King Digital Crushes the Market, Dow Ends Higher on Disney's Strength

RetailMeNot stock slips slightly; reliance on SEO remains a longer-term concern.

Jun 27, 2014 at 6:19PM

The stock market continued to more or less hover around breakeven on Friday, as a dearth of economic data left investors with little to get excited about. The Dow Jones Industrial Average (DJINDICES:^DJI), after a tremendous year in 2013 on the back of quantitative easing and soaring corporate profits, is up less than 3% so far in 2014. It remains to be seen what effect the Federal Reserve's tapering process will have on the economy, but if the stock market's sluggishness is any indication, we may be in for a few more years of subdued growth. The Dow Jones added five points today, or less than 0.1%, to end at 16,851.

Walt Disney (NYSE:DIS) finished as one of the Dow's best performers Friday, tacking on 1%. The media and entertainment giant is up more than 3% in the past three days after the Supreme Court reached a six-to-three decision against the online video start-up Aereo. Aereo threatened the entire business model for big-time broadcasters like Disney; the service snatched video signals out of the air and sent them to Aereo subscribers for a monthly fee, while Aereo paid nothing to the broadcasters in return. With the pesky Aereo dilemma now over and done with, Disney-owned ESPN saw its highest ratings for an NBA Draft ever last night, and will likely enjoy high ratings throughout the World Cup, especially with the U.S. advancing for at least one more match.

If there's one thing you can always count on in the stock market it's a sense of uncertainty. Not to disappoint, shares of King Digital Entertainment (NYSE:KING) soared 5.1% on Friday, despite very little substantive developments regarding the Candy Crush game developer. There seems to be something going on behind the scenes here, though: King Digital's July $18 call options saw freakishly high activity today, more than doubling in price. Unusual options activity in and of itself is practically never a reason to be bullish on a stock -- although I do happen to like King Digital relative to its peers, as it trades at less than nine times earnings.


RetailMeNot's classy logo. Source: RetailMeNot

Lastly, shares of online coupon aggregator RetailMeNot (NASDAQ:SALE) lost 1.8% today. RetailMeNot has a nice little business model going for itself, collecting the latest coupon and discount codes for e-tailers around the web, then taking a percentage of the final sale if discount-seeking shoppers buy products as a result of RetailMeNot's website. While the company has enjoyed enormous success with this model -- sales ballooned from $16 million in 2010 to more than $200 million in 2013 -- the business has one enormous crutch investors shouldn't overlook. RetailMeNot relies overwhelmingly on search engine optimization, or SEO, for traffic, leaving it vulnerable to the ever-changing algorithms at Google and other Internet search engines.

Your cable company is scared, but you can get rich
Aereo was trying to hasten the death of cable. While the Supreme Court squashed Aereo's plans this week, cable's demise remains inevitable. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.

John Divine owns shares of Google (C shares). You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool recommends Google (C shares), RetailMeNot, and Walt Disney. The Motley Fool owns shares of Google (C shares) and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information