Amazon: The Most Undervalued Company

Investment Thesis

Evaluating Amazon’s (NASDAQ:AMZN) in the context of its anticipated growth rate we see that the company is currently undervalued.

I’d like to change the usual format of my articles and reveal my findings in advance: there is a substantial reason to believe that Amazon is an underestimated company, and not an overestimated one. And it’s not my emotions, but the result of the mathematical calculations.

To begin, let’s simply compare the key multipliers of Amazon with those of its closest competitors:

This comparison results in almost complete nonsense. The fair price of Amazon’s share is $200 based on the P/E (forward) multiple, negative (!) based on the EV/EBITDA and significantly undervalued, judging by the P/S (forward).

I admit that the comparative analysis of the three companies may contain significant error. So as the next step, I compared Amazon with all the companies from my database, without sticking to a particular industry. However, the result almost has not changed. Furthermore, three months ago it was approximately the same.

So, the standard approach to evaluating a company through its multiples is clearly not suited to Amazon. We need another technique.

Why do investors buy Amazon’s shares?

Of course, they do it not because they count on the potential dividends or buy back. In my opinion, the main reason is the growth rate of the company. No, it’s not about it. The main reason is the growth rate that investors expect from Amazon in the future.

It is the future growth that is Amazon’s main driver and the only prism this company can be compared and evaluated through.

Based on Yahoo! Finance data I collected and systematized the average analysts’ projections of the earnings per share and the revenues of the companies I closely monitor for the current and the next year. Here is what I’ve got.

As you can see, Amazon is the indisputable leader in terms of the expected growth of earnings per share:

The company is ranked fourth and is significantly higher than the median in terms of the expected revenue growth. Please also note that the expected absolute growth of Amazon’s revenue exceeds the expected aggregate revenue growth of the companies that are ahead of Amazon on this list.

OK, the forecasted growth of Amazon exceeds that of the other companies even in spite of its enormous rate. But what if the current price of its shares already reflects this optimism?

In this situation, it would be reasonable to compare Amazon through the multiples previously adjusted for the expected growth rate. That is, I suggest to compare and evaluate Amazon through the P/E (forward) and P/S (forward) multiples divided by the expected growth rates. The higher is the growth, the lower are the value of each multiple and the relative value of the company. In this case, we compare the dollar evaluation of each percent of the future company’s revenue and profit growth. Here I provided the detailed description of the formulas.

This is what we get analyzing the revenue growth rate, i.e. the P/S to growth (forward) multiple:

In this case, Amazon is almost the cheapest company on the list.

This is what we get analyzing the growth of earnings per share i.e. the P/E to growth (forward) multiple:

In this case, Amazon is the median value of the list.

Now let’s get back to where we started from and compare the new multiples of Amazon with those of its key competitors:

Now Amazon is almost fairly valued in terms of P/E to growth (forward) and undervalued in terms of P/S to growth (forward).

And, in conclusion, let’s use the new technique and compare Amazon with all the companies from my list:

The result: Amazon is fairly valued but is below the upper range border in terms of P/E to growth (forward) and is enormously undervalued in terms of P/S to growth (forward).

Putting It All Together

Amazon is one of the companies whose growth has not yet reached its limit and not even entered the plateau phase. While this situation remains, the market will assess Amazon only through the prism of the expected growth without much regard to the absolute indicators. As I’ve demonstrated, this approach to the assessment indicates that Amazon is now rather underestimated than overestimated.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I Know A REIT That Screens 'Dirt Cheap' And Kimco Is Its Name-O

In our constant quest for value, we regularly screen dozens of REITs weekly in order to find a diamond in the rough. While it’s impossible to eliminate all investment risk, we look to minimize it by selecting securities with a significant margin of safety.

As Warren Buffett told an audience at Columbia Business School in 1984 (for the 50th anniversary commemoration of the original Security Analysis):

You do not cut it close. That is what Ben Graham meant by having a margin of safety. You don’t try to buy businesses worth $83 million for $80 million. You leave yourself an enormous margin. When you build a bridge, you insist it can carry 30,000 pounds, but you only drive 10,000-pund tricks across it. And that same principle works in investing.”

The margin of safety is the essence of value investing because it’s the metric by which hazardous speculations are segregated from bona fide investment opportunities. As Benjamin Graham wrote in The Intelligent Investor, the value investor’s purpose is to capitalize upon “a favorable difference between price on the one hand and indicated or appraised value on the other.”

Surveying our list of filtered investment opportunities, we have identified a REIT that is worthy of ownership. As I explained in a recent article,

Once a moat is created, it must grow. The weaker firms are usually losing market share, and unable to raise prices to offset their costs, or being undercut by competitors…companies that are able to withstand the relentless onslaught of competition for long stretches are the wealth-compounding machines that we want to find and own.”

Identifying a moat-worthy company involves careful consideration of the company’s industry, its current competitive position within that industry, and the “economic moat” around the company; that is, a sustainable competitive advantage that helps preserve long-term pricing power and profitability. Warren Buffett (Fortune 1999) summed it up as follows,

The key to investing is …determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.”

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The Case For Kimco

Kimco Realty (KIM) is the owner and operator of the largest publicly traded portfolio of neighborhood and community shopping centers in North America. The company was founded in 1958 and listed shares in 1991. In 2006, Kimco was added to the S&P 500 Index.

As of Q3-17, KIM’s well-balanced portfolio consists of 507 U.S. shopping centers comprising 84 million square feet of leasable space across 35 states and Puerto Rico. KIM focuses on major U.S. metropolitan markets:

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KIM has a very diverse revenue model with over 8,800 leases with 4,100 tenants. The company has well-staggered lease maturities with limited rollover in any given year; averages ~8% of GLA over next 10 years. 4 of KIM’s top 5 tenants are Moody’s investment grade and only 14 tenants have ABR exposure greater than 1.09%.

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Reviewing KIM’s top 10 tenant list, I consider Kohl’s (NYSE:KSS) and Bed Bath & Beyond (NASDAQ:BBBY) the highest risk. However, Kohl’s has low leverage and I like the recent announcement for “accepting Amazon.com returns at certain U.S. locations.” As Richard Schepp, Kohl’s chief administrative officer, explains,

This is a great example of how Kohl’s and Amazon are leveraging each other’s strengths – the power of Kohl’s store portfolio and omnichannel capabilities combined with the power of Amazon’s reach and loyal customer base.”

Also, Bed Bath & Beyond is still trying to find its groove as “revenue and profit growth have been on a downward trajectory for some time.” Bed Bath & Beyond represents just 1.9% of Kimco’s ABR (average base rent) and Kimco’s diversified business model provides powerful risk management: with over 8,700 individual leases, a significant margin of safety advantage.

Also, community centers are the most recession-resistant shopping centers and KIM’s “open-air” focus makes the case that the company will continue to benefit from growth. As illustrated below, only 5% of KIM’s portfolio is internet vulnerable:

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Quality locations are where the retailers will always want to be, and the quality of Kimco’s portfolio continues to improve. Since 2010, the company has sold over $6 billion of real estate, recycling the proceeds into higher quality assets and reducing the size of the portfolio from over 900 to 508 assets.

The result is a higher quality portfolio concentrated in the best markets in the US. By focusing on high barrier to entry markets and executing on the company’s unique customer strategy, Kimco has become more efficient and able to drive greater value-creation.

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Kimco remains on track to sell five non-core assets for $62 million, at a mid-7% cap rate. This brings the company’s sales total for the first nine months of 2017 to 21 shopping centers and three land parcels for a gross price of $331 million. Kimco has another 19 assets, either under contract or with price agreements, for a total of approximately $185 million that should have closes by year-end.

Balance Sheet Improvements

Kimco has been very active on the balance sheet front: The company issued $850 million in unsecured bonds, $500 million at 3.3% and $350 million at 4.45% with a weighted average life of 16.7 years. Also, Kimco completed the $206 million refinancing of the mortgage at the Tustin property with a new 13-year mortgage at a reduced rate of 4.15% versus 6.9% previously and issued $225 million of perpetual preferred stock.

Proceeds from the bond and preferred offerings were used to redeem $225 million of 6% preferred, $211 million of 4.3% bonds due in 2018 and to repay the outstanding balance on the revolving credit facility.

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As a result of these transactions, Kimco’s weighted average debt maturity now stands at 10.8 years, one of the longest in the REIT industry. The company has over $2 billion of immediate liquidity with less than $100 million of debt maturing in 2018.

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As I explained in a recent article, “it appears that Kimco could become an ‘A’ rated REIT during the next year or two. KIM has similar ratings with Moody’s and Fitch.”

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I only mention the likely credit upgrade because I want to compare KIM with the peers when I examine the valuation metrics at the end of this article. It’s important to recognize the quality of KIM’s dividend power, and the potential for multiple expansion.

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Note: I will compare Regency Centers (REG) and Federal Realty (FRT) to Kimco at the end of the article. It’s important to understand the comparison as Kimco is striving to move into the upper echelon (A-rated) by focusing on its balance sheet.

The Latest Earnings Results

The strength of Kimco’s real estate portfolio continues to shine as the company had another strong quarter led by our leasing activity that produced positive double-digit leasing spreads and an increased occupancy level. As illustrated below, occupancy is pushing toward all-time high and continues to validate the quality of the portfolio.

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Leasing is the most direct and important creator of value, whether it comes from filling vacancies, renewing existing tenants, preleasing redevelopment and development projects or realizing mark-to-market opportunities.

One example of this is Kimco’s ability to transform and reposition specific assets. Specifically, Kimco signed new leases at strong leasing spreads that included the recapture of three former Kmart boxes in Q3-17.

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Redevelopment and development continue to be a part of Kimco’s long-term growth strategy. In Q3-17 Kimco achieved several critical milestones that will pave the way for future success.

It’s important to keep in mind that Kimco has over $360 million invested in development projects which are not earning today, thus impacting FFO growth in the short-term. These development projects will begin slowing in stages in the latter half of 2018 and into 2019.

Kimco’s operating portfolio continues to deliver positive results. Same-site NOI growth was 3.1% for Q3-17 and includes negative 20 basis points impact from redevelopments.

For the nine months, same-site NOI growth was 1.7% with no incremental contribution from redevelopments, as the company started a number of new redevelopment projects that have been completed. The Boulevard redevelopment project is an example of this:

For Q3-17, Kimco reported NAREIT-defined FFO per diluted share of $0.39 per share, which includes $0.03 per share of foreign currency gain on the substantial liquidation of the Canadian investments. Also included is a $0.02 per share charge attributable to the preferred stock redemption, prepayment of bonds, and some land impairments.

NAREIT-defined FFO per share for the third quarter in 2016 was $0.18 per diluted share and included transactional expenses totaling $0.20 per share from the early repayment of debt and the deferred tax valuation resulting from the merger of the taxable REIT subsidiary into the REIT.

FFO as adjusted (which excludes transactional increment expense and non-operating impairments) was $161.3 million with $0.38 per share, the same per share level as Q3-16.

Based on Kimco’s nine-month results (of NAREIT-defined FFO per diluted share) of $1.17 and FFO as adjusted per diluted share of $1.13, Kimco has narrowed the guidance range for FFO to $1.55 to $1.56 per diluted share from the previous range of $1.53 to $1.57 per share. Similarly, Kimco narrowed the FFO as adjusted per diluted share guidance range to $1.51 to $1.52 from the previous range of $1.50 to $1.54.

Also, Kimco’s Board approved an increase in the common stock quarterly cash dividend to $0.28 per share from $0.27, an increase of 3.7%. The increased dividend level represents a conservative and safe dividend payout ratio in the low 70s.

I Know A REIT That Screens Dirt Cheap And Kimco Is Its Name-O

Whenever the financial markets fail to fully incorporate fundamental values into securities prices, an investor’s margin of safety is high, hence the title to my article today:

I Know A REIT That Screens Dirt Cheap And Kimco Is Its Name-O

Let’s define “dirt cheap” by viewing the chart below:

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We have not seen $16.55 in over five years. In fact, we have not seen $16.55 since 2010…

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So why has Kimco underperformed the peers? (Note: REG and FRT are shaded in light purple):

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Let’s compare Kimco’s dividend yield with the peer group (FRT and REG shaded in purple):

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Now let’s compare the P/FFO multiple (FRT and REG are shaded in purple):

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Wow, or shall I say…

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Kimco is not just cheap, this puppy is “dirt cheap.” Let’s take a look at consensus FFO/share growth (data: F.A.S.T. Graphs)…

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We can now see that Kimco doesn’t rank high in terms of FFO/share growth (REG averaging 6.9% and FRT averaging 5.3%, compared to Kimco’s 1.8%). However, as illustrated below, Kimco is moving out of its flat-line growth and the substantial development pipeline should kick in this year and next. Also, according to the National Retail Federation, “Americans spent more than expected this holiday season, fueling the strongest growth in holiday retail sales since the end of the Great Recession.”

Holiday sales rose to $691.9 billion in November and December, marking a 5.5% increase from the year before, according to the National Retail Federation. The lobbying group had forecast holiday spending growth of 3.6% to 4%.

Many retailers say they saw a bump in sales during the important holiday season. Kohl’s reported a 6.9% increase in holiday sales at stores open at least one year, while sales rose 3.4% at both Target (TGT) and J.C. Penney (JCP). Tax Reform should certainly serve as a catalyst too as many retailers are in the highest tax brackets and savings will be significant.

Kimco is well-positioned to benefit and the strong locations serve as the primary moat giving the company an edge. Also, economies of scale provide another moat characteristic that allows Kimco added diversification. Most importantly, and not recognized by the market, is Kimco’s disciplined balance sheet. Since the end of the last recession (Kimco did cut its dividend in 2008), Kimco has done an excellent job at managing its balance sheet and this provides the company with excellent financial flexibility to maneuver the choppy retail storms.

Arguably, Kimco does not deserve the same multiple as REG or FRT, but there is certainly room to grow the multiple from 11x to 15x. I am maintaining a Strong Buy, and I Know A REIT That Screens Dirt Cheap And Kimco Is Its Name-O.

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More: Getting Under The Hood Of The Newest Kimco Preferred

Other REITs mentioned: WHLR, WSR, UBA, ROIC, FRT, RPAI, REG, WRI, RPT, DDR, WPG, BRX, UE, AKR, and KRG.

Note: Brad Thomas is a Wall Street writer, and that means he is not always right with his predictions or recommendations. That also applies to his grammar. Please excuse any typos, and be assured that he will do his best to correct any errors if they are overlooked.

Finally, this article is free, and the sole purpose for writing it is to assist with research, while also providing a forum for second-level thinking. If you have not followed him, please take five seconds and click his name above (top of the page).

Source: F.A.S.T. Graphs and KIM Investor Presentation.

Disclosure: I am/we are long ACC, APTS, ARI, BRX, BXMT, CCI, CHCT, CIO, CLDT, CONE, CORR, CUBE, DDR, DEA, DLR, DOC, EPR, EXR, FPI, FRT, GEO, GMRE, GPT, HASI, HTA, IRET, IRM, JCAP, KIM, LADR, LAND, LMRK, LTC, MNR, NXRT, O, OFC, OHI, OUT, PEB, PEI, PK, QTS, REG, RHP, ROIC, SKT, SPG, STAG, STOR, STWD, TCO, UBA, UMH, UNIT, VER, VTR, WPC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Contraceptive App Natural Cycles Blamed for Playing Role in 37 Unwanted Pregnancies

An app that promises to offer “an effective method of natural contraception” has been accused of causing nearly 40 unwanted pregnancies.

Natural Cycles, which analyzes a woman’s individual menstrual cycle to inform her when she’s “fertile” and not, caused 37 women to become pregnant, ultimately forcing them to visit hospitals for abortions, Swedish publication SVT is reporting. The claims, which were earlier reported on by The Verge, were made to the Swedish regulator Medical Product Agency (MPA).

The Natural Cycles company was founded by a couple who wanted a safer way form of contraception that doesn’t rely on hormones. The app requires women to take their temperature each day and input the reading into the app. On the assumption that women can only become pregnant on “up to six days in one cycle,” among others, the app gives a reading to tell them whether they’re fertile that day or not. Natural Cycles says on its site that women may “have sex without protection” on the days they’re described as “not fertile.”

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“Natural Cycles is backed by a unique algorithm that takes your temperature and many other factors like sperm survival, temperature fluctuations and cycle irregularities into account,” the company says on its site. “It not only detects ovulation, fertility and the different stages of your cycle, it also calculates accurate predictions for upcoming cycles.”

The European Union in August made Natural Cycles the first app certified as a form of contraception. On its website, Natural Cycles said a study found a “perfect use failure rate” 1%. When women don’t use it exactly as prescribed, the failure rate jumps to 7%.

It’s unclear from the Swedish report whether Natural Cycles is indeed to blame for the unwanted pregnancies. However, in a statement to Fortune, a company spokesman said that it’s launching an internal investigation into the matter and acknowledged that at 93% effectiveness, it’s possible Natural Cycles could cause some unwanted pregnancies.

“As our user base increases, so will the amount of unintended pregnancies coming from Natural Cycles app users, which is an inevitable reality,” the spokesman said. He added, however, that Natural Cycles is “clinically proven” and should ultimately “decrease the unwanted pregnancy rates” around the world.

Feast Your Eyes on TAG Heuer’s $197,000 Smartwatch

When the gold Apple Watch Edition launched in 2015 at a high-end price of $17,000, it raised eyebrows. But that’s nothing compared to a diamond-plated TAG Heuer handset that was recently announced.

TAG Heuer on Monday announced the new Connected Modular smartwatch, featuring a white gold band and nearly two dozen carats of diamonds. It costs 190,000 Swiss Francs, or about $197,000. TAG Heuer said in a statement that the device is the most expensive smartwatch ever released.

In a listing on its website, TAG Heuer said that the smartwatch comes with a round 1.4-inch screen that doubles as a touch display for tapping around the device’s Android Wear operating system. It also works with Apple’s iPhones, allowing users to see notifications, access app information, and more. It comes with 4GB of storage and has a near-field communication (NFC) chip so users can place it near a point-of-sale terminal and make mobile purchases.

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TAG Heuer is one of many traditional watchmakers trying its luck in a smartwatch market dominated by Apple and Google. Many of those traditional watchmakers are designing products that come with traditional watch designs but support apps, notifications, and other features users might want in a smartwatch. Still, Apple Watch has proven most popular in the fledgling market.

Whether anyone will actually want a nearly $200,000 smartwatch remains to be seen. While Apple hasn’t ever released Apple Watch sales data, the company’s decision in 2016 to discontinue its gold Apple Watch Edition suggested there was little demand for such an expensive smartwatch. And with a price tag that’s more than 10 times greater than that Apple Watch Edition, TAG Heuer’s smartwatch might have some trouble finding buyers.

Computer AI Can Now Read Better Than You Do

Alibaba has developed an artificial intelligence model that scored better than humans in a Stanford University reading and comprehension test.

Alibaba Group Holding (baba) put its deep neural network model through its paces last week, asking the AI to provide exact answers to more than 100,000 questions comprising a quiz that’s considered one of the world’s most authoritative machine-reading gauges. The model developed by Alibaba’s Institute of Data Science of Technologies scored 82.44, edging past the 82.304 that rival humans achieved.

Alibaba said it’s the first time a machine has out-done a real person in such a contest. Microsoft achieved a similar feat, scoring 82.650 on the same test, but those results were finalized a day after Alibaba’s, the company said.

Read: Alphabet’s DeepMind Is Using Games to Discover If Artificial Intelligence Can Break Free and Kill Us All

The Chinese e-commerce titan has joined the likes of Tencent Holdings (tctzf) and Baidu (bidu) in a race to develop AI that can enrich social media feeds, target ads and services or even aid in autonomous driving. Beijing has endorsed the technology in a national-level plan that calls for the country to become the industry leader 2030.

So-called natural language processing mimics human comprehension of words and sentences. Based on more than 500 Wikipedia articles, Stanford’s set of questions are designed to tease out whether machine-learning models can process large amounts of information before supplying precise answers to queries.

Read: Elon Musk Says Tesla Is Developing Artificial Intelligence: ‘Will Be the Best in the World’

“That means objective questions such as ‘what causes rain’ can now be answered with high accuracy by machines,” Luo Si, chief scientist for natural language processing at the Alibaba institute, said in a statement. “The technology underneath can be gradually applied to numerous applications such as customer service, museum tutorials and online responses to medical inquiries from patients, decreasing the need for human input in an unprecedented way.”

Trump's 'Shithole Countries' Comment Tops This Week's Internet News

Last week Facebook decided that maybe it should make some changes to the information people see on the platform; also, a lot of people got very interested in the pay discrepancies between Mark Wahlberg and Michelle Williams. But, beyond that, it was also a week where everyone learned that a school kid could play the Cantina Band song from Star Wars with a pencil.

Yes, it was yet another strange, wonderful week on the internet. But what else happened? Here we go.

President Trump’s Unsavory Comments

What Happened: President Trump reportedly referred to Haiti, El Salvador, and some African nations as “shithole countries.” The internet responded in kind.

What Really Happened: There is absolutely no denying that Trump has had an impressively full week, declaring himself a stable genius, denying the possibility that he might be deposed as part of the Russia investigation, and avoiding Kendrick Lamar. But it was his comments reported Thursday that will likely have the longest-lasting impact.

Oh.

Some were concerned about journalistic standards…

…but many more were concerned about presidential standards, instead.

Naturally, media reports came fast, furious, and horrified. As the fallout from the comments continued, perhaps the most surprising reaction was the fact that the White House didn’t even try to deny it initially.

And they weren’t the only ones failing to denounce Trump’s crude language.

Still, at least one prominent conservative was willing to correct Trump.

As some of the countries mentioned started asking for comment on the comments, Trump said this:

Well, that’s what he said publicly, at least…

The Takeaway: Twitter?

Breitbart Says Goodbye to Bannon

What Happened: Apparently, when shadow presidents fall, it happens quickly and they even lose their satellite radio shows. Sorry, Steve Bannon.

What Really Happened: As those reading Michael Wolff’s Fire and Fury book know, there is one figure that looms arguably even larger throughout the entire thing than Trump himself: self-proclaimed genius (hey, another one!) Steve Bannon. Turns out, the ego-stroking he might have gotten from the book was likely a farewell gift, considering how the rest of his week went.

Yes, Bannon has lost the Breitbart job he swiftly returned to after leaving the White House back in August, despite releasing a full-throated walk-back of his comments in the Wolff book. So, what happened?

That’d do it. Sure enough, Breitbart was tweeting about his departure.

But it wasn’t just Breitbart that dumped him, it turned out.

(Bannon lost his Sirius show because it was a Breitbart-related venture, for those wondering; it wasn’t a coincidence, just cause and effect.) As would only be expected, news of his departure was everywhere in the media, but how did the rest of the internet respond?

It wasn’t only glee at Bannon’s misfortune, of course; some were also wondering just who could replace him at the outlet. Or maybe that should be, “what.”

The Takeaway: If only there was some kind of lesson to be learned from the swift rise and fall of Steve Bannon. Maybe it’s this?

The Leak of the Week

What Happened: In a political environment consumed with the concept of leaking, a surprise release of previously secret testimony to Congress took the internet by storm.

What Really Happened: Despite what certain POTUSes might have you believe, the investigations into potential collusion between the Trump campaign and Russia are ongoing, although at least one—the one being carried out by the Senate Judiciary Committee—is running aground thanks to internal strife between Republicans and Democrats on the committee. At the start of the week, one of the topics causing the most upset was the testimony of Fusion GPS co-founder Glenn Simpson over the origins of the company’s infamous “Russian dossier.”

Simpson testified in a closed session in August, but faced new calls from Republican committee chairman Chuck Grassley last week to testify again, publicly. Simpson and co-founder Peter Fritsch, in an op-ed that appeared in the New York Times, argued that Congress should simply release the transcript of his earlier testimony. Things seemed at an impasse… and then they didn’t. What changed?

People were surprised at how hardcore the move was…

…especially after Senator Feinstein responded to questions about why she did it.

This kind of thing is, well, unusual to say the least, so of course it was everywhere almost immediately. The 312 page document was, unsurprisingly, very enlightening.

This was, in other words, a really, really big deal. Although what kind of a big deal apparently depended on which side of the ideological spectrum you were on.

Expect this one to run and run.

The Takeaway: Actually, wait, we never checked in on how Trump responded to this news. Mr. President?

She Is Spartacus

What Happened: When it looked as if a news story was going to out the creator of a secret list of crappy men, the internet took it upon itself to handle the situation first.

What Really Happened: Perhaps you heard of the “Shitty Media Men” list before last week; it was a Google spreadsheet shared and edited anonymously that listed more than 70 men who were accused of being, to some degree, abusive towards women, whether it was creepy DMs or physical and sexual abuse. Since its creation in October of last year, it’s been the topic of much speculation and discussion, not least of all because no one actually knew where and how the list got started. And then, last week, that all changed.

It all started with a thread from n+1 editor Dayne Tortorici.

There’s much more in that thread, but those are the most salient points. Tortorici’s comments prompted a response from journalist Nicole Cliffe, and follow-ups from other journalists and editors.

It turned out that the writer of the piece, Katie Roiphe, was willing to comment that she was not about name anyone involved in the list.

Maybe the creator(s) of the list wouldn’t be named, and there was no need to worry about doxing! Well, OK, that was unlikely (for reasons we’ll soon get to). But then, something wonderful happened.

Indeed, so many women came forward to claim responsibility that a hashtag was created, #IWroteTheList, to share collective responsibility:

And then, the real author stepped forward.

Donegan’s piece for The Cut had an immediate impact.

The Takeaway: Nicole Cliffe, want to wrap this one up?

The (Flagging) Power of CES

What Happened: Someone at CES 2018 took the idea of “lights out” a little too literally.

What Really Happened: What would be the most unfortunate thing to happen at a trade show where electricity is kind of important?

Yes, the 2018 Consumer Electronics Show was hit by a twohour power outage last week. Before the cause was known—apparently, it was just rain—some people had some… special theories about what was happening.

Others were just philosophical about it all.

Some were even wondering who “won” the blackout. To be fair, a couple of brands definitely tried their best to claim the crown.

Ultimately, though, the answer to who won is fairly obvious, surely.

Some people at the show really seemed to enjoy the darkness, even if they didn’t make off with any free gifts. Hell, some went to so far as to hope it wasn’t a one-off.

The Takeaway: Of course, it’s worth keeping some sense of perspective about things…

Why Apple Could Soon Save More Than $4 Billion in Taxes

Along the spectrum of good and bad weeks for Apple, this past one was middling, at best.

The week kicked off with some debate over just how much Apple is doing to safeguard kids who are spending too much time on their iPhones and not enough time communicating with others. It then turned to reports that Apple will be handing over control of its iCloud data center operations in China to a local company there to comply with Chinese law.

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But behind the scenes as CES—touted to be the world’s largest tech trade show—was in full swing with major tech announcements from all of Apple’s competitors, the company still featured prominently in the news cycle. Apple optioned rights on a new TV drama this week and a little tax quirk could net the tech giant a $4 billion cash windfall.

Here’s a look back at Apple’s week and the good and bad that came with it:

This is Fortune’s latest weekly roundup of the biggest Apple news. Here’s last week’s roundup.

  1. Apple responded to shareholders last week that called on the company to do its part in combating kids’ smartphone addictions. In a statement, Apple said that its products, including the iPhone and iPad, all come with a variety of controls to curb a child’s use of its devices. But the company also promised more controls in future software updates.
  2. Apple might not have been at CES, but its products were featured prominently. Appliance-maker Whirlpool announced at the show that more than 20 of its products, including washers, dryers, and ranges, will get Apple Watch support soon. The feature means users will be able to adjust their range temperatures and see the status on a load of laundry all from Apple’s smartwatch.
  3. The iPhone maker confirmed this week that all Chinese iCloud user data will be handed over to a local company starting on Feb. 28. The move is a response by Apple to Chinese regulatory authorities that are clamping down on foreign companies housing Chinese user data overseas. Some critics see China’s move as another way for the government to spy on its users. Apple, however, has said that user data will be encrypted.
  4. Apple has reportedly green-lit a new “epic” drama series set in a futuristic world called See. The series will likely have eight episodes in its first season and will be directed by Francis Lawrence, the well-known director of films The Hunger Games: Catching Fire and Mockingjay Parts 1 & 2. There’s no word yet on when the show might air on Apple’s streaming services.
  5. A quirk in the tax bill passed at the end of 2017 allows companies that don’t have fiscal years starting on January 1 to reduce through the end of their fiscal years the amount of foreign cash they accumulate. The less companies stockpile overseas between now and the end of their fiscal years, the less they’ll have to pay in tax on offshore cash. Stephen Shay, a tax professor at Harvard Law School, estimated that Apple could save more than $4 billion in taxes by taking advantage of the loophole.
  6. Follow last week’s speculation that he was leaving the company, Apple Music chief and music industry veteran Jimmy Iovine said this week that he’s staying on at Apple. In an interview with Variety, Iovine said that he’s “loyal to the guys at Apple.”

One more thing…A MacBook Air that never connected to the Internet and was kept in a safe was home to the Star Wars: The Last Jedi script, the film’s director Rian Johnson said this week. Johnson said his producer was worried he’s leave his MacBook Air at a coffee shop for anyone to steal.

With Stunning Honesty, McDonald's Just Admitted Who Really Eats Big Macs

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

Some companies don’t want to admit who really uses their products.

They put image on one side and, on the other side, the board of directors quietly rub their hands with glee when they see the profits roll in from the sorts of people they’d never feature in ads.

McDonald’s, though, has decided to take a completely different route.

In order to celebrate its 50th anniversary, it wants the world to know that people who eat Big Macs are not the sort of trendy people who desperately want disgraceful things like, oh, fresh meat.

No, Big Mac eaters are people who say no all the time. 

They’re people who think mullets are gorgeous. 

How do I know?

Because the company’s Belgian arm just released an ad that says precisely this.

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Isn’t that refreshing?

Yes, they’re the people who snort at iPhones because they still adore their flip phones. 

Among which clan is Warren Buffett

If you’re moved by this concept, I’ve included the full 60 seconds of it below. Complete with Belgian French voiceover.

This includes longer scenes of the man in the jacuzzi wearing his Speedos.

Now, of course McDonald’s is bending with the times and introducing all sorts of new things that will disturb its conservative Big Mac eaters to the point of apoplexy. 

It must surely be hard for them to contemplate something as base and unnatural as the McVegan Burger

In 50 years time, though, the diehards will still be sporting a mullet and still be eating a Big Mac.

They will likely, of course, have bought it from a machine, but let’s not hold that against them.

I feel sure of one thing, though. These utterly faithful, joyously contrary Big Maccers have never bought a Sriracha Big Mac.

Just imagine the sacrilege.

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South Korea plans to ban cryptocurrency trading, rattles market

SEOUL (Reuters) – The South Korean government on Thursday said it plans to ban cryptocurrency trading, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil as the nation’s police and tax authorities raided local exchanges on alleged tax evasion.

The clampdown in South Korea, a crucial source of global demand for cryptocurrency, came as policymaker around the world struggled to regulate an asset whose value has skyrocketed over the last year.

Justice minister Park Sang-ki said the government is preparing a bill to ban trading of the virtual currency on domestic exchanges.

“There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” said Park at a press conference, according to the ministry’s press office.

A press official said the proposed ban on cryptocurrency trading was announced after “enough discussion” with other government agencies including the nation’s finance ministry and financial regulators.

Once a bill is drafted, legislation for an outright ban of virtual coin trading will require a majority vote of the total 297 members of the National Assembly, a process that could take months or even years.

The government’s tough stance triggered a selloff of the cyrptocurrency on both local and offshore exchanges.

The local price of bitcoin plunged as much as 21 percent in midday trade to 18.3 million won ($17,064.53) after the minister’s comments. It still trades at around a 30 percent premium compared to other countries.

Bitcoin was down more than 10 percent on the Luxembourg-based Bitstamp at $13,199, after earlier dropping as low as $13,120, its weakest since Jan. 2.

South Korea’s cryptocurrency-related shares were also hammered. Vidente and Omnitel, which are stakeholders of Bithumb, skidded by the daily trading limit of 30 percent each.

Park Nok-sun, a cryptocurrency analyst at NH Investment & Securities, said the herd behaviour in South Korea’s virtual coin market has raised concerns.

Indeed, bitcoin’s 1,500 percent surge last year has stoked huge demand for cryptocurency in South Korea, drawing college students to housewives and sparking worries of a gambling addiction.

“Virtual coins trade at a hefty premium in South Korea, and that is herd behaviour showing how strong demand is here,” Park said. “Some officials are pushing for stronger and stronger regulations because they only see more (investors) jumping in, not out.”

RAIDS

There are more than a dozen cryptocurrency exchanges in South Korea, according to Korea Blockchain Industry Association.

The proliferation of the virtual currency and the accompanying trading frenzy have raised eyebrows among regulators globally, though many central banks have refrained from supervising cryptocurrencies themselves.

The news on South Korea’s proposed ban came as authorities tightened their grip on some of the cryptocurrency exchanges.

The nation’s largest cryptocurrency exchanges like Coinone and Bithumb were raided by police and tax agencies this week for alleged tax evasion. The raids follow moves by the finance ministry to identify ways to tax the market that has become as big as the nation’s small-cap Kosdaq index in terms of daily trading volume.

Some investors appeared to have taken preemptive action.

”I have already cashed most of mine (virtual coins) as I was aware that something was coming up in a couple of days,” said Eoh Kyung-hoon, a 23-year old investor.

Bitcoin sank on Monday after website CoinMarketCap removed prices from South Korean exchanges, because coins were trading at a premium of about 30 percent in Asia’s fourth largest economy. That created confusion and triggered a broad selloff among investors.

An official at Coinone told Reuters that a few officials from the National Tax Service raided the company’s office this week.

“Local police also have been investigating our company since last year, they think what we do is gambling,” the official, who spoke on condition of anonymity, said and added that Coinone was cooperating with the investigation.

Bithumb, the second largest virtual currency operator in South Korea, was also raided by the tax authorities on Wednesday.

“We were asked by the tax officials to disclose paperwork and things yesterday,” an official at Bithumb said, requesting anonymity due to the sensitivity of the issue.

The nation’s tax office and police declined to confirm whether they raided the local exchanges.

South Korean financial authorities had previously said they are inspecting six local banks that offer virtual currency accounts to institutions, amid concerns the increasing use of such assets could lead to a surge in crime.

($1 = 1,069.9600 won)

Reporting by Dahee Kim & Cynthia Kim; Editing by Shri Navaratnam

Exiting Your Startup: The Grand Finale

Your company has finally achieved success.

You’re finally looking to cash out on the effort you invested.

Deservingly so, but you’re not done yet. The most critical stage is near-;the exit.

Founders can’t simply hand over the reins in exchange for a handsome payday. It’s more complicated, as exiting is a strategic decision-;one that founders must be aware of early on.

We have invested in over one hundred successful startups, and founded our own açai-infused vodka company, VEEV. We learned lessons the hard way, and we want to make it easier for you.

Here’s a fact that most founders overlook. You need a reason for potential buyers to actually want to buy your company.

What about taking your company public via an initial public offering (IPO)? The reality is that IPOs comprise a small percentage of total exits, so we’ll focus on more common acquisitions.

Consider how your company will be positioned for an attractive acquisition. There are many areas of your business to focus on to ensure a successful exit. Mastering any three of the following areas will greatly work in your favor:

  1. Your distribution model

  2. Your access to a particular demographic

  3. Your brand’s strength

What about revenue?

Revenue is important, but potential acquirers rarely buy a company for the added revenue. Odds are that the incremental revenue barely moves the needle for your acquirer.

While revenue-;especially revenue growth rate-;is important, the three aforementioned areas carry more weight. Let’s discuss them in further detail.

Create a nimble distribution model that an acquirer couldn’t replicate.

PetSmart’s acquisition of Chewy for $3.5B in the spring of 2017 is a great example of a purchase based on a distribution model. PetSmart, the brick and mortar retailer of pet supplies, needed Chewy, an e-commerce provider of pet supplies, for its direct-to-consumer channel.

In the end, PetSmart gains critical online access while Chewy receives the expertise and resources necessary to refine and expand its business.

A win for both parties.

Additionally, corporations realize the need to gain access to new demographics-; especially Millennials.

Consider RXBAR, the maker of simple ingredient, protein bars. Founded in 2014, the company has experienced meteoric growth, due in no small part to its support from Millennials who are attracted to RXBAR for its simplicity in both labeling and ingredients. Food manufacturer Kellogg’s-;eager to enter the space-;announced in October 2017 its intention of acquiring RXBAR.

RXBAR plans to remain an independent company within Kellogg’s all the while expanding its product, and Kellogg’s can effectively leverage the access to RXBAR’s target demographics.

Again, a win for both parties.

Finally, it’s impossible to overstate the importance of your brand image. Corporations are seeking ways to capitalize on emotion-based purchasing.

We’ve previously mentioned the increasing role that emotion is having on consumer purchasing behavior and significance of brand image here. However, it is worth reiterating the point again.

Why?

Because corporations-;not just consumers-;are looking for products with a strong brand that evokes a particular emotion. Oftentimes, this is not their area of expertise. Corporate competitive advantages traditionally lie in the form of a cost advantage.

Now, they’re looking to acquire companies with an emotional advantage.

PepsiCo’s acquisition of the sparkling probiotic drink maker KeVita is a prime example. A slogan of KeVita’s, “Revitalize from the Inside,” represents the pathos that PepsiCo was looking to capture. In a time where consumers are turning away from traditional soft drinks, PepsiCo found a perfect opportunity in the health-conscious KeVita.

The acquisition places Kevita on a larger stage, giving it increased access to new distribution channels and resources. PepsiCo now has the means to leverage KeVita’s image to ideally position itself in a time of changing consumer behavior.

Yet again, a win for both parties.

Determine early on what makes your company a threat to potential acquirers. If they need you more than you need them, you’re in a good position.

You know what to focus on.

Now you need to balance the operations of your company with the intricacies of an exit.

Now let’s address the less concrete aspects of selling your business and how to best-position yourself. Two pieces of advice come to mind:

  1. Base your exit on operational milestones, not a timeline

  2. Keep potential acquirers in the loop

A fundamental misunderstanding that many founders have is basing exits off a timeline, and not an operational milestone.

This principle can be applied in a greater context, especially when it comes to fundraising. All too often, founders seek a certain amount of capital to grant them X months or years of runway. Rather, they should seek this capital to reach a particular milestone, such as achieving a particular customer acquisition cost or breaching a given revenue threshold.

The same issue occurs with exits.

Founders are too focused on exiting in Y years, and not based off a given milestone. A major reason we sold VEEV was because we realistically could not keep growing the business. We had reached an intermediate size, and realized that we didn’t have the distribution capacity or necessary connections to expand VEEV internationally and further grow.

This telltale milestone was far more helpful than any time-based method in determining the right time to sell. Additionally, milestone-based exits are also more flexible than their time-based counterparts. They account for unpredictable macroeconomic factors that can either expedite or slow your timeline.

With that said, build relationships with potential acquirers well-before you reach your desired exit milestones. You should keep them in the loop from an early date.

It’s known that you should contact investors well before your intent to raise the next round of fundraising. The same logic applies to exits.

There a few reasons for this.

The first is simply the importance of getting your foot in the door and establishing relationships with corporate partners early on. The second-;and equally as important-;reason is that they can help you reach or tailor your operational milestones.

Essentially, your potential acquirers can outline the kind of milestone that would spark their interest in a deal.

However, be straightforward if challenges arise that may hinder the completion of a milestone. Acquirers should be willing to work with you. They will not be willing if you paint a rosy picture, only to have them later discover issues in the due diligence process.

That should go without saying, but we have seen it adversely affect many deals.

A final note is to realize that this process takes time. We may have mentioned the importance of stressing milestones over time, but it’s important to realize that a corporation moves slower than a startup. You should be in discussion with companies at least a year before any intention to sell, and know that exit deals usually take at least six months.

In the end, it’s no secret. Exiting is difficult.

Applying this advice will differentiate yourself from the competition and increase the odds of gaining the attention of an acquirer.

The earlier you start the process, the better your odds of success.

From experience, we realize that the timing is never perfect and an ideal match is rare. With that said, it’s important to always keep the exit in the back of your mind, and explore the many ways that you can capture the value of the business you created.

Now, get to work!

And if you need help to guide you along the way, find resources from people who have been there and done that.