Investor

This Startup Is Telling Everyday Investors It Will Be The Next Uber

Actor John O’Hurley appears in an ad for YayYo, a ride-sharing app that promises to compare the prices of different ride-sharing companies (that aren’t Uber or Lyft).

Ramy El-Batrawi has founded 27 companies that are now inactive or dissolved, hawking everything from relationship counseling to futures trading to van rentals to Alaskan fishing vacations, a HuffPost review of state records finds. He even ran a travel agency in Palm Beach, Florida, with a Saudi arms dealer involved in the Iran-Contra affair, and was named as a go-between for an offshore entity listed in the Panama Papers.

In 2010, the Securities and Exchange Commission barred El-Batrawi from being an executive in a publicly traded company for five years as part of the settlement over a $130 million stock fraud case against a company he led until it collapsed in 2001.

Now that his prohibition period is over, El-Batrawi has something new to sell: shares in YayYo, a price-comparing ride-sharing app that doesn’t currently work.

HuffPost

The company, with El-Batrawi as CEO, is trying to sell $50 million in stock ― which it can do thanks to newly relaxed securities laws that let speculative startups raise money from mom-and-pop investors. Proponents of the laws said they would boost the economy and create jobs, while critics said the loosened rules put people’s money at risk.

YayYo paid Master P to record a promotional track for the company and has been running TV ads on daytime cable news for weeks featuring the actor John O’Hurley, who famously played a catalog salesman peddling ordinary products and whimsical stories on “Seinfeld.”

“What if you were an early investor in Uber or Lyft — what would you be worth today?” O’Hurley asks. The answer, he says, is that you would have made “made millions, if not tens of millions.” (Uber and Lyft are valued at $62.5 billion and $7.4 billion, respectively.)

But wait, there’s more: YayYo, O’Hurley says, might just grow even faster that Uber and Lyft. When and if YayYo’s app works, it will let you compare prices from different ride-hailing companies by plugging directly into the data that companies like Uber and Lyft have made available to third-party developers.

As the old saying goes, if it sounds too good to be true, it’s probably running stock ads on Fox News at 11:45 on a random weekday morning.

Lyft has already filed a cease and desist order against YayYo and barred the company from using its data, a spokesman told HuffPost. Uber did not return HuffPost’s request for comment, but BuzzFeed’s Will Alden noted that the company’s terms don’t allow its data to be aggregated with that of its competitors.

A ride-hailing price-comparison app that can’t compare the prices of the two dominant ride-hailing services is extremely unlikely to succeed,…

Are We Headed Toward a Bull or Bear Market?

The stock market has been on a roll over the last year. Since the winter of 2016, investors have enjoyed a delightful bull market that has seen the S&P 500 index rise by more than 25 percent.

Whenever there is a lengthy run-up like this, investors always want to know how long it can last. Are we due for a big correction or even a record-breaking crash? Or will we see the markets continue to rise?

Trying to time the market’s movement is a fool’s game, but it’s always smart to look at the various indicators that may foreshadow future performance. With the current market, there is evidence to back up both bullish and bearish predictions.

Indicators of a bull market

The good times won’t end anytime soon.

Most economic indicators are strong

For the most part, the American economy is stable. Unemployment is at its lowest point in a decade. Inflation is not out of hand. Manufacturing output is up, along with consumer confidence. There are some concerns about overall growth and productivity, but nothing that spells immediate doom for American investors at this point. Generally speaking, if the underlying foundations of the economy are sound, a sudden drop in stock prices is unlikely.

Interest rates are still historically low

We’ve seen interest rates creep up a bit, but they are still very low by historical standards. If you’re placing money in a bank account, don’t expect to receive much in the way of income. Bond yields are also very low. Thus, there’s a good chance we’ll see people continue to invest in stocks, as they have recently offered much better returns than most other options. As long as interest rates remain low, demand for stocks will be high.

Technical analysis supports it

Many analysts and financial planners prefer to examine a technical analysis of the stock market’s performance, which looks at long-term trends that have historically repeated themselves. Most observers of these trends believe we are halfway through a growth cycle that began around 2010 and will continue another five to 10 years.

Corporate earnings are…

Improbable draws $502 million from SoftBank and others for dream of giant online game worlds

How’s this for improbable?

Online gaming world enabler Improbable has raised $502 million in a second round of investors, including SoftBank. Improbable has created an operating system, SpatialOS, that marshals the power of cloud computing and distributed platforms to enable even small studios to develop games with giant worlds.

The London-based company showed off a few of those games at the recent Game Developers Conference (GDC).

Above: Bossa Studios’ Worlds Adrift

Image Credit: Bossa Studios

CEO Herman Narula told me in an interview at the time that the company has launched its open beta for SpatialOS.

Developers working on SpatialOS-based games include Worlds Adrift, the upcoming game from Bossa Studios; Chronicles of Elyria by Soulbound Studios, a massively multiplayer online role-playing game built with the Unreal engine; Seed by Klang, a game of planetary settlement set in a shared, persistent world, created by a team including former senior CCP (Eve Online) employees; Lazarus by Spilt Milk Studios, a multiplayer top-down 2D shooter set in a huge galaxy populated by artificially intelligent alien factions locked in a war for territory; and Vanishing Stars: Colony Wars by Ninpo Game Studio, a new type of massively multiplayer real-time strategy game, played across thousands of star systems, each with their own planets to battle on.

Deep Nishar of SoftBank has joined the Improbable board following this investment, which sees SoftBank taking a non-controlling stake in the company. Earlier investors Andreessen Horowitz, Horizons Ventures and Temasek Holdings also participated. Improbable had received $20 million in a first round of funding from Andreessen Horowitz in March 2015.

Solina Chau, founder of Horizons Ventures, said in a statement,…

What You Need to Know About the Easiest Way to Save for Retirement

If you have a 401(k), chances are you’ve been given the option to invest in a “target-date” fund. This is a balanced mutual fund that gradually changes its investment mix depending on how close you are to retirement. It’s designed to hold a higher percentage of riskier, growth-oriented investments like stocks when you’re young, and increase the proportion of more conservative investments, such as cash and bonds, as you age.

Many brokerage firms offer target-date funds, which come with names like Fidelity Freedom 2050 or Lifepath Index 2045. The idea is to pick one associated with the year you expect to retire.

There are advantages to these funds, especially for those who don’t want to spend a lot of time managing their investments. But there are some drawbacks, too.

Pros

Let’s start with the upsides.

1. They automatically rebalance

Target-date funds are designed to build wealth while you’re working, and protect it as you approach retirement. They accomplish this by gradually and automatically changing the investment mix over time, which is referred to as rebalancing. Because it’s not particularly easy for the average investor to make these kinds of changes on their own, a target-date fund offers the convenience of “set it and forget it,” saving you time and extra work.

2. They are easy to select

Picking which mutual fund is right for you is tricky, because there are often so many choices. There are funds for specific industries, funds for growth, and others for income — it can be overwhelming. When choosing which target-date fund is right for you, though, all you need to do is pick one that lines up best with the year you expect to retire. So if you are now 30 years old and plan to retire at age 63, you would pick a fund labeled with the year 2050.

3. They offer diversification

Most target-date funds are essentially “funds of funds.” In other words, they are comprised of a mix of mutual funds, which are…

How These 8 Company Stocks Fared Following Scandal

From bad business decisions to PR nightmares (looking at you, United Airlines), negative news can crush a company’s bottom line and send investors fleeing. But not all scandals — or their fallouts — are the same. Some companies rebound quickly, while others spend years recovering — or go out of business altogether.

Let’s take a look at some of the largest corporate scandals in recent memory, and their impact on shareholders.

1. Tyco

This was one of the biggest corporate scandals in the early part of the millennium. CEO Dennis Kozlowski and CFO Mark Swartz were convicted of grand larceny after improperly awarding themselves millions of dollars in bonuses. Details of the lavish $2 million birthday party that Kozlowski threw for his wife made for great tabloid fodder.

Tyco’s shares took a hit in the short term, but the company’s underlying business in security and fire protection systems was still sound. Over the years, Tyco has split into multiple firms, leaving patient investors with shares of a diverse array of companies — many of which have outperformed the markets. Pentair, a company that acquired one Tyco division in 2012, has seen shares rise more than 40 percent. Johnson Controls bought Tyco last year and then spun off its automotive seating business, Adient. Adient shares are up 55 percent since the spinoff in November. (Disclosure: I own some shares of Johnson Controls, Adient, TE Connectivity, and Pentair.)

2. Chipotle Mexican Grill

The burrito chain faced scandal in 2015 after an E. coli outbreak affected dozens of customers. The company’s share price suffered for months as investors wondered whether it had a handle on food safety. Those issues appear to be in the past now, and shares have risen 23 percent in 2017. Still, they fail to come anywhere close to the highs of two years ago.

3. Samsung

Samsung was forced to recall all of its Galaxy Note 7 devices last year after reports of the phones catching fire due to battery defects. The discontinuation of the high-end phone cost…

Apple’s Stock Races Ahead as Investors Bet on New iPhones

SAN FRANCISCO — A year ago, many investors had given up on Apple, whose stock price had fallen more than 30 percent from its 2015 peak. Apple’s once-unstoppable growth had come to a crashing halt: The number of iPhones sold was down 13 percent, and the company posted its first revenue decline in 13 years.

Today, Apple’s business remains sluggish, but that hasn’t stopped investors, including the famously tech-averse Warren E. Buffett, from falling in love with it again. Shares of the tech giant — the most valuable company in the United States by market value — have repeatedly hit new highs this year. On Friday, they closed at $143.65, up nearly 60 percent from last May’s trough.

What’s driving the stock, say skeptics and fans alike, is hope — hope that the new iPhones due in September, on the 10th anniversary of the original iPhone’s introduction, will be dazzling enough to inspire existing iPhone users to upgrade and prompt others to switch from Android phones made by Samsung, Huawei and other manufacturers.

“Everyone expects Apple to cure cancer with their next product launch,” said Kevin Landis, chief executive of Firsthand Funds, who has managed tech-focused mutual funds through many ups and downs.

Investors will get more data about Apple’s performance, and perhaps some clues about its future, on Tuesday, when the company reports its results for the financial quarter that ended in March. Analysts expect the company to report a slight increase in iPhone sales and overall revenue.

Apple declined to comment ahead of its earnings report.

Mr. Landis sold most of Firsthand’s Apple position near last year’s bottom, but he said he had no regrets despite the stock’s recent gains. He expects Apple to continue churning out incremental improvements rather than shake up the industry. The biggest change in last fall’s iPhone 7, he noted, was the elimination of the headphone jack.

Apple is expected to make more exciting updates in its next high-end iPhone, including a high-resolution screen that covers the phone’s entire face. But the company has also suggested that much of its future growth will come from services like Apple Music, Apple Pay and the cut that Apple takes from application sales and subscriptions in the app store.

Apple executives, who are fond of using the word “revolutionary” to describe their products, have also acknowledged some missteps. After watching iPad unit sales spiral downward for 12 quarters in a row, the company introduced a cheaper model in March to win over schools that were flocking to Chromebooks. Apple is also likely to update its Pro models for businesses this year.

Apple…

4 Ways Your Money Can Support Your Values

Giving to charity is an important line item in my family budget — but it’s only one line. There are far more charitable organizations that I want to support than I can possibly give money to.

But what if there were a way to support your values without having to free up more money to give to charity? In fact, there is a way. You can do the same things you always do with your money — bank it, invest it, spend it on utilities, and shop — all while providing important financial benefits to the causes you care about.

Socially responsible robo-investing

I’ll never forget the stricken look on my financial adviser’s face when I told him I was uncomfortable with big oil, tobacco, or firearms as investments in my retirement portfolio. He took a deep breath and told me that I would probably have to be a little flexible about that if I wanted to maintain my passive investment strategy. The only other option would be to individually choose the investments I wanted so that my money was aligned with my values. Not only would that be expensive and time consuming (someone would have to do the stock picking), but it would not necessarily grow my money.

Passive investors like me now have the option of investing in funds that only go to companies we approve of. The new robo adviser OpenInvest offers investors the ability to personalize the specific issues they care most about. You simply create an “issue profile” that narrows down the types of companies you would either like to invest in or steer clear of. The robo adviser’s algorithm then creates a basket of about 60 stocks that match your values and should match the returns of the broader market.

Your money grows just like it would with any investment, but you are supporting companies that reflect your values. (See also: 5 Stocks to Buy If You Love the Earth)

Cellphone activism

It’s hard to imagine life without your cellphone — which makes it an excellent tool to help support your values. Simply changing your cellphone provider can make paying your bill part of your activism.

Whether your politics align…

HP moves into VR and AR with investment in Venture Reality Fund

Hewlett-Packard is putting on its headsets. One of the world’s oldest technology companies is investing in the fledgling virtual reality market by becoming an investor in The Venture Reality Fund.

The exact amount wasn’t disclosed. But HP Tech Ventures, the new corporate venture arm of HP, has joined as an investor The VR Fund, which has become one of the most active investors in VR, augmented reality, and mixed reality startups. It is HP’s first move into VR investments.

The VR Fund has invested in a number of early-stage startups developing infrastructure, tools, platforms, content and apps for the mixed reality ecosystem.

The VR Fund will provide HP with early access to leading AR/VR/MR technologies with commercial applications in HP’s target markets including office, retail, healthcare, manufacturing and education. The VR Fund’s…

How to tell when a SaaS startup is ready for IPO

Image Credit: Vintage Tone/Shutterstock

If you’re a founder, early employee, or investor of a growing SaaS startup, chances are that the word “Exit” has crossed your mind. Generally, you have two options: get acquired or go public. While the former has long been a viable option, the public market for SaaS businesses is relatively new. Salesforce.com was the first of its ilk to go public (in June 2004); the stock priced 30 percent above the initial filing range and ended its first day of trading up 56 percent. That success demarcated the market’s receptivity to SaaS companies, and a precedent was formed. Blackbaud and RightNow followed in subsequent months, and so have 75+ other SaaS businesses since then.

To understand what it takes for these companies to exist in the public markets, I and James Shalhoub, an investment banking associate at Jefferies, reviewed each of their S-1s and compared their IPO profiles.

At a glance

Based on historical data, the “median SaaS company” at IPO is 10 years old with ~530 employees, generates nearly $100 million in run-rate revenue, grows at 48 percent, and still operates at a loss. Founders, early employees, and investors would likely see their SaaS companies price above the filing range to achieve a ~$600 million market cap and watch their shares pop 32 percent after their first day of trading. The table below shows a range of the general IPO data points for these businesses.

Interesting benchmarks, but it’s unfair to apply these metrics to the entire SaaS universe. We consolidated the SaaS IPOs into three groups based on equity value at IPO: market cap of $500 million or less, between $500 million and $1 billion, and greater than $1 billion. We then analyzed relevant SaaS benchmarks, related to growth, profitability, capital allocation, and efficiency, to uncover deeper trends.

High expectations for growth

While public investors demand higher revenue growth from technology companies over other industries, the benchmark is set even higher for SaaS companies. After all, one merit of these companies is the ease with which they can deploy their product. Management can, in turn, spend more resources on acquiring new customers and expanding sales within existing accounts. The stakes are high for larger SaaS companies, though, as demonstrated in the chart to below.

SaaS players that achieved a $1 billion+ market cap at IPO had a median trailing 12 month (LTM) growth rate of 85 percent, helping fuel their larger valuation. The achievement does not go unnoticed, however. Every single one of these companies priced above their filing range and had a median first day close of +64 percent –…