The Market Ticker
Commentary on The Capital Markets- Category [Company Specific]
2017-11-06 13:47 by Karl Denninger
in Company Specific , 435 references
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The latest.

Go to Facesucker with an ad-blocker on in your browser.

Pay very careful attention.

You will not see ads.

Sort of.

You will see a flicker of them if you catch the screen just right, then they disappear and are replaced by the rest of the timeline.  Note that it's not just one video frame (e.g. a still image "placeholder") -- it's several frames.

Wait a second: How did that happen?

Realize this folks: If the page couldn't load the ad (video ads, mostly) you'd get nothing at all in that space.  You might get a literal zero (the "div" is there but nothing in it, so the net is no screen real estate taken up at all) or you might get a blank space on the page (depending on how they coded it) but you could not get the first half-second or quarter-second of the video itself and then it would be blocked because there's no data path available (that's how the blockers work, by "tricking" your browser into referencing an "incorrect" location, usually which is your own computer and thus they get nothing back.)

But that's not what's happening.

So here's my best guess, and it's ugly.

Facesucker is charging advertisers for the impression and claiming you "saw" it, when in fact you didn't and they know it.  They have architected their systems to recognize the ad blocker and "honor" it but the advertiser thinks you saw the ad and thus pays for the impression.

If this wasn't what was going on there'd be no reason for them to send any amount of the content to you (as all transmission costs money.) The only reason to do it is to claim it was "delivered", which it (sort of) was.

In other words I suspect they're robbing people (their advertisers) and it's not an accident.

Note that Facesucker has disclosed they're aware of the issue of "ad load" and that at some point it causes revulsion rather than acceptance.  Well, how much more can they "load" the page with ads if they bill someone for something you had flash momentarily on your screen briefly-enough that unless you're REALLY paying attention you don't even notice it was there?

And by the way -- why shouldn't they pull something like this?  The company got away with twice claiming there were more "reachable people" for a specific demographic in the US than there are persons alive according to the US Census!  There has been exactly zero regulatory or prosecutorial activity directed at them for either of those events.....

Update 11/8: In the last day or two I've noted a material change in this behavior.  It appears Facebook is now explicitly targeting the "2 second rule" for video ads and the "1 second rule" for still image ads so they can count them as impressions.  To those who said this was due to their use of UDP-based "preloading", uh, no, that wouldn't explain the behavior -- especially given the change in behavior I have observed over the last 48 hours.

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CNBC should be taken off the air for this outrageous pumping of a scam.

And a scam it is.

Here's from the Amazon Q, off their own page:

DateSalesCOGSSales/Cog %FulfillmentNet% Profit

Sales (of goods) in gross, cost of said goods, mark-up over cost, fulfillment expense, net (Sales - COGS - Fulfillment) and finally, profit on sales of goods ignoring SG&A and Marketing, which of course are real costs (in other words, this is better than "operating earnings" as it excludes the cost of labor and other day-to-day expenses normally in SG&A!)

Note that their margin on product sales (sales minus fulfillment and cost of products) for products has gone from a negative 9.2% margin to a negative 18.08 percent margin!

They're selling everything physical they sell, including all the costs they lard up on the sellers, at an 18% LOSS -- and that's BEFORE the firm's operating expenses!

What's even better is that they're getting squeezed margin-wise on all metrics at once.  Their gross margin (cost of goods sold .vs. sales) is down from 10.09% to 4.42% over the last year and change -- more than early half.  At the same time while sales went up 29% fulfillment costs skyrocketed by 48% and what's worse the cost of goods sold was up by 29% as well -- ~75 basis points above gross sales!

"Leverage"?  Well sure, for a good long time you can sell at a loss as your costs go up on all metrics much faster than your sales do and drive other people out of business doing that.  The problem is that the market is supposed to stop you from taking that path through two mechanisms: Unfair competitive practice law and Wall Street is not supposed to let you pull this crap on a sustained basis either -- the street analysts should immediately call "BeeEss!" on any such attempt.

But Amazon doesn't only do it on a sustained basis they're boosted by Wall Street "opinions" that intentionally omit the very facts found on the top of the company's own financial reports!  There was not one word on the outrageous destruction of operating margins and ridiculous expansion of negative gross margins from all sides in any of the research notes I read this morning.

Jeff Bezos doesn't walk on water.  He's not special.

The company is in fact robbing everyone up and down the line and in any sort of market where there was justice those displaced would come after him and toss his ass in prison.  But we don't live in such a market or nation anymore and as a result Bezos' "net worth" goes up by billions every time he reports an expanding negative profit margin.

Bezos has been pulling this crap with Amazon for more than ten years continually, and yet they continue to expand the scheme with the full support of Wall Street and so-called "media", supporting their loss on product sales with cross-subsidization on a "just barely" basis.  This is how they get their tax margin down too.  May I remind you that so-called "corporate tax relief" will do exactly nothing to change any of this (or improve anything for them) since the company pays damn near zero tax to begin with as all of its product offerings are in fact sold at a loss!

You don't pay corporate income tax on a loss.

Ed: The original table had an error in the pickup; their IR site had the old file on it.  Now corrected with current data and expanded to fill in the missing quarters from EDGAR (official SEC publication site.)

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2017-10-25 14:54 by Karl Denninger
in Company Specific , 280 references
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I have a dozen ways criminals could exploit this, and they will.

You give Spamzon a means to access your house (e.g. a keypad on your door, etc.)  They now have it.

Let's enumerate a few of the ways you can get hosed:

  • The "employee" (really a contractor, by the way) for Amazon simply steals anything he or she wants in your house while making the delivery -- which you allowed them in for.

  • Your credit card gets compromised.  Said individual orders something on your card to your house, waits for it to be delivered inside and exploits said delivery, either in confederation with the person doing it or by rick-rolling them, and robs your house.

  • The access code is stolen and used to directly access your home.  It's in the cloud.  I'm sure nothing in the cloud will ever be stolen, right?  Uh huh, just like virtually every American's credit file wasn't?  And since the code used to open the door will be authorized guess what -- your high-fautin' security system won't raise a peep as your nice 60" 4k OLED TV and jewelry walk right out the front door!

These took me about 30 seconds to come up with.  A bit more thinking would, I'm sure, enumerate dozens more, all of which will be exploited immediately by those with criminal intent.

I cannot imagine how stupid you have to be to sign up for such a thing.  The "initiative" to get into your car to make deliveries is bad enough, but allowing a retailer's contractors into your home when you have utterly no idea who they are or how said access data will be secured has to rank as one of the dumbest things I've ever heard of, and if you allow it then you have just marked yourself as having an IQ smaller than my running shoes.

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2017-07-20 15:38 by Karl Denninger
in Company Specific , 251 references
[Comments enabled]  

How do you stop Zuckerpig's privacy invasions?

Boycott anyone who advertises on those sites -- do not buy and do not do business with in any other way.  How do you know they're advertising?  You see "Sponsored" or any sort of video ad from a given entity.

This post is exempt and will never go away.  I will add to it as I see new companies, and if you do and can confirm it to me I'll add them.  Here's my pledge: If I see an ad from your firm on any of Zuckerpig's properties or sufficient confirmation (e.g. seeing such an ad on someone else's device in the app) I will never buy anything from you.

You choose -- you advertise and pay that company to do so, you lose my business.  To get it back you must permanently pledge to never again advertise on any Facebook-owned property, in public, via a formal press release or other similarly-verifiable and public method.

Oh and you get one second chance, never more.

Advertising is legal.  So is refusing to do business with you because you are the primary and in fact nearly the sole source of funds for a company that does things I consider detestable.

So here is the start of it folks, and yes, it will grow.... check back often!

  • Best Buy (Oh well; I've bought plenty there)
  • REI (this one hurts; I like them.... but no more!)
  • Big Green Egg (Sorry *******s, I was interested but NOT NOW!)
  • Southwest Airlines (all airlines SUCK, but now these ****ers are on my blackball list)
  • Consumer Reports
  • Inked Magazine
  • Runner's World (oh well!)
  • 30A clothing company (oops -- that one's local)
  • The Heritage Foundation (oops again!)
  • Huffington Post (no loss there)
  • A&E TV
  • We Are The Mighty (Military-oriented news org)
  • Orbitz
  • LinkedIN (be a paying customer and you're blackballed - as employer or employee!)
  • iHeartDogs.Com
  • Pensacola Runners Association (ouch; they sponsor races I'd run in...)
  • National Geographic (oh well)
  • CNet (Bleh)
  • 22 Words (Clickbait garbage, but heh)
  • (oops again; and I have bought quite a lot from gearup...)
  • 12 Tomatoes
  • The Penny Hoarder (yeah, another clickbait garbage site, but..)
  • SoWal (oops -- bye-bye Walton County beach businesses..)
  • Innermost House (San Fran Non-profit... good for some west coasters)
  • NTD Television
  • The New York Times (shock - NOT!)
  • Conservative Tribune (news)
  • Netgear (Router/ipCam/etc manufacturer)
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