The next Big Tech or FAANG stock is among us. Stripe is an online powerhouse. The Collison brothers founded the business 10 years ago and changed the online payments industry.
The company has a simple mission: To increase the economic GDP of the internet. Stripe has made a tremendous impact on the global economy by rebuilding the rails for the online payment infrastructure. The company is developer-friendly which is why it has been integrated in every major tech startup launched in the last decade.
Stripe has been on a hiring spree. This week the company hired Dhivya Suryadevara, an experienced public-company CFO, away from General Motors. Now the Stripe management team is preparing to go public.
We started using Stripe several months ago and quickly found out why the system is critical for the new digital economy. The software is web-friendly and very intuitive. It removes several of the major pain points seen in PayPal.
The competition is heating up in telemedicine. During the Obamacare era, there were dozens of niche telemed businesses building brands. Most needed venture funding to build a supply of medical professionals and demand from customers. In the world of Covid, telehealth is the only way to receive virtual medical assistance. Throughout the pandemic, health clinics have been overloaded and still have limited access.
Last week Teladoc Health (TDOC) and Livongo Health (LVGO) announced a big merger. Teledoc shareholders will own 58% of the combined company after the merger. But many Teladoc shareholders sold out post-announcement because of the deal structure may be too bloated.
Both companies were trading at very high valuations before the announcement. This merger of equals will change the marketplace but may stifle innovation. These mega deals take years to integrate and slow down the development process.
Corporate Debt Levels are on my watch list. Corporate credit will erode over the next year. In March 2020, many businesses took on significant debt to their increase cash positions. The second order impact will come from reduced revenues and increased leverage over the summer and winter seasons.
Even with low interest rates, leverage will cripple balance sheets across the board. If your company didn’t have a flexible cost structure pre-Covid, investors can anticipate poor earnings for the rest of 2020.
Over the weekend, Simon Property Group, the largest owner of malls in America, is now working with Amazon to create new fulfillment centers. Malls need anchor tenants and heavy foot traffic for all of its tenants to be profitable. Let's see how Amazon takes advantages of mall real estate while foot traffic remains low in local cities.
We are entering a recessionary period. Don't let the stock market sugarcoat the market. Stocks are a lagging, not a leading indicator. The economy will have +10% unemployment until 2022 and the current distress is only beginning.
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