The club holdings Amazon (AMZN), Wells Fargo (WFC) as well as Nvidia (NVDA) and Microsoft (MSFT) are in the headlines on Wednesday. Here are the headlines and the implications for the club’s investment thesis. Amazon Completes Healthcare Deal AMZN YTD Berg Amazon’s stock performance year-to-date. The news: Amazon has completed its acquisition of primary care provider One Medical, the companies announced on Wednesday, officially deepening the e-commerce giant’s presence in the healthcare sector. The $3.9 billion transaction announced in July is Amazon’s largest healthcare acquisition to date. By buying the tech-focused One Medical, Amazon said the companies can work together to make going to the doctor an easier and more convenient experience. San Francisco-based One Medical ended fiscal 2022 with 836,000 members and operating 221 medical practices in 27 markets across the United States. One Medical reported revenue of $1.05 billion and a net loss of $397.8 million in fiscal 2022. While the Amazon-One Medical deal was subject to investigation by the Federal Trade Commission, US regulators did not challenge the acquisition within the first review window. It’s possible the connection will face additional scrutiny, Reuters reported, citing an FTC official who said the agency will monitor potential harm to competition and uses of consumer data. The club’s take: Amazon’s most important foray into healthcare has been the delivery of prescription drugs, a natural target for the logistics powerhouse. With One Medical, the Amazon flag is now also being raised in the world of inpatient medical practices. Healthcare isn’t the focus of our investment thesis at Amazon, and we’ve recently focused on Amazon’s cost discipline during a period of tougher revenue growth. Healthcare is a huge market, however, and Amazon has a strong track record of innovating in online retail, as well as computing through Amazon Web Services. While some of Amazon’s medical endeavors have not exactly panned out in the past, One Medical gives the tech giant another opportunity to improve the healthcare customer experience. Wells Fargo’s Record-Breaking WFC YTD Mountain Wells Fargo’s Stock Performance Year-to-Date. The news: Two banking regulators are investigating record keeping failures at Wells Fargo, according to the company’s annual filing. Specifically, Wells Fargo said the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) investigations focused on “business communications sent via unauthorized electronic messaging channels.” The club’s opinion: This new revelation from Wells Fargo is not a cause for concern. Yes, Wells Fargo’s efforts to pull through a series of scandals are a big part of our investment case at the bank. However, this particular matter appears to be similar to recent investigations into JPMorgan (JPM), Bank of America (BAC) and other Wall Street firms. Those requests, which focused on the use of personal devices, came amid a boom in remote work for bank employees during the Covid pandemic. In other words, this doesn’t appear to be a Wells Fargo-specific issue, unlike previous issues that CEO Charlie Scharf has fixed. Several banks have already paid fines ranging from $200 million to $225 million related to those investigations, Morgan Stanley analysts said in a note to clients on Wednesday. If Wells Fargo ended up paying a $200 million penalty in connection with this SEC and CFTC affair, analysts say it would result in a loss of 5 cents per share — or about 1% — of full-year earnings per share equivalent (EPS) estimate of $5.56. The analysts also noted that Wells Fargo likely already has money set aside to cover a potential fine as part of the $1.4 billion legal reserve it disclosed during its fourth-quarter earnings call in January. Microsoft, Nvidia Cloud Gaming MSFT YTD Berg Microsoft’s stock performance year-to-date. The news: Microsoft has made Xbox PC games available through Nvidia’s cloud gaming service – and now Nvidia is backing Microsoft’s blockbuster deal to buy video game publisher Activision Blizzard (ATVI). The chipmaker, whose GPUs are popular with gamers, had reportedly expressed concern over Microsoft’s controversial acquisition, which is under scrutiny from antitrust authorities around the world. Microsoft and Nvidia announced their 10-year partnership on Tuesday. Microsoft also said Activision’s PC games like Call of Duty will be available on Nvidia’s gaming service called GeForce NOW if the acquisition goes through. According to the company, GeForce NOW has more than 25 million members worldwide. There is a limited free version as well as two premium tiers at $9.99 per month and $19.99 per month. Microsoft has its own cloud gaming service called Game Pass, which typically costs $9.99 per month. The Club’s Opinion: The agreement between Microsoft and Nvidia appears to be an attempt to address government agencies’ competition concerns with the Activision deal. However, it remains to be seen how, if at all, the pact will affect the thinking of regulators in the US, UK and Europe. In the last few weeks it seemed as if the deal was unlikely to go through. But the club’s thesis on Microsoft doesn’t focus on the tech giant’s acquisition of Activision. It’s more about the growth of the Azure cloud computing space in general. (Jim Cramer’s Charitable Trust is Long AMZN, NVDA, MSFT, WFC. For a full list of stocks click here.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling any stock in his charitable foundation’s portfolio. When Jim spoke about a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS GOVERNED BY OUR TERMS AND CONDITIONS AND PRIVACY POLICY ALONG WITH OUR DISCLAIMER. NO OBLIGATION OR OBLIGATION SHALL BE OR CREATED BY YOUR RECEIVING OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC RESULT OR PROFIT IS GUARANTEED.
The regulator was concerned about Amazon’s dual role as both a marketplace and a competitor to merchants selling on its platform.
Nathan Stirk | Getty Images
club holdings Amazon (AMZN), Wells Fargo (WFC) as well NVIDIA (NVDA) and Microsoft (MSFT) are in the news Wednesday. Here are the headlines and the implications for the club’s investment thesis.