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 pay Nintendo to have their location be one of those locations for players. Thus, players will 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 has Wal-Mart pay them a small fee for the privilege of having the virtual Pokemon 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 game evolves over time. One thing is for sure, this will not be the last augmented reality game to hit smartphones.
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.
On news that a Fitbit has helped save a man's life and with the stock being up over 10%... Today I want to talk about the true potential of Fitbit. Right now, Fitbit is a fitness company. The company has a focus on helping people get in better shape. The social platform allows users to interact and compete against each other. However, the great opportunity for the company lies beyond fitness, it is in overall healthcare and corporate wellness programs. A Fitbit may help insurance companies save money. If people wearing Fitbit devices lead healthier lifestyles, insurers may pay out less in health care costs in the long run. Health insurers may begin subsidizing Fitbit devices to their customers. After all, just a few days ago it was reported that a Fitbit saved a man's life. The doctor was able to utilize data from the Fitbit to administer medical treatment properly. I see three points of focus for Fitbit to transition further into being an overall healthcare company. 1. Greater analytics & appealing visual dashboard 2. Statistically proven health benefits of the device 3. Increasingly accurate sensors Fitbit is doubling R&D spending for this year. CEO James Park has mentioned they view themselves as a "digital health and wellness company" and 2016 will be a year for increased "software improvements, more algorithms, and coaching". This speaks beyond getting people up and running more, he is looking beyond the hardware and seeing what these devices can tell us. Analytics provided to healthcare insurers can help them understand how a Fitbit leads to a healthier lifestyle, what level of activity or heart rate can lower the chance of heart disease. Actionable insights from Fitbit will force the hand of insurance companies. It will become clear that they must find a way to get these devices into the hands of their customers. At that point, not only will sales from the physical devices soar but also Fitbit will begin to monetize additional aspects of the business. The data and analytics they provide can be monetized. Of course, for all of this to occur, the sensors on the devices must improve. It's a safe bet that Fitbit engineers are working hard to do just that. If you believe that this is a possibility, it may a worthwhile investment while the company is valued at just over $3 Billion. After all, the healthcare sector is a $1 Trillion plus business per year.