Amazon Valuation. 30.05.2021

Dear Reader,

Amazon.com, Inc., the online merchandizing and cloud computing company, is valued at 1.63 trillion USD by public markets.

I estimate Amazon is worth 1.1 trillion USD or 33 % lower than its current market valuation.

Yes, I know cloud computing has a very high net profit margin, is growing very quickly, Amazon is the leader in cloud computing and cloud computing is the future. But investors, influenced by money printing by central banks, have too lofty growth and profit expectations for Amazon as things stand at the moment.

Amazon's online merchandizing business in Europe and internationally is still loss making, despite being a relatively large portion of the Amazon's revenue overall.

Yes, Amazon's advertising business really took off and Amazon is now at third place behind Alphabet's Google and  Facebook in the currently around 400 billion USD a year in revenue  online advertising market.

The cloud computing business growth, however, is bound to slow down and competitors like IBM and many smaller and more agile firms are ambitious to take a larger share of the cloud computing market.

All that said, after central banks start pulling off the monetary support for the economy Amazon's market capitalization may well fall down to what I estimate is its true intrinsic value of 1.1 trillion SUD 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

Do Bitcoin and Other Cryptocurrencies Have Intrinsic Value?

Dear Reader,

Many analysts and successful and famous investors say that Bitcoin and other cryptocurrencies do not have intrinsic value, so they are worthless.

What they mean is that there are no cash flows backing Bitcoin and other cryptocurrencies. 
Standard finance theory says the value of a stock or a bond is derived from the discounted value of the future cash flows derived from the stock or its dividends and finally the selling price of the stock holding and the future cash flows from the bond or its interest payments and the selling price or maturity notional payments.

However, just look at Amazon.com, Inc, the online merchandizer and cloud computing company. Amazon, in its 24 years of public company status, has never payed any dividends. And many doubt that it will ever will. Earlier Amazon was making losses, later its Price/Earnings ratio was around 200 or even higher, now its Price/Earnings ratio is 61.3 and Amazon is profitable. At 1.63 trillion market capitalization of Amazon.com, Inc. investors seem to think there is huge intrinsic value in the company.

Bitcoin provides actually infrastructure for the cryptocurrency market. Ethereum in a way also. Other cryptocurrencies are tied to companies' projects, so there are to a company's prospects similar to common stocks, but they are not entitled to company dividends or proceeds in the event of bankruptcy of the company.

Bitcoin's infrastructure service and its for now not full blown function of means of exchange, unit of account and store of value or money does have some value. Paper money has value, although it is not backed by cash flows, but just by the public's beliefs, perceptions and trust in the governments. Money and Bitcoin, actually, save people time, effort and money so they facilitate. Facilitation or saving of effort, time and money does have value since our life spans are limited, our physical and mental capabilities are also limited.

Governments can, of course, simply outlaw Bitcoin in a globally coordinated way. This will drive cryptocurrencies' value to 0(zero). That, however, is an unlikely event because Bitcoin and other cryptocurrencies provide many benefits and efficiencies. 

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

Apple Valuation. 29.05.2021

Dear Reader,

Apple is currently valued at 2.08 trillion USD by investors on the NASDAQ bourse.

I estimate Apple's true value is around 1.6 trillion USD or Price/Sales of 4 and  Price/Earnings ratio of around 15 which better reflect Apple's future potential.

The whole stock market and technology stocks especially are a bubble inflated by central banks' money printing and retail investors' greed. Apple's market capitalization is also artificially inflated.

S&P 500, DJIA and Nasdaq could fall by 30%, 25% and 40 % respectively in the next 2-3 years as central banks start to withdraw the monetary support for the economy scared off by rising price levels or inflation.

Technology stocks will be hurt the most, while value stocks like regional banks, universal banks and energy and commodities producers and industrial companies will perform relatively better.

Technology value stocks like Apple, Intel, Amazon and Microsoft will also outperform the Nasdaq composite and fall less than the Nasdaq composite index.

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

Bitcoin's Latest Developments

Dear Reader,

Several countries are making an attempt to ban certain Bitcoin activities and transactions.

This naturally influenced Bitcoin's price and Bitcoin and other major cryptocurrencies' prices went down in the last two weeks.

I doubt that governments will outlaw Bitcoin and other cryptocurrencies. Cryptocurrencies transactions and profits increase the financial pie on which governments can collect taxes. Via Bitcoin money transfers and remittances governments collect more taxes and thus have more money to spend for their policies. Many people who have never invested in financial assets have entered the investing world by investing in cryptocurrencies.

I forecast Bitcoin's price will reach 100 000 USD in the next 3-5 years.

Bitcoin just provides too many efficiencies and is part of the artificial intelligence lead fourth industrial revolution.

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

McDonald's Corporation Valuation

Dear Reader,

McDonald's Corporation, the fast food restaurants chain, is currently valued at 173.4 billion USD by public markets.

I estimate the real intrinsic value of McDonald's is around 125 billion USD. Yes, McDonald's has high net profit margin of approximately 25 % for the last five rolling quarters, but at Price/Earnings ratio of 33.73 McDonald's is way overvalued. Yes, the company has a stable, proven in decades business model, high dividend yield, durable competitive advantage or moat as Warren Buffett would say, but the company simply seems overvalued to me. McDonald's valuation seems to be pricing growth that currently proves illusive. Yes, after the pandemic ends people may well eat out more and be more frugal, but McDonald's stock has priced such growth for the last five years and it has not come to fruition.

Apparently, investors are rewarding McDonald's for its high profitability.

All in all, I think McDonald's is worth around 125 billion USD or 28 % discount from its current price.

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 to Invest in Cryptocurrencies?

Dear Reader,

Bitcoin and other cryptocurrencies have taken over the world by storm in the last 5 years.

Many people who have never invested are now regular investors in Bitcoin and other cryptocurrencies.

Basically, to invest in cryptocurrency one has to open an account in a brokerage company like Coinbase or Robinhood Financial. Via the brokerage company's interface one can buy and sell cryptocurrencies and thus invest in Bitcoin and other cryptocurrencies.

Actually, buying and selling cryptocurrency is not difficult at all. Much more difficult is to do it profitably. More so after the wild swings in the price of Bitcoin during the previous week.

When investing in cryptocurrencies risk management is vital. For the last rolling year before last week it was easy, just buy Bitcoin and the price went up almost intermittently. In the last 2 years, however, and in the previous week especially there have been very large falls in the price of Bitcoin. If one buys at the recent peak, does not hold one's nerve and sells at the bottom one can end up loosing 30 % or even more of one's investment.

One of the main principles of economics is that there is no free lunch. Investing in cryptocurrency is a case in point. One has to take significant risk in order to expect high rewards. Even if news on cryptocurrencies are closely followed this does not guarantee that significant losses will not be incurred.

In my opinion, however, Bitcoin and other cryptocurrencies provide too much benefits and the price of Bitcoin and most other major currencies and even more obscure crypto tokens will continue rising in the next 5-7 years, barring a shocking decision by governments to outlaw cryptocurrencies or any similar Black Swan event pertaining to 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

Will Governments Outlaw Bitcoin and Other Cryptocurrencies?

Dear Reader,

Bitcoin experienced a significant price crash several days ago on the news that China is making steps of limiting cryptocurrency servicing, investing and trading.

Actually, governments banning cryptocurrencies is the biggest risk the nascent digital currencies asset class is facing. If governments all over the world outlaw cryptocurrencies in a coordinated way the price of Bitcoin and other cryptocurrencies could go close to zero.

Will governments outlaw Bitcoin and other cryptocurrencies? No, I do not think so. Cryptocurrencies just provide many efficiencies by saving time, effort and money to both people and governments. Governments can tax Bitcoin transactions which actually increase the financial transactions revenue size since many people entered finance and investments that never before had significant interest in this area. Bitcoin and other cryptocurrencies increase the velocity of money which raises world's GDP, corporate profits and thus governments revenues. And after the coronavirus pandemic the world's leading economies took on massive new amounts of debt which has to be serviced.

In short, governments desperately need Bitcoin and other cryptocurrencies and the tax revenue they will provide. So barring irrational behavior or decisions the probability that governments will outlaw Bitcoin or other cryptocurrencies is small.

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

International Business Machines Corporation IBM Valuation

 

Dear Reader,

International Business Machines Corporation, IBM, is valued at 129.27 billion USD currently by pubic markets. 

I estimate the real intrinsic value of IBM is 200 billion USD.

IBM has recently focused on cloud computing and artificial intelligence. Yes, IBM's revenue for four of the last five quarters declined year on year by 3 % on average. In Q1 2021, however, IBM's revenue grew with 0.9% for the first time in a long time.

Yes, IBM's restructuring was a long and painful process, but cloud computing and artificial intelligence are the future of the computing business and the world essentially.

IBM has all the people and technology resources to transform itself into a leader in cloud computing and artificial intelligence.

That is why I think IBM is worth 200 billion USD or approximately 55% above its current market capitalization.

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

Will Rising Interest Rates Crash Bitcoin and Other Cryptocurrencies' Prices?

Dear Reader,

Bitcoin and other cryptocurrencies' prices fell after Elon Musk's negative comments on cryptocurrency mining excessive energy consumption.

I think this is just a correction along the path upwards for Bitcoin and most other cryptocurrencies' prices.

Many analysts think that Federal Reserve raising interest rates levels and other major globally significant central banks following suit could trigger a crash in cryptocurrencies' prices. Apparently they think that rising interest rates levels will have the effect they usually have on technology stocks and technology startups companies' values. When interest rates rise technology companies, most of which are unprofitable, find it harder to raise capital. In addition to that, pension funds, hedge funds and mutual funds find it more attractive on a risk adjusted basis to invest in the now not small interest rates of 10 year US Treasuries. This saps away the much needed capital for startup technology companies and their values fall. I do not think rising interest rates would have such an effect on cryptocurrencies. At least, not to the extent they have on technology companies.

In the mid-term, I forecast the march higher for Bitcoin and other major cryptocurrencies' prices will continue. We might soon see a price of 100 000 USD for a Bitcoin.

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 Will the Technology Stocks Bubble Burst?

 

Dear Reader,

Technology companies stocks. listed on leading global stock exchanges, especially in the USA, are undoubtedly in a valuation bubble territory measured by the most common fundamental valuation metrics Price/Earnings, Price/Sales, Price/Book ratios.

What is going to burst this bubble? Most analysts and portfolio managers thinks the bubble bursting trigger would be the Federal Reserve stopping asset purchases or raising interest rates levels. I actually think it could be more the psychology of investors what will pop the current technology stocks bubble.

At some point investors will decide that technology stocks are too overvalued based on Price/Earnings, Price/Sales, Price/Book ratios and other valuation metrics. Fear will set in, people will start selling, selling will beget more selling and the technology bubble will burst.

The ending of many financial bubbles in history could be traced simply to mass psychology, the investing public suddenly realizing that the respective financial asset is too overvalued.

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

What Drives Cryptocurrencies' Prices?

Dear Reader,

Bitcoin and other cryptocurrencies have been on the way up for the last 7 years.

The main factors driving the increase are people's adoption of cryptocurrencies as a means of exchange, unit of account and store of value or the characteristics of money, people, corporations and institutions investing in Bitcoin and other cryptocurrencies, regulators' positive approach to cryptocurrencies and finally cryptocurrencies acting as a way to increase your wealth.

None of the aforementioned factors has lessened, so cryptocurrencies' prices are likely to continue to go higher in the short to mid-term.

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

Can You Loose All Your Initial Investment When Investing in Cryptocurrencies?

Dear Reader,

Bitcoin and other cryptocurrencies investing is often cited as a risky investment by many analysts, portfolio managers and regulators.

Yes, if one invests in Bitcoin and other cryptocurrencies, even in a diversified way, there is a non negligible chance that one can loose the whole of one's initial investment. If an investor invests in a diversified stocks portfolio, especially in large capitalization stocks traded on large countries' regulated bourses, it is very unlikely that he or she will loose the whole of their initial investment.

Since cryptocurrencies do not participate in the capital structure of a company, they are not entitled to any proceeds in the event of the related company's bankruptcy. In addition, common stocks listed on exchanges have been around for hundreds of years, are duly regulated, accepted by the public and regulators. There is virtually no chance investing in common stocks could be outlawed. There is, of course, the catastrophic risk of a global scale natural disaster or large scale nuclear war, the ensuing of which could wipe out the value of commons stocks completely.

Bitcoin and other cryptocurrencies, however, are a new financial instrument, their regulation is either nonexistent or nascent. Governments are not yet still 100 % sure if cryptocurrencies' benefits outweigh their costs. So there is still the relatively significant risk that governments through their regulating bodies could ban cryptocurrencies, which would bring Bitcoin and other cryptocurrencies' value to zero.

In short, when investing in cryptocurrencies one has to be mindful.

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 Honest Company Valuation

Dear Reader,

The Honest Company, the American consumer goods company founded by actress Jessica Alba, staged an IPO on Nasdaq this Tuesday with the price of The Honest Company's stock leaping 43.75% on its first day of trading with The Honest Company currently valued at 2.08 billion USD.

Is The Honest Company overvalued, fairly valued or undervalued> I would say that currently The Honest Company is undervalued based on its SEC financial results IPO filing. I estimate the current 2-3 year horizon fair value for The Honest Company is 2.5 billion USD

The Honest Company grew its revenue by 28% year on year in the calendar 2020 compared the calendar 2019.

In the long run, however, The Honest Company could prove grossly undervalued. The market for beauty skincare products, diapers and wipes is huge compared to the revenue that The Honest Company is currently making. And The Honest Company is on the verge of becoming profitable by generating a net loss of only 14.5 mln. USD in 2020.

So in the long run, 5 to 7 years The Honest Company could end up being worth around 9 billion USD if its strategy is executed well. The market for women beauty care products is too concentrated, underinvested and rife for disruption by beauty technology companies like The Honest Company.

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 to Risk Manage Cryptocurrencies Investments?

Dear Reader,

Investing in Bitcoin and other cryptocurrencies is the new investment craze. I know many people, usually information technologists, who never before invested in anything now first invest in cryptocurrencies and later in stocks, foreign exchange or even commodities.

Yes, we are living through another dot-com bubble like in 2001. Then, again, day traders were prolific. Now, free of charge brokerage platforms like Robinhood and Trade Republic gamify buying financial assets, making it easy and free. However, buying stocks may be easy, but buying and selling them with a profit is not easy at all!

The same goes for cryptocurrencies. If one is investing in cryptocurrencies, especially smaller less famous and less liquid cryptocurrency tokens one has to be extremely vigilant. Buy and hold for less liquid cryptocurrencies will hardly work. There are just too many factors at play. The company behind the crypto token could go bankrupt, governments could outlaw cryptocurrencies, a large holder could sell a large holding of an illiquid security, Bitcoin's price can crash.

One has to buy at weakness, like a fall in the price of the cryptocurrency of 20% from a recent peak, and sell at a rise of 20% from a recent cryptocurrency price level. Yes, the commissions for trading an illiquid commodity like an obscure cryptocurrency are high, but the rewards can be potentially much higher.

The downside of being complacent, though, could be extremely painful.

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

Coca Cola Valuation

Dear Reader,

Coca-Cola, the American multinational beverage corporation, is currently valued at 234.90 billion USD.

I estimate the real intrinsic value of Coca-Cola is 200 billion USD. Coca-Cola seems currently overvalued both on Price/Earnings and Price/Sales ratios given that it posted 4 years of negative revenue growth in the last 5 calendar years.

Yes, I know Coca-Cola has a strong brand, but globally the consumers are shifting to healthy foods and drinks which hurts Coca-Cola's main Coca Cola brand and its derivatives like Sprite and Fanta. Yes, Warren Buffett has a large stake in Coca-Cola and has long supported and liked the company in public.

But simply Coca-Cola, as far as I am concerned, is worth "only" around 200 billion USD and this can be justified only because of its high net profit margin of usually approximately 20 % on a yearly basis.

Coca-Cola's current fortunes resemble IBM's which recorded many consecutive quarters of declining year on year revenues. Yes, Coca-Cola has a healthy dividend of 3.1% and I do see why Warren Buffett likes the company. If one invests in Coca-Cola a large sum of money, many billions USD in Buffett's case, one can expect to redeem 100 % of the investment in 5 years with a capital profit of around 25 % and including in addition the 15 % dividends of the investment value. And such returns are not negligible for pension funds, large institutional asset management funds and insurance companies like Warren Buffett's Berkshire Hathaway.

All in all, however, I estimate Coca Cola's intrinsic value is 200 billion USD currently. Or with other words, Coca Cola is overvalued. One opportunity for Coca Cola is to use its large cash reserves and cash generating ability to enter new markets, especially healthy foods, drinks or coffee products, or buy up other beverage companies to achieve the growth that has eluded the company for years and increase its market value.

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

Twitter's Future

 

Dear Reader,

Twitter, the short messaging social media company, is currently valued at 43.6 billion USD as evidenced by its New York Stock Exchange Listing.

I estimate Twitter is fairly valued for the next 3 to 5 years. Twitter has actually a lot of untapped value. Twitter has staked its future on video content, which is a mega trend, and a paid service according to various media sources.

Actually, I believe Twitter has to look for more ways to tap the in the moment news content on its network. Twitter is relatively much more popular outside the US in comparison with other leading social networks like Facebook and LinkedIn. Its audience is 70.4 % male which I think reflects the objective statistic that men consume and are more interested in news. Twitter is actually the best social network for news. All leading news anchors and reporters globally are on Twitter and often cite Twitter as their favorite social network. What is more, media staff share their posts usually first on Twitter and spend the most time on Twitter, compared to other social networks. Many revolutions around the world started on Twitter. I think this has to do with the short messaging format of Twitter. Writing short, but informative messages on Twitter takes less time, is more efficient, value creating and wealth and well being enhancing. The short messages in Twitter preserve the value of information, spread the word more quickly and are basically are a better media strategy.

So I believe Twitter has to firmly stake its future on monetizing the news content created by its users. Creating paid posts service is a good idea. People pay for products and services that save them time, effort and money. Twitter actually provides in many instances extremely valuable information and usually is the first source to report on a hot and breaking topic. People have throughout history paid a lot for the most valuable commodity - information. And Twitter should be able to convince people to pay for parts of its service. Yes, for now Facebook, LinkedIn and Twitter are free for users and paid for advertisers who value a lot the information about the social networks' users. 

Twitter, however, is a special case in that its news content created by its users is specialized, informative and timely. So Twitter's future looks bright.

If Twitter is able to monetize its news, I believe Twitter could be worth around 100 billion USD in the next 5 to 7 years.

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

Goldman Sachs Investment Analysis

Dear Reader,

Goldman Sachs, the global investment banking firm, is valued at 120 billion USD currently by public markets. 

Based on profit and revenue achieved by Goldman Sachs in the last four rolling quarters or in the calendar 2020 Goldman Sachs looks undervalued. A lot. Based only on Price/Earnings ratio I would say that Goldman Sachs should be worth around 200 billion USD.

Investment banks like Goldman Sachs and Morgan Stanley, however, are trading at a steep discount to technology companies and even at a smaller discount to the overall S&P 500 market currently. The main reason, as far as I am concerned, is the huge value destruction investors in banks and brokerages experienced in 2008 and 2009. Another reason is that the revenue of Goldman Sachs is not growing as fast as in 2006 and 2007. 

Yes, in Q1 2021 Goldman Sachs' revenue basically exploded driven mainly by the booming equity and fixed income underwriting. However, as the Archegos case recently showed, investment banks are only one large false bet away from their viability being threatened. That is inherent for the investment banking business. Investment banking, especially the brokerage wing, is a high risks, high reward business.

One has to risk a lot to win a lot. If the Q1 2021 business boom continues for three more quarters or for 2 years altogether, however, Goldman Sachs could end up being worth around 250 billion USD in the next 3 years.

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

Bitcoin as an Alternative Investment

Dear Reader,

Up until recently, people regarded mainly hedge funds, private equity and real estate as alternative investments.

Since 2013 Bitcoin and slowly afterwards other cryptocurrencies entered the mainstream. Bitcoin and other cryptocurrencies are actually the single new investment asset class to be developed in decades. Bitcoin and other cryptocurrencies are alternative because they are new, unregulated and unstudied. The lack of regulation for Bitcoin and other cryptocurrencies fosters innovation in the asset class. Actually, the lack of regulation is the main reason why hedge funds and private equity funds owners are some of the richest people on the planet.

Regulation, in most cases, destroys investment. Banks, after nearly collapsing the global economy in 2008, are now heavily regulated and they are barely at their profit levels at 2008. The money is flowing now in private equity funds and hedge funds which do not benefit from an implicit government guarantee.

Bitcoin and other cryptocurrencies are now unregulated and that is one reason why they are flourishing. Bitcoin and other cryptocurrencies still offer opportunities to earn multiples on one's investment. There is always the risk that governments could outlaw Bitcoin and other cryptocurrencies. But governments, especially in relatively less democratic states, could also destroy companies, like the case of Ant Group in China clearly showed. And Microsoft's US antitrust problems threatened the viability of Microsoft at the time.

So, for now, Bitcoin and other cryptocurrencies offer good risk reward ratios. The Securities and Exchange Commission in the USA defines Bitcoin as a commodity. Yes, akin to oil and gold Bitcoin is volatile. But I think Bitcoin  and other cryptocurrencies are closer to stocks, since most cryptocurrencies depend on some company's project. Bitcoin and Etherum are a bit different since they serve mainly as a payments infrastructure.

All in all, Bitcoin and other cryptocurrency remain a revolutionary, quickly evolving asset class that holds the promise of any breakthrough technology - to change the world and simultaneously make many early adopters fabulously rich.

So far, I am optimistic.

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

Are Leading Emerging Markets Stocks Undervalued? BRICS. Brazil, Russia, India, China and South Africa.

Dear Reader,

Much of the attention and investment flows of the investing community since 2010 have gone into the fast growing technology companies listed mainly on the NYSE and Nasdaq bourses in the USA.

That, as far as I am concerned, has left the leading stocks on the largest emerging markets like Brazil, Russia, India, China and South Africa undervalued. Here one may doubt if Chinese technology companies listed on China's mainland bourses, Hong Kong or USA are still undervalued.

Basically, technology companies all over the world are trading at very high Price/Earnings, Price/Book and Price/Sales ratios.

That has left many materials or natural resources stocks listed in Russia or Brazil, for example, undervalued. Now, according to many market participants and Wall Street research analysts, the tide is turning and the attention is focusing on value stocks or currently banks, commodities producers and industrials. Certainly the price performance in the last 4 months of the aforementioned companies globally and particularly in the US confirm these expectations. In Russia, Brazil and China there are many banks, oil and other commodities companies and industrials which seem to be undervalued. Examples in Russia include oil producing companies like Gazprom and Lukoil, Petroleo Brasileiro in Brazil and many companies in India and China.

The major companies on bourses in Russia and India have high dividend yields and this makes them even more attractive.

One risk for my assertion that currently companies in emerging markets, especially in Russia, Brazil and India are undervalued, is a possible strengthening of the United Stated Dollar. Many companies in the leading emerging markets like Brazil, Russia, India, China and South Africa finance themselves in USD denominated corporate bonds, but get their revenues mostly in other currencies, predominantly the domestic ones. This creates a funding risk if the USD appreciates a lot.

That said, large commodities producers, banks and industrial companies listed in Brazil, Russia, India and less so in China seem undervalued. I forecast we can soon see something like the period of 2003 to 2008, when after the bursting of the technology dot-com bubble in the USA, the investing flows went into emerging markets.

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