Holy fucking shit. It is not often Money McBags wakes up to such a far reaching news story (even farther reaching than Ben Bernanke’s logic) and a story of such epic proportions (even more epically proportioned than Ice-T’s wife) that it dominates the headlines more than a Presidential election, has potentially more dire consequences on the global economy than the subprime meltdown of 2007, and causes the whole world to shut down and run to their computers to understand what is happening. But ladies, gentlemen, Hilda Solis, today was such a day. In fact, Money McBags will wager that years from now you will all remember where you were when you heard the news in the same way you remember where you were when the US invaded Iraq, when OJ sped away in his Ford Bronco, and when the late great Nipsey Russell passed away. That’s right, this news threatens to change the world as we know it and that news of course is the release of topless NSFW Brooklyn Decker pictures. Unfucking believable. Now Money McBags doesn’t believe in God (because if there were a God, the pictures would have been full frontal, and maybe WWII wouldn’t have happened), but every once in a while he has to pause and wonder.
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But that wasn’t the only ginormous news of the day as the damage to nuclear reactors from the tsunami that blew through Japan like Karinne Stefens blew through the Wu-Tang clan continued to intensify due to aftershocks and a failure of the cooling system which led to the most fear in the streets of Japan since Rodan was hatched and caused the Japanese stock market to drop over 10%. Now look, Money McBags doesn’t want to be overly flippant about this as as natural disasters aren’t really that funny (except for Lindsay Lohan) so he’ll refrain from anymore Godzilla references (though quietly hope someone evacuated all of the lizards from near the Fukushima Dai-ichi plant), he won’t suggest that if Japan really wants to cool the reactors, instead of dropping water on them from a helicopter, they should drop Fonzie on them because that is one cool motherfucker, he won’t share his research on the supermoon theory that could have caused the tsunami by pointing out that this might have been the supermoon responsible for it, and most of all, he won’t make any jokes about bukkake, geishas, or geisha bukkake.
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No, this is some serious shit and more than anything, Money McBags hopes the people of Japan are ok, the radiation turns out to be nothing more than fear, and this all gets cleaned up so we can go back to making fun of stupid shit like Angry Birds raising $42MM (which Money McBags thinks now makes them, Elated Fucking Birds) and a mom suing her 4 year old’s school for hindering her daughter’s chances to get in to an Ivy League school (and Dear Woman Suing The School, Fuck you. Love, Money McBags. Because first of all, as Money McBags can attest, an Ivy league education does not mean you won’t find yourself unemployed, getting older, and writing dick jokes for free all day on the internet, and secondly, fuck you). So godspeed to all the people in Japan, even the ones in the library (and to be clear, the only things Money McBags condones in that video are the funbags), hopefully things only get better from here.
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But shit, the Japan tsunami news drowned out the increasing tensions in the Middle East as Bahrain is once again making it rain bullets, and this time at the Saudis who sent in troops to defend the government (and we can only hope the reign in Bahrain does not mimic Hussein). Plus Qaddafi is getting closer to squashing the rebellion in Libya as he chased the resistance to the city of Benghazi while rebels try to get countries to approve a no fly zone over Libya (and Money McBags has been trying to get universal no fly zone approved for years). The point is there is so much shit going on in the world that Money McBags can’t believe the VIX isn’t spiking higher than Rebecca Black’s new song on a list of things that cause cerebral hemorrhages. There is more uncertainty than in an episode of the Maury Povich Show and because of that Money McBags is more dumbstruck than Caitlin Upton in a pillow fight because shit, he could wake up tomorrow and learn radiation is heading towards Tokyo or the US, the Middle East has imploded in a sweeping and widespread civil war, or his penis defied natural selection and regrew a spine, so all Money McBags can do right now is tell you he hopes you are hedged and that we all come out of this with only a few more emotional scars.
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Oh yeah, with all of this international turmoil, who the fuck could focus on the markets where the Fed released their monthly statement to no dissenting votes since Thomas “T. Ho” Hoenig was put on lay away which leaves the Governors free to engage in more group think than the members of a Sabrina Deep fan bang. The statement was less changed than Charlie Sheen after rehab (and did a fuckload less winning) with the only new interesting bit of language being around inflation and the Fed’s belief that the spike in energy and commodity prices is “transitory,” which is weird, because even Lloyd Blankfein doesn’t think “transitory” means what they think it means. The Fed also said “The economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually” before adding “now if we could just get that pesky labor force participation rate down even more, the labor market would be buzzing.”
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In the market, anything with ties to Japan was down including GE, AFL, and George Takei’s taint (and Money McBags is not entirely sure what that means). The market basically served up a shit sandwich across the board except for the bastion of all that is good and titriffic, NFLX. NFLX soared almost 7% as it never met a dip in which it shouldn’t be bought. Driving NFLX up was an upgrade by Goldman Sachs analyst Ingrid Chung who raised her price target to $300 (so still only one million percent below NFLX’s true intrinsic value) on the thesis that video consumption is growing rapidly, NFLX has scale to keep competitors out, and there are almost 2.5 billion people in India and China so if just 198% of them earn enough money for a computer to stream videos, the stock should appreciate. When questioned further, Chung said NFLX is king.
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In small cap news, every fucking name Money McBags has recommended in the past few months got assraped as if they were trying out for Scared Straight 3: The Morning After. Again, Money McBags is playing on the low end of the volume scale which means higher volatility in times of global fucking panic so as long as you don’t think the world is blowing up (which is more of a non-zero probability than Ann Coulter having a vagina), these are buy opportunities as none of the stories have changed.
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Take old friend RICK for example which has dropped under .5 lap dances per share and is thus trading at 9x to 12x the range of Money McBags’ eps guess. Shit, do you think fewer people are going to go to strip clubs because of Japan’s nuclear meltdown? No really? In a worst case scenario if radiation spreads to the US and people have to stay in inside, don’t you think a shitload of people will choose to stay inside Rick’s? The stock has been selling off for a while but it is now getting to be way oversold so if you have any faith in the market (and there is no reason you should), this is a name that should continue to perform (barring any stupid acquisitions or misplaced mouths in the champagne room).
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Also, one of Money McBags’ favorite shorts, ZAGG, released their earnings and the stock sold the fuck off because, well, because they sell an overpriced product in a highly competitive market where their cash fucking cow AAPL is now starting to provide their own alternatives to ZAGG’s shitty screen protectors. And that is not even to mention these screen could all be going to scratch proof material in the near future, so um, fuck you very much.
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As far as the Q, revenue was up 157% to $29MM, but it was up only 27% sequentially in what should be ZAGG’s biggest quarter. Their gross margins declined again, this time about 500bps to 45% so um, discount away. Their cash dropped from ~$5MM to ~$2.3MM as inventories, receivables, and every other balance sheet item spiked once again, so um, great job on the $.16 eps, but you’re getting dangerously close to running out of cash since you have less cash on your balance sheet than you burned this quarter.
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Anyway, Money McBags has not had a chance to read the transcript, so he can’t fully break down ZAGG’s quarter and doesn’t know if they gave guidance, but they are now trading at ~17x trailing twelve month revenues and their business is going to face more headwinds than Camille Crimson‘s partner when she gets a cough. Money McBags continues to believe this company is a long-term short as their business just has no reason to exist and they have failed with every other product they have tried to market in their attempts to diversify revenues. Money McBags hopes to have a better breakdown next week when he has had a chance to go through their tranny, but nothing in their earnings release gives him reason to doubt his thesis.
