Talk that Amazon (AMZN) is interested in buying Peloton (PTON) highlights the fact that mega-cap technology stocks have a huge pool they can use for takeovers.
That idea appeared on Bloomberg, which reported that Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), Amazon and Meta Platforms (MVRS) have a hefty $648 billion in cash and marketable securities combined.
Apple leads the way with $203 billion, followed by Alphabet with $169 billion, Microsoft with $132 billion, Amazon with $96 billion and Meta with $48 billion.
“Having a lot of cash on hand creates flexibility for these companies in challenging economic environments; they can put cash to work, make acquisitions,” Carlos Garcia-Tunon, head of fundamental equity at MacKay Shields, told Bloomberg. “I wouldn’t be surprised if we saw a pickup in deal activity in this environment.”
The stocks of big-name companies like Peloton and Netflix have slumped, making them more affordable, he noted. Peloton has plunged 47% over the past three months, while Netflix (NFLX) has dropped 38%.
Bezos Got $18.8 Billion Richer, Zuckerberg Lost $36 Billion Last Week
The fortunes of the tech moguls come and go with the stock market performance of their respective companies.
When Amazon stock surged this past week on Wall Street, if anyone was to rub their hands and do their math, it was Jeff Bezos, the founder of the e-commerce giant. Bezos saw his fortune soar by nearly $19 billion in one day.
Bezos, who holds 9.85% of the capital of the e-commerce giant according to figures from FactSet, now has a personal fortune estimated at $183 billion, according to the Bloomberg Billionaires Index.
He remains behind Elon Musk, the CEO of Tesla and SpaceX whose fortune is estimated at $239 billion. Much like Musk, the bulk of Bezos' personal fortune is based on the shares he owns in his companies.
On the other hand, Mark Zuckerberg, the founding CEO of Facebook, saw his fortune drop by $36.1 billion in 48 hours. He had to drop a few places in the ranking of the largest fortunes on the planet. Mr. Zuckerberg can always console himself with a fortune estimated at $89.4 billion.
Zuckerberg lost almost $30 billion in 24 hours following a bad earnings report by Meta Platforms, parent company of social media giants Facebook and Instagram.
Warren Buffett Likes Facebook, but its Stock? Not so Much
Warren Buffett has shown admiration for Meta Platforms over the years, but he also has indicated little interest in buying the stock. That comes from Markets Insider, which has published a round-up of the Berkshire Hathaway CEO’s remarks about Meta.
Most recently, at Berkshire’s annual meeting, Buffett said, "We've always known that the dream business is the one that takes very little capital and grows a lot. Apple and Google and Microsoft and Facebook are terrific examples of that."
In a 2012 interview with CNBC, Buffett called Facebook an "extraordinary business."
But he also has expressed some qualms about the company. In a 2018 CNBC interview, he cited Facebook’s influence on the 2016 presidential election and the potential for it to be used to limit voting.
In the same 2012 CNBC interview where Buffett lauded Facebook, he also said the best companies are the most difficult to value. And he said the outlook for Facebook over the next five to 10-years was too uncertain to invest in it, Markets Insider reports.
Here's a breakdown list of the technology and FAANG/MAMAA stocks to watch right now based on their performance over the past week:
More Facebook news...
Facebook's bet is not paying off. For the moment. We will probably have to wait a little longer to pass final judgment. But at a time when all companies, small, medium and multinational, are throwing themselves headlong into the metaverse, this new virtual world that the gurus and big names in tech are selling us, the performance of Facebook's metaverse division should challenge more than one.
The company, which renamed itself Meta in October to put many controversies behind it, released for the first time earnings for its metaverse projects. Reality Labs, which includes augmented- and virtual-reality-related consumer hardware, software and content, is a sink for the company. This division lost $10.2 billion in 2021, more than double the operating losses recorded in 2020 -- $4.62 billion. In 2019, the operating loss was $4.5 billion.
TheStreet Quant Ratings rates Meta Platforms (formerly Facebook) as a Buy with a rating score of B+.
Peloton
Peloton shares surged Monday following multiple media reports that suggest Amazon is preparing a potential takeover bid for the connected fitness equipment maker. Amazon is said to be exploring talks with senior Peloton officials, amid separate reports that activist investors at Blackwells Capital LLC called for the firing of CEO John Foley, and the potential sale of the company, in the wake of last week's multi-billion selloff following reports of production halts and cratering customer demand.
Britain's Financial Times also reported potential interest from Nike (NKE), one of the companies pushed by Blackwells Jason Aintabi as a possible suitor. And, if Apple needed a nudge to bid for the fitness-equipment maker, it just got one. Wedbush in a note on Monday said, "we would be shocked if Apple is not aggressively involved in this potential deal process." Peloton's market capitalization has slumped, as market demand for and sales of its extravagantly priced connected-fitness bikes and treadmills have waned.
TheStreet Quant Ratings rates Peloton as a Sell with a rating score of D.
Apple
Apple could be getting ready to launch a new iPhone SE and iPad Air, according to rumors reported by Bloomberg. Both devices could be announced next month. Should investors jump on Apple stock before the new devices are unveiled? If confirmed, these will be Apple’s first new products of the year.
The iPhone business is, by far, the most important piece in Apple’s total revenues. It accounted for 52% of the company’s sales in fiscal 2021. Better yet, iPhone revenues grew at an outstanding clip of 34% in the past four quarters, the most of any segment. Judging by the recent earnings call conversations, much of the success can be credited to the higher-end models. The iPhone 13 was launched in September 2021. The iPad Air, on the other hand, is less likely to be a game changer.
TheStreet Quant Ratings rates Apple as a Buy with a rating score of A.
Netflix
After changing the ways we all watch our content, Netflix wants to create exciting new measures to make certain no one ever looks away from their mobile phone ever again. Netflix has reached an agreement with the Montreal-based RocketRide Games, a self-described “boutique consulting agency for the video game industry,” to bring more games to the streaming service’s mobile platform.
There’s no current word on when the games will be delivered, what they will be, or how many more are in the pipeline, but it would seem that this is a long-term deal between the two companies. This deal follows an agreement from late last year that saw RocketRide deliver the mix-and-match game “Dominoes Café” and the puzzle game “Knittens” to Netflix’s mobile game app, which is free to subscribers and doesn’t include pop-up ads or in-app purchases.
TheStreet Quant Ratings rates Netflix as a Buy with a rating score of B.
Spotify
Spotify (SPOT) shares were on the back foot again Monday after the music sharing platform found itself entangled another controversy involving podcast host Joe Rogan. Spotify CEO Daniel Elk, who last week had to manage the impact of weaker-than-expected user growth linked in part to the fallout from the popular "Joe Rogan Experience" podcast, apologized to employees over the weekend after a video surfaced of Rogan using racial slurs on several occasions during his show over a twelve year span.
Rogan, who apologized for spreading vaccine misinformation on his podcast last week, also expressed regret for his use of the N-word, which was uncovered in an Instagram post by the singer-songwriter India.Arie.
TheStreet Quant Ratings rates Spotify as a Buy with a rating score of B-.
Bumble
Dating app Bumble (BMBL) on Monday said it acquired French rival Fruitz in a bid to strengthen growth in European markets against dating giant Match Group (MTCH), which owns Tinder. Terms weren't disclosed. The move comes when Bumble needs to drum up more investor interest about the company's plans. Bumble shares have slumped 35% since its Nasdaq debut in February last year.
"The acquisition of Fruitz allows us to expand our product offerings in line with our focus on empowering relationships for everyone," Bumble Founder and Chief Executive Whitney Wolfe Herd said in a statement. Bumble, which allows women to make the first move, also owns European and Latin American centered dating app Badoo.
TheStreet currently does not have a rating for Bumble.
Amazon
Amazon shares jumped higher this past week after posting stronger-than-expected fourth quarter earnings, powered in part by its web services business, while unveiling a price increase for its Prime members. Amazon's net income nearly doubled from last year to $14.3 billion, thanks in large part to an $11.8 billion boost from Amazon's stake in EV maker Rivian Automotive (RIVN). Still, sales were up 9% to a record $137.5 billion, while revenues at Amazon Web Services soared 40% to a record $17.8 billion.
The internet behemoth set a new record on Friday when its stock reached the largest increase in market capitalization in history during one day's trading session. Amazon's stock added $191 billion in market value after rising 14% on Friday. This record by Amazon surpasses the one set by Apple just last week when its strong earnings report added $179 billion in value the following day. Profit in Amazon's cloud-computing division clocked in at nearly $18 billion last quarter. Web3 proponents are doubling down to take a piece of the pie.
TheStreet Quant Ratings rates Amazon as a Buy with a rating score of B-.
Pinterest (PINS) shares surged higher this past week after the image-sharing social media group posted better-than-expected fourth quarter earnings and its first-ever annual profit. Pinterest said daily active users were down 6% from last year's pandemic-driven peak, but a focus on advertising through video helped revenues rise 20% to a Street-beating $846.7 million. Adjusted earnings also topped forecasts at 49 cents per share.
Social media groups have cautioned that Apple's Identifier for Advertisers (IDFA) privacy changes, which make it more difficult to track and target users with specific ads, have impacted both user growth and top line revenue gains.
TheStreet Quant Ratings rates Pinterest as a Sell with a rating score of D+.
Snap
Snap (SNAP) shares soared the most on record this past week, in a move that could add nearly $20 billion to the message-app maker's market value, following better-than-expected fourth quarter earnings and a robust near-term outlook.
Snap, which had been hit hard by privacy changes put in place by Apple that limits its ability to sell targeted ads, said it's been able to transition to new techniques "quicker than we expected", and added 319 million new users over the three months ending in December, helping revenues rise 42% from last year to a Street-beating $1.3 billion while notching its first positive net income as a public company.
TheStreet Quant Ratings rates Snap as a Sell with a rating score of D+.
