Investors Just Don’t Understand
Now, this is a story all about how Big Tech got flipped, turned upside down. And I’d like to take a minute, just sit right down; I’ll tell you how Andy Jassy became the prince of Amazon (Nasdaq: AMZN).
Unless you live under a rock, you probably already know that Jazzy Jeff Bezos is stepping down as Amazon’s CEO.
Apparently, Bezos is off to do his best Elon Musk impression by focusing on his private space company, Blue Origin. Haven’t heard of Blue Origin? Neither has anyone else. Good luck, Jeff; you’ve got your work cut out for you.
Anywho … replacing Bezos at Amazon’s helm is the equally jazzy Andy Jassy. It’s like jazzy, but with more disco and jazz hands … he’s Jassy!
Naturally, the crowning of a new king of the jungle has Amazonians restless. But there’s no need to resort to benzos for Bezos’ exit. Jassy is the head of Amazon Web Services (AWS) — you know, the Amazon division with revenue growing like weeds in your flower garden?
Speaking of revenue, Jassy’s Amazon ascension overshadowed the company’s best quarter ever. Period.
Revenue topped $100 billion in the fourth quarter for the first time, coming in at $125.56 billion. Earnings spiked to $14.09 per share, nearly doubling Wall Street’s expectations for $7.23.
As for Jassy’s AWS division? Cloud services revenue spiked 28% to $12.7 billion. Remember, AWS is battling Microsoft for cloud supremacy, so 28% growth in this competitive field is remarkable. I think Amazon is in good hands going forward.
Looking ahead, Amazon foresees a slowdown from the fourth quarter — which is expected, given that the pandemic is starting to abate … and that the fourth quarter included the holiday shopping season.
Despite that slowdown, Amazon still expects sales growth of between 33% and 40% year over year in the first quarter. That’s a “slowdown” any company would be thrilled to have.
That said, investors apparently just don’t understand. AMZN shares stagnated today, dipping into the red. Even a price target hike from Susquehanna from $4,000 to $5,200 couldn’t make AMZN’s price action jazzy.
Now, I’ve always maintained that AMZN is a solid investment. The only reason I haven’t added the stock to the Great Stuff Picks portfolio is the price tag. This isn’t about valuation — it’s about AMZN trading for more than $3,300. That’s not within many retail investors’ budgets.
While I’m not adding AMZN to the portfolio today either, if you have the opportunity to pick up Amazon stock — even via fractional shares — it’s well worth the investment. And today’s stagnation on stellar quarterly results is the time to get in. It’s Jassy!
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Good: Not Even Close
If you bought into the work-from-home hype, you’re probably worried about how companies like Zoom Video Communications (Nasdaq: ZM) will fare once offices start reopening for good.
Well, you’re not alone. Zoom is also worried about remaining relevant.
In an attempt to do just that, the company announced an update to Zoom Rooms that it believes will revolutionize the office workforce. Zoom Rooms is essentially virtual conference software for businesses … with a business price tag.
With the new upgrade, Zoom Rooms adds what the company calls Kiosk Mode. Just want you wanted, right? More touchscreens.
The idea is that companies will put touchscreens with Zoom Kiosk Mode in their lobbies. Doing so will allow receptionists to interact with visitors while still working remotely. Chief Information Officer Harry Moseley thinks this is a wonderful idea:
OK … that’s enough of that. Anyone who’s dealt with non-local customer support will just love this idea, I can tell you.
I get what Zoom is doing here — trying to stay relevant. Maybe it can disrupt the office software market, replace the more traditional phone conferencing and meeting programs on the market.
But, we’re not living in Blade Runner here — not quite yet. Virtual receptionists might catch on at a few locations here and there, but I don’t see any Fortune 500 companies making the switch anytime soon.
Good, but not quite good enough. ZM was down more than 2% on the news.
Better: Bringing Home the Billions
Zoom’s virtual welcome committee aside … you know how you do stay relevant in the digital environment?
Ads. Lots of ads. Ads in your searches, ads in your purchases. Ads in your face, ads in every space … at least for all you non-ad-block users out there.
Google was working as a search engine in a browser bar when I met you. I picked you out, shook you up and turned you around … turned Google into someone new (an advertising powerhouse, in this case).
And the company’s quarterly report portrays a roaring return of digital ad spending. Per-share earnings of $22.30 walloped estimates for $15.90. Alphabet brought in $56.90 billion, which also beat expectations for $53.13 billion.
That’s all nice, but what about the ads? I need my rev growth fix over here, man!
YouTube’s ad revenue grew 47% year over year if you needed yet another sign of advertisers’ pandemic-boosted shift to digital ads. On the whole, Alphabet’s ad revenue shot up 22% year over year — no low-bar expectations here, no siree.
What’s the big deal? Like Amazon, we don’t own Alphabet in Great Stuff Picks … but we do own a handful of stocks that benefit from a resurgence in digital ads. Roku (Nasdaq: ROKU) is top of the digital ad pack as far as we’re concerned, though we’ll have to wait for Roku’s own report next week for further details.
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Best: Joint Statements
Mr. Great Stuff! Did you see? Weed legalization is coming! Or wait, was it legislation? Something’s happening! I think…
Such has been the pot stock story for some time now. (Where are my 2018 holdouts at?! Anyone? OK…)
Today, pot stocks took off after Senators Ron Wyden of Oregon and Cory Booker of New Jersey joined Senate Majority Leader Chuck Schumer in announcing that they’d make cannabis reform “a key priority in the current Congress.”
Digging into their news release … it’s a nice, well-meaning joint statement outlining, I’ll give you that. But there’s hardly any hard-and-fast takeaway other than “ending federal prohibition is necessary.”
No hard schedule or plan other than that the senators plan to draft some form of legislation “early this year.” Specific details are still as hazy as a dorm room afternoon.
The thing is, many consumers — and cannabis investors, mind you — seem to have a hard time discerning between formal legalization and chitter chatter about yet-to-be-drafted legislation. The former is implied, but nothing’s explicit thus far.
In other words … I’ll believe it when I see it.
Any potential cannabis legislation is a sight for sore, red eyes, and pot investors reacted in kind, sending the entire sector deep into the green today. Even if this rally’s an early overreaction to potentially landmark news … tendies are tendies.
However they shape up, new measures to reform cannabis legislation shouldn’t surprise you — not if you’ve kept up with your Great Stuff. We’ve watched the green wave wash over Wall Street since the early, waking days of 2021 when the Senate elections spurred a similar sectorwide celebration.
We even (informally) called a bottom back in September, but more on that in a sec…
Welcome one and all — newfound Great Ones and frequent ‘Stuff fliers alike — to another Poll of the Week!
It’s our chance to hear your take on the latest market drama and corporate happenings. Of course, this isn’t the only time we reach out for your thoughts.
In fact, you have a few hours left to make tomorrow’s edition of Reader Feedback, where we jump headfirst into the virtual Great Stuff mailbag for a good ol’ rummage-around. Oh, and we also respond to said emails too!
Dig it? Join in: GreatStuffToday@BanyanHill.com is where the fun begins.
In this week’s poll, however, we’re talking about pot stocks … if you couldn’t already guess.
Now, we haven’t checked in on all y’all cannabis investors out there in a hot minute — not since late September, in fact! In our last pot poll, we asked whether or not you believed the pot stock resurgence was nigh.
And the results were much more evenly split than you’d guess today. About 22.6% of Great Ones had never left the pot stock drum circle, while another 27.4% were still buying in.
That means congratulations are in order for, well, half of you! Take your pick of cannabis-tracking ETF — YOLO and MJ are most popular — and it’s likely more than doubled than since our September 23 poll.
Now that leaves the other half of you — those left dazed and confused while everyone else’s pot stock gains get utterly lit. If you didn’t get in on the cannabis rally … why not? No judgment here, of course — we just want to know if there’s any particular reason why you’re no-go on the ganja.
Click below and let us know!
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Of course, you can always let us know your thoughts, your whole thoughts and nothing but your thoughts alone right here in our inbox (click me).
By the way, if you were curious about how your fellow Great Ones made out in the great GameStop revolt, I’d wager “rather well” … for most of you. Just over 78% of you stood laughing on the sidelines (thankfully). And good luck to the 10% of you still holding the line in GME…
For the rest of you already in and out of the meme-mooning trade fiasco, let us know how you fared! GreatStuffToday@BanyanHill.com is the place for all your stock market war stories.
Until next time, stay Great!
Editor, Great Stuff