Is it dollar liquidity driving this action or the EU crisis? Or both?
see:
Central Banks Pushed to Act as Funding Squeeze on Banks Worsens,
Businessweek
Anyway, the news should give a pop to equities worldwide, at least for today.
Wednesday, November 30, 2011
Tuesday, November 29, 2011
Zynga employee relations to affect the company?
For those of you not in the know, Zynga is the maker of Farmville and Mafia Wars games on Facebook and as a standalone app. Earlier this year it applied to IPO. Roadshows should start soon. However publicity over its treatment of its employees are coming to light and not in a good way.
Its reputation could've possibly affected potential acqusitions of Popcap, which it offered $950M in cash, and Angry Birds maker, Rovio, for $2.5B. Both turned down offers.
see:
Zynga to employees: Give back our stock or you'll be fired
Current implied valuations on Sharepost stand at $12.9B, as of Nov 29, 2011. 2011Q1 earnings hit $12M with full year revenues believed to be above $1B.
see:
Zynga road show kicks off next week: sources
Games are for free, but die-hards called whales (named after their casino counterparts), will spend money to gain that edge over others. It was estimated that 1% of Zynga's players account for 25-50% of its revenue. It's the new revenue model for the free video game business model. Businessweek highlighted a customer who spent $500 in Farmville and a competitor to Zynga claiming it had 200 people who spent more than $10,000 per year on their games.
see:
Facebook 2012 IPO?
How can you play this as an investment? You can't! Unless you are a very large (or important) high net worth individual (HNWI) at Goldman Sachs ex-US according to an earlier Reuters report. It was rumored that Goldman offered HNWIs the chance to invest a minimum of $2M with a lockup until 2013. Goldman was estimated to raise $1.5B in the private placement.
Although it has come to light there is an alternative market trading pre-IPO private shares. Sharepost is reportedly trading private shares of Facebook, Twitter, and Zynga to name a few. In order to qualify, the website states that you must be an accredited investor. The current Sharepost Facebook implied valuation is $73B. Without data it's difficult to determine the proper valuation. However if the investor were able to get in at $73B and it IPO'd at $100B, the gains will be sizable.
For all the remaining retail investors, you will have to wait until the IPO hits the secondary market.
Monday, November 28, 2011
IMF to provide an aid package to Italy?
Over the weekend there was a rumor that the IMF was preparing a 600 Billion Euro aid package for Italy. However this morning, the IMF has officially denied it.
So what is the outlook for Italy if it doesn't receive a bailout like Greece and Ireland? Not too good. Italy has amassed $2.2 Trillion in debt, 120% of GDP and now its 10-year bond is now sitting firmly above the 7% rate, the rate at which signaled peril for Ireland and Greece. The market has lost confidence and is demanding more to lend.
About half of the debt is held domestically. But who are the other large Italian debt holders?
1. France, $105B
2. Germany, $51B
3. Japan, $30B
4. Belgium, $17B
5. US, $14B
source: Wallstcheat
To note, Belgium was just downgraded by Standard & Poor's from AA+ to AA.
What does it mean to your investment portfolio? An exposure to Italian banks would be something to avoid. As of Friday (Nov 25), Fitch downgraded 8 mid-size banks citing a rise in cost of funds and the risk of the Italian economy heading into recession.
According to Professor Paolo Manasse, of Bologna University, Unicredit (UCG) owns as much as 40 Billion Euros in government bonds, while Intesa Sanpaolo (ISP) 64 Billion Euros.
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