Microsoft (MSFT) made its most aggressive play into the video game space Tuesday with a $68.7 billion takeover bid for "Call of Duty" maker Activision Blizzard. This marks the latest and largest mega-deal for the video game industry.
Activision Blizzard (ATVI) shares surged after the all-cash deal, which will value Activision, which also publishes "World of Warcraft," at $95.00 a share, the companies said, a 45% premium to its Friday closing price, with the deal-making Microsoft.
The Microsoft takeover follows last week's planned $12.7 billion takeover of "Farmville" maker Zynga (ZNGA) by Take-Two Interactive TTWO.
Microsoft bought ZeniMax Media for $7.5 billion last March -- the world's third-largest gaming group behind Tencent and Sony.
Microsoft will have access to 30 internal game development studios, as well as e-sports publishing capabilities when the deal closes later this year, while helping build out its XBox console offerings.
The deal could see rivals scrambling to secure their place, as well as their scale, in the 3 billion player-strong video game market as companies to establish and monetize their subscriber bases ahead of their move into the so-called metaverse, a hyper-realized version of the internet pioneered by Facebook parent Meta Platforms (FB).
Well-Known Value Investor Likes Google, Meta, Netflix
FAANG stocks Meta Platforms, Alphabet (GOOGL), and Netflix (NFLX) generally aren’t considered value stocks. But renowned value investor Bill Nygren of Oakmark Funds likes them anyway.
Meta Platforms and Alphabet are “falling between the cracks between the hypergrowth investors and value investors,” he told CNBC this past week.
“Accounting doesn’t do them justice for their venture capital investments,” he said. “And if you make adjustments for that, we think we’re paying less than a market multiple for their base businesses.” Those base businesses are “significantly better than average businesses at below-average multiples,” Nygren said.
As for Netflix, “we think the value of Netflix subscriptions to the average customer is significantly higher than what they’re paying today,” he said. “By underpricing the product, Netflix is able to grow at scale so rapidly that it’s very difficult for anyone else to catch up,” he said.
When it comes to Alphabet, Morningstar analyst Ali Mogharabi raised his fair value estimate to $3,470 from $3,400 last month, citing his enthusiasm about the company’s YouTube unit.
Apple and the Metaverse
Meta Platforms may be the company with half the word “metaverse” in its name, but will fellow FAANG stock Apple (AAPL) be the true beneficiary of the technology world’s latest big trend?
Investors and analysts are talking up Apple’s potential to exploit the metaverse, which consists of digital alternate realities, The Wall Street Journal reports.
Over on Real Money, contributor Doug Kass says a quick rise in interest rates likely will hit growth stocks by raising the risk-free cost of capital and by reducing the present value of their earnings. Read more of his investing ideas and trading strategies for tech stocks and the rest of the market on Real Money.
The enthusiasm has helped Apple stock soar 23% over the past three months, hitting a record $182.88 on Jan. 3. It recently traded at $175.83, up 0.4%.
The Cupertino, Calif., tech giant hasn’t said much about its plans for the metaverse, but Chief Executive Tim Cook has said it will be vital for the company’s future.
Here's a breakdown list of more technology and FAANG/MAMAA stocks to watch right now based on their performance over the past week:
Meta Drops on Glassdoor "Best Places to Work" Rankings for 2022
Mark Zuckerberg's attempt to deflect attention away from Facebook’s increasingly toxic reputation with a new name Meta Platforms hasn't stopped the company's fall from grace in Glassdoor's top workplace rankings. The tech giant featured at the No. 47 spot in Glassdoor's "Best Places to Work" rankings for 2022, a nosedive from its No. 11 position on the annual company rankings last year. Glassdoor said employees cited concerns around unwanted public scrutiny, lack of action from leadership on platform issues, and questions about the company’s future direction, according to a CNBC report.
Meta is the latest company in corporate America to delay its return to the office due to increased risk from the fast-spreading omicron variant of coronavirus. The move signals that America's triumphant return to office after two years of living in a pandemic may not turn out as planned. The company has pushed its reopening date for all U.S. offices to March 28 from Jan. 31, the tech giant said in a statement. Meta will also need all workers returning to the office to present proof of their booster jabs.
TheStreet Quant Ratings rates Meta Platforms (formerly Facebook) as a Buy with a rating score of B+.
Apple Yields $60 Billion in Revenue but Faces a $6 Billion Supply-Chain Problem
Apple developers brought in $60 billion in revenue in 2021 and $260 billion since the App Store launched in 2008, according to the latest digital performance numbers released by the company. The former year has outpaced some past ones by a wide margin — when the tech giant last reported these numbers a year ago, it pegged its total profit at $200 billion. While not specifying the exact amount, Apple also said that spending between Christmas Eve and New Year's Eve in 2021 grew in the double digits. The iPhone and Mac maker has seen its business grow by a third over the past 12 months.
However, Apple has a $6 billion supply chain problem that may get worse. "If you look at Q4 for a moment, we had about $6 billion in supply constraints and it affected the iPhone, the iPad, and the Mac," Tim Cook said. "We had -- there were two causes of them for Q4. One was the chip shortages that you've heard a lot about from many different companies throughout the industry. And the second was COVID-related manufacturing disruptions in Southeast Asia."
TheStreet Quant Ratings rates Apple as a Buy with a rating score of A.
Amazon vs. Apple: the Race for Dominating Sports Entertainment Streaming
Apple vs. Amazon (AMZN); Siri vs. Alexa; TV+ vs, Prime: Gloves might be off soon between the two tech giants. The iPhone maker is said to be on the verge of entering sports, a space where the e-commerce giant is building a fortress to win the streaming war. Apple is in "serious" discussions with MLB to broadcast Major League baseball games next season, according to Andrew Marchand from The New York Post. MLB has also spoken to Amazon, according to The New York Post.
Amazon Prime has made it clear it wants to be a major player in sports. Next NFL season, Amazon Prime Video will become the exclusive home to “Thursday Night Football.” Internationally, Amazon Prime Video has won rights for top soccer events, including the Premier League. The group founded by billionaire Jeff Bezos is also developing sports programs, according to The Post, in hopes of potentially having a full daily lineup to compete with prominent shows such as ESPN’s “Get Up” and “First Take” and FS1’s “Undisputed.”
TheStreet Quant Ratings rates Amazon as a Buy with a rating score of B-.
Google Allegedly Misled Publishers and Advertises About Pricing
Alphabet's Google (GOOGL) allegedly misled publishers and advertisers about the pricing and processes of its ad auctions, according to a news report, and created secret programs that deflated sales for some companies while increasing prices for buyers. The search engine giant then allegedly pocketed the difference between what it told publishers and advertisers that an ad cost and used the pool of money to manipulate future auctions to expand its digital monopoly, the Wall Street Journal reported, citing unredacted allegations and details in a lawsuit by state attorneys general.
Rivals have complained that Google tilted the market in its own favor, allowing it to win more bids and foreclose competition. The unredacted filing on Friday in the U.S. District Court of the Southern District of New York came after a federal judge ruled this week that an amended complaint filed last year could be unsealed.
TheStreet Quant Ratings rates Alphabet as a Buy with a rating score of A.
Microsoft Poised to Take Advantage of Metaverse
Microsoft, Adobe (ADBE,) and Salesforce (CRM) are poised to take advantage of the metaverse, says investment management/research firm Bernstein. Microsoft is “best positioned to be a big winner from the metaverse, … having almost all of the major capabilities required to deliver a metaverse platform today,” Bernstein analyst Mark Moerdler wrote in a commentary cited by CNBC. He pointed to the company’s smart glasses unit HoloLens, its Mixed Reality headset, its business communications platform Microsoft Teams and LinkedIn.
Morningstar analyst Dan Romanoff assigns it a wide moat and puts fair value at $345. The stock closed Thursday at $304.80, down 4%. “Microsoft has become one of two public cloud providers that can deliver a wide variety of … solutions at scale,” he wrote in October. “Additionally, Microsoft embraced the open-source movement and has largely transitioned from a traditional perpetual license model to a subscription model. Finally, Microsoft exited the low-growth, low-margin mobile handset business and is driving Gaming to be more cloud-based.”
The Street Quant Ratings rates Microsoft as a Buy with a rating score of A+.
Netflix Raises Subscription Prices
If your Saturday evening usually involves some version of the couch and Netflix, get ready to pay more. The Los Gatos, Calif.-based streaming platform is raising the prices of its subscriptions by $1 to $2 a month. The cost of the standard Netflix plan will rise to $15.49 from $13.99 in the U.S. The rising prices, the company said, will be used to help Netflix provide more original programming and interesting content at a time when viewers have more and more options on different platforms.
Netflix shares rose slightly in after-hours trading Friday after news broke — an indication, as some analysts said, that a commitment to strong content (Netflix has shows like "Cobra Kai") will be what helps streaming companies stay competitive going forward. "In our view, the original content released by Netflix in 4Q:21 was unprecedented and we believe this will encourage strong engagement," Monness Crespi Hardt analyst Brian J. White wrote in an investor note first seen by MarketWatch. Netflix is due to release its fourth-quarter earnings on Jan. 20.
TheStreet Quant Ratings rates Netflix as a Buy with a rating score of B.
Peloton Shares Slumped Extending Six-Month Decline
Peloton (PTON) shares slumped lower this past week, extending their six-month decline past 72% after Nasdaq officials planned to remove the fitness equipment maker from its benchmark tech indices. The Nasdaq said shipping operator Old Dominion Freight Line (ODFL) will replace Peloton for the start of trading on Jan. 24, a move that could trigger even more selling from investors that track indices such as the Nasdaq 100, the Nasdaq Equal Weight Index, and the Nasdaq ex-Technology Index.
Peloton shares were marked 4.6% lower in midday trading Friday to change hands at $30.67 each, the lowest since the peak of the market decline in May of 2020. Peloton, as well as other so-called "stay-at-home" stocks, has struggled to hold investor confidence as pandemic-triggered surges in orders and sales faded amid easing restrictions on indoor gatherings and a return to office work.
The Street Quant Ratings rates Peloton as a Sell with a rating score of D.
Intel is Investing $1 Billion To Build Semiconductor Factory in Ohio
While large-scale semiconductor factories usually bring up thoughts of the kind of innovation happening in Japan and Taiwan, Ohio residents may soon see millions of semiconductors being made in their own state. While Intel (INTC) has not yet confirmed the news, Ohio residents reported a 3,000-acre plot being set up for a large semiconductor factory.
While official plans have not yet been confirmed by the company or federal authorities, several Ohio newspapers reported that the Santa Clara, Calif.-based Intel, which forecasts a doubling of the semiconductor market to $1 trillion by 2030, is investing $1 billion to build a semiconductor plant in New Albany, Ohio. As producing this chip requires costly state-of-the-art infrastructure, only a few companies currently have the resources to do so. Pressure to ramp up production and open new factories is high.
The Street Quant Ratings rates Intel as a Buy with a rating score of B.
Twitter Ban in Nigeria Has Been Lifted
The Nigerian government on Jan. 13 lifted the ban on Twitter (TWTR) after the social media platform agreed to open a local office, among other agreements with authorities in the West African country. Twitter will establish a legal entity in Nigeria and appoint a country representative to engage with the government when required, Bloomberg, Reuters report.
Twitter also had to agree to meet other conditions that the government set, including "managing prohibited publication in line with Nigerian law." The social network has to pay domestic taxes as well. "WE ARE BACK," the National Information Technology Development Agency, or Nitda, wrote on his official Twitter account on Thursday, its first tweet since June 4.
The Street Quant Ratings rates Intel as a Buy with a rating score of B.
