Seeking Alpha

Don Dion's  Instablog

Don Dion
  • on IPO Analysis
  • on Financial
  • on Conglomerates
Send Message
Don Dion (donalddion@gmail.com, @DRDInvestments) is the owner and Chief Investment Officer of DRD Investments, LLC, based in Naples, FL. and Williamstown, MA., a family office focused on managing a long/short hedge fund, real estate assets and various other financial assets for the Dion family.... More
My blog:
fidelityadviser.com
My book:
The Ultimate Guide to Trading ETFs
View Don Dion's Instablogs on:
  • Tesla's Savvy Global Expansion Strategy

    As Tesla (NASDAQ:TSLA) exceeded Wall Street expectations in volume and earnings metrics in the second quarter of 2014, a critical trademark issue in China was resolved.

    Latest news on the Gigafactory battery production project also revealed a solid and secure launch pad for global marketing and distribution of Tesla electric vehicles (NYSE:EV). Plans for US domestic development and production of Tesla's proprietary battery technology in partnership with Panasonic (OTCPK:PCRFF) offers investors confidence that Tesla will protect their technological lead.

    Tech, Not Automotive, Roots

    The Tesla EV concept was founded in the technology industry rather than the automotive industry. Their partnership with Panasonic on the Gigafactory battery production project is one of many examples supporting this key insight.

    Although the positive resolution of the issue Tesla experienced in China was based on a potential trademark conflict, this focus on critical trade issues reveals part of the savvy strategy to protect their industrial interests.

    Transportation industry leaders, for example, have been concerned that China may have reverse-engineered high speed rail technology while working with European firms on the initial launch of China's massive rail expansion initiative. Another example leading to concerns about protecting industrial intangible assets is the growth of the knock-off smart phones using technology developed in the West while utilizing cheaper materials to produce these phones in the East.

    Increased Re-Fueling Speed

    It seems that a significant increasing in refueling speed is also a priority of the company. This appears to be the next significant factor in what Mr. Musk refers to as customer "delight." Refueling speed seems doable for Tesla's Chief Technology Officer, J.B. Struabel. Mr. Straubel is convinced by his analysis that EV is the most cost effective and achievable leading technology as an alternative to fossil fuel dependent vehicles.

    Moving Forward

    Plans for the first Tesla Gigafactory site seems to be pointing to Nevada and future consideration for production expansion in other US States. While design of their EV revolution remains is in California, Tesla's approach to US domestic production exclusivity has become apparent this year. Investor confidence is bolstered with several pieces of the strategic puzzle unveiled along with evidence of improvements in business performance.

    Tesla's Brand Becomes Even More Viable, Shareholders' Holdings More Valuable

    With an unparalleled combination of style, power, technology and range, the Tesla brand is becoming undeniably viable.

    Continued development of battery technology will ensure alternatives fuels such as hydrogen will loose attraction.

    The company's run rate target of producing 100,000 per year by the end of 2015 will be reliant on battery production facilities in the US and service centers in each of the global markets Tesla plans for marketing and distribution.

    Recent Earnings

    In Q2 2014, Tesla reported record Model S deliveries of 7,579 vehicles and production of 8,763 vehicles. While this is still below the market share of electric vehicle rival Nissan (OTCPK:NSANY), Tesla's market influence is perhaps far superior. According to the Harvard Business Review, Tesla's decision to share, instead of retain, the patent on some of its most important technologies, could actually be critical to the company's long-term success.

    Non-GAAP revenue, at $858 million, was up 55% from the same time one year ago.

    Tesla's market performance has historically been very strong; YTD, the stock has also seen significant appreciation.

    (click to enlarge)

    (Nasdaq.com)

    The company has beat estimates for earnings the past five quarters, consistently. With China's increasingly voracious appetite for luxury goods, Tesla is well poised to benefit from expanding in this market.

    We are continually positive on TSLA's forward-thinking, disruptive technology in 2014 and suggest other investors be so, as well.

    We encourage readers wishing to join the discussion on Tesla to click +FOLLOW above the title of this article - and those wishing for the latest updates to click +Get real time alerts.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

    Tags: long-ideas
    Aug 18 8:39 AM | Link | Comment!
  • XENT Quiet Period Expiration: August 17
    • The 25 day SEC-enforced quiet period for XENT will expire on August 17.
    • On August 18 XENT's IPO underwriters can release analyses of the ear, nose, and throat drug device company, likely leading to at least a temporary rise in shares.
    • Research has shown above-market returns of 2.3% in the 8 day (-5, +2) period, surrounding a company's IPO quiet period expiration.
    • Given that XENT is already gaining ground in the market, the event could be an additional boost and create a new buying opportunity.
    • Additional information here.

    Disclosure: The author is long XENT.

    Tags: XENT
    Aug 15 11:29 AM | Link | Comment!
  • Disney Rebuffs Amazon, Continues To Look Strong In 2014

    Amazon (NASDAQ:AMZN) has recently decided to go head-to-head with the Disney Corporation (NYSE:DIS) on prices for new releases, continuing their strategy of putting pressure on suppliers of their online entertainment inventory.

    Amazon already has an ongoing dispute with French company Hatchette Publishing to lower the price of e-books offered on the Amazon site.

    Many experts feel Disney is in a good position to resist this current effort to depress prices for their popular movies.

    Amazon's Strategy

    Amazon's CEO Jeff Bezos is taking the aggressive route to force suppliers to lower prices in order to help him increase AMZN profits. The stock price has lagged in 2014, making further gains a matter of concern among investors.

    (click to enlarge)

    (Nasdaq.com)

    As a result, Amazon put a halt to the pre-order of Disney movies such as "Captain America" and "Maleficent," hoping to coerce Disney in lowering prices. In addition, customers receive a message saying "Sign up to be notified when this item becomes available" for other movies as well, such as "Muppets Most Wanted" and "Million Dollar Arm." The move is only part of a bigger action Amazon has undertaken to strong-arm content providers in the industry.

    Amazon and Hatchette

    The current move comes in the wake of a dispute with Hatchette Publishing to push down prices on e-books it offers to customers on the Amazon site. Amazon demands the books be priced at the $9.99 level instead of the $12.99 or $14.99 level that has been customary until this time. When Hatchette balked, Amazon employed the tactic of withholding the pre-releases of Hatchette books. AMZN has even gone directly to the authors to help pressure Hatchette, offering them the full royalty during the dispute. However, the action has caused a backlash from 900 authors, including John Grisham and Stephen King, who are standing up against the strong-arm tactic.

    Disney's Stand

    Disney shows no sign of going compliantly along with the Bezos strategy. Although the company depends on individual sales to supplement movie sales, the releases are still available on iTunes and Amazon streaming. Also, customers only need to wait a slightly longer period of time before the movies are available at Walmart (NYSE:WMT) and Target (NYSE:TGT).

    But in an age when content is king, Amazon is likely to continue to be a big player in the content market in years to come, putting Disney in a difficult bargaining position.

    Disney Outlook

    The Disney Company stock has experienced a steady rise over the past three to five years, producing good results for its investors.

    (click to enlarge)

    (Nasdaq.com)

    Historically, DIS has beat analyst estimates for earnings for the past twelve quarters. DIS dividends have increased at a healthy rate over the same time period as well.

    (click to enlarge)

    (Nasdaq.com)

    As of August 5, 2014, the company announced earnings per share increase of 27 percent for the third quarter with revenues up eight percent. This was largely driven by the film Frozen's continued success.

    The acquisition of Maker Studios recently has been an additional positive strategy.

    Little has gotten in the way of its domination in the entertainment industry, with its ownership of Pixar, ABC and Marvel. Amazon's attempt to bring this big dog into line may be a fruitless effort and may end up hurting its reputation with consumers in the end.

    In contrast, Disney has several generations of good public relations to help shore up whatever decision it chooses to make.

    We continue to be positive on DIS moving forward in 2014, despite AMZN's aggression.

    Readers wishing to join the discussion on Disney and Amazon might click +FOLLOW above the title of this article, and those looking for the latest news to click +Get real time alerts.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

    Tags: AMZN, TGT, WMT, DIS, long-ideas
    Aug 15 8:04 AM | Link | 1 Comment
Full index of posts »
Latest Followers

StockTalks

More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.