Voting Fun With Facebook
Today, I read one of the most terrifying headlines ever:
That was CNBC’s headline as of this morning. CNBC has a habit of updating these things throughout the day, so your results may vary.
The social media giant has a curriculum planned around “getting people ready for the fact that there’s a high likelihood that it takes days or weeks to count this — and there’s nothing wrong or illegitimate about that,” according to CEO Mark Zuckerberg.
That curriculum also includes new rules centered on flagging early claims of victory or other results.
The idea that Facebook Inc. (Nasdaq: FB) will “educate” U.S. voters on the November election is laughable. This is the company that was duped by Cambridge Analytica. It’s the company known for spreading misinformation on literally every topic known to man — from Tide Pods to viruses and vaccines.
On one hand, I have to give Facebook credit for attempting to do something to rein in the wild, Wild West of social media.
On the other hand, I’ll believe this altruism when I see it. In my mind, Zuckerberg doesn’t want to spend hours testifying in front of Congress again. And this move is one big CYA for Facebook after it was accused of influencing the 2016 elections.
In a different, but related vein for investors, J.P. Morgan Analyst John Normand said that the markets are headed toward a modest correction, but investors shouldn’t panic.
“Some misgivings are justified given a macro backdrop that is becoming muddied, but not muddied enough to justify bearish targets or a defensive investment strategy,” Normand said in a note.
A muddied macro backdrop is just analyst speak for “the economy is not recovering from the pandemic like we expected.” Normand goes on to say that a Congressional stimulus package of at least $1 trillion will bolster the U.S. and keep the economy “well above trend.”
So, to recap: We’re relying on Facebook to educate people about mail-in voting during a pandemic. And we’re relying on Congress to do the right thing and bolster the U.S. economy during an election year.
If those aren’t good reasons to take a defensive stance in this market, I don’t know what are.
The bottom line is that even in a best-case scenario, we’re looking at a lot of market volatility as the pandemic and November elections play out. That means sticking to the defensive strategies that Great Stuff has frequently laid out: holding currency funds, gold and Treasuries.
But you don’t have to completely duck and cover. There are ways to make this market work in your favor.
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The Good: TikTok on the Clock
Love it or hate it, TikTok is one of the hottest social media companies on the planet right now.
That popularity has brought with it severe scrutiny from global governments.
TikTok, which is owned by Chinese company ByteDance, has become a lightning rod for global tensions with China.
Countries from India to Japan to the U.S. are concerned that ByteDance is sharing user information directly with China’s government — a claim TikTok has denied.
But those concerns could be resolved in less than a month. Microsoft Corp. (Nasdaq: MSFT) confirmed this weekend that it is in talks to acquire TikTok’s operations in the U.S., Canada, Australia and New Zealand.
President Trump initially opposed the acquisition but has given Microsoft 45 days to cut a deal.
This could be a huge win for Microsoft if it can work a deal for TikTok. The company already has a foothold in the social media space with LinkedIn. But LinkedIn is more of a professional social media platform, and TikTok is far from professional.
In fact, a TikTok acquisition would put Microsoft in direct competition with Facebook’s Instagram and Snap Inc.’s (NYSE: SNAP) Snapchat.
Investors are already gearing up for Microsoft’s latest move into the social media space, sending MSFT more than 4% higher on the news.
The Bad: Not So Private Eyes
Keeping with the Big Tech theme today, we have reported that Alphabet Inc.’s (Nasdaq: GOOG) Google invested $450 million in home security company ADT Inc. (NYSE: ADT). The investment gives Google a 6.6% stake in ADT.
The idea here is that the duo will work together to broaden smart home security by integrating ADT’s network and devices with Google’s Nest smart home network. Let’s let Nest General Manager Rishi Chandra describe the tie-up:
The goal is to give customers fewer false alarms, more ways to receive alarm events, and better detection of potential incidents inside and around the home. It will also provide people with more helpful notifications that make everyday life more convenient, like package detection.
ADT customers will also have access to Nest Aware, a service that keeps people informed about important events at home, including intelligent alerts and event history recording for up to 30 days.
It all sounds very snazzy, and ADT investors are clearly excited. ADT initially surged more than 80% on the news.
But GOOG shares are down about 1% following the report. Maybe they know something we don’t?
Which brings us to why this deal is “bad.”
First, we’re all worried about TikTok sending massive amounts of data to China, but has anyone looked at what data this ADT deal will give Alphabet?
Second, Google has a history of launching new projects and then abandoning them a year or two later. There is a very real chance that ADT’s tie-up with Nest will end up in the Google graveyard after Alphabet has milked it for everything it’s worth.
ADT investors would be wise to keep a close eye on this deal and take profits where appropriate.
The Ugly: Biting the Hand That Feeds
Well, I heard Mister Musk talk about her. Well, I heard ol’ Elon put her down.
Well, I hope Elon Musk will remember, an American don’t need him around, anyhow.
Tesla Inc. (Nasdaq: TSLA) is back in the headlines today, and not in a good way. In a recent interview with Automotive News, CEO Elon Musk blasted Americans as “entitled” and “complacent” while praising China:
China rocks, in my opinion. The energy in China is great … there’s like a lot of smart, hard working people. And they’re really — they’re not entitled, they’re not complacent.
What, Elon? Was the $4.9 billion in U.S. government funding not enough for you?
Billions in tax breaks, incentives and taxpayer dollars too “complacent?”
Was California not allowing you to reopen your production plans amid a pandemic too “entitled?”
Try this argument in China and see how far it gets you. I expect to hear Musk complaining about Nio Inc.’s (NYSE: NIO) unfair advantage in about a year’s time. Let’s see what he thinks about American entitlement and complacency then.
Now, I like Tesla as a company. I think they have a revolutionary product at the forefront of an automotive and energy revolution. But — and I think many Tesla bulls would agree — Elon Musk just needs to shut his piehole and let the company do what it does best.
Are you ready, kids?
Ooooohh… It’s Chart of the Week time! And that means another trip to EarningsWhispers.com for this week’s most anticipated earnings releases.
We’ve got quite a lineup this week, including several Great Stuff Picks:
There are more than 130 compaines data dumping on Wall Street this week. So, what is Great Stuff watching?
Why, Great Stuff Picks companies, of course.
On Tuesday, Beyond Meat Inc. (Nasdaq: BYND) is expected to report a loss of $0.02 per share, versus a whisper number for a profit of $0.01. How well did meatless meat hold up during the pandemic? We’re about to find out. The Walt Disney Company (NYSE: DIS) and electric-vehicle maker Nikola Inc. (Nasdaq: NKLA) are also on tap to report on Tuesday.
On Wednesday, Roku Inc. (Nasdaq: ROKU) streams into the earnings confessional with Wall Street targeting a loss of $0.55 per share. Whispers are for a narrower loss of $0.45 per share. That said, this report will be all about active users and subscriber growth. Keeps those earnings figures on the back burner, and watch for subscriber totals.
Thursday offers up Wix.com Ltd. (Nasdaq: WIX). This website-creation enabler is sure to have had a bang-up quarter with everyone and their mother going online to make a few extra bucks during the pandemic. Expectations sit at earnings of $0.26 per share, compared to a whisper number of $0.35. Great Stuff investors are already sitting on a gain of more than 100% for WIX, and Thursday should bring more gains to the table.
It’s going to be an interesting week, dear reader.
Great Stuff: Getting Corny
Thanks for tuning in to another week of Great Stuff!
Are you hyped up for this week’s earnings reports? Any companies you’re watching that we’ve overlooked?
Got a rant on Facebook, TikTok or … *gasp* … Elon Musk?
Let us know! Drop us a line at GreatStuffToday@banyanhill.com.
Until next time, stay Great!
Editor, Great Stuff