Pinterest Valuation!

Dear Sir or Madam,


Pinterest, Inc., the social media company characterized with pinning your interests, went public with an IPO last week under the ticker PINS. Pinterest's stock went up 28.42% on its first day of trading to 24.40 USD currently boasting a market capitalization of 12.92 billion USD.

Is Pinterest Inc., overvalued, undervalued or fairly valued?

I think Pinterest is overvalued. The intrinsic worth of Pinterest, according to my opinion, is about 8 billion USD. Why? Because Pinterest currently trades at about 15 times Price/Sales(trailing year revenue) ratio. Facebook, also showing robust growth, trades at about 9 times Price/Sales ratio. Pinterest revenue grew in 2018 by circa 57% compared with 2017. Actually, Pinterest is close to profitability by losing minor 63 mln. USD in 2018. Apparently, this is what investors like, which caused the pop in Pinterest's stock market price. Facebook, however, exhibited a net profit marging of circa 34% in 2018.

Basically, all signs point to the fact that we are in the latest stages of an Information Technology bubble much like  the dot com boom and bust in 2001. Yes, I know this time the technology stocks do have revenue, but they are overvalued by approximately 30% on average. And when the tide stops, many  "investors will be caught swimming naked" as my idol Warren Buffett says.

Yes, soon in 1-3 years, there will be a US and global stock market crash, caused by the bursting of the current technology bubble. But as Joseph Schumpeter says creative destruction is the engine of capitalism. From the ashes of the crash, several large information technology companies will survive, rise like a phoenix and remain the new leaders of tomorrow, much like Google and Amazon did in the last dot com boom and bust. I think Facebook, Twitter, Snapchat and LinkedIn will survive, because social media is here to stay. Pinterest could also survive. After the crash, capital flows will again go primarily to emerging markets, because emerging markets stocks are way undervalued as they are.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

Uber Valuation!

Dear Reader,


Uber, the ride-hailing company, filed its IPO prospectus as it indends to go public in May. Currently, news flow suggests Uber will receive a public markets valuation of about 100 bln. USD, lower than its last private funds raising round valuation of 120 bln. USD.

Is Uber worth 100 bln. USD? What is the intrinsic worth of the company? I think Uber is currently worth about 70 bln. USD.

Why? First, because Uber lost 1.8 bln. USD on revenue of 11.3 billion USD in 2018 excluding certain items according to its prospectus. Second, its revenue growth is slowing significantly. Basically, Uber's current valuation is a classic technology bubble.

As Warren Buffett said, when you do not see who the fool is, the fool is probably you. Apparently, too much private Venture Capital money is chasing too few opportunities, That is why the value of companies like Uber gets inflated so much. It is very reminiscent of the late stages of the 2001 dot com bubble. Yes, now the IT bubble companies at least have revenue, but their valuations are still unrealistic and many investors will get burnt.

Actually, there are technology companies listed on public markets in the USA and elsewhere, which are reasonably valued. I think some examples are Microsoft, Spotify, Lending Tree, Dropbox, Box, Intel, Oracle etc. Actually, many technology bubbles like GroupOn, Zynga, GoPro, DDD, FitBit have quietly popped. This is an interesting development, as it suggests the market could actually weed out the underperformers without crashing too much. Will it turn out this way? No. The major US stock indices and other global stock markets will fall circa 30-40% from their highs. This will be a healthy correction, the creative destruction of capitalism, which will give birth to the new Googles, Amazons, Facebooks and Apples of this world. This creative destruction is what keeps the world moving forward. The most efficient allocation of resources. Economics. Free market capitalism!

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

Lyft Valuation.

Dear Reader,


Lyft Inc., the car sharing company, went public two weeks ago and its stock slumped about 6% since then.

Is Lyft fairly valued?

No. According to my opinion, Lyft's fair valuation is about 15 bln. USD. Lyft's current market capitalization is 21.28 bln. USD. So Lyft is about 50% overvalued.

Why? First, because it is hugely unprofitable. Lyft lost 911 mln. USD on 2.157 bln. USD of sales or negative net profit margin of -40%. Wall Street research analysts seem to be counting that Lyft's year on year sales growth of about 50% will lift the company to profitability. But sales grew even faster two years ago and the company only expanded its losses. Lyft employs a classic dumping strategy - keeps low prices until it conquers a large market share and then Lyft will raise prices, much like Netflix did. The problem with such a strategy is that someone has to finance Lyft's revenue growth until the market share is deemed large enough to start raising prices and reach profitability. Now public shareholders are financing Lyft's growth. Many former star technology companies like Groupon, Zynga, Snapchat, GoPro,Fitbit etc. went public at high valuations and high hopes, but later failed to live up to those high aspirations and their stock prices fell significantly from the IPO public prices. Wall Street research analysts and Wall Street as a whole again sold the story that the aforementioned companies will be the next big IT disruptors, but things did not turn out so well.

Basically, I think we are in the final stages of the 10 year bull market we have been witnessing. Typically, the end of bull markets is characterised by high number of IPOs at lofty valuations. Slack, Uber, Pinterest, Palantir are waiting in the wings to go public. Lyft currently trades at an unsustainable valuation, since it is loosing a lot of money. I think companies like Lyft and Uber will survive the coming stock market fall, if they find a path to profitability in the next 4-5 years. Yes, I know Amazon Inc. was unprofitable for a long time, but it eventually makes money and its stock did fell a lot!

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich