Fortnite Is More Popular Than Ever… Good Time to Buy Activision?

Recently, we wrote an Article on Fortnite’s monumental success through the last few months and the effect that it would have on Activision. Since we wrote the article Activision’s stock has fallen over ten percent, dropping 6 billion in market cap.

Fortnite’s popularity doesn’t seem to be fading. Not only has the game gained more users, but Epic Games(The creators of Fortnite) have also come out with a mobile version of Fortnite. Enabling people without a PS4, Xbox, or a computer to access the game.

From our perspective, Fortnite hasn’t slowed down and is more popular than ever. Kids in our school play it in every moment of spare time they have.

Fortnite is doing a good job of coming out with new guns and features to keep the game progressing.

How much room does Fortnite have to grow? Fortnite is getting just about as much publicity possible right now, being featured all over social media, just about everyone has heard about Fortnite. That being said, they simply don’t have much room to grow. Nothing stays cool and popular forever, while Fortnite is popular now, soon the hype around the game will begin to fade. People will get tired of posting about it and talking about it eliminating the buzz around the game. Additionally,  Activision is expected to release a similar Fortnite gameplay to their popular games such as Call of Duty and Overwatch. As of now, there is no one else offering the same style gameplay as Fortnite other than PUBG, when Activision and other companies begin releasing a similar style game, it will become harder and harder for Fortnite to maintain their current active user base.

As Fortnite popularity fades, Activision will be able to reclaim much of their lost market share. Understanding that Activision’s recent dip is due to Fortnite’s success, it is crucial to figure out when Fortnite begins to lose popularity. Identifying this could give you a good entry price in Activision’s stock

Disclaimer: Do not invest your own money without doing your own research, our content is not meant to convince you to buy or sell a stock, but simply to share ideas and unique viewpoints.

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Market Reacts Strongly to Twitter’s New Feature – Stock Was Up Seven Percent on Day

Twitter’s new feature

On March 14th Twitter stated that they were working on a “camera-first” feature. After delivering the news, Twitter’s stock spiked, rising over seven percent on the day. Although early in development, the new concept is said to resemble some of the Snapchats features while being integrated into Twitters existing platform. It is said to incorporate photo, video, and location. That being said, there is very little known about the new feature and nothing can be confirmed.

What does this new feature mean for Twitter? Why did the Market react so strongly?

To back up their successful earnings report, Twitter will need to report strong earnings in the upcoming quarter in order to increase or maintain their current stock price. To do this, Twitter will have to optimize their advertisement capabilities to maximize their ad revenue. Their new feature plays a huge role in increasing their ad revenue as it is an entirely new part of their platform which means entirely new advertising opportunities. Additionally, video advertising is significantly more expensive than text, therefore, many believe that this “camera-first” feature will have a huge effect on increasing ad revenue. Also, this new feature will allow Twitter to compete with other social media platforms such as Snapchat as they now too will be placing advertisements between photos and videos, similar to Snapchat stories.

What do we think of this new feature?

As it is the beginning steps of developing this feature, it is very difficult to understand the specifics of what it will look like and how people will react to it. We believe that a “camera first” feature in which the user can use their camera to post current/relevant photos or videos will fit seamlessly into Twitter’s current platform. Twitter specializes in current day to day topics in real time, this new feature will enhance the user’s experience by giving them the opportunity to express their ideas and feelings through real-time photo and videos that they take. That being said, there have been instances in which new social media features receive a lot of backlash from their platform users at first (ex. Snapchat update, Instagram stories). Even if Twitter’s new update doesn’t get a positive response at first, we believe that the platform’s users will eventually learn to get used to using it as they did with the other social media features mentioned above. Although in the early stages of development, we feel that a feature of this sort would be huge for Twitter.

Disclaimer: Do not invest your own money without doing your own research, our content is not meant to convince you to buy or sell a stock, but simply to share ideas and unique viewpoints.

Where Will Twitter’s Stock Go From Here?

Twitter Stock Review(TWTR):

For years, Twitter has failed quarter after quarter to deliver profitability.  Recently, Twitter had its best quarter ever with a net income of 91 million dollars. Shocking the market, Twitter’s stock price has gone straight up since its successful earnings.  Additionally,  although Twitter’s revenue rose, its monthly active user base showed no growth. Twitter has shown great promise with its successful last quarter, however, there are still many issues surrounding the company. Let’s take a closer look at Twitter and what the future could hold.

Their Challenges:

At the moment, one of Twitter’s Problem is the number of fake or inactive accounts on its platform.  Many analysts downgrade the stock believing that many fake and or inactive users make up a large part of their user base. Also, many analysts believe Twitter is too similar to its behemoth competitor, Facebook. They believe that Twitter doesn’t have enough key differentiating factors and will eventually be crushed by Facebook.

The President’s Affect on Twitter:

If you follow politics, you know that The President Trump’s favorite way to reach the general public is through Twitter. He attracts many to the platform who otherwise would not of been on it. As a result, the President has brought publicity and new users to the platform.

Our View:

Although many see Twitter’s Short-term success as no indication of the future, we disagree.  

Twitter is already working on eliminating the inactive accounts that scared away many investors. Once these accounts have been eliminated, we don’t believe that this problem will have a significant or lasting effect on the platform. Additionally, we don’t believe the justification of this downgrade is fair because most other major social media platforms deal with or have dealt with similar issues.

From our recent experiences on Twitter, we have noticed an increase in ads throughout the platform. The company is clearly working to increase its ad revenue by finding new ways to increase the number of ads on the platform. This is great news as it shows advertisers are finding their advertisement campaigns on Twitter successful. However, if Twitter were to make ads even more frequent, the platform would begin to look spammy and tacky. Therefore, for Twitter to start making even more money(which it needs to – currently valued at 101 p/e) it will need to increase its daily and monthly active user base.

We see Twitter as an essential platform that will be here for the long run. Its platform separates it from other social media platforms such as Facebook and Instagram because it is THE PLACE for live news regarding any subject. If we want to see live updates of a sports game – we go to Twitter; If we want live news about a political topic – we go to Twitter; If we want weather updates – we go to our local weather man’s Twitter. The list goes on and on. We would never go to Facebook or Instagram to find these results, because people posting on Facebook and Instagram are mostly sharing special moments in their life, and not their opinion on a public news matter. That being said, some Facebook users do post about these topics, but generally speaking, Twitter has locked up that category. Therefore, because Twitter has a niche that is essential to social media and a strong demand for ads on their platform, we believe they have the potential to continue their success far into the future. 

Disclaimer: Do not invest your own money without doing your own research, our content is not meant to convince you to buy or sell a stock, but simply to share ideas and unique viewpoints.

 

The Future of Chipotle – Can Their Stock Make a Turnaround

Emerging in 1993, Chipotle was one of the first restaurants to serve healthy fast food. Being one of the first in the category of healthy fast food, Chipotle’s customer base grew rapidly, attracting many who had previously been deterred from fast food due to its lack of nutritional value. Opening new locations and growth of sales allowed Chipotle to reach a market cap of 23.41 Billion in late 2015.

For countless years, Chipotle seemed unstoppable in the fast food realm. After years of tremendous growth, Chipotle hit a massive roadblock in 2015 as illnesses such as E. coli and salmonella were reported by some of Chipotle’s customers. With hundreds victim to Chipotle’s sanitary issues, it’s stock took a turn for the worst. Reports regarding Chipotle’s sanitation continued, forcing Chipotle to temporarily close some stores. As their operating income plummeted from 764 million in 2015 to 35 million in 2016. When it finally solved its sanitary issues, the company was not the same. The huge customer base that it had built up was greatly diminished. The sanitary scandals put a bad taste in many of Chipotle’s customer’s mouths. Also, acknowledging the initial success of Chipotle, many other healthy fast food chains began to appear. These competitors capitalized on Chipotle’s sanitary issues by capturing some of their market shares.

Ever since their sanitary issues, Chipotle has struggled to return to its previous brand image and has seen decreases in same-store sales. This has caused the stock to sink from a high of $758 per share in in early August of 2015 to a low of $247 per share on February 9, 2018. Currently Chipotle has a market cap of 9 billion dollars with a P/E of 52. Looking at the P/E,  it is clear that investors still believe that Chipotle will eventually return to its former self and start earning profits like it was. It is on the right track, as it’s revenue went from 3.9 billion in 2016 to 4.47 billion in 2017. Also, Chipotle recently hired a new CEO, Brian Niccol, former Taco Bell CEO. His great track record in the fast food realm has brought new life to the Chipotle stock. Since they released the news on its leadership, its stock has risen from $251.33 to $322.70 per share.

Although news of Chipotle’s new CEO has temporarily boosted its stock, Chipotle is going to need strong earnings reports in the upcoming quarters to justify the continuation of this trend. In order to achieve these sales, Chipotle will need to regain lost customers.  Is it possible for Chipotle to regain these lost customers?  The amount of time it will take for previous Chipotle customers to regain trust in the brand is unknown. Some may never eat there again and some have already returned. Chipotle in our eyes has done everything they need to do to gain customer confidence and make the overall brand trusted again. Because Chipotle has laid the groundwork with 2,400 locations and not a single dollar of debt; they need to and have been putting millions of dollars into food safety. It has invested in its food suppliers to help it grow safer foods along with investing in its restaurants by educating employees.

At the high of Chipotle’s stock, they were one of the only restaurants in the healthy fast food business. Now, in order to reach their previous sales and profitability, Chipotle will have to compete with the numerous other restaurants that have emerged in the same category. This being said, there may also be more demand for healthy fast food than ever before.

Our Point of View:

Chipotle was wildly popular when it first came out, with lines out the door in certain locations. When the news regarding the sanitary issues came out, we saw many people turn away from Chipotle. Despite the decrease in sales, we haven’t seen a decline in the food quality. We always thought that at some point these customers would slowly return as the news blew over. On a smaller scale, from looking at our friends and family we have seen them beginning to venture back into being a Chipotle consumer. Recently, Chipotle released a 0.9% increase in same-store sales, which could just be the beginning.  Maintaining the high-quality food, opening new stores, and spending millions on food safety, is why we believe that Chipotle may be able to both regain and accumulate new customers, returning themselves to their prior sales and brand image.

Disclaimer: Do not invest your own money without doing your own research, our content is not meant to convince you to buy or sell a stock, but simply to share ideas and unique viewpoints.