Feds Fumble Facebook, Bank On Dividends & Cerevel Saviors
About the time that Android came to fight the phone war, I saw Instagram in the App Store … in the App Store, when I was thirteen. I thought it was the finest thing I ever had seen.
So, I asked if I could have Facebook (Nasdaq: FB) someday when I grew up. Mama dropped a dozen eggs — she really blew up. She really blew up. She didn’t understand. Mama said that Facebook is the devil’s right hand…
It’s probably just me, Great Ones, but a little outlaw country by Steve Earle just felt right for today’s look at Facebook’s antitrust problems.
Yes, yes … I know that Facebook is now the fifth $1 trillion U.S. company by market capitalization.
I just think that the company is living on borrowed time as generational shifts push consumers toward different social media experiences and preferences.
I mean, as much as many of you dislike TikTok, Gen Z absolutely loves the service … and it’s one Facebook would be hard-pressed to replicate. But Twitter on the other hand…
I digress. My ire today is not directed at Facebook, surprisingly. It’s directed at the Federal Trade Commission (FTC) and 46 state attorneys general that waltzed into federal court thinking they had a slam-dunk antitrust case.
Narrator: They didn’t.
The trial was in the morning; they drug Facebook out of bed. Asked them how they pleaded; not guilty, they said. Not guilty, they said. You’ve got the wrong man. Nothing touched the trigger but the devil’s right hand…
U.S. District Judge James Boasberg dismissed the FTC’s suit, calling it “legally insufficient.”
How do 46 attorneys general walk into federal court with the FTC and get thrown out for being legally insufficient? It sounds like a bad bar joke. Clearly, these lawyers were woefully unprepared, as Judge Boasberg elaborated:
To paraphrase Goose from Top Gun: “The FTC regrets to inform you that the Facebook lawsuit is dead because our lawyers are stupid.”
And that’s the real deal here: Despite its public posturing, Facebook didn’t win anything in court. The FTC forfeited before it even took the field. Luckily for the FTC and the 46 state attorneys general, Boasberg left the door open for the antitrust lawsuit to continue if the group can provide enough support for its claims. The FTC has 30 days to refile its claim.
And for those investors out there worried that breaking up Facebook would negatively impact your portfolio, I urge you to read the latest article from Ted Bauman: “For Big Gains, Break Up Big Tech.”
And remember: Facebook will get you into trouble … but it can’t get you out.
Editor’s Note: Tech Recovery Lifting Off NOW
This is the biggest profit story for the second half of 2021. After a rough few months, the tech rebound is starting. Already, stocks are beginning to rally… PLUG: up 63% in a month. DDD: up 100% in six weeks. REAL: up 53% in a month.
Paul Mampilly’s strategy targets all of these stocks for even bigger profits. It’s how he achieved a streak of 34 wins in a row. Why wait for new record highs … when you can lock in the biggest gains now?
Good: Attention Dividend Disorder
Great Ones, if you like dividends — bank dividends, in particular — today’s flurry of news out of the banking sector was music to your ears.
Last week, the Federal Reserve announced that all 23 U.S. banks passed their 2021 stress tests — you know, that old relic from the 2008 financial crisis?
Anyway, banks barely waited a week before dumping money on shareholders via dividend increases and share buybacks. Here’s the shortlist:
- Morgan Stanley (NYSE: MS): Doubled dividend to $0.70. $12 billion buyback plan.
- Wells Fargo (NYSE: WFC): Doubled dividend to $0.20. $18 billion buyback plan.
- JPMorgan Chase (NYSE: JPM): Boosted dividend by 11% to $1.
- Bank of America (NYSE: BAC): Boosted dividend by 17% to $0.21. $25 billion buyback plan.
- Goldman Sachs (NYSE: GS): Boosted dividend by 60% to $2.
It was like an episode of Oprah’s favorite things out there today. “You get a dividend increase! You get a dividend increase!”
But not every bank joined the dividend hype train. Citigroup (NYSE: C) was the lone holdout among the major U.S. banks, holding its dividend firm at $0.51 and continuing with its planned stock buybacks.
Citi tried to downplay the lack of a dividend increase by noting that its “stock price is below tangible book value per share,” but we all know the real deal here: Citigroup needs the cash on hand.
Citi itself even said that its stress buffer will increase this year, likely due to defaults on consumer and business loans.
While nearly every other major U.S. bank stock rallied 2% or more, C shares fell roughly 1%.
Better: Mighty Wings
More good news for Great Stuff Picks readers who bought Boeing (NYSE: BA) back in December!
According to the financial media, United’s order is the biggest order of the past decade by any single carrier. Sweet!
For BA investors — especially Great Stuff Picks readers — this is yet more proof that Boeing is greatly underappreciated. The shares rose roughly 2% on the news, and I expect more gains to come as more airlines buy more Boeing jets to handle the increasing travel load due to an unwinding pandemic.
Meanwhile, UAL bounced between losses and gains on the day. I still don’t understand why investors freak out when companies spend money to grow their business.
Where do investors think United is putting all those new travelers looking to get out and about after the pandemic? On the wings of existing planes? Just strap them down in the cargo hold? And who’s going to fly those planes? Service them? Wait on passengers?
Seriously, people… I get that a company spending money means less is going into your pocket right now. We can’t all just throw dividends and share buybacks around like the big banks. Some businesses have actual labor and equipment overhead costs, and airlines occasionally need to spend money to make money.
I’m not a big UAL fan — I personally prefer Delta Air Lines (NYSE: DAL) — but the company doesn’t deserve to be punished for growth spending.
Editor’s Note: The Top 3 “Double Down” Stocks for 2021
Just when you thought the uncertainty of 2020 was over, the market is back to swinging down 500 points one day, 300 points up the next. So, you may be wondering: Is now a good time to invest?
America’s No. 1 investing guru says YES, but you must avoid the dangerous mistake most people make with their investments… (Click here for more.)
Best: Feel Good Inc.
Nothing makes me laugh (and roll my eyes) like overexaggerated ads for depression drugs.
Do you ever find yourself staring at the dining room table for hours?
Do you often weep when pushing children on the swings?
Do you feel the need to turn away slightly when other humans experience joy?
You may need this one drug that might also cause heart palpitations, rectal bleeding, Lupus and death…
It’s not Lupus!
I have no idea what BS they’re going to come up with for schizophrenia commercials … but we’ll soon find out if everything goes right for Cerevel Therapeutics (Nasdaq: CERE).
The biotech just announced tremendous results for its Phase 1b trials for CVL-231 — designed to help patients with schizophrenia. No surprise, CERE shares nearly doubled today.
So far in the trial, CVL-231 (catchy name, I know) was able to show clinically meaningful antipsychotic effects “while avoiding both the debilitating extrapyramidal side effects commonly seen with dopamine antagonists.” Took the words right out of my mouth!
Essentially, many antipsychotic drugs that use dopamine antagonists can also riddle patients with drug-induced tremors and other uncontrollable movements. It’s … not fun. And any chance at treating schizophrenic symptoms without these side effects would be life-changing, to say the least.
Now, this was just a Phase 1b trial. Next, Cerevel wants to test the drug for other use cases, such as dementia-related psychosis. There’s still a whole lotta testing left before the drug hits the market. But when/if it does? Phew, boy, what a lucrative market it will hit.
The market for schizophrenic drugs is expected to hit $9.48 billion by 2026. That’s a big market in its own right, but if Cerevel can prove the drug helps with dementia as well? That’s HUGE. It may even be a bigger drug for Alzheimer’s treatment than the money grab that Biogen (Nasdaq: BIIB) was approved for earlier this month.
Cerevel only has a market cap of about $3 billion after today’s rally. And if you don’t see the buyout opportunity there … Big Pharma will. If this drug is really that effective, and CERE is exploring even more uses for the drug, CERE is a no-brainer takeover target given the enormous upside.
Any of you own CERE before today’s 100% plus rally? Let me know, and if so, congrats!
Welcome to Understatement Corner — I’m glad you came.
Have you ever been gaming and thought to yourself: “Gee, this needs some ads to break up all this gameplay! Why have I not been peppered with ukulele jingles and marketing buzzwords yet?”
The time is nigh. In-game ads have escaped Candy Crush’s mobile gaming kingdom. And it’s only a matter of “when” ads will fully infect every inch of the gaming realm. I might be overexaggerating. Then again, I might not be.
That’s for PlayerWON — a double-speak name if ever I’ve heard one — to decide. The platform launches this week and lets marketers inject TV-style ads into games. Users will decide whether they want to watch a 15- or 30-second video ad, which would unlock exclusive in-game perks.
For right now (and this is key), PlayerWON’s in-game advertising mainly targets free-to-play games — franchises that otherwise rely on brand tie-ins or in-game purchases to make dough, rather than paying for the game upfront.
These free-to-play games are already quickly adopting the Japanese gacha model for gaming: You pay for “random rolls” for characters, skins and other aesthetic junk. In other words … it’s a simple transition to put ads in these games and bait gamers with free virtual loot.
Greed? In gaming? It’s more likely than you think. Just ask Electronic Arts (Nasdaq: EA). No one knows how to extract money, time and attention from a gamer like EA does. And the company’s already gung-ho on trying PlayerWON’s ad platform.
It’s only a matter of time before marketers get a taste of that sweet, sweet in-game ad money … and dive off the deep end with it.
Once you start putting obtrusive annoying ads in full-price AAA titles — and it will happen, mark my words — then the gaming world’s backlash will get very ugly. I’ve already heard ire across the interwebs about ads in NBA game titles while you’re waiting for the next period to start. I’d just go outside and shoot hoops at that point…
But, as much as I never want to see an ad again in my life … this move was inevitable. Younger gamers (say, teens to 30-year-olds) are largely cord cutters who have evaded ads for years. And you will have a hard time convincing them to leave the ad-free world.
But preteens and younger kids? Oh, they’re a fresh marketing gold mine. Millions of kids just ready to be spoon-fed marketing and taught the consumerist way — make like NSYNC and buy, buy, buy!
None of these kids watch traditional TV, contrary to what hordes of garbage Facebook memes would have you believe. And if their parents have already cut the cord and bought any streaming service(s) — like yours truly — how else would marketers spoon-feed ads to these kids than gaming?
It was bound to happen. But, how does all this affect you?
Well … what’d you say to our poll a couple weeks back asking about video games? If you’re a diehard gamer with a passionate hatred for ads, yeah, I’d say this could eventually impact your gaming experience unless you resign to pulling out the ol’ ad-free GameCube.
But whether or not you dig gaming, the profit opportunity that in-game ads pose is now very real. We both know in-game ads will literally print money. If PlayerWon parent company Simulmedia was publicly traded, this would be an investment I’d look deeper into … as much as I hate the idea of loading up Elder Scrolls and seeing an ad for GenericCryptoApp™ or … Metamucil.
What do you think, Great Ones? Are in-game ads an unavoidable future for gamers? How do you feel about EA having the ability to shove more loot box microtransactions down your gullet?
Let me know in the ol’ inbox-a-roo: GreatStuffToday@BanyanHill.com is where you can let your words fly like the wind and join in the Great Stuff. And in the meantime, here’s where else you can find us:
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Until next time, stay Great!
Editor, Great Stuff