UA

UA is the ticker symbol

High growth company

Growth slowed
IPO: 2016

Recent earnings report

last quarter announcement
Sales expected: $1.4 Bil
Actual sales: $1.3 Bil
Stock price dropped
EPS expected: $0.25/share
Actual EPS: $0.23/share
Stock price has dropped about 20%
Unlike a growth company they were
S&P rated Under Armour
Rating was "cut" or downgraded from BBB- (solid
investment) --> BB+ (junk)

Rating cut because:

Increased competition
Pricing pressure (lower profit margins led to
downgrade)
Weak operational execution (management not as
efficient)
RESULTS:
The company is more of a risk as an investment, harder to raise capital,
will have to face higher interest rates because of greater risk

Silver Lining: Super Bowl endorsement through Tom Brady

Tom Brady took equity for endorsement instead of cash
Lost a lot when stock price dropped drastically
Financial crisis of 2008

Ethical - banks lied about riskiness of bond securities in

order to sell them to investors

Loan Market:

Home buyer seeks loan --->

Loan Bank/Mortgage broker sells loan --->
Fannie Mae or Freddie Mac sells loan --->
Large/investment banks sell again as a security bond

Fannie Mae | Freddie Mac are GSE -

Created by government to assist with loans
Backed by US treasury, so pay off loan with US tax
dollars
Protects local lender

Issues:
1. Political:
a. Goal: everyone should own a house
b. Low lending standards
c. High volume of people couldnt repay loans
2. Irrational consumers want to sell for profit
a. Belief that home prices will always keep rising
i. Assumed could sell off more expensive
house that can afford because value will raise (not true)
1. Market collapsed when no one could
pay off loan
b. Increased demand, increased home prices
1. Greedy lenders:
 a. Goal: issue as many loans as possible plus had
soft lending requirements
i. Creative financing - Would offer loan even
for down payment
1. Less money down
2. Adjustable rates
a. When standard rates would
increase, couldn't pay so default or take out
another mortgage (yikes)
2. Mortgage backed securities
a. Bank would have loans in different areas, would
lump diverse loans together to a mortgage backed security
i. More unlikely that loans would default in
different places
ii. Sold this security to investment bankers
b. Problem: these securities were rated with credit,
often shown as more expensive AAA credit when in reality
it's very risky
i. Had so many expensive AAA loans
defaulting

So much speculation - too much gambling in real estate market

What happened? Economy slowed down

Home prices quit rising
Many home owners could not refinance because value
of home was no longer higher than the loan
Home value < loan balance
Massive increase in defaults
Plummet value of mortgage securities
Credit swaps:
Banks took bets on housing market collapse
Banks thought diversified loans would uphold so
took bets
 Banks were stuck with swaps to pay +
mortgage securities

Verizon: 3 factors pushing stock price

1. Competition with other providers
a. Just announced unlimited data
i. In order to maintain market share (T-Mobile,
Sprint)
ii. Good for consumer, but bad for investors
because profit margins decrease
1. "Price War" hurting profitability
a. Telecommunication stock prices
dropped across the board
2. Yahoo! Merger still is uncertain = volatility
3. Big dividend companies have been down since election
(Verizon, ATT pay good dividends)
a. Dividend yield = annual dividends/ current price
i. 4.72% dividend yield for Verizon

Bid dividend companies have been down since election because interest
rates are INCR
Impacting Verizon because Bond Yield Maturities
INCR
So investors leave high dividend stocks for high
yield bonds **

Snap, INC. (Snapchat)

Snapchat parent company

IPO: Initial Public Offering for this year

Private firm plans to go public by selling equity to raise
capital
Proposed IPO
200 million shares
Sell shares to middle man (bank) who then sells shares
to market
~14$-16$ per share
Translates to $3.2 Billion in capital for about 15%
of company
Company value will translate to 18-20 billion

All Time Tech IPOs:

1. 2016 Alibaba $25 billion

2. Facebook $16 billion

Snap will most likely fall between 1 and 2 top IPOs

Kind of late to market, previously projected at $35

billion

Snap, INC. financials

revenues:
2015, $58 million
2016, $404 million
This intense growth is unheard of

Net Income:
2015, $ - 372 million
2016, $ - 514 million
 So much into investment that it's not
profitable yet
So much loss that it's a red flag

Issues:
Growth of active users
Speed at which active users growing (expansion)
is falling
The maturity of company scares off
investors
"Road Show"
CEO, CFO will travel to meet investors (banks to
buy stocks)
Try to justify the valuation with financials

IPO's have more value in BULL market **

When prices are increasing, people more likely to
invest in an IPO
Bear market, prices decreasing

Venture Capitalists / Theranos

2/21

Why do venture capitalists need 30-40% return?

Theranos has cost capitalists a lot of money because it is currently

plummeting
Private health technology company
2003 Founded
 Elizabeth Holmes (Age 19)
Finger stick blood sample use few drops of blood for
hundreds of tests at once

$725 million raised in capital - lost by investors

At its peak, the company was worth 9 billion dollars

Problems:
So much capital for this company but the science had
not passed scientific testing
Technology had been finished because was not
accurate
Company mis-represented results
Border directors had no scientists

Today:
Company had zero revenue
Balance sheet $200 million in cash
Lawsuits: $240 million
Will most likely eat into all of cash balance

Owner: Holmes originally valued at 4.5 billion, now only 800

million, which is like nothing

One positive:

Grail: Bill Gates & Jeff Bezos

Blood drop test for cancer
$1 billion in venture capitalists money raised
already