Club Holdings Amazon (AMZN), Wells Fargo (WFC) as well as Nvidia (NVDA) and Microsoft (MSFT) are in the news on Wednesday. Here are the headlines and implications for the club’s investing thesis. Amazon completes health deal AMZN YTD mounts Amazon’s year-to-date stock performance. The news: Amazon has completed its acquisition of primary-care provider One Medical, the companies announced Wednesday, officially deepening the e-commerce giant’s health-care presence. The transaction — announced in July and valued at $3.9 billion — is Amazon’s largest health care acquisition to date. In buying tech-focused One Medical, Amazon has said that together the companies can make going to the doctor an easier and more convenient experience. San Francisco-based One Medical ended fiscal 2022 with 836,000 members, operating 221 medical offices in 27 markets in the U.S. One Medical reported $1.05 billion in fiscal 2022 revenue and a net loss of $397.8 million. While the Amazon-One Medical deal faced Federal Trade Commission scrutiny, the US regulator did not challenge the acquisition within the initial review window. It’s possible the tie-up could face additional scrutiny, Reuters reported citing an FTC official, adding that the agency will monitor potential harm to competition and consumer data uses. Club’s opinion: Amazon’s main foray into health care was through prescription drug delivery, a natural place for the logistics powerhouse to target. With One Medical, Amazon’s flag has now been planted in the world of brick-and-mortar doctors’ offices. Health care is not central to our investment thesis in Amazon, and we’ve recently focused on Amazon’s cost discipline at a time of difficult topline revenue growth. However, health care is a huge market, and Amazon has a strong track record of innovation in online retail as well as in computing through Amazon Web Services. While some of Amazon’s past medical efforts haven’t completely panned out, One Medical gives the tech giant another opportunity to improve the customer experience in health care. Wells Fargo’s record-keeping WFC YTD Mountain Wells Fargo’s year-to-date stock performance. The news: A pair of banking regulators are investigating record-keeping failings at Wells Fargo, according to the company’s annual filing. Specifically, Wells Fargo said investigations by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) focused on “business communications sent over unapproved electronic messaging channels.” Club’s View: This new disclosure from Wells Fargo is not a cause for concern. Yes, Wells Fargo’s efforts to move on from a series of scandals are a big part of our investment case in the bank. However, this particular case appears to be similar to recent investigations into JP Morgan (JPM), Bank of America (BAC) and other Wall Street firms. The inquiries, focused on the use of personal devices, came amid a surge in remote working for bank employees during the COVID pandemic. In other words, this doesn’t appear to be a Wells Fargo-specific issue, unlike past troubles that CEO Charlie Scharf is clearing up. Morgan Stanley analysts said in a note to clients on Wednesday that several banks have already paid fines in connection with those investigations, which total between $200 million and $225 million. If Wells Fargo were to pay a $200 million fine related to this SEC and CFTC case, analysts said it would amount to a 5-per-share hit — or roughly 1% — to their full-year earnings-per-share. Estimated EPS of $5.56 per share. Analysts also noted that Wells Fargo had already set aside money to cover potential fines as part of $1.4 billion in legal reserves during its fourth-quarter earnings call in January. Microsoft, Nvidia Cloud Gaming MSFT YTD Microsoft’s year-to-date stock performance climbed a mountain. News: Microsoft made Xbox PC games available on Nvidia’s cloud gaming service—and now, Nvidia backs Microsoft’s blockbuster deal to buy video-game publisher Activision Blizzard (ATVI). The chipmaker, whose graphics processors are popular among gamers, has reportedly raised concerns about the controversial acquisition of Microsoft, which is under scrutiny from antitrust regulators around the world. Microsoft and Nvidia announced their 10-year partnership on Tuesday. Microsoft also said that Activision’s PC games, such as “Call of Duty”, would 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 globally. There is a limited free version with two premium tiers at $9.99 per month and $19.99 per month. Microsoft has its own cloud gaming service called Game Pass, which usually costs $9.99 per month. The Club Tech: The settlement between Microsoft and Nvidia appears to be an attempt to address competition concerns from government agencies with the Activision deal. However, it remains to be seen how, if at all, this agreement will affect the thinking of regulators in the US, UK and Europe. In recent weeks, it had begun to look as though there was a high likelihood that the deal would not go through. But Club’s thesis on Microsoft isn’t centered on acquiring tech giant Activision. It’s more about the development of Azure, the cloud-computing arm, in general. (Jim Cramer’s charitable trust is long AMZN, NVDA, MSFT, WFC. See here for a full list of stocks.) As a subscriber to CNBC Investing Club with Jim Cramer, you’ll receive trade alerts before Jim trades . Jim waits 45 minutes to send a trade alert before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. 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The regulator was concerned with Amazon’s dual role as both a marketplace and a competitor to merchants selling on its platform.
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club holdings Amazon (amzn), Wells Fargo (WFC) as well as NVIDIA (NVDA) and Microsoft (MSFT) are in the news on Wednesday. Here are the headlines and implications for the club’s investing thesis.