New York Says No to Amazon and JPMorgan Goes Crypto

Catch up with this week’s Five on Friday!

6 min readFeb 15, 2019

#NoThanks

Amazon revealed yesterday that it will not move forward with plans to build its second headquarters in New York after facing months of fierce opposition from local activists and politicians.

What does this mean?

For some, Amazon’s decision to pull out of New York could be seen coming for a while. The e-commerce company’s highly-publicized search for a “HQ2” was met with criticism from the beginning. This was especially true in one of the successful locations, New York City, where a number of grassroots campaigns that included social media initiatives as well as street marches were organized against the proposed offices. Protestors were mostly concerned about the effect hundreds of new tech jobs would have on the city’s housing affordability crisis as well as its already-overburdened infrastructure. Amazon, for which this withdrawal represents a major PR defeat, released a statement saying it won’t continue the search for a new so-called ‘HQ2’, but it will “proceed as planned in Northern Virginia and Nashville,” referring to its other greenlighted locations. “[F]or Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term,” the company added.

#EllieMae

Mortgage processing company Ellie Mae announced this week that it had agreed to be acquired by a private equity firm, Thoma Bravo.

What does this mean?

The deal, which is worth about $3.7 billion, will see Ellie Mae shareholders receive $99 in cash — a 21% premium on last Friday’s closing price. A 35-day “go shop” period, in which Ellie Mae can solicit buyout offers from other parties, has now begun. However, if no other offers are made for the company, the acquisition by Thoma Bravo will likely close in the second or third quarter of 2019. Ellie Mae is a software company that processes mortgage applications in the US, with its partners including the government-sponsored mortgage giants, Fannie Mae and Freddie Mac. We first added Ellie Mae to our showroom back in September 2016, and with this week’s news — which included a mixed earnings report for the company — it looks as though it will be leaving the app at the same price we added it. In fact, Ellie Mae is the second company in the MyWallSt app to be acquired so far in 2019: only last Monday, Ultimate Software was acquired by private equity firm Hellman & Friedman in a deal that valued the company at $11 billion, and represented a 58.37% return since it was first added to the app.

#JPMCoin

Not two years after its CEO declared bitcoin a “fraud”, J.P. Morgan Chase has announced that it will be the first major US bank to launch its own cryptocurrency.

What does this mean?

Inventively branded ‘JPM Coin’, the new currency will begin trials in a few months’ time and will be used by the bank to instantly settle payments between clients. According to J.P. Morgan’s head of blockchain projects Umar Farooq, there are three early applications that J.P. Morgan has identified for its new project — international payments for large corporate clients, securities transactions, and replacement for dollars that large treasury services hold in subsidiaries across the world. Although CEO Jamie Dimon predicted that bitcoin would not end well for buyers back in October 2017 (he’s been right so far), he would later renege somewhat on those comments and say that there was indeed a future in the blockchain — which is the underlying technology behind such cryptocurrencies. In fact, J.P. Morgan’s iteration might be somewhat safer than the bitcoin madness we witnessed back in those speculative days, considering the regulatory hurdles that both the bank and its clients have undergone. In this sense, ‘JPM Coin’ is not an asset like Bitcoin that you’ll be able to invest in, but rather an innovative tool that will be used between the bank and its big institutional clients.

#EarningsOverview

Though many of the biggest companies in ‘Our 1%’ showroom have already reported their quarterly earnings, there were still plenty of reports to digest this week. Get up to speed with ‘The Earnings Overview’:

The Good 😁

Arista — The cloud networking company topped Wall Street’s expectations, with revenue growing 27% year-on-year to $596 million, and gave a strong outlook for 2019

Blackline — The financial software company topped expectations across the board and saw healthy growth in its user base.

Chegg — Shares soared on Tuesday as the online education services company easily beat analyst expectations for the quarter and raised guidance for the rest of the year.

Under Armour — Driven largely by overseas sales, which rose 28% to almost $400 million, the sports apparel maker posted better-than-expected earnings and revenue for the quarter.

Shopify — It was a very good quarter for the e-commerce company, which easily beat on earnings and saw revenue of $344 million, a 55% increase on the same period last year and well above analyst forecasts.

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The (Not) Bad 😐

Activision Blizzard — Weaker-than-anticipated retail demand saw the gaming company’s revenue outlook fall $1.18 billion below expectations, although it reported a solid beat on earnings.

Coca-Cola — Earnings of 43 cents per share for the beverage giant were roughly in line with expectations, while revenue came in slightly higher, but a disappointing outlook for the coming year drove shares down.

Cognex — The advanced technology company surpassed expectations, and saw 5.5% year-on-year revenue growth, but guided low for the current quarter and warned of increasing costs going forward.

Ellie Mae — In the wake of its acquisition, the mortgage software company reported earnings of 27 cents per share, missing on the 36 cents per share expected by analysts, while revenue of $116 million beat estimates.

TripAdvisor — The online travel service surpassed revenue expectations but missed on earnings, while its non-hotel segment saw impressive growth of 38%.

Trupanion — The pet-insurance company posted a surprise loss of 1 cent per share, though 24% revenue growth and a 20% jump in the company’s subscription business cushioned the blow.

Twilio — The cloud communications provider reported fourth-quarter earnings that were largely in line with consensus estimates but guided lower than expected for the current quarter.

The Ugly 🦃

TrueCar — Shares of the automotive site plummeted following a disappointing report that missed on both earnings and revenue.

#SentryDog

Tesla just announced a pair of new features for its electric vehicle lineup that are proving irresistible to technology and automobile lovers alike. The first and more amusing of the two is Tesla’s so-called ‘Dog Mode’, which is designed to keep pets at a comfortable temperature while their owners are out of the car. The feature even includes an on-screen message for concerned passersby that reads: “My owner will be back soon, don’t worry”, followed by a real-time thermal display. The second addition is ‘Sentry Mode’, which enables the car to defend itself from potential robbers. If the system detects a threat, such as someone breaking a window, Sentry Mode will switch to a high-alert state, activating the car alarm and playing the radio at maximum volume to frighten off the assailant. Meanwhile, the car will send its owner a security alert via their smartphone, allowing them to respond as rapidly as possible.

What does this mean?

While most of the Tesla news we can remember from last year was bizarre and counterproductive, it’s good to see that in 2019 Elon Musk is back to doing what he does best — dazzling us with brilliant technology

The Week In Numbers

42,000

farms have signed up to the brand-new livestock app, Tudder, which is billed as an agricultural answer to Tinder, “but for finding cows instead of people”.