BBY

Best Buy Co., Inc.

68.85
USD
-4.56%
68.85
USD
-4.56%
67.66 141.97
52 weeks
52 weeks

Mkt Cap 16.94B

Shares Out 245.96M

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The Social Media Company That “Snapped” The Markets

It’s no secret that the social ad space that launched platforms like Twitter, Facebook, and Pinterest into the billion-dollar territory is now having a tough go of it. Nearly every major name in the sector has reported sluggish first-quarter growth. Nearly every major name in the sector missed the mark in terms of industry targets too. Though none has slid so severely as Snap Inc. (SNAP). That’s the parent company of Snapchat, a messaging app that allows users to communicate via vanishing texts and images. Historically, this platform has performed well with Gen Z and millennial markets. However, in a filing released Monday afternoon, Snap Inc. announced dire second-quarter projections from predictions made barely a month ago. “There is a lot to deal with in the macro-environment today,” Chief Executive Officer Evan Spiegel said at a JP Morgan Chase & Co. conference. Revenues have apparently declined “further and faster” than expected since Snap’s last discussion on the subject. The company cited a range of circumstances including (of course) inflation, Apple’s privacy policy updates, and even the war in Ukraine. That’s why the Nasdaq especially was down so badly yesterday despite its Monday rally. Though Snap only represents a fraction of social media, its adjustment sent shockwaves through the field. Snap’s stock was down 41% by midday yesterday following Monday’s conference. Facebook’s parent Meta (FB) fell 9% on the news, and shares of Pinterest (PINS) shed 22%. Even Alphabet (GOOG) and Twitter (TWTR) took hits. And Amazon (AMZN) – which only recently started disclosing the breadth of its $33 billion online ad business – saw its shares dip by 4%. Despite all of that, investors should really understand that comparing these companies against one another is complex. There are so many variables to consider such as demographics, geographics, and performance. That remains true regardless of whether the markets are prone to instantaneous panic or not. More Non-REIT News to Know About Last week, we reported on the rather dismal state of retailers across the country as inflation interferes with discretionary spending. No doubt, you recall Target (TGT) releasing its worst earnings report since the mid-eighties. That and Walmart (WMT) plunging a record 11% in a single trading day. That sad saga continued yesterday when Best Buy (BBY) – America’s premier electronics retailer – announced falling sales and profits in its own Q1 earnings report. The slip in revenue was attributed to inflation, increased promotions, and higher shipping and logistics expenses. From The Wall Street Journal: “Best Buy reported earnings of $341 million for the quarter ended April 30 compared with $595 million a year earlier. The company’s revenue for the quarter fell roughly $1 billion from the previous year to $10.6 billion. Comparable sales dropped 8% compared with a rise of 37% in the quarter a year ago.” The electronics giant now predicts a yearly revenue of $48.3 billion to $49.9 billion. That’s down from $49.3 billion to $50.8 billion. Unlike Target and Walmart, Best Buy doesn’t deal in staples that can make up for dips in discretionary spending. So it’s the kind of retailer that could really suffer from here depending on how much consumers tighten their wallets. The World According to REITs The real estate investment trust (REIT) world involves some of the smartest, savviest investors and executives in the entire equities industry. Even better, there isn’t much in the way of scandal in this circle. Its priorities consist of creating top-quality stable products, which usually entails a ton of transparency. Overall, this is a “boring but beautiful” kind of category. So seeing four executives from United Development Funding sentenced to federal prison last Friday on fraud charges? That’s not normal, to say the least. You’re excused if you haven’t heard of this company before. It’s not exactly listed on a major exchange. Still, I couldn’t help but notice the unnatural drama unfolding. According to the attorney for the Northern District of Texas, these so-called leaders will receive 20 years in prison after they were found guilty on 10 counts of conspiracy and securities fraud. ABC affiliate WFAA wrote: “According to the USDOJ, the defendants moved money between their five funds – UDF I, II, III, IV, and V – when one of the funds didn’t get their loan back from a developer. “The U.S. attorney said the SEC and the investors were not made aware of those transfers. “‘According to evidence presented at trial, the defendants orchestrated a scheme to mislead investors and the SEC about their funds’ performance,’ [he added]…” This news rocked the REIT realm when it first came to light last year. And it seems as though justice was finally levied upon the fraudsters last Friday. To its credit, UDF is keeping a complete chronology of events in this investigation, which can be found on its website. Hopefully, this sentence will send a message to anyone else out there who’s considering these types of crimes.

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