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  • Red Herring In Twitter's 'Facebook-Like' Ad Revenue Model
    Today, 3:52 PM FB, TWTR Comment!

    Summary

    • Twitter is revamping its ad revenue model to resemble Facebook's.
    • Under "pay for performance" model, advertisers will pay when users click a link, download an app or supply their email address to advertisers.
    • By changing its ad model now, Twitter is implying that its Q2 results were amplified by the World Cup and are not sustainable going forward.
    • I rate Twitter a sell.
  • Molycorp: Sans Oaktree Financing, Q1 2015 Bankruptcy Likely
    Today, 8:14 AM MCP 23 Comments

    Summary

    • Molycorp's $400 million Oaktree financing overshadowed dismal Q2 financial results.
    • Excluding a $13 million legal settlement, Q2 cash burn would have been $93 million.
    • Q2 results make previous estimates of bankruptcy appear more prescient.
    • The market is telling us that even with the Oaktree financing, Molycorp is still not out of the woods.
  • Molycorp Investors Register To Sell 23.8 Million Shares, Stock Dives 10%
    Yesterday, 3:27 PM LYSCF, LYSDY, MCP 15 Comments

    Summary

    • Shareholders have filed a shelf registration to sell nearly 24 million shares (about 10% of shares outstanding).
    • The stock is down 10% on the news.
    • Given operating losses and cash burn gone unabated, investors should avoid Molycorp.
  • Urban Outfitters' Earnings Decline Amid Record Revenue Portends Trouble
    Yesterday, 1:31 PM URBN Comment!

    Summary

    • Urban Outfitters reported quarterly earnings yesterday.
    • Revenue was up 7% Y/Y, yet net income declined 20%.
    • With a 21x p/e ratio amid declining earnings, Urban Outfitters is a sell.
  • Fuel Systems Solutions Is Worth $3.30 - $4.10 Per Share
    Yesterday, 11:22 AM FSYS 34 Comments

    Summary

    • Fuel Systems Solutions reported quarterly earnings on Monday.
    • Despite a 21% decline in revenue Y/Y and deteriorating operating margins, the company trades at 24x LTM adjusted EBITDA ($9.90 per share).
    • At 8x - 10x EBITDA, the company is worth $3.30 - $4.10 per share.
  • Quantifying World Cup Impact - What Twitter Could Learn From Comcast
    Mon, Aug. 18 P, TWTR 2 Comments

    Summary

    • Going into Q2 earnings, I expected Twitter to show the World Cup impact in a similar manner that Comcast showed the impact of the Olympics on its Q1 2014 results.
    • Twitter implied the World Cup impact was de minimis.
    • The market's valuation of Twitter implies the World Cup impact in Q2 is recurring.
    • I do not think Twitter can replicate Q2's out-performance on operating metrics or advertising rates in Q3. I rate the company a sell.
  • Apple Storing User Data In China; Veiled Attempt To Counteract Government Ban?
    Mon, Aug. 18 AAPL 93 Comments

    Summary

    • Apple has decided to store user data in China.
    • The move comes shortly after a moratorium on purchases of Apple devices by the Chinese government.
    • It could potentially alienate consumers and hurt sales due to concerns over privacy and censorship.
  • Fuel Systems Solutions Is A Sell Heading Into Earnings
    Mon, Aug. 18 FSYS Comment!

    Summary

    • Fuel Systems Solutions is expected to announce quarterly earnings prior to the market's open.
    • Q1 2014 revenue declined 18% Y/Y and had a loss per share of $0.10.
    • Based on an EBITDA multiple of 18x, Fuel Systems Solutions is a sell going into earnings.
  • As Encrypted Messaging Enters Mainstream, BlackBerry In Catbird Seat
    Mon, Aug. 18 AAPL, GOOG, GOOGL 133 Comments

    Summary

    • Start-ups and established companies like Apple, Google and Yahoo! are betting on encrypted messaging entering the mainstream.
    • BlackBerry's mission is to provide security for governments and the enterprise.
    • If encrypted messaging enters the mainstream, BlackBerry is poised to dominate the consumer market as well.
  • Wall Street Sours On Molycorp, Is $1.60 Next?
    Fri, Aug. 15 MCP 19 Comments

    Summary

    • Molycorp has been the subject of two negative analyst reports since Q2 earnings.
    • After the Oaktree financing, the good news has been priced into the stock.
    • The only positive catalyst left is strong operating performance, which will not materialize for several quarters. The stock could test $1.60 again.
  • RetailMeNot: Is 25% Gross Margin Compression Unrealistic?
    Thu, Aug. 14 GRPN, GS, SALE 18 Comments

    Summary

    • RetailMeNot is attempting to diversify revenue sources from organic search to direct, email and mobile - mirroring that of competitor Groupon.
    • As RetailMeNot's revenue sources begin to mirror Groupon's, so should its cost structure.
    • RetailMeNot's near term gross margins could decline by up to 25%. I rate the company a sell.
  • Flat Revenue Growth Quarter Over Quarter, Deteriorating Operating Leverage Make Groupon A Sell
    Thu, Aug. 14 GRPN 5 Comments

    Summary

    • Groupon's gross margin and profitability have declined under its new ecommerce strategy.
    • The company lacks the scale to compete with the likes of eBay or Amazon. With flat revenue growth Q/Q, there is no guarantee the company will reach that scale.
    • Despite a greater than 15% decline in the stock since Q2 earnings, the stock has further room to fall.
  • Kate Spade Shares Routed After Earnings, Stock Still A Sell
    Wed, Aug. 13 KATE 7 Comments

    Summary

    • Kate Spade announced quarterly earnings yesterday.
    • The Street was ecstatic over a 49% increase in revenue Y/Y and $10 million operating profit.
    • However, after margin pressure from discounting to move excess inventory and keep up with competitors, the stock sold off by over 25%.
  • Mounting Losses And Unsustainable $24B Debt Load Make Caesars A Strong Sell
    Tue, Aug. 12 CZR Comment!

    Summary

    • Caesars announced Q2 earnings last night.
    • Revenue of $2.2 billion fell shy of analysts' expectations, while losses doubled to $466 million.
    • Mounting losses, unsustainable debt of $24 billion and a valuation of 17x adjusted EBITDA make Caesars a strong sell.
  • Why Twitter's 38 Million Zombies Could Impact Ad Revenue
    Tue, Aug. 12 TWTR 20 Comments

    Summary

    • The Wall Street Journal is reporting that 14% (38 million) of Twitter's Q2 2014 MAUs do not log into the service and never see an ad.
    • Twitter's active user growth and advertising reach are less than once thought.
    • I expect ad placements, advertising rates and ad revenue to decline. Twitter is a sell.
  • Kate Spade Is Synonymous With 'Cachet' And 'Consistent Operating Losses'
    Mon, Aug. 11 COH, KORS, KATE 11 Comments

    Summary

    • Kate Spade announces quarterly earnings tomorrow.
    • The brand's cache and upscale appeal have led to strong topline growth.
    • However, its consistent operating losses are a cause for concern and do not warrant its enterprise value of 4x LTM revenue.
  • Caesars Is In Deep Trouble Heading Into Earnings
    Mon, Aug. 11 CZR 3 Comments

    Summary

    • Caesars is expected to announced Q2 earnings on Monday.
    • The company's flat-to-declining revenue and operating income do not justify its 16x EBITDA multiple.
    • With $21 billion in long-term debt, which Moody's cites as unsustainable, Caesars is in deep trouble heading into earnings.
  • Goldman's PR Campaign Can't Save RetailMeNot From Becoming Kindling
    Fri, Aug. 8 SALE 9 Comments

    Summary

    • RetailMeNot released Q2 earnings this week. The stock dropped 20% after-hours due to earnings per share below expectations.
    • Goldman Sachs tried to explain the market's confusion over non-GAAP expections (0.17 eps) vs. GAAP results ($0.08 eps).
    • The stock has continued to fall due to flat revenue and rising operating costs.
  • POOF! There Goes The Short Thesis: Molycorp Receives $400MM Lifeline
    Editors' Pick • Thu, Aug. 7 MCP 55 Comments

    Summary

    • Molycorp announced Q2 earnings yesterday.
    • Revenue of $117 million was below expectations of $131 million, but the average selling price increased 16% above Q1 2014 results.
    • $400 million financing from Oaktree gives Molycorp a lifeline and kills my short thesis.
  • After China's Government Bans Purchases Of Apple Devices, Is BlackBerry In Catbird Seat?
    Thu, Aug. 7 BBRY, IBM, AAPL 167 Comments

    Summary

    • Due to security concerns, China has excluded Apple devices from a list of products that can be purchased by the government.
    • The ban could dampen sales of the iPhone 6 and cause potential clients to look askance on Apple's partnership with IBM pursuant to mobile device management.
    • BlackBerry could potentially use its reputation in security to offer mobile device management services and handsets to the Chinese government.
  • Avoid RetailMeNot Until It Weans Itself Off Google Or Finds A Proven Business Model
    Wed, Aug. 6 GOOG, GOOGL, GRPN 16 Comments

    Summary

    • RetailMeNot reported flat revenue and declining operating income margins for Q2 2014.
    • The company has not fully recovered from a decline in organic search rankings after a recent change in Google's algorithm.
    • I project slowing revenue growth and protracted margin compression from transitioning into non-organic traffic. Investors should avoid the stock until the new strategy pans out.
  • Groupon Misses On Revenue, Stock Burns Like Kindling A La RetailMeNot
    Wed, Aug. 6 GRPN 9 Comments

    Summary

    • Groupon announced Q2 earnings after-hours today.
    • Revenue of $752 million was up 23% Y/Y, flat Q/Q and short of the expected $762 million. Non-GAAP earnings of $0.01 per share met expectations.
    • At 1.3x run-rate revenue and nearly 50x run-rate EBITDA, Groupon is a strong sell.
  • Earnings Preview: Will Groupon Become Kindling Like RetailMeNot?
    Tue, Aug. 5 SALE, GRPN 4 Comments

    Summary

    • Groupon announces Q2 earnings after-hours.
    • Analysts expect 25% revenue growth Y/Y and flat growth Q/Q. They also expect earnings per share of $0.01 versus a loss in Q2 2013 of $0.01.
    • It would take a strong effort on revenue and cost containment to get there. I currently own straddles on the stock, in case Groupon misses.
  • RetailMeNot, Inc. Is A Firesale
    Tue, Aug. 5 SALE 21 Comments

    Summary

    • RetailMeNot announced Q2 earnings yesterday.
    • The company met revenue estimates of $60 million, but net income was down 16% Y/Y and 29% Q/Q.
    • At 53x run-rate earnings per share and 9x run-rate revenue, RetailMeNot is a strong sell.
  • Michael Kors Delivers Effortless Style And Earnings, Yet Declines On Q2 Guidance
    Mon, Aug. 4 KORS 6 Comments

    Summary

    • Michael Kors announced Q1 2015 earnings today.
    • Revenue grew 43% to $919 million and earnings per share increased 48% annually, both exceeding analysts' expectations.
    • The stock is down in pre-market trading after warning on revenue and earnings guidance for Q2.
  • Without A Cash Infusion, RadioShack's Days Are Numbered
    Mon, Aug. 4 AMZN, BBY, RSH 15 Comments

    Summary

    • RadioShack is set to report earnings on Monday.
    • Due to covenants in lender agreements, the company has been unable to engage in mass store closing to help stem its cash burn.
    • After cash burn of $48 million last quarter, the company has only $62 million of cash on hand. Without a capital infusion, RadioShack's days are numbered.
  • Michael Kors: Still Caught Up In Coach's Backdraft?
    Mon, Aug. 4 COH, KORS 6 Comments

    Summary

    • Michael Kors is expected to announce Q1 2015 earnings on Monday.
    • Its earnings growth has been robust, and it should meet or exceed expectations of 33% earnings per share growth for the quarter.
    • Whether investors believe Kors' expansion will tarnish the brand and ultimately, sales, will determine how the stock trades from here.
  • BlackBerry: Is BBM For Windows Phone A Trial Balloon?
    Sun, Aug. 3 AAPL, GOOG, MSFT 185 Comments

    Summary

    • BlackBerry announced BlackBerry Messenger for Windows phones.
    • The market was sanguine on the announcement, assuming BlackBerry was showing weakness by getting into bed with Microsoft.
    • The alliance is consistent with BlackBerry's new multi-platform strategy, and may be a trial balloon for BBM for the desktop.
  • Barbarians At The Rare Earth Mine: Molycorp Equity Holders Could Get Cooked
    Fri, Aug. 1 APO, MC, MCP 54 Comments

    Summary

    • Molycorp reports its Q2 earnings next week.
    • I expect the company to report that it has not found a solution to its cash burn.
    • I also expect any solution - equity raise, bootstrap deal - to result in dilution for existing shareholders.
  • Q2 Earnings Down 4%, At 56x P/E Sirius XM Is A Short
    Fri, Aug. 1 SIRI 51 Comments

    Summary

    • Sirius reported Q2 earnings earlier this week.
    • Revenue was up 10%, yet earnings declined 4%. Earnings per share was flat year-over-year due to share buybacks.
    • At 56x LTM earnings, Sirius is a short.
  • In Beats Restructuring, Apple's Tim Cook Sends Subliminal Message To Pandora
    Thu, Jul. 31 AAPL, P 38 Comments

    Summary

    • Bloomberg News reported that Apple is laying off 200 employees in a restructuring of Beats Electronics.
    • Apple CEO Tim Cook is sending a message to the markets that he is minding the details of the $3 billion Beats deal, and he wants it to be accretive.
    • Cook may have also sent a subliminal message to Pandora - "Market share is good, but profits are better".
  • Q2 Earnings Preview: Molycorp Could Lose $180MM - $200MM, And That's The Upside Case
    Thu, Jul. 31 MCP 16 Comments

    Summary

    • Molycorp reports Q2 earnings on August 6th.
    • Analysts are expecting revenue of $131 million and a net loss of $0.28 per share.
    • A potential net loss of $180 million ($0.81 per share) to $200 million ($0.90 per share) could send bulls running for cover.