FitBit Shares Fall 16% In After Hours Trading, Starbucks To Revamp Their Loyalty Program (For Better Or Worse)

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Congrats to Tom Lane, a consulting analyst, for winning last week’s Brew quiz competition and Brew swag prize! If you missed it last week, don’t worry: make sure to open Friday’s issue for this week’s quiz!

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“I hope folks will take a deep breath and stop saying the world is ending” — James Comey, Director of the FBI. Comey’s letter was in response to planned protests against the FBI after it called on Apple to unlock the iPhone of one of the San Bernardino shooters.

 

MARKET SNAPSHOT
Big Picture

  • U.S. stocks picked up from last week’s strong momentum in a hurry, finishing higher across the board as commodities prices rebounded heavily. Leading that charge was…

Alternatives to Watch

  • You guessed it: oil, which posted a huge gain on Monday as the number of active oil-drilling rigs dropped last week and the International Energy Agency expects the supply-demand balance will be restored by 2017

Market Movers

  • In-flight internet service provider Gogo saw its shares fly 10% after American Airlines ended its legal dispute with the company over Gogo’s unsatisfactory speeds
  • Hardwood flooring giant Lumber Liquidators saw its stock hit the floor: it fell 15% yesterday after the CDC reported that it underestimated the risk of cancer the company’s flooring posed to workers

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WORLD MACRO

Ye Olde Brexit

Tension has been mounting between the U.K. and the European Union. Here’s the deal: the U.K. has been considering leaving the EU for some time now, but is still very much on the fence. Prime Minister David Cameron has been pushing to stay, citing economic benefits, which sounded good to the public until Boris Johnson (the Mayor of London) declared the exact opposite, pushing for an exit from the EU (affectionately dubbed a “Brexit”). The recent uncertainty in the marketplace led the British pound to drop to a seven-year low against the dollar yesterday, and with the decision to exit still months away, it looks like there might be plenty more volatility to come.

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CORPORATE PRIMER

HSBC In the Ring

HSBC got hit with the old one-two yesterday. One: the London bank is being investigated by the SEC for hiring personnel related to government officers in Asia. If proven true, HSBC will enter an SEC monitoring period and could face criminal charges, including fines. The sucker punch? Bad press combined with subpar earnings (shares fell 3%) really hit home.

Starbucks Pulls a Fast One

America’s go-to caffeine shop is testing our allegiance. It’s hard to deny that Starbucks’ current loyalty program is generous: for every 12 items purchased, you get one free. But all good things must come to an end: April will bring a revamp of the program to incentivize customers to buy expensive specialty drinks rather than plain old (and cheap) coffee. Executives claim this isn’t weakening the program, and they’re probably right: people will do a lot to get the Starbucks caffeine rush.

Fitbit Feels the Heat

Following disappointing forecasts by the fitness gadget-maker, Fitbit shares fell 16% in after hours trading. Earnings are now expected to be barely positive going forward, and while the company reported $712 million in revenue last quarter, it’s now expecting only $420-440 million in the first quarter of 2016. The source? Stiff competition from the not-just-a-fitness-tracker Apple Watch has investors worried, and shares are now down 44% on the year.

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OTHER STORIES

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ECONOMIC CALENDAR

  • Monday: Fitbit (-), Allergan (+) Earnings
  • Tuesday: Macy’s, Office Depot, Papa John’s, Dollar Tree, Home Depot, DreamWorks, First Solar Earnings; Existing Home Sales; Consumer Confidence; S&P Case-Shiller Home Price Index
  • Wednesday: Hewlett-Packard, Target, Chesapeake Energy, Etsy Earnings; New Home Sales
  • Thursday: Best Buy, Domino’s, Gap, Baidu, Weight Watchers, Campbell Soup, Herbalife, Kohl’s, SeaWorld Earnings; Durable Goods Orders; Weekly Jobless Claims
  • Friday: U.S. Q4 GDP (2nd Estimate); Foot Locker, JC Penney Earnings; Personal Income and Outlays

JEB BLOWS HIS INHERITANCE

There’s only one way primary season can end: with two candidates left standing. One by one, candidates will fall out of the running, with all their funding essentially gone to waste. As you may know, former Governor Jeb Bush suspended his bid for the Republican nomination—meaning hundreds of millions in spending has also gone to waste. So exactly how much did he spend? Here’s the breakdown:

  • In total, the Bush campaign (including his Super PAC) spent a whopping $130 million out of a total $157 million raised—that’s the most spent of any candidate.
  • So where did the $130 million go? The majority—$84 million—went to advertising, which was especially important as Bush last held public office eight years ago.
  • Bush also paid his people well: $8.3 million went to funding a large support organization, more than any other candidate in either party. He also fed his people well: nearly $5,000 went to pizza.

INTERVIEW QUESTION OF THE DAY

A detective who was mere days from cracking an international smuggling ring has suddenly gone missing. While inspecting his last-known location, you find a note: 710 57735 34 5508 51 7718. Currently, there are three suspects: Bill, John and Todd. Can you break the detective’s code and find the criminal’s name? (Answer 7)

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BUSINESS TERM OF THE DAY

Downside Protection — The use of an option or other hedging instrument in order to limit or reduce losses in the case of a decline in the value of the underlying security. Downside protection often involves the purchase of an option to hedge a long position.

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FOOD FOR THOUGHT
Did you know that Americans drove a record 3.1 trillion miles in 2015? You might need some perspective, so consider this: 3.1 trillion miles is roughly 337 round trips from Earth to Pluto.