Groupon needs a sale — its own

The chief executive of Groupon Inc. says the online-deals company has to go through a “profound change,” but he doesn’t seem to understand how big of a change is needed.

Groupon announced Tuesday afternoon that it would stop selling goods and return to focusing on “experiences,” along with proposing a reverse stock split to shareholders, as it showed off disappointing fourth-quarter financial results.

“This performance shortfall, coupled with the significant headwinds we continue to face, call for profound change,” said Groupon Chief Executive Rich Williams in a shareholder letter Tuesday. “We’re taking immediate and decisive action to return the company to growth.”

Groupon investors showed exactly what they thought of the results and Williams’s plans Wednesday, when Groupon’s stock GRPN, -44.26% suffered its biggest one-day decline since going public in 2011, a 42% plunge to a record-low closing price.

Longtime Groupon shareholders should be used to this by now. The company has frantically changed its approach several times, including its push into selling goods as it sought to move out of email inboxes and draw customers to its website. Now, it plans to dump that business and go back to focusing solely on local experiences — “turn Groupon into THE local experiences marketplace,” as Groupon told investors Wednesday.

“Much of that is no piece of cake, particularly rebranding the company, which has deeply entrenched consumer association to vouchers,” Wedbush Securities analyst Ygal Arounian wrote in a note Wednesday, adding that the goods business has historically been a driver to local deal traffic.

All of this nibbling around the edges of Groupon’s approach does nothing to address the core issue, though — Groupon’s business model makes no sense for an independent company. So now it seems it’s the time for Groupon to look for a partner that might make sense.

Arounian noted that he still believes the company would be a good candidate to merge with Yelp Inc., YELP, -1.53%, an idea that surfaced last September. At the time, both companies declined to comment on the rumors. On Wednesday, a Yelp spokeswoman again declined to comment and Groupon did not respond immediately to a request for comment. Online travel companies such as Airbnb and TripAdvisor TRIP, -0.10%  might also be good candidates, but Arounian thinks Yelp is the best fit.

“They could survive on their own if they execute on the local opportunity,” Arounian said in an email.
“But I think the biggest likelihood is that they combine with someone else. I do think the Yelp combination makes a lot of sense, ties together two local companies, one with top-of-funnel strength and one with transactional.”

Groupon has always made more sense as part of another company, not on its own. Since Yelp, too, is focused on driving more local traffic, some kind of combination between the two does make sense. Arounian wrote that he believes the latest moves will make a potential deal more likely. At this point, investors should hope he is right. YELP, -1.53%

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Stamps.com stock shoots 30% higher as earnings, forecast destroy expectations

Stamps.com Inc. STMP, +3.89% shares soared 30% higher in after-hours trading Wednesday after the online postage-sales company released fourth-quarter results and a 2020 forecast that belied fears that a divorce from the U.S. Postal Service would destroy its business. Stamps.com earned $20.3 million, or $1.13 a share, compared with $42.7 million, or $2.30 a share, in the fourth quarter of 2018. Adjusted for one-time items, Stamps.com earned $2.12 a share, compared with $3.73 a share a year ago. Revenue fell 5% to $161 million, compared with $170 million in the fourth quarter of 2018. Those results beat expectations, as analysts on average expected adjusted earnings of adjusted earnings of $1.03 a share on sales of $144.7 million, according to FactSet. Stamps.com shares were literally cut in half after the company ended its exclusive deal with the USPS a year ago, but that move has allowed it to partner with other carriers, and the company said Wednesday that it could return to sales growth in 2020. Stamps.com projected 2020 earnings of $2.08 to $2.92 a share, or $4 to $5 on an adjusted basis, on revenue of $570 million to $600 million, after the company posted total 2019 revenue of $571.9 million. Analysts on average were expecting 2020 adjusted earnings of $3.24 a share on sales of $537.7 million, according to FactSet. "We are very excited about our business prospects in 2020 and beyond," Chief Executive Ken McBride said in Wednesday’s announcement. After closing at $95.46, Stamps.com shares topped $125 in the extended session Wednesday following the release of the results.

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RTI replies flag concerns about tea waste’s use as adulterant

The Tea Board’s response to an RTI query, filed by a Nilgiris resident, has revealed that 23 companies in Southern India were granted licenses to purchase “tea waste” between January 1, 2019, and November 5, 2019.

The replies given by authorities to two separate Right to Information (RTI) requests have raised concerns about the possibility that “tea waste,” ostensibly being bought for use in bio-fertilizer plants, is instead being used by manufacturers to adulterate tea.

The Tea Board’s response to an RTI query, filed by H. Intesar, a Nilgiris resident, has revealed that 23 companies in Southern India were granted licenses to purchase “tea waste” between January 1, 2019, and November 5, 2019. According to the government, tea waste is described as “tea sweepings, tea fluff, tea fiber or tea stalks or any article purporting to be tea which does not confirm to the specification for tea laid down under the Prevention of Food Adulteration Act, 1954 (37 of 1954), but does not include green tea or green tea stalks.”

Of the 23 companies given licenses to purchase tea waste, 15 purchase it for use in bio-fertilizer plants, eight of which are located in Coimbatore and Tirupur, said Ms. Intesar. “When we filed another RTI query with the [Tamil Nadu] Department of Agriculture, it was clarified that none of the companies functioning in these areas have applied for permits to run bio-nutrient fertilizer facilities,” observed Ms. Intesar, who said that the findings raised major concerns about what was being done with the tea waste.

“If the tea waste is not being used to produce fertilizers, it could point to the waste being supplied to tea manufacturers to be used as an adulterant,” she added.

A tea manufacturer in the Nilgiris, who spoke on condition of anonymity, said that the RTI replies raised an “enormous number of questions, as to how much of the quantity of tea being produced in the Nilgiris is adulterated, and as to how many factories are involved in such practices”.

“It should be the responsibility of the Tea Board to ensure that companies that do purchase tea waste use it for the purposes that they are reporting,” the manufacturer said. “There should be periodic checks and action taken against companies purchasing tea waste without getting the requisite permissions,” he added.

Officials from the Tea Board said that based on the returns submitted by the manufacturers of bio-fertilizers, a total of 2.16 lakh kg of bio-fertilizer had been produced over the last five years by 15 companies.

A senior official from the Tea Board said that the allegations raised by the RTI activist would be seriously looked into. “We have already cracked down on a number of factories found to be adulterating tea, and will continue to aggressively clamp down on anyone found to be doing so,” asserted the official, who declined to be identified.

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Puma beats guidance, but warns of coronavirus hit

Puma SE beat its 2019 earnings guidance as profit and sales grew strongly but warned that its results for the first quarter of this year will take a hit due to the coronavirus outbreak.

The German sporting-goods company reported net profit of 17.8 million euros ($19.3 million) for the quarter, up from EUR11.5 million the year previous.

Earnings before interest and tax, or EBIT, for the quarter rose 47% to EUR55.2 million.

EBIT for the year rose 31% to EUR440.2 million, beating the company’s guidance of EUR420 million to EU430 million for 2019 and outpacing analysts’ expectations of EUR437.2 million, according to FactSet.

Sales for the quarter were EUR1.48 billion, a touch above expectations of EUR1.43 billion, according to a consensus estimate provided by FactSet. Full-year sales rose 18% to EUR5.5 billion.

Puma proposed a dividend of EUR0.50 a share, up from EUR0.35 a share the year before.

For 2020, the company guided for currency-adjusted sales growth of around 10%. EBIT is expected to be between EUR500 million and EUR520 million, Puma said.

The company warned that its sales and EBIT will likely be negatively impacted by the coronavirus during the first quarter of the year.

The viral outbreak has negatively hit Puma’s business since the start of this month, especially in China where more than half its stores remain closed. Business has also been negatively affected in other markets, especially in Asia, due to a drop in Chinese tourism, the company said.

Puma is currently working under the assumption that the situation around the virus will normalize in the short term and that it will be able to meet its goals for the year, it said.

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Vistara plans to start in-flight broadband service by March-end

It would also be the first domestic carrier to provide in-flight broadband for fliers.

Full service carrier Vistara plans to offer in-flight broadband service on certain international routes by March-end after inducting Dreamliners and Airbus 321 planes, a senior airline official said on Wednesday.

A joint venture between Tatas and Singapore Airlines, Vistara has tied up with Tata group firm Nelco to offer in-flight connectivity service.

Vistara would also be the first domestic carrier to provide in-flight broadband for fliers.

The airline would offer access to in-flight connectivity only on Dreamliners, which is Boeing 787 aircraft and Airbus 321 aircraft on international routes, Vistara Chief Strategy Officer Vinod Kannan told reporters here.

The service would also be available for domestic customers when these planes are operated in the Indian airspace.

Nelco has partnered with Panasonic Avionics Corporation to start the service.

“We have ordered Dreamliners and A321 which will be delivered by February-end or March. We will start their commercial operations on international routes by March-end or April with in-flight service on board.

“In the next two weeks, we will sit with Nelco and Panasonic to decide on the price,” Mr. Kannan said.

Vistara has ordered six Dreamliners and ten A321 planes. In-flight broadband service would be made available on all these aircraft.

“We will get four Dreamliners and two A321 aircraft this year. By end of 2021, we will be offering in-flight connectivity in 10 aircraft,” Mr. Kannan said.

According to him, a decision on offering the service in domestic flights would also depend on routes where Dreamliners and A321 aircraft would fly.

“We will initially look at offering broadband service. We have not decided on offering voice calls,” Mr. Kannan said.

Nelco MD and CEO P J Nath said the capability to provide both broadband and voice services would exist. It would depend on airline partners on the way they would like to package the services, he added.

“We are delighted that Nelco is spearheading in providing the long awaited Aero in-flight connectivity services in the country. Vistara is first airline to sign up for this service,” Mr. Nath said.

Panasonic Avionics Corporation Vice President Tom Eskola said passengers would be able to access the service even at a height of 35,000 feet.

“We currently cover 99.6% of routes on which aircraft fly. We are also migrating our system to generation 3 from generation 1. Vistara will have access to our generation 3 system when they start operation which will offer high speed broadband service during flight as they get on ground,” Mr. Eskola said.

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Hero MotoCorp to invest ₹10,000 crore in research and development, other activities

Announcing that the company’s Vision 2020 will “be the future of mobility”, Hero MotoCorp Chairman and Managing Director Pawan Munjal said the company also aims to be carbon neutral by 2030.

The country’s largest two-wheeler maker Hero MotoCorp on Tuesday announced investment of ₹10,000 crore over the next 5-7 years on various activities, including research and development and setting up new manufacturing facilities.

Announcing that the company’s Vision 2020 will “be the future of mobility”, Hero MotoCorp Chairman and Managing Director Pawan Munjal said the company also aims to be carbon neutral by 2030.

“Today even as we continue to rationalise our costs, we will not leave any stone unturned to realise our Vision of ‘The Future of Mobility’

“Over the next five to seven years, we would be investing around ₹10,000 crore in research and development of alternative mobility solutions, modern, state-of-the-art, sustainable manufacturing facilities, network expansion, and brand building across the globe,” Mr. Munjal said.

He said ever since the company started its solo journey in 2011 after parting ways with Japan’s Honda, Hero MotoCorp has invested USD 1 billion on new plants, machineries and product development while another USD 600 million was pumped into R&D.

Munjal said, later this year the company expects to cross 100 million cumulative sales since the company started its journey way back in 1985.

Hero MotoCorp on Tuesday launched BS-VI compliant versions of its Glamour motorcycle model priced at ₹68,900 and ₹72,000 and Passion Pro bike priced at ₹64,990 and ₹67,190.

The company also unveiled premium bike Xtreme 160R which will hit the markets in March.

Sharing the company’s sustainability targets, he said Hero MotoCorp aims to be carbon neutral by 2030; waste neutral by 2025 and 500 per cent water positive by the same year.

Munjal also stressed on the company’s ambition to become a force to reckon with in global landscape and said the company is now exporting to over 40 countries as compared to just four when it started the solo journey in 2011.

There has been a lot of innovation by the company’s global partners and more will come, he said adding “sooner than later we will find our rightful place in global automotive business”.

He further said, “Changing times call for a change in structure. So, to address the new, emerging trends, we have created a separate vertical — the Emerging Mobility Business Unit (EMBU) that is working on a range of mobility solutions for the future.”

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Walmart expects to save $60 million annually on shopping bags

Walmart Inc. is saving big bucks on an unexpected part of the business: shopping bags.

The world’s largest company by revenue expects to save $60 million annually on plastic shopping bags, “just by changing our buying process and better utilizing our scale,” Chief Financial Officer Brett Biggs said.

The remarks were made after the retail giant announced its fourth-quarter earnings on Tuesday. The earnings announcement also fell on the same day as the company’s investment community event.

Biggs also said the company is saving 15% on the cost of vests worn by sales staff, which are made with recyclable materials. Biggs said the vests are “more comfortable and more sustainable.”

This isn’t the first time Walmart WMT, +1.48%  has announced savings from a random corner of the business. Back in October 2018, the company said it would save $20 million annually by switching to a new floor wax that was cheaper and made it possible to buff the floors fewer times.

While Walmart is anticipating big savings on shopping bags and associate uniforms, the impact of the coronavirus is still to be determined.

Biggs said the company anticipates a “couple of cents negative impact” in the first quarter from the coronavirus outbreak. The impact of the outbreak wasn’t included in Walmart’s fiscal 2021 outlook.

Walmart is guiding for earnings per share of $5.00 to $5.15, up 1.5% to 4.5% from fiscal 2020 adjusted EPS, e-commerce growth of around 30% and Walmart U.S. same-store sales growth of at least 2.5%, excluding fuel.

The FactSet consensus is for EPS of $5.21 and domestic same-store sales growth of 3%.

Also: E-commerce surge sparks questions about reliability of same-store sales metric

Fourth-quarter earnings and revenue fell short, which Chief Executive Doug McMillon attributed to a variety of factors, including the shortened holiday shopping season, the shift to e-commerce and the lack of a hot toy.

Walmart raised its dividend by 2%.

“Walmart’s Q4 performance, which we characterize as tepid overall, indicates that the holiday season was if anything even more promotional than we anticipated, with its U.S. operating margin down around 75 basis points for the quarter, some of which was due to mix as lower margin food sales were strong while higher margin apparel was weak, some due to softness in key holiday categories such as toys, and some due to increased expenses around delivery,” said Charlie O’Shea, Moody’s lead Walmart analyst.

GlobalData Managing Director Neil Saunders notes that the holiday challenges at Walmart weren’t unique to that retailer. Target Corp. TGT, +1.60% , for instance, talked about the bigger-than-expected challenges of the shortened holiday season.

However, Walmart saw some cannibalization from its e-commerce business, which grew 35% in the fourth quarter, with customers opting for a digital purchase rather than going to stores, Saunders said.

Amazon.com Inc. AMZN, +0.97%  didn’t help either.

“Competition from Amazon heated up across multiple categories as its spending initiatives further heightened promotional activity as it drove sales above management’s forecast, though in doing so it ‘sacrificed’ around 150 basis points of margin for the quarter,” Moody’s O’Shea said.

What also hurt was unrest in Chile, with Biggs saying that some stores in that country were destroyed during political protests. The business there is not expected to recover in the coming fiscal year.

Disruption in Chile coupled with a legal matter cost 5 cents per share in the fourth quarter. Chile hurt operating income by about $110 million.

“Overall, we think Walmart likely wasn’t immune from some of the near-term pressures like a shortened holiday season that impacted competitors such as Target during the holiday season,” wrote UBS analysts led by Michael Lasser.

“Still its early guidance leads us to believe that its current year-to-date performance in February has been strong and it’s well positioned to take further share.”

UBS rates Walmart stock neutral with a $125 price target.

Walmart stock is up 1.4% in Tuesday trading, and up 19.6% over the last year. The Dow Jones Industrial Average DJIA, -0.56%  has gained 12.8% for the period.

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How AI ‘therapists’ could shrink the cost of mental health

“Alexa, I’m depressed.” The idea that a tabletop virtual assistant such as Alexa or Siri knows or cares how you’re feeling sounds straight out of some neurotic comedy. Today, at least.

Mental health is a brave new frontier for artificial-intelligence and machine-learning algorithms driven by “big data.” Before long, if some forward-looking psychologists, doctors and venture-capital investors have their way, your therapist could be a virtual human able to listen, counsel and even bill for that 50-minute hour.

“AI will be a game-changer,” says James Lake, a California psychiatrist and author of a series of self-help e-books showing individuals how to integrate a broad-based plan for their mental health. AI tools, he adds, will allow mental-health providers to “optimize patient care on the basis of each individual’s unique history, symptoms, needs, financial constraints and preferences.”

What if you need an anti-depressant or another psychiatric medication? AI can help a psychiatrist pinpoint the exact drug or drug class that your body will respond to, shortening or even eliminating the trial and error — and its side-effects — that frustrates both patients and doctors. Algorithms also can tell, based on someone’s age, gender, responses to questions and other factors, if that person is about to attempt suicide; Facebook FB, +1.39%, for example, uses an algorithm that flags a post if it contains words that suggest suicidal thoughts or self-harm.

Caring for patients with precision is a Holy Grail for mental-health professionals. Current diagnosis and treatment methods, while skilled and insightful, cannot fully capture the unique needs and complexity of every patient — not without time, money and a willingness that many people simply do not have. AI-based therapies have the potential to be faster and cheaper, and therefore more effective, which in turn can encourage patients to continue their counseling.

Data-based precision mental health also appeals to cost-conscious employers and insurance plans. Startups with traction in this area include Quartet Health, whose backers include GV (formerly Google Ventures), a unit of Alphabet GOOG, -0.16%GOOGL, -0.08%, which has partnered with health-care systems and health plans in several U.S. states, with a particular focus on underserved Medicaid patients. Another startup, Lyra Health, matches employees to health professionals using big data to diagnose mental conditions, and counts eBay EBAY, +0.38% and Amgen AMGN, -0.88% among its customers.

“We can predict whether someone would recover if they took a specific treatment,” says Adam Chekroud, a clinical psychologist and co-founder of Spring Health, a startup whose predictive models detect mental states and recommend appropriate treatment.

Some large companies including Gap GPS, -4.24% and Amazon’s AMZN, +0.43% Whole Foods use Spring Health’s technology for their employees. After answering questions about personal problems and behaviors, employees are directed to an in-network provider who is given specific treatments that Spring Health determines are most likely to help that patient. Adds Chekroud: “When people did what was predicted [for them], they were twice as likely to recover.”

Encouraging outcomes are also apparent from smartphone-based “chatbots” that use AI to deliver cognitive behavioral therapy, or CBT, which can help emotionally troubled people build life skills and self-compassion. CBT is a proven way to treat depression, and CBT-based chatbots, or “conversational agents” — which simulate human conversation through voice and text — have been shown to reduce depressive episodes in users after just two weeks of daily interaction.

For example, Woebot, a chatbot that Stanford University clinicians originally developed for college students, is now a downloadable app with venture funding. Woebot introduces itself as an “emotional assistant” that is “like a wise little person you can consult with during difficult times, and not-so-difficult times.” Its chatty interface is friendly and colloquial, gently probing about feelings and habits. “This allows me to find patterns that are sometimes hard for humans to see,” Woebot explains.

Chatbots like Woebot aim to tap into the root of psychotherapy — a therapeutic relationship of trust, connection, and a patient’s belief that a provider understands and cares about their feelings, thoughts and experiences. Chatbots aren’t yet so sophisticated, but Woebot reminds you that it will check in every day, and a session ends with the app offering an element of positive psychology, such as practicing gratitude.

Clearly, AI has the potential to reshape mental-health care in powerful and meaningful ways — if people choose to get help, or are able to find it. One of every five adults in the U.S. experienced mental illness in 2018, according to the U.S. Department of Health and Human Services, but less than half received treatment. One reason is that psychiatrists and psychologists in the U.S. are concentrated in urban areas, mostly in the Northeast and on the West Coast. More than three times as many psychologists practice in New England, for example, than in the Gulf states. Many rural counties have no mental-health professionals.

Perhaps the biggest obstacle to treatment is an age-old cultural stigma about mental illness and therapy. The irony is that while mental disorders now are more out in the open, privately many patients and their families carry shame and embarrassment about it. Add financial constraints and lack of health insurance for some, and it’s clear why many people who need psychological counseling go untreated. The gap in care is global: the World Health Organization reports that one in four people globally will suffer from psychological distress at some point in life, but two-thirds will never seek help.

“Stigma is something we can do a great deal about,” says Bandy Lee, a psychiatrist on the faculty of the Yale School of Medicine’s Law and Psychiatry Division. “It takes very little to acquire an attitude of openness and educate the public in ways that could change the way we view mental illness. This has happened with cancer and AIDS — we don’t immediately prejudge the person because of the illness and we don’t consider the illness to define the person.”

Using AI-based tools to destigmatize mental illness, lower treatment costs, and promise care for people who have limited access to it would be a giant leap toward mainstreaming mental health. Moreover, for therapy-resistant people, virtual therapists present a unique solution. Just as patients are more likely to open up to a chatbot, studies show that people reveal more personal, intimate information “face-to-face” with a humanoid-like machine than to a live human. The AI in the virtual human, in turn, is designed to sense a person’s intonation, movements and gestures for clues to their mental state.

Could machines that look, act and sound human replace psychologists and psychiatrists? Probably not — that possibility is limited so far by a lack of technological understanding and infrastructure — but many clinicians fear this future nonetheless. Virtual therapists are available anytime, anywhere. “They’re never tired, never fatigued; they can build a giant database of what you say and how you say it,” says Skip Rizzo, director for medical virtual reality at the University of Southern California’s Institute for Creative Technologies.

Rizzo and his colleagues are leaders in the research and development of virtual humans for mental health treatment, but he insists that the technology exists solely to alleviate the shortage of providers. “We’re not making a ‘doc in a box,’ ” Rizzo says. “We’re helping a person to put a toe in the water in a safe, anonymous place where they can explore their issues.”

If all this sounds like science-fiction, it isn’t. Consequently, like a dystopian science-fiction story, the known rewards of AI carry unknowable risks. AI poses sobering ethical issues that psychologists and psychiatrists, along with the data scientists and companies creating the technology, are just beginning to confront. Who owns your mental health? Who has access to the data? What happens if the data is hacked? Might your record be used against you by employers, by governments?

David Luxton, a clinical psychologist and an authority on the ethics of artificial intelligence in behavioral- and mental-health care, is concerned about these questions and more. “Who is controlling the technology?” he says. “I would be reluctant to provide private information about my mental state on a mobile app or the internet. How do you know what the company is going to be doing with that information?”

More chillingly, machine-learning algorithms can be biased. Algorithms look for patterns — that’s how Amazon and other retailers can tell you what to buy, given what you’ve purchased or shown interest in. But algorithmic patterns can be harmful, making systematic errors that, for instance, favor one ethnic or cultural group over another or define your emotional state based on incomplete data and inaccurate assumptions. Before long the pattern becomes self-reinforcing in its confirmation bias, leading to unfair and unfortunate results.

Given these dangers, the time is now, Luxton says, to revise and update codes and practices to ensure that AI-based mental health tools are used ethically, with particular attention to privacy and transparency rules and laws. “We’ve got this stuff in our hands,” Luxton adds. “Where are we going to be in the next 10 years?”

If you or someone you know is experiencing a mental-health crisis, the National Suicide Prevention Lifeline is available at any time at this toll-free telephone number: 1-800-273-8255.

Jonathan Burton is an editor and reporter at MarketWatch.

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Tesla’s stock spikes above $850 after Bernstein sees no ‘imminent’ negative catalyst

Shares of Tesla Inc. shot back above $850 Tuesday before paring gains, after Bernstein analyst Toni Sacconaghi nearly doubled his price target, saying he didn’t see any negative catalysts on the horizon for a stock that wasn’t especially expensive.

The electric car maker’s stockTSLA, +5.78% rose as much 7.5% to an intraday high of $860.00, before paring gains to be up 5.8% in midday trading. It has now more than doubled (up 102%) just this year. The stock is 4.6% below its record close of $887.06 on Feb. 4.

Sacconaghi raised his stock price target to $730, which is still 14% below current levels, from $325. He reiterated the market perform rating that he’s had on Tesla for at least the past three years.

Sacconaghi said he has been thinking about how to value Tesla, following the stock’s meteoric rise over the last several weeks. Using traditional auto valuations and discounted cash flows, he said it would be difficult to justify the current share price, which would suggest Tesla will eventually become bigger and more profitable than Volkswagen.

Don’t miss: Tesla wins ‘applause’ from Wall Street, stock tops $800.

Also read: Tesla jolts market with $2 billion stock offering, SEC subpoena.

However, he acknowledged that investor perceptions have changed, with Tesla becoming the “ultimate ‘possibility’ stock.”

“Investors feel much better about Tesla’s ability to be sustainably profitable; Model 3 demand remains healthy; [gross margins and operating expenditures] are both poised to materially improve;” competition is sputtering; and product and production pipelines are robust,” Sacconaghi wrote in a note to clients.

See related: The hedge-fund investor who has beaten Warren Buffett by 200x likely made a killing on Tesla.

With regard to competition, after Tesla Chief Executive Elon Musk learned that Microsoft Corp.MSFT, +0.77% founder Bill Gates had bought an electric Porsche Taycan, Musk described in a tweet that his conversations with Gates had been “underwhelming.”

Sacconaghi said he believes Tesla’s addressable market will grow 30-fold over the next 20 years, so even if the company’s shares of the electric vehicle market gets cut in half, it will still grow 15-fold. In addition, Tesla has “significant addition optionality” through the truck, self-driving, battery technology and solar markets.

Beside the possibilities, Sacconaghi sees little downside risk in the near term: “We are skeptical that upside possibilities are likely to be expunged any time soon — suggesting no imminent negative catalysts for the stock.”

He also suggested that Tesla’s stock is “not unprecedentedly expensive,” even after the recent bubble-like rally. “Notably, Tesla is the single fastest-growing large-cap tech stock today, and the scarcity of such a profile inevitably commands a premium, especially in this market,” Sacconaghi wrote.

He said at $800, Tesla’s stock would be valued at 33-times consensus 2023 earnings before interest and taxes (EBIT), while Netflix Inc.NFLX, +1.78% trades at 20-times, Amazon.com Inc.AMZN, +0.43% trades at 24-times and ServiceNow Inc.NOW, -0.35% trades at 29-times, all of which have slower growth.

See related: Tesla’s biggest bull stampedes to a $7,000 price target.

Despite all of Sacconaghi’s justifications for where Tesla’s stock is trading, keep in mind that he’s not recommending investors buy the stock. For Bernstein, a market perform rating indicates the analyst believes the stock will perform in line with the broader stock market, plus or minus 15 percentage points, over the next year.

Of the 31 analysts surveyed by FactSet, there are currently no less than 5 analysts with price targets above $700 and just one with a price target at $800. The average target of $526.71 is 38% below current levels. The average rating is the equivalent of hold, with 14 analysts having sell or underweight ratings, 11 with the equivalent of hold and just six with the equivalent of buy ratings.

Tesla’s stock has run up 175% over the past 12 months, while shares of rival General Motors Co.GM, -1.74% have lost 13% and Ford Motor Co.’s sharesF, -0.43% have declined 5.9%. The S&P 500 indexSPX, -0.48% has gained 21% over the past year.

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A doctor’s prescription to save patients money, grief and sticker shock

A few weeks ago, Perla Ni went to the Stanford Health Care hospital system for a breast biopsy. Days later she was given the procedure’s price: $143,396.66. I know everything costs more in California, but this was ridiculous. I’ve performed hundreds of those operations. They take about 45 minutes.

Like many Americans, Perla is on a high-deductible health plan, so she had to pay a lot out of pocket. She shelled out $7,750 for her copay and deductible, which would have covered the entire cost of the procedure at Surgery Center of Oklahoma, a cash pay facility that has a price menu for its services. Perla’s insurance company, which had a negotiated discount, got a bill for $67,088. When I asked Stanford to explain its high price, it replied: “We attempt to include a realistic estimate of the procedure, in an effort to avoid surprise charges.”

If Americans are puzzled about soaring health care costs, remember that Perla’s insurance company will raise everyone’s premiums this year.

Price gouging like this is costing Americans billions of dollars and eroding public trust in American hospitals. Sixty-four percent of Americans say they have avoided or delayed medical care for fear of the bill.

I wish I could say that the overcharging Perla experienced was the exception. Sadly, it’s not. Prices are seldom shown beforehand, a practice we would never tolerate in other industries. Just imagine if the next time you went to book a flight, the airline refused to show prices until after your flight.

Stanford hospital is not alone. Despite claims that hospitals have razor-thin margins, large hospitals are building granite lobbies, planting Zen gardens and reporting record profits. According to the government watchdog group Open the Books, the country’s top 82 tax-exempt medical centers had a 23% increase in their net assets last year, jumping from $164 billion to $203 billion. That’s why I was so disappointed to discover a surge in tax-exempt hospitals suing patients to garnish their wages when they can’t pay. Approximately one-third of hospitals sued patients in 2017, according to a study my colleagues and I published last year in the Journal of the American Medical Association. The most common employer of the people getting sued? Walmart WMT, +0.93%.

The health-care establishment should remember that half of Americans have less than $400 in savings. Every stakeholder in health care is doing very well financially except for one — the patient. Many Americans are still living paycheck to paycheck. For them, life can be a struggle.

Yet there is hope. As I learned while researching for my recent book, “The Price We Pay,” a new wave of startups is emerging to disrupt health care’s money games. Some are creating the equivalent of travel websites that list airline prices. Companies such as MDsave, MyMedicalShopper and SurgiPrice are creating online marketplaces for medical services, steering patients to the few medical centers that are posting real prices. In the past, hospitals scoffed at the idea of agreeing to prices before scheduling services, but now the joke is on them. Medical centers that are not participating in these online marketplaces are losing business to the medical centers that are.

On a recent trip to Carlsbad, N.M., to help a patient who was overcharged for a CAT scan, I decided to walk over to the hospital’s radiology counter to ask how much a CAT scan of the abdomen actually costs. I gave the radiology representative the exact medical code for the procedure. She said it would cost “about $5,000,” which translates to a direct out-of-pocket cost of $5,000 for many out-of-network patients and those with a high deductible. Knowing the price should be much lower, I explained my frustration at the price and pointed out that other imaging centers charge far less. She responded by whispering to me “OK, if you go to MDsave.com, we list it there for about $500.” Actually, $522 to be exact, when I checked the website. Why does a hospital drop its prices so dramatically on a competitive website? That’s the power of transparent markets.

Employers, such as Boeing Co. BA, -0.91%, Microsoft Corp. MSFT, +0.78% and Tesla Inc. TSLA, +5.78%, are leading the way demanding fair prices. Acting as a proxy shopper for their employees, whose health costs they cover, employers and their health plans are creating preferred networks and eliminating copays and deductibles for people who go to high-quality “centers of excellence” that have fair prices. Acting as an employer group, the Pacific Business Group on Health is now using its collective purchasing power to drive greater price and quality transparency by hospitals. It is also creating public accountability. Recently, it challenged Sutter Health over its extremely high prices, pointing out a number of potentially illegal anti-competitive practices. The California Attorney General Xavier Becerra took the business group’s complaint to court, which resulted in a $575 million settlement by the hospital.

A fundamental problem in health care is that we have non-competitive markets. While policy makers may feel tempted to just set a price cap for surprise bills or drugs, the better and more disruptive idea is to actually make markets competitive on price and quality. And though price transparency is not the silver bullet to lower health-care costs, it is a necessary first step.

Medical providers are also responding to the public demand for honest pricing. The Free Market Medical Association is a consortium of doctors opting out of the game of artificially inflating prices for the purpose of negotiating bigger insurance discounts. Sick and tired of the high cost of medical coding, collections, and exhausting appeals, these medical providers are setting true upfront prices. In reality, bypassing the parade of middlemen who profit when prices are higher is allowing some medical centers to price their services at 30% to 40% below what they would otherwise charge. For example, the Surgery Center of Oklahoma, which has impeccable quality, has a set menu of true prices, which do not vary depending on your insurance carrier or employer. Because the center doesn’t spend money on insurance contracting and wrestling over bills, their prices are well below what others charge. And business is good. In one study, surgery centers that switched to real price transparency reported a 50% increase in patient volume and a 30% increase in revenue. Americans are hungry for honesty in health care.

Billing quality is medical quality. And financial toxicity is medical harm. In the same way that hospital complication rates are currently being tracked for public reporting and quality improvement purposes, Dr. Simon Matthews and I have recently published new metrics of billing quality in the Journal of the American Medical Association. The measures assess whether a hospital provides itemized bills in plain English, shows real prices, sues patients, offers prompt customer service after bills are sent, and if the center issues surprise bills. Benchmarking and public reporting of a hospital’s performance on billing quality using this simple five-star rating system can be used for patient navigation and to create public accountability.

Do we have bad people running America’s hospitals? I actually believe we have good people who have inherited a bad system of jacking up prices each year for the purpose of offering bigger discounts to insurers. It’s gotten so out of hand that hospitals and insurers now have armies of people to negotiate discounts for bills they themselves can’t interpret. For years hospitals have been focused on other priorities like hiring staff and meeting regulatory requirements. Itemizing their true cost to calculate a real price has never been required by the market. But given our current cost crisis and its toll on American workers, transparency’s time has come.

Responding to intense frustration by American families and businesses over price gouging, the Trump administration, through the U.S. Department of Health and Human Services, recently announced a price transparency rule requiring hospitals to post real prices for 300 common, shoppable services. The rule also requires public disclosure of the secret negotiated discounts between hospitals and insurers. The hope is that this will shine a light on the current pricing games and ignite competition. The new rule had no partisan opposition when it was announced, but the American Hospital Association immediately filed a lawsuit to block it, arguing, remarkably, that showing prices would confuse patients. In the spirit of public accountability, you may want to ask your beloved community hospital if they support the lawsuit to block price transparency. And any reporters out there willing to tackle the No. 1 issue for voters might want to ask local and national candidates if they support the price transparency rule or the hospital lawsuit to crush it.

When American hospitals were built, they had a mission to be a safe haven for the sick and injured. Most of these hospitals were sustained by charity and committed to great values of equality. At my hospital’s founding, Mr. Johns Hopkins stated that its purpose was to care for “the indigent sick of this city and its environs, without regard to sex, age or color … the poor of this city and state of all races, who are stricken down by any casualty, shall be received into the hospital without charge.” Those values of compassion and quality embody the great heritage of our medical profession. It’s time we restore medicine to its mission.

Regardless of whether the recent government regulation to create transparency survives its legal battle with American hospitals, the private sector is moving swiftly to meet the public demand for real prices. The revolution to make health care more honest, more transparent, and more direct is positioned to disrupt our broken system, but more important, it can rebuild the public trust in American hospitals.

Dr. Marty Makary is a Professor of Surgery and Health Policy at the Johns Hopkins School of Medicine, Editor-in-Chief of MedPage Today, and author of the new book “The Price We Pay.”

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