Tech Stock News: 7 Things You Missed This Week
August 23, 2019
Lead Tech Analyst
1. Amazon Calls on India to Reduce Ecommerce Restrictions
Amazon executive Amit Agarwal recently told Reuters that India needs to reduce red tape and encourage ecommerce if it is to overcome sluggish domestic growth. “There is so much opportunity to just let ecommerce thrive versus trying to define every single guard rail under which it should operate,” Agarwal said.
Agarwal’s comment was directed at India’s latest ecommerce laws which limits Amazon and Walmart’s ability to operate in the country. Pushing back on these new legislations, he emphasized Amazon’s role in helping small and medium enterprises in the country by enhancing their export capabilities. According to reports, Amazon has allowed India’s businesses to earn more than $1 billion in exports, with another $5 billion expected in the next three years if certain barriers are eliminated.
“The number of basic paper cut opportunities out there are so many,” Agarwal said. “I feel we’re getting lost in the high level debate around ecommerce and data localization.”
Despite these concerns, Amazon is actively expanding its presence in the subcontinent. Not only has the company launched a new campus in India, Amazon founder Jeff Bezos also promises to invest $5 billion into India. Furthermore, Indian demand for the Amazon Prime loyalty program also doubled in the last 18 months, and the country remains one of the fastest growing markets for Prime Membership in the world.
2. Splunk Expands Cloud Capabilities With $1 Billion Acquisition Of SignalFx
Splunk made news this Wednesday when it announced that it had acquired cloud monitoring SignalFx for $1.05 billion. This new acquisition will not only allow SignalFx to expand its cloud capabilities, it will also allow Splunk to expand its presence in the application performance monitoring market.
SignalFx offers real time cloud monitoring services for data anomalies, and it seems to be doing well. It managed to generate $25 million in revenue last year, and raise $179 million at a recent valuation of $500 million. It also managed to secure venture capital support from well-known firms like CRV and Andressen Horowitz.
Aside from its SignalFX deal, Splunk’s stock also rose to $141.25 shortly after it released its latest quarterly earnings and revenue report. According to the official data, the company’s revenues rose by $517 million, which represents a 33% year over year increase. This news, combined with the Signal Fx acquisition, helped to drive up sentiment for Splunk shares throughout most of the week.
3. NVIDIA Jumps by 7% After RTX Ray-Tracing Technology Announcement
NVIDIA shares recently jumped by 7% after announcing that their RTX Ray-Tracing technology will be used for the PC version of Minecraft, the most widely sold video game in the world. NVIDIA shares closed at $170.78 this Monday, bringing the stock’s year to date 2019 return to 28%.
NVIDIA’s RTX Ray-Tracing technology promises to allow Minecraft fans to experience more realistic lightings, shadows and colors on the PC platform. Additionally, this new technology is also expected to increase exposure for NVIDIA’s latest graphic processing unit (GPU) technology, which happens to be the only GPU with real time ray tracing capabilities.
NVIDIA originally introduced RTX technology back in 2018, a huge achievement at that time. Today, NVIDIA’s leaders believe that by introducing RTX technology into Minecraft’s PC platform, it will be able to expose PC gamers to what the technology has to offer.
“Minecraft will expose ray tracing to millions of gamers of all ages and backgrounds that may not play more hardcore video games,” GeForce head of Marketing Matt Wuebbling said.
Aside from its Ray-Tracing announcement, NVIDIA’s stock also benefited from last week’s second quarter earnings report. Although adjusted earnings per share fell by 36% year over year to $1.24, they were still higher than expectations.
Finally, NVIDIA also benefitted from the overall strength in tech sector, which rallied due to investor expectations that the US-China trade war may be cooling or at least stabilizing.
4. The Trade Desk Brings in New Talent to Speed Up China Strategy
The Trade Desk’s (TTD) recent appointment of Calvin Chan as their general manager for their China operations marked another key step in their growth strategy. The news comes at the heels of The Trade Desk’s announcement back in in spring that it will allow customers to purchase ads in the country.
Prior to joining The Trade Desk, Chan originally worked for AdMaster, a major data and digital company in China. He also briefly worked at Nielsen, which specializes in data, information and management. TTD Senior vice president of North Asia, Troy Yang said that, “Calvin’s appointment will help accelerate our growth with major Chinese partners and advertisers.”
Although TTD’s presence in China is relatively small, it is aggressive expanding under the assumption that it can tap into the country’s growing middle class. Chan was chosen because of his experiences and connections in China, and also because of his deep understanding of TTD’s long term strategy for the country.
The Trade Desk’s China strategy aims for a ‘long term approach,’ comparable to the one used to create a platform for the connected-TV market. Not only will the company need to adapt to serve China’s growing middle class, it will also need to cultivate deeper connections with the Chinese tech industry.
5. Are Lyft Options About to Get Cheaper?
Lyft’s shares took a big jump this Tuesday, climbing 3% in early trading. Investors have always been bullish on Lyft’s future prospects, but there was another reason why the stock jumped the way it did earlier this week: cheaper Lyft Options.
Many were betting that Lyft shares would soon bottom out, which in turn forced many investors to rethink their strategies, particularly with regards to the $50 support level. This all happened in conjunction with the lockup expiration, which failed to cause many major selloffs among shareholders.
According to Seymour Asset Management’s Tim Seymour, people who bought Lyft shares this week did so because they believe in its long term value. “If you’re buying this company today … I don’t think you’re buying it for a trade. I think you are truly going to be an investor,” Seymour said.
Additionally, there was also Lyft’s August 7 earnings report, which beat most expectations, further reinforcing the sentiment that ride-shares and Lyft’s business model as a whole have bright futures.
6. Roku Adds New Child Streaming Service
Roku recently announced the creation of a “Kids and Family” section for its ad-supported channel this Monday. The announcement came at the heels of last week’s news which saw Roku shares reaching a new record high of 142.10 on August 13 based on strong second quarter data.
According to official reports, the new child streaming service will not only offer quality, child-friendly shows and content, it will also allow parents to control what their children can watch. Furthermore, there are also premium subscription offerings for children’s entertainment as well as other future services.
The new Kid’s and Family service promises to offer around 7000 free, ad-supported shows and movies from several Roku partners, including Lionsgate, Mattel, Hasbro, Pocket Watch and more. Lego has also willingly signed on as the first advertising sponsor for the new Roku service.
7. Salesforce Beats Revenue Forecasts; Shares Rise by 7%
Salesforce shares climbed by around 7% on Thursday after the software company announced that its quarterly revenue had beaten expectations. The company’s shares briefly touched $149 per share before closing at $148.24.
According to official data, Salesforce’s quarter revenue rose to around $4 billion this quarter, higher than the $3.95 billion estimate from earlier projections. A significant portion of the revenue was generated by the company’s largest product, Sales Cloud which grew by 13% while the second largest, Service Cloud grew by 22%. Due to the positive data, Salesforce is raising its revenue forecast for 2019 from $16.2 billion to between $16.7 billion and $16.9 billion.
However, even before the company released its latest report, Salesforce had already expected to beat its revenue target for the current fiscal year by several billions dollars. A major portion of this growth came from Tableau and Mulesoft, which were acquired for $15.3 billion and $6.5 billion respectively. The company plans to continue its rapid expansion all throughout the year.
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