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Blue Chip

Elon Musk’s tweet will cost him……

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Well, that was fast… Tesla CEO Elon Musk has agreed to step down as chairman of his company and pay a hefty $20 million fine to settle charges brought last week regarding his reckless tweets. But don’t fret – Musk will remain CEO of the company. For the record, Musk accepted the deal without “admitting or denying” the accusations against him.

 

The money will go to… investors that were harmed by the tweet (so people shorting Tesla). Tesla will also appoint two new independent directors to its board to help oversee Musk’s communications. Yes, they will be watching him. And honestly, the result isn’t as bad as it could have been.

 

The SEC sought to ban Musk from… serving as an officer or director of any publicly traded company. However, the SEC may have decided that removing Musk as CEO would harm Tesla’s share price and hurt investors further. After all, what is Tesla without Elon Musk!? He is the madman we have all grown to know and love – never stop bein’ you, Elon…

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Mid caps

BlackBerry: Not just your middle school cell phone company

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From a struggling smartphone company… to an up-and-coming cybersecurity company. BlackBerry now generates over 90% of its revenue from software and services. Even better, 81% of its sales a recurring which means they have plenty of cash flowing in. The company reported profits and sales on Friday and killed Wall Street’s expectations. The stock was up 15% following the news.

 

Oh, and they do other things… and CEO John Chen said the company’s most significant success this quarter stemmed from the connected and autonomous car market. That business unit saw growth of 30%. And BlackBerry is working to gain more ground in the automotive market – even teaming up Chinese search engine Baidu to develop self-driving cars.

 

In 2016… BlackBerry stopped making phones and outsourced the production of devices with the BlackBerry name still attached. And now, the company is all-in on software. The switch from phones to software has the company’s stock up over 60%. Not bad for a company we all thought had died a long time ago!

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Mid caps

JCPenney: No CEO, no CFO, no problemo!

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We’ve talked about JCPenney’s… lack of CEO and how that’s a bad thing. However, matters have gotten even worse for the company, with the CFO Jeffrey Davis leaving after just 14 months. It looks like more bad news for a company that has seen its stock drop 45% this year.

 

On Friday… JCPenney stock dropped another 9% and is now trading at $1.60. The company also has over $4 billion in debt. The once-booming retailer has only posted a quarterly profit twice in the last four years. Most recently, the company posted a loss of $101 million and was forced to sell much of its clothing at a substantial discount.

 

So, what now… that’s what investors are asking, but haven’t gotten much of an answer. The retailer has closed 141 stores within the last year and will be closing eight more this year. JCPenney switched from older shopper to younger but is now going back toward middle-aged women. The company plans to update everyone on who it wants its customers to be in November when it reports quarterly earnings. We’re looking forward to it…

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Miscellaneous

Speaking of failing retailers…

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Sears is on the clearance rack… and the company is officially a “penny stock.” The company’s stock is now trading for under $1 and dropped to as low as .85 cents per share on Friday. Sears could also be delisted from the Nasdaq – but that’s a long process and won’t happen until 2019. The stock has had a brutal year, too, down 88%.

 

Today, Sears must… prove to lenders that they can pay $134 million worth of debt due on October 15. The company is running out of time and cash. Sears market value has also fallen below $100 million.

 

You may be too young to remember… Sears was once one of America’s largest retailers and employers. Many Americans bought mass-produced goods for the first time through a Sears catalog. However, by the early 2000s companies like Walmart began beating Sears in both price and selection. And it has been mostly downhill since.

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