Tech has been doing well lately. The semi stocks has been doing well thanks to the AI hype. Marvell stock price went up by 32% today with good AI forecasts. Even Intel is up today thanks to AI. It appears that the AI hype is going to last for a bit.
Intel has been like the canary in the coal mine for me in the past few years such that if I put this canary to any market I expect it to die, but this is not the case at the moment.
If Intel is up and then we’re most likely in a bull market.
$intc $nvda $mrvl $amd $tsm
This is a follow up post to https://www.stockideashq.com/posts/IuPbHZui/this-place-might-be-a-good-long-term-entry-for-tech-stocks/
Tech finally showed signs of stabilization. many stocks has bounced quite a bit since the last time I made this post. no one knows what's gonna happen to those companies in a few years but it appeared that the valuations of those companies dropped another 5-10% this quarter.
It's foreseeable that we can see more software team adoption of $crwd, $snow, $mdb, $dog, $net. also something to look into are $zs, $brze, $pd, $panw, $frog, $mndy, $gtlb, $hcp. companies use them for a lot of reasons and what I learned in the past is switching a tool is easy for a startup but not for a big company since the stack is too high there. So maybe that's why we don't have companies are ditching x for y kind of stories.
Same thing for ai stocks in the short term. Chatgpt is saying there would be a lot of demand for generative ai kind of stuff in the future. This makes companies like $nvda, $amd very valuable because they give you access to ai playground. $pltr, $snow and many are applications in the ai space and they might have a good story in the short to medium term too.
snow dropped 16% yesterday but we can see all the metrics are saying this is a growing company. If you're lucky and maybe when it drops another 10-15% it would be a good opportunity to get a little bit.
Jpow has told us they might be pausing real soon. Cramer has also suggest that you should get out of tech. Maybe this is a good time to start looking into tech opportunities. e.g. $nvda.
good luck investing.
Snowflake's earnings result is pretty lackluster. On one hand they're still growing in most metrics like headcount or revenue or user base, but on the other hand we can see numbers like RPO or retentions start to drop.
Those could be leading metrics that tells you that maybe you don’t need them as much, possibly because of the economy, or the banking issues, or even because of competition from Databricks or Microsoft.
How is this only down 10% in the after-hour trading when the p/s is still at an astronomical 25. This market makes very little sense really.
By the way they're still a company that can print cash much faster than many other tech companies. If it gets a lot lower you should still have good trading opportunities here. But at the moment the valuation is still quite rich even after the huge drop.
I remain optimistic about Snowflake long term but would stay cautious in the short term. $snow
How is this only down 5% premarket on ER day when you lose like half to one-third of paying users within a year? The market is coming back to its senses in the regular hour trading, but this shows how inefficient the stock market is at the moment.
QAU and QPU tells you this company is not going anywhere. Also, QAU is, imo, a less strict gauge of a company than DAU or MAU. You literally just need to give people some free goodies per quarter so that you can get 1 QAU it's significantly easier to achieve than the other metrics.
Thanks to JPow, tech valuations have significantly dropped to a reasonable or even cheap level. We don't know where the bottom is, but given that if you have people (the Fed, in case you have not noticed) working hard to get the liquidity out of the system and slashing prices for you, it might be a good idea to start buying something and position yourself for the long term.
Take a few examples:
Those charts have been randomly chosen and they are showing growth in most metrics. When you look at their growth, it seems as though recession has had no effect on many of the companies. We also know that the recession will eventually end, and some of them might emerge unscathed, or even come out ahead of the competition and become big over time.
Back in 2002, companies like Amazon were also describing a similar scenario where all metrics in the company were growing yet the stock price was dropping every day. This was also true in the 1970s but now when you look back at stocks like Disney, Kraft, Costco, ... etc and would you care much if you bought it at $1 or $0.9 or $0.8?
Time in the market is more important than the timing in the market. Cheers.
The earnings report looks really good actually. Daily active user is up 62% yoy. 4.2m paid subscribers. Revenue and bookings are also up around 46-47%. EBITDA is up 300% yoy. It seems to be a matter of time before they really make money and something in the education space.
You'd thought their offering is too simple but in my opinion that's doing the right thing. That is, to do one thing and do it really well. And now they're moving to other space like math and it would be quite a challenge to existing players in the math education space.
The earnings is really good. We should all take a look at their earnings report and you'll understand why do I say that.
Subscription based revenue grows about 455/270=68% yoy. Cash App gross profit is about 1 billion. Cash App MAU over 50m in the previous quarter, transacting actives are also about 50m this quarter. So people do use this Cash App and is deeply involved in this ecosystem.
Gross profit is about 3b a year for Cash App and 3b a year for Square. EBITDA is not growing but maintains at around 1b level. Amazing execution in a harsh macro environment like this when we have shops failing to survive and borrowers failing to repay their loans.
Shareholder letter: https://s29.q4cdn.com/628966176/files/doc_financials/2022/q4/Block_Shareholder-Letter-4Q22.pdf
Earnings Call - Prepared Remarks: https://s29.q4cdn.com/628966176/files/doc_financials/2022/q4/Block_Prepared-Remarks-from-Earnings-Call-4Q22.pdf
Coinbase reported a net loss of $2.62 billion in 2022. At the same time, they have grown in many areas and shifted their focus to a more SaaS-like approach. The results are mixed, and it will be interesting to see what happens in the next few trading sessions.
Some business highlights:
They pay a lot of stock based compensation that's about 68% of their total revenue this quarter. Reducing headcount would also bring down the expense in this part so maybe in a few quarters we can see the company turn into profitability. It's not impossible.
Revenue, ARR, billing, user count, RPO are all growing consistently. non-GAAP EPS is about $1 this quarter and that translates to about $4 a year. (Actually, at the peak it was about non-GAAP EPS $8 a year). This gives them about 166.89/4 = 42 p/e (or about 166.89/8=21 p/e at peak EPS assuming current price level).
$5M and $10M deals count are also growing a lot on a year over year basis. I would not take it for granted when you can get people to pay you $10M a year. This number indicates that they have something that companies need in the cybersecurity space. This is quite something.
The after-hour stock price is up 7% right now. Maybe valuation is at a level where investing would make a lot of sense. p/e 42 might already be quite low for a company growing revenue 20-50% a year consistently in the past 10 years.
They are happy about the results they delivered in 2022 and expect growth to continue into 2023. They acquired some fintech companies and mentioned being an AWS of fintech in their earnings call. Also, they have always wanted to be a one-stop-shop for finances, and as we can see they're able to navigate through the macro and continue to help users with everything related to finances and they seem to be on track to achieving their goals with growth and economies of scale.
All in all, this is a company that we should continue to monitor.
I'll point out a few things in the earnings call that I think are worth mentioning. Overall, although their guidance is not so good, I think this company is doing really well even during a recession. And this should be a company that we continue to monitor in the next few quarters.
Fourth Quarter 2022 Financial Highlights:
So most metrics continue to grow. Revenue, RPO, headcount, user base are all growing pretty well in a harsh macro environment. Dollar retention rate continues to be in the 130% rate. Cashflows is decreasing on a year over year basis but is up on a quarter over quarter basis.
Guidance is pretty bad. However they mentioned that they guide conservatively based on the trend they are seeing with their customers. Q1 was also a historically slower period and they expect this optimization to continue throughout the year. So they probably do not have issues growing fundamentally but mostly impacted by a macro reason.
It's worth pointing out that their $1M ARR customers have shot up by 50% this year. That's quite impressive, as even though 2022 is a year for optimization and efficiency for most companies, they apparently provide tools that are already reasonably priced, so there's not much room to further reduce usage. Tech companies' cost cutting does not appear to be a serious concern for them. And they continue to get new logos as well as dominance in this observability space.
Highlights during Q&A:
Airbnb has a marketcap of 76.53 billion at close. P/FCF was 76.53 / 3.4 = 22.5 before close. This is honestly quite low considering they are seriously disrupting the hotel industry and is becoming the default platform if you want to find a place to stay.
I have a hard time seeing companies like Marriott, Hilton, and Sheraton competing with this company. When you choose a hotel, you can choose among countless amounts of hotel chains. But if you're looking for a B&B, it would be Airbnb. Their competitors like Vrbo don’t really stand a chance. Letting random people go into your house involves a lot of trust and they have already own the trust from 4m hosts. $abnb $mar $h $hlt
A few years from now people will ask why did a company like Palantir that is deeply involved in world military ops gets valued at $6 a share. Betting on Palantir's stock to go south of $6 is like to betting that the US will eventually lose control of its military dominance.
meta is probably going to rally on Monday. Although this could also mean that we might be seeing a MySpace in the making.
It is quite impressive that the recession does not seem to have any impact on this company.