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WILL SNAPCHAT’S AMBITIOUS VALUATION LAST LONGER THAN ITS POSTS?

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WILL SNAPCHAT’S AMBITIOUS VALUATION LAST LONGER THAN ITS POSTS?

Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. Snapchat’s brand has been found to be worth only US$1.7 billion. This is 8-9% of the suggested US$19.5-22 billion company value range, an unusually low percentage which suggests that the target may be over-ambitious.

Brand Finance’s CEO David Haigh comments, “’Brand Finance has valued the Snapchat brand from first principles. The brand value is relatively low because of low revenues and margins and an unproven ability to monetise the platform substantively. Snapchat has made its name by delivering posts which are here one minute and gone the next. Its users appreciate its ability to make their photos disappear, but over-excited investors certainly won’t feel the same about their cash.”

Snapchat’s brand value is in fact so low that it fails to make Brand Finance’s list of the 100 most valuable tech brands, despite the fact that its IPO is expected to be the 4th biggest in the industry’s history.

Click here to view the full list of the world’s 100 most valuable tech brands

The full list reveals Twitter’s precipitous fall as its inability to prove itself financially and slowing user growth have caught up with it. Brand value is down 39% year on year to US$2.5 billion which sees it fall out of the top 50 to 83rd.

Apple is another brand to suffer this year. US$38.7 billion has been wiped off its brand value as optimism around its ability to innovate and sustain revenue growth wane. David Haigh continues, “Apple has struggled to maintain its technological advantage, with new iterations of the iPhone delivering diminishing returns, while the Chinese market is now crowded with local competitors such as Huawei. Apple has been living on borrowed time for several years by exploiting its accumulated brand equity. This underlines one of the many benefits of a strong brand, but Apple has finally taken it too far.”

Despite these notable casualties, on the whole this was another stellar year for tech brands, which achieved an average brand value growth rate of 26%, against a figure of 20% across all sectors. Google’s brand value rose 24% (from $88.2bn to US$109.4bn) overtaking Apple to become the most valuable brand not just in tech but across all sectors.

Chinese tech brands are performing particularly well. Alibaba’s brand value has nearly doubled to US$34.8 billion. Its success stems from the opportunities to both open up and simplify commerce for Chinese communities, particularly rural ones. It is now aiming to accelerate brand recognition and growth abroad by joining McDonald’s, Coca-Cola and Visa as a major sponsor of the Olympics Games.

WeChat has over 850 million users and despite being largely confined to its domestic market. It offers a more extensive range of services, than any comparable brand, from mobile payments to video games and text messaging to video sharing. As a result, it is far more embedded in the daily life of its average user, even replacing work emails for many Chinese. This central position in daily life builds an intense brand affinity, helping to build brand value to US$13.2 billion.

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GameStop surges more than 18%, other ‘meme stocks’ also rally

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GameStop surges more than 18%, other 'meme stocks' also rally 1

By Sinéad Carew and Lewis Krauskopf

(Reuters) – GameStop and other “meme stocks” mounted a late-day rally on Monday, with shares of the video game retailer climbing nearly 32% at one point on little apparent news.

Shares of the videogame retailer, along with other stocks favored by retail investors congregating in online forums such as Reddit’s popular WallStreetBets, have roared back in recent sessions after a wild ride in which they soared in late January and tumbled early last month.

Along with GameStop, which pared gains to close up 18.3%, cinema chain AMC Entertainment finished up 14.6% and headphone maker Koss added 13.4%.

At one point, GameStop, which closed at $120.40, reached a session peak of $133.99. Its low for the day was $99.97.

Some analysts said a tick higher in short positioning from last week may have provided some fuel for the rally. A short squeeze – in which a flurry of buying forces bearish investors to unwind their bets against the stock – was a key catalyst behind GameStop’s late January run, when it gained as much as 1600% before reversing.

The number of GameStop shares shorted stood at 17.74 million, analytics firm S3 Partners said on Monday, with short interest accounting for about 32.6% of the float, compared with about 26% a week earlier, according to S3 Partners. Short interest peaked at 142% in early January, S3 data showed.

“We’re definitely seeing some of the shorts who came on over the past week probably covering and it’s helping boost today’s rally,” said Ihor Dusaniwsky, managing director of predictive analytics at S3. “Looking at today’s price movement, I’m sure these big red numbers are going to be chasing out quite a few shorts out of their positions.”

GameStop short sellers were down $331 million in mark-to-market losses on Monday, bringing year-to-date mark-to-market losses to $5.1 billion, according to Dusaniwsky.

More than 48 million shares in GameStop changed hands, with volume surpassing the 10-day moving average. So far the stock is up 539% year-to-dated. However, it was still below its Jan.28 peak of $483.

(Reporting by Sinéad Carew and Lewis Krauskopf; Editing by Ira Iosebashvili and Dan Grebler)

 

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Wall Street rallies on U.S. stimulus and vaccine hopes as bond markets calm

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Wall Street rallies on U.S. stimulus and vaccine hopes as bond markets calm 2

By Suzanne Barlyn

NEW YORK (Reuters) – Global equities markets rose and the S&P 500 on Monday had its best day since June 5, with investors taking lower U.S. bond yields in stride on optimism over the $1.9 trillion coronavirus relief bill and distribution of Johnson & Johnson’s newly authorized COVID-19 vaccine.

Wall Street’s rise follows a jump in European shares and solid gains on Asian stock markets.

Investor optimism that the J&J vaccine would further lift the economy is “giving a lift to all of the ‘go-to-work’ stocks” that benefit from businesses reopening, said Jim Awad, senior managing director at Clearstead Advisors in New York.

A stabilization of U.S. Treasury yields has also removed pressure from growth stocks, Awad said.

The Dow Jones Industrial Average rose 603.14 points, or 1.95%, to 31,535.51, the S&P 500 gained 90.67 points, or 2.38%, to 3,901.82 and the Nasdaq Composite added 396.48 points, or 3.01%, to 13,588.83.

The much-anticipated COVID-19 relief bill was passed in the U.S. House of Representatives on Saturday, and now moves to the Senate.

The pan-European STOXX 600 index rose 1.84% and MSCI’s gauge of stocks across the globe gained 2.01%.

Emerging market stocks rose 1.71%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.83% higher, while Japan’s Nikkei rose 2.41%.

Reports on manufacturing and factory activity showed strength in many developed economies on Monday, including a three-year high in the United States, which could keep inflation concerns on the radar.

Major sovereign bonds rallied on Monday as markets showed further signs of stabilization after their worst monthly performance in years.

Expectations of economic recovery and rising inflation boosted global benchmark bond yields in February to their biggest monthly rises in years. But the expected run-down of U.S. Treasury balances at the Federal Reserve has held down shorter-dated rates.

Benchmark 10-year Treasury notes last rose 8/32 in price to yield 1.429%, from 1.456% on Monday.

The coronavirus pandemic laid bare weaknesses in the financial system that should be addressed with new rules to prepare for the next shock, Fed Governor Lael Brainard said.

“We should not miss the opportunity to distill lessons from the COVID shock and institute reforms so our system is more resilient and better able to withstand a variety of possible shocks in the future,” Brainard said.

Gold prices rose as the retreat in U.S. Treasury yields helped to bolster its status as an inflation hedge, but a firmer dollar limited bullion’s advance.

Spot gold dropped 0.5% to $1,724.06 an ounce. U.S. gold futures fell 0.45% to $1,720.40 an ounce.

The dollar index rose to a three-week high as investors bet on faster growth and inflation in the United States, while the Australian dollar gained after Australia’s central bank increased its bond purchases in a bid to stem rapidly rising yields.

Bitcoin rose 6.70% to $48,719.02, with Citi saying the most popular cryptocurrency was at a “tipping point” and could become the preferred currency for international trade.

Goldman Sachs has restarted its cryptocurrency trading desk, a person familiar with the matter told Reuters.

U.S. crude recently fell 1.77% to $60.41 per barrel and Brent was at $63.45, down 1.51% on the day on fears that Chinese oil crude consumption is slowing and that OPEC may increase global supply following a meeting this week.

Wall Street rallies on U.S. stimulus and vaccine hopes as bond markets calm 3

(GRAPHIC – Germany 10-year: https://fingfx.thomsonreuters.com/gfx/mkt/jbyprddzype/Germany%2010-year.png)

(Reporting by Suzanne Barlyn; Editing by Lisa Shumaker and Sonya Hepinstall)

 

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Oil down more than 1% on Chinese fuel demand doubts, OPEC supply concerns

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Oil down more than 1% on Chinese fuel demand doubts, OPEC supply concerns 4

By Laila Kearney

NEW YORK (Reuters) – Oil prices fell more than 1% on Monday as fears that Chinese oil crude consumption is slowing and that OPEC may increase global supply following a meeting this week.

Brent crude settled at $63.69 a barrel, falling 73 cents, or 1.1%, and U.S. West Texas Intermediate (WTI) crude settled at $60.64 a barrel, losing 86 cents, or 1.4%.

China’s factory activity growth slipped to a nine-month low in February, sounding alarms over Chinese crude buying and pressuring oil prices.

“There’s some talk that their strategic reserves are filled up, and so some people are betting against the Chinese continuing to drive oil prices,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

Investors were also concerned that the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, would soon increase oil output.

“The worry is that that’s going to end up adding as much as 1.5 million barrels to the market,” said Bob Yawger, director of energy futures at Mizuho. “They have to construct some kind of story to bring those barrels back.”

OPEC oil output fell in February as a voluntary cut by Saudi Arabia added to agreed reductions under a pact with allies, a Reuters survey found, ending a run of seven consecutive monthly increases.

The group meets on Thursday and could discuss allowing as much as 1.5 million barrels per day of crude back into the market.

ING analysts said OPEC+ needs to avoid surprising traders by releasing too much supply.

“There is a large amount of speculative money in oil at the moment, so they will want to avoid any action that will see (those investors) running for the exit,” the analysts said.

A stronger U.S. dollar, which typically moves inversely with oil, also weighed on oil.

Rising COVID-19 vaccinations stirring up economic activity along with a $1.9 trillion coronavirus-related relief package passed by the U.S. House of Representatives on Saturday kept prices from sinking lower.

Oil prices rose earlier in the session on hopes tied to the proposed U.S. stimulus package would pay for vaccines and medical supplies, and send a new round of emergency financial aid to households and small businesses, which will have a direct impact on energy demand.

The approval of Johnson & Johnson’s COVID-19 shot also buoyed the economic outlook.

(Reporting by Laila Kearney; Additional reporting by Bozorgmehr Sharafedin in London, Jessica Jaganathan and Florence Tan in Singapore; Editing by Jonathan Oatis and Lisa Shumaker)

 

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