{"id":105609,"date":"2017-05-05T10:17:52","date_gmt":"2017-05-05T14:17:52","guid":{"rendered":"http:\/\/countingpips.com\/?p=105609"},"modified":"2017-05-05T07:18:25","modified_gmt":"2017-05-05T11:18:25","slug":"friday-charts-ipo-nightmare-and-the-downside-to-record-highs","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/05\/friday-charts-ipo-nightmare-and-the-downside-to-record-highs\/","title":{"rendered":"Friday Charts: IPO Nightmare and the Downside to Record Highs"},"content":{"rendered":"<div id=\"inves-2527092835\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">May 5, 2017<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p>By <a href=\"http:\/\/WallStreetDaily.com\/\"><u>WallStreetDaily.com<\/u><\/a> <img loading=\"lazy\" decoding=\"async\" class=\"attachment-home-th size-home-th wp-post-image\" style=\"display: block; margin-bottom: 5px; clear: both;\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/05\/0417_ipo_feature.jpg\" sizes=\"auto, (max-width: 580px) 100vw, 580px\" srcset=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/05\/0417_ipo_feature.jpg 580w, https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/05\/0417_ipo_feature-300x155.jpg 300w\" alt=\"Friday Charts: IPO Nightmare and the Downside to Record Highs\" width=\"580\" height=\"300\" \/><\/p>\n<ul>\n<li>Celebrated IPO crashes and burns.<\/li>\n<li>The surprising source of Amazon\u2019s profits.<\/li>\n<li>Pain without the gain.<\/li>\n<li><strong><a href=\"https:\/\/pro.agorafinancial.com\/m\/671883\" target=\"_blank\" rel=\"noopener noreferrer\">Also recommended: Are you inhaling tech debris?<\/a><\/strong><\/li>\n<\/ul>\n<p>If you\u2019re new to the <em>Wall Street Daily <\/em>Nation<em>,<\/em> here\u2019s the rundown\u2026<\/p>\n<p>On Fridays, I embrace the adage that \u201ca picture is worth a thousand words\u201d and hand-select compelling graphics to put recent investment news into perspective.<\/p>\n<p>All it takes is a quick glance and you\u2019ll be up to speed.<\/p>\n<p>This time, we\u2019re sharing a fresh reminder why you should avoid Wall Street\u2019s hottest IPOs, the single most important data point for Amazon and why it sucks to be a short seller right now. Enjoy!<\/p>\n<h2 class=\"subhead\">Momma Told Me There\u2019d Be IPOs Like This<\/h2>\n<p>Once dubbed \u201cthe most interesting tech IPO of the year\u201d by Quartz, cloud communications company Twilio (TWLO) just crashed and burned.<\/p><div id=\"inves-1857421740\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p class=\"centered\"><img decoding=\"async\" class=\"centered aligncenter\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/05\/ipo_chart.png\" alt=\"Six-month price performance for TWLO\" \/><\/p>\n<p>You\u2019ll recall the company provides tools to send texts for the largest Silicon Valley apps, including Uber, WhatsApp, Box and Zendesk.<\/p>\n<p>And when everyone was getting hot and bothered about Twilio\u2019s IPO last June, I <a href=\"https:\/\/www.wallstreetdaily.com\/2016\/06\/13\/twilio-ipo\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>warned<\/strong><\/a> about the company\u2019s customer concentration.<\/p>\n<p>Sure enough, it came back to bite the company.<\/p>\n<p>On this week\u2019s conference call, CEO Jeff Lawson revealed one of the company\u2019s largest customers, which was later confirmed to be Uber, is decreasing its usage. Dramatically.<\/p>\n<p>Uber once accounted for 17% of Twilio\u2019s revenue. But the contribution dropped to 12% in the most recent quarter, and Lawson \u201cexpects contributions to decline further.\u201d<\/p>\n<p>Facebook\u2019s WhatsApp is another double-digit contributor, too. If it decides to reduce Twilio usage, look out below!<\/p>\n<p>Of course, Twilio is just one of the many \u201chot IPOs\u201d we warned about here \u2014 including Groupon (GRPN), Twitter (TWTR), Zynga (ZNGA) and Fitbit (FIT).<\/p>\n<p>Here\u2019s the key takeaway: The more enthusiastic Wall Street gets about an upcoming IPO, the more you should consider running the other direction. As we <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/03\/03\/friday-charts-boom-bust-ipos-artificial-intelligence-ominous-divergence\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>shared<\/strong><\/a> in early March, the most hyped offerings tend to fare the worst.<\/p>\n<h2 class=\"subhead\">The Surprising Source of Amazon\u2019s Profits<\/h2>\n<p>In previous updates, I\u2019ve highlighted the voracious pace at which online retailing giant Amazon.com Inc. (AMZN) is gobbling up the competition.<\/p>\n<ul>\n<li>In <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/02\/10\/amazon-online-bookseller-turned-retail-monster\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>February<\/strong><\/a>, I shared that Amazon accounted for a whopping 43% of all online retail sales in 2016 \u2014 up from 33% in 2015 and 25% in 2012.<\/li>\n<li>In <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/03\/24\/friday-charts-amazons-retail-apocalypse-black-swans-sp-500s-broken-win-streak\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>March<\/strong><\/a>, I shared the impact of Amazon\u2019s increasing dominance \u2014 a wave of more than 3,500 retail store closings.<\/li>\n<\/ul>\n<p>Against this backdrop, you\u2019d think that retail sales generate most of Amazon\u2019s profits. But think again!<\/p>\n<p>The company\u2019s cloud computing division, AWS, which only accounts for 10% of total revenue, generates nearly 90% of the company\u2019s operating income.<\/p>\n<p class=\"centered\"><img decoding=\"async\" class=\"centered aligncenter\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/05\/amazonincome_chart.png\" alt=\"AMZN operating income breakdown\" \/><\/p>\n<p>Now you know why analysts pay so much attention to growth for this \u201ctiny\u201d segment!<\/p>\n<p>As I shared on a recent appearance on <a href=\"http:\/\/video.foxbusiness.com\/v\/5414781919001\/?#sp=show-clips\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Fox Business<\/strong><\/a>, AWS posted solid growth of 43%. Translation: Short Amazon at your own peril.<\/p>\n<p>Speaking of shorting\u2026<\/p>\n<h2 class=\"subhead\">Lots of Pain and No Gain<\/h2>\n<p>With all three major U.S. stock markets hovering at all-time highs, there should be nothing but rejoicing by investors. That is, unless you\u2019re a short seller.<\/p>\n<p>The latest analysis from Goldman Sachs reveals that the market\u2019s most heavily shorted stocks have risen to their highest level since August 2015.<\/p>\n<p>In other words, short sellers are getting clobbered by these names.<\/p>\n<p>Interestingly, though, they\u2019re not about to surrender. The data show that the proportion of shares borrowed to sell short on U.S. exchanges is climbing.<\/p>\n<p class=\"centered\"><img decoding=\"async\" class=\"centered aligncenter\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/05\/rollingshort_chart.png\" alt=\"Most short rolling basket\" \/><\/p>\n<p>This doesn\u2019t surprise me, either. While some people characterize short selling as un-American, I\u2019ve found that short sellers do the most thorough research. And they\u2019re willing to hang tight until they\u2019re proven right.<\/p>\n<p>That means if you\u2019re invested in a stock that\u2019s heavily being shorted, you better make sure you\u2019ve done your homework, too. As we all know, the tables can turn quickly on Wall Street.<\/p>\n<p>Ahead of the tape,<\/p>\n<p>Louis Basenese<br \/>\nChief Investment Strategist, <i>Wall Street Daily<\/i><\/p>\n<p>The post <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/05\/05\/friday-charts-ipo-nightmare-downside-record-highs\/\" rel=\"nofollow\">Friday Charts: IPO Nightmare and the Downside to Record Highs<\/a> appeared first on <a href=\"https:\/\/www.wallstreetdaily.com\" rel=\"nofollow\">Wall Street Daily<\/a>.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By WallStreetDaily.com Celebrated IPO crashes and burns. The surprising source of Amazon\u2019s profits. Pain without the gain. Also recommended: Are you inhaling tech debris? If you\u2019re new to the Wall Street Daily Nation, here\u2019s the rundown\u2026 On Fridays, I embrace the adage that \u201ca picture is worth a thousand words\u201d and hand-select compelling graphics to [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-105609","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105609","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=105609"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105609\/revisions"}],"predecessor-version":[{"id":105622,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105609\/revisions\/105622"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=105609"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=105609"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=105609"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}