Apple Valuation. Tesla Valuation

Apple is currently valued at 2.42 trillion USD and Tesla is valued at 862.74 billion USD.

Apple's intrinsic value is 1 trillion USD, while Tesla's intrinsic values is 120 billion USD, according to my estimates.

Apple faces the Black Swan of China invading Taiwan where most computer processing chips for Macs, iPhones and iPads are manufactured. Tesla is simply not profitable without subsidies and even now it seems to expense 5 000 USD current downpayment for the whole of minimum 35 000 USD price of Tesla vehicles.

I would call this creative accounting. Yes, so far this kind of accounting has worked for Tesla, because the economy and technology investment flows were in a boom phase. But if there is a sudden, deep economic shock followed by a deep and protracted recession, Tesla could find out that many customers are giving up on the 5 000 USD downpayment and reneging on the implicit promise to pay the rest and giving up the dream of owning Tesla.

And Tesla is burning cash as it is and if customers turn away as described above, Tesla could face solvency troubles as in a couple of times in the past according to the words of Elon Musk, himself.

Apple Inc should have diversified its chip production sites and countries long time ago. Fighting Chinese "communism" is all very nice, but if China invades Taiwan, Apple Inc's market capitalisation can fall more than 70 % in the space of 1 month and drag the Nasdaq Composite down with it, followed by the Standard and Poor's 500 and Dow Jones Industrial Average, which of course will crash all global stock markets.

Apple has on its tail a huge production chain, which is deeply intertwined with the global economy. And if Apple suffers a shock, the global economy will get a headache, it seems.

Bavarian Nordic, Moderna Valuation

Bavarian Nordic, the only approved monkeypox vaccine producer is undervalued. So is Moderna, the Covid, coronavirus vaccine producer. Big time.

Bavarian Nordic's market capitalzation can rise 17 times from the current level.

Moderna, with its messenger RNA technology is more a long-term play on the future of healthcare and biotechnology and its market capitalisation  can rise 7 times from current levels in 10-12 years.

Can Bitcoin Replace the USD?

Yes, partially.

Bitcoin has almost all of the characteristics of money - unit of account, store of value and means of exchange.

Bitcoin's only problem is its too high price volatility. You do not know how much value you exactly store, since Bitcoin can either rise 60 % or fall 60 % in the space of three months.

Otherwise, Bitcoin is actually much more efficient than USD bankkontes printing. Minting Bitcoin takes up less resources, does not create so much waste and is verified by the global population.

I think Bitcoin will slowly take up market share from USD, since people are now fundamentally distrustful of the United States Dollar and other paper money. Especially now in times of high inflation.

In times of high inflation people are getting disgusted from paper money and the politicians behind them.

Bitcoin is a fresh, new, democratic alternative.

Sooner or later politicians, even US democrats will embrace Bitcoin, I think.

Bitcoin's efficiency and turnover velocity can increase tax revenue and thus the loosely controlled Bitcoin could become more palatable for politicians. 

Figma Valuation

Adobe Inc bought private cloud-based designer software producer for Figma at 20 billion USD, which values Figma at 50 times revenue.

Many value investors, private equity investors and financial media are questioning whether Figma is really worth 20 billion USD with many of them saying Figma's "intrinsic worth" or "real" value is a fraction of that amount.

I would offer a slightly different angle. Adobe Inc is valued by public markets at 140 billion USD. And the main reason Adobe paid such a high sum for Figma is because Adobe sees Figma's cloud-based designer software producer as a really credible threat for its own business.

And just a reminder: Adobe's market capitalisation stood a t approximately 300 billion USD only one year ago.

So potentially Figma could be worth 300 billion USD or even more since videos, pictures, where both Adobe and Figma are active are the current and future mega trends since graphical content is easier on people's eyes.

And whoever thinks the probability for this is low sbould just remember what Apple with the iPhone did to Blackberry or what Google, now part of Alphabet Inc did to Yahoo or what Microsoft did to IBM if one goes further back into the past.

In my personal opinion, Figma is worth around 10 billion USD.

But judging from the media content, if I was Adobe Inc, I would also have bought Figma. The danger for Adobe was just too great from Figma, a nimble, agile and quick tech startup.

0.0001% probability on a long enough time-line could become a 100 % probability.

Adobe Valuation

At the current market capitalisation of 140 billion USD, I estimate Adobe Inc is undervalued.

I estimate the intrinsic value of Adobe Inc at 270 billion USD.

Many companies like Alphabet Inc (previously Google) and Meta Inc (previously Facebook) strive to become the foundation of internet, so their oligopoly position remains cemented.

Actually, with its imaging software and PDF documents software Adobe is much closer to this goal than Meta, I would say.

This is the big problem with technology companies. Technology is a capital light, easy to scale business and thus any new young technology startup has the chance to disrupt the leaders as Meta, Alphabet, Microsoft etc. That is why most technology companies are trying to build the proverbial moat around their business to quote Warren Buffett.

Adobe, in my personal opinion has built quite a good moat around its business. PDFs are omnipresent, as well as Adobe's imaging software. In addition, the future lies in videos and images which are easier on the eyesight than long text documents.

What is more, with Adobe Creative Cloud, Adobe is on the crest of the cloud computing wave, which is slowly permeating every area of our life.

Oil, Commodities And Industrials Are the Value Stocks Currently

 

Oil, commodities and industrials are the value stocks currently as measured by their Price/Earnings, Price/Book and Price/Sales ratios.

It is interesting to observe how the proverbial margin of safety based on durable competitive advantage to quote the legendary Warren Buffett works its magic-> today oil futures are down currently around 3.5% while large and mid sized oil companies' stocks are down only 1% to 2% at the most.

Apparently there is much institutional interest in oil, commodities and industrial stocks.

In 2006-2008 oil and commodities were considered growth stocks and they are the growth stocks of the day as the China lead world growth was forecasted to go on for a very long period.

Now, oil stocks have performed remarkably well from their nadir in 2020.

And if the West and Russia do not cut a temporary deal, inflation will continue to grow and oil and other commodities and stocks of the companies that produce them will go hire is my estimate.

Bavarian Nordic Prospects

Bavarian Nordic, the only firm to have an approved monkeypox vaccine and that is used currently can increase its market capitalisation from the current circa 3 billion USD to 70 billion USD, I think.

Monkeypox is spreading fast and if contracted it can have a devastating effect on the organism of human beings.

Countries the world over are too slow to respond to the monkeypox threat, which increases the fear factor and raises the probability of a global, deadly monkeypox virus pandemic.

Possible China Taiwan Invasion. Risks for Stocks

 

Russia invading Ukraine has started a chain reaction of possibly exploding long held dormant conflicts.

China's long held rivalry with Taiwan is a case in point. China considers Taiwan its territory. USA sending politicians to Taiwan is only stoking the pressure and long held tensions.

If China invades Taiwan, the first reaction will be Apple Inc, the Mac, iPad, iPhone producer stock and respectively market capitalisation falling by more than 50 % in the space of several weeks.

As witnessed by the Apple 7th September event, news on Apple tend to exert huge influence over technology stocks mainly represented on the Nasdaq Composite and by extension over the broader US stock market and further on global stock markets due to the interconnectedness of the global economy.

Apple Inc makes more than 300 billion USD a year in revenue and a huge, broad chain of suppliers will be affected if Apple Inc runs into trouble if China invades Taiwan. These suppliers have suppliers of their own and the chain reaction will go on and affect the whole microprocessing chips industry and thus almost all industries globally, since nowadays most production processes, automobiles, machines and so on are run by computers.

If China invades Taiwan, Apple Inc's stock will fall by 50 % and global stock markets leading indices could fall by 25 % in the space of several weeks.

The Current Technology Stocks Nasdaq Bubble. Has It Popped?

No. The current dot-com bubble has further to go.

The Nasdaq Composite, I think it will fall around 30 % from current levels.

In the mean time, however, we could, in my humble opinion witness a significant bear market rally whereby the Nasdaq Composite could rise 15 % from its current points level.

I think a potential Nasdaq Composite bear market rally can go until the end of October 2022. Then, when November comes and the cold sets in, inflation will rise significantly again, global central banks will be forced to raise interest rates levels significantly and this will plunge the global economy into a recession, corporations and consumers, especially will face difficulties repaying their loans with the higher interest rates, the crisis will spill into the banking sector and we could, potentially witness a 2008-2009 style sudden stop of capital flows, interbank especially.

After the fall, however most technology stocks will be deeply undervalued and will be bargains, I forecast. 

Many of them will become the proverbial ten bagger stocks.

Cryptocurrencies Issuance As Venture Capital Funds and Angel Investors Alternative

In 2015 and in 2016 many mostly young, fledgling technology companies issued their own cryptocurrencies to fund their businesses.

These newly issued cryptocurrencies tokens can be described as a sort of I Owe You or Promissory Note, which is not a firm promise of payment, but is related to the proceeds from a certain project of the company, that has issued the particular cryptocurrency.

This is a very specific niche, which I think is even before angel investors and preceding by a wide margin seed investing by venture capital funds.

That is why new cryptocurrencies issuance will start thriving again soon. Basically, newly minted cryptocurrencies are a way to slice investment risk into even thinner pieces. These new cryptocurrencies have the advantage they have reasonable liquidity, while angel investors' stakes and venture capital stakes in companies are vey difficult to liquidate.

It is not surprising that the leading venture capital funds in Silicon Valley are embracing cryptocurrencies and investing in them.

Sooner or later Bitcoin and cryptocurrencies will become mainstream in my humble opinion.

Cryptocurrencies is the single, most important financial markets, finance innovation in the last more than two decades. And  a good innovation always finds its way to change society.

How High Can the Price of Oil Go?

I think the price of both WTI and Brent Crude oil can reach 150 USD if USA and Europe ban Russian oil exports purchases.

An average price of 120 USD of oil until 2023 is my other forecast.

GitLab Business Strategy

GitLab, the online code repository and collaboration software has set its sights on becoming the software factory of the world.

Due to its easy interface, on GitLab software engineers can teamwork to ultimately create quality software application.

GitLab has chosen a single product offering, price tiering for small, medium and large enterprises. So, inherent scale combined with flexibility.

Many leading corporations have chosen GitLab for online code collaboration due to its flexibility and not so high price.

GitLab's strategy seems to be to scale a so far difficult to scale service, namely teamwork and make it at the same time tailor-made by pricing it according to customers' size and resources.

If executed well by GitLab's management, this strategy could prove a game changer in the Infrastructure as a Service cloud computing offering, which is currently the most exciting business in the world.

Etsy Valuation. 05 September 2022

Etsy, the e-commerce company geared toward small businesses is currently with a 13.4 billion USD market capitalisation.

In my view, Etsy's intrinsic value is 55 billion USD.

Why? Because Etsy is the only credible competitor to Amazon Inc, which has a market cap of 1.3 trillion USD as of today. Etsy used a handmade, vintage items and craft supplies niche to turn into a 2.5 billion USD yearly revenue run rate business. So Etsy's business is not so niche any more. 

Etsy's Price/Earnings ratio is 37.32, while Amazon's Price/Earnings ratio is 114.66. And this is now, when Amazon's cloud business Amazon Web Services, the leading cloud computing business in the world is bringing in tens of billions of USD a year in revenue with a circa 20 % net profit margin.

At 10.63 % the quarterly year on year revenue growth rate of Etsy is higher than Amazon's 7.21 %.

All in all, Etsy does seem undervalued long-term, contrary to most listed technology stocks at present.

Top 5 Technology Companies Intrinsic Value. Bubble. Valuation

Apple is currently valued at 2.50 trillion. According to my estimations Apple is worth 1.2 trillion USD, a revision downwards from my previous 1.4 trillion USD estimation for Apple. Taiwan is a huge risk.

Microsoft is valued at 1.91 trillion USD. I estimate Microsoft's intrinsic value at 1.1 trillion USD.

Alphabet, Google's owner has currently a market capitalisation of 1.41 trillion USD. I estimate Alphabet's intrinsic value at 780 billion USD.

Amazon has currently a market capitalisation of 1.3 trillion USD. I think Amazon is worth 600 billion USD.

Meta Inc, Facebook's owner has currently a market capitalisation of 431 billion USD. Actually, according to my estimates Meta is worth 520 billion. Meta is the only one of the big 5 technology companies that is actually undervalued, in my view, due to Meta's stock price recent steep fall.

In short, currently we are experiencing the greatest technology stocks bubble in human history. Rising technology companies' market capitalisations the world over have driven the rising of total stock market index capitalisations, globally. The two main factors being historical technological breakthrough, namely artificial intelligence or AI facilitated by money creation, or more colloquially known as money printing by the Federal Reserve, The European Central Bank and other leading central banks.

Which means, I think, that we are witnessing the biggest stock market bubble in history.

Cryptocurrencies' Intrinsic Value

Bitcoin, Ethereum and other cryptocurrencies do have intrinsic value, according to my humble opinion, contrary to what Warren Buffett and many other value investors are saying.

By the way, the Oracle of Omaha as Warren Buffett's moniker goes, has been saying many things are not OK and it turns out he either currently or at a later stage invested in them.

Example: Warren Buffett has said that "Derivatives are weapons of mass destruction", while the insurance business lead conglomerate Berkshire Hathaway, managed and majority controlled by Warren Buffett himself has tens of billions of USD invested in financial derivatives.

Anyhow, Bitcoin, Ethereum and other cryptocurrencies intrinsic value lies in being a means of exchange, store of value and financing vehicle, among other value accretive features.

Yes, Bitcoin and Ethereum do not pay dividends yet, but so do not Amazon, Facebook Alphabet(Google owner) and most other technology companies.

Browsing on the internet, watching videos, creating Microsoft Excel and Microsoft Word files, drinking coffee also do not pay dividend income streams, but these activities do provide value.

Internet as technology has been applied by firms like Apple, Microsoft, Intel, Nvidia even that have paid out and are paying dividends.

It is a matter of time, according to my humble opinion that many technology companies and firms from other industries apply Bitcoin, Ethereum, other cryptocurrencies and the blockchain technology underpinning them to create value, streamline their production processes and provide higher revenue and profits, which ultimately will translate into dividend income from profitability.

Barring governments the world over from getting involved and for example outlawing Bitcoin and other cryptocurrencies. But history has shown it is very difficult to go against the people.

"There is nothing more powerful than an idea which time has come".

The Value of Wall Street Investment Banks' Equity Research

The equity research of Wall Street banks which can loosely be listed as Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America,  Citigroup, Barclays, Credit Suisse, Deutsche Bank, UBS, Jeffries etc. has been under scrutiny for a long time as being biased and not independent of the mergers and acquisitions, M&A advisory and equity underwriting business.

I have read and continue reading Wall Street Banks' equity research. I would say on a whole stock market index direction level it is quite good, since, perhaps on the aggregate, macro level the bias and pressure from M&A and equity research is less.

The individual stocks' equity research of Wall Street investment banks is less good. The reason, according to my opinion is twofold:

 1) Most of the equity researchers are trend followers or the price action is one of the main determinants of the equity research recommendations. This has its business logic, of course. Due mainly to the money creation of leading central banks and innovative technology companies most technology companies' stocks prices and market capitalisations all over the world have ben rising since 2009 until November 2021 and the general market due to the high technology industry weighting has followed suite. So analysts, to actually produce accurate stocks prices forecasts must or are compelled to issue predominantly buy recommendations. Because, otherwise their buy side clients would be unhappy and the equity research analysts can loose their jobs

2) The second determinant of the relatively mediocre quality of equity research is the inherent conflicts of interest with the Mergers and Acquisitions advisory, equity underwriting, especially Initial Public Offerings and junk bond underwriting business lines of the Wall Street investment banks. The Mergers and Acquisitions advisory, Equity underwriting, especially Initial Public Offerings and junk bond underwriting business lines seem to still be, according to many media reports and anecdotal evidence  exerting pressure on equity research analysts in Wall Street banks to issue favourable equity research ratings, that is give out a BUY rating for Mergers and Acquisitions companies clients, IPO and junk bond clients. It seems, according to media reports very difficult for equity research analysts to have a successful career if they do not yield to the pressure of business line.

Mike Mayo's career is a case in point.

One has to be brave, but when billions of USD are at stake, many people are either greedy or fearful.

Amazon Valuation. 01 September 2022

Amazon is currently valued at 1.29 billion USD market capitalisation.

In my opinion, Amazon's true intrinsic value is around 700 billion USD.

As of today, Amazon's Price/Earnings ratio is 114.

To substantiate such a valuation, Amazon's revenue has to grow with 20 % for 12 years and achieve a net profit margin of 17 %, at least, compared to the current average yearly profit margin of 4 % for Amazon in the last few years.

The online merchandising market is growing and huge in yearly revenue, but the growth rates are not as big as before and they are going to decrease. Cloud computing is a huge business, where Amazon with Amazon Web Services is a leader with 22 % market share. 

In both online merchandising and cloud computing, there is always the danger that a new hot technology startup will emerge and take a large market share from Amazon. Much like Google did with Yahoo and Facebook did with the whole market for internet advertising.

The money printing of leading central banks in the last 10 years created the biggest technology bubble in history, much larger in market capitalisation than the previous dot-com bubble in 1996-2021.

Even the big 5 technology companies Apple, Microsoft, Alphabet, Amazon, and Facebook are significantly overvalued.

The music, sooner or later, will stop and to quote Warren Buffett "when the tide turns, it will be seen who is swimming naked".

Yes, if one times the market correctly, huge riches can be made. But stock market timing has been historically, notoriously difficult.