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Tag: GRPN

The Biggest Tech IPOs to Hit the Market- Money Morning

Thursday, micro-blogging site Twitter (NYSE: TWTR) will debut as a publicly traded company on Wall Street’s Big Board. Many analysts – including those at Money Morning – will steer clear of the hotly anticipated IPO – but TWTR has had no trouble generating investor interest.

The San Francisco-based company even increased its price range Monday on roughly 70 million shares from $17 to $20 per share to $23 to $25. The move values the company at a whopping $13.9 billion, or 26 times its revenue over the last 12 months. Twitter hopes to raise as much as $1.75 billion.

Stock Market Volatility: How to Beat the Market at its Own Game

Many investors are convinced the market is stacked against them. It is…. but not for the reasons you might think. Dismal returns actually have very little to do with super computers, research, insider information or access to the trading floor. The real issue comes down to something very simple – the difference between how individuals and professionals approach stock market volatility. Most investors head for the hills when volatility rises.
Successful traders, on the other hand, embrace it because they know stock market volatility represents an opportunity.

Is JPMorgan (NYSE: JPM) Setting Delta Airlines (NYSE: DAL) Up For a Crash?

The devil is in the details.

That’s what I thought when I read that Delta Airlines (NYSE: DAL) may be hopping into bed with JPMorgan Chase (NYSE: JPM).

According to various reports, Delta is in talks to purchase the idled “Trainer” refinery facility in Philadelphia with assistance from JPMorgan Chase as its financier.

On the surface, the deal seems to make perfect sense. Jet fuel is very expensive.

Delivering jet fuel to New York Harbor would have cost you $1.94 a gallon five years ago. Today it’s $3.12, or 60.82% higher according to Bloomberg.

Owning a refinery would be a good way to lock up supplies and keep fuel costs down in today’s world.

It’s so smart I’d watch for United, British Airlines and Lufthansa to do the same in short order. Perhaps even the regional carriers will get in on the action at some point, too.

All are “route heavy” on the Eastern U.S. seaboard where many refineries have to pay for more expensive imported Brent crude because they can’t access less expensive West Texas blends or alternatives coming from North Dakota shale fields.

But what the frack?

Ordinarily, airlines would simply hedge price increases like this in the futures markets.

So there must be something else at work that would make Delta and presumably other carriers so desperate they’re willing to enter the refinery business. After all, it’s a tough business — even for oil companies.

Two thoughts come to mind specifically about Delta: a) its geographic concentration, and b) its credit rating, which stinks, may be so bad the airline can’t cost effectively hedge in the open markets.

Few people realize this but several major oil companies, including Sunoco, Hess Corp, Valero and ConocoPhillips — just to name a few — are planning to close, idle or otherwise shut down refineries on the east coast.

That would remove 51% of U.S. East Coast refinery capacity from the equation by some accounts.

This means that delivering fuel into the northeast corridor’s airports is going to become especially problematic and more expensive.

In that sense, one could argue that Delta is taking prudent steps to secure its own supplies while building in defenses against higher prices ahead.

I can’t find fault with that given that every penny increase per gallon costs Delta $40 million more on an annualized basis, according to Bloomberg. I would be thinking along the same lines.

But I don’t “buy” it even though the airline spent $11.8 billion on fuel last year and understandably wants to save money.

Here’s where it gets interesting (and I get suspicious).

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Is Groupon (Nasdaq: GRPN) the Next Enron?

Is Groupon the next Enron? … No. It’s worse.
Before the company even went public, there were signs that internal financial controls weren’t up to snuff.
Now I’m hearing refrains of “three blind mice” as “defrauded” investors line up to have their day in court. You might as well say the “dog ate my homework.” It’s not like no one knew this was coming. The U.S. Securities and Exchange Commission (SEC) made management redo Groupon’s financial statements and accounting practices not once, but twice before the company’s January 2011 initial public offering (IPO).

The first time involved including the cost of marketing in operating income – duh. The second was to force the company to deduct merchant payments from revenues – double duh!

Both are basic accounting principles.

If you spent $2 to gain $1 in orders you have to report that as a $1 loss if you’re dealing with cold, hard cash. Also, if you have $1 in merchant payments, you can’t count that as $2 in revenues, unless apparently you work at Groupon and love accrual accounting.

It’s not like Groupon execs can claim they didn’t know.

It’s abundantly clear to me that the “company” has very little, if any, understanding of REG FD and securities litigation.

(REG FD, in case you are not familiar with it, is short for Regulation Fair Disclosure which the SEC adopted Aug. 15, 2000. REG FD is intended to eliminate selective disclosure of material non-public information.)

But I have a hunch they’re going to find out the hard way.

Groupon’s “Material Weakness”

When the SEC came knocking again on April 2nd the company was forced to restate its Q4 financials. That summarily reduced Groupon’s revenue by $14 million and profits – assuming there were any to begin with – by $22.6 million.

In an official statement, Ernst & Young, the company’s primary auditor, noted “material weakness” with regard to the company’s internal controls. Investors simply noted that they’d better get going while the going was good.

Groupon’s share price tumbled 16.87% Monday alone and is down 55% from its peak.

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