Amazon buying a ticketing service provider may seem odd at first glance. Yet, below I will explain why there are benefits to an acquisition of this kind. If Amazon were to purchase Ticketmaster (Parent company is Live Nation), it would be able to leverage the existing ticket distribution service to bring in more revenue and target more specific customer needs through the newly obtained customer data.
First, visitors to Ticketmaster and Live Nation sites will now redirect to Amazon.com/Ticketmaster or Amazon.com/Tickets. That way, additional traffic is directed towards the online marketplace. In 2015, Live Nation processed 530 million tickets, which is substantial traffic. Amazon.com is currently in the top 5 of sites visited in the USA. I am sure Jeff Bezos would like to see them as the #1 site. “The Everything Store” would gain an additional piece to that puzzle, a portal for live sporting events, concerts and more. Within the ticketing section, there will be links to merchandise for those same events. This leads to the next big benefit of the acquisition.
Customer Data. Amazon wants to know as much detail about its customers as possible. With the addition of a ticketing service, users will link their Amazon accounts to their ticket purchases. Amazon will now know what concerts, sporting events, or plays you like to attend. That information will enable Amazon to directly target products to individual customers based on music tastes, sporting tastes and so on. As time goes on, Amazon will understand who your favorite teams, what games you go to and when, and then be able to offer you deals on select merchandise heading into a football season, or into a game that they know you will be attending.
A scenario plays out where you log onto Amazon.com/tickets and purchase two tickets to the upcoming Knicks game. On the way to the cart, offers will pop for a Knicks hat, or a Carmelo Anthony jersey. Of course, free shipping is included with Prime. Certainly you are more likely to purchase that merchandise than someone that isn’t about to attend a game. This plays into Amazon’s strategy of being able to cater to customers on a personalized level. For the next two weeks leading into that game, Amazon can target specific products to you.
At a current market cap of $5.5 Billion, an acquisition of Live Nation will be a rounding error for Amazon. They could even purchase Ticketmaster from within Live Nation for less. This would be just another piece to the puzzle of becoming the “Everything Store” that Jeff Bezos has envisioned. Lastly, I haven’t mentioned the benefit of acquiring the ticketing business itself, a sector that has a long runway to grow considering the preference of live sporting/concert events that the younger generation has.
Nintendo shares are on fire after releasing the earth shattering, augmented reality "Pokemon GO" game this past week.
Thinking about this from a financial perspective, I will quickly summarize a potential revenue stream for Nintendo from the game. Retailers and fast food chains can have Nintendo make their location an important stop where players can find rare items or Pokemon or whatever else is important to gather in the game. I'll save the specifics of what they need to have because I don't play the game myself, but I do understand there are certain locations that are important for players to visit. Stores can become that location and players would have to visit those stores to go further in the game. For example, this upcoming weekend, Wal-Mart may run a special that has their store give a higher chance of catching a rare Pokemon in the game. Nintendo charges Wal-Mart a fee for setting up a virtual Pokemon catching ground in their store for the weekend and Wal-Mart benefits by increasing foot traffic to the store and getting more potential customers inside the doors. This could be any company, all over the world. It will be interesting to see how the augment gaming evolves over time. Yet, one thing is for sure, this will not be the last augmented reality game that takes the world by storm.
90 year old Former Fed Chairman Alan Greenspan speaking on the recent referendum in the United Kingdom. Greenspan believes Scotland will go for Independence next, and Northern Ireland is a maybe. Contagion is a key issue markets will be focusing on in the weeks ahead. Was Brexit a one off event, or part of a broader dissolution of the European Union?
I spent the previous weekend in Newport, Rhode Island attending a cousin's graduation. Below is a picture I took of the harbor, though it was cloudy. Newport is a beautiful town that combines it's old history with a newer, people friendly downtown that has plenty of shops and restaurants to keep you busy.
Starbucks earnings are out after the bell today. I believe if earnings come in below expectations, this will be a great buying opportunity for long term investors. One concern for potential investors right now may be the high p/e multiple, currently around 37 times earnings. However, long term, the strong growth from Starbucks will continue to impress. The company is pushing hard into China and Greater Asia with the market in China now the second largest for Starbucks, behind only the USA. CEO Howard Schultz has said the company plans to open 500 stores in China, every year for the next five years. Clearly, management is looking to take advantage of the growing incomes there. For those investors who may be doubting coffee culture in China or the rise of the consumer would be mistaken. This past March, when I was in China, every Starbucks I passed was jam packed. Now, before you dismiss an empirical observation, the numbers confirm what I saw, fourth quarter revenues in Asia doubled year over year for the company. Rising incomes in the region and the growing emergence of a middle class will only continue to drive top and bottom line growth for Starbucks. With further expansion plans into South Africa and Italy, Starbucks growth is not tapped out and will continue for the company. This is without mentioning the loyalty program, increased mobile app usage, and the continued innovation in the stores with wireless charging and free wi-fi in stores. Starbucks is currently valued at $90 Billion and I wouldn't be surprised to see news headlines in the future highlighting how Starbucks has passed McDonalds (valued at $110 Billion) in terms of market cap. The arches are parting way for the green apron.