- Is Peloton the next short-lived fitness fad? Peloton has a lasting product with the engagement of a live class and the convenience of a home workout.
- Currently, heavy up-front investments in a new headquarters, its treadmill product, its supply chain, and an international expansion mask a highly profitable business. Profitability will come with scale.
- I see further potential upside to consensus sales, driven by its treadmill product, higher marketing expense, and geographic expansion into Canada, UK, and Germany.
- Sum of the parts valuation, with a 3-4x 2021 sales multiple on the equipment segment, and a 8-10x 2021 sales multiple on the subscription business, points to a $30-34 stock price.
Read More- Zillow, Redfin, and Opendoor are all looking to improve the archaic buying experience in real estate through iBuying and offering adjacent products
- Zillow’s primary strength lies in its ownership of the customer relationship, which will translate into lower customer acquisition cost on both the buying and the selling of homes
- The unit economics remain unproven but Zillow has outlined a path to 2-3% adj. EBITDA margins. If successful, Zillow could more than double its adj. EBITDA
- Zillow’s most significant risk in the near-term is the large amount of change underway at both its new and core businesses. These changes, and the resulting guidance revisions that could come, keep me on the sideline for now
Read MoreMy thoughts following 1Q results and Tesla’s Autonomy Investor Day.
The key question that largely determines your view on where the stock is going: Does Tesla have enough demand to sell at similar levels to the other major premium sedans?
Read More- Tesla saw 1Q deliveries fall short of expectations, leading to demand concerns. The key question is whether this is a temporary blip or an ongoing structural issue
- Based on the data we know today, I view the issues as temporary in nature and see strong longer-term demand driven by high customer satisfaction and strong market share within their existing products
- Model S/X weakness is concerning, but explained by the decision to stop selling entry-level models. An upcoming refresh mitigates this risk, but Tesla must demonstrate superior value to other models
- Tesla Network buzz ahead of the Autonomy Investor Day is overly bullish in my view, but Tesla could still financially benefit from a capable semi-autonomous driving system
- The path to a higher stock is driven by showing profitable demand that can fund the next growth initiatives - the China Gigafactory and Model Y. I believe this is likely to occur over the course of 2019
Read More-With Musk ending his attempt to take Tesla private, focus will shift to potential SEC enforcement, which I believe will consist of a fine but no removal of Elon Musk
-Enforcement could hinge on whether Musk had intent to mislead investors with his tweets, which is a high bar to prove
-This is further supported by BP's oil spill, which involved disclosures that misled investors and a subsequent $525 million fine over three years, but no executive removal
-Despite these considerations, we still cannot rule out that the SEC will pursue a harsher punishment given the unprecedented nature of the disclosures
Read More- Analysts are overwhelmingly bullish on Match with the recent pullback from Facebook's upcoming dating feature. Analysts see a large market with room for multiple players to succeed, and numerous other reasons for optimism.
- Match has a number of growth drivers that should provide upside to the stock. The company remains in the early innings of monetizing its significant user base, and will also grow internationally.
- Several risks exist, including the risk that Facebook's curated approach succeeds and dents Match's growth trajectory. There is also headline risk once Facebook announces more detailed plans in the dating space.
Read More1. Growth of high margin businesses providing upside to profitability expectations
2. Amazon's strategic use of Whole Foods to capture more share in groceries
3. The impact of a potential increase in shipping rates from the USPS
Read More1) What impact will the ad load drop have on ad revenue in 2H17?
2) Where will expense growth end up for the year?
3) Messaging is a huge opportunity
Read MoreGaming is becoming a bigger part of our lives. Whether it's over our phones while on the subway, on the Xbox on our TV at home, or on Twitch on our PC, more and more of our time is spent playing or watching games. Over the last five years, Activison's stock has risen steadily higher on this gaming wave.
Read MoreIt has been some time since I last wrote about Amazon. For a long period of time, between 2014 and 2015, Amazon stock was under heavy scrutiny as investors began to question the underlying profitability of the business. The problem was created primarily by a period of (what appeared to be) bad results, exacerbated by poor financial disclosures.
Read MoreTesla reported 1Q deliveries of just over 25,000, of which 13,450 were for the Model S, while 11,550 were for the Model X. The deliveries announcement today will add fuel to the bull thesis, as the company's deliveries were above consensus estimates of ~24,000 units for the quarter, suggesting that the company is on track to meet the high end of their 1H deliveries guidance of 47,000 - 50,000 target. The results were positive overall for the company, and the stock is currently trading up 5% as of this writing.
However, many investors remain skeptical of Tesla. Looking beyond the Model 3 trade, many investors are debating what is happening to underlying demand for Tesla's older models.
Read MoreAdobe has shot through the roof, gaining 279% over the last 5 years. The stock has benefited primarily from the ongoing shift of marketing/media to the internet, as well as Adobe's product shift towards the cloud. As people's eyeballs move towards our screens, advertising and content creation is increasingly following it. In turn, people are increasingly demanding more tools to create, distribute, and analyze/optimize content. Adobe's suite of products are perfectly positioned to address these issues.
Read MoreThe auto part retailers have long been the darlings of the retail industry with consistent earnings growth, the highest margins in the sector, and protection from online players. And as a result, the stocks have been rewarded with a high valuation and market outperformance. However, there's a looming technology that could disrupt the industry that I don't think is being accounted for by investors.
Read MoreAs part of a shift in my writing, I am going to start talking a bit more about my own views on stocks (and stuff outside of stocks) and on the trades that I've made. I'll start with my latest trades on Tesla, where I bought some shares in late November and early January.
Read MoreHave you ever seen a company beat consensus EPS estimates, but the stock still goes down? This happens because institutional investors focus on many other line items besides earnings. Here are the key issues (beyond the obvious EPS estimate of $0.52) that investors will be focused on.
Read MoreFacebook is a widely loved stock among both the buy-side and sell-side analysts. One of the reasons for the optimism is Facebook's near-term revenue growth drivers in video and Instagram, as I detailed yesterday. Beyond these factors, the company also has a number longer-term sources that hold a significant amount of potential. Specifically, Facebook's messaging apps, Facebook Messenger and WhatsApp, have an even greater number of users than Instagram and could unlock further growth beyond 2016. Additionally, Facebook's virtual reality company, Oculus, holds potential beyond PC and mobile as the next computing platform.
Read MoreThe FB bull thesis is made up of a number of revenue drivers that could drive advertising revenue and EPS upside. In the near-term, investors see a number of positives that could benefit sales, including easing comparisons and FX headwinds. Beyond these superficial tailwinds, investors are most bullish on the opportunities from video and Instagram, which are not fully baked into consensus estimates for next year.
Read MoreApple reported fiscal 4Q15 results after market close yesterday, and investors reacted positively (Apple is currently up +1% in the premarket). While the quarter's results were largely in line with investor expectations, investors were generally positive on Apple's 1Q16 guidance for positive iPhone revenue and unit growth. However, many investors remain concerned that growth could decline the rest of the year in fiscal 2016. A key question going forward will be whether Apple will be able to grow iPhone units and revenue in 2016 on top of the highly successful prior year.
Read MoreGoing into 3Q results, investors feared that Amazon's recent string of strong results had led to impossibly high expectations for the company to achieve. However, Amazon's recently reported 3Q results managed to exceed even these expectations, with results that were strong across the board.
Read MoreApple reports earnings next Wednesday, October 27th. Here are the key discussion points among professional investors.
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