Biggest Initial Public Offering Since 2014

Snapchat’s new Spectacles

Snapchat (SNAP) is looking to raise money with their IPO, and investors are excited. They hope to raise between 19 to 22 billion dollars. The future of this company is unclear though as their new user rates have dropped since Instagram knocked off Snapchat’s storyline feature. That, and they are still in the red taking massive losses with a $500 million net loss with $400 million revenue.

Despite that, their growth is on a good clip compared to their expenses. They are hoping that future sales of their new product, Spectacles, will make up for the current position they are in. The stylish glasses are being sold for $130 each, and are still in the process of being rolled out. The first round of glasses being distributed through pop up stores and vending machines, they were able to create grassroots excitement. However, they admitted in IPO filings that the glasses were not making them profit right now, “The launch of Spectacles . . . has not generated significant revenue for us” and states “We expect to experience production and operating costs related to Spectacles that will exceed the related revenue in the near future”.

DESPITE THAT, the excitement buzzing around their new product is promising. The Spectacles might actually take hold in the tough market of wearable technology, where Google’s (GOOG) Glass failed. Smart watches have already surmounted the immediate obstacles of having technology that is fashionable and functional enough to justify wearing. The Google Glass was clunky, cyborgish and did not let people know when they were recording, so people were uncomfortable with them. The snap glasses solves these issues with fashionable design for the aesthetic, and a glowing red led light for when the glasses are in use and recording.

This is the most excitement around an IPO since Ali Baba (BABA), but its hard to tell where things will land after recent experiences with other new web and tech firm IPOs such as Twitter (TWTR), Facebook (FB), GoPro (GPRO), and Fitbit (FIT). Of which, only Facebook is pulling through with value. Funny, they own Instagram.

Airline Industry Taking Off

Warren Buffett has been pouring billions of dollars into an industry he once warned people to avoid. It seems that his sentiment for the airline business has changed lately, as for the second time in six months, Berkshire Hathaway is putting their chips on multiple airline companies such as American, Delta, Southwest and United Airlines for a total of close to $10 billion.

His investment between the different players in the field are about equal across the board, with 2 to 3 billion dollars in each, showing confidence for the entire industry.

The domestic airline industry has changed much in the last 10 years. There have been many buyouts leaving a handful of companies  to compete for  consumers. Less competitors, less competition. Also the massive decline in the oil markets and lower labor costs. All of these factors helped contribute to record profits.

The Upcoming Week FYI

Monday:

Monday, stock markets are closed for Presidents Day. European finance ministers will be meeting to discuss Greece and the terms of their bailout program. Another struggling EU player, Spain’s Banco Popular Espanol, is holding a special shareholder meeting to appoint a new chairman. They posted a $3.7 billion dollar loss last year after a slew of bad loans from the nation’s real estate crash.

Tuesday:

Macy’s, Walmart, Cracker Barrel, and Home Depot are releasing earning reports before the bell. Philadelphia’s Federal Reserve president Patrick Harker and Minneapolis’ Federal Reserve president Neel Kashkari are speaking at two separate events regarding the economy. After a rough ride for clean energy companies as of late, and the loss of close to half of First Solar’s stock in the last year, First Solar is reporting their earnings after the market closes.

Wednesday:

The Fed will be publishing the minutes from their most recent meeting. They decided to leave rates unchanged. They have projected at least three rate increases this year. Maybe next time.

Wednesday morning, Garmin, Papa John’s, and TJX are announcing earnings in the morning, to be followed by Tesla, Fitbit, HP, Square, L Brands and Boston Beer in the afternoon. Tesla’s stock has been rising at a brisk pace lately, reaching old heights before a small pull back. They are getting lots of attention in anticipation of their Model 3, a mass-market game changer for the company.

Thursday:

Fed president of the Atlanta Fed is retiring at the end of the month and will give a speech about his time there. Kohls will report earnings before the bell, while Gap, Hewlett Packard Enterprise, Herbalife, and in the news Nordstroms, will release earnings in the afternoon. Donald Trump’s ire was too recent for the financial implications to show in the report. Next quarter then!

Friday:

The Securities & Exchange Commission will provide an update on their priorities for the next year, however, the SEC chair, Mary Jo White, is being replaced by Trump’s pick of former Wall Street lawyer, Jay Clayton.

J.C. Penny and Foot Locker will share earnings in the morning.

Saturday:

Warren Buffet will be sending his letter to shareholders at 8:00 AM, Eastern Time. Berkshire Hathaway shareholders can most likely find reassurance in his words during these tumultuous times. Warren Buffet has quadrupled his holdings of Apple, dumped Walmart, and increased his holdings in airlines. What does he see that we don’t?! Hopefully we can gain insight from his letter this Saturday.