These are supposed to be the finest companies. They’re not babies anymore, most having impressive streams of revenues and an idea of prospective earnings. So then why do their shares suck? Most social media companies have been crushed over the past year–companies at the forefront of revolution, enacting change in human behavior and commerce.
Here are some social media stocks, with 1 yr returns.
ANGI -67%
YNDX -58%
SALE -54%
P -49%
YOKU -47%
TWTR -38%
AWAY -35%
QIHU -34%
GRPN -31%
YELP -30%
TRIP -14%
On the other side of the ledger, only FB (+37%), Z (+28%) and LNKD (+7%) are up over the past 12 months. I have to believe share price performance will, once again, track the growth rates of the aforementioned companies. The culprit? Fucking vulture capitalists and investment banks for pricing these companies so expensively. They came public at such high valuations that they were bound to disappoint. As such, they’re now trying to meet their elaborate valuations somewhere in the middle.
For my money, anything less than 12x sales is reason enough to get long, providing they are still growing and exceeding estimates.
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FIG
1
YNDX is an undervalued beauty. TRIP has the best business model, ever.
Don’t invest in any multinational stocks… Global is bad right now in this era of strong dollar. Invest in foreign stocks hedged into USD (STOXX, DAX) and invest in tech (QQQ). S&P is about to underperform… big time given weaker oil and stronger dollar.
Nikkei will also underperform because Draghi missiled them in the FX wars.
My take?
ANGI – Is literally a going concern. Paying for reviews under the guise of authenticity seems absurd. I get the allure, “will this plumber be good etc, oh, its unbiased bc yada yada” but its really dependent on the marginal sub, there is zero pricing power, and most ppl are content to just get referrals from friends or free on the net.
YNDX – It’s Russian, ergo, it’s no good
SALE – Coupons, next
P – Could see this one potentially going higher. Still suffers from pricing power / marginal user syndrome, but ppl like the product
YOKU – next
TWTR – sellers rule the name. Came out too high in valuation, lotta upside “spent” early
AWAY – don’t know what this is, assume gayer than a one legged stool
QIHU – Nah playa
GRPN – a going concern. No way this company is in business 5 yrs from now
YELP – I get the name is popular, but here’s what I dont get — (especially with a man of refined taste such as yourself) — you chide the fat pigs and derelict canaille, yet place stock in their opinion as to what is good or not? Fly walks into a deli, he knows goddamn well what he sees. Aside from the occasional “where to eat, ok lets check yelp, I feel like X, havent eaten at Y, ok lets try” (which adds nothing to yelps bottom line) I dont see what the “value” of yelp is. Not to mention, the very nature of the nerd who is so self-absorbed they have to “review” a place on yelp means 1.) they are a nerd 2. They have a vested interest in reviewing. So that means you get primarily nerds and butthurt customer reviews. Sordid sales tactics and hard to monetize content – trouble
TRIP -14% – No.
Danny
YELP can be a friend to you.
True. Certainly more than the other ones (in terms of my usage).
And you (from what I recall) nailed it long in the teens.
Danny-
I’d agree there are reasonable questions about the foundation of the social space. But this is the hand we are dealt as long as the Millennial generation is driving the bus. I wonder if this will follow them into later years?
Then again, my girlfriend is old, and she can’t get enough of Facebook and texting God knows who. She doesn’t read this site, otherwise I would need to start wearing the football helmet when I go to sleep again…
“But this is the hand we are dealt as long as the Millennial generation is driving the bus”
Not sure I agree with than. Teens suck. They don’t have assets and spending power absent an allowance. You can create your own hand, and that hand can be the one that slaps teens in the face and about the torso.
Large cap tech as been a top performing asset class for going on 2 yrs, and you could have skipped this entire sandlot with no detriment.
So don’t think they are compelling. Just my opinion.
—
Then you look at the huge pricing power / generational boom in healthcare, pain management, etc, the strength in REITS, etc, lotta strong places to focus still
As long as $FB is running and will always run the Social Kingdom, all others are to be avoided.
Simple reason, $FB can easily enter any space or replicate their functionality on their platform of say 1 billion users and growing.
Other reasons:
Actually have cash flow and profits.
Scaleable model with steady margins.
CEO that is a dreamer and is not sitting on his hands, a COO (for now) that keeps the dreamer in check and makes execution happen.
Many other reasons but I have rambled on enough. Hold this stock forever, plain and simple.
I am long FB and YELP. I’d love to own TRIP, Z and TWTR at some point too.