The proposed Walgreens Boots Alliance, Inc. (NASDAQ:WBA) and Rite Aid Corporation (NYSE:RAD) deal continues to be drawn out and increasingly tumultuous between the companies involved and federal regulators. Recently, Rite Aid and Fred's Inc. (NASDAQ:FRED) shares dropped amid talk the Federal Trade Commission is leaning towards filing a lawsuit seeking to block Walgreens' planned acquisition of Rite Aid. In December of 2016, the companies announced an agreement to sell 865 stores to Fred’s for $950 million in cash. Earlier this year, Walgreens and Rite Aid agreed to divest more stores, boosting the number to 1,200 and to reduce their merger price.
Healthcare related stocks and more notably the biotech cohort saw a very tumultuous 2016. As the political backdrop, drug pricing debate and presidential election were thrusted into the spotlight, healthcare related stocks responded erratically to any news that would have a perceived impact on the industry. Now that 2016 it’s in the books, investors can look to 2017 and the new administration under president-elect Donald Trump. Since Donald Trump voiced his concerns over drug pricing, the initial rally in healthcare-related stocks has largely eroded to pre-election levels. Initially, the entire cohort saw significant gains as traders viewed a republican controlled government in positive light with regard to the healthcare sector. Considering the aforementioned factors throughout 2016, the iShares NASDAQ Biotechnology Index (Ticker:IBB) traded in a wide range with pronounced volatility after the presidential election posting a range of ~$240 to $344 or a 104-point gap. The upcoming 2017 year is shaping up to be an eventful one with continued uncertainty with regard to the political climate, governmental stance on mergers and acquisitions, potential deregulation, potential restructuring of the Affordable Care Act and a potentially more favorable tax and repatriation rates throughout the industry.
And it is taking place right now in your neighborhood. No, I'm not talking about ISIS invading your neighborhood, what I'm talking about is credit card payments to merchants.
Earlier this month, Apple announced its mobile payment system called ApplePay. The Apple iPhone 6 uses a technology called Near Field Communication or NFC, which is built into their new iPhones to pay for a product in a store that supports this technology. This is similar to Google Wallet which uses the same technology.
On one side of battlefield you have Apple Inc. (NASDAQ:AAPL), on the other side you have a consortium of merchants led by Wal-Mart Stores Inc. (NYSE:WMT), , which includes CVS Health Corporation (NYSE:CVS) and Rite Aid Corporation (NYSE:RAD). That consortium whose name is MCX (The Merchants Exchange) want to use their own mobile system that they have been developing since 2012. That system is named CurrentC. What's that going to do for consumers? You only have to look at the MCX website to understand what their goal is.
From the MCX Web site: "Merchant Customer Exchange is the only merchant-owned mobile commerce network built to streamline the customer shopping experience across all major retail verticals."
From the press kit: "It will also offer innovative features and benefits, such as merchant loyalty programs and instant coupon savings, all stored on the phone and available right at the point-of-sale."
Sounds very similar to Google wallet and ApplePay, does it not? Mobile payment solutions such as Google wallet have not really caught on with Millennials or anyone else for that matter. It was only when Apple came along with their new payment system that the MCX realized they had to attack. The first part of the attack was putting pressure on CVS Health Corporation (NYSE:CVS) and Rite Aid Corporation (NYSE:RAD) to turn off their NFC receivers on their cash registers so ApplePay would not work. What is strange is that Target, who is also a member of MCX, will accept ApplePay as it offers a more secure and superior method of payment over a regular credit card. Looking at some of the recent challenges that Target has had with credit card theft, it is understandable.
So today's poll question is:
If you have any comments you'd like to share with us about this post or about mobile payments in general, please feel free to leave them below this post.
Life is never boring, even in the mobile payments section.
Every success with MarketClub, Adam Hewison