There are signals that the time is ripe to invest again in US technology stocks.
US technology stocks, those with the largest capitalization(Microsoft, Apple, Alphabet, Amazon and Facebook) and those with smaller market capitalization have corrected quite a bit. The recovery that started on 24 December 2018 has erased some of the losses in market capitalization these companies suffered.
The largest US technology companies are still gowing their revenue with double digits, which is nothing short of remarkable given the size of these companies, both in market capitalization, revenue and profits in most cases. Some of the smaller technology stocks like Snapchat, GroupOn, Zynga, GoPro, FitBit are actually trading as value stocks by Price/Sales Ratios. This, however, does not mean that all of them will recover.
I actually like Snapchat. Snap Inc., its owner, is the only social network that has the largest chance of challenging Facebook. Why? Just look at what Facebook does? Facebook looks quite scared it could drive off users, if it does not offer more security and privacy. It literally copied the story feature of Snapchat and now even Mark Zuckerberg is openly betting Facebook's future on the stories feature and more privacy, which are... milestones of Snapchat, the ephemeral, disappearing messaging conmpany. What is more, Facebook in the not so distant future tried to buy Snapchat for 3 billion USD. So if Mark Zuckerberg tacitly acknowledges Snapchat is the biggest existential threat to Facebook, there is certainly something special in Snap Inc. Snap Inc., Snapchat's owner, is growing its revenue in excess of 30% year on year, even though its user growth has stalled. But there is certainly place for a third major player in the internet advertising market. It is true that Amazon seems to have occupied the third place in internet advertising with 10 bln. USD from advertisements revenue, but Snap Inc. has all the ingredients to become the fourth large player in the internet advertisement market.
Zynga seems to be another not so bad technology value play in the gaming market, given its valuation.
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Kind regards,
Petar Posledovich
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