Archive for the ‘Stock Opinions’ Category

Facebook, An Attractive Buy At These Levels

By: ispeculatornew | Date posted: 10.12.2015 (3:00 am)

$FBOver the years, I’ve written about the ecosystem play and how Facebook was one of a handful of names that was positioned to profit from its very strong ecosystem. That is quickly happening and while the stock has already gained tremendously, I believe a lot more upside is left.

The “New” Web

In a world where most internet users are going online through mobile devices, the starting point is no longer a Google homepage or even an internet browser. Rather, users start with their home screen where they access their apps. For more and more users, that means Facebook. In the US, the 2 most downloaded apps are Facebook and Facebook Messenger. Not far behind are Instagram and Whatsapp. In fact, AppAnnie has 4 of the top 6 apps of all time belonging to Facebook:


credit: AppAnnie

Nearly all the time spent on mobile devices is spent in apps (rather than on the mobile web) and time spent in apps is even catching up to tv time:

credit: TechCrunch

The Growth Of The “Closed Garden”

Remember the mission of Google to organize the world’s information? That is becoming increasingly difficult in a world where more and more of the information is within Facebook’s closed ecosystem. The first step was consumers talking to each other within the walls of Facebook, Messenger, Instagram. There is little doubt that Facebook has achieved that goal as users (by the tune of 1B in a single day) use the network to catch up with friends and family, share photos, videos and chat.

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaEarningsSales 5Y Avg Growth
FBFacebook Inc93.2494.3633.7718.5258.364.6814.020.8511/04/201558.4

FB_chart (1)From Consumers to Businesses

That is quickly growing though as businesses (from the biggest to the smallest) are increasingly using their Facebook pages to keep in touch with consumers and soon will be able to offer coupons and products for sale. Every time I see an ad by companies that send their users towards their Facebook/Instagram pages, I’m reminded of how much power and influence Facebook has been able to gain. On the core Facebook product, the company has been able to grow advertising spend by those businesses both by giving incredible ROI and by “selling” timeline views for users that have “linked” those business pages. I also think the “M” initiative for Facebook messenger is incredibly promising. If Facebook is able to help businesses communicate more efficiently with clients, that will certainly end up helping the top and bottom lines.

Facebook has also started enabling content creators to distribute content within its walls through videos and instant articles for newspapers/blogs/magazines. This sets Facebook up for massive success if it continues to focus on building its products, its audience and then moving to monetization. Facebook has obviously done very well in monetizing its core Facebook product through advertising but has yet to focus on that aspect for Messenger, WhatsApp and Instragram. I strongly believe that Facebook will continue to slowly “open the pipes” and see strong growth in its other properties. This will happen through advertising but also through payments, ecommerce, etc. These revenue charts will continue to display strong growth in the coming years:


Disclaimer: Long Facebook (FB)

Facebook ($FB) Crushing Google ($GOOG) – Is Zuck Just Getting Started?

By: ispeculatornew | Date posted: 04.10.2015 (3:00 am)

$googA couple of weeks ago, I updated this blog with my latest thoughts about the ecosystem play. I followed that up with a more detailed analysis of Apple (AAPL) and why I think it remain a screaming buy.  This week, I spent more time looking at the other plays and in an unexpected way, I ended up seeing the need to write about both Google (GOOG) and Facebook (FB) together. As you can imagine from my previous writings, I’m much more convinced about Facebook’s long term growth potential but I think both companies compete much more than most would imagine. Both companies are convinced that the most important factor in growing their businesses is growing the online audience. Facebook has its initiative and has been working hard on helping several emerging countries connect to the web. Google has several such initiatives both in emerging countries such as Loon but also through what looks like an increasingly serious effort to become an ISP (Google Fiber). They are making great progress in connecting more and more people online. The big question of course is.. what is the web?


Phase #1 – The Search Era

When Google became a major online player, it offered a unique way to search the web and thanks to its innovative Pagerank algorithm, Google quickly became the best search engine out there and the only search engine that was able to index (most of) the entire web and deliver quick and solid search results. That is mostly how internet users discovered content. They’d open a browser, go to Google and find whatever they were looking for. At this point, Facebook was a non-factor. I won’t go on and on but search has obviously been the biggest battle on the web to date and Google emerged as the very clear winner.

Winner of Search Era: Google

$FBPhase #2 – The Social Era

After years of having users searching the web through search engines, a transformation started happening thanks in large part to Facebook and Twitter as most users started spending time on social websites to share thoughts, photos, videos and more. Google certainly tried with several different efforts (Blogger, Orkut, Google Wave, Google Buzz and Google+). There are many different theories as to why Google has failed so badly over and over and my personal opinion is that Google started by underestimating the impact of social and was simply too much of an algorithmic company. In contrast, Facebook not only launched the most successful social network in history with over 1 billion users but also was able to buy what is possibly its biggest competition in Instragram. This is proving a bigger and bigger problem for Google as Facebook is not only hosting content from users and businesses but now moving to a phase where it will be hosting content within its walls. The web is moving outside of Google’s reach both in social networks but also inside of mobile apps.

Winner of Search Era: Facebook

Phase #3 – The Mobile Web (apps,o/s)

A couple of years ago, Google looked like the clear winner in mobile. Not only was it dominating in terms of market share with Android but Google remains the biggest player in mobile search and owns one of the major app stores (Google Play). That has however been more and more contested as mobile moves to an “app world”. With most users now spending most of their time inside of apps rather than searching the web, the battle has turned to apps and in that world, Facebook is the clear winner. Not only does it have the top app in terms of usage (Facebook) but it also ranks very high with other apps such as Instagram, Messenger, WhatsApp, etc. It will be interesting to see how Google will try to turn this around.

Winner of Search Era: Facebook but Google is obviously still in the run

Phase #4 – Video

As video continues to gain in importance, most big players are making some kind of play. Some such as Twitter have several different angles including the recently launched Periscope. Clearly though, the top video player is Youtube which Google purchased for $1.65B back in 2006 (what a bargain!). Youtube remains the dominant player but Facebook seems to be emerging as a credible threat and its recent changes to allow embeddable videos will make it an even stronger one. Some metrics including the number of videos viewed tell a story of Facebook overtaking Youtube which seems like a stretch given how Facebook has enabled the autoplay function. But the trend remains clear:


Winner of Video Era: Google so far but it’s clearly still in play


Phase #5 – Messenging

I wish I could call this a battle but for some reason Google has barely even tried to compete in messenger services. I 100% agree with this quote: I wish I could call this a battle but for some reason Google has barely even tried to compete in messenger services. I 100% agree with this quote:

— dustin curtis (@dcurtis) March 25, 2015

Yes, messenger has only one basic use – sending messages to friends and family but as has been displayed in Asia already, it can become a platform in itself as messenger services gain the ability to be used to send payments, used by businesses, etc. Facebook displayed its clear intentions at its last F8 developers conference and with 2 of the dominant messenging services (messenger and WhatsApp), it is clearly in a great position. Yes, messenger has only one basic use – sending messages to friends and family but as has been displayed in Asia already, it can become a platform in itself as messenger services gain the ability to be used to send payments, used by businesses, etc. Facebook displayed its clear intentions at its last F8 developers conference and with 2 of the dominant messenging services (messenger and WhatsApp), it is clearly in a great position.
Internet-top-mobile-messenger-apps (1)

Phase #6 – VR/AR

It is very early but it certainly looks like at some point the big battle will be somewhere between augmented reality (AR) and virtual reality (VR) players. It’s very early to call winners and I’d have to give Google the edge here given its massive investments in things like artificial intelligence, etc. That being said, Google’s first actual product, Google Glass was quite a failure given the hopes that Google’s Larry Page had for it. Facebook bought one of the leading players, Oculus which is one if not the biggest name out there.

Winner of VR/AR: Google slightly although it’s very early to tell

In The End

As I look at things, it becomes increasingly clear why Facebook has been doing so well. Yes, Facebook remains a non player in online search but that is just one of 6 phases and in all phases it is either leading or quickly gaining ground. As a Facebook investor, I’m confident that the company will continue to grow extremely quickly as it leverages its app, messenger, social and video platforms.  I’m much more concerned about Google though. Search is a decreasing part of the online experience and apart from video, where Google’s Youtube is dominant but losing ground to Facebook and others, Google has yet to establish its presence in other phases. Yes, Android remains dominant but it’s less and less clear how Google will be able to use that in a world where forked versions of Android can now exclude Google’s core services.

Disclosure: Long Facebook (FB)

Apple ($AAPL) Remains A Screaming Buy

By: ispeculatornew | Date posted: 03.23.2015 (3:00 am)

$AAPLOne of the key metrics/charts that I always look at when trying to judge Apple is the distribution of revenues for the company. Analyst Horace Dediu (a must follow @Asymco) updates several charts after each earnings update and here is the most recent one following the 2014 Q4 results:


Clearly, Apple is all about iPhones at this point and that is likely to remain the case as long as the smartphone is at the center of our digital lives. I would also argue that as the ecosystem continues to expand, the revenues coming from the periphery will expand. In terms of hardware, that will translate into more sales of accessories from simple cables and cases to Beats headphones and a lot more. The even bigger sector, though, is likely to be services which some expect to grow to 20% of Apple’s earnings in the next two years. Apple will be able to be a part of its users lives not only in terms of entertainment (movies, tv, music, etc) but also in helping them live healthier lives, have a more enjoyable experience in their cars, gyms, etc. Here is another chart from Asymco:

Valuation (P/E of AAPL vs S&P500)

I’d argue that it’s very difficult to justify Apple trading so close to the S&P500 average valuation when it’s been growing much faster. I also consider the downside risk to be very small given the strength of Apple’s ecosystem. There are many different ways to compare valuations but here is one example from Morningstar’s numbers:


That seems difficult to justify given the fact that by some estimates, Apple is among the 10 fastest growing companies in the S&P500 in terms of revenue growth.

Potential Growth

Let’s agree on the fact that the main reason Apple is not trading higher is the belief that Apple will not be able to keep growing. Yes, that argument has been around for many years but it’s still the main argument for non Apple believers. Let’s look at Apple’s core to see if growth can persist:

iPhone: I’d argue that while growth may slow down, in many ways, Apple faces less competition in the high end and that as the smartphone business continues to expand, so will Apple’s sales. Yes, they might continue to lose market share but as long as they hold on to their current users and continue adding more, they’ll be more than fine.

iPad’s+MacBooks+Watches+TV’s: There seems to be a good opportunity here for Apple and while there is a wide range in the sales estimates for products such as Apple Watches, I tend to think that in the long run, these will do well and that while the upgrade cycle might be closer to what we’re seeing with MacBooks and iPad’s, those will continue to be strong businesses.

Enterprise: An area that has been dominated mostly by Microsoft (MSFT) and Blackberry (BBRY) is now slowly but surely opening up to Apple and those big enterprise and government contracts are not only big dollars but they are also very stable revenues that will help a great deal to keep up the growth. The partnership with IBM is another clear sign of promising things to come.

Services (App Store, Apple Pay, Music, Video, HealthKit, HomeKit, CarPlay, TV): Apple has been very smart in recently increasing its release speed for these ecosystems. With more developers and hardware builders than ever ready to start building around Apple’s ecosystem, the company can now expand its lead and continue to make its ecosystem the most valuable out there not only for developers, but also for users. As cars, home, clothes, TV’s and more gain the ability to interact better with our phones, Apple is likely to have a very valuable spot right in the middle of this ecosystem, even if only by continuing to sell (an increasing numbers of) its iPhones.  There are also multiple other ways, such as a rumoured Apple web TV offering that could have a significant medium to long term impact.

Competition Is Crumbling

One main argument that I would hold for Apple is that it faces so little competition. For a company like Apple to face a decline, it would either need the entire market to mature or competitors to start eating away at its market share. I think it’s fair to say that the phone/electronics markets will continue to grow for the foreseeable future and digital services growth is likely to accelerate in the coming years. In terms of competitors, I guess it depends on how you look at each one:

Google (GOOG): The search giant is clearly Apple’s top competitor. While it does not really compete on the hardware part (yes, Google sells some Nexus devices and owns Nest), it does compete in plenty of other spaces. The top area of course would be Android, the dominant (in terms of #users) mobile O/S. I think it’s fair to say that both have very different target markets and do not threaten each other at this point. The other more problematic area in my opinion is web services where Apple has needed to make several moves to compete with Google. Some worked well, others took some time (maps being a primary area) and in many others (Youtube, Search and ISP being a few examples), Apple has no answer. I don’t consider those a threat to Apple at this point, but they’re certainly a challenge.

Samsung: When Apple CEO Tim Cook says that Apple’s focus is on making money by selling its devices, not selling ads, it obviously means that Apple needs to maintain its pricing power on those devices and for some time it looked like Samsung might create some issues. Samsung was the only company that seemed both willing and capable of competing on the very high end devices that Apple dominates. That did not last, though, and while the sales of iPhones have increased over time, Samsung’s Galaxy is under increased pressure:



Xiaomi: Clearly, Xiaomi is a force to be reckoned with. Yes, it mainly operates in China but that is a major market for Apple and Xiaomi could obviously expand well beyond China. That being said, its products are not yet up to par with Apple, it (mostly) operates in one country and Xiaomi’s brand is not very well known in major Western markets, so to say that it is a threat to Apple in the near to medium term is a stretch in my opinion.

Other Hardware Makers: A few years ago, you could say that companies such as Dell, HP, Compaq, Lenovo offered competition but they have all been losing ground.

So really, I do not see a major player that can take on and disrupt Apple at this point. That challenge is likely to become even harder over time as Apple’s rich ecosystem continues to grow both in terms of hardware and software… Overall, I continue to think that Apple remains an obvious pick in terms of upside vs. downside.

Disclosure: Long Apple (AAPL)

Adding A Stock To My Tech Stock Dashboard ($BOX)

By: ispeculatornew | Date posted: 02.12.2015 (5:10 am)

$BOXToday, I’m adding the first of several stocks to the list of stocks that I follow; Box Inc. (BOX)

For those of you who are new to the blog, you might know that one of the main things I blog about are my long & short tech stocks. It’s not a big part of my investments but it’s a lot more active than the rest and has done extremely well in the past few years. Evey time that I look for a trade opportunity, I start by looking at the list of stocks that I follow. That list can be found here.

I also track news, earnings reports and more for all of these companies. I generally tend to stay away from trading recently turned public companies. It is partially because I want more historical data on those companies but also because they are so volatile in the first few months. Just look at the daily movements by BOX:


What is Box?

Box is an extremely interesting company to add. It is an online file sharing company that mainly focuses on a business offering. As companies quickly move their assets towards the “cloud”, Box is very well positioned as one of the leaders. Many companies have tried to do this themselves which often ends up with security issues as we saw with the now famous Sony hacking incident.

Growing Sector But…

Box’s main problem of course is that it competes with the likes of Microsoft, Google, Dropbox, Amazon and many others in a sector where margins are quickly decreasing. Many of these companies are looking at selling this service as a way to establish a relationship with these businesses rather than trying to make money off of it which makes it extremely difficult for BOX to extract good margins and for that reason, I’d be very hesitant to pay a high valuation for a stock like that.

Beware The Company’s Financials

Like other stocks such as ZenDesk (ZEN) and Salesforce (CRM), Box should be seen as a SAAS (software as a service) company and valued based off of that. Here is a great article that explains the differences involved:

Understanding SAAS: Why the pundits have it wrong

Do any of you have a position or opinion on BOX?

Time to Dump eBay ($EBAY)

By: ispeculatornew | Date posted: 10.31.2014 (4:19 am)
$ebayThis morning, I’ll be closing one of my two remaining 2014 long & short tech stock picks. Why? At this point, I can no longer support holding eBay. Why?

Valuing eBay as a Bank?

For years, I’ve been saying that I value eBay as a bank. Why? Mostly because I’m not a big believer in its “online auctions/store” business. There is very little growth left:
Really, the growth is in its payments business:
That left a lot of “unlocked value”. But when eBay finally confirmed it was going to spin out Paypal, the stock reacted:
I’d argue that while not all of that value has been unlocked certainly a decent portion has.

Paypal Is In An Increasingly Bad Position

Two or three years ago, Paypal was the dominant payments player. That may still be the case but with leadership focused on irrelevant initiatives such as advertising networks, same-day shipping (which the company is now stopping), it wasted time and resources that could have been much better spent on payments.
Now, Paypal finds itself in a defensive position as it tries to fight off Apple Pay (already the clear leader), Google wallet and other initiatives by established and new players. Even worse is the clear trend where Paypal is losing momentum….
Look at this Google Trends and I would bet that 1-2 years from now, it will look very different:
I personally struggle to see much in terms of optimism when I look at $EBAY these days. The growth is slowing,The company has been so paralysed that it’s been unable to adapt fast enough to position itself . The payments (both offline and online) scene looks like it will be dominated by a few players led by Apple Pay, Google Wallets with a few outsiders like EBAY, McX and Square now looking like they’re in trouble. Of course, it’s still very early and there’s certainly a chance that Paypal could turn it around but I don’t see anything that leads me to believe that is likely.  Private company Stripe, through alliances with Apple, Alipay is clearly stealing much of Paypal’s platform with developers.
In the end, eBay no longer is a good opportunity at these levels and for now I prefer staying out of the stock
Disclaimer: Long eBay (EBAY) which will be closed on today’s opening


Increasingly Confused by Amazon ($AMZN)…the Good, The Bad And The Great

By: ispeculatornew | Date posted: 09.30.2014 (3:00 am)

$AMZNMany of you know how much I believe in my “web ecosystem theory”. I have started working on a new article about it and the impact that mobile has had on that theory but as you can guess, I’m still a big believer in placing chips on the 5 major ecosystem players ($GOOG, $AAPL, $FB, $MSFT, $AMZN). I have already taken significant longer term stakes in Apple and Facebook which have worked out well so far. I’m certainly not saying that other tech players can’t have success but it’s important to keep in mind that they will need to co-exist with these established players in order to do well. Netflix ($NFLX), Twitter ($TWTR) and TripAdvisor ($TRIP – which I recently bought – are a few of the players which I think will do well despite not “controlling their ecosystem”.

Does Amazon Belong To The Group?

The one player that I often got questions about in this group was Amazon because the nature of their activites (ecommerce) was so different but the 5 names seem to be converging rather quickly and as players like Google move towards ecommerce and shipping while Amazon starts working on mobile devices, advertising services, video websites, gaming platforms, etc, it’s increasingly clear that the collisions between these 5 players are only getting started. One area where Amazon does not fit with them however is in terms of market cap. Just take a look at the biggest US companies (in terms of market cap):


You will see that 3 of the ecosystem plays are among the top 4. Facebook is not that far behind and being the most recently founded company, is well on its way to get there. The missing company? Amazon of course is ranked #26 on that list despite its incredible growth story? Why? It’s a rather simple reason: “Lack of profits”. Today I wanted to take a new look at Amazon after reading two very thought provoking posts written by two of the top guys when it comes to tech in the recent weeks that got me thinking. I highly recommend both:

Losing my Amazon religion @ Stratechery
Why Amazon has no profits (and why it works) @ Benedict-Evans

I won’t go over every statement in those 2 posts but if you are investing or considering trading Amazon, you do need to read both.

The Good

I certainly feel like Benedict-Evans explained it extremely well and perhaps even more clearly is the tweet by legendary VC Marc Andreeson:

Clearly, the reason why Amazon’s net profit has consistently been around $0 is because that is exactly what Jeff Bezos is trying to do.

ycharts_chart (1)


Spend as much as you can. Why? Because Amazon’s mission requires an incredible amount of resources. What is that “mission”. I’ll agree that it’s not clear and even being the “everything store” seems to under-estimate what Amazon is trying to accomplish. It’s much more than a “store” that can sell you everything.  Jessica Lessin, editor of the Information (a paid but incredibly valuable website) has the best vision that I’ve heard of what Amazon is trying to do: “Amazon-as-city“. Amazon wants to sell more than physical and digital goods and is increasingly moving towards services. The good news is that it’s working as it continues to gain market share and eliminate competition:


1Amazon has also been able to make incredible progress when it comes to building these incredible warehouses. This post from Re/code gives a few maps that give you some idea of the progress that’s been made.  Clearly, no other company comes close to what Amazon has been able to build. Even companies such as Walmart that have a much broader physical presence are nowhere near as organized which is showing up in the numbers (no surprise here).

Amazon is taking over markets one at a time and if books are any indication, Amazon will be able to innovate greatly once it reaches that point. Just think of how it changed the whole ebook market, its print-as-you-go initiative, unlimited Kindle subscriptions, etc.

The Bad

I feel like Ben Thompson expressed it very well (again the link) and there are many products or ideas that Amazon is working on that make me scratch my head. Bezos is incredible and it’s a tough position to doubt Amazon’s success but it’s hard to argue that Amazon is not well positioned to compete with players such as Apple and Google when it comes to smartphones and tablets for example. Rumors that Amazon has only sold 35,000 Fire phones are a good way to think about how far the company has to go if it wants to become relevant. I understand why it would be important to dominate mobile but at what cost? How much are these products costing to develop and is it even clear that Amazon has a shot of catching up?

When Amazon spends a billion dollars to buy video gaming video community Twitch, it’s not clear how this will end up profiting Amazon. Yes, it’s a terrific property that Google was looking to buy and yes Amazon would like to have terrific video content to provide on all of its platforms. But what makes Amazon uniquely qualified to run Twitch? It seems like one more distraction.

I was very critical of eBay trying to launch an advertising network and can probably be almost as critical about Amazon’s idea to do the same. Yes, Amazon seems like its slightly better positioned but the strategy remains a mystery to me. Wouldn’t it make more sense to use that billion dollars to build more warehouses?

The Great

All of that being said, in the end I do think that Amazon remains worth the gamble. More transparency would certainly help because I’d like to make sure that most of what the company is reinvesting is being used for warehouses and other strategic purchases to feel even more at ease. But the fact remains that in its core business, Amazon is dominant, faces little to no competition (I’m not buying efforts like Google Shopping Express or ebay same-day shipping to this day) and as long as that trend continues, I do believe the “make no profits” philosophy makes sense. If this is a whole new industry that is being created and that we are still its infancy, it makes a lot of sense to reinvest as much as it possibly can to built the best infrastructure for this new world.

I have not yet found an entry point to my liking but believe me that I will be buying at some point if we see a setback.

Adding Alibaba ($BABA) To The Stocks That I Follow

By: ispeculatornew | Date posted: 09.24.2014 (4:18 am)

$BABAUnless you’ve been living on some other planet, you’ve heard about the very recent Alibaba ($BABA) IPO. I often discuss the ecosystem play where I think owning the US Players ($GOOG, $AAPL, $FB, $AMZN, $MSFT) that dominate the web ecosystem is a great way to play it. Those players dominate to some extent everywhere around the world…almost. There is one major country where they are all but shut out: China. Some of it is caused by their refusal to abide by the rules over there that would be necessary to do business but perhaps more importantly is how different of a market it truly is. They are dominated by 3 very different kind of players (so called BAT players):

-Baidu ($BIDU)
-Alibaba ($BABA)
-Tencent (listed on Hong Kong Exchange)

I could explain what each represent but there has been so much written about them that I fear I would not be adding much value here (try this collection of links). One thing that I’ve been unable to do is buy these 3 stocks to this point. Why? I think this article expresses part of my view:

Alibaba bubble

I’m personally not as concerned about who is benefiting from the IPO but trying to get a good feel for what these companies are up has been extremely challenging. I have found a few good sources of information, try to read the earnings transcripts and I’m hoping that at some point I’ll feel like I have a good enough understanding of the Chinese internet market.


What This Also Means

I have not been active on Chinese names lately but I had also been staying out of Yahoo ($YHOO) given its high volatility linked to its Alibaba stake. That will now change and hopefully I can start putting bets on Yahoo in the near term which is extremely interesting. I’m hoping that e can also now finally start getting some answers on how much taxes Yahoo will be paying on future sales of BABA stock.

Have any of you purchased stocks of Alibaba, Tencent or Baidu?

Time To Get Out Of eBay ($EBAY)

By: ispeculatornew | Date posted: 09.15.2014 (3:00 am)

$ebayI’ve written a decent amount about eBay (EBAY) over the years and have generally been a believer. Today, as I take a new look at things, I’m not as convinced. Why? There area few reasons that I’ll get into. But the one thing that seems apparent is that the current web ecosystem plays ($AAPL, $GOOG, $FB, $AMZN, $MSFT) are now very much ready to take on eBay and I don’t think the company has been able to properly prepare itself. It’s not impossible to survive in such a context (Netflix ($NFLX) and Twitter ($TWTR) are 2 great examples but I feel like eBAY is about to run out of time on that front.

Turns Out Carl Icahn Was Right.. But Maybe Too Late

A few months ago, Carl Icahn waged a very public war with eBay’s board, arguing that they were not doing their job and among other things, should spin out Paypal. Even at the time, I had argued that he was right but I’m believing that more and more. The company is reportedly still considering the move but at some point it will be too late. The problem isn’t so much about having both an auction store and the leading internet payment site in the same company. The issue is that Paypal didn’t get the attention it deserved. I’ve personally said for years that I was valuing eBay as a payments company because that was where the growth and the future was.

So what did Paypal need to do? It needed to quickly build a customer and offline business base that were very active, to support developers (what % of apps that you use try to get you to pay through Paypal?), etc. On those fronts, Paypal has made very little progress.


What Just Changed?

For years, Google has been trying to build a payments solution, Facebook has built “Facebook credits” while Amazon’s “Payments” has slowly but surely continued to gain ground. But what changed was Apple’s recent “Apple Pay” announcement.

Not only does that confirm how serious Apple is taking “Payments” but it will force competing players to up their game VERY quickly because you can bet that Apple will become a major player in the payments space. Apple Pay will also be used for online payments in apps, websites, etc. That is very serious competition for eBay’s Paypal and you can bet that Amazon, Google and Facebook will react to this news very quickly.

The Game Is Not Lost… YET

Of course, Apple only offers payments to its customer base leaving a majority of users unsupported. It is likely that at least one more player will emerge in this space and eBay could certainly compete. I don’t think its chances are good compared to a few years ago when it was by far the dominant payment player. Paypal has around 150 million active users and Apple will almost reach of that number when its new operating system ships next month:


credit Statista


Apple has also signed up all 3 major credit card issuers as partners, will have hundreds of thousands of retail points from the start, etc. Paypal was apparently pushing to be part of Apple’s payments effort but that has clearly failed.

And again… eBay is not so focused on Paypal. Instead last week it announced:




An Ad Network?!?!? To compete with Apple, Google, Facebook, Twitter and others in an ultra-competitive business where eBay has little to no competitive advantage? I don’t think I need to argue this one. Yes eBay knows a lot about what its users like to shop for… but an ad network??? It’s even worse than the focus on same day shipping. eBay is not a technology company or an ad specialist.. so where does this make sense? Why not focus on the area where the company makes most of its money and is being targeted by the world’s leading ecosystems?

Disclosure: Long eBay (EBAY).. but not for long

Facebook ($FB) Increasingly Looking Like A Strong Ecosystem Play

By: ispeculatornew | Date posted: 09.08.2014 (3:00 am)

$FBAs I’ve stated several times over the past few years, I’m a big believer in the ecosystem play when it comes to technology stocks. I won’t get too much into why but you can certainly look at these posts for a better idea:

Ecosystems rule the world
Have you put your chips on the web ecosystems yet?

Most of us would all agree that Google (GOOG), Apple (AAPL) and Microsoft (MSFT) all qualify as ecosystems. They are at the center of mobile and desktop worlds thanks to their control through the operating systems (Windows, iOS, Android) that has extended over time. I’ve also personally had Amazon (AMZN) and Facebook (FB) into that group which I know many of you disagree with. These companies are increasingly competing in all kinds of different ways but I think it’s safe to say that Facebook is headed in the right direction as I tweeted a few days ago:

In this post, I won’t discuss the valuation or revenue expectations simply because I’ve done so in the recent past and I’m also more focused on explaining why I think Facebook is an ecosystem play.

The Current Environment

In an increasingly mobile world, it’s all about dominating the app landscape. You’d rightfully assume that players which have their own O/S have an easier path to promoting their own apps and that’s certainly true but Facebook has been able to achieve incredible numbers.

-The Core Facebook app remains the most used app by a significant portion of users. It is the only non-Google app to reach 1 billion installs on the Google Play app store.
-Facebook messenger is currently the most downloaded app on Android and iOS
-WhatsApp has confirmed it now has over 600 million users, with Zuckerberg saying it could end up reaching several billion users
-For all of the talk of “youngsters moving away from Facebook”, they have been moving towards a few apps, Instagram, owned by Facebook is arguably the top one.
-It continues to innovate with new apps such as Hyperlapse and Paper.

Yes, Facebook lacks an operating system and did try its own version with Facebook home but that was a failure. I do personally love to see Facebook being so aggressive and while they have and will continue to fail, overall the growth has been nothing short of spectacular, both in terms of users and revenues:



credits: Facebook IR

 The Coming Years

If the “desktop era” was the first big step in the “Social Web”, then I think it’s fair to say that mobile is the current era. In most of the world, that has translated into big companies such as Google, Apple, Microsoft and others unbundling their core apps into different “single purpose” ones. I’m not sure if that model will remain so or if the “China model” where a few apps make it possible to do just about anything dominate. If that ends up happening, I think Facebook has a great position through its core app, but also its messenger plays.  It is very plausible that in the next “web”, search will no longer be at the “center” but it could be other core functions such as maps or messaging.

If we’re taking an even longer term view, the recent purchase of Oculus Rift by Facebook certainly gives it a leg up in trying to compete with Google in terms of artificial intelligence.

What Are Your Thoughts On Facebook As A Dominant “Ecosystem”?

Disclosure: Long Facebook (FB)

All Aboard On TripAdvisor (TRIP)

By: ispeculatornew | Date posted: 08.13.2014 (3:00 am)


I had hinted this might be coming and finally ended up pulling the trigger on what I first announced via Twitter:

For those that are new, let me do a quick recap of my investing strategy. The core of my portfolio is built on a passive income (dividend portfolio) and index-based investing (ETF portfolio). Then, I’ve started investing more money over the years into riskier strategies, mostly related to tech stocks. Why? Because it is the sector I know most about, enjoy following, and get the best feeling about. There are also many different stocks that can be traded.

My most active strategy is my long and short portfolio, which has done very well over the years, especially this year. It’s something I enjoy a great deal and have done well with, but it’s certainly volatile and short positions can cause bad surprises.

Once in a while, I take what I call a “long term speculative position.” Those are high conviction picks where I believe the upside potential is very significant compared to the downside risk. I tend to invest a significant amount (from my perspective) in those stocks with a multi-year horizon (unless something changes significantly).

-In 2012, I purchased Facebook (FB) +262%
-In 2013, I purchased Apple (AAPL) +24%

Both have done extremely well and I’m hoping this one will do the same.

Why I’m Buying TripAdvisor (TRIP)

In what I often describe as the “ecosystem” world, very few businesses are safe from giants such as Google (GOOG), Apple (AAPL), Facebook (FB), Microsoft (MSFT), and Amazon (AMZN). I’d argue that Netflix (NFLX) has positioned itself to thrive and I think the same can be said for TripAdvisor. There are hundreds of different web properties that focus on travel. What sets TripAdvisor apart is its brand and, more importantly, its community. Members are able to leave reviews, post photos, and add information, and that ends up being a game changer.

Every website tries to get the best inventory, the best features, the best prices, etc. All of those can be duplicated by competitors, which will always be a challenge for companies such as Expedia (EXPE), Orbitz (OWW), and others. I’d argue that building a community is much more difficult to do and will give TRIP a leg up for many more years. It has also helped TRIP become a platform where consumers and business owners can interact.

It’s Not All About Advertising

Yes, Tripadvisor currently relies mostly on advertising to support its business, but I’d argue that it is well positioned to build a relationship with business owners all around the world. At the start, that relationship might simply be about providing information, but it could and will become much more. If TRIP can help those businesses attract more consumers and facilitate transactions, that will end up generating significant cash flows.


image credit: TRIP IR

I personally think that revenues could then accelerate in a similar way to what Facebook has achieved in the past couple of years:



Credit: YCharts


I’ve been looking at TRIP for some time, but the valuation looked very expensive, so I’m finally getting in after a slight miss in its latest earnings that sent the stock down.

When I look at where TRIP is, I think its growth will remain steady for a few years as it continues to bring more users and activity. Then, when profitability becomes the main focus, I believe revenue and earnings growth will actually accelerate.

Think the focus on traffic is paying off? Just look at this chart from Google Trends:





credit: Google Trends

In the end, I think that the Travel industry is huge, will continue to move towards the web and that TripAdvisor is by far the best positioned to profit from it. With expectations of 20%+ growth in revenues for many years and growth acceleration once its focus shifts to revenues, which I think is still a few years down the line.  I’d love to hear your thoughts on TRIP, think this one can do as well?

Disclaimer: Long TripAdvisor (TRIP)