Stocks I Follow Update

By: ispeculatornew
Date posted: 05.29.2014 (3:00 am) | Write a Comment  (0 Comments)

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$ZENOne of the more interesting parts of what I do in trading and following tech stocks is updating the list of stocks. Today, I thought I’d do a little update on that front. There isn’t a ton to report but I get a feeling that will soon change.

Stock being added: Zendesk ($ZEN)

zen

ZEN is a SAAS stock. Ever heard of SAAS or software as a service? You might not know the term but you’ve heard about the concept. Basically, any company that offers a software service for which it charges a monthly/annual fee would qualify. The new Microsoft Office for example charges a monthly amount instead of selling the entire cost upfront. It’s a very interesting model and makes it more difficult to value. I did see a couple of very interesting posts that explain how SAAS companies should be value here:

http://a16z.com/2014/05/09/a16z-podcast-valuing-todays-fast-growing-software-companies/

hint: P/E isn’t as useful

The big SAAS stock that I’ve traded so far has been Salesforce (CRM) which I’m trying to see under this new light although I still think that its sector is overly competitive. Last week, ZenDesk, a company that helps companies offer online support to its clients turned public. The IPO was seen as successful and the company is certainly very interesting. I’ll be adding it to the stocks I follow and look at trading it, perhaps later this year.

I continue to believe that like ecsosytems, SAAS companies values are mostly related to their lock-in effect and pricing power. From both perspectives, $ZEN is in a good position from my perspective which I’ll certainly expand on.

Upcoming IPO’s

A few stocks are looking to turn public in the next few months and the one that sticks out is Alibaba. It’s one of the largest internet names out there despite being a mostly China-centric company. Just look at these charts:

ali

I also highly recommend a few readings about the company:

What is Alibaba @ WSJ
Alibaba flexes muscle before IPO @ WSJ
Western companies you’d need to combine to get Alibaba @ Quartz

There has been talk about expanding to the US and that may happen but let’s not kid ourselves either. Alibaba’s future mostly depends on China. I’ll certainly hope to get involved in Alibaba but again my big challenge will be getting decent information about the company. I’ve written time and again about my frustration in getting reliable and solid information about China players such as Baidu (BIDU), Tencent, Yohou (YOKU).

That is also why for now I will not be adding Weibo (WB), a very interesting China-based stock that recently turned public.

Uber or Airbnb?

It’s amazing to see these 2 companies explode as a consumer. As an investor, they might provide opportunities but given they are already being valued at or over $10B, it’s not as much of a bargain. In case you’re not familiar, they’re both part of the new “sharing” economy.

AirBnb makes it easier for home owners to rent out their property all around the world
Uber makes it easier for travellers to book, use and pay for transportation that includes black cars, taxis, etc. It is already expanding into goods deliveries and could end up growing much bigger

uber1

Both companies are leaders in their sector (Airbnb faces little “real” competition).

Jessica Lessin from theInformation made a good case for why AirBnb has a more valuable business that did change my opinion to some extent but I do still think Uber could become much bigger. Its road ahead will be a tougher one and might face more local competition but I do t think it could end up being a huge game-changer.

Two Other companies that are generating significant interest and could turn public:

-Dropbox (another SAAS)
-Pinterest

It’s a very quickly moving scene and I’m loving every part of it. It’s helping make my trading environment that much more interesting but also providing new trading and profit opportunities!!

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