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Tag: Stock Market

  • Short Selling Is Vice Described As Virtue, Says Elon Musk

    Short Selling Is Vice Described As Virtue, Says Elon Musk

    “There’s a perniciously false effective markets argument made for shorting,” says Tesla CEO Elon Musk. “It is vice disguised as virtue. Short selling is frankly used against the public. We don’t have shorting in private companies. The vast majority of companies, over 90 percent are private, and you cannot short them. Yet somehow, private companies get things done.”

    Elon Musk, CEO of Tesla, explains in an interesting interview with Sandy Munro, why short selling is an attack on the people and is actually vice but described by its greedy advocates as virtue:

    Short Selling Is An Attack On The People

    There are very few areas in life where you can sell things that you don’t own. Short selling, where you can sell shares that you don’t own, when I said it was vestigial I meant it came from an era when stocks were traded by people traveling on horseback to exchange stock certificates. In order to have the transaction speed not take weeks, somebody would say well the stock certificate is coming on that horse. I don’t have the stock certificate right now but I promise you that I’m getting the stock certificate and the rider is going to be here in New York from Chicago in three days and then I’ll be able to give you the stock certificate.

    That’s where this whole silly thing arose. But then the problem is like the way short selling is used today is it’s frankly used against the public. Most people aren’t aware that short selling even exists. Then the ones that are aware very few of them know actually how to use it. It’s basically like .01 percent of stockholders know how to use short positions to get ahead. I think it is effectively an attack on the public.

    It Is Vice Disguised As Virtue

    Tesla was under a massive attack by the short and distort, where they take a short position and then they do everything possible to trash the company six ways to Sunday, and they were successful. This has now happened to Tesla twice. It happened in 2013, and it happened in 2017 through 2019. The intensity of the attack was crazy. I was like man, it would cause you to lose faith in humanity, the extent of the greed of this that went on.

    We don’t have shorting in private companies. The vast majority of companies, over 90 percent are private, and you cannot short them. Yet somehow, private companies get things done. There’s a perniciously false effective markets argument made for shorting. It is vice disguised as virtue.

  • Fake Twitter Buyout Article Fools Everyone, Sends Stock Soaring

    Fake Twitter Buyout Article Fools Everyone, Sends Stock Soaring

    Hoax articles – fooling everyone from your racist uncle on Facebook to top Wall Street investors.

    An article suggesting that Twitter had received a $31 billion offer sent the company’s stock prices soaring earlier this afternoon.

    The article, called Twitter Attracts Suitors, is hosted on bloomberg.market and made to look exactly like a Bloomberg Business article.

    “Twitter is working closely with bankers after receiving an offer to be bought out for $31 billion, people with knowledge of the situation said,” is reads. “While a deal is expected to to be reached, bankers may rebuff any suitor or work out an eventual sale, the people said asking not to be named as the information is private. In the past, Google has been named most likely to buy the micro-blogging site, but the people said there was also strong interest from an un-named foreign buyer.”

    Google’s named has been floated as a possible Twitter suitor for quite some time. But the only problem with all of this is that it’s a complete fake.

    Bloomberg confirmed the article is not one of their stories.

    As for Twitter stock – see that big spike? That’s the work of the article.

    Screen Shot 2015-07-14 at 1.29.51 PM

    The .market domain was registered a few days ago.

  • Retirement Planning: 3 Reasons To Start As Soon As Possible

    Retirement Planning: 3 Reasons To Start As Soon As Possible

    Retirement planning is typically something that individuals and couples engage in once they hit their late forties and early fifties. The conventional wisdom has been that once you hit a certain age, you should be looking to prepare to retire.

    In actuality, every American needs to start working on their “nest age” immediately. Putting it off while failing to consider drastic changes to the economy will likely result in disappointment later on.

    There IS no certain age to begin retirement planning. These three reasons to start preparations as soon as possible should hopefully help you take steps towards a happy retirement.

    More And More Americans Are Not Able To Retire…Period.

    Senior citizens were polled in 2012 and a surprising number—as many as 30 percent—said they didn’t intend to stop working until they hit 80.

    Compare that to the once held belief that 65 was the ideal retirement age.

    And 80 is being optimistic; for too many senior citizens there will simply be no retirement. Or they may have planned to retire in their 80s, but will not live to see that age.

    The recent recession and housing bust can be blamed for this grim outlook which encourages retirement-age Americans to delay or forego retiring.

    If you do not wish to be working hard into your seventies, then you shouldn’t delay retirement planning.

    The Volatile Stock Markets Aren’t Big On Reassurance

    Putting all your nest eggs in one basket? You may be setting yourself up for disaster.

    We already know that the stock markets can crash at any time, and are likely to do so at least once in our lifetimes.

    A number of aging Americans have put most of their savings into the stock markets in the hopes that what they most of their savings will still be there when they retire.

    While buying some shares isn’t a terrible idea, putting everything into something so unpredictable is never wise. Consider alternatives for investment such as CDs, real estate, and even gold.

    The Longer You Wait, The Less Money You’ll Have

    In the U.S. News article “5 Reasons to Start Investing for Retirement Today”, the writer brings up an outstanding point as to why you should begin saving for retirement as soon as possible:

    The longer you have your money invested, the more powerful compounding interest is. For example, $5,000 invested by a 20-year-old with an average 8 percent annual return will yield $160,000 by the time he retires. That same amount invested by a 39-year-old will yield only $40,000 upon retirement.

    While his example specifically addresses compounding interest, the same logic can be applied no matter how you choose to invest or save for retirement.

    The longer you wait, the fewer retirement resources you will have at your disposal!

    What other NEED TO KNOW advice can you offer persons planning to retire?

  • Stock Market Crash Said To Be Inevitable. So Why Have Baby Boomers Poured Everything Into It?

    Stock Market Crash Said To Be Inevitable. So Why Have Baby Boomers Poured Everything Into It?

    There is an ongoing debate as to what the current state of the stock market means.

    For some, what we’re witnessing is a natural aspect of the market, known as a “correction”.

    The correction part of the cycle is said to occur years after the market enjoys a bullish period. When the stocks have peaked, they may drop down more than ten percent.

    Investors want people to know that this is all to be expected with a healthy market.

    It’s also been pointed out that despite the stock market’s current downward trend, its lost roughly seven and a half percent. For all the panic, it hasn’t hit “correction” levels.

    Well, suppose the stock market does hit those levels and continue to drop. Plummet even.

    Another group of market watchers would not be surprised.

    After all, the stock market crash can occur at any time. Forget the uncomfortable and traumatic nature of the recent recession; we’re talking full-blown Great Depression.

    Speaking of which, this weekend apparently marks the anniversary of that grim turning point in American history.

    Returning to the present, it’s important to address the fact that the stock market crash isn’t just likely to occur within our lifetimes, but there is research to suggest it is inevitable.

    A joint New York University/Boston University study revealed that there will be as many two single day sessions with losses greater than 20 percent in our lifetimes.

    With such a heavy loss due to happen, how has it happened that an entire generation has set itself up for total devastation?

    According to reports, baby boomers outpace all other age groups as to how much of their savings are tied up in the volatile stock markets.

    Of all stock investors who are age 60 to 65, 30 percent have put everything into the stock market. Fifty-two percent of this age group are said to have the majority of their wealth tied up in markets.

    Overall, it seems that if things go bad, it’s this group of Americans that will be hit hardest. And as it is a group prepping for retirement, that will be beyond devastating.

    What can these persons do to shield themselves?

    Professor Xavier Gabaix, who was behind the ground-breaking study previously mentioned, strongly suggests that individuals carefully construct their stock portfolios so that a big hit will not be a fatal blow to their life savings.

    Are you prepared to survive a stock market crash?

  • Facebook Stock Opens at All Time High

    Facebook Stock Opens at All Time High

    On the heels of a strong earnings report, Facebook stock soared in after hours trading and has carried that momentum into pre-market trading, hitting an all-time high.

    Wednesday afternoon, Facebook released its Q2 earnings, reporting revenue of $2.91 billion – up 61 percent year-over-year. Revenue from advertising was up 67 percent, with 62 percent of that coming from mobile. COO Sheryl Sandberg announced that the company now has over 1.5 million active advertisers.

    “We had a good second quarter. Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world,” said Zuckerberg.

    Not only was revenue up (beating expectations), but user totals also climbed in the second quarter. Facebook now boasts 1.32 billion monthly active users, up 14 percent year-over-year.

    All of this pushed stock to the brink of an all time high at close on Wednesday at $71.29 (the stock hit $72 in March, only to fall a bit over the past few months).

    But now, Facebook stock has in fact hit an all-time high. Shares were set to open as high as $78.13 (nine percent higher) in pre-market trading, but have now officially opened the day around $76.

    Quite a long way from August of 2012, when the stock price was flailing and resided somewhere in the upper teens. Show the street you can make money (especially with mobile advertising), and oh how things can change.

  • GoDaddy Files for a $100 Million IPO

    In 2006, web hosting company GoDaddy.com decided it was time to file for an initial public offering (IPO). However, it quickly changed its mind after learning that it would have to take a 50 percent haircut (a loss on the market-value of a stock to provide a cushion for the brokerage company in case the investment loses money) on its initial public offering.

    Since then, GoDaddy has experienced a plethora of financial issues, eventually culminating in a business-saving, $2.25 billion investment from three different private equity firms in 2011 – KKR & Co. (KKR), Silver Lake Partners and Technology Crossover Ventures. Collectively, these three companies now own 69 percent of GoDaddy, with founder Bob Parsons owning 28 percent himself.

    Unfortunately, these investments have not led GoDaddy out of financial straits. Despite posting a 24 percent increase in revenue from last year, GoDaddy still lost $200 million last year. Surprisingly, this number represents a vast improvement from 2012, where GoDaddy lost $279 million. Through the first quarter of this year, GoDaddy has posted $51 million in losses.

    It is due to these extreme losses on a yearly basis that GoDaddy has finally decided to file for its IPO. With this offering, GoDaddy hopes to raise approximately $100 million, with all of the proceeds going toward repayments of its debts. However, this number is very likely to change once the company actually hits the market.

    Fortunately for GoDaddy and its future investors, the non-financial numbers have been trending up for the company for quite some time. GoDaddy has reported an increasing customer base of 13 percent over the last few years, with its total number of customers reaching 11.6 million in 2013.

    GoDaddy also has precedence on its side. Twitter was successful with its IPO foray late last year, and GoDaddy competitor Endurance International Group Holdings Inc. (EIGI) has posted a 14 percent growth in shares since its company went public last year.

    Image via YouTube

  • Rite Aid Stock Down on Poor Earnings Update

    Stock in Rite Aid Corporation is tumbling today following a dismal earnings update by the company. On Thursday Rite Aid released sales results for May and updated its quarterly and yearly earnings estimates, previewing a year of worse-than-expected earnings.

    Rite Aid reported that its front-end same store sales for the five weeks ending on May 31 increased just 0.5% over the same month one year ago. Pharmacy same store sales were up 5% and overall same store sales were up 3.5%. Rite Aid drugstore sales were up 2.5% for the month, hitting $2.484 billion.

    For the quarter so far, overall same-store sales increased 3.1% and pharmacy same store sales increased 4.6% over the same 13-week period last year. However, front-end same store sales have not increased, remaining flat for the quarter. Drugstore sales for the quarter so far are up 2.6% to $6.425 billion.

    Despite the rise in sales, Rite Aid’s preliminary quarterly results show that the company expects to report between $35 million and $45 million in net income, earning $0.04 per share. The company also expects its quarterly adjusted EBITDA to fall behind that of the same quarter last year. Rite Aid is blaming this decline on “higher-than-expected drug costs” due to delayed price reductions among generic pharmaceuticals and a “greater-than-expected reduction in reimbursement rates.” The company is scheduled to release its final quarterly results on June 19.

    Based on these quarterly earnings estimates, Rite Aid revised down its total-year financial guidance. The company now estimates yearly adjusted EBITDA to come in between $1.275 billion and $1.35 billion. Rite Aid now expects to take in between $298 million and $408 million in net income for the year with a corresponding income per share of between $0.30 and $0.40.

    The earnings update came as a disappointment to investors who had been expecting Rite Aid to bring in closer to $0.40 per share in income for the year. With $0.40 now closer to the high end of the company’s estimates, Rite Aid could have a hard time satisfying investor expectations in the coming quarters.

  • Stock Market Distrust Shown for Third Straight Year

    As it currently stands, the stock market is in a fairly good spot. Interest rates on fixed income and cash are low, market returns in 2013 exceeded 30 percent, and the market itself is setting record highs. Despite all of the success over the past five years, however, Americans are still not likely to invest their hard-earned money in such a “volatile” way.

    Research conducted by Princeton Survey Research Associates International and reported by Bankrate.com show that only 22 percent of Americans trust the stock market enough to be more inclined to invest in it.

    The results were compiled from phone interview with over 1,000 participants. The results showed consistency amongst all ages and income levels and are consistent with the results from similar studies published in 2012 and 2013 in which 76 percent of Americans stated they were not more inclined to invest in the stock market.

    Greg McBride, chief financial analyst at Bankrate.com, believes that this behavior is going to be detrimental to the pockets of Americans in the long-run: “Americans may be avoiding the buy-high, sell-low habit seen in previous market cycles, but only because they’re not buying at all. An overly conservative investment stance compounds the problem that so many Americans have of not saving enough for longer-range goals like retirement.”

    Rick Larrick, a professor of management at Duke University, corroborated McBride’s position about the conservative economic practices of Americans: “People would rather have pathetically low interest rates in something safe rather than (what they see as) the roller-coaster returns on the stock market.”

    Instead of investing in the stock market, Americans have been saving cash and spending their money on bonds, both of which have a low return-rate but offer more stability in the short-term. In the long-term, however, bond investments are dangerous due to the potential impact of inflation, something bonds do not adjust for.

    McBride believes that the best approach to investment is a balanced approach: “Investing over period of years in diverse portfolio is the pathway to financial stability.”

    Unsurprisingly, the study found that those most comfortable with their current economic position are wealthy males with a college education and who are newer to the job market.

    Image via Wikimedia Commons

  • ‘Candy Crush Saga’ Maker Files for IPO

    The maker of Candy Crush Saga filed its Initial Public Offering (IPO) of up to $500 million today. King Digital Entertainment undoubtedly hopes to follow in the footsteps of Zynga, who filed their IPO in late 2011 and has become one of the biggest leaders in mobile gaming.

    King filed their IPO with the Securities and Exchange Commission (SEC) today and plans to trade on the New York Stock Exchange under the ticker “KING.” Some analysts believe that King could be worth more than $5 billion, which is less than what Zynga’s valuation was in 2011, but is nothing to scoff at nonetheless.

    Candy Crush Saga was first released in April 2012 and has since become a raging success, which you probably already knew (even if you don’t play the game yourself) if you ever go near Facebook. According to Recode, “King generated profits of $568 million on revenue of $1.88 billion” in 2013. After posting a loss in 2011, the release of Candy Crush has made King into a powerhouse.

    The game has been downloaded more than half a billion times and according to King’s IPO, Candy Crush has almost 130 million daily users as of December 2013. The number of daily active users has steadily increased since the game was first released, so there is no reason to expect the game, which accounts for more than three-fourths of King’s revenue, to drop off anytime soon.

    In addition to Candy Crush Saga, King also has several other games, including Farm Heroes Saga, Papa Pear Saga, Pet Rescue Saga and Bubble Witch Saga. Even though these games don’t currently generate close to the revenue that Candy Crush earns, perhaps the attention King is getting for their IPO will increase their number of users.

    Considering what a cash cow Candy Crush has become, King was recently approved for a trademark of the word “candy” as far as using the word for video games and clothing goes. The company is also trying to trademark the word “saga.” As such, any developers hoping to slip “Candy” in as part of their game title and perhaps capitalize on Candy Crush’s success won’t be successful. Apple is helping protect the trademark, similar to their move to protect Flappy Bird by rejecting any new titles with “Flappy” in their name.

    Image via Twitter

  • Twitter Stock Makes Co-Founder Jack Dorsey a Billionaire

    Everyone knew that there was a lot of money to be made when Twitter went public, but what Twitter opened at on the New York Stock Exchange far exceeded the company’s expectations.

    So what does this mean for Twitter co-founder Jack Dorsey and others? Cha-ching! Thanks to Twitter, Dorsey has now been elevated to billionaire status.

    Dorsey, a St. Louis, Missouri native, was expected to make some big bucks after it was speculated that Twitter would start trading at $26 on the New York Stock Exchange (NYSE). Instead, Twitter (TWTR) opened at $45.10. Twitter was worth around $18 million before going public. The current trading price makes the company worth right at $32 billion and makes its stockholders a whole lot richer than originally anticipated.

    Twitter co-founder Jack Dorsey is now a billionaire thanks to his Twitter stock alone. If Dorsey were to dump his 23,411,350 shares right now at $45.81 per share, he would make around $1.07 billion. It has been estimated that around 70 million shares will be sold in the IPO. Check out Dorsey’s tweet below after the Twitter IPO ship set sail–he certainly has a few darn good reasons for his enthusiasm!

    Dorsey is also the CEO and founder of Square, a company that accepts mobile credit card payments. Technically, Dorsey was already worth a billion before today if you count what his Square stock would have sold for on the secondary market. But, that’s a lot less exciting than “Man Becomes a Billionaire In One Day!”

    Considering how quickly Square is growing, there is some speculation that Dorsey will make that company public in 2014, which could very well make him a billionaire a second time over.

    [Images via Google and Twitter]

  • Twitter IPO: 7 Things You Might Not Know

    Twitter will go public on the New York Stock Exchange on Thursday morning. On the eve of the company’s much talked about IPO, here are seven things you might now know:

    1. If Twitter’s stock skyrockets tomorrow, it’s actually a bad thing for the company.

    According to San Francisco investment banker Bill Hambrecht, who has helped companies like Amazon, Apple and Google go public, if Twitter’s price per share rises significantly higher than its IPO price of $26 on opening day, that money’s going into the pockets of Wall Street insiders instead of flowing back into the company.

    2. There’s a reason we’re talking about MAUs.

    An MAU is a monthly active user. This number is important because many Twitter users aren’t actually active on the platform. Only about half of registered users follow two or more people. Investors want to know how many people are actually using the network, not how many are merely signed up, because of the obvious implications this has for income generation.

    3. Speaking of MAUs, Twitter is lagging behind some of its competitors.

    Facebook boasts an impressive 1.19 billion MAUs while Twitter reports just 215 million. It also lags behind Google+, which reports 300 million.

    4. Most of Twitter’s MAUs are outside the United States.

    An estimated 3/4 MAUs are outside the US, and experts caution that this could have negative implications when it comes to monetization.

    5. Some San Franciscans don’t like Twitter, and they plan to let the world know.

    A group of individuals and community-based organizations will stage a protest on Thursday, set to begin at 6:30 a.m., right when Twitter’s shares start trading on the New York Stock Exchange. They claim that the company receives unfair tax breaks, and is driving up rent in the Tenderloin and Mid-Market neighborhoods.

    In a twist of irony, the protest has been promoted on Twitter, under the hashtag #ThrownOutByTwitter.

    6. Twitter is doing its IPO a little differently than Facebook did.

    Besides being generally more low-key about it, Twitter is listing its stock on the New York Stock Exchange, while Facebook listed on the more tech-driven NASDAQ Stock Market.

    The lead banker for Twitter’s IPO is Goldman Sachs Group Inc, while Facebook went with Morgan Stanley.

    7. When it comes to privacy concerns, Twitter could potentially know more about its users than any of the other social networks.

    When you’re reading an article on a website or blog, you usually have the option to tweet it or like it on Facebook. While Facebook claims it doesn’t use its like buttons for tracking, Twitter makes no such promises.

    Furthermore, Twitter recently acquired MoPub, a start-up that will place ads within its mobile app. The combined information collecting abilities of Twitter and MoPub have the potential to create what some tech experts are calling a “digital Rosetta Stone that enables it to know who you are, wherever you are.”

    Image: Twitter (SEC)

  • Wall Street Ends 5 Day Skid; Stocks are Up

    The stock market saw a surprise surge last Wednesday after the Federal Reserve announced that it would continue its bond-buying program. That up-swing did not last long, though; The stocks dipped drastically on Thursday, and Wall Street has seen a losing-streak the previous 5 days.

    There was positive news for Wall Street today, however. The Dow Jones, S&P, and Nasdaq all showed positive gains for the day, with increases of 0.41%, 0.18%, and 0.61% respectively.

    Along with the reviving stocks, the US economy also saw a reviving job market with unemployment reports coming back positive – Initial claims dropped 5,000 to 305,000, with the four-week average of new claims dropping 7,000 to 308,000. These numbers make jobless claims the lowest they have been in 6 years.

    Part of the surge has been caused by two new companies that were recently added to the Dow – Nike, and Visa. Visa was up 1.3%, while Nike closed with gains of 4.1%.

    Investors link the 5 day losing-streak to the fiasco that is currently happening in Washington concerning the looming government shutdown. Part of today’s surge, however, may be due to the air of compromise or negotiation that has rumored to have occurred in D.C. Republican Senator Jeff Sessions, ranking minority member of the Senate Budget Committee, said that there will be no government shutdown or default. Meanwhile, John Boehner urged the Republicans to be flexible to options that will allow the government to continue to function.

    While the stock market showed signs of improvement today, the closing figures were not spectacular. This has led many, such as Ron Florance, deputy chief investment officer for Wells Fargo Private Bank, to conclude that the Federal Reserve was right in continuing its bond-buying program: “It’s fair to say that the Fed got it right by delaying (cuts to the stimulus). Growth is uninteresting and subdued.”

    Phil Orlando, chief equity market strategist at Federated Investors in New York, believes that this market growth shows, however, that the Federal Reserve will be able to cut back it’s program soon: “If today’s number was a good number, that means when we see the job report on October 4, that number ought to be pretty strong. That’s going to give us another clue as to the underlying strength of the labor market, which was one of the reasons the Federal Reserve chose not to commence the taper.”

    Still, others are worried that the recent rise in stocks is the result of temporary fixes: “Worryingly, it looks like even this relatively modest growth is only being achieved by firms cutting prices,” stated Chris Williamson, the chief economist at Markit.

    Whatever the reason, higher prices in the stock market and lower unemployment rates can only be views as positive for the US. With its credit-rating on the line due to the debt-ceiling crisis and potential default, any inducement for foreign investors to enter into the American market is a good thing.

    Image via Wikimedia Commons

  • Bonds Continue to Rise, Making Investment Wise

    There has been much talk lately of a government shutdown, and for good reason. Politicians in Washington are still debating what to do about the looming debt-ceiling crisis, with Republicans still pushing for the defunding of Obamacare in order to make things work. The biggest loser in this battle? The stock market.

    Despite the high numbers reported for the month of September, the stock market has taken a blow, mainly due to the bickering in D.C. With the uncertainty of what decision the federal government is going to make concerning the looming shutdown, investors are starting to shed their risk-making policies.

    So, where are investors turning? Bonds. This week, bonds saw their biggest price gains since July 2012, with 10-year notes rising 4/32 in price and 30-year notes rising 7/32. The biggest investor in the US market, China, bought record amounts of US bonds and mortgage back securities in July, increasing its holdings by $20.2 billion.

    There are several reasons why so much attention is being given to the bond-market currently. First, bonds generally act inversely to stocks. Thus, when stocks are bad, bonds are good. With the continuing debacle over government shutdown in Washington continuing to affect stock-investors, investment in bonds makes sense.

    If the government was to actually shutdown, investment in bonds would be the best financial move possible. With shutdown comes no discretionary budget, meaning the federal government would have to stop expenditures on contracts, subsidies, and indirect payments to defense contractors and technology companies. This means lowered forecasts for said companies, and reduced stock activity. The thought of the US not paying its bonds debts would seem absurd considering how much government debt is owned by foreign countries, such as China (who currently owns $1.277 trillion).

    All signs also point to the fact that fewer bonds will be available in the future, mainly due to the drastic cuts in the deficit that have been made – from $1.089 trillion to $700 billion over the past year. If sequester spending continues, along with increased taxed, the deficit could be reduced even further, leaving fewer bonds available for purchase. As the law of supply and demand dictates, less supply and higher demands results in higher price yield.

    Bonds themselves have three main advantages. The first is that bonds represent capital stability. As previously stated, the government is not likely to default on its bonds payments anytime soon. The second advantage is that bonds offer more liquidity than other investments. The return for bonds on the secondary-market is essentially equal to the primary market. The last advantage of bonds is that they come with a fixed interest-rate that is locked-in for the duration of the bond. With the instability of the current US market, a stable investment makes sense.

    In short, buying treasury bonds today is as sure of a bet as putting some money on Barry Bonds was back in 2001.

    Image via Wikimedia Commons

  • Stock Market Dips Drastically After Wednesday’s High

    On Wednesday, September 18, the Dow set an all-time high at closing, as did the S&P. The boom came shortly after the Federal Reserve announced that it would continue its economic stimulus program.

    However, the investment-high did not last long. The stock saw itself losing all of its gains from Wednesday on Thursday and Friday. Economic pundits believe the dip in the market is due to uncertainty surrounding the actual strength of the market: “Investors need to take a step back and consider the idea that maybe the U.S economy is on weaker footing than we originally thought,” stated Marc Doss, regional CIO for Wells Fargo.

    Investors were surprised when Ben Bernanke announced that the Fed would continue its $85 billion bond-buying program. All signs pointed to the program being decommissioned this September. However, the Federal Reserve stated that it “decided to await more evidence that progress will be sustained” before ending the program.

    The purpose of the Fed’s bond-buyig program is to pump money into the economy to encourage people and banks to borrow and lend more money. Thus, it is a program that would need to be implemented when the market is not at its strongest. Because of its continuance, investors are wary as to current market strength, hence the drop in the stock market after the announcement.

    Companies themselves, however, seem to have much faith in the market. There have been 140 IPO’s added to the market this year, 46% more than 2012. More companies are offering IPO’s because they see promise and stability in the market. While this is generally seen as a positive sign, it does offer more risks to companies and could create a bubble situation of its own – the influx of IPO’s may start a trend which could diminish the quality of offerings and lessen peoples’ investments in said companies.

    The main concern with the Fed’s bond-buying program right now concerns the time-table as to when the Fed will feel ready to end the program:

    “Fed officials have never been able to agree among themselves what exactly would constitute the ‘substantial’ improvement in the labor market outlook that would persuade them to halt the monthly asset purchases. As a result, they have done a very poor job of communicating to the markets how improvements in the labor market should be gauged,” stated Paul Ashworth, chief US economist at Capital Economics.

    There is also the concern that the market growth the US has seen in September is the result of quantitative easing rather than actual company growth. If this is the case, many investors, such as Doug Kass of Seabreeze Partners Management, believe that the Fed has gotten itself in a situation that it can’t escape: “There is no way out for the Fed once it started the process of printing. Getting in was easy. Getting out—not so much. The Fed is trapped and can’t end tapering or else the bond and stock markets will blow up. The longer this continues the bigger the inevitable burst.”

    Then there are the other factors such as potential conflicts in the Middle East, worries over government shutdown, and the question of who will become the next chair of the Federal Reserve. In essence, nothing has changed – no one does not understand economics, and no one ever will.

    Image via Wikimedia Commons

  • NASDAQ Fined $10 Million For Botched Facebook IPO

    To say the Facebook IPO was a disaster might be a bit of an understatement. A few days after the social network went public, reports emerged that a technical issue prevented trading and many investors lost money as the stock’s value tanked. Those same investors brought lawsuits against the NASDAQ and the SEC launched an investigation into the IPO. That investigation has now come to an end.

    The Hill reports that the NASDAQ stock exchange has agreed to pay the SEC a $10 million fine for its part in the botched Facebook IPO. It’s noted that the fine is the largest ever paid by an exchange.

    In the official report from the SEC, the commission says that investors saw a delay of 19 minutes when trading opened. That delay caused 30,000 orders to be stuck for two hours. Sure, it’s annoying, but not scandal worthy.

    What the SEC took issue with is how NASDAQ began accepting orders again after reportedly fixing its system, even as traders were still reporting issues. The commission says that the exchange initiated in trading without understanding the problem with its system, therefore violating many of its own rules. Doing so violates the Securities and Exchange Act.

    “This action against NASDAQ tells the tale of how poorly designed systems and hasty decision-making not only disrupted one of the largest IPOs in history, but produced serious and pervasive violations of fundamental rules governing our markets,” said George Canellos, a co-director of the SEC’s enforcement division.

    Most recently, Facebook itself became the target of another lawsuit in relation to its IPO in March. A shareholder accused the social network of sharing critical information about the business with key investors while leaving everybody else out of the loop.

    Facebook’s stock is down 2.49 percent today on the news. It’s currently trading at $23.50.

  • Twitter Unveils Clickable Stock Tags (e.g. $FB)

    Starting today, when you’re talking about a publicly-traded company on Twitter, make sure you remember to use their new clickable stock tag.

    It’s also being called a “Cashtag,” by some Twitter users. Whatever you call it, Twitter’s new hashtag functionality for stock symbols means that users can view streams of tweets about certain companies’ stock with ease.

    The cashtags work like hashtags in that they are highlighted blue and clickable. Instead of the “#” that precedes normal hashtags, “$” precedes the cashtags (hence the name, I guess).

    For instance, you may see $FB on Twitter now. Clicking on that cashtag will show you all the other tweets that mention $FB.

    Some are saying that Twitter’s new cashtags are cool and all, but they are simply copying features available on other services for years. StockTwit CEO Howard Lindzon said in a blog post:

    It’s interesting that Twitter has hijacked our creation of $TICKER ie. $AAPL. It only took four years to ‘fill‘ this hole, though a few months back they told me in a detailed email it was not a hole they wanted to fill.

    You can hijack a plane but it does not mean you know how to fly it.

    Also:

    Either way, this could be a great way for Twitter users to compile real time stock information, although it’s unclear just how useful it is to obtain stock advice from the majority of Twitter users.

    [h/t Mashable]

  • Zynga Now Under Investigation For Cashing Out Before Shares Slumped

    Well, that didn’t take long. We brought you word this morning that Zynga CEO Mark Pincus and other insiders including Google cashed out on Zynga stock back in April before the company’s shares fell to the abysmal depths that they’re at today. On the suspicion that some less than honest dealings had taken place, multiple law firms are now opening investigations into the game developer.

    According to Kotaku, at least five law firms are now openly investigating Zynga. They will be investigating claims that the company violated federal securities laws and breaching fiduciary duty. If they find that to be case, Zynga could face some pretty large class action lawsuits from their investors.

    The current law firms that are targeting Zynga include Schubert Jonckheer & Kolbe, Newman Ferrara, Johnson & Weaver, Wohl & Fruchter, and Levi & Korsinsky. In even worse news for Zynga, some of these law firms have a lot of experience in winning class action lawsuits against video game publishers including EA and Sony.

    If any of these law firms find that Zynga was up to no good, it could lead to massive class-action lawsuits from investors. That wouldn’t be good for Zynga as the company is already beaten to the lowest they have ever been.

    As we saw yesterday, everybody involved in the social space saw deep cuts into their share prices. Add on to that the fact of Facebook being so close to Zynga and you have a recipe for disaster. It will be a while before either company sees their shares improve. We’ll keep watch over the coming months to see if Zynga can pull itself out of this mess.

  • Zynga Insiders Knew They Were Crashing And Cashed Out

    This week has not been good for Zynga. After posting decent results for Q2, the company’s shares took a dive into previously unknown depths. The shares dropped to trading around $3 each and haven’t really recovered since.

    To add insult to injury, a report from Yahoo News came out this week that says Zynga insiders knew about the coming collapse and cashed out before it happened. You may remember Zynga holding a secondary offering back in March. During that secondary offering, Zynga CEO Mark Pincus sold off 16.5 million shares for a total worth of about $225 million.

    It didn’t stop there though. Yahoo News found that Zynga worked with their other partners to alert investors to the imminent implosion and told them to cash out. Who cashed out?

  • Marc Pincus, Zynga’s CEO, sold 16.5 million shares for $200 million
  • Institutional Venture Partners, a Zynga investor, sold 5.8 million shares for $70 million
  • Union Square Ventures, a Zynga investor, sold 5.2 million shares for $62 million
  • Google, a Zynga investor, sold 4 million shares for $48 million
  • SilverLake Partners, a Zynga investor, sold 4 million shares for $48 million
  • Reid Hoffman, a Zynga investor, sold 688,000 shares for $8.2 million
  • David Wehner, Zynga’s CFO, sold 386,000 shares for $4.6 million
  • John Schappert, Zynga’s COO, sold 322,000 shares for $3.9 million
  • Reginald Davis, Zynga’s General Counsel, sold 315,000 shares for $3.8 million

    • As the report from Yahoo points out, these guys didn’t sell all of their stake in the company. They lost a lot of money when Zynga tanked earlier this week as well. The cash out was probably just a way for investors to cushion the blow when the real crash happened this week.

    While Zynga may be down at the moment, the company made it clear during their earnings release that they are dedicated to getting the company back on top. The social games developer has to cut their ties with Facebook while focusing on their own games portal at Zynga.com. They also have to start embracing mobile while making their games cross platform between the Web and mobile devices.

    If Zynga can pull it off, they could climb back up to profitability while keeping investors happy. The social gaming scene isn’t dead by any means, but it is changing. Zynga will have to keep up with it just like everybody else. They could start by not buying obvious fads like Draw Something.

  • Zynga Shares Hit All-Time Low

    Zynga has not had the best of performance the past few weeks on the stock market after the Facebook IPO opened to disaster and an investigation from the SEC and Congress. It looked like it was maybe getting better for a bit, but then Zynga got kicked in the teeth again.

    Zynga’s shares hit an all-time low of $4.78 today. This was the first time that the social game maker’s stock went below $5 a share. Reuters reports that Nasdaq leaped to action before 10 a.m. by prohibiting short sales. Short sales will be banned until Wednesday.

    According to Reuters, the reason Zynga suddenly dropped 10 percent wasn’t due to Facebook this time, but rather a damning report publishing by analyst Doug Creutz. Creutz said that “interest in Facebook-based gaming may have reached a negative inflection point.”

    What’s the cause of all this? The mass migration to mobile. It’s the one area that Facebook has traditionally struggled in. While Zynga puts the majority of their games on mobile platforms, many of them lack the install base that their top apps command with many of them having under 1 million DAU.

    Zynga attempted to reinvigorate their mobile presence last month with their acquisition of OMGPOP and the developer’s hit game – Draw Something. The game can be played on Facebook, but the majority of users were playing the iOS or Android app. Unfortunately, that plan may have backfired as Draw Something began to bleed users as Zynga started to flood the game with celebrity and product endorsements – the latest of which featured Jennifer Lopez and Enrique Iglesias.

    All of this is a cautionary tale to other game developers that make their living off of Facebook. The future for casual games is mobile and many developers, including Zynga, would do well to cultivate that audience. Facebook needs to join in the mobile foray as well by bringing native support for apps inside Facebook on mobile devices. The newly launched App Center may be a set up for such a feature in the future.

    Since the dramatic plunge this morning, Zynga has been slowly climbing back up to $4.98 a share. Here’s hoping they get above $5 a share by tomorrow’s end or they may be in for a rough week.

  • Stock Market: Spain Bailout May Only Bring Temporary Relief

    Stock markets across Europe increased on news that Spain had accepted the equivalent of €100 billion ($125 billion) in bailout funds, though some seem to view this as only a temporary solution to much bigger problems on the continent. The upcoming elections in Greece, for example, are being watched very closely, as voters are set to determine whether or not the country ditches the euro. If that happens, officials fear that others may do the same.

    Another concern right now is Italy, whose debt is quickly spiraling out of control. Considering the country is the third-largest economy centered around the euro, many feel that it’s really only a matter of time before they request bailout funds, as well. Spain’s rescue is the fourth recent European rescue, following Greece, Portugal, and Ireland.

    “The decision to grasp the nettle looks set to be greeted positively by the markets for the time being, but it is likely to be no more than a relief pop,” explained CMC Markets analyst Michael Hewson. “The decision by Spanish PM Rajoy to acquiesce to the inevitable and request help for Spain’s ailing banking sector at the weekend is the first sign of an acknowledgment of the problems facing the Spanish economy, but the fact it took so long in the face of so much denial remains a problem with respect to the credibility of the Spanish administration.”

    Following the announcement, France’s CAC-40 and the DAX in Germany rose 2.1 percent, while the FTSE index of leading British shares was up 1.3 percent. Additionally, the U.S. stock market was expected to open higher on the news.

    Of course, analysts warn that the bailout may lose its luster in a relatively short period of time, using Greece’s problems as an example of how these situations don’t always pan out.

    “I think it’s only a brief respite for the markets,” Tom Kaan of Louis Capital Markets said. “The €100 billion bailout is hopefully setting up a firewall against a much worse deterioration. Here we are, saving the banks. But what is next?”

  • Stock Market Plunge: Dow Drops 200 on Jobs Report

    Stock market plunges as U.S. employers add fewer jobs than analysts had anticipated, according to the Associated Press. The report ultimately caused the Dow Jones industrial average to drop 200 points, which puts it down for the year. This also marks the steepest one-day drop in the past six months. Adding to the stress are the signs of a global economic slowdown, indicated by the 11% unemployment rate for the 17 country that use the euro as currency.

    “The big worry now is that this economic slowdown is widening and accelerating,” explained Sam Stovall, the chief equity strategist for the market research firm S&P Capital IQ.

    Only 69,000 jobs were added in the United States this past May, causing the unemployment rate to rise to 8.2 percent. Ever hopeful, economists had initially hoped that employers would add nearly 158,000 jobs over the course of the month. Even China, which helped keep the global economy afloat during the recent recession, is showing signs of strain. According to reports, manufacturing was down in May.

    In addition to issues with the Dow, the Standard & Poor’s 500 index and Nasdaq composite index were also down two percent. However, these two indexes are currently still up for the year.