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Sprint and T-Mobile Merger: The Tribe Has Spoken

The Sprint Corp. (NYSE: S)/T-Mobile U.S. Inc. (Nasdaq: TMUS) merger is now less of an Amazing Race and more of a season of Survivor.

Ten state attorneys general filed a lawsuit this week to block the $59 billion deal, including Mississippi, California and New York. The stage is getting crowded indeed.

The upstart duo initially gained approval from games master and Federal Communications Commission head, Ajit Pai. Pai’s approval should have been golden for the Sprint/T-Mobile team and was expected to put pressure on the rules master over at the Department of Justice (DOJ).

But the states are not happy being left out of the negotiations and are now teaming up to strip Sprint and T-Mobile of their last immunity idol.

The outcome now rests with the jury. The lawsuit all but removes the DOJ from the process.

Makan Delrahim, head of the DOJ’s antitrust division, is now in an unenviable position. If he approves the merger and loses in court against the states, he’ll have lost suits to block a merger (AT&T/Time Warner) and approve a merger (Sprint/T-Mobile).

That’s quite a stain on one’s legacy.

The Takeaway:

President Trump wants to fast-track 5G mobile rollout in the U.S., so there could still be another player in the game that could help force the merger through. That would be a lot of “forcing,” but it could still happen.

Additionally, with the advent of the state attorneys general lawsuit, Sprint and T-Mobile could just call it quits and walk away.

The bottom line is that, while it’s tempting to speculate, investors should steer clear of Sprint and T-Mobile stock until the courts have their say. This one is going to be tied up for a while.

Turn on your images.

Good: A Decent Shot

Tesla Inc. (Nasdaq: TSLA) held its annual shareholder meeting last night, and CEO Elon Musk was finally unleashed. Musk had been quiet on Twitter due to the SEC gag order, but he said his piece last night.

“I want to make clear there’s not a demand problem. Sales have far exceeded production and production has been pretty good,” Musk told shareholders.

He noted that Model 3 sales have bested its main competitors in units and dollars. He also said that Tesla has a “decent shot at a record quarter” for sales and production.

Musk went on to talk about the Model Y, the compact SUV, hitting production in 2020, as well as the Chinese gigafactory and a future gigafactory in Europe.

The shareholder meeting was a great boost for investor confidence, but the cash flow needs of Tesla’s plans are hitting the shares today. TSLA is dipping on the news, creating an opportunity for those bullish on the stock.

Better: Unicorns Everywhere!

Every time a baby laughs, a unicorn gets its IPO! [Note: Link to MIP IPO speculator promo]

The latest tech unicorn is cybersecurity firm CrowdStrike Holdings Inc. (Nasdaq: CRWD). The company priced its initial public offering (IPO) on Tuesday, with CRWD going for $34 per share. The company raised more than expected, banking $612 million on the IPO.

You might be thinking that this is just another cloud-based company that will get lost in the herd, but CrowdStrike is different. It specializes in cloud-based cybersecurity to detect and stop security breaches.

With nearly every major company turning to the cloud for cost savings and business solutions, cybersecurity is going to be a big deal. CrowdStrike has its work cut out for it, but the opportunity is there for the taking. Keep CRWD on your watch list.

Best: You Can Patent That?

Zynerba Pharmaceuticals Inc. (Nasdaq: ZYNE) just received a patent in the U.S. for the “treatment of Autism Spectrum Disorder with cannabidiol.” We’ve seen plenty of news about how cannabidiol (CBD) helps in treating autism, but Zynerba just cornered the market.

We’ll file this under, “I didn’t know you could patent that!” alongside all those “As Seen On TV” products that you never thought people would actually buy.

ZYNE surged more than 20% on the news and is up some 300% in the past year, largely due to its CBD treatment for autism. The market for such treatments is expected to rise to $22 billion by 2022, and Zynerba’s just walled off a large chunk of the competition for those billions. But, unlike our Mr. Wonderful meme today, you probably want to be “in” on ZYNE.

Turn on your images.

Turn on your images.

Some comics never go out of style. Be sure to keep an eye on the Federal Open Market Committee meeting next week. The market is pricing in a 25% chance of a rate cut in June, with a 70% chance of a cut in July.

Great Stuff Rant: The End of the Information Age

Turn on your images.

The age of information is dying.

It’s dying at the hands of the same advances in technology that brought it into being.

With the internet, smartphones, powerful computers and lightning-fast data communication speeds, the Information Age is giving way to the “Disinformation Age.”

For a long time, we’ve had a personal responsibility to double- and triple-check the veracity of everything we read and see online. Fake news (the real kind), satire sites, photoshopped images … they have all risen quickly in the past decade. You can no longer trust anything you read or see online.

That line between truth and falsity is about to be blurred beyond anything we’ve imagined so far.

I’m sure you’ve read about deepfake videos. If not, a deepfake is a technique using artificial intelligence and video editing software to combine existing images and videos to make literally anyone appear to say and do anything.

If you want a master class in how this works, just click here — it’s a very eye-opening read and demonstration.

Up until now, it’s largely been used by advertising agencies and comedians.

But things have changed … quickly.

This week, Facebook Inc. (Nasdaq: FB) CEO and Chairman Mark Zuckerberg was the target of a new deepfake. In a protest of the social media giant’s policies on fake news and disinformation, an Israeli startup called Canny AI created a deepfake video of Zuckerberg saying some rather unflattering things about transparency.

You can say that Zuckerberg deserves some of the backlash he’s getting over Facebook’s lax policies. But the deepfake problem has far-reaching implications beyond Facebook’s CEO.

The threat of disinformation to political and national security is so serious that it even has the Pentagon worried.

“The Pentagon, through the Defense Advanced Research Projects Agency (DARPA), is working with several of the country’s biggest research institutions to get ahead of deepfakes,” CNN reported back in January.

Wired has some tips on how to spot these deepfakes for now. However, they will get increasingly more sophisticated as technology advances — as the Zuckerberg video shows.

Pretty soon, you won’t be able to believe anything you read, see, hear or watch online.

Welcome to the age of disinformation.

Until next time, good trading!

Regards,

Joseph Hargett
Great Stuff Managing Editor, Banyan Hill Publishing

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