francisco)

The market has periodically started to worry about the regulation of the tech industry. For a while that felt a bit premature, but given recent events, it is starting to feel more real. For instance, the FTC has just begun a marathon of hearings, which will run through November, into the state of competition and consumer protection in the digital economy. The hearings are about more than tech though, as they are fundamentally about inequality and worker’s rights across the whole of the economy. The head of the FTC said “In my view, basing antitrust policy and enforcement decisions on an ideological viewpoint (from either the left or the right) is a mistake”.

FINSUM: These hearings seem like the first stage of what might prove to be big changes for anti-trust policy in the US. If changes do happen, we believe they will be much more far-reaching than just for tech.

Published in Eq: Tech
Monday, 10 September 2018 09:54

Retail is in Trouble Again

(New York)

Retail stocks have had a very good run over the last year. The first half of 2017 was about as bleak as it could get for retail, which is in the midst of a major disruption caused by ecommerce. However, stocks posed a big rebound over the last twelve months on the back of consumer spending and tightened business models. However, the sector might be set for more trouble as Wall Street analysts have just downgraded about 60% of the S&P’s retail index, giving profit warnings despite good consumer spending. One analyst summed it up this way, saying “The pendulum swung too far: retail never died, but it’s likely not as healthy as people think, either … After a very strong first half, it would seem management teams feel the need to reset the bar, to bring hype back to reality”.

FINSUM: The truth is that the disruption of the industry is far from over and there is likely to be a lot more turmoil, perhaps especially in the next recession, when price competition gets even more fierce.

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

The Regulatory Crackdown on Tech Starts Now


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
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