Amazon’s Stock Is A Roller Coaster, Plus Chipotle Isn’t Living Alone In Their FDA Hellscape

by 4 years ago

morning-brew

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“You’re not a Ghost Killah, I’m sorry” — Pharma enemy of the world Martin Shkreli, in a bizarre, vulgar video attacking rapper Ghostface Killah after insulting Shkreli and calling him the “Michael Jackson nose face kid.” The Brew can’t make this stuff up.

MARKET SNAPSHOT
Big Picture

  • U.S. stocks posted solid gains on Thursday, boosted by generally solid earnings reports (with one Amazon-sized exception—hint: it was Amazon)
  • Japanese stocks jumped as much as 3.5% after the Bank of Japan unexpectedly introduced negative interest rates in an all-hands-on-deck effort to boost its economy

Alternatives to Watch

  • Oil prices rose for a third straight session as investors anticipate world oil powers will finally agree to cap production
  • 10-year treasury yields hit their lowest level of the year after disappointing data on durable goods orders hinted that the economy may have contracted in the fourth quarter

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CORPORATE PRIMER

Amazon: Not for the Faint of Heart

Up 9% during the day, then down 15% after hours. What could be worse? Investors quickly sold news that Amazon had missed both earnings and sales expectations for the fourth quarter. That said, it’s not all bad. The Seattle-based retailer has now posted a profit in three straight quarters and has seen a 69% increase in its dominant cloud computing business. Only time will tell how Amazon will fare in what is now a $2 trillion global e-commerce market. Either way…the Brew’s excited for the ride.

Not Your Father’s Microsoft

Think Microsoft’s still all about Windows? You’re living in the past, man—the tech giant jumped 4% after hours yesterday after reporting strong growth in its fast-growing cloud computing segment (Amazon’s not the only player in this game, after all), and Surface revenue up 29% year over year. Wowed with the growth, investors are looking past falling sales for Windows PC software (down 5%), and Windows Phone (down…wait for it…49%).

Fourth Quarter MVP

Under Armour, oft-referred to as the baby brother of the sports apparel world, just took its seat at the grown-up table. Its footwear and “athleisure” divisions posted powerhouse numbers, helping increase revenue by 31% this quarter—surpassing Adidas for second place in the industry. Sponsorship deals with Steph Curry and Jordan Spieth helped rebrand the company, leading to a massive 22% stock jump yesterday.

Ford Cruises Through Q4

With the sweet combo of low gas prices and high-flying automotive sales, Ford has been living the dream. The automaker announced record fourth quarter profits of $1.9 billion and beat analyst estimates in nearly every metric. International markets also lent sales a helping hand—Europe delivered its first yearly profit in five years and China delivered a large jump in operating profit. Ford expects growth to plateau in the road ahead, but for now, no complaints.

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OTHER STORIES

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ECONOMIC CALENDAR

WHEN FOOD ATTACKS

Chipotle has been taking a lot of flak for breaking the hearts of burrito lovers (read: 90% of America) with questionable food, but it turns out they’re not alone. Good news for Chipotle, bad news for us: over 8,000 food products have been recalled by the FDA last year. Here’s more on this unappetizing fact:

  • It wasn’t until 2011 that the FDA received the power to forcibly recall food, and it isn’t the only agency to have that power: the USDA and the Food Safety Inspection Service have jurisdiction over different types of food.
  • Companies are often reluctant to voluntarily recall, as doing so carries a big sticker price. In 2010, the egg industry as a whole lost $100 million in revenue after recalling 500 million salmonella-ridden eggs from one manufacturer.
  • But there is a silver lining: since recalls have become so commonplace, 78% of manufacturers now purchase recall insurance, meaning maybe next time they won’t be so reluctant to pull salmonella-tainted food from the shelves.

INTERVIEW QUESTION OF THE DAY

What processes do you use to evaluate financial risk? (Answer)

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BUSINESS TERM OF THE DAY

Salary Freeze — When a company suspends salary increases for a period of time. By freezing salaries, management hopes that the company will be able to produce better bottom line results by keeping fixed costs controlled. Let’s just say as an employee, this is the last thing you’d want your employer to do.

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FOOD FOR THOUGHT
$4.1 billion: Of the estimated $4.2 billion in bets that will be placed on this year’s Super Bowl, $4.1 billion, or about 97%, will be wagered illegally, the American Gaming Association estimates.

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