Apple‘s (AAPL) potential move into the market for electronic payments at retail point of sale may already be upsetting the, uh, apple cart for payment processors, according to a note today from Credit Suisse‘s Moshe Orenbuch, who follows shares of American Express (AXP) and who has an Underperform rating on that stock.
Writes Orenbuch, at the outset, an Apple entry will probably be just a “ripple” rather than a “wave” for traditional payments firms.
However, “Longer-term, a successful Apple payment system roll-out would in our view most likely disrupt the interchange revenue stream earned by card issuing banks and 3-party providers such as AXP, as merchants clamor for lower fees given the rise of fraud combating technologies.”
Notes Orenbuch, Apple’s negotiating lower fees on transactions:
Reports suggest that five of the six credit card issuers in our coverage universe (the largest issuers of V, MA and AXP) have agreed to lower discount rates by 15-25 bps (and likely incur other costs as well) to be included in AAPL’s digital wallet. While AAPL may assume some of the increased fraud risk due to “Card Not Present,” we believe the fear of being “left out” of a payment system via the iPhone and iWatch is a more compelling driver to lower rates.
He thinks that could set up a situation where American Express may have to negotiate with other parties:
Although an agreement with AAPL may be a “special situation” given its size and influence, we believe more merchants and merchant aggregators may begin demanding concessions by AXP on its discount rate. We would note that 15 bps of discount rate pressure on the US business would represent $0.60 per share in 2015 (more than 10% of 2015 EPS), unless offset by lowering of rewards.
American Express shares today are down 53 cents, or 0.6%, at $89.08. Apple stock is off 17 cents at $98.80.
Monday, September 8, 2014
Twitter now incorporating a BUY button into posts!
After months of hints about its e-commerce ambitions, Twitter announced on Monday that it would begin publicly testing a “buy” button that can be embedded in posts to allow users to buy a product with a couple of clicks.
The feature, initially aimed at selling limited-edition or time-sensitive items such as T-shirts and event tickets, could eventually create a new revenue stream for the social network, which currently relies on advertising for virtually all of its income.
The test comes as competition in the world of mobile e-commerce intensifies. Apple is expected to unveil a new phone-based payment system on Tuesday as part of its latest update to the iPhone. And Facebook, Twitter’s biggest rival, began testing a “buy” button on its service in July.
Unlike Twitter’s e-commerce efforts with companies such as Amazon and American Express, this one will not require buyers to send a public message with a special hashtag to buy the product being offered. Instead, they will click on a “buy” button inside the Twitter message. The service will then prompt them to enter their credit card and shipping information or, if it is already on file, ask them to click again to confirm the purchase.
“I think of Twitter as the place to connect with the things that you love,” said Nathan Hubbard, the former chief executive of Ticketmaster, who joined Twitter a year ago to lead its commerce efforts. “How can you bring a transaction into the experience to make it additive?”
Mr. Hubbard said the test would initially be limited to a small number of Twitter users in the United States and would include items for sale from 19 entities, including popular musicians like Rihanna and Eminem, non profit groups like the Nature Conservancy and DonorsChoose, and the retailers Home Depot and Burberry.
He said that it was unclear what types of products customers might want to buy on Twitter, although he suspected that what would do best was “anything that is perishable, that has a temporal component to it, or a sense of urgency.”
Stripe, a payment processor that is used by many e-commerce companies, will handle the financial side of the transactions. And three marketing platforms — Fancy, Musictoday and Gumroad — will work with the sellers to handle product presentation and order fulfillment
The feature, initially aimed at selling limited-edition or time-sensitive items such as T-shirts and event tickets, could eventually create a new revenue stream for the social network, which currently relies on advertising for virtually all of its income.
The test comes as competition in the world of mobile e-commerce intensifies. Apple is expected to unveil a new phone-based payment system on Tuesday as part of its latest update to the iPhone. And Facebook, Twitter’s biggest rival, began testing a “buy” button on its service in July.
Unlike Twitter’s e-commerce efforts with companies such as Amazon and American Express, this one will not require buyers to send a public message with a special hashtag to buy the product being offered. Instead, they will click on a “buy” button inside the Twitter message. The service will then prompt them to enter their credit card and shipping information or, if it is already on file, ask them to click again to confirm the purchase.
“I think of Twitter as the place to connect with the things that you love,” said Nathan Hubbard, the former chief executive of Ticketmaster, who joined Twitter a year ago to lead its commerce efforts. “How can you bring a transaction into the experience to make it additive?”
Mr. Hubbard said the test would initially be limited to a small number of Twitter users in the United States and would include items for sale from 19 entities, including popular musicians like Rihanna and Eminem, non profit groups like the Nature Conservancy and DonorsChoose, and the retailers Home Depot and Burberry.
He said that it was unclear what types of products customers might want to buy on Twitter, although he suspected that what would do best was “anything that is perishable, that has a temporal component to it, or a sense of urgency.”
Stripe, a payment processor that is used by many e-commerce companies, will handle the financial side of the transactions. And three marketing platforms — Fancy, Musictoday and Gumroad — will work with the sellers to handle product presentation and order fulfillment
Rite Aids sales bode well for earnings???
Rite Aid Corporation (NYSE:RAD) just announced its August sales numbers and they were quite strong. For the five week period that ended August 30, 2014, same store sales increased 3.9% relative to the comparable year-ago period. Further, the company reported that its August front-end same store sales increased 1.1 percent. Strong growth was noted for pharmacy same store sales. The pharmacy same store sales increased 5.2% relative to 2013 August sales. Within the pharmacies, more prescriptions are being filled, suggesting that Rite-Aid may be pilfering business from big box store pharmacies, or its larger competitors CVS Caremark (NYSE:CVS) and Walgreen (NYSE:WAG). This is because prescription count at comparable stores increased 3.7% over the 2013 period. That caught my attention. In terms of revenues for the period, total drugstore sales increased 3.7% to $2.515 billion compared to the $2.425 billion for August 2013. This bodes well for......READ MORE
SHould you buy Apple ahead of tomorrows iPhone release?
With Apple shares up the better part of 30% since April ahead of the big event there are those who are flashing back 2012 when shares sprinted higher ahead of the release of the original iPhone 5. Apple shares peaked on almost exactly the day of the release then collapsed by almost half over the next six months. Even today the market cap of Apple is lower than those heady days (though the stock price is higher… buybacks make up the difference).
I think the best course of action is to buy call options today, and dump them tomorrow.
The risk reward ratio is favorable
It will take a very disappointing product to send the stock lower
I think the best course of action is to buy call options today, and dump them tomorrow.
The risk reward ratio is favorable
It will take a very disappointing product to send the stock lower
Friday, September 5, 2014
SNTA pays new chief 2 million
Synta Pharmaceuticals Corp. (SNTA) today announced the grant of an inducement award to its newly appointed Chief Executive Officer, Anne Whitaker. The award was approved by the Board's Compensation Committee and ratified by the full Board on August 1, 2014 as an inducement material to Ms. Whitakers entering into employment with the Company in accordance with NASDAQ Listing Rule 5635(c)(4). The award was approved subject to her commencement of employment with the Company on September 2, 2014.
The inducement grant consisted of 500,000 shares of restricted common stock and an option to purchase up to 250,000 shares of common stock. The restricted stock will vest as to 25% of the shares on September 2, 2015, and as to an additional 6.25% of the shares on the last day of each successive three-month period thereafter, provided that she remains employed by Synta (BRLC) on the vesting date. The options will be exercisable at a price of $4.00 per share (the closing price on September 2, 2014) and will vest as to 25% of the shares on September 2, 2015, and as to an additional 6.25% of the shares on the last day of each successive three-month period thereafter, provided that she remains employed by Synta on the vesting date. In addition to the inducement grants Ms. Whitaker also received an option to purchase 500,000 shares of common stock pursuant to Syntas shareholder-approved stock plan at the same price and on the same terms as the inducement option grant.
The inducement grant consisted of 500,000 shares of restricted common stock and an option to purchase up to 250,000 shares of common stock. The restricted stock will vest as to 25% of the shares on September 2, 2015, and as to an additional 6.25% of the shares on the last day of each successive three-month period thereafter, provided that she remains employed by Synta (BRLC) on the vesting date. The options will be exercisable at a price of $4.00 per share (the closing price on September 2, 2014) and will vest as to 25% of the shares on September 2, 2015, and as to an additional 6.25% of the shares on the last day of each successive three-month period thereafter, provided that she remains employed by Synta on the vesting date. In addition to the inducement grants Ms. Whitaker also received an option to purchase 500,000 shares of common stock pursuant to Syntas shareholder-approved stock plan at the same price and on the same terms as the inducement option grant.
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