2 New Trades ($MSFT, $TZOO, $TRIP, $YELP)

By: ispeculatornew
Date posted: 01.04.2017 (3:00 am) | Write a Comment  (0 Comments)

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Today I am opening my trades #3 and #4. As is always the case, you can see past 2016 (and previous years) trades here:


Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaEarningsMkt CapRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
EBAYeBay Inc29.6918.8514.389.1-2.253.516.111/25/2017$33,520,000,000.007.11-2.480.74
GOOGAlphabet Inc771.82N/A18.943.1513.624.8N/A1.211/26/2017$546,000,000,000.00#VALUE!18.7314.78
FBFacebook Inc115.0544.9222.0911.1743.824.6418.781.041/25/2017$336,200,000,000.006.449.44#VALUE!
PYPLPayPal Holdings Inc39.4735.0223.0310.3915.244.1511.77N/A1/25/2017$48,220,000,000.007.57#VALUE!#VALUE!

And the usual chart that I like to bring up:

In many ways, this is a bet on a reversal of what happened last year:


Long Microsoft (MSFT) & Short Travelzoo (TZOO)

Microsoft has been on quite a tear. Despite significant competition, it has been able to turn around many of its businesses, make smart acquisitions (LNKD) and also build solid cloud-based businesses. I’m a strong believer in what the company has been pulling off. On the other side is TZOO, a company that has been performing at a high level and that was a difficult one to short in 2016. I do think that will come back to earth at some point this year and am willing to get back on this short. I will of course be following this one closely but TZOO mostly depends on email marketing which is a solid business and I think the company has been optimising it carefully but there’s a limit to how much that can be done as it will need to be adding a lot more subscribers and thus driving a lot more new users. That is something I’m not seeing right now making me skeptical of its current valuation.

Long TripAdvisor (TRIP) & Short Yelp (YELP)

I did consider for quite some time going long TRIP vs a short on TWTR and as I’ll soon be writing about, I’m very skeptical of Twitter’s ability to turn things around. That being said, shorting TWTR carries a decent amount of risk (takeover, turnaround, news, etc) and for now I’m judging that YELP is a better short. These are two competing products in many ways but I believe TRIP is growing much faster. The big problem of course is TRIP’s inability to convert those numbers into growth in its financials. Last year was painful as a TRIP longer term owner but I do think TRIP offers much better value and that will be reflected over time. Look at a chart from Google trends that gives insight into their traffic evolution:

Disclaimer: Prior to opening this trade, I have a long position on $TRIP
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