The best gains come from getting in front of the herd. The second issue is that many tech companies go through periods of high growth yet can’t sustain this long-term unless there is excellent product market fit. Momentum investors and trend followers struggle most when it comes to FAANG-like gains because they can’t determine the true gems from those that are simply doing what most tech does (disrupt a market for a period of time).
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…
In my latest Forbes article, I discussed a lesser-known announcement from Apple last month in regards to the required opt-in for the ID for Advertisers (IDFA). The IDFA is a number tied to the device that allows ad exchanges to track user interactions and behavior. The primary function is very similar to cookies in that it helps ad companies store data profiles and preferences for personalized messaging, regardless of which device you are logged into. In addition to targeting, the IDFA also helps with attribution and measurement. If you’ve never heard of the IDFA or are not aware that a…
About a week ago, Dan Shvartsman from Seeking Alpha interviewed Knox Ridley and I about the Zoom call we made last Fall, the trade made In January in the low-$60s, and the subsequent trades made in March in the low $100s and mid-$100s on our premium site. We discuss whether the company’s valuation matters now, and how our research site determines if we should hold on or add to the position amidst the rally. We also discuss the hard questions about Zoom, including the security issues the company faced in April and why removing friction from video conferencing is what…
Last July, I began covering bitcoin. The premise was based on three phases for widespread adoption: institutional adoption, global economic uncertainty, and mobile payments. With Square’s cash app reporting fifty percent of its payments being made in bitcoin, or $178 million, it’s time to revisit why bitcoin is a transformative technology that is often misunderstood. Square’s report was for the period between October 1st and December 31st, which represented an increase of 50 percent over the prior two quarters. Perhaps the more critical point to understand about bitcoin is that its purpose is not to polarize opinions on fiat currency.…
The average cloud software company reported 10% growth during the 2008-2009 recession. Meanwhile, we’ve seen the market react harshly towards companies guiding for 25% growth (such as Elastic). We know the winners from shelter-in-place but we are still sorting out what growth should look like in the middle of the category. My guess is that 25% is going to be higher than average by the time we exit this year. I spoke about this and other topics this week on a podcast with Simon Erickson from 7 Investing. Simon Erickson is the CEO and Founder of 7 Investing, a company…
Paul Tudor Jones is one of many money managers who believes that protecting your money is more important than making it. In my latest article, I discussed this very concept in relation to cloud software stocks. The main risk to cloud software during a less-than-ideal economy is downgrades and churn. Signing new customers can also be a challenge. How a company is faring will often show up in net retention rates. My guess is we will see some cloud software companies remove this metric from their Q2 earnings report or we will see previously strong net retention rates dip below…
I recently wrote a report analyzing the future of Roku in 2020. My guess is investors will get Roku’s story wrong again this year as the company must choose between its top line and bottom line. Covid-19 offers an important opportunity for Roku as OTT usage is skyrocketing and the company must expand globally for long-term growth. In the earnings report this week, Roku gained 2.9 million incremental active accounts, or a 37% increase year-over-year to 39.8 million total, and streaming hours increased by 1.6 billion to a record 13.2 billion, or a 49% increase year-over-year. Oppenheimer analyst Jason Helfstein…
Last week I wrote an article explaining why I’m pivoting away from the bull thesis for The Trade Desk for 2020. But first, I should discuss my original bullish thesis. It’s important to remember that The Trade Desk is a “demand-side” or “buy-side’ ad platform which allows advertisers to buy ads in auction-like format through real-time bidding. This is an automated method for buying and selling inventory that eliminates the need to call up an agency or salespeople to place the ad. The Trade Desk’s financials and growth remain solid. Revenue grew 33% to $160.7 million with net income and…
Last week, I wrote about Slack’s product-market fit, and why it’s set to continue thriving in the work-from-home trend. The company’s user growth has been parabolic during the pandemic. According to a series of tweets from the CEO, Slack was at 1 million “simultaneously connected” users in 2015 and grew to 10 million by March 10th, 2020. From there, the company grew to 11 million one week later and 12.5 million the following week. Where the market gets uncomfortable with Slack is their current lack of profitability. The company recently released its fiscal year fourth quarter 2020 results on March…
