Category: Tech Stocks

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…