Weekend Update #025

Welcome to Blue Room's Weekend Update. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.

COINBASE + DOGECOIN 🐶

Coinbase, an online marketplace for trading various cryptocurrencies, IPO'd this week with a reference price of $250 per share, only to hit as high as $429 per share once it began trading on the Nasdaq exchange - representing nearly a $100 billion market capitalization. Ironically, Dogecoin, an alt-coin that is not currently supported on Coinbase, was the best-performing crypto this week as it surged over 550%, reaching a market capitalization of $45 billion — more valuable than roughly 350 companies in the S&P 500

With the Johnson & Johnson COVID-19 vaccine facing regulatory scrutiny based on safety concerns, we believe that there may be a budding opportunity for vaccines in phase 3 development to take advantage of the newly available market share. Moderna and Pfizer have established themselves as the number 1 and 2 vaccine candidate options in the United States, but there will still be room for other COVID-19 vaccine candidates to replace the hole left by J&J. We believe that REGEN-COV, Regeneron’s monoclonal antibody cocktail developed to treat and prevent COVID-19, may have what it takes to be a candidate to fill the potential gap in vaccine offerings.

Zuora began their Investor Day by acknowledging the decelerating growth over the past two years that they attributed to integration, customization and go-to-market issues — which they later addressed with multi-threaded solutions and strategies to enhance the product experience and scale more efficiently. Zuora has brought on new leaders — with Sri Srinivasan, Robbie Traube and Todd McElhatton all joining the company within the last year and a half — to help execute these new strategies and revitalize Zuora’s growth trajectory. The company also highlighted how it is now a multi-product company with Billing, Revenue, and Collect products that will help meet customers where they are in their own process, while also providing opportunities to upsell and cross-sell while they move along the client in their journey to usership. Using this improved strategy, Zuora has provided new financial targets for 2025, as well as new key performance indicators to focus on in order to fully dominate a growing market that is projected to grow 25 - 30% per year.

INFLUENCE

— VERSUS —

COERCION

China is clearly extending an olive branch to de-escalate the rhetoric employed by the last administration.

How will the critical details come into play?

Wednesday
April 14, 2021
9:30 A.M.
__________ __________

BLUE ROOM
Investment Team Bullpen

Congratulations Omar Guzman

for passing your CFA Level 1. Your constant diligence, commitment to learning, solving problems and overall leadership sets a great example for everyone around you — we are so proud and grateful for you every day. Thank you for being Blue Room’s Team Leader.

While it seems that in many respects the world is slowly adjusting back to its pre-pandemic equilibrium, with indoor dining, museums, and bars reopening in many states, some industries have been slower to recover than others. The travel industry has undeniably fallen victim to a slower recovery, with reduced flights and harsh border restrictions, 2020 has seen an overall 50 percent drop in domestic passenger traffic globally, while international traffic fell by 74 percent.

P L E A S E E N J O Y T H E

—WEEKLY—

company updates
from the BR intern team.

Stock Price History

April 12, 2021 $131.24

April 13, 2021 $134.43

April 14, 2021 $132.03

April 15, 2021 $134.50

April 16, 2021 $134.16

This week, Apple, Inc. announced the launch of the Restore Fund, a first-of-its-kind carbon removal project that aims for both environmental and financial returns. Created as a partnership between Apple, Conservation International, and Goldman Sachs, the $200M fund will look to remove at least 1 million metric tons of carbon dioxide from the atmosphere each year. Contributing to Apple's larger goal of becoming carbon neutral by 2030, the Restore Fund hopes to serve as a scalable, replicable model that will increase restorative forestry investments in the environment. Beyond the announcement of the Restore Fund, which was published by the company on April 15, AAPL posted another strong week of gains on the back of a flourishing market as a whole. With the S&P 500 continuing to reach even greater all-time highs after incredibly promising labor and consumer spending metrics were released, it is unsurprising that a blue-chip like AAPL would follow suit. 

Ticker: TTWO
Name: Take-Two Interactive Software, Inc.
Number of Shares Outstanding: 115.11M
Market Capitalization: $20.59B

Stock Price History

April 5, 2021 $183.38

April 6, 2021 $184.00

April 7, 2021 $183.65

April 8, 2021 $183.60

April 9, 2021 $184.02

April 12, 2021 $182.76

April 13, 2021 $182.66

April 14, 2021 $181.44

April 15, 2021 $182.50

April 16, 2021 $178.80

This week, Take-Two's share price ran relatively flat during the early days of the week before experiencing a notable decline on April 16. The largest news of the week broke early Friday morning, when it was announced that on April 13, CEO Strauss Zelnick and Ppresident Karl Slatoff each sold 270,984 shares of TTWO at an average price of $182.90, accumulating $49.6M each in the process. Accordingly, TTWO fell 2.03% to close the trading week. That being said, on April 14, it was announced that Private Division (a subsidiary of Take-Two Interactive Software) and Roll7 will launch the next installment of their OlliOlli skateboarding series this winter, titled OlliOlli World, on all major platforms. While this represents a noticeable pivot for Private Division, who are known for their Kerbal Space Program franchise, the label's commitment to incubate and produce indie-developed games presents promise as the content base of the interactive software industry continues to grow and diversify.

Kelley Jiang

Ticker: LB
Name: L Brands Inc
Number of Shares Outstanding: 278.9M
Market Capitalization: $18.62 B

Stock Price History 

April 1, 2021 $61.80

April 5, 2021 $61.76

April 6, 2021 $62.04

April 7, 2021 $64.29

April 8, 2021 $65.18

April 9, 2021 $66.78

April 12, 2021 $66.61

April 13, 2021 $65.76

April 14, 2021 $66.80

April 15, 2021 $66.77

L Brands, Inc is a segment retailer focused on personal care goods, women’s intimate and other apparel, beauty and fragrance products. Based in Columbus, Ohio, L Brands hosts the flagship brands of Victoria Secret, PINK, and Bath & Body Works under its name. With more thanover 3,000 stores across the globe, the company is focused on inspiring an aspirational lifestyle by making their customers feel bold and powerful.

Emma Leary

Ticker: MSFT
Name: Microsoft Corporation
Shares Outstanding: 7.542B
Market Cap: $1.957T

Stock Price History

April 1, 2021 $238.47

April 5, 2021 $243.76

April 6, 2021 $248.84

April 7, 2021 $249.85

April 8, 2021 $253.25

April 9, 2021 $253.86

April 12, 2021 $254.71

April 13, 2021 $257.26

April 14, 2021 $257.48

April 15, 2021 $257.93

April 16, 2021 $259.47

Microsoft Corporation develops, licenses and supports software, services, devices and solutions worldwide. MSFT has been a notable leader in the technology industry for decades now since the company was founded when the era of personal computing was emerging in 1975. The company currently offers three main segments: Productivity and Business Processes, Intelligent Cloud and More Personal Computing. MSFT is continuing to increase its market price and is trading at $259.47 as of April 16 which is, again, a record high. 

MSFT has had a lot of news in the past couple weeks involving acquisitions and security. This March, MSFT has had security breach issues which first surfaced in January but have recently come back into the news as MSFT is finding it difficult to patch all of its software weaknesses. The hacks have been very sophisticated and damaging to the point where the government has taken action to disconnect products. A big way to avoid these types of breaches is the transition to cloud computing which, as mentioned, MSFT is working toward and has been very successful as shown in the stock prices and general public’s allegiance to the company. Despite the security breach news, the government clearly still trusts MSFT as displayed through their recent contract. 

Some other recent news is that the company is working to acquire Discord, a communication and digital distribution platform, after failing to acquire Pinterest and TikTok. While MSFT’s competitors have successfully acquired these community-based platforms such as Google with Youtube, Amazon with Twitch and Facebook with Instagram, MSFT realized it needed a similar platform that engendered its own community, which Discord would provide them. The $10 billion deal is expected to take place sometime this month and with MSFT’s recent success it seems likely to happen. On April 13, however, MSFT acquired Nuance, which combines solutions and expertise to deliver new cloud and AI capabilities across healthcare and other industries. This acquisition indicates the direction toward the healthcare industry that technology companies are moving toward as a result of the pandemic and makes the Discord deal seem less likely.

Stock Price History

April 1, 2021 $249.16
April 5, 2021 $252.02
April 6, 2021 $249.10
April 7, 2021 $248.21
April 8, 2021 $246.02
April 9, 2021 $248.95
April 12, 2021 $248.94
April 13, 2021 $249.95

Amgen, Inc. Executive Summary (4/17/21)

A biotechnology pioneer since 1980, Amgen is a values-based company dedicated to delivering innovative human therapeutics to areas of highly unmet medical need. These areas include: cardiovascular disease, oncology, bone health, neuroscience, nephrology and inflammation. Over the years, they have grown into one of the world’s leading independent biotechnology companies, reaching millions of patients around the globe. Most recently, Amgen filed their proxy statement (April 6) in advance of their earnings call on April 27. Two things stood out:

First off, Amgen has identified a goal of expanding into the Asia-Pacific region. Early in 2020, Amgen launched an oncology collaboration with Beigene, Ltd., in China. Considering that Beigen is a commercial-stage research-based oncology company with an established and highly experienced team in China, this strategic collaboration will significantly accelerate Amgen’s plans to expand its oncology presence in the world's second-largest pharmaceutical market. In addition to this, Amgen also established their own wholly owned affiliate in Japan through the purchase from Astellas of 49% of shares of Amgen Astellas BioPharma K.K. (AABP), a joint venture between Amgen and Astellas established in 2013. 

The second thing that stood out was the dedication towards environmental sustainability and diversity moving forward. In January 2021, Amgen launched a new sustainability plan which included a goal of achieving carbon neutrality in their owned and operated facilities by 2027 (while also reducing water use by 40% and waste disposed by 75%). For diversity efforts, Amgen announced that they were a founding member of OneTen — a coalition of more than 40 of the world’s largest, best-known companies, with the aim of collectively hiring one million African-Americans over the next 10 years.

Julia Martin

Ticker: TSLA
Name: Tesla, Inc.
Number of Shares Outstanding: 959.85 M 
Market Capitalization: $656.34B

Stock Price History

March 25, 2021 $640.39

March 26, 2021 $618.71

March 29, 2021 $611.29

March 30, 2021 $635.62

March 31, 2021 $667.93

April 1, 2021 $661.75

April 5, 2021 $691.05

April 6, 2021 $691.62

April 7, 2021 $670.97

April 8, 2021 $681.85

April 9, 2021 $677.02

Tesla, Inc. produces electric vehicles and clean energy generation, storage, and consumption solutions. Tesla is focused on accelerating the integration of clean energy transportation and production into society in order to more quickly achieve a zero-emission future. Additionally, all of the new Automotive products include self-driving capabilities, and continuing to develop this Autopilot capability is at the core of Tesla. 

Tesla’s stock has fluctuated recently due to two main reasons. On April 2, 2021, a press release detailed that Tesla produced just over 180,000 vehicles and delivered nearly 185,000 vehicles. These numbers exceeded analysts’ delivery expectations by approximately 10,000 vehicles and is a 109% increase from last year and a 2.3% increase from last quarter. Tesla’s high first quarter numbers are additionally impressive due to the recent shortage in microchips that are crucial to electric vehicle production that resulted in many automotive companies, including Tesla, temporarily shutting down factories. Despite this obstacle, Tesla outperformed competitors and expectations, thereby leading to an increase in their stock price. The April 2 press release also shared that Tesla’s Model Y has been strongly received in China. While Tesla is successfully capturing the Chinese market, news on April 7 revealed push back from the Chinese military regarding Tesla vehicles. The issue arose from the presence of a camera placed above the rear-view mirror in the vehicle that is utilized by Tesla engineers to improve safety. The Chinese military fears that this camera will be utilized for spying by Tesla; however, Tesla has shared that the cameras are not activated outside of North America. 

Asher Nyhoff

Ticker: NKE
Name: NIKE, Inc.
Number of Shares Outstanding: 1.27B
Market Capitalization: $210.341B

Stock Price History

March 24, 2021 $133.16

March 25, 2021 $128.64

March 26, 2021 $132.99

March 29, 2021 $133.49

March 30, 2021 $132.95

March 31, 2021 $132.89

April 1, 2021 $132.53

April 5, 2021 $135.12

April 6, 2021 $137.16

April 7, 2021 $136.54

April 8, 2021 $133.53

April 9, 2021   $135.45

April 12, 2021 $136.64

April 13, 2021 $133.54

April 14, 2021 $132.26

April 15, 2021 $133.67

April 16, 2021 $134.31

Ranked as the world’s most valuable apparel brand for the 7th consecutive year, Nike has continued its focus on innovative product development and retail strategy with a new sustainability initiative.

On Monday April 12th, Nike announced “Nike Refurbished” — a program that facilitates the return and resale of Nike footwear. Customers can return a pair of shoes to Nike, who will inspect and refurbish the pair, giving each a “condition grade” before placing the shoes back on the shelf. Pricing is determined by the footwear type and condition. At launch, refurbished shoes that are “like new,” “gently worn,” and even “cosmetically flawed” will be found in up to 15 Nike stores in the U.S. with expansion in sight.

This program is part of Nike’s larger commitment to sustainability that focuses on reducing carbon emissions and waste associated with Nike’s supply chain. Nike envisions a “continuous loop without waste.” Another sustainability initiative, Nike Grind, takes manufacturing scrap and shoes that would otherwise become waste and turns the products into usable material. Rubber, foam, fiber, leather and textiles are processed into Nike Grind materials suitable for “product design, retail spaces and workplace environments” from “furniture to running tracks.”

In a marketplace increasingly receptive to sustainability and cognizant of environmental impact, it will not be a surprise if “Nike Refurbished” bolsters Nike’s strong brand reputation and contributes to rising stock prices.

Elizabeth Orecchia

Ticker: HLT
Name: Hilton
Shares Outstanding = 277.45M
Market Cap = $34.52B

Stock Price History

April 1, 2021 $121.65
April 5, 2021 $125.40
April 6, 2021 $126.66
April 7, 2021 $125.29
April 8, 2021 $125.28
April 9, 2021 $123.59
April 12, 2021 $125.28
April 13, 2021 $126.11
April 14, 2021 $126.52
April 15, 2021 $127.26

Hilton Worldwide Holdings Inc. was founded in 1919 and is headquartered in McLean, Virginia. They own, lease, manage, develop, and franchise hotels and resorts. It operates through two segments, Management and Franchise, and Ownership. The company engages in the hotel management and licensing of its brands. As of December 31, 2020, the company had approximately 6,478 properties operating under the Hilton label, with over 1,000,000 rooms in 119 countries and territories.

Number of hotel rooms = 1,019,287

Market capitalization of the company at 52 week high stock price = 35,768,854,000 

Market capitalization of the company at 52 week low stock price = 17,332,301,500

Market capitalization of the company at 52 week high stock price / Number of hotel rooms = 35,092

Market capitalization of the company at 52 week low stock price / Number of hotel rooms = 17,004

Number of hotel rooms = 1,019,287

Market capitalization of the company at 52-week high stock price = 35,768,854,000 

Market capitalization of the company at 52-week low stock price = 17,332,301,500

Market capitalization of the company at 52-week high stock price / Number of hotel rooms = 35,092

Market capitalization of the company at 52-week low stock price / Number of hotel rooms = 17,004

Stock Price History

April 1, 2021 $105.63

April 5, 2021 $106.87

April 6, 2021 $105.71

April 7, 2021 $106.83

April 8, 2021 $106.51

April 9, 2021 $107.45

April 12, 2021 $109.96

April 13, 2021 $108.76

April 14, 2021 $110.09

April 15, 2021 $108.53

The Northern Trust Corporation is a preeminent global financial institution that provides asset servicing, investment management and wealth management services for institutions, high-net-worth individuals and families. In recent news, The Northern Trust Asset Management subsidiary announced the renaming of a share class, which provides institutional investors with a money market solution, to reflect and embrace the diversity of their partners, Siebert Cisneros Shank & Co., LLC. The share class, originally under The Williams Capital Group, LP, now operates under the name Siebert Williams Shank & Co., LLC, as Siebert is a leading minority and women owned independent financial services firm in the US. Additionally, continuing with their recent women-led appointments, Katherine Berry Templin, who has been at Northern Trust for over 30 years, was recently named Banking Practice Lead for New England. The market is anticipating Northern Trust’s release of their earnings report on April 20, 2021, for the quarter ended in March.

Max Pumilia

Ticker: LOW
Name: Lowe’s Companies Inc
Number of Shares Outstanding: 731M
Market Capitalization: $152.05B

Stock Price History

April 1st, 2021 $191.32

April 5th, 2021 $193.73

April 6th, 2021 $194.20

April 7th, 2021 $193.67

April 8th, 2021 $194.21

April 9th, 2021 $198.51

April 12th, 2021 $200.65

April 13th, 2021 $199.72

April 14th, 2021 $201.52

April 15th, 2021 $204.57

April 16th, 2021 $208.25

Lowe’s Companies, Inc. is an American retailer specializing in home improvement products. With almost 2,200 locations and over 300,000 employees across the U.S. and Canada, Lowe’s has firmly established itself as the second largest retailer in its industry, trailing only The Home Depot. In 2020, Lowe’s posted its most successful year ever, servicing approximately 20 million customers weekly and generating $90 billion in annual sales. These sales, a product of the consumer’s increased time spent at home during quarantine and the government’s economic stimulus packages, represent an almost 24% increase in revenue year over year. Comparatively, between 2016 and 2019, revenue saw under 3% annualized growth. Valuations have reflected the operational success of this period: stock prices have grown more than 50% since the start of 2020 and have almost tripled since the low-point of the pandemic.

Last Friday (4/9), the U.S. Bureau of Labor Statistics reported March’s Producer Price Index. This figure represented more than  a 1% increase over February’s numbers, smashing expert expectations and fueling investor enthusiasm. Lowe’s valuation has grown more than 7% since the news broke. Moreover, Lowe’s management has continued its ongoing attempts to expand its share of the professional home builder and renovator market with Tuesday’s (4/13) announcement of new products and services. These changes, including the creation of a dedicated “Pro Zone” meant to expedite the professional customer’s shopping process, will allow Lowe’s to further exploit the success of a booming home building market expected to grow substantially faster than the consumer home improvement market in coming years. 

Note: orange text contains links

Taurus Samuels

Ticker: TGT
Name: Target Corporation
Number of Shares Outstanding: 498.62
Market Capitalization: 102.595B

Stock Price History 

March 24, 2021 $188.28

March 25, 2021 $192.70

March 26, 2021 $200.72

March 29, 2021 $198.21

March 30, 2021 $199.65

March 31, 2021 $198.07

April 01, 2021 $200.07

April 05, 2021 $205.35

April 06, 2021 $205.43

April 07, 2021 $204.45

April 08, 2021 $203.46

April 09, 2021 $205.36

Target Corporation is a retailer based in Minneapolis, Minnesota, founded in 1902. As of January 30, 2021, they have over 1,500 stores across the United States. They offer an array of products to their customers, such as various merchandise, everyday essential items, clothing, and food. In many of their locations, they have also partnered with other companies, such as CVS Pharmacy, Inc. to provide their customers with access to a pharmacy when shopping at their stores. 

Unlike many other companies, TGT benefitted from the pandemic. Since March 13, 2020, when the United States declared the Coronavirus a national emergency, Target has seen its stock surge in the Fiscal Year of 2020. Before the pandemic hit, Target put a big emphasis on speed and convenience for their customers. In 2016, they launched their small-format stores, which essentially took a normal sized Target of 100,000+ square feet, and shrank it down to about 50,000, while keeping all of it’s normal items offered, just in a smaller space. Not only did this allow customers to get in and out of stores more quickly and efficiently, it also allowed Target to penetrate neighborhoods where a normal, large-format store would not have been able to operate. During the pandemic, these small format stores allowed their customers to be able to move quickly throughout the store, spending the least amount of time walking around as possible, in order to avoid contracting COVID-19. 

Target also put a huge emphasis on their online presence before the pandemic hit. They invested heavily into their online business, and it paid off. They saw their digital sales soar during 2020, with an increase of 145%! They implemented things such as same day pick up, which allowed their customers to order something online and pick it up that same day, providing their customers with a quick, convenient, and safe way of shopping in a very hectic and scary time.

Target’s 2020 Fiscal Year ended on January 30, 2021, placing November, December, and January as their Q4 in the months. Another reason TGT had such a strong year, and finished it on a high note was because many shoppers were heading into Target stores for the holiday season. Paired with the most recent federal stimulus, many optimistic shoppers were eager to get out and shop, whether it be in stores or online. This benefited TGT, and they were able to end their fiscal year on a high note.

— MISSION —

Togetherism™ embodies our belief that capitalism can be harnessed for good. We are a registered 501c3 nonprofit that acts like a foundation. We give small cash grants to nonprofit organizations that seek to improve our relationships with one another and with the natural world. Some of the organizations we support are working to create a more equitable society, while others enable us to become kinder to our planet and to the other species that share our globe. We are funded by a dedicated revenue stream from Blue Room™ Investing.

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