Facebook Prospects!

Dear Reader,


Facebook is still the dominant social network. For many it is the internet.

What about Facebook's future? Is Facebook currently valued at 516.83 bln. USD overvalued?

Actually, in the long run, 5-7 years from now, such a valuation seems reasonable if a strong competitor does not emerge? The large majority of people outside China who have access to internet are on Facebook. Facebook's main market - internet advertising is forecast to grow 17% in 2019. Yes, Facebook is richly valued at 8.77 trailing Price-to-Sales ratio. But unless a major competitor emerges that takes a large lion share of Facebook's revenue Facebook could well grow in its valuation. If the overall stock market falls 30-40%, which could well happen due to temporary overvaluation, Facebook's market capitalization could well decline temporarily to 250-300 billion USD or circa 40%.

But if no major competitor emerges or Facebook is not broken up, Facebook will again grow to 500 billion USD valuation. People still go to Facebook every day and its main market of internet advertising is forecast to grow by in excess of 10% to 2022. Facebook could well break into new markets like payment or dating. But the Facebook brand has such a huge following and customer loyalty that it is difficult to envision a new competitor quickly gaining ground on Facebook. But such an event should not be excluded. Having an internet site which is extremely popular is very good, but in internet the barriers to entry are low and a new wave could well disrupt Facebook, the same way social media disrupted the internet 12 years ago. But for now Facebook looks certain to continue to thrive in the next 5 years at least. One should not exclude US government intervention, but I think the US government would not risk threatening the freedom of speech or the main freedom upon which the USA is built.

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

How Deep Wil Be the Current Stock Market Dip? Technology Stocks with No Profit?

Dear Reader,


US and global stock markets recorded some losses lately. Nasdaq Composite is off by circa 4% from its recent levels. How deep will be the current stock market dip? Will it again come the time to buy the dip?

Yes. US stock markets will quickly recover again after the current fall. But not before the main US stock market indices fall approximately 15% from their recent highs.

The news headlines about the trade conflict between the USA and China will definitely change the fundamental value of stocks and US stock markets will dip further from current levels. But it is too early for the major recession that will cause US and global stock indices to fall by more than 30-40% from their peaks.

Many famous technology companies like Lyft, Pinterest and Uber have listed on US stock exchanges. But they do not make money, they do not exhibit net profits. Is this sustainable? No. No business can survive in the long run without making money. Tesla is a notorious money losing machine, but its stock is trading at nearly half its 383 USD June 2017 all time high. The reason for Tesla's languishing stock price is largely the company reneging on its promise to start making money, that is reporting net profits in the near future.

Apparently, we are in the late stages of a technology stock market bubble, but it is too early for the bubble to burst yet. Most probably, after the highly likely Donald Trump Presidential reelection in 2020 the US government could lift its hands from the steering wheel and stop propping up the economy. This of course, will not be the decisive factor, but a catalyst. Much more the leverage inherent in the global financial system today will play its rule in bringing down major global stock market indices 30-50% in several years. China, the US and Europe are all overleveraged. Sooner or later this ticking debt time bomb will burst.

But not yet. The current US stock market correction will be a shallow one - 10-15% from the recent US DJIA, S&P 500 and Nasdaq's peaks. Again buy the dip will be a good strategy.

For the time being.

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