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- Alibaba reported improving monetization trends, paired with robust volume growth.
- Net income doesn’t compare very well to prior periods, but the high profitability excluding investment income reveals that Alibaba’s profit margin is respectable when compared to peers.
- The favorable economic backdrop, paired with high growth potential in Chinese e-commerce should be considered when determining whether or not to invest into Alibaba.
- Investors should ignore the double top pattern, and instead look to Apple’s promising future.
- iPad refresh will drive significant revenue growth in the next fiscal year, and new product categories like iWatch will be supplemental to Apple’s growth.
- Assuming iPad, iWatch, peripheral, and software/app/iTunes growth continue, Apple’s stock price will continue to trend higher.
- Last year Google announced a new same-day-delivery service in collaboration with local retailers which competes with Amazon.
- As a response, Amazon is expected to launch a new advertising platform.
- Facebook and Twitter offer their version of an e-commerce penetration – a buy button.
- It is early to decide whether or not these initiatives are successful; however it clearly signals the way the market is going to go.
- Rumors of eBay spinning off PayPal have surfaced again.
- It’s not well understood as to how this will benefit eBay shareholders and a spin-off is therefore hard to justify.
- eBay has plenty of other alternatives for driving top line growth, or bottom line earnings.
- P/E ratio is not the be all and end all of valuation metrics.
- Is it skewed in favor of market reactions rather than fundamentals?
- Key factors to be considered before applying PE ratio.
- Other relevant ratios : Price Earnings Growth ratio, Free Cash flows.
- Facebook is the premier momentum stock in this market and looks to be on the verge of a powerful advance.
- Underperforming fund managers will pile into FB and other momentum stocks.
- It is the primary beneficiary of the growth in mobile advertising, and is poised for further growth.
- Facebook stock is currently at a low risk entry point.
- Amazon had recently announced that it is testing a new online ad placement product and also acquired Twitch, a gaming focussed video streaming portal.
- Twitch will enable Amazon to accelerate its online advertising initiatives.
- The high profit margins of the online advertising industry will be a huge relief for Amazon investors, in stark contrast to Amazon’s constantly increasing presence in low margin businesses.
- However, Amazon’s current valuations are hard to justify even considering an exponential rise in earnings and our Amazon stock analysis re-iterates our negative long term outlook on the stock.
- Alibaba has grown sales as well as net income at a fairly high rate.
- Alibaba has high profitability, and continues to expand into compatible opportunities that work well with its ecommerce ecosystem.
- Alibaba has risk factors due to the political climate, and legal interpretation of special purpose entities.
- Alibaba IPO will be a wildcard event, as further dilution, paired with Yahoo liquidating its position may impair Alibaba valuation.
- Google filed new patents for the Google Glass, which indicates that the designs have radically improved.
- Going forward, Google Glass may grow into a significant contributor to Google revenue.
- However, other business developments will also contribute to top line sales growth.
- Facebook has made changes to its newsfeed, which has resulted in conflict between major media.
- The continued emphasis on curated content for users improves engagement, which will eventually result in more user generated content.
- Facebook’s growth trajectory is solidly intact based on key performance indicators.
- Warren Buffett prefers to invest in companies which operate in fairly stable and certain environments. Technology sector is the last place to look for certainty.
- He values certainty of returns more than the potentially huge but risky returns.
- He believes predicting the economics of the fast paced technology sector is far beyond his competency, probably a strong reason for his avoidance of the sector.
- LinkedIn reported Q2 2014 financial results, beating analysts’ expectations for EPS and revenues, sending the stock price to an 11.7% increase a day after the earnings release.
- LinkedIn presented weak progress in its international revenues with 60% of revenues originating in the US.
- LinkedIn made a few steps into China to penetrate that market, however; Chinese market is currently dominated by local player Tianji that is owned by French rival, Viadeo.
- With the global expansion problems and high P/S and forward P/E ratio LinkedIn is not the best tech company to invest in right now.
- YouTube's share of US online video advertising could expand in 2014.
- Facebook has made good progress in its number of video viewers.
- Directr acquisition could help YouTube serve small business better.
- At the end of July, Amazon announced disappointing financial results for Q2 2014 driven by a drop in AWS revenues.
- Two weeks after the earnings call Amazon, announced a new mobile payment service named Amazon Local Register to compete with Square and PayPal Here.
- By offering mobile payment service, Amazon could be present in the brick-and-mortar stores and leverage that to future partnerships and further income from complementary services.
- Twitter valuations have run up after strong user growth in Q2 2014.
- Twitter's recent update suggests, user base is smaller than 271 million users.
- Our Twitter stock analysis rates it a sell at its current valuations.
- ChannelAdvisor reported its July 2014 same store sales report last week
- Based on the historic relationship between ChannelAdvisor numbers and Actual revenue growth reported, we model the Amazon’s August and September same store sales growth required to beat the company’s Q3 guided growth.
- With an ever improving topline growth performance through the last few months, Amazon looks likely to beat Q3 2014 revenue guidance.
- Investors are punishing lack of earnings at Amazon and as the company has regularly failed to deliver on this metric; we reiterate our negative outlook on Amazon stock as reflected in our Amazon stock analysis.
- Apple’s upcoming iPhone 6 carries significant upside assuming production runs are inclusive of sapphire.
- A pricing tier may offset supply chain constraints.
- Assuming Apple can earn higher incremental profit from each consumer, Apple should have no difficulty with meeting FY 2014 consensus EPS estimates.
- Zynga and King are two online game developers that succeeded to unlock the potential of web 2.0 and were able to gain substantial revenues from it.
- These companies used the bullish market and buzz around their games and went public in a very disappointing debut.
- Both of them presented in Q2 2014 another decrease in revenues that increased investors’ concerns about their ability to generate revenues apart from their good old titles.
- Each company is handling that situation differently: Zynga is investing further in its business model while King attempts to penetrate new markets.
- Alibaba’s equity interest in Alipay has potentially increased to 33%, upon Alipay’s IPO.
- However, if Alibaba cannot secure regulatory approval to own any equity interest in Alipay, Alibaba will earn a royalty stream that’s equivalent to 37.5% of Alipay’s pre-tax earnings.
- Alibaba valuations will get a boost and investors can gain more upside if Alibaba can secure 33% equity interest in Alipay.
- TripAdvisor's revenue growth and future prospects look attractive.
- Profit margin contraction is expected in the coming quarters.
- TripAdvisor's valuations are likely to come under pressure, making it a risky bet.
- Facebook trades at a reasonable valuation when compared to peers.
- Facebook’s revenue growth paired with falling incremental cost will continue to improve its profitability.
- Assuming Facebook can reverse the trend in share dilution through share buybacks, EPS growth will improve drastically.
- Priceline reported a strong Q2 performance, though missing revenue estimates marginally.
- The company beat consensus EPS estimates by 4%, with a Non-GAAP EPS of $12.51 in Q2.
- The current valuation multiples, future growth opportunities and M&A activity make Priceline an attractive investment in the OTA space.
- We reiterate our positive long term outlook on Priceline stock post Q2 results, as reflected in our Priceline stock analysis.
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