I was busily preparing for the post-close rantings of a polarizing lunatic (by which I mean the RH earnings report and conference call) when it came across the wire that Amazon could be in the running to buy TikTok.
Amazon spiked on the news, as well it should have. As mentioned almost too often, Amazon is exceptional at deploying capital. Amazon convinced America to put what amounts to spyware-capable microphones in bad speakers, call it Alexa and sell about a billion of them. Amazon started selling Prime memberships in exchange for 2 day delivery on select items. Now Prime generates $50b in membership sales per year.
The company started as a bookstore.
If Amazon buys TikTok and hotlinks weirdly specific targeted advertising to America's preferred hub for impulse shopping chains like Target might as well stop trying to build out online retail and focus on going viral. I'm only half kidding.
Merging social media and retail seamlessly has been a dream since the first pop-up ad. In September of 2020 Walmart and Oracle announced a "Tentative" deal to purchase 20% of what would have been a newly formed TikTok Global. The terms were vague, the deal seemed like a politically motivated PR move from the then POTUS and Walmart at the time really had no idea what to do with TikTok.
Which didn't stop Walmart from spiking 8% on the headline (to the considerable joy of WMT investors):
Amazon absolutely knows what to do with TikTok. "Offer people goods and services based on what they watch, own the distribution channel, ad space and fulfilment, invite other retailers to buy ad space for a huge mark-up".
That's what Amazon does with everything.
It doesn't matter how the economy goes, Amazon will take the consumer mind and market share. It doesn't matter all that much if Amazon even gets TikTok. The whole thing sort of seems like a bit of a distraction launched by the current POTUS because nothing ever changes. What matters is that Amazon is still playing the long game while the stock gets slapped around on fears over how the current quarter is going (probably not well).
If Amazon does somehow elbow its way into a deal for TikTok the shares are going higher. If there isn't a recession, Amazon shares will work. If there is a recession, Amazon shares will likely work; it'll just take longer.
That's a lot of ways to win.
RH Counter-Programming:
As mentioned, RH reports tonight. Time and space limitations prevent me from really delving into just how weird RH is, but I promise to tell the story of this furniture store turned hyper-levered jet rental luxury experience company another day.
In the meantime, watch the price action tonight. RH has been ticking off the $250 area on the low side since 2022. Shares are sitting near the spot again, going into what has the potential to be a disastrous report and guidance tonight. RH has exposure to literally everything that could possibly go wrong, starting with the very highest-end consumers getting most abused by this market sell-off.
I've got a strong hunch about what RH is going to say, but the reaction is a coin flip.
Technically, the stock needs a rally:
Anyway, here's what's going on with my Indefensible 10 Portfolio.
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