Mom and Pop Are On Epic Stock Buying Spree With Free Trades

Mom and Pop Are On Epic Stock Buying Spree With Free Trades(Bloomberg) -- Small investors are back. In a big way.Their fingerprints are on Apple Inc.’s staggering rally. They piled into Tesla Inc. as it tripled, and turned speculative fliers like Virgin Galactic Holdings Inc. into some of the most heavily traded shares in the country. Why the enthusiasm? Some see a link to decisions by brokerages to cut commissions on trades to nothing.While it’s tough to know what’s causing what -- bull markets are fueled by new converts but also lure them -- trading volume at online and discount brokers has exploded. TD Ameritrade Holding Corp., which started offering free trading in October, has seen million-trade days multiplying at a record pace.Along with E*Trade Financial Corp., daily average revenue trades -- a standard industry metric that may be a bit of a misnomer now since buying and selling is free -- have almost doubled to an all-time high since last September, data compiled by Sundial Research showed.“When you take a bull market and juice it with zero commission trading, we can expect it to generate interest among retail accounts. That, it did,” said Jason Goepfert, president of Sundial. “Retail traders have become manic.”Individual investors were seen as indifferent participants for much of the 11-year bull market. No more. The latest leg of their emergence times closely with October, when E*Trade, Charles Schwab and TD Ameritrade slashed commission fees to zero. Not that it’s firm proof of anything, but since the start of that month, the S&P 500 is up 12% and the Nasdaq 100 has surged 22%.Conversations with a handful of clients found lots of praise for zero-commission trades but mostly conservative purchases -- index funds and blue chips. Matt Hermansen, 23, who works for a concrete company in Oakland, California, said the absence of fees makes him more willing to trade.“I’ll invest smaller amounts. Before I never really invested anything less than $1,000, $500 minimum,” he said in a phone interview. “Now if I have enough to buy an extra share, I’ll do it. I’ll do like $300.”At TD Ameritrade, the number of days where the amount of trades topped 1 million reached 38 during the fiscal first quarter ended Dec. 31, according to Steve Boyle, interim president and chief executive officer. That compares to 23 such days in all of fiscal year 2019.It’s “a new world in discount brokerage where price no longer clouds the comparison for trades,” Boyle said in an earnings statement on Jan. 21. By that date, the firm’s monthly volume had already risen 40% from a year ago, averaging 1.4 million trades per day.At E*Trade, similar trends has played out. Daily average revenue trades have increased 74% since the firm’s fee cut, Sundial’s data showed.Randy Frederick, a vice president of trading and derivatives at Charles Schwab, says the surge in trading also reflects a growing confidence in the bull market. Indeed, from the coronavirus outbreak to Apple’s sales warning, nothing has been able to stop shares from marching higher.“It’s partially driven by free commissions, but I don’t think it’s just that, because not everyone is offering free commissions,” Frederick said. “The fact that we have been in a bull market for a long time, people are just optimistic. Things are going up and they continue to go up.”U.S. households are turning more optimistic on the stock market. According to the latest sentiment reading from the Conference Board, the share of respondents expecting stocks to rise in the next year advanced to 43.1% in January, the highest since October 2018.Hot stocks get the most attention. At TD Ameritrade, Apple, Microsoft Inc., Tesla and Virgin Galactic have been among the highly traded this year, according to JJ Kinahan, the firm’s chief market strategist. Shares of the two tech giants have climbed at least 9%, double the S&P 500’s gain. Tesla, Elon Musk’s automaker, and Virgin Galactic, Richard Branson’s space-tourism company, have done even better, with triple-digit advances. Virgin Galactic, in particular, has seen retail investors talking up their positions on message boards like r/wallstreetbets on Reddit.“A lot of our millennial clients over the past six months were buyers of Tesla,” Kinahan said. “Younger people buy products they are familiar with, or more importantly, think are going to be viable products down the road,” he added. “It does make sense to say that some of these, maybe Virgin Galactic, may be a product that makes sense in 10 years.”For Peter Cecchini, chief global market strategist at Cantor Fitzgerald LP, affection among retail investors for both tech stocks and loss-making companies is creating flashbacks to the internet frenzy in late 1990s.“There’s sometimes no fundamental reason for it. It just is based on perception -- a perception based on narratives that run only an inch deep,” he said in note. “Let’s see how much longer it persists. This kind of activity often unwinds much faster than the wind up.”(Updates prices in sixth paragraph)\--With assistance from Claire Ballentine and Esha Dey.To contact the reporters on this story: Lu Wang in New York at [email protected];Vildana Hajric in New York at [email protected] contact the editors responsible for this story: Brad Olesen at [email protected], Chris Nagi, Richard RichtmyerFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


Amazon Seeks Internal Pentagon Documents in JEDI Cloud Case

Amazon Seeks Internal Pentagon Documents in JEDI Cloud Case(Bloomberg) -- Amazon.com Inc. has asked a court to force the government to hand over documents related to Defense Secretary Mark Esper’s decision to recuse himself from making decisions on a $10 billion cloud-services contract.In a court filing made public on Friday, Amazon seeks a trove of documents to bolster its challenge of the Pentagon’s Joint Enterprise Defense Infrastructure, or JEDI, cloud contract that was awarded to Microsoft Corp. in October.Amazon Web Services, Amazon’s cloud unit, is also asking the U.S Court of Federal Claims to require the government to turn over materials that shed light on the role that Stacy Cummings, a deputy assistant secretary of defense, played in the procurement.Cummings communicated with the team evaluating JEDI bids and worked on preparations for JEDI-related meetings involving Esper, the lawsuit said. She recused herself from working on the procurement in September 2019, according to the lawsuit.In a previous filing, government lawyers argued that Amazon is “not entitled” to all materials relating to the recusals of Cummings and Esper. They added that Cummings had a conflict with Microsoft, that “did not impact the procurement.”Other files Amazon seeks include “informal notes” between the bid selection team members, JEDI-related content on digital channels and procurement documents that were presented to Esper and Deputy Secretary David Norquist.Representatives for the Defense Department and Microsoft didn’t immediately respond to requests for comment.Amazon filed a lawsuit in November in the U.S. Court of Federal Claims alleging that the Defense Department failed to fairly judge its bid because President Donald Trump viewed Amazon Chief Executive Officer Jeff Bezos as his “political enemy.”Amazon asked the court earlier this month to allow it to question Trump, Esper, former Defense Secretary James Mattis, and Dana Deasy, the Pentagon’s chief information officer.In August 2019, the newly confirmed Esper ordered a review of the procurement after Trump endorsed criticism that the Pentagon had given Amazon an unfair advantage with the contract’s design.The Pentagon announced in October that Esper would recuse himself from any decisions involving the contract to avoid the appearance of a conflict of interest. Esper’s son worked as a consultant for International Business Machines Corp., which along with Oracle Corp., had earlier been eliminated from the competition.Three days after Esper’s recusal, the Pentagon announced it had chosen Microsoft, an upset victory for the company that many in the industry viewed as a distant second to Amazon.“A complete factual record on the bases for these recusals is especially critical in light of the well-grounded allegations AWS has made about the troubling circumstances surrounding the recusals of DoD personnel,” the lawsuit said.The Pentagon’s JEDI project is designed to consolidate the department’s cloud computing infrastructure and modernize its technology systems. Earlier this month, a judge agreed to block Microsoft from working on the contract while Amazon’s lawsuit is being litigated.To contact the reporter on this story: Naomi Nix in Washington at [email protected] contact the editors responsible for this story: Sara Forden at [email protected], Paula DwyerFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


SpaceX said to be seeking around $250 million in funding, boosting valuation to roughly $36 billion

SpaceX is looking to raise around $250 million in new funding according to a new report from CNBC’s Michael Sheetz. The additional cash would bring SpaceX’s total valuation to around $36 billion, according to CNBC’s sources — an increase of more than $2.5 billion versus its most recently reported valuation.

The rocket launch company founded and run by Elon Musk is no stranger to raising large sums of money — it added $1.33 billion during 2019 (from three separate rounds). In total, the company has raised more than $3 billion in funding to date — but the scale of its ambitions provides a clear explanation of why the company has sought so much capital.

SpaceX is also generating a significant amount of revenue: Its contract to develop the Crew Dragon spacecraft as part of the NASA commercial crew program came with $3.1 billion in contract award money from the agency, for example, and it charges its customers roughly $60 million per launch of one of its Falcon 9 rockets. Last year alone, SpaceX had 13 launches.

But SpaceX is also not a company to rest on its laurels, or its pre-existing technology investments. The company is in the process of developing its next spacecraft, dubbed “Starship.” Starship will potentially be able to eventually replace both Falcon 9 and Falcon Heavy, and will be fully reusable, instead of partially reusable like those systems. Once it’s operational, it will be able to provide significant cost savings and advantages to SpaceX’s bottom line, if the company’s projections are correct, but getting there requires a massive expenditure of capital in development of the technology required to make Starship fly, and fly reliably.

Musk recently went into detail about the company’s plans to essentially build new versions of Starship as fast as it’s able, incorporating significant changes and updates to each new successive version as it goes. Given the scale of Starship and the relatively expensive process of building each as an essentially bespoke new model, it makes perfect sense why SpaceX would seek to bolster its existing capital with additional funds.

CNBC reports that the funding could close sometime in the middle of next month. We reached out to SpaceX for comment, but did not receive a reply as of publication.

Trump’s Election Day YouTube takeover plan feels very different in 2020

According to a report from Bloomberg, the Trump campaign called dibs on some of the most prized ad space online in the days leading up to the 2020 U.S. election.

Starting in early November and continuing onto Election Day itself, the campaign will reportedly command YouTube’s masthead, the space at the very top of the video sharing site’s homepage. YouTube is now the second most popular website globally after the online video platform overtook Facebook in web traffic back in 2018. Bloomberg didn’t report the details of the purchase, but the YouTube masthead space is reported to cost as much as a million dollars a day.

The Trump campaign’s ad buy is likely to rub the president’s many critics the wrong way, but it isn’t unprecedented. In 2012, the Obama campaign bought the same space before Mitt Romney landed the Republican nomination. It’s also not a first for the Trump campaign, which bought banner ads at the top of YouTube last June to send its own message during the first Democratic debate.

Screenshot of the Trump campaign’s June 2019 YouTube ads via NPR/YouTube

In spite of the precedent, 2020 is a very different year for political money flowing to tech companies — one with a great degree of newfound scrutiny. The big tech platforms are still honing their respective rules for political advertising as November inches closer, but the kinks are far from ironed out and the awkward dance between politics and tech continues.

The fluidity of the situation is a boon to campaigns eager to plow massive amounts of cash into tech platforms. Facebook remains under scrutiny for its willingness to accept money for political ads containing misleading claims, even as the company is showered in cash by 2020 campaigns. Most notable among them is the controversial candidacy of multi-billionaire Mike Bloomberg, who spent a whopping $33 million on Facebook alone in the last 30 days. In spite of its contentious political ad policies, much-maligned Facebook offers a surprising degree of transparency around what runs on its platform through its robust political ad library, a tool that arose out of the controversy surrounding the 2016 U.S. election.

On the other end of the spectrum, Twitter opted to ban political ads altogether, and is currently working on a way to label “synthetic or manipulated media” intended to mislead users — an effort that could flag non-paid content by candidates, including a recent debate video doctored by the Bloomberg campaign. Twitter is working through its own policy issues in a relatively public way, embracing trial-and-error rather than carving its rules in stone.

Unlike Twitter, YouTube will continue to run political ads, but did mysteriously remove a batch of 300 Trump campaign ads last year without disclosing what policy the ads had violated. Google also announced that it would limit election ad targeting to a few high-level categories (age, gender and ZIP code), a decision the Trump campaign called the “muzzling of political speech.” In spite of its strong stance on microtargeting, Google’s policies around allowing lies in political ads fall closer to Facebook’s anything-goes approach. Google makes a few exceptions, disallowing “misleading claims about the census process” and “false claims that could significantly undermine participation or trust in an electoral or democratic process,” the latter of which leaves an amphitheater-sized amount of room for interpretation.

In recent years, much of the criticism around political advertising has centered around the practice of microtargeting ads to hyper-specific sets of users, a potent technique made possible by the amount of personal data collected by modern social platforms and a strategy very much back in action in 2020. While Trump’s campaign leveraged that phenomenon to great success in 2016, Trump’s big YouTube ad buy is just one part of an effort to see what sticks, advertising to anybody and everybody in the splashiest spot online in the process.

YouTube declined to confirm to TechCrunch the Trump campaign’s reported ad buy, but noted that the practice of buying the YouTube masthead is “common” during elections.

“In the past, campaigns, PACs, and other political groups have run various types of ads leading up to election day,” the spokesperson said. “All advertisers follow the same process and are welcome to purchase the masthead space as long as their ads comply with our policies.”

Can Beyond Meat (BYND) Stock Keep Surging Higher? Analysts Remain Skeptical

Can Beyond Meat (BYND) Stock Keep Surging Higher? Analysts Remain SkepticalIf volatility was a vegan patty, the Beyond Meat (BYND) offering would be selling by the truckload. Shares of the meat industry disruptor are up by 54% year-to-date. The wild ride continues last year’s action-packed performance; following its public listing in May, the stock surged by more than 420% to a high of $239.71 in July, before crashing all the way down to $73.6 in mid-December.The jury is still out on whether Beyond Meat really has what it takes to become a marquee name in the 2020s, as a number of questions regarding its road to long-term success still remain a moot point; Do consumers care enough about brand burgers? Are plant-based meat brands likely to become a thing? Can the new company withstand the increasing competition from other industry players? Are barriers to entry in plant-based meats more than trivial? All currently remain unanswered.Beyond Meat’s recovery from last year’s lows has been partly attributed to speculation of a possible partnership with either McDonald’s or KFC. The former gave BYND a small run-out in Canada last year, with the addition of a menu item titled the P.L.T. (plant, lettuce, and tomato). The experiment has been extended upon this year; McDonald’s have added the item to a further 52 restaurants, in turn fueling hopes it might make it a permanent addition to the fast food giant’s menu. Where the latter is concerned, a test for a Beyond Meat menu item called Beyond Fried Chicken recently expanded from a single restaurant in Atlanta to more than 60 locations in Charlotte, North Carolina, and Nashville, Tennessee. If a partnership with either materializes, there’s no need to explain the impact the news will have on the price action. There are a number of reasons why Oppenheimer’s Rupesh Parikh looks favorably upon the Beyond Meat brand. The 5-star analyst cites the company’s track record of innovation, longer-term prospects, and positioning as attractive. However, the recent gain and the company’s high stock valuation -- the forward price-to-earnings ratio is 283 – are currently keeping him on the sidelines.Parikh said, “Going forward, we expect a volatile trade to continue driven by potentially lumpy foodservice wins & losses and prospects for an increasingly competitive backdrop. On the print specifically, we have less conviction given seemingly high expectations of a potential US McDonald’s win but still very high short interest levels north of 40%. We continue to look very favorably upon BYND's longer-term prospects and would await a more attractive entry point.”Accordingly, Parikh maintains a Perform rating on BYND, without suggesting a price target. (To watch Parikh’s track record, click here) Bernstein’s Alexia Howard takes a similar view: “We continue to believe that Beyond Meat’s near-term sales growth potential in the U.S. is largely priced in at this point, however, there could be upside if Beyond Meat further expands its capacity and more meaningfully expands into international markets.”Howard maintains a Hold rating on the stock but has bumped up her price target from $106 to $117. (To watch Ellis’s track record, click here)Overall, sentiment on the Street indicates a cautious approach to the meat industry disruptor’s prospects; All 6 analysts tracked over the last 3 months recommend BYND as a Hold. The average price target comes in at $124.2 and indicates a modest upside of 5%. (See BYND stock analysis on TipRanks)