Disney Has High Profits Yet Sees Shares Fall 5% Due To ESPN, Coke Pulls Off Higher Than Expected Q4 Earnings

“The first thing I did was get my free burrito, because I don’t dislike burritos” — Maryland resident Hank Levine, in response to receiving 250 accidental text messages about Chipotle’s “raincheck” burrito promotion due to an area code mistake.

Big Picture

  • U.S. stocks ended a tad negative, but it was quite an up-and-down day as investors eagerly await testimony from Fed Chairwoman Janet Yellen today
  • Japan’s Nikkei Index plummeted 5.4% on Monday night, its worst decline since June 2013, showing investors aren’t as enthusiastic about Japan’s surprise negative interest rate move as initially thought

Alternatives to Watch

Market Movers

  • Two of Japan’s biggest lenders, Sumitomo Mitsui and Mitsubishi UFJ Financial Group, dove 9% as the banking selloff that hit Europe spread to Asia—and speaking of that bank selloff…




Banks Struggle to Stay Afloat

Following the nearly 10% drop in its share price on Monday, Germany-based Deutsche Bank is now considering buying back some of its bonds. Why do such a thing? By buying back its debt at a discount, the bank may help to offset concerns of a dreaded default. It’s not just Deutsche, though: since late November, the biggest five banks have lost 20% of their market capitalization. Goldman Sachs and others are looking to cut expenses even further in order to counter declining oil prices and all this crazy market turmoil.


Viacom Catches 0 Breaks

What’s worse than being the CEO when your shares plummet 21% in a day? Being the CEO accused of “exceedingly poor performance” by Wall Street analysts, and having to defend yourself amidst plunging profits, revenue and forward guidance. Yesterday, media giant Viacom (which controls CBS, Nickelodeon, MTV and Comedy Central, among others) and newly-minted CEO Philippe Dauman were in the hot seat after releasing “exceedingly” weak earnings. Even though Viacom also struck a major advertising deal with Snapchat, neither the market nor investors seemed amused.

Coke Pulls it Off

Coca-Cola’s Q4 earnings are in, and given the ever-shrinking soda market, the results were surprisingly good. The multinational beverage giant posted higher-than-expected profits due to a refreshing combination of price hikes on its products and low commodity costs. While revenue fell year-over-year, the figure still beat Wall Street’s expectations, helping shares edge upward. Moving forward, Coke plans to sell off its bottling operations in order to cut costs and keep earnings on the rise.

The Profits Awaken…But ESPN Doesn’t

The force was strong with Disney this past fiscal quarter after the Happiest Company on Earth reported its highest profits ever. Need proof? Earnings jumped 28% over last year, crushing analyst estimates, and were driven mainly by Disney’s studio and theme park businesses—not to mention the record-breaking $2 billion in ticket sales from The Force Awakens. So why did shares fall over 5% after hours? Despite the outstanding performance, investors were upset over another slowdown in ESPN subscribers, coupled with an increase in programming costs—quite the dismal combo.






Many companies make a bet on themselves by buying back their own stock, but it’s not always the right move. Billions have been lost, and we’re not just talking about energy companies either. To be precise, 229 companies in the S&P 500 have lost money on share buybacks in the past three years. What’s the deal?

  • Typically, Wall Street commends corporate buybacks since they reduce the number of shares outstanding, meaning profits per share rise.
  • But these buyers often have the timing all wrong, buying back shares when their company’s valuations are already expensive.
  • So who are these corporations with self-inflicted buyback injuries? American Express, Macy’s and Chevron have all racked up losses in the billions, but IBM takes the cake, suffering $9.8 billion in paper losses—suggesting that these companies should have invested back into their businesses for the long haul instead.


Mary, riding her white horse, goes into the forest. How far can she go? (Answer)



Tail Risk — A form of portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution.


30%: did you know that after Beyonce mentioned Red Lobster during her Super Bowl performance, the restaurant chain’s sales jumped 30% the next day?