Editorials | 12 months ago

Three Stocks Capitalizing Off Dow Record Highs & Strong Job Reports For July

 

U.S. stocks moved higher in late morning trading on August 4th as the Dow reaches record highs and data showed U.S. employers hired more employees than anticipated in July. During Friday morning’s trading session, the Dow Jones gained 19.73 points, or 0.09%, at 22,045.83, the S&P 500 gained 3.32 points, or 0.13%, at 2,475.48 and the Nasdaq Composite increased 10.19 points, or 0.16%, at 6,350. With the markets on an uptrend here are three companies that are capitalizing off the strong market momentum: Snap, Inc. (SNAP), GOPRO, Inc. (NASDAQ:GPRO) and Cincinnati Bell, Inc. (NYSE:CBB).

Snap, Inc. (SNAP) has been the core of huge speculation over recent weeks as original holders are set to see their restrictions lift within the coming weeks. From August 3 to August 4 share prices increased from $12.65 to as high as $13.70 on August 4th. The company is due to report earnings during the week of August 6th. However, many continue to remain skeptical until October when most of the shareholders with restrictions on their stock could take profit.

“We have been wrong about SNAP’s ability to innovate and improve its ad product this year (improving scalability, targeting, measurability, etc.) and user monetization as it works to move beyond ‘experimental’ ad budgets into larger branded and direct response ad allocations,” wrote Morgan Stanley’s Brian Nowak in his downgrade note.

For all the concerns about the company, however, it would be a misstep to think that Snap has been laying idle. The company has made a string of moves over the last few months to revamp its ad platform. These include:

  • Partnering with Nielsen and three other major ad data providers to help advertisers better measure the impact of campaigns on ad sales.
  • Creating Snap Publisher, a tool that advertisers can use to convert horizontal video ads into vertical ads that can be run against Snapchat Stories.
  • Launching World Lenses, a product that lets users add augmented reality content (including content promoted by advertisers) to photos and videos taken with a phone’s rear camera.
  • Buying Placed, a startup whose services track the impact of mobile ads on offline sales by monitoring user locations, reportedly for over $200 million.
  • Creating a “Certified Partners” program through which the company works with agencies to improve the effectiveness of their clients’ Snapchat ad campaigns.
  • Launching Engagement Audiences, a solution that lets advertisers send a follow-up ad to a user who has already engaged with one of their ads.

GOPRO, Inc. (NASDAQ: GPRO) saw a 25.6% surge after it beat Q2 2017 earnings expectations. Some highlights from their financials are the following:

  • Q2 revenue was $297 million, up 34% year-over-year and 36% quarter-over-quarter. Adjusted EBITDA was $5.1 million.
  • GoPro’s drone, Karma, was the #2 selling drone brand in the U.S. in the second quarter, according to the NPD Group’s Retail Tracking Service.
  • Sharp focus on inventory and channel management resulted in a 39% reduction in inventory quarter-over-quarter; forward weeks of supply in the channel are down 25%.

“GoPro is building momentum,” stated Founder and CEO Nicholas Woodman.  “Strong demand combined with our cost management and margin initiatives contributed to GoPro’s EBITDA positive performance in the second quarter.  HERO6 and Fusion, our 5.2K spherical camera, are on course to launch later this year and we continue to track toward our goal of full-year, non-GAAP profitability in 2017.”

Cincinnati Bell, Inc. (NYSE:CBB) is a regional telephone company that on Friday announced they have beat Q2 revenue forecasts. During Friday morning’s trading session the stock hiked 23% from lows of $17.80 to daily highs of $22.00. In their reported financials the Cincinnati-based company highlighted these numbers:

  • Strategic revenue of $171 million, up 9% year-over-year, highlighting continued strong demand for Fioptics and cloud services.
  • Entertainment and Communications revenue gained 5% year-over year to $201 million.
  • Fioptics Internet subscribers increased 22% and Fioptics video subscribers advanced 13% year-over-year.

Leigh Fox, President and Chief Executive Officer of Cincinnati Bell, stated, “Our strong financial performance this quarter demonstrates our ability to continue to win with fiber as we successfully transition customers to an infrastructure that supports high-density data transmission. We are also encouraged by the continued demand for our strategic IT solutions and cloud services as we transition to becoming a leading cloud integrator for both voice and data. Importantly, the recently announced combinations with Hawaiian Telcom and OnX provide increased geographic and customer diversification to further capitalize on these secular trends.”

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