The SEC Won’t Let Me Be, Shopify Stupefies & Intel’s Government Pension
What A Tangled Web We Weave…
Great Ones, today we’re talking about billionaire investor Mark Cuban and his spat with the SEC.
But first … did y’all see the new Spider-Man: No Way Home teaser trailer?
Spoiler alert! I’ve watched this trailer way too many times, which directly shows (or hints at) the following appearances: Dr. Strange, Doc Ock, Green Goblin, Electro, Sandman, Lizard and Black Suit Spider-Man. What in the name of Madam Web is going on?! This looks epic! Kudos, Sony (NYSE: SONY) and Disney (NYSE: DIS).
All right … Mark Cuban is no Spider-Man. OK, maybe he’s a bit like Toby Maguire’s emo Spider-Man in Spider-Man 3, but we all know that’s possibly the worst Spider-Man movie ever made.
But I have to say that Mark Cuban sometimes comes close to Peter Parker’s wit. Take his grilling of SEC Chairman Gary Gensler, for example.
Yesterday, Gensler tweeted out the following:
If someone asks a lawyer, accountant, or adviser if something is over the line, maybe it’s time to step back from the line.
Going right up to the edge of a rule or searching for some ambiguity in the text or a footnote may not be consistent w/the law & its purpose.
The spirit of the law is about protecting investors.
Protecting investors … really, Mr. Gensler?
Is that why the SEC came down so hard on Elon Musk’s market manipulation with Tesla (Nasdaq: TSLA) stock? Or Elon Musk’s market manipulation of Bitcoin (BTC)? Or when Robinhood (Nasdaq: HOOD) blocked customers from buying certain stocks? Or the entirety of the 2008 financial crisis? The Panama Papers?
You and I both know that list is waaaay too long for me to share here, but you get the point. And so did Mark Cuban when he replied:
If you really want to make the markets safer, rather than puffing up your chest and posturing to or with Wall Street, talk to small investors about what they want to see and how they want to be communicated with.
Ask yourself why are there thousands of lawyers at the SEC? Lawyers want to litigate. In EVERY business, if you need a lawyer to fix a problem, you have a big problem. Why doesn’t the SEC have thousands of people working to make sure there isn’t a need for thousands of lawyers?
I mean, it’s no Spider-Man quip … but it might be as close as we can get with billionaires. Maybe we should ask Bruce Wayne?
But wait, there’s more… Cuban’s pièce de resistance was this Tweet:
Now that set my spider senses tingling. (Stop that, I know what you’re thinking.)
Cuban has a very big, shiny point: Retail investors typically can’t afford lawyers, especially lawyers adept at handling the SEC. Good lawyers require extremely good money.
It’s why Elon Musk has only ever been slapped on the wrist for stunts like “Am considering taking Tesla private at $420. Funding secured.”
If you or I tried that, we’d be in deep bantha poodoo … and I guarantee you we wouldn’t be in some posh “prison” like the one Martha Stewart was sentenced to.
My point — and what I believe Mark Cuban’s point is here — is that there’s been a massive influx of retail investors on Wall Street due to the commission-free-trading market that Robinhood pioneered.
These retail investors are the moms and pops, the Average Joes, the salt of the Earth … the common clay of the new Wall Street if you will. The SEC’s rules need to be crystal clear, and you can’t let one side get away with something and then punish the other for doing the same thing … “spirit of the law” or not.
The only spirit of the law I’ve seen in my time as a market analyst is that he who has the best lawyers will spirit right past the laws.
Never thought I’d praise Mark Cuban … but here we are. And the SEC made it happen. Mr. Gensler needs to be reminded that with great power comes great responsibility. Thank you, Uncle Ben.
Editor’s Note: The No. 1 Investment Of The 2020s
A technology that my colleague Adam calls “Imperium” is about to spark the biggest investment mega trend in history … with one small Silicon Valley company at the center of it all.
Elon Musk calls it “amazing…” While a Harvard Ph.D. says it could “[surpass] the space, atomic and electronic revolutions in its significance.”
Good: Trusty Ol’ Federal Spending
Good news? From Intel (Nasdaq: INTC)?! And you thought a new Spider-Man trailer was worth waking up for today…
Let’s not get too far ahead of ourselves here. The headline news is that Intel won a U.S. Department of Defense contract to make advanced microchips for an unnamed “broader program.” And since the DoD likes its secrets (and secret budgets), the contract’s full sum remains undisclosed.
Nevertheless, a few things surprise me here. The first is that someone at the DoD thought Intel’s tech was advanced. The second is that they thought Intel has the manufacturing capabilities to handle such a project.
Intel’s already losing face in the data center market race. And the market for gamers, too. Now Intel plans to bring that mediocrity to the defense-contract stage. I can’t wait to see how it all plays out.
I mean, the U.S. definitely wouldn’t give a better chipmaker like Advanced Micro Devices (Nasdaq: AMD) a DoD contract for various nationalistic reasons we won’t go into here (see also: Nvidia’s current ordeal for ARM).
While I commend the Defense Department for moving more chipmaking stateside and weaning off of overseas supply chains … do they know that Intel’s trying to do the same?
Intel better hope its deal to buy GlobalFoundries — AMD’s old in-house semiconductor-making business — finalizes soon enough. The company’s dying a slow manufacturing death at the hands of the global semiconductor shortage, other more-efficient chipmakers and, unfortunately, its own goalpost-moving.
And a DoD contract — fulfilled successfully and on time (lol, as if) — would be a big step for Intel to start reclaiming former glory.
Better: Still No PS5s? Seriously!
Best Buy (NYSE: BBY) still doesn’t have any PlayStation 5s in stock … yes, I’m still freaking bitter. But what Best Buy lacks in next-gen gaming consoles, it more than makes up for in revenue and sales.
The big-box behemoth released second-quarter earnings this morning that smashed Wall Street’s expectations. Per-share earnings rang in at $2.98 versus estimates of $1.85. Revenue also jumped to $11.85 billion versus analysts’ estimates of $11.49 billion.
Furthermore, Best Buy raised its same-store sales outlook for the second half of 2021. Instead of 3% to 6% growth, it now anticipates growth of 9% to 11%.
Unsurprisingly, Best Buy’s CEO Corie Barry said the company continued to benefit from consumers’ needs for better at-home tech because of the COVID-19 pandemic:
You mean a global pandemic that separated people for months made us more rabid for tech than … I don’t know … basic human interaction? I’m surprisingly OK with that. But then again, I’ve done the “work from home” gig since 2011, so…
Pandemic or not, this consumer tech trend is just getting started. I know this drill. I’ve been at it for 10 years already. It’s all headphones, external monitors and HDMI cables from here, chaps. The barn door is open, and we aren’t getting all the horses back inside … ever.
Mix in COVID fears with the upcoming cold and flu season, and methinks the current work-from-home crowd will have a few more months of respite from all that in-office, water cooler banter — good news for Best Buy, BBY investors and introverts everywhere.
Best: No Ragrets…
Have you ever regretted getting out of a trade?
If you’re like me, you probably set your investment goals and target gains before you buy a stock or enter an options trade. It’s the smart way to keep emotion out of the investing equation. But … occasionally … I look back and think: “I should’ve aimed higher!”
That’s how I feel this week with Shopify (NYSE: SHOP).
Great Stuff Picks readers banked about a 110% gain on SHOP in May 2020. I was very happy for you at the time and declared there was “No reason to get greedy. And with market volatility being what it is, it’s better to take the money and run.”
Well, SHOP has roughly doubled since that fateful day. While I’m still happy that Great Stuff Picks readers were duly rewarded … I feel like I should’ve done more.
This feeling came back today when Gen Z social media giant TikTok announced it’s broadening its partnership with Shopify. Now, I don’t know if you have kids or not, but TikTok is freaking huge with young’uns these days. I started using TikTok just to keep up with what my kids watch — that’s my story, and I’m sticking to it.
What this partnership does is create opportunities for TikTok users to buy directly from TikTok influencers or companies on the TikTok app. It’s called TikTok Shopping, and it’s going live with select U.S., U.K. and Canadian retailers in the next month.
This is a huge deal for Shopify and TikTok as it means massive revenue growth potential for both. It also means I need to lock down any payment methods my kids have access to on TikTok … now. Otherwise, my house is gonna be flooded with cosplay materials, clothes and various assorted anime figurines. Don’t judge … it is what it is.
My household issues aside, I’m now actively looking for another good entry point for SHOP. The stock has been on a tear since we exited last year, and if we could just get one good consolidation period or correction, we’d be in business again.
If you still own SHOP, kudos to you. If not, maybe you’ll join me in searching for a good reentry point.
Welcome one, welcome all to the ball of a time we call the Quote of the Week!
These days, that means “let’s check Twitter to see what hullabaloo is turning into a ballyhoo” … other than Mark Cuban’s spat with the SEC. And by golly, aren’t you surprised — look, it’s Elon Musk again!
He’s whining about … uhh … his own self-driving tech?
Weird flex, bro. What kind of bizarro marketing chess move is this? Play right into the complaints many Tesla owners have with their car’s “supposed” full-self driving tech? We’ll get to them in a second because as is par for the course, the hot takes about Elon’s hot takes are, well, hotter.
Here’s Bryant Walker Smith, Law and Engineering associate professor at the University of South Carolina:
That’s a good question — maybe we can soon ask one of Tesla’s bots to respond? You know, the AI-powered zombie fire demons Tesla’s building because it just had the parts lying around?
Now, we need to clarify here that “Full Self-Driving” is a company name for a product. That’s what Tesla is calling whatever autopilot abilities its cars have … regardless of whether or not you can legit let Jesus take the wheel and doze off for a sec.
And a company wouldn’t go so far as to … you know … fib in its marketing, right? That’d be unheard of…
Are people also upset that Dawn doesn’t actually have the sun in it? That Tide has no ocean whatsoever? Are the snozzberries really made from real snozzberries? This actually brings me to my next point…
Oh great, he has another one.
Maybe it’s foolish for customers to expect something called “Full Self-Driving” to actually be full self-driving. Maybe… But whose fault is it anyway for building that perception? Is it the consumer’s fault for believing Tesla’s “marketing?”
Or is Tesla wrong for incessantly building up hype and then ever-so-carefully straddling the line between misleading name schemes and plausible deniability? You let me know in the inbox here (if you haven’t already) how you feel about Tesla’s hit-and-miss honesty.
Because all Wall Street ever wanted from Elon was an update — a real, honest, no-trolling, good faith update. And he wouldn’t give it to ‘em! Just one Pepsi — erm, update! (I’m not crazy; you’re the one that’s crazy.)
Jeez. I get that Musk gets some teenager-y delight out of poking fun of Wall Street and that it was cute and edgy for a while — I mean, why else do you read Great Stuff? (For the memes! The lyrics! The comradery!)
Barron’s summed up Tesla’s entire FSD fiasco with one line, which honestly, is our real Quote of the Week:
And therein lies the real problem. Investors read Elon’s Tweets and wondered what it says about Tesla’s promised tech edge — living up to past hype.
Elon, on the other hand, tweets just to tweet … as natural and ingrained a process like you or I breathe, feed and defecate. Except with a global Twitter following, $#!^-posting gets the attention-hungry dopamine pumpin’ real good. Gets the people goin’!
Other automakers are getting in on the self-driving (or driver-assisted) game now, but you don’t see them taking to Twitter to promise the literal moon and back because everyone would lose their dang minds.
But for the Tesla CEO, it’s just another way to do branding. It’s worked so far, and the Musk man will keep at it.
If you ask me, the guy should’ve never dissed the lidar tech that, you know, could help Tesla’s self-driven case here… Almost every other car company is betting on this new tech: Audi alone is investing $16 billion … GM, $27 billion through 2025 … BMW, $35 billion… Click here to see why.
What do you think, Great Ones? Do any of you have an FSD-enabled Tesla? How do you feel about self-driving cars to begin with? When was the last time you went into a Best Buy? (And did you see any PS5s there? Please?)
Let me know in the inbox! Who knows? You just might find your email in this week’s edition of Reader Feedback.
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Until next time, stay Great!
Editor, Great Stuff