My biggest concern with twitter is that it lacks a consumption medium. Its great at content distrubution, but it suck for the layman. The lack of user growth and monthly MAU time spent is a clear signal to this. With that said, te financial results were not that bad.
Here is where they loose the traders:
They need a redesign for layman consumption. Filters! Images! Curation! (Sounds like Yahoo, and this is why Yahoo has +430M MAU.) I think twitter gets this, as they purchased gnipe.
As twtr approaches the $20 billion market cap, the stock becomes interesting. What would be even more interesting would be a merger between Twitter (content distribution) and Yahoo (content consumption). The two would absolutely rival Google and Facebook. (That would be awesome.)
Management fucked up, hard. Seems like every so often a major bank fucks up like this now and again. (JPM with their risk procedures via the london-whale, costing about $7b!) BofA fuck-up doesnt seem as bad, but the perception of incompetence is not diminished any. I mean seriously, the top dogs are paid millions to get this shit right, so get it right!!
The technicals on the daily are now shit.
The technicals on the weekly are not to encouraging. The trend has been to bounce off the 20-28 sma, but the "re-adjustment" fucked that up. Now its testing its 50sma.
The monthly suggests the 9sma may hold, but its a await and see game for now. (Will need to see some better structure in the daily to confirm.)
No one likes to see readjustments, but a reality remains: BAC has a tangible book of 13-14, and a book value of 20-21. Prior to contracting "shooting-self-in-foot" syndrome, BAC was on its way towards the final large litigation settlement which would have facilitated a return to book value. (As a major uncertainty would be lifted.)
Now there is procedural uncertainty. Will these uncertainties be enough to drive the stock towards tangible book? Is it justified vs book value?
The long thesis on bac: an improving economy leadsto a more certain book value. The economy has improved and is improving. As uncertainties ease, the trade is to have bac trade at or above book value.
Longer-term, the thesis is earnings / cash flow valuation, but one step at a time.
Update: when JPM had their London-whale issue, the stock dropped another 14-15% after it's initial drop. IMO, their issue was worse cause it was procedural controls that lost them real money. (BAC's issue was purely an accounting fuck up on a tiny bit of assets.) Not expecting the same type of reaction.
The growth pattern is predicated on past performance.
From a longerterm perspective the trajectory looks solid.
The revenue growth is predicated on a gradual increase in global digital ad share, in relation to emarketer's forecast.
Fundies look solid, except when we look at revenue in relation to market capitalization.
Facebook currently has a $160 market cap, while becoming a mature digital ad play, with a very very high multiple. Much of the revenue growth from 2015-2018 is predicated on market share gain, but if this is not seen, revenue growth will decline hard. Similar to what Google is currently seeing. And like Google, facebook looks to have gotten a bit destracted considering their recent M&As.
Currently waiting for Facebook to hit their consolidation phase, and it may have started coming off its high.
Waiting for the mid-to-low 40s. (This maybe delayed if PC ad rates remain elevated as mobile rates keep rising.)
"Customers really like the new mobility value proposition and are choosing to move off device specific subsidies to simpler pricing while at the same time, they are continuing to move to smartphones with larger data plans"
Easy way to prove that, give the break down of new postpaid smartphone adds.
Looks like Yahoo had managed to stop the year-over-year revenue decline.
Judging by guidance, management continues to expect flat revenue growth.
The early stages of a turn around seem to be in play.
On the flip side, earnings continue to be supported by equity interest (Yahoo Japan and Alibaba). But as revenue increases, so will operational earnings. Yahoo's gross margins are sizable (and grew under Mayer), an increase to revenue will trickle to the bottom line nicely.
Scratching my head a bit wondering why the market thinks the current report is worthy of a 3% decline in the stock.
From all accounts, the report was decent. The street factored in lower revenues, and BAC beat. The biggest headline factor was the effect of the litigations. Hit the bottom line more then expected.
The bank is still one of the few large banks trading below tangible book, and in relatively healthy shape. As the litigation risk slowly passes (as today represents chipping away of that risk) the stock should begin to approach tangible book.
Yahoo reports tax day, and I'm not sure what kind of report they will give us.
Marissa Mayer has done an interesting job transforming the company. It's morphed back into an nice consumption-facing product. Beautiful layouts, fast speeds, interesting products and a focus on the driving technologies.
Simply, the streets wants to see revenue growth. If yhoo sees it, a +7-10% move would not be surprising.
Unfortunately there was chatter from Kara Swisher that suggests this may not happen. (Because of her connections to the industry, it's a point-of-chatter that holds more sway.)
Mayer took a more hands on role trying to court advertisers toward the end of last year. And because many of Yahoo's products were / are in the right conditions (with a high level of user numbers), there is an expectation of progress. (At least from me.)
Maybe Mayer set the stage for ad partners, and will now look to hand it off to another. But the chatter was not something that I wanted to see, obviously.
Regardless of the core business performance, the Alibaba IPO is coming around Q3, with an expected value of $120-150billion, to add support to Yahoo's stock. But I am more interested in the revitalization of a once great internet name. Hopefully, the efforts made over the last year or so are starting to pay off.
The jobless claims were suppose to set the tone. It was a kick ass number. A number that should have sent the treasuries higher, and at least allowed the market to see a morning pop. That was very wrong logic. Instead the treasuries took a dump. And it had diarrhea throughout the day.
One of my biggest concerns is Putin-bear. There maybe enough geopolitical uncertainty to remove the premium from the market. That maybe happening considering the treasury demand in a robust economic enviornment.
My other lingering concern, and a correlation highlighted many weeks ago, is the Yen.
Six days ago, it looked to be in a breakdown mode. About to test the lows. But bounced, hard.
Six days ago the SP500 started the decline, although it was minimal. The real fun came the two days after.
The Yen continued to jump, and equities for America and Japan followed. (There was a bit of a pause as the markets rose, but that was due to dovish comments from the Fed.)
Over the last month, Yen down-equities up prevailed.
Some of the strength came over the last few days because of the lack of "additional" stimulus. (Although the BoJ still plans on spending a ton on stimulus. We also had the Chinese stay mum on more stimulus, but didnt effect their market.)
The 3% SP500 decline seems to be a market mechanics issue.
With a timespan of a very "blah" quarter, IBM traded like crap, then with very little positive chatter, traded awesomely.
And that's the head scratcher. It's a tech company. News about its business performance should be readily available for extrapolation.
The one positive data point was Gartner's IT spending projections. Other then that, no chatter about future potential regarding Watson or its public cloud initiative (other than deflationary pressures from price cuts across all competitors).
I am a fan of IBM. They have a corporate structure that allows for them to continuously evaluate and change their business. My biggest gripe is their poorer execution in relation to their competitors. Usually, a move from 170 to 197 (near highs), are caused by a catalyst. A break from a negative perception. But there was no catalyst in Q1.
The last time I felt this way about IBM, a month later it was revealed that Buffett took on a major stake. Maybe similar scenario is happening, with other bigboys. Or Buffett is adding.
Over the last few days the chatter turned negative for the banks. Main reason is Q1 low trading volume. The low volume is apparently to set the tone for the rest of the year. With the negativity, GS has now approached tangible book value.
GS is already at a longer-term oversold condition.
The monthly suggest mid 140s is viable via the 98sma.
Glodal GDP is still rising. The biggest threat right now is geopolitical via Putin-bear. US GDP is growing. As such, tangible book will continue to rise.
At current levels there appears to be less down side risk.
My current play: maintain a minimal position, but go heavy at the 98sma for the bounce.
PS... Potential future increased earnings, aside from increased business from an improving economy, should come when the GSEs are dismantled and the private sector picks up the business.
Apple saw about $170b in revenue in their 2013 year. Apple is about as much of a growth company as P&G.
The play on AAPL is multiple expansion.
1. Continued buy backs
(Until aapl starts to trade near multiples of PG or KO or COH or other consumer branded stocks, it's multiple is too low for the type of market we are in.)
2. Institutional demand
Investors realize the product line are sustainable, and services is a sizable and sustainable business for Apple. Continued efforts in iAds, iTunes Radio and future video distribution will become evident, and when it does, the sustainability will facilitate a higher multiple. (At least to the level of msft.)
3. New product(s) categories
Alleviates the fear of the "lack of innovation" crowd. At best the new products sustain revenue or provide single digit growth. (I could be completely underestimating the wearable and consumer internet-of-things market size, and larger revenue growth is possible.)
In the mean time, its chillen. Making higher lows since the Q1report and mostlikely waiting for its next cue. (Maybe from the Q2 report or new 'invite' for product discussion.)
There is resistance at 550, 565 and then near 650.