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In this post, we’ll cover:
Various market updates
Ban on Russian oil
Ryan Cohen’s 10% stake in Bed Bath & Beyond
Amazon’s 20-to-1 stock split
Marqeta’s (MQ) recent earnings
Quick stock market update, Biden’s ban on Russian oil, Bitcoin, Google, activist investors, and Amazon’s stock split.
Stock Market Update
The markets have been all over the place this week. On Monday we saw the S&P 500 trade down nearly -3% catalyzed by heightened geopolitical uncertainty between Russia and Ukraine.
Markets rallied on Wednesday with investors hopeful for progress on a cease-fire. However, that rally was short lived.
Banning Russian Oil
We’re seeing gas prices hit all-time-highs now that Joe Biden has banned the import of Russian oil and natural gas — a move to punish the country for their unwarranted invasion of Ukraine.
Crypto Executive Order
Bitcoin has traded up +10% so far this week — catalyzed by Joe Biden’s executive order (outlined here) that specifically outlines the administration’s efforts to understand the risks and benefits of cryptocurrencies.
Google’s 2nd Largest Acquisition
Google (GOOG) acquired cybersecurity firm Mandiant (MNDT) for $5.2 billion as part of an effort to better protect their cloud customers. This marks Mandiant as Google’s second largest acquisition ever.
“Organizations around the world are facing unprecedented cybersecurity challenges as the sophistication and severity of attacks that were previously used to target major governments are now being used to target companies in every industry.”
— Thomas Kurian, CEO of Google Cloud
If you haven’t yet read my deep dive into cybersecurity stocks, I’ve linked it below. Just last week I shared this post detailing my favorite two cybersecurity stocks to own as we navigate the Russian cyber-warfare uncertainty.
Everyone’s favorite activist investor, Ryan Cohen, recently announced his 10% stake in the company Bed Bath & Beyond (BBBY). As you all might recall, Ryan is the chairman of the board of directors for Gamestop (GME).
Ryan has since caught their management team’s attention with a massive stake in the company. According to this Reuters article, Ryan is exploring a plethora of strategic initiatives to generate value for shareholders — including a complete sale.
Amazon’s 20:1 Stock Split
Hell has officially frozen over — Amazon announced a 20-for-1 stock split and $10 billion share buyback program. Why this is a “monumental” moment for the company is because according to this 1997 letter to their shareholders..
We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions.
— Jeff Bezos
Is it just me, or is it now a “theme” to announce a stock split knowing it will artificially raise your stock price in the near-term?
Not sure what I’m talking about? Watch this TikTok video I published about it.
There’s no fundamental reason $70 billion in market capitalization should have be added to Amazon this morning — but it was.
Before we moved on to the next segment, I wanted to share with you all my growing interest of exiting my Amazon position — specifically because of the sky high oil prices. Unlike airlines or other companies whose bottom line is directly correlated to oil price, Amazon can’t just go raise their prices.
Delta (DAL) can raise ticket prices on their flights to compensate for the higher cost in jet fuel, and people will pay it. Amazon cannot ask everyone with Amazon Prime to pay an extra $20 to offset the higher transportation (fuel) costs they’re incurring right now. This higher cost cannot be easily offset and will eat into their margins. By how much? I’m not sure.
If you have any feedback related to this perspective, please feel free to share it in the comments below.
Marqeta (MQ) Earnings Update
Marqeta, the modern card issuing and payment solutions platform, reported stellar quarterly earnings results after the market closed Wednesday.
Revenue: $155 million, up +76%
Gross Profit: $76 million, up +105%
Total Processing Volume: $33 billion, up +76%
Business Highlights —
Marqeta crossed a major platform scale milestone in December, with annual TPV crossing $100 billion for 2021, finishing at $111 billion for the year. This represents a 50x increase in TPV since 2017.
It announced new platform certifications in Singapore, Thailand, and Philippines, expanding the global reach of its modern card issuing platform to 39 countries internationally.
Marqeta announced a new partnership with Citi Commercial Cards, who will use Marqeta's industry-first tokenization-as-a-service solution across more than 40 markets globally. Marqeta’s modern card issuing platform will integrate with Citi’s existing systems and enable Citi’s global commercial cardholder base to seamlessly provision corporate plastic cards as well as virtual cards into mobile wallets.
Alongside its support for Klarna’s business in North America and Asia Pacific, Marqeta expanded its partnership with Klarna (KLAR) into 13 new European markets. Marqeta also announced that it had powered the launch of the Square Card in Canada, with Marqeta’s global footprint helping to quickly scale a new card program into an international market.
Marqeta announced a partnership with Plaid to enable customers to seamlessly and securely authenticate their bank accounts and fund their accounts to power more immediate spending.
Wall Street’s Feedback —
“We acknowledge depressed growth stock valuations, hence our lower price target. However, we think MQ is nearing a point at which meaningfully above-average durable organic revenue growth and improving scale will set floor valuations — creating conditions of renewed outperformance.
We now see Marqeta to rapidly take share $8 trillion US consumer card market, while also expanding into a much larger global total addressable market. “
— Andrew Jeffrey, CFA ($20 — Truist)
My Feedback —
This quarter was massive. Not only did we see a report that reflected insane revenue growth ($155M vs. $135M expected), but the company also guided to revenue growth much higher than Wall Street’s expectations ($770M).
Their achilles heel, in many investor opinions, is their massive revenue concentration coming from one customer — Square (Block — SQ). However, revenue specifically generated from Square this quarter was 63%, down from 68% last quarter. This is a great step in the right direction. I’d even argue having a majority of your revenue coming from an incredible company like Square might not be a bad thing.
Very excited about Marqeta and the world they’re building. Couldn’t be happier about their gross profit margin expansion (below).
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Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.