Fed’s attempt to control BTC

According to Forbes, people have been making a comparison between bitcoin and gold. They are saying that based on the grounds of these assets being the “safe-haven” or “disaster hedges” when the economy is in recession. However, bitcoin is neither safe nor will its value maintain as the economy goes awry. Cryptocurrency could lose its value within a matter of seconds with no warning signs. It is unpredictable, and there are very few legal rules and regulations in the market. When was the last time someone rejected gold as a worthwhile asset?

Of course, with more people attempting to make a quick fortune, cryptocurrency has begun to turn more heads. With the global attention on these coins, it is no surprise that the Federal Reserve (Fed) is doing something about them. They have recently announced the increase of the interest rate – as many have long anticipated.

However, some professionals have agreed that this, too will not affect bitcoin significantly.

(Forbes, then, pointed out that increasing the rate would have impacted gold.)

In fact, David Johnson, CEO of Latium, have asserted that, “Bitcoin should move up due to increased clarity from regulators as it moves into a more defined asset class.”

With the predictions from these experts, it seems that Bitcoin continues to be a worthwhile asset. Many are discussing the entities that are bounding and affecting such commodities. The rules that are governing the movement of bitcoin are rather unique as the notion of cryptocurrency is still the first of its kind.

“Bitcoin will move on its idiosyncratic factors,” Arthur Hayes, the CEO and one of the founder of BitMEX, a Seychelles-based cryptocurrency exchange points out – at least for now. Along with Hayes, Mati Greenspan, senior market analyst of eToro has also expressed similar views. “Bitcoin is largely disconnected with any traditional markets and bears absolutely no connection to interest rate outlook at this time.”

Besides, bitcoin was never intended for layman to earn a couple of quick bucks. The cryptocurrency, bitcoin, was initially set to be another currency. In fact, it was intended as the future of currency, a digital version that goes hand in hand with our advancement in science and technology. As we move forward with the process of perfecting Artificial Intelligence (AI) and other capitals that are against the law of nature, cryptocurrency has become the potential substitute of our current medium of exchange. However, many are purchasing bitcoins for a different intention.

“People are buying BTC for all kinds of reasons,” Jeff Bishop, the CEO of Raging Bull stresses. “When you have an asset moving 10%+ in a week on a regular basis, you don’t really consider if the Fed causing 10-year interest rates to over 3% as a major concern,” he explains.

While it may be an easily accessible and flexible option for first-time investors, it is also a risky and ruthless investment. The rules that govern it is not clear or strict, the value could go down without any notice or indication. You could lose your entire investment in a matter of seconds.

In addition, bitcoin wallet has a very strong security. This is because of the existence of many low-profile internet hackers. If you have no knowledge of computer science, how do you defend yourself, or even comprehend the situation? Who would you be going to for assistance?

Conversely, investing in bitcoins could also bring you a lot of benefits. Like the anticipation of the fall, it could also rocket up within seconds. Anyone who invests, regardless of the chosen commodity, should already have the anticipated the possibility of losing their token.

Either way, investing is merely another form of gambling. There is no guarantee.

Featured image via flickr/ fdecomite

Amazon continues to flourish

For some time now, Alphabet, the parent company of our beloved Google, has been holding the position of the runner-up, right behind Apple Inc. in the global market. In recent events, Amazon.com has just surpassed Alphabet in acquiring the position of the second most valuable company in the world. This is the first of such occurrence. Apple Inc. has been valued at $889 billion for the past two years. As of now, Amazon’s market capitalization is $7 billion ahead of Alphabet, with $768 billion and $761 billion respectively.

This should not come as a surprise since Jeff Bezos, the founder and CEO of Amazon, has recently been proclaimed by Forbes as the wealthiest man in the world. At a net worth of $130 billion, he holds the label of the first and only centi-billionaire in the United States. Over the past 5 years, Amazon has been experiencing a positive growth in market value. At present, it has acquired a growth of 2.69 percent in its stock price as opposed to Alphabet’s 0.39 percent decrease.

In addition to three of these tech giants, Microsoft is also in the game, placing fourth. The company’s market capitalization is valued at $717 billion as of today.

Due to the comparably small gap between the top three firms, any change in positions between them will not bring about too much of a commotion. Besides, with the obvious and consistent growth that Amazon has seen recently, it is highly possible for it to surpass the rests and safely secure the position as the most valuable company across the world.

Amazon has been venturing towards different industries. They range from shopping to banking as well as healthcare. The Motley Fool has even insinuated at the company’s possible endeavor in being a “major hospital supplier”. With Bezos brisk success in recent years, it would not be surprising if they continue to achieve excellence in any possible plans. To put it briefly, a $5,000 investment in Amazon.com from 21 years ago would have gotten you a million dollars today.

On the other hand, Google is seemingly losing its grip as the firm is already anticipating a further decline, particularly in their share of the country’s advertisement industry. At the moment, Google seems to be directing its effort on the invention and production of hardware like speakers, in order to compete with the other tech giants.

For instance, Apple has found its success in various products, ranging from iPhones to Apple watches. Two years ago, Apple had introduced the AirPods, a pair of wireless earphones. This product was a huge success such that its purchasing demand far surpassed the supply. It is not easy and there are hardly any goods or services, that are not necessities, that can achieve that, especially when it is not the most affordable item. However, Apple has always been able to acquire demand for its product since brand loyalty is one of the most significant element that has led to its top spot in the global market. This is clearly evident from the series of Apple products. For instance, the series of iPhone, up till iPhone X, has consumers queueing up to purchase it. In spite of the passing of the late Steve Jobs, Apple is still coming up with each products’ successor. Take the Apple Watch for instance. From its debut in 2015, the Apple Watch has not lost its popularity within the market. From the first, to Series 2 and the latest Apple Watch Series 3. Tim Cook, the CEO of Apple has revealed that the sales of the newest batch are twice the sale of the second batch.

With Apple’s consistent growth, will Amazon be able to surpass its market value or will Apple be able to hold on to the top spot?

Featured image via flickr/ simone.brunozzi

Why are the cryptocurrencies crashing?

Within the past weekend, Bitcoin has fallen drastically to $7,335.57, at its lowest on Sunday. Fortunately, as CoinDesk conveys, the value of the cryptocurrency gradually recuperated. By Monday afternoon, the value of Bitcoin picked up again returned to an average of $8,585.

Although we can never know for certain the reason underlying such change, many have pointed to the advertising ban of bitcoin throughout the weekend. Sky News has reported the advertising ban for initial coin offerings, token sales and cryptocurrency wallets all across the world that Twitter has supposedly imposed and will be implemented within a fortnight.

Another one of those attempts to reprimand cryptocurrency scams, this move is not unheard of. Several tech giants have already imposed strict rules and regulations on these advertisements early on. In the start of the year, Facebook, runner-up to the world’s biggest online advertisement platform, has announced its plan to impose bans on all cryptocurrencies-related advertisements. Its reason for taking such drastic measures is to avoid circulation of “financial products and services frequently associated with misleading or deceptive promotional practices”. Moreover, just last week, Google has announced its plans to reinforce the financial services policy. Hence, advertisements circling cryptocurrencies, and such will be curbed within three months.

“Facebook was previous, but now Twitter is also rumored. Much of crypto(currency) demand is retail, so this may negatively impact demand,” suggests Joe DiPasquale, the Chief Executive Officer of BitBull Capital.

The former statement remains to be unsubstantiated as Twitter has not disclosed anything.

There was considerable news pointing to the high price of mining as the underlying cause of the fall in bitcoin’s value since last week. That was reiterated by DiPasquale, “Now that it’s dropped below that, there’s less incentive for miners to continue to keep machines on unless they are in a lower-cost energy area or have a way of producing at less than cost”.

The mining of bitcoin includes the utilization of certain software and expensive hardware to solve mathematics equations in order to earn bitcoins. With the current rate, they are now looking at a mere $8,000 for one bitcoin. This, in addition to regulatory issues, have largely impacted the value of bitcoin within the past few weeks.

Initially valued at a fine five figures of $11,000 just a couple of weeks ago, a statement issued by the Securities and Exchange Commission (SEC) expressing its concerns over cryptocurrency exchanges as well as the lack of security and privacy on Binance, a Hong Kong-based cryptocurrency exchange momentarily brought down the value of bitcoin.

According to the grapevine, finance ministers of G-20, as well as governors of central banks, have agreed to consolidate in Buenos Aires, Argentina. A G-20 representative has informed CNBC that these discussions will take place in a private and confidential setting before making its way to the press conference.

The Financial Stability Board (FSB) serves as a regulator for G-20 economies all across the world. They have begun to take actions after receiving a number of calls from various countries regarding the security of cryptocurrencies.

“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time,” proclaims Mark Carney, Chair of the Financial Stability Board as well as Governor of the Bank of England.

“Even at their recent peak, their combined global market value was less than 1 percent of global GDP,” Carney continues in an effort to juxtapose the size of cryptocurrency investments with the rest of the global financial system.

“The more speculative coins are being hit particularly hard. Liquidity is among their primary features and many of the holders lack long-term conviction, therefore they’re rotating into larger coins with stronger long-term prospects,” asserted by Spencer Bogart, one of the partners of Blockchain Capital.

He underlines the “potential for a liquidity crunch” as phrased by CNBC. He believes that to be the decisive factor for investors to let go of alternative coins and focus on more prominent cryptocurrencies like bitcoin.

Bitcoin was not the only cryptocurrency that had experienced a fall over the weekend. Ethereum went down by an alarming seventeen percent, reaching a nadir of $460.09, as reported by CoinDesk. That, however, is nothing in comparison to Ripple, which has suffered a decreased of fourteen percent to a meek $0.55. Similarly, the value of bitcoin cash and Litecoin have both deteriorated significantly at about ten percent.

While it may seem like bitcoin may be making a comeback, as people lose confidence in these currencies, the value subsequently decreases, too. Should investors pull out now or continue to await more positive results?

Featured image via flickr/ Zach Copley

Apple is dominating the tech industry

Back in 2010, there was a virtual magazine subscription called Next Issue, but was rebranded as Texture by Next Issue Media in 2015. Now, Texture has over two hundred magazines available electronically on most systems including Windows, Amazon, Android and iOS. All it requires users to do is to pay a fixed monthly charge and access to articles from all of the magazines will be available in its entirety.

Initially, the application was created by several large magazine issuers collectively and supported by the financial assistance of external investors at a total sum of $50 million. The main idea was to become the dominant platform for tablet (i.e. iPad etc.) users to subscribe to magazines. Since people have been going onto the internet to do so, Google has been that platform for them.

In an era where smart devices and gadgets have become a necessity, it was assumed that magazines too, like other entities, will be highly sought after in electronic form. However, this plan took a hit when The Daily, a highly popular digital magazine by News Corporation went under. Even so, Texture apparently has had couple hundred thousand of clients by 2016 as disclosed by John Loughlin, the CEO of Texture, initially recounted by The New York Post. If that is the case, why did Next Issue Media let go of Texture?

In recent news, Apple, the iOS devices’ company has announced its official acquisition of Texture. Fortunately for those who are not in possession of an iOS device, Apple has confirmed that Android devices will still be able to get a hold on the application. It seems that Texture employees too, are secured in their current post as Apple has procured the staff in addition to the firm. This leads us to the next question. If Next Issue Media is willing to let Texture go, presumably because of its low demand in the market, why is Apple rushing to acquire it and at what cost?

Moreover, Apple, on its own, already offers digital magazine subscription services online. Hence, for what reason could it be for Apple to bid for another magazine service? Eddy Cue, the Senior Vice President of Apple issued a statement as presented below:

“We’re excited Texture will join Apple, along with an impressive catalog of magazines from many of the world’s leading publishers. We are committed to quality journalism from trusted sources and allowing magazines to keep producing beautifully designed and engaging stories for users.”

Likewise, CEO of Texture has also issued a statement to express their contentment:

“I’m thrilled that Next Issue Media and its award-winning Texture app are being acquired by Apple. The Texture team and its current owners, Condé Nast, Hearst, Meredith, Rogers Media, and KKR, could not be more pleased or excited with this development. We could not imagine a better home or future for the service.”

In 2014, Apple has taken over Beats, the brand of quality speakers and headphones. In addition to the gadgets and products, Apple had also taken over their music streaming service. With that, they turned it into the current Apple Music, which is as high in demand as Spotify. Within the same year, Apple once again recruited another brand, BookLamp. This application highly resembles Texture such that books are to BookLamp as magazines are to Texture. None of these is new because Apple has always been on the look to expand its empire. Another case in point is Apple’s recent acquisition of Shazam, another music streaming application.

Though we remain to be in the dark regarding Apple’s possible vision for Texture, an article by Ars Technica have made a suggestion. Even though nothing conclusive was disclosed in the statement issued by Apple’s Senior Vice President, arstechnica shed light on the phrase “trusted sources” and suggests that there’s a hidden meaning behind it. The article refers to the present as a time when reporters and publishers have voiced their opinions about large tech companies like Facebook and Google that are believed to have contributed to the biases in media as they are the one who controls the spread of news. Such actions have become noticeable that many heads have been turned and it has become public knowledge to take the content found on these platforms with a grain of salt.

Nonetheless, that is still just an assumption and we can only wait for Apple to announce their plans for Texture, if any, in the future.

On a different note, however, these multinational tech companies have surpassed mere dominance on the web. Just a couple of weeks ago, Jeff Bezos, the co-founder of Amazon has been proclaimed as the richest man in America. With that said, Amazon and Google, as well as Facebook, have provided digital magazine subscription services at one point or another. One way or another, they are further expanding their empires by dominating the market. At the moment, they are still attempting to grab every opportunity available in their industry. What happens when they have completely monopolized the industry? Will they dive into other industries and in turn dominate the world?

These companies are the perfect example of how the capitalist system is helping the rich get richer while the poor continue to suffer. Shouldn’t we be examining this news through a more economic and political aspect?

Featured image via flickr/ Luke Wroblewski

Jeff Bezos, First Centi-Billionaire in America

Jeff Bezos, the co-founder of Amazon has officially made it all the way to the top of Forbes list of world’s billionaires. Moreover, he has become the first and only person in America to acquire the title of centi-billionaire at a total worth of $127 billion, as determined by the Bloomberg Billionaires Index. He has now surpassed other well-known billionaires, like Bill Gates, the co-founder of Microsoft who is estimated at the worth of $90 billion, and Warren Buffet, the CEO of Berkshire Hathaway. Though Bezos was already a centi-billionaire from the sudden development of the Amazon shares last year, he has already earned about $15 billion more in the start of just this year and is expecting further growth.

This is apparent by the four percent increase – in Amazon stocks – in February when the broader market suffered a decline of four percent.

“Bezos has seen his wealth remain in excess of $100 billion, and with the likes of Bill Gates, Warren Buffett and Mark Zuckerberg also tipped to reach that eye-watering milestone, it seems we’re entering the era of the centi-billionaire,” articulated by Vishal Chhatralia, the Vice President of Digital Operations for RS Components.  

To illustrate the astronomical extent of his wealth, juxtapositions have been made. To begin with, the ratio of a centi-billionaire with exactly $100 billion juxtaposed with an average American’s wealth (based on the country’s Gross Domestic Product) is 1 to 1.8 million. Likewise, the ratio of an average American’s wealth juxtaposed with Jeff Bezos’ fortune is 2.3 million to one.

Capitalism promotes profitability and long term economic expansion. It is the market system that has led to the United States’ success in today’s global market. However, it is also a system that works by merit. Although it can bring about a vast reduction in the unemployment rate that consequently eliminates the costs and wastes in the society, many have brought up the counterargument concerning the increasing gap in wealth inequality. Ultimately, the decision-making power within the market will fall on the top tier of the society, the centi-billionaires and the government, resulting in the negligence of other consumers’ wants and needs. This is a cause of distress because if the gap of wealth inequality gets bigger without a solution, various form of political instability and radicalization of society will be more likely to happen.

Nonetheless, the neoliberal form of capitalism is believed to be the most satisfactory political economic future so far as it is able to solve the demand problem caused by wealth inequality. This is attributable to the increase in state spending following the increase in profit margins as business proprietors dominate the labor industry. Like the conventional capitalist system, this, too, works by merit and though wealth inequality may become an issue, the increased collective spending can act as a counter against it. The strength of continuing the neoliberal form of capitalism, perhaps with some adjustments to it is that it is currently the most efficient system in maintaining a balanced relationship between the society and economy of a nation. Yet again, this system, without its previous function to ensure a stable growth in the economy, will only result in a decline in the living standard of the majority.

Hence, a centi-billionaire’s decision towards the final placement of their fortune can affect the future of many; ranging from an individual to an entire nation. Prospective centi-billionaires such as Bill Gates, Warren Buffet and Mark Zuckerberg have all pledged to return a big portion of their fortunes to the society for the greater good. No such promise has been made by Jeff Bezos. Then again, Bezos and his spouse have been quite the philanthropist for some time now. As alumni of Princeton University, they have previously donated a sum of $15 million to the college. In addition, the United States branch of Reporters Without Borders opened an office in San Francisco, California after receiving a generous donation of $250,000 from Bezos.

Adding to the list is a $33 million donation made to TheDream.US, a scholarship reserved for a thousand immigrant high school students with Deferred Action for Childhood Arrivals status who are receiving tertiary education. His reason for choosing this cause could be traced back to his father. As a sixteen years old Cuban immigrant, his father travelled by himself to the States under Operation Pedro Plan.

All things considered, however, the key aspect to keep an eye on is Blue Origin, Jeff Bezos’ space exploration company. His alleged plan is to support this company by trading off $1 billion worth of Amazon stock annually. Blue Origin centers its research with the goal to acquire technological revolution. Bezos have explained his vision to build an economical space platform to compete with the Internet, despite its current focus on commercial purposes.

“That will be necessary to save the Earth, because without being able to expand into space, human civilization will have to contract,” he justified at a conference held in Los Angeles, California last November.

Featured Image via Wikimedia

Carpooling service Via closes investment round, plans U.S. and oversea expansion

Carpooling service Via just completed a funding round, the proceeds of which the company intends to use to expand its service in the U.S. and to establish a presence in Europe, TechCrunch reports. Via will begin London operations in the near future, and Paris service soon after.

The amount of the funding round remains undisclosed, but a source told TechCrunch the number was $250 million.

Prior to the investment round, Zirra estimated the company’s value between $450 million and $500 million, TechCrunch notes. Following the round, then, Via could be worth as much as $750 million.

Via provides carpool service to riders seeking a cheaper alternative to operations like Uber and Lyft. A single Via vehicle carries up to five passengers at a time, so customers can book rides for as little as $5 plus tax. An algorithm determines routes in real-time as customers request rides, so unlike conventional public transit systems, Via is not constrained by a preset schedule. The company’s website says the average wait time is five minutes.

Today, Via runs 24-hour service in its hometown of New York City and also operates in Washington, D.C. and Chicago. TechCrunch says the service gives about one million rides per month.

In addition to running its own operation, Via licenses its platform to other transportation companies, including Arriva—a subsidiary of German-based railway company Deutsche Bahn AG—which operates buses, trains, and other mass transit options across 14 countries in Europe, and Keolis, a subsidiary of France-based SNCF, which offers similar service worldwide.

Daimler AG, which owns Mercedes-Benz, led Via’s most recent funding round, and the two companies plan to intensify their partnership. In addition to its contribution to the funding round, Daimler will provide $50 million towards a joint venture project with Via.

The two companies have been collaborating for years, TechCrunch notes. In late 2015, Via joined forces with Mercedes-Benz Research and Development North America, Inc. to launch a pilot program in Orange County, CA, a suburb of Los Angeles. Mercedes provided Via with Metris passenger vans for that trial program.

Daimler and Mercedes will likely provide vehicles for Via’s European expansion as well. The partnership with Via will give Daimler a ready-made sales connection and will provide a platform through which Daimler can develop and test vehicles optimized for carpooling.

As tech-based transportation start-ups change the way consumers approach moving around, automakers are seeking the most efficient ways to adapt to the changes in the industry.

“One big question is, ‘what is the right vehicle?’” Via CTO and co-founder Oren Shoval told TechCrunch “There are the seating arrangements, how you connect the sensors, what kind of door it should have. This is a big piece of mobility.”

Shoval adds that the Via-Mercedes partnership will streamline and solidify Via’s service. “We also believe that the vehicles in the network, at the end of the day, it’s not just an app but a whole service that you are getting. It makes sense to have these things converge,” said Shoval.

Volker Mornhinweg, head of Mercedes-Benz Vans, echoed Shoval’s sentiment that the partnership would improve Via’s service, and added that the collaboration was important to Daimler’s long-term strategy in the changing transportation sector.

“Via is one of the most successful providers in the growing ride-sharing sector while Mercedes-Benz Vans has the perfect vehicles that are being continuously optimized for this job,” he said. “By deepening our cooperation with Via, we are thus taking the next logical step in the context of our strategy for the future and are expanding our range of new mobility services.”

Daimler launched Car2Go, which allows users to rent cars parked in various places around a city and then return those cars to one of many drop zones around town, in 2008. Now, Car2Go operates in 26 cities across North America, Europe and Asia, and serves 2.5 million registered members.

Daimler, in tandem with Audi and BMW, bought GPS mapping service Here in late 2015 and has independently acquired a number of ride-sharing companies, including Germany’s MyTaxi, the U.K.’s Hailo, and Taxibeat in Greece. All three of those services have merged under the MyTaxi umbrella since Daimler acquired them.

Featured Image via Wikimedia Commons

Chinese authorities crackdown on cryptocurrency ICOs

Monday, the Chinese government banned the practice of creating and selling new cryptocurrencies, Reuters reports

With the rise of Blockchain technology, initial coin offerings (ICOs)—which give investors the opportunity to buy newly-created cryptocurrencies—have gained popularity. In total, Reuters says, ICOs have raised $2.32 billion since the inception of the cryptocurrency market; $2.16 billion of that amount has come in 2017.

In China this year, 65 ICOs have raised a combined 2.62 billion yuan ($394.6-million) and attracted 105,000 investors, according to Reuters.

The value of Ethereum, the cryptocurrency in which most ICOs are transacted, has plummeted on the news. On Sunday, one Ethereum token was worth $349.93. Late Monday, that figure had fallen 14.3 percent to $299.72. As of 1:33 p.m. Eastern Tuesday, Ethereum has recovered slightly; the USD-Ethereum exchange rate sits at 307.56 to one.

The Bitcoin-USD exchange rate has dropped 5.9 percent since midnight Monday morning on China’s news. Late Sunday night, one bitcoin was worth $4,632.46. As of 1:39 Eastern Tuesday, the value of a single bitcoin token is $4,359.07.

The market capitalization of the cryptocurrency industry as a whole dropped 11.66 percent Monday, from $165.095 billion to $145.833 billion. Since midnight Tuesday morning, though, the industry’s market cap has gained 1.7 percent. As of 1:55 p.m. Eastern, the industry is worth $148.358 billion.

“The large price falls can be attributed to panic amongst traders and profit-taking,” said Cryptocompare founder Charles Hayter, per Reuters.

Indeed, China’s announcement had many investors across the internet predicting doom and gloom. A participant in one chatroom set up for an upcoming ICO said “the music has stopped” for the cryptocurrency boom, Reuters reports.

“Sell all your bitcoins now,” another advised, again per Reuters.

The organizer of the ICO to which the chatroom was dedicated, which was meant to launch a new cryptocurrency called SelfSell, has suspended the project.

Regulators around the world are struggling to understand cryptocurrency investment and the risks associated with it, said Zennon Kapron, director of the Shanghai-based financial technology consultancy Kapronasia, per Reuters.

Prior to China’s announcement, the U.S. Securities and Exchange Commission, as well as similar agencies in Singapore and Canada, warned that regulations would likely be needed to control the cryptocurrency market.

The lack of regulation governing cryptocurrency and investment in it is unprecedented. Blockchain, the backbone of cryptocurrency transactions, functions without a centralized overseer.

The nature of investment in cryptocurrency is also unconventional. When one contributes to a fundraiser for a traditional company, one generally receives a share in the company and/or a security. ICO investors, Reuters notes, receive neither.

Therefore, Reuters points out, an investment in a cryptocurrency is little more than a bet that demand for that currency will exceed supply, driving up value. It is a risky bet, considering the volatility of cryptocurrencies.

With risks to investors so high, government regulators are purportedly taking strides to protect their citizens. Cryptocurrency expert and Blockchain proponent Oliver Bussman said, per Reuters, that the lack of private financial advice firms in China obligates the government to be especially vigilant in protecting the finances of its constituents.

Of course, many would argue that it is an investor’s own responsibility to protect him/herself.

Despite some predictions that China’s move spells the beginning of the end of the cryptocurrency boom, many experts believe the regulatory shutdown is but a temporary measure designed to give the country’s government time to develop a strategy by which to handle cryptocurrencies.

“China, in many ways, is no different than the U.S. or Singapore in saying, ok, we need to push back on these for now until we figure out how to deal with them,” Kapron said, per Reuters, adding that he expected regulators in China to eventually ease the ICO ban.

Bussman says, per Reuters, that cryptocurrency technology is too revolutionary, too integral to the future of global economics, to be shutdown. Cryptocurrency, he says, has already worked itself into the fabric of modern investment.

“The initial coin offering is a new business model leveraging blockchain technology and it will remain. This is not the end of the ICO – absolutely not,” he said.

Featured Image via Flickr/BTC Keychain

Starbucks stock falls, but one analyst predicts recovery

Since June 2, Starbucks stock has fallen more than 16 percent. Shares dipped just over nine percent (to $54.00/share) in 24 hours after the company released its most recent quarterly earnings report on July 27.

Investors are losing confidence in the iconic coffee brand due to declining growth rates, Daniel Schönberger of SeekingAlpha writes. Though Starbucks reported an 8 percent jump in revenue and a 12 percent increase in earnings per share last quarter, revenue growth has been falling since the first quarter of 2016, and EPS growth has declined from 37 percent in quarter four of 2013.

Still, Schönberger notes that most companies would love to post growth numbers comparable to Starbucks’, and points to a number of promising indicators for the company’s future.

The growth rate of the chain’s comparable sales increased over the most recent quarter. The comparable sales metric compares sales performance at a given store over some period of time. According to Schönberger, the figure is important from a sustainability perspective, as it is cheaper for a company to grow sales at existing locations than to open new stores. In the most recent quarter, Starbucks reported a 5 percent increase in comparable sales, up from 3 percent in each of the two prior quarters.

Still, in the long view, Starbucks’ comparable sales growth is slowing. In quarter four of 2011, comparable sales grew 10 percent. Until 2014, the company consistently reported comparable sales growth in excess of 5 percent.

Through the latter half of 2013, traffic growth accounted for the lion’s share of comparable sales growth. In the fourth quarter of that year, traffic growth began to decline, and increasing margins of individual sales (“ticket growth”) accounted for most of Starbucks’ comparable sales growth. Traffic has remained flat or declined in each of the last five quarters.

To maintain its dominance in the coffee sphere, Starbucks relies heavily on its brand image, Schönberger notes, citing a 2016 Interbrand report that ranks the Starbucks brand as the 64th most valuable worldwide, worth almost $7.5 billion. In 2016, Interbrand says, Starbucks’ brand appreciated 20 percent.

In a coffee sector in which competition is fierce, barrier to entry is low (i.e., it is easy to open a coffee shop), and customers can shift their loyalties with ease, the strength of Starbucks brand, Schönberger says, compels customers to tolerate long lines and high prices to obtain the familiar, quality product Starbucks offers.

Starbucks continues to expand in the U.S. The company opened 244 new stores on American soil last quarter and has opened 1,002 in the past 12 months. Schönberger argues, though, that the chain’s real potential for growth lies in international markets like India, Brazil, and Japan.

In its most recent earnings call, the company said year-over-year revenue in “China/Asia Pacific increased 9 percent while operating income jumped 22 percent. The company is particularly optimistic about its burgeoning presence in China.

“Starbucks’ opportunity for growth in China is unparalleled…” said Johnson.

There are approximately 2,600 Starbucks stores spread across 127 cities throughout China, Schönberger says. Starbucks’ growth in China mirrors its early growth in the U.S. Comparable sales growth is trending upward on the strength of increasing traffic. Starbucks intends to open 500 stores a year in China, CEO Kevin Johnson said in the earnings call.

Of course, there are risks associated with Starbucks’ expansion into China. Should tension between the U.S. and China continue to escalate, exchange rates may become volatile, Schönberger points out. Moreover, Chinese authorities could impose sanctions, even bans, on American businesses.

As of 2:08 Eastern Monday, Starbucks shares are trading at $54.25 apiece. The stock’s 52-week low is $50.84. Schönberger recommends that investors capitalize on the low share prices by picking up stakes in the coffee giant.

Featured image via Wikimedia Commons

BitCoin’s value surges despite looming scalability challenges

As of 2:18 Eastern Monday, a single bitcoin is worth $4,282—an all time high for the cryptocurrency, invented in 2008. The bitcoin-USD exchange has soared more than 200% this year, as investors in Korea and Japan increasingly seek to buy the cryptocurrency—some such investors are willing to pay premiums of up to 30%—and May’s New York Agreement helps it to accommodate expansion.

A wide array of investors have jumped on the bandwagon, some more enthusiastically than others. “Whether or not you believe in the merit of investing in cryptocurrencies…real dollars are at work here and warrant watching,” Goldman Sachs analysts wrote in a note to clients, per Bloomberg.

Joshua M. Brown, a financial advisor at Ritholtz Wealth Management, is among those who, despite their skepticism, cannot resist BitCoin’s upside. When the cryptocurrency first became part of investors’ vernacular seven years ago, Brown observed in a blog post in mid-July describing his first-ever BitCoin purchase, it was subject to all the volatility that accompanies a “new and unproven” investment opportunity.

Now, though, the cryptocurrency has been hanging around in the public eye for quite a while, and recent developments such as the New York Agreement may lead to stabilization.

As a limited resource as well as a medium of exchange, Bitcoin has properties of a commodity as well as a currency, Goldman Sachs’ note to clients points out. The United States IRS does not recognize Bitcoin as legal tender but, rather, treats it as property for tax purposes.

BitCoin’s value is not supported by some inherently valuable asset like gold or silver, but the lack of such a standard is par for today’s currencies, according to Tim Courtney, CIO at Exencial Wealth Advisors.

“The first thing to understand is that, just like every other currency, there is no asset backing digital and cryptocurrencies,” Courtney told TheStreet. “In the past, some currencies were backed by gold or silver, but that’s no longer the case.”

Without any sort of backing, Bitcoin derives all of its value from supply and demand. BitCoins, in other words, are only worth what someone is willing to pay for them.

“When you see returns on digital currencies moving up, that means demand for them has outnumbered the sellers out there,” Courtney explained to TheStreet.

BitCoin will face a minefield of obstacles as it scales up to satisfy increasing demand. One such challenge could be unprecedented volatility. In late June, Ethereum, a cryptocurrency similar to Bitcoin, dropped from $300 dollars to $0.10 on a single, multi-million-dollar exchange, CNBC reports.

Courtney observes, per TheStreet, that there was no way to reverse the trades, as there would have been had the crash involved “established assets.”

“…there is no security to your [cryptocurrency] trades if something unexpected happens,” Courtney told TheStreet.

‘”What we’ve been doing in the stock market to prevent flash crashes, they’re nowhere near that in the cryptocurrency market,” adds Joe Saluzzi, co-founder of Themis Trading, per CNBC.

Bitcoin also runs the risk of devaluing itself as it expands, Courtney says. He cites the “constrained supply” of Bitcoin as an integral part of its value—basic microeconomics principles hold that if a commodity is in high demand but short supply, its price will rise.

Yet, as Bitcoin expands to serve increasing demand, it will become less and less scarce, and may, therefore, lose much of its value. In other words, like any other currency that loses its scarcity, Bitcoin will be subject to inflation.

BitCoin has long been vulnerable to cyberattacks. As its popularity grows, it will increasingly become a target for hackers. Exchange services BTC-e and Bitfinex both reported being hacked last week, according to CNBC.

The security and anonymity of BitCoin make it a suitable platform through which to launder money, demand ransoms, and carry out other nefarious transactions. All transactions carried out on contraband distribution websites like the AlphaBay and Hamsa, both of which authorities shut down in July, are conducted via BitCoin. Late last month, alleged BTC-e operator Alex Vinnik was arrested on suspicion of having laundered more than $4 billion his clients generated through a variety of criminal enterprises.

“It’s hard to imagine the IRS, Treasury etc allowing anonymous transactions without any reporting becoming a global standard for US persons,” Brown wrote in his blog post.

Still, Brown says, he is not willing to miss out on the potential upside of an investment in BitCoin. “I’m old enough to realize that just because I don’t see a use for something, that doesn’t mean I won’t be proven wrong by others who do,” he writes.

Judging by the spikes in the cryptocurrency’s value—it seems to hit a new high every day, of late—plenty of other investors are indeed anxious to prove Brown wrong.

Featured Image via Flickr/Zach Copley

Investors bail-out SoundCloud in emergency investment round

Struggling music service SoundCloud just completed a $169.5 million emergency Series F funding round, TechCrunch reports. New York investment bank Raine Group and Singapore’s sovereign wealth fund Temasek led the round, which Tech Crunch called a “do-or-die moment” for SoundCloud. Soundcloud’s investors approved the financing round on Friday morning, just ahead of the deadline.

Last month, the company laid off 40% of its workforce (137 employees), according to TechCrunch. Prior to this most recent investment round, which SoundCloud shareholders approved today, the company was valued at $150 million. In the past, it has been worth as much as $700 million. According to TechCrunch, SoundCloud, privately owned, says it is on pace to generate $100 million a year in revenue.

However, after TechCrunch broke the news concerning the severity of SoundCloud’s woes, musicians and avid music listeners alike offered support, CEO Alex Ljung says. TechCrunch reports that Chance the Rapper, who made his name via Soundcloud, made an effort to save the platform.

“I’ve been moved by the outpouring of commentary around SoundCloud’s unique & crucial role in driving what global culture is today (and what it will become tomorrow),” Ljung wrote. “You’ve told me how, without SoundCloud, there would be a giant gaping void in today’s world of music.”

SoundCloud does occupy a unique niche in the music streaming space. Unlike services like Spotify and Apple Music, which pay artists for the right to use their music, SoundCloud allows artists to upload their own music. The open platform model has helped to make SoundCloud “the world’s largest music and audio platform,” per the company’s website. The service features exclusive content like “breakthrough tracks, raw demos, podcasts and more.” Moreover, it facilitates direct communication between listeners and artists.

Rather than touting its uniqueness as a strength, SoundCloud is trying to compete with the likes of Spotify and Apple Music. According to TechCrunch, the service could recover by “doubl[ing] down on the user-uploaded indie music scene, including garage demos, DJ sets, unofficial remixes and miscellaneous audio you can’t find elsewhere.”

The company could also increase revenue by scaling-up its advertising efforts and redesigning its paid subscription offerings.

SoundCloud employees told TechCrunch that morale at the company under Ljung’s regime was low, particularly following the layoffs. Though the company had planned the layoffs months in advance, it continued to hire new employees right up until the end. As a result, SoundCloud let some people go mere weeks after it had hired them.

Employees, according to TechCrunch, have accused Ljung of a lack of focus and a propensity for excessive revelry, and have noted “inconsistency” in the company’s product direction.

As part of the effort toward recovery, SoundCloud is overhauling its leadership. Kerry Trainor, who headed video-streaming service Vimeo from 2012-2016, will replace Alex Ljung as CEO; Ljung will become chairman of the board. Trainor will make former Vimeo COO Mike Weissman his new CEO at SoundCloud. Eric Wahlfross, who vacated his CTO position in January to become chief product officer, will remain in that role. Artem Fishman, who migrated to SoundCloud from Yahoo! to take Wahlfross’ place, will remain CTO.

In return for its investment, Raine will receive two seats on SoundCloud’s board. Fred Davis, who has worked with services like Spotify and Shazam as a music industry attorney; and Raine’s vice president, Joe Puthenveetil, who manages Raine’s music investments, will take those seats.

TechCrunch says the management shakeup—particularly the addition of the Vimeo veterans— could launch SoundCloud in a promising new direction. Years ago, YouTube was threatening to push Vimeo out of the market, and Trainor revitalized his service by underscoring and developing the aspects that differentiated it from YouTube: chiefly, according to TechCrunch, its emphasis on amateur art film rather than viral videos. SoundCloud might be wise to similarly sharpen its niche in a market of giants, TechCrunch says.

It may, alternatively, be of the service’s best interest to pursue a merger agreement. TechCrunch reported in January that Google had expressed interest in taking over SoundCloud.

Whatever its future, today “SoundCloud remains strong and independent,” Ljung writes.

Featured image via Flickr/Freenerd

Investors bought exclusive community in San Francisco–and residents didn’t even know

The 35 mega-mansions on Presidio Terrace in San Francisco each cost many millions of dollars. They have been homes to some of Washington’s political elite, including House Democratic leader Nancy Pelosi and California senator Dianne Feinstein.

In 2015, Michael Cheng and Tina Lam bought the street itself and its common areas—everything except the houses—for $90,000, The Washington Post reports.

Cheng, who makes his living as a real estate investor, told The Mercury News Presidio was “the most unique property I’ve come across, by far.”

“I’m talking to my other investors,” he said, “and they’ve never seen anything like this — and they own some weird stuff.”

The San Francisco tax office put the land up for sale after the community homeowners’ association failed to pay the taxes on the property for more than three decades. The dues were $14 a year.

The homeowners’ association says the bills had been coming to the address of an accountant who had not been involved with the association since the 1980s. The debt had piled up to $994 by the time Lam and Cheng made the purchase. The tax office sold the land to “recoup additional fees and penalties,” the Post reports.

No warnings or notices were posted. In fact, the first time anybody on Presidio Terrace learned of the sale was when an investor working on behalf of Lam and Cheng approached the neighborhood about buying the land back.

One Presidio Terrace homeowner told The Washington Post she was “shocked to learn that this could happen.”

Attorney Scott Emblidge, who represents the homeowners’ association, says the back taxes are not the result of deliberate negligence on the part of residents.

“This isn’t about choosing not to pay property taxes; residents of Presidio Terrace pay their individual property taxes each year,” he said. “This is purely an oversight that needs to be corrected and we are working with the City to correct this unfortunate situation.”

Indeed, residents are taking legal strides to challenge the sale. A hearing in October will determine whether the sale will be rescinded. But, Amanda Fried, a spokeswoman for San Francisco’s treasurer and tax collector, says per the Post that  “there is nothing that [her] office can do” to reverse her sale. Fried is unaware of any precedent for a “rescission hearing.”

“Ninety-nine percent of property owners in San Francisco know what they need to do, and they pay their taxes on time — and they keep their mailing address up to date,” Fried adds.

According to the Post, the city taxes ownership of all of its 181 private streets.

Emblidge presumes that Cheng and Lam, whom he calls “savvy real estate professionals,” are endeavoring to “exploit a bureaucratic oversight to their advantage.” They waited two years to approach the neighborhood “so the property sale would be more difficult to rescind,” he charges.

Cheng told The Mercury News he and Lam “were kind of looking forward” to meeting with the residents face to face to discuss the matter, but that, in light of the pending litigation, the partners’ attorney had advised them not to talk to anyone in Presidio Terrace.

Cheng also said, per The Morning News, that he and Lang are not interested in exploiting the community, but are in fact considering building a house of their own in Presidio.

“When we saw it was zoned single-family, we started thinking about that — if it can be worked out,” Cheng told The Mercury News.

Still, Cheng noted that “as legal owners of the property, [he and Lam] have a list of options, and that he and his partner are “still trying to figure out what the land-use opportunities are.”

Some of those opportunities could be financially lucrative. For instance, if the couple does not sell the land back to the homeowners’ association, they could rent out the 120 parking spots that line the street.

In the past, racial segregation laws would have barred Chang, born in Taiwan, from purchasing the land. Prior to a 1948 Supreme Court decision prohibiting the segregation of neighborhoods, Presidio Terrace was whites-only, according to The Washington Post.

Today, Cheng and Lam can say they own one of the most exclusive communities in San Francisco, which they bought for less than the price of a top-of-the-line sports car.

Featured image via Wikimedia Commons

SoftBank Looks to Make Inroads Into US Ride-Hailing Sector

SoftBank CEO Masayoshi Son has indicated intentions to make inroads into the US ride-hailing market with a multi-billion dollar investment in Uber or Lyft, CNN’s Sherisse Pham reports.

At a news conference Monday, Son said his company was “definitely interested” in pursuing a partnership with one of the two ride-hailing operations. Son expects a boom in the ride-hailing industry to accompany the rise of self-driving cars.

“…when that stage comes [i.e. when autonomous cars sponsored by ride-hailing companies hit the streets],” said Son, “this ride share business becomes even more important.”

SoftBank already holds sizable stakes in a host of Asian ride-hailing companies, including China’s Didi Chuxing, India’s Ola, Brazil’s 99, and Singapore’s Grab. According to The Wall Street Journal, Son’s interest in Uber may indicate that he believes the US startup will combine its operations with Ola and Grab

Uber has set a precedent of willingness to partner with local companies in international markets. After a heated competition between Uber and Didi Chuxing ended in a stalemate, Uber agreed to sell its Chinese business to Didi in exchange for a 20% stake in the Chinese company. In July, Uber announced plans to strike a similar deal with Russia’s YandexTaxi.

On July 25, the Wall Street Journal reported that SoftBank was considering investment in Uber, but said negotiations between the two companies were “preliminary and one-sided.” A deal would likely be postponed until Uber appointed a new CEO in the wake of former chief Travis Kalanick’s resignation over sexual harassment allegations in June. The scandal also left the company without a chief operating officer, a general counsel, and an independent board chair, according to Bloomberg. On August 4, The Washington Post reported that Uber’s shortlist for the CEO position had been cut to three people.

The management vacancies, coupled with the increasing success of Lyft, are prompting many early Uber investors to jump ship. Sources told Bloomberg two such investors are negotiating to sell their stakes to larger investment firms.

With a market cap of $89.7 billion, SoftBank is among Japan’s most valuable companies. Its subsidiaries include Sprint, Yahoo! Japan, Myspace Japan, and myriad others.

In May, SoftBank, along with Saudi Arabia, Apple, and others, formed a $100 billion dollar tech fund, called the Vision Fund, that “will focus on investments of more than $100 million in technology businesses of the future,” according to a CNN report. It is unclear whether SoftBank’s investment in Uber or Lyft will be pulled from that fund.

Last Thursday, SoftBank contributed $250 million to Kabbage, a financial technology company based in Atlanta, GA. Kabbage, a next generation lending company, uses an online system to quickly evaluate a small business’s eligibility for a capital loan. According to the company’s website, the evaluation process analyzes business performance as well as credit score, and a customer can gain approval for a loan in less than 10 minutes. The website also says Kabbage has lent more than $3.5 billion dollars worth of funding to more than 100,000 businesses.

Kabbage licenses out its technology to traditional banks who wish to offer automated lending; the program is currently used by banks like Banco Santander SA (SAN.MC), ING Groep NV, and Scotiabank. SoftBank is the first Asian player outside of China to enter the automated lending space.

Son’s press conference on Monday coincided with the release of SoftBank’s quarterly earnings report, in which the company reported $4.33 billion worth of profit—a 50% year-over-year increase. The jump came after SoftBank included the Vision Fund as a reportable segment for the first time.

Profits were further boosted by the success of Sprint, in which SoftBank owns an 80% stake. The cellular service provider reported its first profit in more than three years Monday. SoftBank is considering a potential merger between Sprint and T-Mobile, or between Sprint and Charter Communications Incorporated.

SoftBank’s shares have risen just over 1% since Monday.

Featured Image via Flickr/Nobuyuki Hayashi

GE Shares Plummet On Earnings Call, but a Rebound Could Be Coming

A massive selloff, spurred in large part by last Monday’s earnings call, in which outgoing CEO Jeff Immiet said the company expected the lull of the oil and gas market to continue to cut into profits, has plagued General Electric stock of late.

“Given our outlook on oil and gas,” Immelt said in the call, per David Alton Clark of Seeking Alpha,  “we are trending to the bottom end of the range of $1.60 to $1.70 EPS [earnings per share] for the year.”

Shares have taken a 4% hit since the earnings call. In fact, they have dipped steadily since the beginning of the year, down almost 19% since December 30, 2016. As of 11:51 a.m. Eastern Wednesday, GE is trading at 25.64/share. The stock is in correction territory, down 20% from its 52-week high ($32.25/share on December 20 of last year).

The downturn in recent weeks comes despite a second quarter in which GE exceeded analyst expectations in profit as well as revenue. The company reported an EPS of $0.28, surpassing projections of $0.25, and a revenue of $29.558 billion, which exceeds expectations of $29.015 billion. Revenue is up 6.9 percent from the first quarter of this year; profit has risen 50%. Still, revenue is down 11.6% from quarter two of last year, and profit has plummeted by more than 55% since then.

Cash flow from operating activities (CFOA), which was a concern for investors after GE reported an outflow $1 billion higher than expected in quarter 1, hit the mark set by management, and the projected range of full-year CFOA stayed constant, although Immelt said the number would likely come in close to the bottom of the $12-14 billion target. The company expects CFOA to continue to increase in the second half of the year.

CFOA numbers should be buttressed by GE’s cost cutting efforts, which are on schedule: “We’ve reduced our Industrial structural costs year to date by $670 million and we are on track to meet or exceed our $1 billion cost reduction target for the year,” Immelt said in the call.

The stock’s dividend yield currently sits at an alarming 3.75%, but the encouraging projections and results with regard to CFOA should prevent a further dividend decrease, according to Clark, who says he sees “no chance of a dividend cut whatsoever.”

Both times in the past five years when the dividend yield has hovered around the 4% mark, Clark points out, investors have jumped all over it, thereby raising its value. However, given the uncertainty that accompanies a change in CEO, Clark expects GE’s share prices to remain low until the company’s new CEO, John Flannery, releases the revised 2018 targets in November.

Clark is urging investors to snap up GE stock, citing the old “buy low, sell high” adage. “Sentiment on the stock appears at an all-time low,” he writes. “This is exactly the time to buy, not sell, for long-term shareholders looking to lock in a superior yield.”

Clark advocates a mean reversion strategy with respect to GE. Said strategy is based on the principle that a stock will eventually modulate toward its average value. In the case of a company like GE that has maintained solid performance over a long period of time, the mean reversion approach is attractive.

GE’s services—healthcare, power generation, and oil and gas provisions among them—are always in demand, and Clark expects demand to “grow exponentially” with the emergence of what he calls a “global middle class.” He presumably means that as more and more people around the world gain access to the modern conveniences GE provides, the company will be able to serve a much wider market.

GE is certainly struggling. The oil and gas industry is in a dip and has been slow to rebound. Management changes are leaving investors in limbo. Still, many, such as Clark, believe a return to equilibrium is to come, making now a great time to invest in the reeling giant.

Barnes & Noble Activist Investor Urges Privatization, Shares Soar

Sandell Asset Management, an activist investment firm, has accumulated a large number of shares in Barnes & Noble Booksellers, and is urging the company to go private, CNBC’s Lauren Thomas reports.

Sandell, which the Wall Street Journal says is now among the book retailer’s top ten investors, believes Barnes & Noble’s $520 million market value is “unconscionably low,” the result of investors’ skittishness to buy into brick-and-mortar retail operations amidst the continued boom of the online marketplace.

On Tuesday, in a letter to the formerly iconic bookstore chain, Thomas Sandell, CEO of the Sandell firm, said investors’ wariness of retail is ill-advised. “Physical books, and physical bookstores, are not going away anytime soon,” the letter read.

“What makes the under-valuation of Barnes & Noble all the more shocking is that…there is but one truly national bookstore chain,” added Sandell. The letter also called the Barnes and Noble stores “beachfront property,” referencing, presumably, the desirability of the stores’ locations from a retail perspective.

The letter claimed Barnes & Noble, currently valued at $8 a share New York Stock Exchange, could sell itself for around $12 a share on the private market.

Public investors seem to support the move toward privatization. Since news of Sandell’s letter was released Tuesday, Barnes and Noble’s share price has jumped more than thirteen percent as of 12:15 Eastern, clearing the $8 dollar mark.

Barnes & Noble’s 1993 IPO gave it a market value of nearly $2 billion, according to CrunchBase.com. By early 2006, shares were worth almost 2.5 times their IPO value. But, in May 2007, the stock began to decline and has yet to recover. Since then, share prices have fallen more than 71%. Revenue has fallen almost 25% since 2013, according to eMarket retailer

Some of the falls can be attributed to the struggles of Barnes & Noble’s Nook, an eReader the company introduced to the market in November 2009 to compete with Amazon’s Kindle. Nook sales generated just $105.44 million in revenue in 2010, but Nook-based revenue spiked by over 550% in 2011, and rose another thirty-plus percent in 2012. Since then, though, Nook sales have been on the decline. Nook- based revenue fell more than 15% from 2012 to 2013, almost 35% from 2013 to 2014, and close to 50% from 2014 to 2015. In total, Nook revenue has fallen 85% since 2012 (data via statista.com).

In fiscal 2017, Nook-based sales dropped more than 23%, according to a June article by Ellen Duffer of Forbes Magazine.

“Digital just seems to be something that B&N can’t quite get right,” Duffer writes.

However, Sandell believes the company’s efforts to capture the digital market have been misguided. The true value of Barnes and Noble’s business, the letter implied, is its niche—not, mind you, its Nook—in the physical book market.

Barnes & Noble has flirted with private ownership before. Ronald Burkle began stockpiling shares in the company in 2008, building his stake to 20% by May of 2010. Amidst disagreements with the company’s management, many of which were over the emerging Nook business, Burkle launched an ultimately unsuccessful proxy war. In response, management instituted a “poison pill” measure preventing investors from compiling a stake larger than 20%.

Leonard Riggio, the retailer’s chairman and largest shareholder, who acquired the Barnes & Noble name and its flagship Manhattan store in the 1970s and was instrumental in building the company into the household name it is today, made a bid to buy back the operation’s retail arm in early 2013.  In the letter, Sandell suggests that Riggio once again endeavors to buy out the company.

Despite all the trendy talk about the demise of paper books, Sandell maintains that success can still be had in that market, and considers privatization Barnes and Noble’s first step toward reclaiming its past financial success.

“We are strong believers in the vital service that Barnes & Noble provides as the nation’s largest book retailer,” Sandell said in his letter.

Asian Ride-Hailing Company Grab Has Raised 2 Billion and Counting in Latest Investment Round

China’s most prominent ride sharing company, Didi Chuxing, and SoftBank, a leader in the Japanese telecommunications and internet services industries, have invested a combined $2 billion in southeast Asian ride-hailing company Grab, Johana Bhuyan of recode.net reports. Grab expects to collect an additional $500 million dollars during this round of funding. It will use the money to expand geographically, as well as to bolster GrabPay, its mobile pay service.

Grab, founded in Singapore in 2012 as “MyTeksi,” now operates in 65 cities across 7 countries in Southeast Asia. The company serves three million daily users, Bhuyan says, and claims to hold 95% of the taxi market and 71% of the ride hailing market in the region.

Didi initially invested in Grab in 2015, during the latter company’s $350 million Series E round. SoftBank led Grab’s $250 million series D round in 2014.

Didi owns Uber’s China operation, and holds stake in Lyft, as well as in India’s largest ride-hailing company, Ola, and Brazil’s leading ride-hailing company, 99. SoftBank invested $100 million in 99 back in May, and a $210 million in Ola in 2015.

Rather than compete with one another across foreign markets, many ride-hailing companies are  choosing to cooperate, sharing their driver networks with each other. As a result of the Lyft-Didi alliance, for instance, a Lyft user traveling in China will find Didi cars listed when he opens his Lyft app, and vise versa. When it closed a $5.5 billion funding round in April, Didi said it planned to use the money to create a “sustainable global mobility ecosystem.” The investment in Grab marks another step toward doing just that.

Uber took a different approach toward establishing itself in international markets: it went head to head with established local companies like Didi in China. Its attempt to break into the Chinese market cost Uber about $2 billion, Kara Swisher of recode wrote last August. In the end, the companies called a truce: Didi gained control of Uber’s Chinese assets, adding $7 billion to its valuation, but Uber was granted a 20% stake the expanded Didi company, which] invested $1 billion in Uber.

SoftBank is also making inroads into self-driving technology. Just last week, it co-led a $159 million investment round in Nauto, which develops technology in driverless cars.

According to Arjun Kharpal of CNBC, Nauto plans to “use the money to grow and develop its camera technology and install it into more cars globally.”

Self-driving technology may be intertwined with the ride-hailing industry for the foreseeable future. Last week, Lyft announced intentions to add driverless cars to its network by the end of this year. Last September, Grab partnered with NuTonomy, a Cambridge based MIT spinoff that specializes in autonomous car technology, to allow users to try driverless cars for free. Uber’s Advanced Technologies Center in Pittsburgh, founded in 2015, employs some of the industry’s top minds in the effort toward self-driving technology. Lyft will create a similar operation, it said in the aforementioned announcement.

Cooperation is doing much to spur the ride-hailing as well as the autonomous car industry. GM and BMW also participated in Nutonomy’s investment round last week, and such automakers will likely team with ride hailing companies, which can provide platforms for the honing of autonomous technology.

The expansive alliance network that includes Didi, Left, Grab, and others is making it easier for customers to find rides around the world. Of course, the easier that becomes, the more ride hailing will pull ahead in the transportation space.

But Uber, having lost billions in a more or less futile attempt to infiltrate the Chinese market, may be left behind, unless that company can outstrip competitors in the race toward autonomous technology.

Featured image via Flickr/Jon Russell

Snap Shares Dip Below IPO Price, Selloff Expected

Shares of Snap, Inc. were valued at $16.99 when the market closed Monday, marking the first time the stock has dipped below its $17 IPO price since the company went public in March.

The drop comes as the market anticipates a massive selloff of Snap stock when a lockup period, which prevented investors who bought Snap’s IPO from offloading their shares, expires on July 29. At that point, more than 60% of Snap’s stock will become eligible to be sold.

Snap entered the public market with a $24 billion valuation, one of the loftiest ever amongst technology companies. Investors bought in, despite Snap’s 61.7 price-to-sales ratio. Following the IPO, the stock rose 41%, opening its first trading day at $24.

But when the company’s first public earnings report, published in May, came in below analysts’ projections, the stock dropped 25% almost instantaneously.

Since then, Snap’s market capitalization has fallen more than $10 billion, from $31 billion to $20 billion. Still, the market values the stock at 20 times the company’s expected 2017 sales, according to Fortune’s Jen Wieczner. When Snap publishes last quarter’s sales report later the summer, the stock is likely to drop even further.

When Snap’s new strategy to attract advertisers to Snap hit a snag earlier this year, Stephen Ju, an analyst for Credit Suisse, lowered his projections of Snap’s revenue last quarter: Credit Suisse no longer believes Snap’s 2017 revenue will crack the $1 billion threshold.

The financial analysis group dropped its target price for Snap from $30 to $25, but still gives Snap an “outperform” rating.

“While we were hoping for Snap to exhibit a more comfortable growth path, we are reminded that nascent companies sometimes grow in fits and starts,” Ju said in explanation of the drop in the target price.

The social media sector as a whole has performed well in the stock market over the last quarter. Since April 11, Facebook stock has risen 10%. Twitter shares have risen almost 30% since the same date.

The number of daily active users of Snap increased just 5% from the final quarter of 2016 to the first quarter of 2017. In the first half of last year, Snap’s user base grew about 15% per quarter, but it has grown an average of just 5% per quarter over the last three-quarters.

Many have compared recent investment trends toward social media and other technology sectors to the dot-com boom of the 1990s. People who have never before dipped a single toe into the stock market are snapping up technology stocks as though they have been investing for years.

Robinhood, a stock trading app, reported that 43% of those who traded on Snap’s first day bought shares in the startup social media company. The median age of those Snap investors was 26.

An overwhelming majority of Snap’s users occupy the 14-35 year old demographic, so it stands to reason that a sizable portion of the company’s investors are similarly aged.

“It’s hard to believe that such rookie investors would be equipped to successfully trade a stock like Snap,” Wieczner wrote in another article.

In the midst of a tech boom which has lingered on over the past three years or so, many considered Snap to be a sure thing, the next Google or Facebook or Twitter.

But given May’s sales report and the further disappointment expected when Snap publishes its quarter two earnings later this summer, it appears Snap’s bold IPO wrote a check it could not cash.

Investors, many of whom will have their first opportunities to sell their Snap stock when the lock-up period ends on July 29, are demanding what’s left of their money back.

Madoff’s Sons’ Estates Pay $18 Million to Victims of Ponzi Scheme in Legal Settlement

The estates of Michael and Andrew Madoff, heirs to the fortune of their father Bernie, will keep just under $4 million dollars after approximately $18 million is seized to pay a legal settlement with Irving Picard, the court-appointed trustee tasked with collecting the money lost by Madoff’s investors. Half of the money awarded in the settlement will go to the Madoff Victim Fund, which has paid out $9 billion to those Madoff cheated since it was created by the Department of Justice after Madoff’s conviction.

The estate of the senior Madoff’s younger son, Andrew, will retain about $2 million; that of Andrew’s older brother, Mark, will keep $1.75 million.

The two brothers managed business and regulation at Bernie Madoff’s private investment securities business. In 2008, they exposed their father’s scheme, after the senior Madoff confessed privately that his investment management enterprise was a classic Ponzi scheme.

Madoff reported false returns over multiple decades, using the money entrusted to him by new clients to pay the dividends he had promised to older ones. Like any Ponzi scheme, Madoff’s operation required a majority of participants to remain indefinitely committed to the scheme, because with no actual profit being made, Madoff was unable to consistently pay out the gains he had reported.

When the bottom dropped out of the economy in 2008, Madoff’s clients asked for $7 billion worth of dividends. Madoff only had a few hundred million dollars with which to pay them. With his scheme on the verge of collapse, Madoff presumably made the aforementioned confession to his sons, who in turn alerted federal authorities.

Several other Ponzi schemes have been enacted throughout history. Allen Stanford used such a scheme to steal $8 billion from his clients; Tom Petters’ swindled investors out of $3.7 billion. Still, no other Ponzi scheme has netted its proprietor a sum even close to that poached by Madoff.

Madoff, 79, is serving a 150-year prison sentence after pleading guilty in 2009 to 11 counts of various varieties of fraud, perjury, money laundering, and theft in connection with the scandal, which allegedly cost thousands of investors a collective $20 billion dollars they had entrusted to Madoff.

Neither of Madoff’s sons will see a dime of their inheritance. Mark Madoff hanged himself with a dog leash in his SoHo condo in December 2010. He allegedly wrote his wife the Madoff family “would be better off without ‘this’ hanging over them all, forever.” Presumably, Mark was referring to his father’s scandal.

Andrew Madoff died in September 2014 of mantle cell lymphoma, with which he was originally diagnosed in 2003. The cancer had been in remission for years before it resurfaced aggressively just prior to the youngest Madoff’s death. Mark Madoff once called his father’s scheme a “father-son betrayal of biblical proportions.”

Though the senior Madoff’s sons were instrumental in bringing his corruption to light, suspicion hounded them in the aftermath of their father’s conviction. Both Madoff brothers held top executive positions at Bernard L. Madoff Investment Securities, but claim to have been uninvolved in the scheme.   Five of Madoff’s employees were convicted of aiding Madoff’s corruption, but neither of the mastermind’s sons was among them.

The ripple effect of a scheme like Madoff’s is incalculable. Of course, thousands upon thousands of investors lost fortunes. Their families lost inheritances; some, presumably, were reduced to poverty. Madoff’s sons spent their lives under the weight of others’ suspicion and their own shame. Andrew Madoff publicly repudiated his father; Mark Madoff ended his own life.

The $4 million dollars the Madoff estates will retain and the $9 billion dollars the Department of Justice has repaid to Bernie Madoff’s victims seem strange and insignificant consolation.

Can Trump Change First Quarter Economic Slump?

Among hopes that the Trump administration would improve economic activity, the U.S. economy in the first quarter grew more slowly than it has in three years. It is too soon to tell how effective Trump’s promise to improve economics, however, recent levels of activity do not paint a positive picture.

In the worst performance since 2014’s first quarter GDP raised only 0.7 percent. The Commerce Department stated Friday that this is due to a decrease in spending on defense.

This comes as a major change after the fourth quarter’s 2.1 percent growth pace. Many economists altered their first-quarter growth estimates on Thursday when the March goods trade deficit and inventory data was released.

Businesses invested less this quarter and consumer spending saw very little increase. Investment in inventory strengthened in the two-quarters previous but has now fallen from $49.6 billion in October through December to $10.3 billion. Likewise, the addition of 1.0 percent from inventory accumulation to national GDP growth has dropped to a 0.93 percent deduction.

Consumer spending experienced a hit from several factors. Heating and utilities were in lower demand because of mild temperatures this winter and the late issue of income tax refunds discouraged many consumers from pulling out their wallets for big spending. Likewise, higher inflation contributed to the decrease.

Consumer spending only grew 0.3 percent, hitting the economy hard as it contributes to over two-thirds of economic activity. After the fourth quarter’s rate of 3.5 percent this slow pace which hasn’t been reached since the fourth quarter of 2009 is a disappointment.

View of the Future

Nevertheless, spending is likely to increase in the future as savings have risen from $778.9 billion to $814.2 billion. Consumer confidence is at an unusually high and the labor market is experiencing greater levels of employment. Also, private domestic demand is 2.2 percent higher than at the beginning of last quarter.

Federal Reserve officials meet next week and are predicted to not raise interest rates. This is because they likely view the consumer spending and GDP decreases as temporary.

Growth rates in the first quarter are only a small portion of the information needed to judge the strength of the economy. The first quarter is often reported as less positive because of data calculation problems which the government hopes to solve. Furthermore, the Trump administration plans to take actions to improve the situation.

Efforts including less economic regulation, tax cuts, and infrastructure spending will soon go into effect. Also, a new tax plan to cut corporate income taxes from 35 percent to 15 percent was proposed Wednesday.

These actions may improve the situation but many economists agree that raising the annual GDP to 4 percent, Trump’s stated goal, will not be easy. A large increase in productivity is necessary.

National, state and local governments decreased investment rates. On a national level, the change in investment is as dramatic as the decrease in the fourth quarter of 2014.

Government spending on defense went down at a 4.0 pace while overall spending decreased at a rate of 1.7 percent.

Economic Hope

In some ways, things are looking up for the U.S. economy. Oil prices improved after a period of decline causing oil well drilling to rise. Along with the rise of gas, this led to a 9.1 percent growth rate for business spending on equipment.

Additionally, investment in home building went up by a 13.7 percent rate. Nonresidential structure spending changed from a 1.9 percent rate to a 22.1 percent rate after this quarter.

These increases in investment were likely caused by the 449 percent rate of growth of mining. This is after only a 23.7 percent raise in the fourth quarter.

Lastly, the 4.1 percent rate of increase in imports fell below the increase of exports at 5.8 percent. The small trade deficit had little to no effect on GDP growth.

Detroit Receives Largest Investment by an Auto Supplier in 20 Years

Monday marked the groundbreaking of Flex-N-Gate Corp’s $95 million manufacturing facility in Detroit, Michigan. The facility will bring approximately 400 to 700 jobs to the city by mid-2018 and is widely considered the largest investment in Detroit by an auto supplier in 20 years.

The Illinois-based company, which produces headlamps, bumpers, and other front-end parts for vehicles, is expanding in response to a long-term contract with Ford Motor Co. Flex-N-Gate has not yet revealed for which Ford vehicle it will be producing parts.

Although Flex-N-Gate’s owner Shahid Khan has not shared whether city residents will be assured a percentage of the manufacturing jobs, specific plans have been made to focus on providing jobs to Detroit residents.

Khan has promised that Detroit construction companies will receive thirty percent of the contracts for the site and city residents will make up 51 percent of the workers required for construction. Focus: HOPE and Detroit at Work, two organizations which focus on job education and training, are partnering with the city to prime residents to be hired by Flex-N-Gate.

The plant is located near Coleman A. Young International Airport on 30 acres of land in Detroit’s I-95 Industrial Park. The 350,000 square foot facility is currently being excavated.

According to community leader Marvis Cofield, the company and the city have collaborated with residents of the area around the plant to insure minimal disturbance to the neighborhood. They have developed a site plan which will, among other things, deflect semi-truck traffic away from the nearby houses.

Flex-N-Gate was awarded a grant of $3.5 million dollars from the Michigan Strategic Fund for the plant. Additionally, the city is providing a property tax abatement of $5.9 million and a federal grant of $2.6 million to be used to improve the roads bordering the southern side of the facility.

The project is predicted to be a driving force for employment in the area and to provide opportunities for many of Detroit’s residents.

Dollar Slips Against Yen After Trump’s Policies

President Trump’s  executive order to curb immigration into the U.S. spread concern on the impact the administration could have on global trade and the economy. On Monday, major world equity markets fell and the dollar fell below the yen.

After the executive order came down on Friday, stocks on Wall Street experienced their worst day of the year. The order barred Syrian refugees from entering the country and suspended travel into the country for citizens from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen for 90 days. These seven countries were already labeled “countries of concern” by a 2015 law about visa admissions that passed through Congress. The law, created by senators from both parties, identified these countries by the presence of “terrorist organizations” and whether or not it was a “safe haven” for terrorists.

Investors seeking traditional security turned to the Japanese currency, letting the dollar fall. In the midst of political uncertainty, gold futures rose 0.4% to $1,193.20 per ounce. The dollar slipped 1.18% to 113.70 yen.

The potential risk from President Trump’s policies has quieted the enthusiasm that carried a rally for U.S. equities. Initially emboldened by campaign promises of tax breaks and simplified codes, U.S. equities set a series of record highs following the November election. Rick Meckler, president of LibertyView Capital Management, attributes the rally to enthusiasm from investors about expectations pro-business policies.

In the face of Trump’s policies actually being implemented, the CBOE Volatility Index, better known as Wall Street’s “fear gauge” increased 1.32 points after years of lows to settle at 11.90.

Meckler attributes this heightened uncertainty to variables outside of the business community, “We seem totally caught up now in immigration reform and travel restrictions. Those are not things the business community is necessarily excited about.”

First Standard Financial chief market economist Peter Cardillo attributes the sudden wavering to investor focus resting solely on Trump’s pro-growth promises, failing to extend toward policies that could still be harmful to economic activity, like the protectivist executive order.