Bitcoin – The Bull that refuses to back into its cage

Bitcoin is now trading above the ceiling predicted to be its cap – it is the bull that remains uncontrollably volatile but unashamedly confident.

bitcoin-2643159__340  In a previous post, I explored how Bitcoin worked and explained the functionality of the centralized ledger. This week I have a new question. Why do people have faith in a currency that has no tangible resource backing it? Traditional currencies use gold, what does Bitcoin have? Hope? I will supply two reasons I find particularly compelling that may explain sudden interest for Bitcoin, however bear in mind that there a multitude of factors, and there is no monocausal reason for the sudden growth of Bitcoin.

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Firstly, financial commentators have commented on the magnitude of growth Bitcoin would experience if it were to be backed by a finite resource like gold. Bitcoin is a currency that has no tangible resource dictating its value. Its value is based precisely in what people think it is worth (or will be worth). Currently, Bitcoin is not backed by gold, or any other finite resource, but what if it were?

Standpoint Research’s Ronnie Moas reported that there is $200 T tied to cash, stocks and bonds. He stated:

“I am not excited about putting my money into any of those – If 1% of that $200 trillion finds its way into crypto in the next 10 years, you will be looking at a 2 trillion-dollar valuation – 10 times what it is today”

A theme common with cryptocurrencies. People are investing on the whim that it “could be” massive.

Secondly, trading Bitcoin may become safer – and hence attract attention from more conservative hedge fund managers. The more investors, the more Bitcoin will grow. Last week, the world’s largest exchange operator by market value (CME Group) has announced it is readying plans to offer futures on Bitcoin.

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This will give momentum to cryptocurrencies’ move away from the fringes of finance. But more importantly, the Chicago–based trading venue said it intended to add Bitcoin to its stable of futures on interest rates, stock indices, commodities, and currencies by the end of the year.

If hedge fund managers can long and short different prices, they can hedge against volatility. Currently, Bitcoin does not allow this. If it were to, which the CME have suggested, then Bitcoin becomes more attractive to less risky investors – once again increasing the amount of investment, and the “normativity” of the currency.

These two points share something. Both signpost to us that Bitcoin is doing well because people think it will do even better in the future. The potentiality for the currency is very high. And, although now there is little tangibility to Bitcoin besides hope and (somewhat) empty prediction, it seems that in the near future Bitcoin could become a global phenomenon.

Does the currency of the future have a future?

Bitcoin’s success has been remarkable. Its most important characteristic, and what makes it different from money (USD or GBP for example), is that it is decentralized. No single institution controls the Bitcoin network. This puts some people at ease – as it means banks and government have no control over their money. Bitcoin is the Rocky Balboa of economics. During the start-up, one Bitcoin was valued around $35; now, it soars anywhere between $5000 to $6000 dollars. This being said, Bitcoin is incredibly volatile. Prices rise and dip considerably month to month, and sometimes day to day. In this week’s article, we will take a look at how bitcoin works, and see what experts predict of its future prosperity. Let’s see if Bitcoin can go the distance.

Bitcoin is a cryptocurrency monitored by a ledger. The ledger is available to be downloaded by anyone, and with it, you can see every account and every transaction ever made. If I want to buy a sofa from you and pay you 0.5 bitcoins, then the coins will go from my e-wallet to your e-wallet and this will be marked onto the ledger. This is available for everyone to see. Simple.

Although all records of transaction are in the public domain, each user remains anonymous. Transactions and accounts (E-wallets) are tracked by a number, and not a name. It would be impossible to trace an account to a person using the ledger alone. Although anyone can check the ledger, they cannot use it to link a transaction to an individual. But this anonymity comes at a price.

As all accounts on the ledger are mathematically coded, the ledger needs constant work to be kept up to date with pending transactions. When you pass money to someone, it creates a key which creates an e-signature from your personal wallet code and the recipients’. This mathematical key is unique and cannot be replicated.

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When you make a sale, everyone in the world’s ledger is updated with this new transaction, and everyone can match this transaction against the ledger. This keep Bitcoin secure.

Mathematicians will link pending transactions to past transactions, this way, everyone’s ledger agrees. Coincidentally, this is how Bitcoins are distributed to people. Someone links a transaction onto past transactions and is paid in Bitcoins. This allows for Bitcoin to be self-sufficient, and have no centralized authority, like the federal reserve to the dollar. This process is called data mining. In turn, no one can print money and Bitcoin is distributed by the system for updating the ledger. Bitcoin is safeguard by everyone, for everyone; and any person who owns a Bitcoin is a part of the Bank of Bitcoin.

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It sure is interesting to see how it works; and, even though it can be daunting understanding it at first – Bitcoin is a simple concept. The founder stated that once understood, it makes much more sense than centralized currency as it is maths. But how does it compare to hard currencies? And does it have a future in the way the world works?

Goldman Sachs made its position clear, they believe “gold wins out over cryptocurrencies in most of the key characteristics of money.” They compared the two in terms of durability, sustainability, intrinsic value, and unit of account. On the other hand, cryptocurrencies take up significantly less space – but new alternatives are being created every day. There is no competition when it comes to the value of gold, but there is to the bitcoin. Goldman rounds of their statement by pointing out that Bitcoin is dangerously volatile. The Bitcoin-to-U.S. dollar volatility on average was nearly 7 times that of gold this year (2017).

Frustratingly, there is not enough evidence to come to any conclusion as to how Bitcoin will do in the future. But the central question we need to bear in mind isn’t whether or not Bitcoin is a fad or has staying power, its whether Bitcoin has the potential to be the new gold. Whilst commentaries from Goldman’s state it does not, it is worth mentioning that they are in the process of building their own tech to help decrypt and data mine. This indicates that despite their comments, they still have some faith in the “currency of the future.”

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Henry James and James O’Leary do not hold any stake in Bitcoin.

 

 

 

Amazon’s hostile takeover

In my previous article we investigated the new strategy implemented by Starbucks in which they closed their online stores and force consumers to physically enter their stores to purchase something. This runs strictly against the business models of giants like Amazon who are happy to sell to consumers in the c omfort of their own home – epitomized by the launch of Amazon Prime – a same day delivery service on selected items bought on Amazon.

But what are Amazon (AMZN) doing in response to this apparent new culture of buying in store? In true Darwinian fashion, they strike back with their own vision of how consumers will be purchasing in the years to come through an appropriation of the semi-monopolized safeguarding market.

ffElectronic payments are a growing market. Traditionally, everyone had a bankcard that was linked to two providers – Mastercard (MA) and Visa (V). These two safeguard companies are well trusted by users and renowned worldwide as being safe, secure and trustworthy. Since the launch of the internet, new providers came along such as PayPal (PYPL) – who ensured a safeguarding through internet transactions. But the market seems to be shifting in another direction now, which will leave these companies in the rubbish-bin of history.

Moody’s Stephen Sohn and his team of analysts tell us that the electronic payments market is large, with plenty of new entrants. This poses a threat to current payment ecosystems of networks and cards. The potential interlopers include, but are not limited to: Alphabet Inc’s Google (GOOG), Amazon.com Inc. (AMZN), and Apple Inc (AAPL). The new goal is to create a gateway system that bypasses Visa and MasterCard’s safeguarding by doing it in-house. Alongside this, we are seeing a myriad of new entrants into the market. If this happens, we could see an even more centralised power from online companies.

We can infer two things from this shift. Firstly, the fact that there are new entrants into the market means that there is a market to be tapped into. This must mean that consumers feel more comfortable doing in house deals with companies than in the past. If there is more competition for roles that were traditionally accomplished by Visa and Mastercard, then it means people are not as suspicious as they once were – which is understandable – consumers often have a lot of faith in companies like Amazon and Google.

Secondly, that online companies are themselves pushing for easier trading on the internet – which is directly opposed to Starbucks’ (SBUX) vision of the future. If this market were tapped by online retailers, they could cut out costs making it cheaper and quicker to purchase online.

This being said, Sohn reports “material displacement of traditional electronic payment providers remains unlikely.” As we have established, Visa and MasterCard have near universal acceptance in the USA which will make them very difficult to dislodge. This may make it difficult for online companies to fulfil their ambition of securing their place in this market.

As a generalisation, tech companies such as Alphabet and Amazon subscribe to the philosophy “if you can’t beat ’em, join ’em.” So far, there have been collaborations between already existing safeguard mediums (Visa and Mastercard) and new-comers into the market (inc. GOOG and AAPL).

So, what can we make of all of this?

It seems that there is a heavy focus on consumer perception to predict the future of sales. Amazon are dependent on online sales to survive and cannot allow Starbucks, or any other competitor such as Nike, to create a social-trend where experience is crucial in the buying of goods. Their response to this is in creating better and easier ways to buy and sell online. Although Starbucks wish to create a new trend, online companies are building on an already existing one.

We will have to wait and see how consumers react to Amazon’s adaptation of buying online.

 

(Please note: James O’Leary does not currently hold a position in: Amazon (AMZN), Starbucks (SBUX), Nike (NKE), or PayPal (PYPL). Henry James International Management does not currently own a position in: Amazon (AMZN), Starbucks (SBUX), Nike (NKE), or PayPal (PYPL).

(Please note: James O’Leary currently holds a position in: APPLE (AAPL), VISA (V), and MasterCard (MA. Henry James International Management currently owns a position in: APPLE (AAPL), VISA (V), and MasterCard (MA).

 

What can we learn from companies shutting down online stores?

Starbucks has recently shut down its online stores. As a pioneer in sales and marketing strategy, Starbucks may be telling us something about the way businesses will have to operate soon. Since jumping onto the Central Perk culture from hit TV-series – Friends, they have revolutionized food and beverage in the last few years by making customers pay and pre-order using their smartphones. Their culture of fast coffee purchases using smartphones was influential enough to inspire credit card companies to produce cards the contactless cards we all have today. Starbucks are always ahead of the game.

 

Starbucks has been a innovator of trends for the last decade
Starbucks has been a innovator of trends for the last decade

 

In the last few years, companies have shifted from high-street retailers to online websites, selling their goods using only their web-client as a means to interact. It is easier for the client, it is cheaper for the company, and it means that people have better access to goods and services. So why have Starbucks shut down their site and discontinued online selling?

Starbucks’ new campaign strives to get people to leave their houses and come into their stores as opposed to surfing their products at home. Their CEO stated that he wants Starbucks to be an “experiential destination.” Customers can surf the net and check out their products using the app, but cannot buy anything without entering a store. This means you can order a coffee on the app and pop in and grab it, but you cannot have anything sent to your house. There must always be some physical interaction with the brand.

This is an interesting move. Why is it that we are seeing this shift back to high street retailers? What is it that companies value in such strategic shifts? Firstly, it allows companies to compete with giants like Amazon, who have a large market share, and sell the products of others. When we think about it, Starbucks would be extinct if Amazon found a way to sell their coffee online. This revolution would hit Amazon hard if Starbucks managed to make a trend of “experiential destinations,” as Amazon do not have a place where customers can come in. If this becomes a trend, it will make companies with a physical presence shine.

Secondly, it makes their product more valuable. Nike and other fashion companies have saturated the market with their goods, they are no longer seen as special. The consumer engagement is lower and people care less and less about high-quality Nike products. They are also available on Amazon. It is more than likely that Nike will swiftly follow suit, and emulate the synthesis of internet marketing and in-store experience. This could be the future for all big companies that sell goods online.

If successful, this business model will have a significant impact any company whose business model is focused in online sales. It will give power back to retailers, and will hinder “middle men” like Amazon. But before all this, they are going to have to convince the world that experiential destinations are successful.

 

 

Starbucks is a place we can work in or relax
Starbucks is a place we can work in or relax

(Please note: James O’Leary does not currently hold a position in: Amazon, Nike, or Starbucks. Henry James International does not currently own a position in: Amazon, Nike, or Starbucks)

 

Does Apple’s New iPhone Launch Signpost A Slowing Of America’s Economy?

 

iphoneWith stock indexes reaching an all-time high, the big tech stocks – FANGs (Facebook (FB), Amazon (AMZN), Netflix (NFLX), Alphabet (GOOG), and Apple (AAPL)) – may have lost their mojo. The most recent setback to one of the major tech companies is Apple (AAPL). According to Barrons, their new iPhone and Apple Watch are not going to meet sales expectations.

The exact reasoning for APPL’s plummet in sales is relatively unclear, but we can gather something from recent international trade relations. Firstly, China has been investing less in the American economy year by year. This is not of direct fault of APPL, but of China’s decision to cut down on outsourcing and invest more in its own domestic products. The price of copper also took a hit earlier this month due to China’s moderating demands which shows it is not a tech-centred issue.

It has also been evident that the iPhone 8 has been subject to slander on all social media platforms. Every time the Facebook and Twitter community decide they do not like a product, it has a direct negative effect on the sales of that product. It symbolizes that their clients are not happy with their products. APPL have since admitted having poor sales. They have also publicly acknowledged problems with their watch.

Of course, just because one tech company is underperforming, we should not begin to worry about the future of the American Stock Market. However, when FANGs struggle, we cannot throw caution to the wind. These stocks represent a large portion of market capitalization, and it most definitely will be a concern for the S&P 500 and Nasdaq.

On the surface, the American market seems strong due to stock prices chugging higher, regardless of APPL’s recent decline. But analysts are persistently pointing toward a low reading of Chicago Board options Exchange Volatility Index (VIX). The VIX, commonly understood as the fear index, signposts to us the volatility of the market. If it is low, then there is little fear of for investors looking to invest. The index is currently high. This means, although stock prices are rising, the market at any second could be volatile. Risks that were once safe, become high-risk. It makes for an uncomfortable climate that investors tend to avoid.

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Apple’s sales to China have underperformed, but this should not necessarily spook investors. It means that other regions will have to outperform expectations. It is possible that demand is coming from elsewhere, and that due to the September hit on the Copper industry, Apple realized China would underperform regardless, and thus changed their target location. In other words, lower sales to China is not directly related to the outcome of the market. We could see a resurgence of APPL shares shortly, when the iPhone is released.

According to Michael Khan, APPL and FANGs decline does not spell the end for the American market. It seems that in the current financial climate, the failings of APPL’s most recent product is being supported by other facets of the market. The market could remain stable, bearing in mind its normal fluctuations. Unless there is some major political shift in congress, or a major international confrontation – everything should level itself out.

(Please note: James O’Leary does not currently hold a position in: Amazon, Alphabet, Netflix, or Twitter; and Henry James International does not currently own a position in:. Amazon, Alphabet, Netflix, or Twitter)

(Please note: James O’Leary currently holds a position in Apple and Facebook; and Henry James International currently owns a position in Apple and Facebook ).

The Rise and Fall of Big Names in Sportswear

Constant changes in consumers’ shopping habits and the development of e-commerce has left marks on sports brands, with several growing in popularity and others dropping in sales and buyer interest.

Going public in 1980 sportswear brand Nike rapidly grew in popularity. An investment of £1,000 in 1980 would have grown to over $700,000 in 2015. However, recent developments in the markets have impacted negatively on the company with shares dropping 16% to $52 since 2015. This fall has been attributed, partially, to a rise in e-commerce shopping as the brand’s major distributors, such as Foot Locker, have been negatively impacted by growing preferences for online shopping. Another contributing factor has been the growing success of rival company’s such as Adidas, whose currency neutral sales increased at a rate between 17% and 19% and gross margins increased 0.8pp to 50.0% while Nike’s sales remained flat. Market analysts have forecast that Nike stock prices could decline by a further 10% to $2.41 per share with a possible drop of 6.6% in earnings to $3.96 billion in 2017.

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Another company that has responded to a recent lag in customer activity is clothing company Under Armour. Shares have dropped by 8% and as a result plans have been put underway to reduce the company’s workforce by 2% to cut costs. In this quarter revenue grew by only 8%, compared to the same period in 2016 when revenue grew by 28%. In an attempt to increase consumer traffic Under Armour will be directing more of it’s efforts towards direct-to-consumer channels.

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While several well-established brands have been impacted by changes in consumer attitudes and the rise of multiple competitors, one company that has rallied is the athletic apparel company Lululemon. In 2014 the business experienced a dramatic drop in share prices, from $81 to $39 following a recall of 17% of stock due to faults. However, in following years stocks have begun to appreciate again, increasing by 33.4%, currently valuing at $61 per share.

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As buying habits change, moving towards e-commerce and certain brands, companies will need to innovate to remain relevant in the market. Although Nike has recently declined in value the introduction of their new shoe line, VaporMax has been met with positive results, implying that the company could rally. As the market becomes saturated with more companies some will rise in popularity, leading to higher profits, while others will fall behind and command a smaller portion of the industry.

(Please note: James O’Leary does not currently hold a position in Nike, Foot Locker, Under Armour, or Lululemon. Henry James International does not currently own a position Nike, Foot Locker, Under Armour, or Lululemon).

(Please note: James O’Leary currently holds a position in Adidas. Henry James International currently holds a position in Adidas). 

How France’s Economy is Growing and Reforming

France’s economy looks to be on the up recently, following growth in several areas over the first two quarters of 2017. Developments in the country’s employment rates, as President Macron makes steps towards reformation, may also lead towards positive growth for the country.

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The second largest economy in the Eurozone, France experienced economic growth of 1.9% in the second quarter, following the upward trend that was observed in the previous two quarters. One driver of this upward growth is a high level of foreign demand for French exports. Export levels increased by 10% in the second quarter of 2017, the highest level in four years, following a rise of only 3.4% in the first quarter. The increase in exports was nearly seven times higher than that of imports, which rose by 1.5% in the second quarter. Although also up by 2.7% in the second quarter, gross fixed capital investment growth was down on the first quarter when it hit 5.4%, its highest level since 2011.

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Progress is also being made in France’s labor market. President Macron has put measures in place in the hope of tackling the country’s growing unemployment issues. In a move to make it easier for companies to negotiate agreements in-house concerning employee wages and working conditions the labor reforms will limit the power of unions to a certain degree. Further efforts have been announced to encourage companies to offer more permanent contracts than they currently do with caps being placed on the payments that can be imposed during tribunals over unfair dismissals. Previously tribunals were able to set high rates of payments in unfair dismissals claims and the hope is, with these rates capped, fewer companies will offer temporary contracts to employees. In another attempt to raise employment levels the government intents to make changes to the unemployment benefits system and reduce payroll taxes. These steps, although controversial, should stimulate higher employment.

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As Macron’s policies are put into place it awaits to be seen how they will affect the employment sector. The outlook is generally positive with levels of unemployment falling, however, unions currently still hold a high level of power, working with employers to set national wage rates. The result is that, for many companies, the wages they pay their employees are out of line with productivity levels. Overall, the country appears to be in a period of upheaval, with upward economic growth over the past three quarters and positive developments within France’s employment sector.

Mexico’s Market Activity Bounces Back in 2017

Mexico’s currency fell to record lows in November 2016 following the election of President Trump. Fears that foreign investment in Mexico would reach a standstill caused a mass sell of the Mexican peso. However, contrary to these fears, the currency has seen as resurgence, with monetary policy and business conditions pushing it to its highest level in over a year. Other areas of Mexico’s economy are similarly seeing positive growth, the country being one of the strongest-performing markets in 2017, with the MSCI Mexico Share Price Index soaring by 30.2% year-to-date.

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Up until the second quarter of 2017 Mexico saw 16 straight quarters of economic growth, with exports alone valuing $198 billion. In the first six months of 2017 the export industry in Mexico increased 10.4% year on year according to Mexico’s National Institute of Statistics and Geography. Mexico’s number one export sector is the automotive industry, representing 76.8% of all exports to the US, and it saw a leap of 9.8%. It was estimated for the June quarter that the country would see an economic increase of 0.2% which they met three-fold, up 0.6%. Having created a record number of new jobs much of this rise is due to performance in the services sector which, although not as substantial as the 3.7% increase of the first quarter, was still up 3.2% year-on-year in the second quarter.

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However, not all investment news is positive for Mexico following President Trump’s indication that the North American Free Trade Agreement (Nafta) trade negotiations could turn sour. On the 23rd of August the iShares MSCI Mexico Capped exchange-traded fund dropped by 0.5%. Mexican stocks also took a hit, with Cemex down by 0.3%, and America Movil falling 0.8%. Kansas City Southern, which is exposed to Mexican trade via its railroad network, saw its shares plummet by 2.4%. Wal-Mart de Mexico and Grupo Televisa, however, rallied up 1.4% and 0.6% respectively.

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Despite these slips in stock values Mexico’s economy has remained resilient in 2017, amid fears that political changes could have negative impacts on the country. In the second quarter of this year GDP was up 0.6%, slightly lower than the 0.7% growth of the first quarter, but a rise of 1.8% compared with the same period of 2016. While these progressions bode well for Mexico’s economy, uncertainty concerning the renegotiation of Nafta and the effects it will have on the second-largest economy in Latin America still exists.

(Please note: James O’Leary does not currently hold a position in Kansas City Southern, Wal-Mart de Mexico, or Grupo Tevevisa. Henry James International does not currently own a position in Kansas City Southern. Wal-Mart de Mexico, or Grupo Tevevisa.

Please note: James O’Leary currently holds a position in CEMEX and American Movil. Henry James International currently owns a position in CEMEX and American Movil).

The Effect of Recent US Political Events on Investments

The US has recently experienced a number of political events that have had immediate repercussions in the investment sector. Many analysts, however, believe that the markets’ responses are short term and that there will be little impact on the financial world in the long run.

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On the 8th of August President Donald Trump issued a warning to the leader of North Korea, Kim Jong-un, stating that he would unleash “fire and fury” in response to any military provocation from the East Asian country. The warning came shortly after North Korea announced they had successfully created a miniature nuclear warhead small enough to fit inside the top of their missiles. Following the confrontation the Dow Jones Industrial Average experienced its largest one-week drop since March, falling by 1%, or 234.49 points, to 21,858.32. Other indexes followed suit, with the Nasdaq Composite reaching 6256.56, down by 1.5%, and the Standard & Poor’s 500 index dropping 1.4% to 2441.32. Despite this downward trend many experts, such as chief economist and strategist at Gluskin Sheff, David Rosenberg, believe that this is a short-term change and that the damage that this geopolitical conflict has caused is unlikely to last.

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The Dow Jones Industrial Average, after having regained some ground, was again hit following the president’s response to the recent events at Charlottesville on the 12th of August. In the wake, the index dropped to 21,674.51, a fall of 0.8%. The Standard & Poor’s 500 index saw a further decline of 0.6% to 2425.55 and, for the fourth week running, the Nasdaq Composite was down, sliding 0.6% to 6216.53 in its longest weekly losing streak since May 2016. While President Trump’s controversial statement lend, in part, to these declines, other world political events may have had impacts on the economy too. Terror attacks in Spain as well as controversial minutes from both the European Central Bank and the Federal Reserve contributed to a period of investment uncertainty. Rafiki Capital Management’s Head of Research and Strategy, Steven Englander, believes that these dips will, again, be equally short-lived as the political situation re-stabilizes.

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Without the threat of an acute political or economic crisis, investment markets should return to previously good performance levels, boosting the country’s economic growth. Indeed the Atlanta Fed’s GDP Now predicts that the US’s GDP will increase by 3.8% in the third-quarter of 2017, with the current drops in market activity being the result of short term anxiety amongst investors.

Developments as the Travel Sector Takes Off

International travel is more popular today than ever before, with the International Air Transport Association stating that airline passenger demand grew by 7.8% in June 2017. To keep up with this growing demand, travel companies have to continuously adapt and develop to stay competitive.

In 2015 the travel company Expedia bought over HomeAway, an accommodation rental site, in an attempt to rival Airbnb. Work is now under way to better integrate the two platforms, making it easier for customers to find holiday homes as well as flights all on one same site. In the current quarter the number of rentals available on the main Expedia site was increased from 20,000 to 60,000. The investment in HomeAway has so far yielded positive results for Expedia, with revenue increasing by 31% relative to the level of revenue in the same time period of 2016. Overall earnings were higher than predicted, boosting investor confidence. As a result the price of Expedia shares was up 3.4% on the 28th of July.

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As Expedia’s position in the travel sector gets stronger other, rival companies are struggling to keep up. Travel comparison site TripAdvisor has launched a campaign of television advertising in an attempt to reach a larger audience. The company aims for the television strategy to benefit its financial situation in the long term but has noted that, in the short term, profits could take a hit. Although the company’s second quarter earnings exceeded expectations, it may still fall behind other big name travel businesses such as Expedia and Priceline whose spending on advertising along is more than TripAdvisor’s revenue.

The increased demand for international travel has benefited aircraft companies as well. BOC Aviation, Asia’s largest aircraft operating leasing company, has grown its portfolio to 261 planes, from only 50 in 2004. With another 80 deliveries planned it is set to be the largest buyer of aircrafts in 2017. This increased demand for air transport has pushed shares of BOC Aviation up by 7% from last year while DBS Vickers analyst Paul Yong predicts that the company will see its net profit rise by 18% annually over the next five years. Major US airline Delta Air Lines has similarly benefited from the increased demand for flights. Shares have reached $50, which is around nine times its 2017 estimated earnings per share, with Andrew Bary of Barrons believing there is a possibility of Delta’s stock rising by a further 35% in the next couple of years.

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As travel becomes accessible to more people many companies in the sector will continue to benefit. However, with so many companies offering similar services, some are destined to fall behind in the market if they do not innovate.

(Please note: James O’Leary does not currently hold a position in Airbnb, Expedia, Trip Advisor, Priceline, or BOC Aviation. Henry James International does not currently own a position in Airbnb, Expedia, Trip Advisor, Priceline, or BOC Aviation.).

(Please note: James O’Leary currently holds a position in Delta Airlines. Henry James International currently owns a position in Delta Airlines).