Pinterest. A Facebook Challenger?

Dear Reader,

Pinterest, the social networking company, posted 39% year on year growth of monthly average users in the 2020 second quarter ending on June 30.

Revenue, however, grew only barely by 4% year on year. Pinterest is currently valued at 20.91 billion USD.

Facebook is the dominant social network valued at 835.6 billion USD by public markets. I think there is room for other social networking players on the market. Pinterest and Snapchat look like the most likely Facebook challengers.

All in all, I think in the next 4-5 years Pinterest could be worth 70 billion USD.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook 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 on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

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.)!

Respectfully yours,

Petar Posledovich

When Is the Next Stock Market Fall Coming?

Dear Reader,

US stock markets keep going higher since their March lows.

Personally, I think the upward stock market movement will continue until November/December 2020. Then we will experience again a large fall of the major stock market indices of above 10%, more likely more than 20% decline.

Why? Simply because than most likely during the late autumn and in the vicinity of winter the coronavirus second wave will be in full swing. Presidential candidate Joe Biden has already said he is prepared to shut down the economy again if the health experts recommend him to do so.

I do not know if Joe Biden will win the coming November 3 US Presidential elections, but the again spreading of the coronavirus could well force the hand of the next US President, whoever he may be, to institute an economic lockdown again.

A new US economic lockdown will, of course, cause many businesses to lose revenue and ultimately profits and the US stock market will naturally come down hard. Banks will be hurt a lot this time around, due to nonperforming loans.

In any effect, the US stock market is due for a correction and I forecast this to happen in November/December this year.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook 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 on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

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.)!

Respectfully yours,

Petar Posledovich

How Big a Bubble Is Tesla?

Dear Reader,

Tesla's market capitalization is currently 342 billion USD.

I believe Tesla is worth no more than 70 billion USD or Tesla's stock needs to fall approximately 80% to reflect the company's true intrinsic long-term value.

Just look at the Price/Sales ratio of other luxury automobile manufacturers like Daimler or BMW. Yes, Ferrari's Price/Sales ratio is quite higher than the aforementioned German automobile producers, but Ferrari in previous quarters has recorded profit margins of circa 20%

Just think of it. At Price/Earnings Ratio of 950 if you buy the whole of Tesla and distribute all its yearly profit in dividends to yourself you would need 950 years to get your money back(!)

Tesla is a poster child for this market. When the stock market crash comes, it will be especially hard for technology stocks as Nasdaq Composite could fall 70%.

Some of the larger and smaller technology companies, though, would remain as they have created amazing products that add a lot value to both consumers and corporations.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook 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 on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

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.)!

Respectfully yours,

Petar Posledovich

Facebook's Future

Dear Reader,

Facebook, one of the world's five biggest technology companies along with Apple, Microsoft, Amazon and Alphabet(Google) has risen in market capitalization to 744.22 billion USD. A staggering amount of money. Facebook is trading at a Price/Earnings ratio of 32, so Facebook does not seem wildly overvalued.

That said, internet advertising, the main revenue engine for Facebook is seeing slowing growth of the total addressable market. Facebook needs to find new avenues of growth, if it is to justify its already huge market capitalization.

And Facebook is certainly going after financial services with its cryptocurrency Libra project and its payments initiatives. What is more, Facebook is making strides into online shopping with Marketplace.

However, it has proved notoriously difficult for a firm dominant in one are of the internet, hardware or software production to emulate its previous spectacular growth into other verticals. Just ask Microsoft, Apple and Alphabet. Amazon has had quite a success with its cloud services Amazon Web Services, though.

Facebook is facing one binary event. If regulators crack down on the social network as they have threatened in the past, Facebook may well face an existential threat which will slash its market value staggeringly quickly. What is more, if future growth projections currently built into Facebook's stock price prove unrealistic, Facebook stock will crash abruptly as it did several years ago. 

What is more, there is always the threat of another hot site, social network, coming out and attracting away all Facebook's users.

All in all, I think currently Facebook is overvalued by 40%. If no credible competitor threat emerges, though, Facebook could well be worth 700 billion USD again in 5 to 7 years again.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook 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 on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

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.)!

Respectfully yours,

Petar Posledovich

Cryptocurrencies as a Viable Investment Vehicle

Dear Reader,

Cryptocurrencies are now a legitimate investment vehicle.

Cryptocurrencies, outside bitcoin, are essentially tokens bound to companies growth and its projects. The investing premise is the same as with stocks - if the company that issued the cryptocurrency, the token, does well, increases its revenues and profits, the company's stock will rise and its cryptocurrency token will appreciate in value.

However, since cryptocurrencies do not have legal residual claim on the company's assets if the company goes bankrupt, cryptocurrencies are much more volatile, or their price moves ever so much more, than the company's stock price.

Essentially, investing in cryptocurrencies should be done with great care and carefulness. Either you invest for the short-term, be prepared to go in and out quickly or you invest and "forget" your investment for 2-3 years. In the latter way you can expect higher returns, but also to lose almost 100% of your initial investment. In  the former quick and nimble investing style, one can control better risk, but has to be right many more times.

All in all, cryptocurrencies are here to stay as an investment vehicle. The much more we read up on cryptocurrencies and analyze companies that issue cryptocurrencies the better we will understand cryptocurrencies.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook 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 on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

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.)!

Respectfully yours,

Petar Posledovich

By What Margin Are US Technology Stocks Overvalued?

Dear Reader,

In my opinion the top 5 mega capitalization US technology stocks Apple, Amazon, Microsoft, Alphabet(Google) and Facebook are overvalued by 30% to 40% currently. Smaller technology companies like Snap(Snapchat), Pinterest, Tesla, Roku, Netflix etc. are overvalued by 50% to 80%.

The market capitalizations of the aforementioned companies simply imply too much future growth of revenue and earnings. Yes, the cloud services market is huge already and growing fast. Digital transformation is in full swing. But a similar thing happened to Microsoft during the dot-com boom. Microsoft's market capitalization got way ahead of fundamentals, crashed and did not grow in the next 15 years compared with the dot-com high level.

Now we see a similar thing. Investors' money flows are getting the market valuations of technology companies way ahead of fundamentals. Yes, one day revenues and profits for many of the current hot technology companies might realize their current market valuations, but not as things stand currently.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook 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 on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

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.)!

Respectfully yours,

Petar Posledovich

Rocket Companies Quicken Loans IPO Valuation.

Dear Reader,

Rocket Companies, the mortgage lending company, and its ultimate parent Quicken Loans made an IPO on the New York Stock Exchange.

Currently the public market values Rocket Companies at around 38 billion USD.

According to Yahoo Finance Rocket Companies brought in 4.244 billion USD and made 894 million USD in profit in 2019, which roughly bring its current Price/Earnings and Price/Sales ratios to roughly 41 and 9 respectively.

In its core, Rocket Companies is a mortgage lender that benefited after 2008 as traditional banks pulled out partially of mortgage lending due to falling house market prices. Recently, Rocket Companies benefited handsomely from the Federal Reserve slashing interest rates to help the economy weather the coronavirus pandemic. Rocket Companies tries to present itself as a financial technology company and the market values in this way, it seems.

I think Rocket Companies is grossly overvalued at 38 billion USD market capitalization. Rocket Companies' intrinsic values is around 25 billion USD, in my opinion. Large banks with significant mortgage businesses like Wells Fargo, JPMorgan, Bank of America and Citigroup trade at much lower valuation metrics.

Rocket Companies is the largest mortgage lender in America with a market share of 9.2 % of the mortgage market, it claims.

That said, Rocket Companies still seems grossly overvalued. What is more, if the coronavirus pandemic causes a house market price crash, Rocket Companies market capitalization could well fall to around 10 billion USD.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook 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 on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

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.)!

Respectfully yours,

Petar Posledovich

The Future of Apple. A Valuation in Addition

Dear Reader,

Apple reported blowout mainly revenue and earnings for the quarter ending June 2020 and its stock price jumped 10.5 % on the news.

Apple's future looks bright. Apple does not any more break out numbers for iPhone, iPad and Mac sales, but it seems during the coronavirus pandemic people bought ought Apple's phones, tablets and computers  to study, work and communicate with others.

Personally, I bet iPad sales did really well since many students and children at schools snapped up iPads to study remotely. Students at colleges must have also bought many Macs laptops to study better remotely.

This is great news for Apple. Apple has long dreamed of getting a larger share of the ultimate platform - the personal computer. Through iPads Apple has been trying to circumvent personal computers or at least make better alternative inroads into the personal computer market. Apple has also been trying to sell its App Store and Apple Music services which depends heavily on selling more hardware. So, all in all, last quarter brought great news for apple.

So is Apple fairly valued? At 1.84 trillion USD current valuation I estimate Apple is grossly overvalued. In my opinion the intrinsic worth of Apple is around 1.2 trillion USD even if Apple continues to sells its hardware at a brisk pace in the next couple of years. The market is pricing just too much future potential profits and revenue that will flow to Apple. Smartphone and tablet unit sales globally have been in decline for the past several years. Personal computer sales have predominantly stalled or declined in the last decade.

So the usual revenue streams of Apple do not seem very promising. Actually, I think behavioral finance is here at play. Consumers look up and dream of Apple's products. Individual investors extrapolate that feeling into owning Apple's stock. Much like Ferrari and Tesla are trading at many times higher Price/Sales multiples than Volkswagen, Toyota or even BMW. What is more Apple's stock price growth keeps index tracking funds funds flows coming into Apple's stock which even further raises Apple's stock price.

In short, I think Apple's is worth 1.2 trillion USD. But Apple is a fantastic company, which I think will continue to thrive in the mid-term. Apple's future looks bright.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook 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 on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

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.)!

Respectfully yours,

Petar Posledovich

Cryptocurrencies as a Means of Exchange

Dear Reader,

Cryptocurrencies are the new hot asset class. I think the key to their prosperous future is that they become a means of exchange.

Much like company stocks listed on an exchange are a popular means of investing, since you can both increase your investment, but also exchange the stocks for regular currencies like USD, EUR, YEN, GBP etc. Actually stocks are denominated in regular currencies.

The moment cryptocurrencies become a stable means of exchange they will also become one of the greatest investment vehicles ever.

Now the problem with cryptocurrencies is that they are vey volatile. Once you buy into a cryptocurrency you are not sure for how much USD you will be able to exchange your cryptocurrency. However, that very same volatility contributes to the upside potential of cryptocurrencies, which can make them a great investment vehicle. Cryptocurrencies are volatile mainly because they do not qualify for a share of the company's profits or assets, if the company goes bankrupt and goes into resolution. The hierarchy for the company's assets is as follows: senior debt, which may include bonds, junior debt, preference shares and common equity. As most cryptocurrencies are loosely connected to the future of the company and the company's projects they exhibit much higher movements than commons stocks.

I think the future is the middle ground. As cryptocurrencies become more mainstream their liquidity will improve, their volatility will fall and they could become a good, albeit volatile, means of exchange.

Basically, cryptocurrencies issued by companies, are a highly leveraged bet on the future of the respective company. The more mainstream cryptocurrencies like Bitcoin, Ethereum and others are a leveraged bet on the transformation of the global financial system, which is highly dependent on the future of the underlying companies all over the world, of course.

Listed stocks that benefit directly from crypto currencies are NVIDIA, Advanced Micro Devices and Microsoft.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook 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 on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

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.)!

Respectfully yours,

Petar Posledovich