Amid earnings season, it’s tough to keep track of who is up and who is down. The stock market is a scorecard, redone on a daily basis. But if you want to play the long game, it’s a good idea to keep an eye on where the money goes — in this case, used as currency for strategic deals. As of late, the question of “build” versus “buy” is being decided squarely in the camp of “buy.”
SIZZLE
Apple iPhone Sales
Apple has climbed to the top of the slippery slope that is the smartphone battle — for the latest quarter, at least. In data released the day after a strong earnings report, it looks like Apple squeaked past Samsung to hold the title of most smartphones shipped, at a bit more than 78 million versus 77 million for Samsung. Sizzle, for the time being, in a jockeying for position that will never end.
Facebook Mobile
Mobile ads were 84 percent of sales in the latest quarter, with a 17 percent increase in monthly average users to 1.8 billion. The average revenue per user in North America at the end of 2016 stood at roughly $20, a big jump from the mid-single digits seen just a half decade ago.
SUV Vehicle Sales
The rubber met the road, the pedal met the metal and throw in whatever other metaphor you’d like for a shining spot in a quarter where car sales and truck sales were off 1.8 percent. For the SUV market, the data was a little more sanguine, as 62.6 percent of new vehicle sales in the U.S. were SUVs, compared to 58.2 percent last year.
FIZZLE
Trumpy Bumpy Stock Market
Stocks hit psychological milestones not long ago, when, for example, the Dow crossed 20,000 for the first time ever. Some observers called it the Trump Effect, and yet, just two weeks into the presidency, equities have retreated amid controversial policies tied to trade and immigration. Will this Trump Effect (policies) trump the other Trump Effect (positive stock momentum)?
Identity Fraud Climbs
The roster of identity fraud victims grew by 2 million names in 2016, up 16 percent year over year. That’s according to Javelin Research and presages more bad actors and bad news to come. This is not the type of growth you want to see, unless you’re a hacker.
UPS And FedEx
UPS numbers underwhelmed The Street, and now, Amazon is looking to branch out into the land and air for logistics and further avenues of reaching consumers’ minds and wallets. The first air cargo hub is in the offing, with a growing Prime Air fleet of cargo planes ready to step up the delivery game.
Sizzle Of The Week: Acquisition
If the last several weeks/months have proven anything, it is that the people — particularly those located in the U.S., U.K., EU and (now) Australia — have decided being friends with anyone is highly overrated. Seriously, while Nigel Farage was addressing the European Parliament, a different (Labour) MP held up a sign behind him for several minutes that said:
“He’s lying to you.”
It has not been good days for civility on this planet, leading many of us to ask the question the band War once poignantly put to us all.
And while we are watching this all unfold, back here in payments and commerce land, our ecosystem has done us all a solid over the last several days, though one we might have all missed. It’s proving to us all that at least some entities can collaborate, join forces and perhaps together build something better collectively that they could have done apart.
For example…
SoFi Buys Zenbanx
SoFi started out refinancing student loans, but its ambitions are clearly growing toward a great number of financial services on offer.
The online lender has inked a deal to buy Zenbanx, a FinTech company that gives SoFi the ability to offer checking accounts and credit cards, among other financial services.
The details of the deal — like price — were not disclosed.
The move comes as one of a piece with SoFi’s efforts over the last several years to branch out from its student loan wheelhouse into areas like mortgages and personal loans. Zenbanx offers a mobile banking account that enables customers to save, send and spend money in multiple currencies, both in the U.S. and abroad. Since it is not a bank, it teamed up with FDIC member Wilmington Savings Fund Society, which issues accounts for Zenbanx.
Currently, SoFi has more than 230,000 customers and has raised $1.4 billion in funding. The deal is expected to be valued at roughly $100 million when it closes later in February.
“With Zenbanx joining SoFi, we’re moving one step closer to becoming the center of our members’ financial lives by adding SoFi deposit, money transfer and credit card products to our offerings for members,” said Mike Cagney, CEO of SoFi, in the report.
SoFi is also exploring channels to go into the life insurance game and has reportedly acquired licenses and inked a partnership deal with Protective Life Insurance. Good collaborators there at SoFi.
And they weren’t the only ones this week.
Green Dot Grabs UniRush
Green Dot announced Monday (Jan. 30) that it will buy UniRush and its operating businesses RushCard, an online direct-to-consumer general purpose reloadable prepaid card provider, and Rapid! PayCard, a corporate payroll card provider.
In a press release, Green Dot said the buy, which is part of its plan to enhance shareholder value, expands the company’s scale with the addition of the RushCard and Rapid! PayCard installed customer bases.
It also establishes a stronger position for Green Dot in the increasingly competitive payroll card and wage disbursement market.
The acquisition comes at a steep price — $147 million plus a minimum $4 million annual earn-out payment for five years post-closing. The acquired company will be debt-free and cash-free at the time of closing with the exception of working capital items, Green Dot said in the press release.
“As one of the largest and most successful FinTech banking franchises in America, Green Dot has proven its ability to efficiently integrate highly accretive acquisitions. We believe the acquisition of UniRush, LLC, including the RushCard business and the Rapid! PayCard corporate payroll card business, will be a strategic and financial success in both the near and long term,” said Steve Streit, founder and chief executive of Green Dot. “In particular, the RushCard program has for many years been one of the most important and respected prepaid programs in America with a mission espoused by its legendary founder, Russell Simmons, strikingly similar to that of Green Dot’s long-time mission to reinvent personal banking for the masses and to empower the unempowered.”
The acquisition is expected to close prior to the end of the first quarter subject to customary closing conditions.
Also Worth Noting…
While those were the big deals announced this week, acquisitions have abounded since the beginning of 2017. Last week, the big eye-catcher was the AntFinancial-MoneyGram acquisition, which will blow open a lot of commerce and payments doors here in the U.S. and in China as well.
“[Ant Financial] is all about equal access to financial services globally. When we speak about financial inclusion that is open and supportive of the needs of society, both organizations fit squarely in the middle of that,” CEO Alexander Holmes told Karen Webster in an interview earlier this week. “Ant Financial wants to be in every country in the world. There are 7,000 employees of Ant Financial , but 6,800 are in China. Now, they will have 3,000 employees who aren’t in China who can now grow and expand Ant Financial services.”
So, acquisitions sizzle this week, but more importantly, so did the notion that human beings can occasionally work together for the common good.
Of course, exchanging vast sums of money first does help grease the wheels a bit.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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