Strategic Alternatives = Mo’ Money

Shares of Insignia Systems (ISIG) once again skyrocketed in Wednesday’s trading session closing the day up +84.1%. That brings the stock’s 5-day cumulative move to an astounding +247.8%. The catalyst for the move is the announcement that the firm has hired Chardan (an NY-based investment bank) to conduct a strategic review of their operations.

• Insignia Systems provides in-store digital point-of-purchase advertising displays for consumer packaged goods companies.
• The company has been hard hit by the pandemic, seeing its revenue decline in 9 of the last 11 quarters, and realizing a net loss in each of those quarters. In other words, they’re drowning and looking for a rescue boat.
• Increased competition and lower brand spending have been a drag on the company’s sales, and management expects continued weakness in the coming quarters.

Let’s review the last three trading days for $ISIG: Monday up +205%, Tuesday down -31% (most likely profit taking), and Wednesday up +84.1%. This has “buy the rumor, sell the news” written all over it. The stock is rallying on the announcement, which investors are looking at as a possible future merger or acquisition. It may be that the selloff comes once the board announces their plan of action. $ISIG was trading between $5-$10 before the current move. I am keeping the stock on my watchlist and waiting for a potential retracement back to $10 before I think of taking a long position.

Google Be Like…

Shares of Roku were higher Wednesday than your loser friend that still follows Phish around the country. The stock closed the session up at $256.08 (+18.23%) on an announcement that the company “has reached a multiyear agreement with Google to keep YouTube and YouTube TV on its streaming platform.” Terms of the deal were not disclosed, but today’s news puts an end to what has been a contentious negotiation regarding the future of YouTube and YouTube TV on the Roku platform.

• In April, Roku pulled the YouTube app from its channel store after failing to reach an agreement with the online cable service.
• Roku claimed that Google had “required it to prefer YouTube content over that of other providers in the company’s search results.” Google, of course, denied such accusations. Could you imagine a major Big Tech company like Google committing anything resembling anti-competitive tactics? *cue eye roll*
• Roku currently has 56.4M active accounts and a removal of YouTube and YouTube TV could have led to a mass exodus of customers to Amazon Fire or Apple TV, which both carry the ‘tube.

Even after today’s rally, $ROKU is still off its ATH of $490.76 by a measly 48%. Investors like nice round numbers, so it’s possible we see a sustained rally back to the $300 level before seeing another retracement. I will be watching for momentum above the swing close of $284.19 from May 6th before feeling confident the stock can reach the $300 mark.

You’re not going to believe this, but you need more shots

Pfizer whenever a new booster drops.^

Pfizer-BioNTech announced yesterday that a third dose of their vaccine is effectively able to neutralize the Omicron variant. That’s a relief, because the usual two doses offer just 4% of the protection they provide against other strains (and a 100% chance of sharing your location with Bill Gates). Just to be extra careful, Pfizer’s working on an Omicron-specific shot anyway, and thinks they’ll have that ready by March so that you’ll be healthy enough to fill out your bracket.

• Many believe the highly contagious Omicron variant is going to be the dominant COVID strain in the U.S. by spring. Thankfully, it also happens to be the one that doesn’t even lift, so your T-cells should have an easier time of whooping its a*s if you do get it.
• That’s just the current strain, though. As the outback’s (Australia, not Subaru) new “omicron-like” strain suggests, Omicron evolves rapidly enough that health authorities believe we’ll need an annual shot to protect ourselves from it, like the flu.
• Neither Pfizer nor BioNTech did so hot on the stock market despite this being fairly positive news. BioNTech had dipped 3.55% by markets’ close on Monday, while shares of Pfizer took a 0.62% hit.

This is a mixed bag for Pfizer and BioNTech. On the one hand, they’ve got the most promising solution to Omicron… On the other hand, it’s less a solution than a short-term fix, and what we know about COVID and rates of mutation suggests that there may never be a single long-term solution.

The market really wants to know what Discover’s crypto strategy is! Nothing drives innovation like fear, and it looks like Visa (V) was worried about being left behind in the cryptocurrency revolution. The big V (stop laughing) launched a crypto advisory consulting business to advise banks on digital asset strategy. The credit card company also performed a study that could have banks more nervous than a “natural” bodybuilder during a urine test.

• Visa found that 18% of customers would be likely to use a bank with crypto offerings in the coming year and that 40% would be at least willing to switch.
• The new team will work with banks and retailers to advise them on crypto related topics such as payments processing and NFTs. Looks like an NFT of the Aflac duck is pretty much inevitable.
• From October 2020 through September 2021, Visa processed $3.5B of cryptocurrency transactions, so digital assets are likely to be a main growth driver in the coming years.

Visa (and likely other credit card companies to follow) aren’t going to let anything infringe on their global payment system without a fight, so watching what investments they make in the digital assets space could be a signal of where the market is going. Still, the payment innovation I would most like to see is for the local liquor store to take AMEX.

Is it Por-SHH or Por-SHUH?

Volkswagen is serious about the EV game and might be willing to part with one of its crown jewels in order to fund its effort. The company is considering spinning off its Porche unit in a move that could raise up to €15B… no word on how much this equates to in real US dollars. Porsche and VW have a family led corporate structure where the Porsche and Piech families own 31.4% of Volkswagen, which has 53.3% of the voting rights. I can’t imagine working with my extended family to plan a vacation, much less run a global automaker.

• Even if the families sell the reported stakes, they would remain the company’s largest shareholder, followed by the state of Lower Saxony which holds 11.8% of shares and 20% of voting rights. Family and government, it’s amazing that VW is functional at all.
• Back in March the company announced ambitions to become the global leader in electric vehicles. Back in the fifth grade I announced ambitions to be the drummer in Guns N’ Roses. We’ll see which one happens first.
• Porsche, as its own company, could have a market cap of €45B-€90B, which would be in the same ballpark as GM, Ferrari, or Honda depending on the final figure.
• A Porsche IPO may be the best play for both gas and electric vehicles. The Taycan, Porsche’s electric sedan is currently outselling the flagship 911.

The prospects of a company that sells expensive vehicles and moves every unit they produce is much more intriguing than a legacy automaker of hatchbacks and family cars switching whole cloth from gas to electric. It’s a bit like being offered a Cayman or a Jetta.

Other News Link Roundup

• Apple shares head for $3T in market value, making them worth almost 10 Elons (read)

• Good news, laborers: the inflation death spiral includes a sweet pay raise (read)

• Nestlé sells $10B of L’Oreal shares back to them, wonders why it had them for 50 years (read)

• Possible recession looms as America’s poor spend all the cash stored under the mattress (read)

• Great Resignation slows down as unemployed Americans forget how much work sucks (read)
  

I think I finally understand cryptocurrencies: