Archive for the ‘Stock Opinions’ Category

Updating The Stocks I Follow ($BKNG, $DBX, $SPOT)

By: ispeculatornew | Date posted: 04.09.2018 (3:00 am)

Good morning, it has been a long time but I’m happy to be back with hopefully a lot more on the road ahead. For today, I wanted to update the list of stocks that I follow to include 2 newly turned public companies as well as one ticker change.

Priceline (PCLN) renames to Booking Holdings (BKNG): Priceline has been one of the top success stories in the past decade in the tech space and while Priceline.com is the property most American users would associate most with the company, the facts are that Booking.com is a huge part of the company’s business and while a large portion of the company’s business is in Europe, it has been growing worldwide.  The name change is in part “to more accurately align our company name with our largest business,” CEO Glenn Fogel said in a news release.

The other 2 names are companies that I had discussed here and was hoping to see turn public soon. From a consumer perspective, I do love both companies but I’m also very skeptical of their long term success as independent companies.

Dropbox (DBX): Dropbox is an online storage company that started off early, has been loved by its customers. It charges a monthly fee for customers to have access to online space where they can backup and store their data. Because of how well their product is built, they’ve had little churn. Great business opportunity? I have 2 big concerns about DBX:

-Margins will be under tremendous pressure. Dropbox’s competitors are the big ecosystem plays that I often talk about. Google’s Drive, Amazon’s Cloud Drive, Apple’s iCloud and Microsoft’s OneDrive as well as more specialized players such as Box. That spells disaster for me. Several of these players consider online storage as a feature that they can include in other packages which will put tremendous pressure on prices but also mean they’ll likely offer the product for free with other products.

-Growth: I’m skeptical that DBX will be able to generate much growth. The company has been around for a decade and potential users typically already know about the company. They have not become customers yet either because they already have storage from a competitor or because they do not see the value yet. Not exactly easy to turn up the growth in my opinion.

I believe that DBX growth would need from building new products to existing customers which the company has attempted in the past with little to no success…

Spotify (SPOT): Like many of you I’m sure, I’m a Spotify customer and really like the product. I do have several of the same concerns about Spotify in the sense that it also competes with among others Google Music, Apple Music, Amazon Music and that will make it difficult to compete and even reach profitability. Tha being said, I do think Spotify has a better shot at making it because it could eventually start cutting out labels or signing its own artists because of its dominant position. If that were to happen, Spotify could improve its financial situation as its cost structure could become more fixed in nature.

I don’t expect to their DBX or SPOT in the near future but I will be monitoring and could certainly see myself shorting DBX after a few earnings are announced.

Did any of you buy SPOT or DBX? Which one do you believe in more?

 

Adding 2 Names To The Stocks I Follow ($SEND, $SFIX)

By: ispeculatornew | Date posted: 12.04.2017 (3:00 am)

Exciting times these days as a few new companies went public in recent weeks. While these are not the big ones that I’ve been looking forward to (Uber, Airbnb, Lyft and Dropbox among others), it is still very nice to have more trading options and while I never expect to trade recently turned public companies initially, I will be following news, earnings and will certainly comment when there is a good opportunity.

Sendgrid (SEND) is a new SaaS company which is nice to see given the lack of options (apart from Salesforce-CRM) as the numbers work out very differently when the costs involved are structured upfront and are paid off over several years. This breakdown of revenues is one great example:

SendGrid has over 50,000 paying customers that send 35 billion (yes, billion) emails every month! Crazy right? I will be following SEND’s progress over the next few months.

Stitch Fix (SFIX) is the second company I’m adding to my list and will be very interesting to follow. Like SEND, there are parallels with another public company but a less successful one (to say the least) as SFIX is similar to Blue Apron (APRN) by its model (sending a box of goods – in this case clothes) to paying subscribers. While they do not yet face competition from Amazon in that exact segment, it could be right around the corner and is clearly a threat. The story behind the company is a great one though as it is led by a 34 year old female, a rare thing in the tech space. She is also a young mother and brought her toddler to the IPO as you can see here:

Obviously, that is not enough for me to buy the stock but it is an interesting company that I will be following despite some obvious concerns with its model and possible competition.

I’d love to hear any thoughts about these 2 companies if you have any!

 

Changes To The Stocks I Follow ($GDDY, $WBMD)

By: ispeculatornew | Date posted: 10.31.2017 (5:51 am)

There has been a lack of updates here in recent weeks caused by a very busy schedule more than anything else, very sorry about that. I did want to give an update on a change in the list of stocks that I follow.

Removing WebMD (WMBD): I had not traded WBMD in a long time mostly because there was so much speculation that it would eventually be taken over and that is exactly what ended up happening, the stock is no longer listed after private equity firm KKR ended up buying the company in a $2.8B deal.

Adding GoDaddy (GDDY): Godaddy is a domain registrar and web hosting company more known for its Super Bowl ads and its publicity stunts than anything else and while it has been a publicly traded company for some time (2014), I have not to this point spent much time looking at the stock so I don’t expect to start trading it in the near future or until I get a better feel for the stock. At first glance, I am surprised by GDDY’s valuation and lack of earnings. While the company has not been public for that long, it is not a new company by any standard having started operating in 1997.  Here is an idea of sales growth and EPS over the past few years.

Changes To Stocks I Follow ($APRN, $YHOO)

By: ispeculatornew | Date posted: 07.10.2017 (3:00 am)

Today, I’m making a couple of changes to the list of stocks I follow. First off, Yahoo, which I had not been trading for some time given the M&A speculation involved but also the lack of activity. In the end, Yahoo’s purchase by Verizon (VZ) did go through and Yahoo is no longer listed.

On a brighter side, Blue Apron (APRN) recently went through its IPO. It’s fair to say its timing was bad. To give you context, Blue Apron is a meal delivery service where customers sign up, choose what they’d like to eat and then receive everything necessary to make the meal shipped at home. It’s a business that requires scale but the bigger issue is that potential competitors such as Amazon would have a big leg up in such a business. AMZN is able to ship cheaper than anyone thanks to its efficient warehouses and shipping network. There had been hints that AMZN was interested in the food business because of its testing with Amazon Fresh among other initiatives. But just days before APRN started trading, Amazon announced its intention to buy Whole Foods which in many ways could set it on a path to compete, put pressure on Blue Apron.

As is the case in companies that end up competing with ecosystem companies (FAAMG), things will get very tricky as Amazon is able and willing to operate at zero or even negative margins for long periods of time in order to:

-successfully enter a market, especially one where it needs scale like this one
-eliminate competitors

If one of the plans for Bezos decision to acquire Whole Foods includes shipping food, and even curated boxes such as what Blue Apron does, it’s fair to say that APRN will likely not survive. Yes, some players are able to compete with ecosystem plays and one such example might be Spotify but even that one struggles to generate any profits and the big difference is the heavy pressure on costs that shipping meals around the country has generated.

For now, difficult to say how much APRN is worth or how likely it is to survive but I will be holding off trading for now (as I do for most recently turned public companies).

Not Buying The EBAY ($EBAY) Turnaround Story

By: ispeculatornew | Date posted: 04.12.2017 (5:55 am)

While looking at different pieces of news about the stocks that I follow, I ended up on this piece of analysis done by Barclays where Ross Sandler explains that he expects 2017 to be a turnaround year for EBAY. Really? I had strong doubts but I did decide to do additional research. He blames EBAY’s struggles on 2 main reasons:

-losing market share to Amazon
-customer security concerns following a 2014 data breach.

He also explains that EBAY is better positioned now that it puts more focus on fixed pricing sales and also compares the struggle to what Expedia (and I’d add Tripadvisor) lived when they made significant technology models. Finally, they also declare Stubhub to be a significant source of revenue with potential contributions of up to $1B in 2018.

Data Breach Impact Is Overblown

I personally consider the 2014 breach impact to be overblown at this point. It did have an impact of course but I’d argue that many others have had similar issues and that it’s been over 2 years. Customers that are still not comfortable with EBAY will likely not become so anytime soon. I personally don’t buy it.

It’s All About Amazon

The other main point, Amazon is the overwhelming factor that will determine EBAY’s success in my opinion. As I wrote in my most recent piece about Amazon, I am a skeptical that EBAY even has a shot at competing. Yes, the ecommerce pie is growing quickly but so is Amazon’s share of that pie. Why? Because it’s business model is unlike any other competitor.

One benefit that EBAY has compared to Amazon is that given its business model is based off of being a true middle man. When EBAY clients buy items, they end up paying the seller and receiving the item directly from the seller. That means EBAY has very little true fixed costs. EBAY collects a fee from the seller and if the volume increases 5-10% or much more, EBAY will collect that much more.

The downside though is that EBAY has much smaller control on the overall customer experience. A big part of that is shipping of course and that makes a world of difference. Take a look at this chart of where consumers now start their shopping searches:

Amazon is increasingly dominant and that is because not only does it have incredible customer service but its shipping service is heads and shoulders above everyone else. As eBay announced it was working on getting guaranteed 3 day delivery on 20 million of its items, Amazon continues to work on expanding its same day and even 1 hour delivery. They’re obviously operating at completely different speeds and that makes a world of difference for customers.

Another critical space where Amazon is gaining an advantage is through its Prime service, one of its booming sources of revenues. Yes, Amazon is incurring costs for the services it offers to those customers such as cloud storage and video offerings. That being said, it is also a big part of the reason why tens of millions of the more valuable consumers shop with Amazon as a default. All of that market share is adding up in terms of overall shipping costs but its helping Amazon get closer to its customers through new warehouses, scale in operating its own fleet of planes and freight ships and will in theory mean that its shipping costs/unit should decline over time as it gains more scale. Ebay on the other hand does not have such ambitions or plans to get there. The other benefit of course is gaining leverage over suppliers in trying to dictate terms and products offered but also gaining more data than anyone else about its customers to offer a more tailored experience when they do visit the website.

eBay Can Survive But Not Thrive

In the end, my opinion is that while eBay will obviously continue to exist and will do well with some segments such as Stubhub, I do expect the company to continue losing ecommerce market share for the foreseeable future as will be the case for most of Amazon’s competitors given the current positioning. That makes it eBay a tough buy at these levels.

Disclaimer: Currently hold a short position on EBAY

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:

top10

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:
tvapps

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:

FB_chart

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 Internet.org 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?

ycharts_chart

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:

Facebook__Helped_By_Autoplay__Passes_YouTube_For_Desktop_Video_Views_For_First_Time-800x337

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

whatsapp

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)
source

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:

aapl

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:

AAPL2

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:

samsung-mobile-scary-chart

 

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:

ycharts_chart

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:
EBAY
Really, the growth is in its payments business:
EBAY2
That left a lot of “unlocked value”. But when eBay finally confirmed it was going to spin out Paypal, the stock reacted:
ycharts_chart
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