Black Friday pushes Jeff Bezos’ net worth to $100 billion

Being the richest man in the world wasn’t enough.

After Amazon shares climbed on Black Friday, founder and CEO Jeff Bezos saw his net worth rise to $100.3 billion, according to Bloomberg estimates.

Amazon’s stock has soared this year and Bezos has benefited to the tune of $32.6 billion. Yes, that’s the amount he has earned in 2017 alone.

So what’s he going to do with all that money?

Bezos wants suggestions. Over the summer, he tweeted a “request for ideas.” He said he wants his “philanthropic activity to be helping people in the here and now- short term- at the intersection of urgent need and lasting impact.”

It isn’t the first time someone reached the unfathomable 12-figure milestone. Microsoft co-founder Bill Gates hit the mark in 1999.

Gates has since started The Giving Pledge alongside investor Warren Buffett, a promise to give away at least half of his fortune to charitable endeavors. He has also launched the Bill & Melinda Gates Foundation, which aims to reduce poverty globally.

Bezos eclipsed Gates to become the world’s richest person last month. Buffett is presently estimated to be the third-richest at $78.9 billion.

Amazon has seen its stock rise this year as it continues to convince investors that it will carve out an even bigger lead in e-commerce. The company has also seen success in some of its hardware devices like voice-assistant Alexa.

Amazon has additionally seen growth in its cloud services business, Amazon Web Services (AWS) and is making new bets in a range of other verticals. Among them is a bet on groceries, with its purchase of Whole Foods earlier this year.

Featured Image: Mark Wilson/Getty Images

Could Tesla Lose $1 Billion In Q4? – Tesla Motors (NASDAQ:TSLA)

Late last week, I read fellow SA contributor Montana Skeptic’s article talking about another massive loss for Tesla (TSLA) in Q4 2017. The article did a good job of showing why CoverDrive believes the automaker could lose even more money in Q4 than it did in Q3. By adding just a few tweaks to the forecast, I could actually make the argument that things could be even worse, with Tesla potentially losing $1 billion during the three month period. Now that could blow your mind out of your head and into another galaxy, unlike the Tesla Semi event that basically served as a modified capital raise.

Tesla management has guided to “about 100,000” deliveries of the Model S and X for the year, and it is just under 73,000 through Q3. That would imply 27,000 total units for Q4, up about 1,000 or so from what was seen during Q3. During October, sales in the US and Europe were down 737 units according to current estimates by TMC and InsideEvs. How many times though have we seen Tesla come up short at the end of the year, due to a laundry list of excuses?

CoverDrive is expecting 26,300 total units sold in Q4, including 1,000 to 1,500 of the Model 3. However, should that October shortfall continue through the next two months, it would put Tesla under 24,000 for the S/X in Q4, without accounting for any changes in Asian markets or new markets like UAE / South Korea. If Tesla only matches Q3’s total sales volume, but that includes several hundred or even a thousand or two Model 3s, overall automotive revenues could decline thanks to a lower average selling price. Don’t forget, Tesla expects to further decrease Model S/X inventory in Q4, so those are going to be less than full price sales you would expect.

Tesla Energy is supposed to ramp up a little more in Q4, although this segment continues to be a massive money loser. Since we are talking about a worst-case scenario here, I’m assuming no revenues from the massive South Australia contract, the one that has to be completed in 100 days or it is free. Because the 100-day deadline doesn’t appear to be until a week into January, it is possible that these revenues might not be recognized until Q1. With a seasonal decline in solar, it’s possible that total energy revenues may not jump as much as they did sequentially from Q2 to Q3.

In the Q3 investor letter, management said that it expects non-automotive gross margins to fall to about 15% in Q4 thanks to the Model 3 mix added in. However, if Model S/X sales fall short of expectations as I detailed above, what if there also are no ZEV credit sales and we see more discounting? For every 100 basis points (1 percentage point) of gross margin, at this projected $2.32 billion revenue level for automotive, you are talking about $23.2 million in gross profit. Additionally, could the solar business be under margin pressure from the surge in polysilicon prices? Management was already expecting Energy margins to decline thanks to a greater percentage of revenues coming from the storage business that is deeply in the red.

In Q3, Tesla was well above where it had guided to for operating expenses, and spending could be even more in Q4 as the supercharger network is built out, more sales/service centers are opened, and the mobile service fleet is built out. Plus, we now have a full quarter of interest from the August debt deal, LIBOR rates are rising which impacts some of Tesla’s variable rate debt, and the dollar could rise if the Fed does hike in December. Tesla’s interest and tax expense value hit a peak of $160 million in Q2, so couldn’t it easily rise to $175 million in Q4?

Before I tell you how this all plays out, let’s just recap where we stand with income statement items under this current projection:

  • Total revenues of $3 billion, up slightly from Q3.
  • Automotive gross margins of 14.01%; non-automotive of 1.99% compared to non-automotive of 2.75% in Q3.
  • Operating expenses of $1 billion, up from $985 million in Q3.
  • Other items of negative $175 million, up from negative $135 million in Q3 which included a negative tax rate.

Throwing this all together, I get a net loss for Tesla of $837 million, before subtracting out losses from non-controlling interests. When I subtract out those of about $50 million like we saw in Q3, plus take out $0.75 in EPS for stock-based compensation, Tesla loses $3.91 per share non-GAAP. You might think that’s crazy, but that wouldn’t even be the worst estimate on the street right now. Thus, while the situation I proposed looks quite terrible, there is someone who thinks it will be even worse.

Of course, I’m trying to put together a worst-case scenario, but knowing Tesla’s history, going from an $837 million loss to a billion-dollar one, doesn’t take a lot more critical thinking. Just lower revenues a tiny bit, take another couple of points off gross margins, etc. Maybe even Tesla has more “one-time” expenses in Q4, or something like inventory write-downs or losses on the SolarCity acquisition. Those could easily push you closer to the $1 billion mark. With at least one analyst already calling for a $4 plus loss even on a non-GAAP basis, at least one expert on the street is getting close to thinking this is possible. Before you say it isn’t possible, just remember that as late as August 2016, no single analyst on the street thought Tesla would do worse than a $100 million non-GAAP PROFIT this year, and the company has actually lost $924 million just in the first three quarters of 2017.

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Alibaba’s Singles’ Day sale amassed $25.3 billion, doubling Black Friday and Cyber Monday combined sales

A decade ago, November 11th was a tongue-in-cheek cultural “celebration” of single people in China. In 2009, retailer Alibaba turned the day into the country’s version of Black Friday — and eight years later, sales from the Chinese e-commerce’s one-day event has nearly doubled those from Black Friday and Cyber Monday in the US combined.

Alibaba reported that sales from Singles’ Day amounted to $25.3 billion, a 40 percent jump from last year’s figures. (The number did not take into account some sales that began earlier in the week in honor of the event.) Additionally, the retailer hit a record $18 billion in just 13 hours on Saturday, eclipsing last year’s record of $17.8 billion in 24 hours. Market research experts say the massive growth is attributed to retailers competing for a share of consumer spending in China’s growing economy. In comparison, US sales between Thanksgiving until Cyber Monday accounted for $12.8 billion in 2016.

Just like US versions of the shopping holidays, Alibaba offered discounts on a variety of goods, from household items to electronic gadgets to clothing to beauty supplies. Quirkier items meant to nail in on the joke about the nature of Singles’ Day were heavily promoted, such as a one time payment of 11,111 yuan (roughly $1,672 USD) for a lifetime supply of baiju liquor. Revenue also came in the form of “virtual shopping cart space,” where customers can pay for expanded cart capacity. The Sixth Tone reports that Chinese retailers traditionally put a limit on how many items you can put in your online shopping cart to help “ease operations,” encouraging buyers to put in one purchase order rather than multiple transactions that require more processing.

In honor of the event, Alibaba founder Jack Ma held a gala to celebrate its kickoff, with celebrities like Pharrell, Nicole Kidman, Jessie J, and Maria Sharapova in attendance. It was televised on both Alibaba’s video service and on three Chinese TV networks. Ahead of the event, the retailer also outfitted nearly 100,000 of its Tmall stores across China with facial recognition technology to process payments.

Apple is $100 Billion Away From Becoming World’s Only Trillion Dollar Company

Apple shares are currently trading for around $175, giving the iPhone maker a market cap of roughly $900 billion. The valuation puts Apple within $100 billion of becoming the world’s only trillion dollar company.

Apple shares will have to rise to around the $195 mark for the company to reach a trillion dollar valuation, depending on the rate of its share buybacks, and an increasing number of Wall Street analysts think that will happen.

Drexel Hamilton analyst Brian White, who is extremely bullish about Apple, has a lofty 12-month price target of $235 for the company’s stock. In other words, he forecasts that Apple could be a $1.2 trillion company within a year.

With a market cap of over $900 billion, we believe Apple is on its way to becoming a “trillion dollar baby” as reflected in our price target. We were the first on Wall Street to project that Apple would reach a $1 trillion market cap as reflected by a price target; our current price target of $235.00 equates to approximately a $1.2 trillion market cap.

RBC Capital Markets analyst Amit Daryanani has also said Apple has the potential to achieve a trillion dollar market cap, and even surpass that valuation, by the end of 2018. His current price target for Apple shares is $190.

Apple could be the world’s only trillion dollar company, but it wouldn’t be the first. The spice trading Dutch East India Company, founded in 1602, was the first to go public and at one point was valued at over $7 trillion when adjusted for inflation.

Wall Street analysts, including White, have been prognosticating Apple becoming a trillion dollar company since as early as 2012.

Pressure Mounts for Xbox’s Missing VR Strategy as PSVR Rakes in Half a Billion in Hardware Alone

VR may still be young, and adoption still low compared to the world of traditional gaming, but it can’t be ignored that mounting sales of the Playstation VR headset—effectively a very expensive accessory for the PS4—is adding up to considerable revenue. In an era where Sony appears to have a significant lead in console sales already, and with PSVR sharpening the system’s competitive edge, pressure is mounting for Microsoft to figure out its Xbox VR strategy.

Moving the Needle

Photo by Road to VR

Gamespot reports Sony’s latest PS4 sales figures (including both PS4 and PS4 Pro) at a whopping 67.5 million units. Microsoft meanwhile hasn’t publicly revealed their Xbox One sales figures for some time, though estimates earlier this year put it somewhere between 30 and 40 million units. Competitively, that’s a massive gap. And it isn’t helping Microsoft that, for gamers on the fence between the two consoles, PlayStation has a big fat check mark in the VR column while Xbox doesn’t.

It isn’t just the weight of VR support that could be furthering PlayStation’s edge, but there’s revenue to be considered too. PlayStation VR’s sales figures might not be huge relative to PS4, but it’s an expensive device—often even more expensive than the console that powers it—and it adds up to something considerable.

VR and AR intelligence firm Greenlight Insights estimates that Sony has sold 1.5 million PlayStation VR headsets through October 2017. The headset is sold in several different bundle configurations ranging, in the US at least, from the $500 Launch Bundle to the now discounted standalone headset at $290. Roughing out a $350 average selling price (which is conservative given the generally higher prices in Europe), we can estimate that Sony has pulled in some $525 million in hardware revenue. Software revenue on top of that stands to add considerably more.

That’s not a huge amount in comparison to revenue from the PS4 console itself, but it’s definitely a needle-moving figure—and a new revenue stream that Xbox isn’t tapping—that furthers Sony’s console lead. Pressure is mounting Microsoft to figure out how its VR plans pan out on Xbox.

A False Start for VR on Xbox One X

Photo by Road to VR

Back when it was introduced at E3 2016, Microsoft made a clear point to talk about how that the Xbox One X (at the time called ‘Project Scorpio’) would “lead the industry into a future in which true 4K gaming and high-fidelity VR are the standard, not an exception.” It was even announced that Fallout 4 VR would be coming to the system.

Hardly more than a month later, Xbox head Phil Spencer was giving mixed messages about VR support on the Xbox One X. In 2017 it became clear that the console wouldn’t have any type of VR support for its launch next week, and Microsoft hasn’t even said whether or not we’ll see VR on the Xbox One X in 2018.

The marketing blunder is particularly odd, as Microsoft has executed an impressive rollout of their ‘Windows Mixed Reality’ VR platform on the PC side. Last month saw the launch of Windows VR headsets from a slew of PC hardware vendors, and a big update to Windows 10 which bakes VR directly into the operating system.

With the Xbox One X purportedly running Windows 10 underneath the hood, and Microsoft continuing to push their ‘Universal Windows Platform’ (which encourages developers to build apps which are cross-compatible with any Windows 10 device), the writing is on the wall for Xbox One X to get roped into Microsoft’s Mixed Reality platform at some point. The big question is: when?

In a candid interview earlier this year, Xbox Head Phil Spencer suggested that Microsoft was staying away from VR on Xbox because they didn’t feel that the family room is a good place for tethered headsets. He figured at the time that the industry is “a few years away [from a wireless VR solution].”

But if Microsoft is planning on waiting “a few years” for wireless tech before rolling out a VR offering on Xbox, they could be handing away a couple billion dollars in extra revenue to a competitor which already has a sizable lead.

Greenlight Insights and Road to VR co-author the 2017 VR Industry Report, the Fall Update edition launches soon with the latest insights into the state of the VR industry.