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Blue Chip

Elon Musk will pay Tesla’s fine out-of-pocket!

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Elon Musk is a standup guy… because he plans to right his wrongs by purchasing $20 million of Tesla stock with his own money to cover the penalty for his tweets. The CEO agreed to pay $20 million to settle a federal lawsuit stemming from tweets about taking the company private. As part of the agreement, Musk also must vacate his potion as chairman of the company.

 

This is unusual… but really, that is what we have come to expect from Elon Musk. It is rare for an executive to buy shares of their own company with their own money, to say the least. Musk will purchase the shares directly from Tesla (rather than the open market) so that the money will go to the company.

 

The company hasn’t said… that Musk is paying the fine with his purchase – but we’ll say it – he is paying the fine with his own money. The investment is relatively small, increasing Musk’s stake by 0.2% – but hey, it’s a nice gesture.

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Blue Chip

Good news for at least one airline

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High oil prices and lousy weather… were no problem for Delta Air Lines. Much to everyone’s delight, the airline overcame these obstacles by hiking fares. And, somehow, the company managed to sell more seats on its plane in the third quarter.

 

But can you blame them… because airline fuel cost the airline $655 million more compared to the same quarter last year. Fuel prices were up 37% and to add to that, Hurricane Florence cost the company another $30 million. Despite these obstacles, Delta’s profit was up $127 million for the quarter.

 

The details on how they did it… passengers paid an average of 4% more to fly per mile. The increase alone gave sales an $892 million bump which more than covered the fuel costs. Delta is the first airline to report its third-quarter earnings, and the result is a good one for investors (but not so much for passengers).

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Blue Chip

eBay is taking Amazon to court!

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If you can’t beat ‘em… you should sue ‘em. eBay is filing a lawsuit against Amazon alleging that the company fraudulently led high-value sellers away by using an internal messaging system called M2M. eBay also stated the Amazon is “unwilling to fairly compete for third-party seller business.” In a nutshell, Amazon is [allegedly] a big cheater!!

 

Here’s how they got caught… eBay monitors its messaging system for unauthorized use. However, eBay only caught Amazon a few weeks ago when a seller informed the company about the Amazon reps. From there, eBay discovered messages from a “large number” of Amazon representatives.

 

eBay also emphasized… that their company is a “pure open marketplace” that doesn’t compete against its sellers. Amazon can’t claim the same thing because they make their own products that compete directly with other sellers; but something is making customers switch over to the dark side. Maybe it’s the two-day shipping?

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Blue Chip

A GREAT day for the stock market – here’s what happened

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Corporate America to the rescue… the Dow closed up 2.2% on Tuesday on the back of big corporate profits from some of the most prominent companies. Yesterday represents the best day for the Dow since March. And, quick to forgive, investors were back on the Amazon, Facebook, and Netflix bandwagon after dropping the stocks like a hot potato last week!

 

Last week took an L…, but today we bounce back (after last week’s mini-crash). Last week, the Dow, S&P 500, and Nasdaq all had their worst week since March (yes, the same month the market had its best day). However, despite the solid rebound, all three indexes are down for the month.

 

Yesterday’s issues… are slightly better today. Treasury rates have gone from 3.25% to 3.15% which has calmed investors down a bit. Remember – treasury rates move in the opposite direction of stock prices. Let’s hope the bull keeps charging forward!

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Blue Chip

Netflix is still the streaming K-I-N-G

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The results are in… and they are quite good. Netflix gained close to 7 million new subscribers last quarter which is 2 million more than expected. With the latest results, Netflix now has more than 137 million subscribers worldwide. And with the subscriber growth came a 14% price hike in the company’s stock (hopefully you didn’t sell last week).

 

Netflix has the last laugh… because the stock plummeted with last quarters subscriber results…and then again, last week, with the rest of the tech stocks. CEO Reed Hastings chalked the second quarter up to “forecasting issues.” Also, in the future, the streaming giant plans to only account for those who pay for their Netflix account – not you ‘free trial’ freeloaders.

 

Another big plus… is that 6 million of the total new subscribers were from overseas. So what’s next? Well, the company plans to keep investing heavily in original content – somewhere between $8-13 billion in 2018. Netflix is hoping the massive cash investment will pay dividends in the future.

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Blue Chip

Can Netflix be redeemed!?

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Let’s face it… Netflix didn’t produce last quarter – and they got crushed because of it. In case you forgot, Netflix reported 1 million fewer subscribers than expected in the second quarter. However, the company did manage to add 5.2 million subscribers in total. But that wasn’t enough for investors and the stock plummeted.

 

The stock is still down… 20% compared to before the “bad” subscriber growth results. But now, Netflix can make amends with investors upon third quarter earnings which will be released today. Analysts are expecting just under 5 million new subscribers – but most of those subscribers are expected to come from outside the United States. And for Netflix, having a global audience would be huge.

 

The results better be good… because streaming media is gaining new competitors by the second! Hulu, Amazon, AT&T, Walmart, and Disney all have streaming services one way or another. This influx of competition means that Netflix better keep coming with original content – and with great original content comes great subscribers…

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Blue Chip

Co-founder of Microsoft, Paul Allen, dies at 65

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We usually talk business… but today, it’s important we note an incredibly impactful man’s death. Paul Allen, the co-founder of Microsoft, died Monday at the age of 65. Allen founded Microsoft with Bill Gates all the way back in 1975; however, Allen left the company in 1982 after being diagnosed with Hodgkin’s disease.

 

But he didn’t stop there… because Allen continued on Microsoft’s board of directors and even went on to establish his own philanthropic foundation. From there, he founded the investment firm, Vulcan. Allen also purchased two professional sports teams: the Portland Trail Blazers and the Seattle Seahawks.

 

Everything around today… probably wouldn’t have been possible without the help of Paul Allen. Allen was a great businessman, influencer, and a role model for many. So today, we honor and thank an impressive man for all of his achievements!

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Blue Chip

Tech billionaires are arguing about the homeless

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And they are… Salesforce CEO Marc Benioff and Twitter and Square CEO Jack Dorsey. The two are in a contentious debate about how to help the homeless in San Francisco – evidenced by one another’s tweets. So, we’ll lay out both POVs and let you decide who is right…

 

Benioff wants to see companies… raise money to help the homeless. The Salesforce CEO is even spending money to promote ballot Proposition C, a tax of around 0.5% on businesses gross receipts above $50 million per year. The proposed tax would raise up to $300 million annually which would contribute to housing, mental health treatment, and shelter beds. And to put that figure in perspective, $300 million is double what the city currently spends on homelessness.

 

Jack Dorsey wants to see the mayor… figure out how to deal with homeless people. The mayor is also against the proposition – basically saying that throwing money at the problem won’t help. Thus, Dorsey is not a heartless sociopath; he thinks there are better ways to solve the problem. What do you think about homelessness in San Francisco?

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Blue Chip

A BIG opportunity for retailers…

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There is a $21 billion industry… that has mostly been ignored in years past. That industry is plus-sized women’s clothing, and it is here to stay! In fact, over half of the women in the United States between the ages of 18 and 65 wear a size 14 or higher.

 

Interestingly enough… “plus size” clothing makes up just one-fifth of women’s overall clothing sales. Retailers have realized this opportunity and are racing to capture these customers and meet the demand. For years, various brands, fashion designers, and retailers have all neglected the market – not just plus-size in general, but trendy plus-size clothing.

 

Walmart has already… purchased a plus-size clothing brand called Eloquii last week. The company has also launched Terra & Sky, its private label plus size brand and bought Modcloth who also sells extended sizes. Yes – what was once a niche is becoming the norm – and retailers are taking notice.

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Blue Chip

The USPS wants to start raking in the dough

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This is a big deal… because the US Postal Service (USPS) has proposed the biggest price increase on stamps in its history. So actually, this is only a big deal if you like to pretend you’re living in the 1800s and still send letters through the mail. Just kidding – it is important for other reasons (you know we wouldn’t waste your time).

 

The price increases… will hopefully provide the agency revenue and keep USPS competitive within the industry. You will also see more costly Priority Mail packages, which are expected to increase by around 5.9%. And they aren’t just hiking prices for the hell of it – USPS is required to pre-fund the cost of retiree health benefits which has put quite a dent in the agencies wallet.

 

And a mailing industry update… we are seeing letters being replaced by e-mail and online advertisements. Revenue from first-class mail has dropped from $28.4B in 2015 to $25.6B in 2017. On the other hand, package revenues are up $4.5B from 2015 to 2017. Meh, we’ll take the good with the bad.

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