Stocks valuations, analysis. Unbiased. Insightful. Property of Wolfteam Ltd., www.wolfteamedge.com If you find the blog useful, LINK TO www.posledovich.blogspot.com Stocks, Bitcoin, Cryptocurrencies, AI, analysis, insights. CLICK ADVERTISEMENTS, SHARE ON SOCIAL NETWORKS! Technology, Bitcoin, AI, company strategy, stocks analysis. Stocks, crypto involve high RISK! Nothing on this blog is meant or should be construed as investment recommendation to buy or sell securities or their derivatives!
Reddit, Astera Labs, Rubrik. There has been a wave of technology IPOs lately.
The IPOs have definitely given the stock market a boost. The money from Initial Public Offerings gets recycled in both public and private companies, which gives a boost to both the technology and overall market ecosystem.
As long as the IPO wave goes on, the US stock markets and by extension global stock markets should go on marching higher, in Wolfteam Ltd.'s view.
Rubrik, Inc the cybersecurity company staged an IPO on the New York Stock Exchange during the week.
At its current market capitalization of 6.67 billion USD, Rubrik is overvalued. Rubrik Inc exhibits too high a negative profit margin of regularly more than - 50 % net profit margin, which is unsustainable for Rubrik's current valuation, in Wolfteam Ltd.'s projections and estimates.
It is true that Rubrik states it has a path to profitability, but this is not be seen in its financial results. Yes, cybersecurity is a hot sector, but for niche product Rubrik just has to show better operational results.
Rubrik's intrinsic value is 3.7 billion USD, according to Wolfteam Ltd.'s projections and estimates.
The Federal Reserve will still do 3 Federal Funds Rate cuts in 2024, according to Wolfteam Ltd.'s projections and estimates, primarily on expectations inflation will not rise too much and on political pressure form both parties.
Snap Inc, Snapchat's owner, Pinterest and Reddit are all vying to become a viable competitor to Facebook in social networking.
Snapchat has the highest chance to vie with Facebook for social media supremacy, in Wolfteam Ltd.'s view. Snap Inc, however is unprofitable, which limits currently the upside of Snap Inc to circa 24 billion USD market capitalization compared with Meta, Facebook owner's 1.12 trillion USD market capitalization.
Snapchat, Pinterest and Reddit are basically discounters in social network advertisements. That is, it costs much less to advertise on Snapchat, Pinterest and Reddit than on Facebook, LinkedIn and Twitter.
That is why Snap, Pinterest and Reddit are unprofitable, with the slight exception of Pinterest.
If Snap achieves 5 % net profit margin, Snap could have a market capitalization of 60 billion USD.
If Snap achieves 10 % net profit margin, Snap could have a market capitalization of 80 billion USD.
If Snap achieves 15 % net profit margin, Snap could have a market capitalization of 120 billion USD.
If Snap achieves 20 % net profit margin, Snap could have a market capitalization of 190 billion USD.
According to Wolfteam Ltd.'s projections and estimates.
Snap Inc, the owner of the Snapchat application beat on earnings and Snap's stock price is up 26 % today.
Snapchat, along with Pinterest are the two most viable Facebook competitors as social networks. Meta, Facebook owner's stock market capitalization is 1.12 trillion USD , while Snap and Pinterest's market capitalization hover around 24 billion USD currently.
Both Snapchat and Pinterest could make inroads into becoming even a minor competitor as a social network to Facebook, which could increase multiple fold their market capitalization, especially Snapchat Snap owner's, according to Wolfteam Ltd.'s projections and estimates.
The US stock market is currently in a bubble lead by AI and Bitcoin.
There could be more than 27 % fall in the main US stock market indices in the next 3 years, triggered by the Federal Reserve raising rates followed by a large bank failure, according to Wolfteam Ltd.'s projections and estimates.
Both Apple and Microsoft are overvalued mainly on the seeming over-promise of artificial intelligence, AI. Markets and investors seem to be expecting the benefits of AI to accrue far too quickly and in too large quantities.
In addition, if China Taiwan tensions erupt, Apple could lose 80 % of its chips for Macintosh computers, iPhones, iPads production overnight. If China Taiwan enter encounter, inevitably US and China tensions will be pulled, which will affect both the demand for Apple's Macintosh computers, iPhones, iPads and Microsoft's Windows and MS Office software.
Apple and Microsoft are both overvalued by around 57 %, according to Wolfteam Ltd.'s projections and estimates.
Both stock market and bond market volatility is bound to increase, according to Wolfteam Ltd.'s projections and estimates.
Inflation guessing is a wild card at the moment, as the tensions between Iran and Israel could easily increase.
Inflation is stated as currently the leading metric the Federal Reserve follows. The Federal Reserve, USA's central bank is the leading central bank globally, as the USD is the leading global reserve currency. The Federal Reserve interest rate levels actions are followed closely and usually emulated the world over.
The Federal Reserve ended 2023 by forecasting 3 or 4 four cuts of the Federal Funds Rate target. Now both Federal Reserve officials and market participants imply the lowering of the interest rates levels targets by the Federal Reserve might be 2 or 1 or even none, whatsoever.
These expectations for volatility is yet to manifest themselves on the markets for stocks, bonds, foreign exchange and commodities and the associated derivatives. The worst kind of trigger could be difficulties for a major bank, which could translate into a credit crunch and huge downside financial market volatility and ultimately plunge the global economy into a recession, much as in the Great Recession in 2008 - 2009.
Much depends on the path of inflation.
It all depends on Israel's counter offensive.
Investors and analysts seem to be underestimating the probability of a disproportional Israeli counter response to Iran's recent attack, in Wolfteam Ltd.'s view.
Israel was hurt and surprisingly so by the Hamas' initial encounter and answered very actively. A severe attack on Iran could evoke a harsh embargo on Iran oil's produce, close the Hormuz straight and disrupt Middle East and Africa's oil and other commodities shipments.
All these possible events are not improbable and could drive oil's price to 120 USD both Brent and West Texas Intermediate oil prices, according to Wolfteam Ltd.'s projections and estimates.
Silver, as a leveraged play on gold is undervalued on geopolitics.
Silver, as a metal with broad industrial usage is undervalued on industrial demand, partially in military equipment, but more in commodities alloys.
Silver is undervalued as a store of value, much less and untruly appreciated than gold as a safe haven, according to Wolfteam Ltd.'s projections and estimates.
Currently, the stock market measured by the main indices S&P 500, Nasdaq Composite and DJIA could really fall 10 % from its peak due to calibration of Federal Reserve interest rate actions.
We could easily see just one Federal Funds Rate target cut in 2024, which will cut 12 % of the S&P 500 expectations level for 2024, in Wolfteam Ltd.'s view
The Federal Reserve will cut interest rates 2 or 3 times, mainly on political pressure, desire for financial stability and less high than expected inflation, according to Wolfteam Ltd.'s expectations and estimates.
The market for Initial Public Offerings seems to have opened up.
The newly recycled IPO money via the IPOs of Astera Labs, Reddit will find their way into venture capital funds again and thus via being invested anew will benefit the whole global technology ecosystem.
A possible headwind is the Federal Reserve not cutting interest rates at all which will be detrimental for the entire technology sector.
All in all, the technology sector boom is bound to continue for the next 2-3 years, in Wolfteam Ltd.'s view.
Oil and gold and oil and gold stocks are undervalued on the latest geopolitical tensions.
Oil could easily top 100 USD, while gold's price can surpass 3 000 USD, in Wolfteam Ltd.'s view.
The current geopolitcal tensions are the highest they have been for decades.
If oil and other commodities' prices shoot up, inflation rates will rise and the Federal Reserve might not lower the Federal Funds Rate target or interest rates at all. Which could tank the US and global stock markets. And the negative wealth effect could trigger a mild global recession.
Apple plans to add additional artificial intelligence, AI computations capabilities to its entire Macintosh computers line via new enhanced M4 in-house developed computer processing units.
On the news Apple's stock price climbed 4.3 % last Thursday.
AI narratives are catchy currently and tend to shoot up the prices of the major technology companies that announce AI improvements or even AI technology leaps.
AI consumer technology is a way for Apple to still utilize AI's potential without compromising the vast treasure trove of users' data Apple possesses by mining, harvesting and analyzing it.
The Apple Inc. in-house developed processors are still mainly assembled in Taiwan, less in China and India, which is the key risk for Apple's stock price, which could tank the company's market capitalization if a major event disrupts Apple's Asian supply chain.
For now, however, Apple should benefit handsomely from the new bettered AI M4 processors, which will empower users to model, predict via AI and enjoy movies, songs and entertainment via better algorithms processing.
After the strong inflation print of 3.5 % there are now analysts and experts who predict that the Federal Reserve might not lower the target for the Federal Funds Rate at all, far from the previous forecasts of 3-4 lowering of interest rates levels targets.
If the Federal Reserve ends up not lowering the target interest rate in 2024 and if geopolitical tensions flare anew between Iran and Israel, the price of oil and oil producers' stocks will shoot up, gold will also rise, while technology stocks may fall, in Wolfteam Ltd.'s view.
It will be interesting to observe whether the probable fall of US technology stocks prices will affect the general stock market level lower and possibly trigger an economic slowdown, possibly a mild recession.
Tesla's intrinsic worth is 120 billion USD, according to Wolfteam Ltd.'s projections and estimates.
That compares with Tesla's current market capitalization of circa 535 billion USD.
The 120 billion USD is the value of Tesla's manufacturing staff, the value of the electric vehicle production technology, the AI specialists, the software engineers and financial staff working for Tesla.
Tesla's market capitalization has fallen by about 57 % from its all time high.
Even so, Tesla is overvalued by about 55 %, in Wolfteam Ltd.'s view.
Reddit's intrinsic value is 17 billion USD, according to Wolfteam Ltd.'s projections and estimates.
At its current market capitalization of 7.53 billion USD Reddit is undervalued.
Reddit could turn to a semi viable competitor to Facebook.