FAANG is Toothless

February 7, 2022 Good morning traders! Welcome back to The Daily Setup. Markets were mixed Friday, as the Nasdaq saw a big gain while the Dow edged out a slight loss. Here’s what’s on the docket today: - Bill.com sees a big gain - Saudi Aramco is considering another share offering - Rumors swirl around Amazon and Peloton It’s the first Monday of the month. Let’s get to work. Nick How’d the markets look? Market Outlook 👀 DOW 35,089.74 -0.06% S&P 500 4,500.53 +0.52% NASDAQ 14,098.01 +1.58% BITCOIN $41,552.71 +10.58% Bill.com, Saudi Aramco, and FAANG BIGGEST MOVER Dollar, Dollar BILL Y’all! Shares of Bill.com Holdings (BILL) headed into the weekend higher than Snoop Dogg at The Chronic album release party circa ’92. The [cloud-based software company]( that “simplifies, digitizes, and automates complex back office financial operations for small and medium sized businesses (SMBs),” reported Q2 earnings that beat analysts’ expectations on both the top and adjusted bottom line. BILL, which was down 31.7% YTD prior to the announcement, got back into positive territory on the year thanks to the [36.38% gain]( on Friday. - According to FactSet, analysts were expecting a loss of $0.18/share on $131.1M in revenue, but were too low on both fronts, as [BILL reported]( adjusted EPS flat for the quarter on revenue of $156.5M. - The company included earnings results both with and without revenue from their 2021 acquisitions of Divvy and Invoice2go. - Bill.com is projecting FY2022 revenue of $597M-$600M vs. analysts’ expectations of $592.7M Bill.com traded between $224-$262 for most of December 2021. As of Friday’s close, the stock had broken right back into that range, which makes me a bit cautious on the long side. I am keeping BILL on my watchlist as a rally to the upper end of the range may prompt me to look for a short position, while a slight pullback could result in a favorable spot to go long. The stock is roughly at the midpoint of its 52-week range of $128-$348.50, and I prefer not to play in the middle, so I’ll be waiting in the wings and staying patient for the time being. Black Gold for Sale! Looking to capitalize on rising oil prices, state-owned Saudi Aramco, the world’s most valuable oil producer, is said to be in discussions regarding a [$50B share offering](. If the sale materializes, it will be the largest listing of shares in the history of the capital markets, almost doubling the company’s $29.4B raised in its 2019 IPO. [Those close to the company have said]( that Aramco is, “trying to cash in while investors still have an appetite for oil-related assets in a rapidly decarbonizing world.” As of [Friday’s close of $91.92](, crude oil prices are now at their highest level since mid-2014. - The company planned to sell $100B in shares in 2019 (5% stake) on a major international exchange. That was reduced to 1.5% as concern from the international community over governance issues became apparent. - While the 2019 IPO listed on the Tadawul (Saudi Stock Exchange), the London Stock Exchange is said to be the preferred destination for the 2022 IPO. - Aramco is next in line as the world’s most profitable public company behind Apple, Alphabet, and Microsoft. Perhaps you’ve heard of them. This deal seems far from becoming a reality at this point. Not that it couldn’t come together, but Crude would need to continue its rally or stay in the $90 range for international investors to stay interested. Since it is very difficult for U.S. investors to trade Aramco due to its foreign listing, crude futures are an easy and efficient way to gain exposure to the oil markets. One can also look to the Oil & Gas Exploration and Production ETF (XOP) or the U.S. Oil Fund ETF (USO) if you would rather stick to equities. FAANG is Toothless FAANG, the once darlings of the tech investor world, has had a rough time since the turn of the calendar. The NYSE FANG+ index has tumbled [-10% this year alone](, as former safe bets like Netflix (NFLX) and Facebook Meta Platforms (FB) have declined around -30% YTD. The slump experienced by these major players have given investors pause to reevaluate whether the growth in tech will remain reliable, suggesting some bearish underpinnings to the market. - Earnings reports certainly hampered tech companies like NFLX and Peloton (PTON), but larger factors like Treasury Yields hitting their [highest point since 2019]( all but guarantee that interest rate hikes are on the horizon. This only adds to the pressure on tech stocks. - It’s not doom and gloom for every FAANG member however. On Friday, Amazon (AMZN) gained $190B in value, the [largest-ever one-day gain]( for an American company. Clearly investors aren’t dumping all FAANG stocks, but just sussing out who the winner will continue to be as the market shifts. - One has to wonder if FAANG wouldn’t have these issues if Facebook never rebranded... because who would want to invest in MAANG? The FAANG companies that analysts have the most confidence in are those with the ability to [adapt to different environments]( (think Apple (APPL), Amazon, and Alphabet (GOOG)). These companies offer a broad number of services and products and have the infrastructure to back it up. Amazon has AWS, Apple has the iPhone brand and cloud services, while Netflix adds the 6 billionth original created for an audience that doesn’t even exist. Coming Out in the Wash: Treasury Dept Scrutinizes NFTs for Money Laundering Token Talk Ever wonder how a [bunch of scribbles]( could sell for $70.5M? Well according to a recent [study]( by the US Treasury Department, there’s a good chance the reason is money laundering. The report was primarily concerned with tracking the activity of illicit-financing (ie: money-laundering and terrorism-financing) practices in the fine art market, but made sure to mention that the digital art market (NFTs) could be susceptible to similar subterfuge. If this is the case then suddenly the Bored Ape Yacht club becomes way more bad*ss. - While money-laundering across NFTs marketplaces remains low for the time being, platforms like OpenSea and SuperRare could be considered [Virtual Asset Service Providers]( (VASPs) by the Financial Action Task Force (FATF). This would subject them to know-your-customer and anti-money laundering regulation if enforced. - [According to Chainalysis](, NFT related illicit-finance is small compared to overall crypto-finance crime. $1.4M of illicit funds were spent on NFT marketplaces Q4 of 2021, compared to the estimated $8.6B used to launder funds in all of 2021. Money laundering in the art market has been an [open secret]( for years now (have you seen Red Notice?) and this report only confirms what many already knew. But does this mean that the Feds are going to be coming for your Lazy Lions as an accessory to a crime... probably not. As it stands, the bigger problem on NFT platforms is [“wash-trading”](, which is basically people trading NFTs amongst themselves to jack up the price. Of course, while the report does not recommend any explicit regulation of either market, this is another instance of the growing scrutiny that digital assets are facing in [Washington]( so there could be more substantial action on the horizon. Amazon Could Be Peloton's Valentine Deals and Rumors It’s February and love is in the air⦠not because of Valentine’s Day, but because Peloton (PTON) is being courted by multiple suitors. After 12 months of supply-chain woes, declining subscriber counts, and lackluster earnings reports [degraded PTON’s stock]( by -83%, the connected-fitness company was in need of a knight in shining armor. Amazon and Nike are [rumored to be potential suitors](, but neither party has commented on the veracity of these claims. - Whether the rumors are true or not, PTON is happy to get the attention. Shares in the company [surged 26% afterhours Friday]( to ride into the weekend above their IPO price of $29.00. - Peloton has been under pressure to sell, most notably from activist group [Blackwells Capital]( (they own less than a 5% stake (embarrassing)), who have also advocated for the firing of PTON CEO John Foley. If other stakeholders join the clamor and the interest is there, a sale really could be a possibility. - Peloton’s Q2 earnings report is released [tomorrow](. So why would Amazon even consider purchasing PTON when their numbers have been so disappointing since their pandemic high? Well do you remember Oracle’s recent purchase of [Cerner Corp]( for $28.3B? That deal was almost entirely about gaining access to Cerner’s extensive medical data, and a purchase of Peloton could act under a similar principle. In acquiring PTON, Amazon would be gaining access to the health data of the company’s combined 6M subscriber base. This is information AMZN could neatly fold into its existing Halo Health and Wellness services while integrating PTON hardware into its devices unit, bolstering their Alexa ecosystem. Considering that Peloton stock is at its lowest point, now could be an ideal moment for Amazon to scoop up those resources on the cheap. Link Roundup 📿 Other News Other News Link Roundup - Kohl’s Delusional, May Have Poisoned Themselves – Kohl’s Says Offers too Low, Adopts Poison Pill ([link]() - Disinfectant Wipes Aren’t Going to Fix That – Clorox Stock Falls as Rising Costs Bite into Margins ([link]() - Uncle Jerome Buys Patagonias, Going Hiking Soon – Strong Jobs Report Points to Fed Hikes in March & May ([link]() - Amazon Ain’t No Meta – Amazon Stock Soars, Price of Prime to Increase ([link]() - 5G for the Peasants – Apple Plans to Launch Low Cost 5G Iphone ([link]() Meme of the Day Anyone else? [Via @wallstmemes]( Questions or concerns about our products? Call or text us on your mobile: (410)-775-8315 © Copyright 2020, [RagingBull]( - [Refund Policy]( - [Privacy Policy]( - [Terms & Conditions]( DISCLAIMER: To more fully understand any Ragingbull.com, LLC ("RagingBull") subscription, website, application or other service ("Services"), please review our full disclaimer located at [(. 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