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PFSweb Reports Fourth Quarter and Full Year 2020 Results and Issues 2021 Outlook

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PFSweb, Inc.
·21 min read
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- Record Fourth Quarter PFS Fulfillment Volumes and Continued Execution in LiveArea Drive 29% Increase in Service Fee Revenue -

ALLEN, Texas, March 25, 2021 (GLOBE NEWSWIRE) -- PFSweb, Inc. (NASDAQ: PFSW), a global commerce services company, is reporting results for the fourth quarter and full year ended December 31, 2020, and is providing a financial outlook for 2021.

“Our fourth quarter financial performance reflects the operational momentum we built throughout 2020, with record holiday fulfillment volumes in PFS and continued execution in LiveArea,” said Mike Willoughby, CEO of PFSweb. “We generated strong growth across both business units as we continued to experience robust eCommerce and holiday demand tailwinds. While we operated at an even larger scale than usual throughout the year—particularly during the holiday season—our teams delivered high levels of performance for our clients and their customers. We are proud to have built such a flexible and differentiated platform to support our clients during an unprecedented year and are excited about our continued opportunities for growth in both business segments.”

Q4 2020 Highlights vs. Q4 2019

  • Total revenues increased 25% to $106.3 million.

  • Service fee equivalent (SFE) revenue (a non-GAAP measure defined and reconciled below) increased 29% to $81.5 million.

  • Service fee gross margin was 27.1% compared to 32.5%.

  • Net loss was $1.5 million or $(0.07) per share, compared to a net income of $1.6 million or $0.08.

  • Adjusted EBITDA (a non-GAAP measure defined and reconciled below) was $4.5 million compared to $6.3 million.

Full Year 2020 Highlights vs. Full Year 2019

  • Total revenues increased 16% to $342.5 million.

  • Service fee equivalent (SFE) revenue (a non-GAAP measure defined and reconciled below) increased 20% to $258.9 million.

  • Service fee gross margin was 31.9% compared to 33.9%.

  • Net loss was $5.5 million or $(0.28) per share, compared to a net loss of $2.2 million or $(0.11).

  • Adjusted EBITDA (a non-GAAP measure defined and reconciled below) increased 18% to $19.1 million compared to $16.2 million.

Willoughby continued: “In PFS, our operational agility allowed us to quickly scale and ramp our resources to meet heightened holiday order volumes. Less than three months after opening, our new PFS fulfillment center in Dallas was operating at full capacity, and our new fulfillment center in Liège also performed at high levels to accommodate accelerating European volumes. We deployed our CloudPickTM based solution into one of our global client’s European distribution facilities to augment our expanded capacity for that client and support over 10% of our client’s European order volume during the holiday period. We also rapidly deployed our RetailConnectTM solution into five stores for an existing client during the holiday period to enable our client to scale up orders fulfilled from their stores, leading to a full production roll-out of RetailConnectTM across their US store footprint in 2021.

“Throughout the year, we took further measures to maintain our continuous sanitation practices needed to keep our facilities optimally safe and productive. While these COVID-19 safety measures and increased fulfillment-related labor rates for both permanent and temporary frontline workers pressured our margins over the period, preserving the health of our team and ensuring high levels of performance for our clients were our top priorities.

“The strategic investments we have made in LiveArea have further expanded the resources we can offer our clients and prospects as they adapt to an evolving eCommerce environment. Under our strengthened sales and marketing leadership, our fourth quarter LiveArea bookings rebounded to their second highest level in company history. Our sales cycle continues to recover strongly from the pandemic-related disruptions we faced in the middle of 2020. With the strong backlog and record sales pipeline we have built going into 2021, we look forward to leveraging our comprehensive platform to support our growth as we offer premium digital customer experiences around the globe.

“As we look to the rest of 2021, we believe our operational discipline and adaptability have positioned both segments for continued strong execution. We currently expect to perform within our targeted range of 10-15% for LiveArea service fee revenue growth, and we also expect to perform within our targeted range of 5-10% for PFS service fee revenue growth despite year-over-year comparisons against a record setting 2020. We are also targeting moderate PFSweb adjusted EBITDA margin expansion as our revenue mix in LiveArea increases and we gain operating leverage in PFS, offset by continued increased fulfillment-related labor rates and sanitation costs as well as costs associated with opening our new Las Vegas distribution facility.”

Fourth Quarter 2020 Financial Results
Total revenues in the fourth quarter of 2020 increased 25% to $106.3 million compared to $85.4 million in the same period of 2019. Service fee revenue in the fourth quarter increased 29% to $81.5 million compared to $63.0 million in the same period of 2019. Product revenue from the company’s last remaining client under this legacy business model was $5.2 million compared to $6.4 million in the same period of 2019.

SFE revenue in the fourth quarter of 2020 increased 29% to $81.5 million compared to $63.4 million in the same period of 2019. The increase was primarily driven by robust levels of fulfillment activity in PFS, as well as continued growth in LiveArea.

Service fee gross margin in the fourth quarter of 2020 was 27.1% compared to 32.5% in the same period of 2019. The decrease was primarily attributable to changes in revenue mix, with the lower gross margin PFS segment generating an increased percentage of the overall service fee revenue, and increased fulfillment-related labor rates and sanitation costs during the quarter. Additionally, our gross margin for the PFS segment was negatively impacted by reduced IT related project, startup and technology related activity. As a result, fourth quarter gross margin for PFS came in below the segment’s typical 25% to 30% guidance range, while LiveArea’s gross margin remained within the segment’s typical 40% to 50% range.

Net loss in the fourth quarter of 2020 was $1.5 million or $(0.07) per share compared to a net income of $1.6 million or $0.08 in the same period of 2019. Net loss included the impact of $1.9 million of stock-based compensation expense in the fourth quarter of 2020 as compared to $0.8 million of stock-based compensation expense in the same period of 2019.

Adjusted EBITDA in the fourth quarter of 2020 was $4.5 million compared to $6.3 million in the same period of 2019. The decrease was primarily driven by expected cost increases in the PFS segment applicable to fulfillment-related labor rates and sanitation costs and other preparations for the holiday season, as well as reduced IT related project, startup and technology related activity. Additionally, operating expenses increased as compared to the prior year primarily related to increased personnel related expenses, including costs associated with supporting the ongoing growth and strategic investments in the LiveArea segment. As a percentage of SFE revenue, adjusted EBITDA margin was 5.5% compared to 9.9% in the same period of 2019.

Non-GAAP net income (a non-GAAP measure defined and reconciled below) in the fourth quarter of 2020 was $1.6 million compared to $3.0 million in the same period of 2019.

At December 31, 2020, net debt (a non-GAAP measure defined and reconciled below as total debt, excluding operating lease liabilities, less cash and cash equivalents) was $31.7 million compared to $25.4 million at December 31, 2019.

Cash and cash equivalents at December 31, 2020 totaled $10.8 million compared to $12.4 million at December 31, 2019, and total debt was $42.5 million compared to $37.8 million at the end of last year.

Full Year 2020 Financial Results
Total revenues in 2020 increased 16% to $342.5 million compared to $294.0 million in 2019. Service fee revenue in 2020 increased 20% to $257.7 million compared to $214.4 million in 2019. Product revenue from the company’s last remaining client under this legacy business model was $22.9 million compared to $26.6 million in 2019.

SFE revenue in 2020 increased 20% to $258.9 million compared to $215.8 million in 2019. The increase was primarily driven by heightened fulfillment activity in PFS throughout the year, as well as double-digit growth in LiveArea.

Service fee gross margin in 2020 was 31.9% compared to 33.9% in 2019. The decrease was primarily attributable to changes in revenue mix and increased fulfillment-related costs throughout the year, as well as reduced IT project, startup and technology related activity in the PFS segment. Gross margins for both segments continued to be within the guidance range of 25% to 30% for the PFS segment and 40% to 50% for the LiveArea segment.

Net loss in 2020 was $5.5 million or $(0.28) per share compared to a net loss of $2.2 million or $(0.11) in 2019.

Adjusted EBITDA in 2020 increased 18% to $19.1 million compared to $16.2 million in 2019. The increase was primarily due to the aforementioned strong growth in SFE revenue. As a percentage of SFE revenue, adjusted EBITDA margin was 7.4% compared to 7.5% in 2019.

Non-GAAP net income (a non-GAAP measure defined and reconciled below) increased 100% to $7.9 million in 2020 compared to $3.9 million in 2019.

2021 Outlook
With strong eCommerce demand driving heightened fulfillment volumes in the company’s PFS segment, as well as LiveArea’s record and expanding pipeline, PFSweb expects to achieve 2021 LiveArea service fee revenue growth of 10% to 15% compared to 2020. For the PFS segment, the company expects to generate 5% to 10% service fee revenue growth compared to 2020. In line with its continued focus on cost management, PFSweb also expects moderate consolidated adjusted EBITDA margin expansion in 2021 when compared to the prior year.

Conference Call
PFSweb will conduct a conference call today at 8:30 a.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2020.

PFSweb management will host the conference call, followed by a question and answer period.

Date: Thursday March 25, 2021
Time: 8:30 a.m. Eastern time (5:30 a.m. Pacific time)
Toll-free dial-in number: (866) 220-4153
International dial-in number: (864) 663-5228
Conference ID: 2475935

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website at www.pfsweb.com.

A replay of the conference call will be available after 11:30 a.m. Eastern time on the same day through April 8, 2021.

Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Replay ID: 2475935

About PFSweb, Inc.
PFSweb (NASDAQ: PFSW) is a global commerce services company that manages the online customer shopping experience on behalf of major branded manufacturers and retailers. Across two business units – LiveArea for data-driven marketing and omnichannel experience design through technology selection, platform implementation and orchestrated services, and PFS for order fulfillment, contact center, payment processing/fraud management, and order management services – they provide solutions to a broad range of Fortune 500® companies and household brand names such as Procter & Gamble, L’Oréal USA, ASICS, Pandora, Ralph Lauren, Shiseido Americas, the United States Mint, and many more. PFSweb enables these brands to provide a more convenient and brand-centric online shopping experience through both traditional and online business channels. The company is headquartered in Allen, TX with additional locations around the globe. For more information, visit www.pfsweb.com.

Non-GAAP Financial Measures
This news release contains certain non-GAAP measures, including non-GAAP net income (loss), net debt, earnings before interest, income taxes, depreciation and amortization (EBITDA), adjusted EBITDA and service fee equivalent revenue.

Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, acquisition-related, restructuring and other costs (including certain client related bankruptcy costs), amortization of acquisition-related intangible assets and deferred tax expense for goodwill amortization.

EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, as well as acquisition-related, restructuring, and other costs (including certain client related bankruptcy costs).

Service fee equivalent revenue represents service fee revenue plus the gross profit earned on product revenue and does not alter existing revenue recognition.

Non-GAAP net income (loss), EBITDA, adjusted EBITDA and service fee equivalent revenue are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, acquisition-related, restructuring and other costs (including certain client related bankruptcy costs), amortization of acquisition-related intangible assets, and deferred tax expense for goodwill amortization, and EBITDA and adjusted EBITDA further eliminate the effect of financing, remaining income taxes and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance. Service fee equivalent revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.

Net debt represents total debt, excluding operating lease liabilities, less cash and cash equivalents.

PFS believes these non-GAAP measures provide useful information to both management and investors by focusing on certain operational metrics and excluding certain expenses in order to present its core operating performance and results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.

Forward-Looking Statements
The matters discussed herein consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “intend,” “plan,” “potential,” “project,” “seek,” “strive,” “predict,” “continue,” “target,” and “estimate” and other similar expressions. These forward-looking statements involve risks and uncertainties and may include assumptions as to how we may perform in the future, including the impact of the COVID-19 pandemic on our business, results of operations and global economic conditions. Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee these expectations will actually be achieved. PFS' Annual Report on Form 10-K, as amended, for the year ended December 31, 2019 and any subsequent amendments or quarterly reports on Form 10-Q identify certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the periodic reports of the company and the Risk Factors described therein. PFS undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.

Company Contact:
Michael C. Willoughby
Chief Executive Officer
Or
Thomas J. Madden
Chief Financial Officer
1-972-881-2900

Investor Relations:
Sean Mansouri, CFA
Gateway Investor Relations
1-949-574-3860
PFSW@gatewayir.com


PFSweb, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, Except Share Data)

December 31,

December 31,

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

10,751

$

12,434

Restricted cash

214

214

Accounts receivable, net of allowance for doubtful accounts of $1,465 and $1,071 at December 31, 2020 and December 31, 2019, respectively

80,778

72,262

Related party receivable

730

-

Inventories, net of reserves of $96 and $291 at December 31, 2020 and December 31, 2019, respectively

3,644

3,281

Other receivables

3,758

3,324

Prepaid expenses and other current assets

8,694

6,954

Total current assets

108,569

98,469

Property and equipment, net

19,178

18,436

Operating lease right-of-use assets, net

34,982

36,403

Identifiable intangibles, net

665

1,135

Goodwill

45,615

45,393

Other assets

4,152

3,772

Total assets

$

213,161

$

203,608

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Trade accounts payable

$

35,648

$

44,640

Accrued expenses

30,881

21,625

Current portion of operating lease liabilities

9,487

8,904

Current portion of long-term debt and capital lease obligations

3,414

2,971

Deferred revenues

5,115

6,058

Total current liabilities

84,545

84,198

Long-term debt and capital lease obligations, less current portion

39,073

34,829

Deferred revenue, less current portion

1,341

1,398

Operating lease liabilities

30,553

33,295

Other liabilities

5,286

3,046

Total liabilities

160,798

156,766

Commitments and contingencies

SHAREHOLDERS' EQUITY:

Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued or outstanding

-

-

Common stock, $0.001 par value; 35,000,000 shares authorized; 20,408,558 and 19,465,877 issued at December 31, 2020 and December 31, 2019, respectively; and 20,375,091 and 19,432,410 outstanding at December 31, 2020 and December 31, 2019, respectively

20

19

Additional paid-in capital

168,244

158,192

Accumulated deficit

(115,447

)

(109,943

)

Accumulated other comprehensive income

(329

)

(1,301

)

Treasury stock at cost, 33,467 shares

(125

)

(125

)

Total shareholders' equity

52,363

46,842

Total liabilities and shareholders' equity

$

213,161

$

203,608



PFSweb, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2019

2020

2019

Revenues:

Service fee revenue

$

80,400

$

63,010

$

256,615

$

214,382

Product revenue, net

5,188

6,397

22,865

26,613

Pass-through revenue

19,926

15,964

61,979

53,027

Related party revenue

773

-

1,046

-

Total revenues

106,287

85,371

342,505

294,022

Costs of revenues:

Cost of service fee revenue

59,168

42,553

175,526

141,616

Cost of product revenue

4,862

6,041

21,594

25,158

Cost of pass-through revenue

19,926

15,964

61,979

53,027

Total costs of revenues

83,956

64,558

259,099

219,801

Gross profit

22,331

20,813

83,406

74,221

Selling, general and administrative expenses

23,050

18,005

85,351

73,334

Income (loss) from operations

(719

)

2,808

(1,945

)

887

Interest expense, net

332

484

1,486

1,896

Income (loss) before income taxes

(1,051

)

2,324

(3,431

)

(1,009

)

Income tax expense

416

722

2,073

1,161

Net income (loss)

(1,467

)

$

1,602

$

(5,504

)

(2,170

)

Non-GAAP net income

$

1,600

$

2,965

$

7,896

$

3,946

Net income (loss) per share

Basic

$

(0.07

)

$

0.08

$

(0.28

)

$

(0.11

)

Diluted

$

(0.07

)

$

0.08

$

(0.28

)

$

(0.11

)

Weighted average number of shares outstanding:

Basic

20,323

19,435

20,005

19,449

Diluted

20,323

19,912

20,005

19,449

EBITDA

$

1,669

$

5,233

$

6,721

$

11,254

Adjusted EBITDA

$

4,498

$

6,303

$

19,127

$

16,188



PFSweb, Inc. and Subsidiaries

Unaudited Reconciliation of Certain Non-GAAP Items to GAAP

(In Thousands)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2019

2020

2019

Net income (loss)

(1,467

)

$

1,602

(5,504

)

(2,170

)

Income tax expense

416

722

2,073

1,161

Interest expense, net

332

484

1,486

1,896

Depreciation and amortization

2,388

2,425

8,666

10,367

EBITDA

1,669

5,233

6,721

11,254

Stock-based compensation

1,851

846

10,785

3,028

Acquisition-related, restructuring and other costs

978

224

1,621

1,906

Adjusted EBITDA

$

4,498

$

6,303

$

19,127

$

16,188

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2019

2020

2019

Net income (loss)

(1,467

)

$

1,602

(5,504

)

(2,170

)

Stock-based compensation

1,851

846

10,785

3,028

Amortization of acquisition-related intangible assets

109

167

470

668

Acquisition-related, restructuring and other costs

978

224

1,621

1,906

Deferred tax expense - goodwill amortization

129

126

523

514

Non-GAAP net income

$

1,600

$

2,965

$

7,896

$

3,946

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2019

2020

2019

Total revenues

$

106,287

$

85,371

$

342,505

$

294,022

Pass-through revenue

(19,926

)

(15,964

)

(61,979

)

(53,027

)

Cost of product revenue

(4,862

)

(6,041

)

(21,594

)

(25,158

)

Service fee equivalent revenue

$

81,499

$

63,366

$

258,932

$

215,837



PFSweb, Inc. and Subsidiaries

Unaudited Consolidated Segment Information

and Reconciliation of Certain Non-GAAP Items to GAAP

(In Thousands)

The segment financial data for the three and twelve months ended, December 31, 2020 and 2019, reflect the financial performance for each of the segments based on the current financial presentation reviewed by the company’s Chief Operating Decision Makers. The company is continuing to evaluate its segregation of costs among the business units, including an effort to further allocate certain Corporate costs into the two operating business units to enhance cost focus and responsibility.

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2019

2020

2019

PFS Operations

Revenues:

Service fee revenue

$

60,684

$

43,559

$

174,868

$

139,490

Product revenue, net

5,188

6,397

22,865

26,613

Pass-through revenue

19,166

15,247

58,874

50,296

Total revenues

85,038

65,203

256,607

216,399

Costs of revenues:

Cost of service fee revenue

47,878

32,084

130,275

101,108

Cost of product revenue

4,862

6,041

21,594

25,158

Cost of pass-through revenue

19,166

15,247

58,874

50,296

Total costs of revenues

71,906

53,372

210,743

176,562

Gross profit

13,132

11,831

45,864

39,837

Direct operating expenses

7,992

6,668

30,694

28,292

Direct contribution

5,140

5,163

15,170

11,545

Depreciation and amortization

1,929

1,894

6,740

8,047

Stock-based compensation

422

98

2,179

478

Acquisition-related, restructuring and other costs

540

56

1,302

1,457

Adjusted EBITDA

$

8,031

$

7,211

$

25,391

$

21,527

Total Revenues

$

85,038

$

65,203

$

256,607

$

216,399

Pass-through revenue

(19,166

)

(15,247

)

(58,874

)

(50,296

)

Cost of product revenue

(4,862

)

(6,041

)

(21,594

)

(25,158

)

Service fee equivalent revenue

$

61,010

$

43,915

$

176,139

$

140,945


PFSweb, Inc. and Subsidiaries

Unaudited Consolidated Segment Information

and Reconciliation of Certain Non-GAAP Items to GAAP

(In Thousands)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2019

2020

2019

LiveArea Professional Services

Revenues:

Service fee revenue

$

19,716

$

19,451

$

81,747

$

74,892

Pass-through revenue

760

717

3,105

2,731

Related party revenue

773

-

1,046

-

Total revenues

21,249

20,168

85,898

77,623

Costs of revenues:

Cost of service fee revenue

11,290

10,469

45,251

40,508

Cost of pass-through revenue

760

717

3,105

2,731

Total costs of revenues

12,050

11,186

48,356

43,239

Gross profit

9,199

8,982

37,542

34,384

Direct operating expenses

7,964

6,502

30,135

25,137

Direct contribution

1,235

2,480

7,407

9,247

Depreciation and amortization

264

271

897

1,162

Stock-based compensation

412

311

3,695

869

Acquisition-related, restructuring and other costs

220

139

226

250

Adjusted EBITDA

$

2,131

$

3,201

$

12,225

$

11,528

Corporate

Selling, general and administrative expenses

$

(7,094

)

$

(4,835

)

$

(24,522

)

$

(19,905

)

Depreciation and amortization

195

260

1,029

1,158

EBITDA

(6,899

)

(4,575

)

(23,493

)

(18,747

)

Stock-based compensation

1,017

437

4,911

1,681

Acquisition-related, restructuring and other costs

218

29

93

199

Adjusted EBITDA

$

(5,664

)

$

(4,109

)

$

(18,489

)

$

(16,867

)


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    A container ship blocking the Suez Canal like a "beached whale" sent new shockwaves through global trade on Thursday as officials stopped all ships entering the channel and the salvage company said it may take weeks to free. The Suez Canal Authority (SCA) said eight tugs were working to move the vessel, which got stuck diagonally across the single-lane southern stretch of the canal on Tuesday morning amid high winds and a dust storm. Several dozen vessels, including other large container ships, tankers carrying oil and gas, and bulk vessels hauling grain have backed up at either end of the canal to create one of the worst shipping jams seen for years.

  • Homebuyers shrug off higher mortgage rates, but refinances stop booming

    Applications rise for homebuyer mortgages, but refinancing continues to cool.

  • Exclusive: Goldman sends Indian employees back home as local COVID-19 cases rise

    Goldman Sachs told all but critical staff at its operation in Indian IT capital Bengaluru to return to working from home on Wednesday, reversing moves to get staff back to one of its biggest global offices as coronavirus infections in the city grew. India earlier reported a new variant of the coronavirus as new infections and deaths nationwide hit the highest this year, prompting the imposition of new restrictions in some states. Bengaluru reported 1,280 new infections on Tuesday, according to city data, and several sources at Goldman told Reuters that teams had been told to return to working from home ahead of an all-office townhall call at 2 p.m. local time on Thursday.

  • If You Invested $1,000 In Bitcoin One Year Ago, Here's How Much You'd Have Now

    Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return over the last 12 months is 74.3%. But there is no question some investments performed better than others along the way. Bitcoin’s Big Run: As strong as the stock market has been since it bottomed on March 23, 2020, Bitcoin (CRYPTO:BTC) has been much stronger. After a wild ride that took Bitcoin prices near $20,000 in late 2017, the previous Bitcoin bubble burst in 2018 and the cryptocurrency finished the year down 72.6%. Bitcoin came back to life in 2019, however, finishing the year up 87.2% and priced at around $7,200. Several factors led to a surge in Bitcoin buying in 2020. First, investors concerned about the potential long-term damage that trillions of dollars in federal stimulus could do to the value of the dollar have flooded into Bitcoin as a potential safe-haven play. Second, younger Americans receiving three rounds of direct stimulus payments have poured a significant chunk of that cash into investments, including Bitcoin. Mizuho recently estimated the most recent round of $1,400 stimulus payments alone could contribute to roughly $24 billion in Bitcoin buying. After starting 2020 at around $7,200, Bitcoin prices had reached $10,000 by mid-February. By the beginning of March, the volatile cryptocurrency was back down to around $8,600 after news of the coronavirus spreading in China prompted concerns about a U.S. pandemic. When the stock market bottomed on March 23, Bitcoin investors were feeling the pain as well. Investors who had purchased Bitcoin as a COVID-19 flight-to-safety trade were down big with Bitcoin priced at around $5,800 at the time. However, once the government stimulus payments started flowing, Bitcoin regained its swagger. By May 31, Bitcoin prices were back above $10,000, and they haven’t traded below $10,000 since September 2020. Related Link: If You Invested ,000 In Ford Stock One Year Ago, Here's How Much You'd Have Now Bitcoin In 2021, Beyond: Bitcoin made it to new all-time highs above $20,000 in December 2020, almost exactly three years after its last new high. The cryptocurrency eventually made it as high as $61,643 in recent weeks, more than tripling its 2017 high. In recent days, the cryptocurrency has pulled back from all-time highs, settling back down to around $55,500 at publication time. Still, Bitcoin investors who bought one year ago and held on have generated a massive return on their investment. In fact, $1,000 in Bitcoin bought on March 23, 2020, would be worth about $8,816 today. Given the exponential rise in Bitcoin prices in the past year coupled with the loss of stimulus payment support in the coming months, some investors are understandably growing concerned about a potential repeat of the 2018 sell-off. Bitcoin has experienced three boom-to-bust drawdowns of more than 80% in the past decade, and a similar sell-off in 2021 could send its price tumbling back down to around the $12,000 level. See more from BenzingaClick here for options trades from Benzinga'Stimmy' Checks And The Stock Market: Will The Retail Trading Frenzy Continue?Cash App Is Giving Away M In Bitcoin: What You Need To Know© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • Enterprise Use Of Augmented Reality Burns A Path For Consumer Next-Gen Smart Glasses

    While consumer-focused companies work to develop smart glasses, Microsoft and Vuzix are making major strides with augmented reality headsets for enterprise applications.

  • Biden will regret the $1.9 trillion stimulus because it squanders the money he’ll need for other priorities

    President Joe Biden’s $1.9 American Rescue Plan will certainly give the economy a jolt, but he may regret not spending the money differently. In 2020, COVID spending raised the federal deficit to $3.1 trillion in 2020 from $1 trillion in 2019. Households saved a good deal of their stimulus checks.

  • VW's Skoda aims for 2021 rebound, plans electric car investments

    Czech carmaker Skoda Auto, part of the Volkswagen Group, said on Wednesday it would invest around 2.5 billion euros over the next five years on future technologies, with more than half going to electric vehicle investment. The Czech Republic's largest exporter is hoping for a rebound in 2021 from a global car sales drop but faces uncertainty over the coronavirus pandemic and a semiconductor shortage rattling the industry. "This year is likely to be another big challenge," finance director Klaus-Dieter Schuermann said.

  • History Says Bond Traders Are Terrible at Timing Fed Liftoff

    (Bloomberg) -- A word of warning for all those bond traders banking on a Federal Reserve rate hike as soon as next year: Since 2008, markets have underestimated how patient officials can be in lifting borrowing costs from zero.After the Fed first slashed rates that low during the financial crisis, hedgers and bettors in money-market derivatives established a track record of being consistently too aggressive on a first move higher, according to JPMorgan Chase & Co. In late 2008, traders already saw several hikes in the following couple years, even though it ultimately took officials until 2015 to tighten, the bank’s analysis shows.That pattern may be happening again -- the savviest speculators in interest rates are looking at trillions of dollars in stimulus and an accelerating vaccination campaign and they’re concluding that there’s no way rates can stay this low without inflation getting out of control.Swaps and futures now reflect almost a quarter-point of tightening late next year, and fully price in three increases of that size in total by the end of 2023.To be clear, the Fed hasn’t always stuck with its plans for the path of rates. But Wall Street strategists warn that the likely outcome this time is that the market ultimately blinks first. It’s a game of chicken that carries risk for both sides, not just traders with money on the table.For the Fed, the standoff threatens to complicate its entire policy framework. The peril is that its message of patience will continue driving up long-term Treasury yields, already near the highest in more than a year, and eventually tighten financial conditions by rattling stocks or jacking up corporate financing costs.“The market has its pricing and perceptions, and what happens can differ from that and has,” said Alex Roever, head of U.S. rates strategy at JPMorgan. The market has been testing the Fed by “trying to push further forward the first hike. But Fed officials don’t seem to be having any of it.”Last CycleTraders were reluctant to align their wagers with the speed of increases officials were penciling in after the central bank began its last tightening cycle. That was in part because after its 2015 liftoff, the Fed failed to deliver the multiple hikes it had projected for 2016. It eventually tightened only once that year as the Brexit vote dimmed the growth outlook. The dynamic shifted in early 2017, when traders had to scramble to price in a hike in response to Fed signals.The Fed said last week that it will keep rates near zero until the labor market reaches maximum employment and inflation is on track to moderately exceed 2% for some time. Governor Lael Brainard said this week the approach implies “resolute patience.” Chair Jerome Powell has also said he wants to see actual inflation data, and in testimony this week played down the risk that growth would spur unwanted price pressures.That hasn’t quelled investors’ inflation angst, which has jolted most Treasury maturities. The selloff has been particularly acute in the so-called belly of the curve, such as the five-year note -- which is closely linked to the Fed’s path over that horizon.The yield on the five-year reached about 0.9% this month -- its highest since March 2020, spurring a reassessment of one of the bond market’s premier reflation trades -- the curve steepener. The rate has since settled back to around 0.8% as traders mull the Fed’s next step.Parsing DotsTraders may have reason to hope that their rate-hike bets will pay off. In projections released last week, 7 of 18 officials predicted higher rates by the end of 2023, compared with 5 of 17 in December. A handful saw a move in 2022, and Dallas Fed President Robert Kaplan said he’s in that group.Still, the median Fed projection is for rates to remain on hold through 2023, so for some analysts the move has been too far, too fast.“Markets are in general forward-looking, but the Fed’s new framework by design is backward-looking, and Powell made clear they’ll be guided by realized data not forecasts,” said Guneet Dhingra, head of U.S. interest-rate strategy at Morgan Stanley. “Some disconnect between markets and the Fed policy is understandable, but the degree of disconnect now is simply glaring. It’s more likely that the market comes to the Fed than the Fed comes to the market.”Given the Fed’s playbook is to begin tapering its bond buying before lifting rates, as it eventually did after the 2008 crisis, tightening is a long way off, said Dhingra. He recommends wagering on further curve steepening, specifically between 5- and 30-year yields, on the view that tightening expectations will fade.That spread peaked at around 166 basis points this month -- near the widest since 2014, before narrowing back to around 150 basis points as the market shifted toward earlier rate increases.To some degree, the market itself is telling the Fed it can settle for merely monitoring the bond tumult for now. Financial conditions, a way of looking at the overall level of stress in markets, have held steady in the face of rising yields. Stocks aren’t far from record highs, for example.At JPMorgan, the thought is that the Fed holds steady until 2024. So the bank aligns with Morgan Stanley’s view, seeing the reckoning ahead coming from traders ultimately stepping back from tightening bets.For now, the bond market is at a crossroads after absorbing a tough stretch, with longer maturities in particular entering a bear market amid mounting inflation expectations. The market’s outlook for consumer-price growth over the coming decade surged this month to an almost 8-year high of 2.34%.“One thing the Fed also has to be careful about is that it’s very hard to get the market to completely comply with everything they want at the front-end of the curve when there’s a bear cycle in the back end,” said Alan Ruskin, chief international strategist at Deutsche Bank AG.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Oil jumps 5pc on Suez canal congestion

    Oil prices bounced back on Tuesday, partly due to the blockage of the Suez Canal, a key transit route for the commodity. Brent crude shot up more than 5pc to $64.3 a barrel over fears disrupted shipments could put oil supply under pressure, and as “bargain hunters swooped in to snap up the relatively cheap contracts”, said David Madden, analyst at CMC Markets. It came after oil fell to its lowest mark in over a month on Monday on concern tighter coronavirus restrictions in Europe would dampen demand from key industries like aviation. Also helping to boost sentiment was new data from the Energy Information Administration that showed US oil inventories rose by 1.9m barrels in the week ended March 19, to 502.7m barrels, compared to expectations for a 272,000-barrel drop according to analysts polled by Reuters. Figures last week reported stockpiles of 2.4m barrels, suggesting that “refineries are working their way through the backlog caused by the big freeze”, said Madden. Some analysts suggest a slowing increase in stockpiles, which comes as travel starts to rebound in the US, could help crude oil rally to fresh highs. Heavyweights BP and Royal Dutch Shell gained on the expectation, adding 5.8p to 301.55p and 27p to £14.63 respectively. BP’s gains come despite Moody’s downgrading the oil giant from its highest rating. The gains helped to lift London’s markets higher after a shaky start to the week, with the benchmark FTSE 100 adding 13.7 points to 6,712.89 and the FTSE 250 closing up 70.78 points to 21,402.54. Energy and mining stocks helped lead the benchmark after data showed a better-than-expected rebound in British business activity in March with services increasing at the fastest rate since August. Anglo American added 62p to £27.83, Glencore rose 6.15p to 278.15p and Rio Tinto gained 77p to £54.22. In company news, Halma was among the top risers on the benchmark after the medical equipment provider upped its profit guidance having made “good progress” in the second half of the financial year. It now expects adjusted pre-tax profit to be in line with last year’s £267m, better than previous predictions of a 5pc fall. Halma said revenue has grown in its four regions, with the strongest performance seen in Asia Pacific. Shares gained 54p to £23.59. On the FTSE 250, Softcat shot up 226p to £17.85, making it the second biggest gainer on the mid-cap index following Gamesys. The IT firm said gross profits increased by a fifth to £134.5m, as revenues boosted 10pc to £577m for the six months to January. Meanwhile, house-builder Bellway lost 79p to £34.13 as it revealed another £20m charge to deal with cladding issues, while also posting a 4pc decline in half-year profits to £280.2m.

  • Watch Replay: Vinson & Elkins and Palm Beach Hedge Fund Association Host “Air Mobility 2” Featuring BLADE and Volocopter on March 23

    Hear from the CEO of BLADE Urban Air Mobility, Inc., the CFO of Volocopter GmbH, along with a preeminent M&A attorney and a former certification director from the European Aviation Safety Agency who joined IPO Edge for a special event on Tuesday, March 23 at 12:00 EST. Our speakers discussed the most important technologies in […]

  • Investing in Alzheimer’s Treatment: Join Jupiter Orphan Therapeutics for Fireside Chat March 30

    Christer Rosén, Chairman-CEO & Founder of Jupiter Orphan Therapeutics, Inc, Raymond “Scott” Turner MD, Professor Neurology, Georgetown University (Alzheimer’s scientist) and Mark Dant, Executive Director, Ryan Foundation IPO Edge, in partnership with The Palm Beach Hedge Fund Association, a Florida trade association for financial professionals and ultra high net worth investors, will host a fireside chat […]

  • Retail Trader Army Is Signaling Retreat on Latest Stimulus Wave

    (Bloomberg) -- From bullish options to basketball trading cards, the multibillion-dollar retail frenzy is showing signs of fading.Just as $1,400 stimulus checks arrive all across the U.S., day-trader favorites are losing steam, stirring speculation that the army of individual investors who disrupted markets over the past year have opted to spend the cash on plane tickets and restaurants rather than their trading apps.Volumes in bullish options favored by members of Reddit’s WallStreetBets forum are down. Blank-check stocks are falling. Even Robinhood Markets Inc.’s ranking in Apple’s App Store has slipped below the top 100.For now, these are just dents in millennial traders’ yearlong remaking of financial markets, which saw hedge funds whipsawed, volume records shattered and even a Congressional hearing over a struggling video-game retailer that surged 1,400% in a month. Many of their favorite trades are still not far from their peaks. But their almost concurrent declines over the past month, especially in recent days, suggest the speculative force driving them is fading.“I think retail interest in trading ebbs and flows,” said Don Calcagni, chief investment officer at Mercer Advisors. “When you see something like a GameStop, or when you see Bitcoin has done exceptionally well, there’s increased interest. And after that hype sort of fizzles out, I think you see retail interest tend to recede from markets.”Here are some signs of a retreat among the retail army:Stock FavoritesSince peaking on March 15, a Goldman Sachs basket of retail favorites dropped about 7%, compared with a 2% decline in the Russell 3000.Cathie Wood’s ARK Innovation ETF -- which has become synonymous with the retail adoration for daring tech bets -- is headed toward its worst month since the pandemic selloff a year ago, while inflows and volumes have also tapered off. The ETFMG Alternative Harvest ETF, which invests in cannabis stocks, has slid 32% from its peak.In another proxy for retail trading, the 10-day average portion of equity volumes taking place off-exchange -- where most individual traders’ orders are routed -- has declined to 42%, compared with nearly 50% in late January.Blank-Check FirmsThe record-breaking listing spree in special-purpose acquisition companies was seen as a sign of excess, since these so-called blank-check firms raise money publicly before looking for companies to buy.An index of these stocks is now 21% from its February peak. Three-quarters of SPAC debuts on Tuesday traded below their listing price -- “the sound of the IPO window closing,” Julian Klymochko, chief executive officer of Accelerate Financial Technologies and a SPAC expert, said on Twitter.Online InterestOver the past month, Robinhood’s ranking in Apple’s App Store has steadily declined, going from the top spot among free apps in early February to below the top 100 now, data from Sensor Tower show. Similarly, Google searches of “buy stock” and “bitcoin” have also dropped over the period.Equity OptionsA feature of the bout of retail trading mania is the Reddit horde’s use of short-dated bullish options, or calls, to wager on their darling shares. Now that’s fading somewhat, though activity remains historically elevated. A daily average of 23 million contracts has changed hands on U.S. exchanges over the past five days -- down from more than 30 million in February.Crypto AssetsBitcoin is down more than 8% from its peak, while Ethereum has dropped about 13%. Bitcoin volumes have fallen, and flows into listed funds tied to the crypto asset has slowed, according to JPMorgan. While it’s difficult to peg specific catalysts behind swings in this market, it’s yet another speculative favorite that’s losing momentum.Even prices in NBA Top Shot trading cards -- sports collectibles with a crypto twist -- have started declining, data compiled from the website Add More Funds show.All told, the YOLO -- You Only Live Once -- crowd appears distracted of late, though their mark on financial markets remains.To be sure, macro forces have turned against some of these trades. The jump in bond yields hurts tech wagers such as the ARKK ETF and Tesla Inc., which are essentially long-duration bets on a distant, transformed future.But while the more adventurous day traders turn elsewhere, this doesn’t necessarily mean individual investors as a whole aren’t putting more cash into stocks. Equity funds attracted a record $68 billion in the week through March 17, the latest data from Bank of America show, with a bias still toward U.S. and tech shares.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Chinese tech stocks slump as U.S. SEC begins rollout of law aimed at delisting

    Shares in dual-listed Chinese companies fell sharply on Thursday in Asia after the U.S. securities regulator adopted measures that would kick foreign companies off American stock exchanges if they do not comply with U.S. auditing standards. The move by the Securities and Exchange Commission (SEC) adds to the unprecedented regulatory crackdown in China on domestic technology companies, citing concerns that they have built market power that stifles competition. The Holding Foreign Companies Accountable Act, signed into law by then-President Donald Trump in December, is aimed at removing Chinese companies from U.S. exchanges if they fail to comply with American auditing standards for three years in a row.

  • Mastercard battles return of $19 billion UK class action

    A specialist London court will this week re-consider allowing an historic 14 billion pound ($19 billion) class action against Mastercard to proceed, which could entitle adults in Britain to about 300 pounds each if successful. Former financial ombudsman Walter Merricks, who alleges that Mastercard overcharged more than 46 million people in Britain over nearly 16 years, hopes the Competition Appeal Tribunal (CAT) will certify the case after the UK Supreme Court overruled objections to it proceeding in December. A two-day court hearing will kick off on Thursday and will determine the fate of Britain's first mass consumer claim -- and clarify the rules for a string of other competition class actions that have stalled in its wake.

  • Yellen now open to U.S. bank dividend payouts, stock buybacks

    Treasury Secretary Janet Yellen on Wednesday said U.S. banks look healthy enough to be allowed to pay dividends and repurchase stock, an updated view that reflects top economic officials' growing confidence in the recovery from the coronavirus pandemic. Yellen made her comments in a second day of testimony in Congress alongside Federal Reserve Chair Jerome Powell. Asked by Senate Banking Committee Chairman Sherrod Brown if she opposed banks paying dividends and buying back stock, Yellen said she was previously opposed but financial institutions look healthier now and "should have some ability to, abiding by the rules, to make returns to shareholders."

  • Razer’s Growth Will Continue in 2021: CEO

    Mar.25 -- Min-Liang Tan, co-founder and chief executive officer at Razer Inc., discusses reporting his first profit since 2014, his plans for the business and his prospects for M&A. He speaks exclusively to Sophie Kamaruddin on “Bloomberg Markets: Asia” from the sidelines of the Credit Suisse Asian Investment Conference in Hong Kong.

  • Stock market news live updates: Stock futures drop, pointing to a third day of declines

    Technology stocks led declines during the regular session on Wednesday.

  • Europe needs $355 billion for 5G rollout, industrial study says

    Europe needs to pump 300 billion euros ($355 billion) into its telecoms infrastructure by 2025 if it wants to roll out super fast 5G across the 27-country bloc to boost economic growth and tap the potential of the technology, a report said on Thursday. The study by consulting firm BCG, commissioned by telecoms lobbying group ETNO, comes as the European Union pins its hopes on 5G to lift it out of a COVID-19 pandemic-induced recession and take the lead in internet-connected devices. But EU telecoms operators have been reluctant to invest in 5G networks, which could support smart factories and self-driving cars, because of the massive outlay, while they say plans to scale up via mergers to take on these costly projects have been stymied by tough EU antitrust rules.

  • Warren Buffett says make this the priority for your $1,400 stimulus check

    Though he's not getting a payment, he has this good advice on what to do with yours.

  • IKEA invests in mapping technology startup what3words

    Ingka Group, the owner of most IKEA stores, has bought a 12 million pound ($16 million) stake in what3words, the London-based technology startup that has divided the world into three metre squares to help pinpoint locations. "What3words has created an innovative solution to the problem of poor and inaccurate addressing, which is a problem in both developing and developed countries" Ingka Group's investment arm Ingka Investments said in a statement. "Unlike a regular street address, which points to a street or building, the system allows people to specify a very precise location such as a side door or utility entrance," it added.