Square to Go Public
According to Forbes, San Francisco based mobile payment company, Square, is expected to go public sometime in 2015. In fact, sources close to the situation report that the firm is expected to file a confidential registration statement very soon, if it hasn’t happened already. Under the JOBS Act, emerging, growing companies can file for an IPO confidentially if they meet certain requirements, including having less than $1 billion in annual revenue. Internal debate over the ideal time for the firm’s IPO has clouded the situation, as has the appointment of co-founder and CEO Jack Dorsey as Twitter’s (TWTR) interim CEO.
Also this week, Square launched a new credit card and phone reader designed to allow businesses to accept Apple Pay and new EMV chip credit cards. We like these ideas, as becoming part of the Apple ecosystem is sure to help any newly-public company, and EMV chip credit cards are widely regarded as the future of credit cards. Both products are expected to be available this fall.
US Crude Production Highs
With an average of ~9.6 million barrels a day, US crude oil production reached a 43-year high this past May, according to the Energy Information Agency. The estimated production in May is the highest of any month since 1972. This influx in production comes despite oil prices still being down ~40% from peak levels around $106 last June. The EIA also raised its US oil (USO, XLE) production estimates for the remainder of 2015 and 2016.
Boeing: Present and Future Updates
Boeing (BA) is reportedly close to a long-sought deal with AerCap, in which the aerospace manufacturing giant will sell 100 of its 737 MAX passenger jets to the Dutch aircraft leasing company. At current list prices the deal is worth ~$11 billion and is expected to be announced at the Paris Airshow June 15-21.
Looking to the future, Boeing increased its 20-year forecast for unit aircraft demand by 3.5%. The update is based on the expectations of strong and resilient growth largely due to Asia’s booming travel market, where two of every five newly built jets are sold. The delivery of 38,050 jets is expected by 2034, or revenue of ~$5.6 trillion.
Innovation Updates at Google
Google (GOOG) is set to launch YouTube Gaming this summer, beginning in the US and UK, and will provide a dedicated app and site for all of YouTube’s gaming content, which will feature over 25,000 games with individual pages or channels. The online video giant currently has over 1 billion active monthly users, and is attempting to steal market share from Twitch. Twitch was acquired by Amazon (AMZN) after Google had held buyout talks with the leader in game livestreaming.
Google has also received positive reviews for Now on Tap, which is effectively Google’s search engine outside of a search box. The new development is able to navigate between apps and generate additional information about content within apps without conducting a formal search, adding convenience and utility to search capabilities for Android smartphone users.
Kinder Morgan
How can we forget yours truly, the Valuentum Team, for surfacing the severe risk profile of the largest midstream energy company in North America, Kinder Morgan (KMI)? The story reverberated through the equity markets after being picked up by news outlets such as Barron’s, YahooFinance, Seeking Alpha, and TheStreet, among others. The risks of Kinder Morgan are far too great. Here is the piece that gave Wall Street pause, and for good reason. The company’s equity remains on shaky ground, in our view.