The Potential of Partnerships
Partnerships among public companies can significantly impact earnings and, consequently, stock prices. When two companies collaborate strategically, they may achieve cost savings through operational efficiencies, streamlined processes, and mutually benefit through shared resources and knowledge. In today’s piece, I will cover what I see as three of Wall Street’s most intriguing and important synergies that have the potential to increase revenue growth, profitability, and ultimately drive the underlying stocks.
Immediate Impact Partnership: Pinterest & Amazon
Zacks Rank #1 (Strong Buy) stock Pinterest is a social media platform that allows users to discover and save ideas for various interests and projects. It functions as a virtual pinboard where users can find and curate content, known as “pins,” on various topics such as home décor, fashion, recipes, travel, and more.
Though Pinterest is a very popular platform, its stock has seesawed since it went public in 2019. The reason for the mediocre action in stock is the lack of monetization. However, in 2023, that came to an end: “Today we’re announcing that we’re opening up third-party ad demand on Pinterest. As user engagement with shoppable content on Pinterest continues to grow, we’re pleased to have selected Amazon as our first partner for third-party ads.” Since the partnership announcement, the stock is up more than 30%, and Zacks Consensus Estimates suggest earnings will grow at a double-digit clip for the foreseeable future.
Image Source: Zacks Investment Research
Intermediate-Term Impact Partnership: Disney & NFL
Earlier this week, Disney shares found buyers off support at the 200-day moving average following reports that the National Football League is in discussion to buy a piece of ESPN. In 2019 Disney gave a rare glimpse into the company’s financials as ESPN desperately searched for a suitor. Unfortunately for Disney, the view was not pretty – profits had plunged more than 20% at the time. Though it’s tough to move the needle at such a large company as Disney, the deal with America’s most popular sports league will inject life into the company’s fledgling ESPN business. Just how influential is the NFL? The first streamed NFL game on media company “Peacock” launched the app to #1 overall in the app store and doubled their search volume on Alphabets (GOOGL) Google.
Image Source: Zacks Investment Research
Long-Term Impact Partnership: Tesla & Uber
Ride-sharing giant Uber is sharing information with Tesla in an effort to drive EV adoption. The two companies are also working in tandem to offer discounts on Tesla vehicles to Uber drivers. Though the partnership has low impact in the near term, could it eventually blossom into an enormous “robo-taxi” business like ARK (ARKK) CEO Cathie Wood predicts?
Zacks Reveals ChatGPT “Sleeper” Stock
One little-known company is at the heart of an especially brilliant Artificial Intelligence sector. By 2030, the AI industry is predicted to have an internet and iPhone-scale economic impact of $15.7 Trillion.