- AmEx to Costco: “Breaking up is hard to do”
Attention Costco shoppers: Costco (COST) will no longer be accepting American Express (AXP) cards at its stores. Until now, American Express had a pretty sweet deal going with Costco, as it was the only credit card accepted in the mecca of bulk shopping, discounts, and free samples for the past 15 years.
But AmEx and Costco were unable to reach an agreement to sign a new contract (aka, Costco wanted more $$), and Costco is now bidding adieu to AmEx starting March 31, 2016. Given that Costco revenues were $112.64 billion last year, this is a major blow to AmEx. It’s estimated that the end of the deal will reduce spending on AmEx cards by about $80 billion a year.
AmEx is now projecting lower earnings for the next two years as it loses revenues and invests in alternatives to the Costco deal. The stock was down about 7% yesterday on the news. Unsurprisingly, other credit card companies were trading higher as no one knows which company will take AmEx’s place yet.
- Orbitz and Expedia get together just in time for Valentine’s Day
The travel industry has been all about consolidation recently. A few years ago it was a merger between American Airlines and US Airways, and now Expedia (EXPE) is buying competing travel site Orbitz (OWW) for $1.34 billion. The acquisition is a move to take the lead from Priceline (PCLN) in Internet travel bookings. Expedia is all about growth recently, as it agreed last month to acquire Travelocity for $280 million in cash.
Unlike the airlines deal, the continued competition in the bookings industry means this deal should pass through antitrust regulation easily (i.e. the two do not form a monopoly). Plus, we won’t even notice much of a difference, as Orbitz will maintain its brand and the two websites will continue to operate independently
- Apple Soars Higher and Higher
This was a great week for Apple (AAPL) investors. On Tuesday, Apple hit an all-time high and became the first company to close at more than $700 billion in market value. For a refresher on just how much money that is, check out this article on all the things one could buy with $700 billion. (Hint, it includes Google, Samsung, and quite a few sports teams).
And the week kept getting better. That same day, while at a financial conference with Goldman Sachs, Tim Cook announced that Apple formed a partnership with First Solar (FSLR) to build an $848 million, 1,300-acre solar farm in California that will power its headquarters, data center in Newark, Calif., all Apple offices and 52 Apple stores in California. The solar farm will result in significant energy cost savings for Apple, and propelled my battered solar holdings higher.
But that’s not all. There are now rumors that Apple is building a car. As much as Elon Musk boasts about poach Apple employees for Tesla (TSLA), it seems that Apple has been doing even more poaching from Tesla. And most of those employees have quite a bit of car building knowledge. At this point it is very much a rumor, but could be quite awesome if it comes to fruition. Not to mention, Musk’s ego could afford to be taken down a notch.
The net result of all this Apple news? Apple hit another all-time high yesterday of $127.48.
- Manhattan luxury condos turn to high-end rentals in days
Here’s an interesting read on the ever-fascinating real estate market in New York. It turns out that Manhattan condos listed at high prices make great rental apartments listed at insane prices. For example, a two bedroom condo was snapped up at $5.35 million, and promptly listed as a rental for $19,500 a month.
- Announcing a TDT talk!
My last item is one I’m super excited about.
Will you be in New Haven on Thursday, Feb. 19th? I’ll be giving a talk on all things personal finance and investing, with lots of time for Q&A, and would love to see you there!