It was a bad start to the week for Snap Inc as the company’s shares fell below the $17 IPO price for the first time. Things didn’t get much better as the week progressed, and when Morgan Stanley—the lead underwriter for the company’s IPO back in March—admitted that it was ‘wrong about Snap’s ability to innovate and improve its ad product this year’, shares went into freefall. As it stands, Snap’s share price has fallen more than 8% from Monday’s opening bell, although it had dropped more than 11% at one stage on Wednesday.
This Means… Snap shares have plummeted about 50% from its post-IPO high, signaling weakened confidence in a ‘camera company’ that has yet to produce any real cameras. One of the main drivers of this devaluation is Facebook’s Instagram, which has mounted fierce competition to effectively kill off Snapchat’s unique selling point. Falling below IPO price isn’t always a sure sign of impending disaster, but when a company’s lead underwriter admits to a mistake in its original valuation, you get the feeling Snap investors are in for a lot more pain.
Here’s a revelation—Amazon sells a lot of stuff. So when the e-commerce giant says that it just had its ‘biggest day ever’, you kind of take notice. The third annual Prime Day event ended at midnight on Tuesday, and Amazon announced on Wednesday that sales this year grew an astounding 60% from last year. In addition to selling more than 200,000 women’s dresses and light bulbs (talk about a wide customer base), however, the company also added more new Prime members on July 11th than any other day in its history. Wowza!
This Means… Prime Day 2017 soundly beat the company’s performance during other major ‘shopping holidays’ like Black Friday, but the real significance is the amount of new Prime customers Amazon added to its ecosystem. Prime users spend $600 more on average per year than non-Prime shoppers on the platform. CNBC also noted that, if this subscription trajectory continues, Amazon Prime should be used in more than 50% of all U.S. households before the year is out. I don’t know if we’re impressed or slightly terrified.
After five months without a CEO, Tiffany & Co announced the appointment of Alessandro Bogliolo to the top job this week. Former Chief Executive Frederic Cumenal was ousted from the company back in February following two years of declining sales and profits. Bogliolo, who has worked extensively with Bulgari and has previously served as the CEO of Diesel, will be tasked with attracting younger shoppers to the luxury brand that has been struggling on almost all fronts lately.
This Means… The iconic New York jeweler has seen Millennials (who are blamed for everything) turn towards more chic brands like Alex and Ani, while the strong dollar has turned visiting tourists away. However, this hire is thought to be primarily driven by the hedge fund Jana Partners, who revealed a stake in Tiffany shortly after Cumenal’s departure. Jana is now the third-biggest shareholder at Tiffany, and struck a deal with the company at the time to add three directors to its board, including Francesco Trapani, an ex-CEO of Bulgari.
Shares of Abercrombie & Fitch tanked more than 20% on Monday morning as the teen retailer announced that it had ended talks with potential buyers. This was seen by many as just the latest blow to the retail sector, which is being absolutely hammered by online retailers like Amazon (see above). For Abercrombie & Fitch, it was potentially the final nail in the coffin for a brand that has lost almost 85% of its value over the last 6 years.
This Means… The announcement of a breakdown in talks comes after months of speculation that either Express Inc. or American Eagle might be potential suitors for the company. Abercrombie & Fitch was once the must-have brand for young shoppers but has seen revenues steadily decline amidst changing fashion trends and an overall slump in mall traffic. The announcement has sent the stock down more than 20% despite chairman Arthur Martinez’s pledge of ‘sound, aggressive action’. I think investors might need a little more than ambiguous pledges though…
To catch incidents of insider trading, the SEC usually have to go through mountains of evidence with a fine-tooth comb. Not in this particular case, however. Fei Yan, a research scientist at MIT, was arrested on Wednesday on charges of insider trading relating to information his wife gave him. The London-based law firm that Yan’s wife works for (she’s since been suspended) was working with two companies—Mattress Firm and Stillwater Mining—on acquisition deals. Yan allegedly bought shares in both companies based on the knowledge that they were soon to be acquired, and when the deal was announced, sold them for a profit of about $120,000. However, when the SEC investigated, the fact that Yan had Googled “how sec detect unusual trade” before buying shares in both companies made their job an awful lot easier.
This Means… C’mon Fei, use incognito mode at least!