Beth.technology Posts

Asana is the best performing cloud stock this year. The I/O Fund discusses how they identified this opportunity by using a blend of fundamentals and technicals to remain with the stock through the growth selloff. I/O Fund also added to the position in May for an 85% gain in under a month. In February, the I/O Fund entered Asana (ASAN) and we held this position through the growth rotation, On May 20, we added to Asana (at $33.25) as a momentum play and held a webinar explaining our entry. It was confirmed that Asana was outlining a common uptrend pattern…

I recently joined the ‘Building Wealth’ podcast with Rajeev Aggarwal. Among several other topics, we spoke about why the I/O Fund thinks having some exposure to Chinese stocks is a good idea, and our long-term view for crypto investments You can watch the full interview here. Bitcoin and Ether. YOUTUBE VIDEO HERE: Investing in crypto requires a different mindset than investing in individual stocks, especially because crypto tends to undergo significant drawdowns, which can shakeout weaker hands fairly easily. Also, we are not crypto enthusiasts; instead, we are only interested in revolutionary tech with large addressable markets. That limits our focus…

The last few months have been difficult for tech growth investors. In isolation, it would appear that the party is over, and the broad market is likely to follow. However, if we track where the money is flowing, it appears that the standard safe haven plays, like Staples, Utilities and Gold, are not receiving the bulk of the rotation. Instead, money is flowing into transportation stocks, industrial stocks and financials. This does not hint at a pre-recession bear market, and instead appears to be quite bullish for a long-term advance. Furthermore, if we note the outperformance of the equal-weight S&P…

Global digital ad spending is projected to grow 10.1% YoY, powered by 18% growth in social media, according to a report from Dentsu, an advertising and public relations company based in Japan. In China, social media ad spending is forecast to rise 29.6%. Source: David Marlin In the U.S., digital ad spending is projected to grow 17% YoY after only 5% growth in 2020, according to estimates from Credit Suisse. Based on these numbers, ad-tech companies like Facebook, Pinterest, Snapchat, and Twitter should continue to benefit from growth in digital ad spending in 2021. For Q1 2021, Snapchat reported first quarter results that…

We have a new name, new website and audited 2020 results. This week we’ve got big news to share. First off, my team has released audited performance results that outperformed $ARKK since the Fund was founded on May 9th, 2020 and we are currently beating the Nasdaq across roughly 34 positions. You can view the press release here. How does a team of four dedicated people beat a team of 38 at Ark Invest or a team of hundreds at Goldman Sachs and Morgan Stanley? I discuss this below. As you are aware, I’ve been publishing under Beth.Technology, but this name no…

2020 earnings from ad-tech stocks have shown us that digital advertising has rebounded sharply from the pandemic recession lows.  Pinterest’s growth rate dropped to 4% YoY in Q2 but has since rebounded to +77% in Q4.  SNAP’s growth rate bottomed at 17% in Q2 and has recovered to +62% in Q4.  In total, global digital advertising spend grew less than 5% in 2020 but is expected to accelerate with 17% YoY growth in 2021 as we head into a higher GDP environment.       Global digital ad spend now makes up 52% of all ad spend, the first year it has eclipsed…

I had the privilege of joining Tim Beyers and Brian Feroldi on The Motley Fool podcast earlier this month.  In the hour-long interview, we cover topics such as big tech, my research process, tech valuations, and we also cover a number of individual stocks including Twilio, Bandwidth, Zoom, Facebook, and Palantir. The discussion starts off with big tech and why I believe Google Cloud Platform has missed an opportunity to catch up to Microsoft Azure and Amazon Web Services on cloud IaaS. With that said, all three players are aggressively pursuing edge computing and how to combine the compute and…

This is an analysis by David Marlin, equity analyst for Beth.Technology. In this analysis, he explains why he is long CrowdStrike. A periodic transaction report filed on September 3rd revealed Nancy Pelosi and her husband Paul Pelosi purchased 5,000 shares of CrowdStrike for a total investment of roughly $650k.  It’s easy to speculate why the Speaker of The House would be purchasing shares of a cybersecurity company that has a history of working with the Democratic National Convention and FBI.  CrowdStrike was instrumental in alleging Russia interfered in the 2016 election, an allegation that led to a multi-year investigation.  The…

IPO Report card: As of late, the underlying goal of IPOs appears to be how to get retailers to pay as much as possible until the lock-up expires. It doesn’t matter if Berkshire invests unless you get a chance to buy at the same price. Your shares could lose 50% and Berkshire would break even. That’s not a public offering by any stretch of the word. Please keep in mind, that many winners in tech retrace well below their opening price (up to 50% below opening price in the case of Crowdstrike). Prior to Snowflake raising its opening price (for…

Facebook stock has struggled to keep up with the stellar gains of its mega-cap tech peers, and the problem can be found at the product level, which discounted cash flow analysis does not help to detect. The company fires on all cylinders when considering Warren Buffet’s investing discipline to seek companies with strong free cash flow and no debt. Facebook’s dilemma is that its applications cannot co-exist with privacy in their current state. If regulations or reputation issues truly force the company to build privacy into the products, then Facebook won’t be quite the cash machine that it is today.…

Microsoft is unique from its peers as its cloud services were designed to serve the needs of large companies. This is particularly true with regards to Microsoft’s lead in hybrid cloud, which is attractive to many companies who are adopting cloud infrastructure for the first time, and who desire more flexibility than traditional cloud-only services can offer. The company’s fiscal Q2 2020 earnings report today prove that Microsoft’s slow and steady focus on the enterprise customers is paying off. Operating income and net income were especially healthy, rising 35% and 38% on a GAAP basis, respectively, from a year earlier.…

Netflix’s addressable market is set to grow from $68 billion in 2018 to $159 billion in 2024, while subscription services are projected to grow by $51 billion from 2018 to 2024, reaching a total of $87 billion. Netflix currently serves 87% of the United States market, 50-70% of all developed countries and up to 20% of the developing world. Prior to earnings, I covered the company’s stock price, its debt, and its 0.17% returns – or nearly 0% — over the past 12 months. I also addressed concerns about Netflix’s problems with free cash flow due to producing content for…

I recently wrote a column on Forbes detailing my predictionsn for tech stocks in 2020. Knowing what trends will prevail is especially important as this earnings season will mark the fourth consecutive quarter of year-over-year of net income declines. When taking into consideration buybacks, which help to reduce companies’ shares, the S&P 500 could post 0.6% EPS growth in all of 2019 compared to 2018’s 23% increase in EPS. Therefore, it’s important to choose investments wisely as we continue to maintain record highs. Here are the main points I covered – please read the full article on Forbes for a more…

Back in December, I wrote an article on how to pick winning cloud software stocks. I began by pointing out how – on average – cloud software companies have reported 10 to 20 times better revenue growth compared to S&P 500 Index companies, most of which grew at an average rate of 5.2% in the last quarter. Those are certainly impressive numbers, but investors weren’t interested in growth. What they wanted were companies that posted positive EPS numbers, particularly those that have at least 10% forward growth. This was the market’s response to cloud software stocks with high valuations in…

This past week, I wrote about how Silicon Valley is losing some of its entrepreneurial spirit as venture capitalists shifted their attention to later stage deals with higher valuations. In the analysis, I pointed out that 2019 was the most lucrative year for exits in more than a decade, with $200 billion in exits generated from venture-backed IPOs. For context, I went back to the golden years of Silicon Valley – 2006 to 2014. During this period, venture capital that was invested in deals below $5 million grew by 290%. However, things changed in 2015, when early stage deals from…

It has been a difficult quarter for many top momentum stocks like Slack (WORK), Veeva Systems (VEEV), Alteryx (AYX) and Zoom Communications (ZM). The companies have continued to execute well but their stock prices have declined. These companies reported better-than-expected third quarter earnings, impressive growth, and boosted their forward guidance. In an analysis in MarketWatch this week, I reviewed why Momentum stocks are down and I look beyond the assumption it’s due to a “value rotation.” Instead, as I point out, there is a lot of volume that suggests institutional selling directly after earnings reports. This volume in momentum stocks…

Roku’s stock price is up by almost 500% over the past two years. Compare this to the S&P 500, which is up less than 25%. That’s 20X more returns than the average stock. The upward trend has not been on a straight line. Roku’s stock price has had four major drawdowns that average about 52%. Two of these drawdowns were greater than 60%. Being long a volatile company like Roku since its IPO is not easy, and it especially takes increased conviction to stay long Roku as we approach the end of the current cycle. However, for those that were…

As Apple’s stock price powers to new highs, returning over 60% YTD and touting the highest market cap in history, now might be a good time for investors to reflect as Apple trades at resistance. With upwards of $260 billion in revenue, a profit margin of 22%, Apple is a cash-generating machine. It produces around $50-$60 billion in free cash flow annually, with reserves of over $100 billion. It is extremely kind to shareholders, with one of the largest buyback programs on the Street. In fact, Apple has spent around $120 billion in stock buybacks since the beginning of 2018,…

This week, Microsoft’s earnings will shed light on whether the fear over cloud valuations is warranted or not. Just last week, IBM results showed that its cloud segment grew by just 14%, boosted by its Red Hat acquisition. In more signs of trouble in the industry, Workday (WDAY) stock declined sharply last week after the company said that growth in its once-lucrative human capital management was slowing to 20%. This led to analyst cuts from Stifel, Deutsche Bank, and RBC. Morgan Stanley (MS) and Evercore ISI analysts have also rushed to downgradethe cloud industry ahead of the busy earnings extravaganza.…