foxex: The SNAP-AZON Cometh!

Monday, September 24, 2018

The SNAP-AZON Cometh!

Insight after the bell

By Caleb Silver, Editor in Chief

Welcome to your new Market Sum Newsletter. We know you are busy and like to get caught up as quickly and succinctly as possible on your market news. So, we are reimagining our way of giving it to you the Investopedia way: Framing news, trends, market-moving events and key developments that impact investors through an educational lens. We'll tell you what happened, but more importantly, why it matters. We want to hear from you. Hit us up anytime on our social channels: Twitter & Facebook. Thanks for spending part of your day with us. #StaySmart!

Caleb Silver

Editor-in-Chief

The SNAP-AZON Cometh!

Talk about a lifeline… Snap Inc., the parent company of Snapchat (the social media platform kids love but investors apparently don't) announced they are finally testing Visual Search with Amazon. It allows smartphone cameras to identify products or anything with a barcode, and take them right to Amazon to buy the product.

Why it matters: We knew this was coming. Visual Search, after all, is the point of the internet, at least for marketers. Instagram and Pinterest already have these kind of features, and SNAP floated this idea several months ago and even buried some code in its Android App to make it possible. SNAP needs some good news as it has been bleeding users and market cap all year. Today's announcement didn't move the stock, but at least investors can see the future.

What's Next: Visual Search is going to be big – especially when 5G networks become the new normal for connectivity over the next five to 10 years. The ability to identify a product you like and buy it within five seconds is nirvana for merchants… no time to reconsider your impulses. SNAP's announcement is also a big step for Amazon, which has not rushed into the social commerce pool, just yet. Safe to say, it will make a pretty big splash when it does.

Can Amazon Help Snap Beat Instagram?

#2 Monday is for Mergers

Sirius XM is buying Pandora (Feels like this should've happened a long time ago, right?) Michael Kors is reportedly buying Versace (Strike a pose, Donatella!) but the biggest merger that no one is really talking about is in the Gold patch, as Barrick and Randgold welded together in an $18 bln deal.

Why it Matters: Scale is hard to achieve in a business these days unless you are in club FAANG, so buying or merging with a competitor is an attractive option in some spaces. The Sirius Pandora deal makes strategic sense given the distribution-meets-content play. Admittedly, the Kors-Versace runway tango caught us by surprise, but it kinda makes sense if you are Kors and don't want to lose your high-end swagger.

What's Next: 2018 has actually been a massive year for M&A with $2.5 trillion announced by July. Growth is hard, at scale, and taking a competitor off the shelf or buying your way into a new market is sometimes the path of least resistance and profitability. Our prediction: This trend stays in motion.

Why Sirius XM is Buying Pandora for $3.5 Billion

#3 The S&P Index Shuffle.. Take your Places

This week, the S&P 500 will see a shakeup in its industry sectors, and this one you'll want to pay attention to. The old Telecom Sector is being renamed 'Communications', and tech giants like Facebook and Alphabet are being loaded into it.

Why it matters: This is a big deal for Index fund managers and investors who track and invest in S&P 500 indexes, as well as tech-focused ETFs and mutual funds.

What's Next: This move was well telegraphed by Standard & Poor's, so fund managers and ETF issuers should be ready. But individual investors who own the old Telecom Index are losing some weight, while owners of the Communications Index have some new, enormous friends in their portfolio.

5 Ways The S&P 500 Stock Shuffle Will Affect Investors

Chart of the Day: GE shares slide to 9-Yr Lows

It's sad to see General Electric at these levels how important in American history, the global economy and as an investment. But here we are, at a 9-year low. GE is no longer the widely held stock it once was -- it's not in among the top ten held by ETFs or Mutual Funds anymore, but a lot of hard-working people relied on it for its healthy dividend and as a nest-egg for their golden years. It'll likely have to keep divesting businesses and consider options we would never have dreamed of before. See the chart below via FactSet of GE vs the S&P 500 over the past 30 years.