Cloudflare Valuation

Cloudfllare Inc, the producer of DDoS attacks mitigation software and cloud based IT security applications producer is currently valued at 25.73 bln. USD after almost doubling in value in the space of a month after excellent quarterly earnings report.

I estimate Cloudflare at 25.73 billion USD market capitalisation currently is fully valued on an intrinsic basis.

If two events simultaneously unfold, Cloudflare could reach a market capitalisation of 100 billion USD.

1) Cloudflare's quarterly revenue goes on growing at more than 50 % year on year.

2) A regime change ensues on the stock market. The positivity could be brought by either the Federal Reserve pausing the federal funds rate hikes or economic growth resuming driven by either a technology breakthrough or global cooperation.

In short, as with most growth stocks from Technology or Pharmaceuticals the future for Cloudflare is binary.

A third, negative scenario is unlikely at the moment, since computing is moving to the cloud. Altogether.

Emerging Technologies. Stocks Valuation

The current emerging technologies can safely be assumed to be artificial intelligence, financial technology, Bitcoin and other cryptocurrencies in particular and cloud computing.

Based on my more than 15 years of experience analysing stocks I estimate that for small, mid capitalisation and large capitalisation companies in the businesses of artificial intelligence, financial technology, Bitcoin and other cryptocurrencies and cloud computing, the adequate revenue, Price/Sales multiples that is are 20, 12 and 7.

Yes, artificial intelligence, fin-tech and cloud computing stocks have seen their valuations reset in public markets, mainly on the Nasdaq and NYSE bourses since last November.

But corporations and individuals are inadvertently moving toward saving on the costs of producing goods and services. Currently, the fourth industrial revolution is under way driven by computer algorithms epitomised by artificial intelligence, AI, machine learning, fin-tech and cloud computing.

Yes, many of the small and mid-cap stocks in the AI, crypto and cloud verticals are burning cash, that is loosing money, but many of theme will survive and even thrive, because people simply want cheaper and cheaper goods and services. Wealth simply is not distributed evenly throughout the world and among individuals, so the only way to raise a two children middle class family in big metropolis cities is to make ends meet by buying reasonably priced goods. Translation: goods produced mainly in China and soon India and soon the production of these goods will be powered more and more by industrial automation.

Since technology is finding its way everywhere it is difficult to estimate how big is the actual market for many technology verticals, especially for artificial intelligence, financial technology, Bitcoin and other cryptocurrencies in particular and cloud computing.

This makes even the high Price/Revenue multiples stated in the beginning of this article seem not too high. And of course makes the valuation of AI, crypto and cloud companies all the more difficult, challenging and ultimately interesting.

Cloud Technology

Cloud computing stocks are still long-term undervalued as the recent very big stock price rise of Cloudflare has clearly shown.

GitLab, HashiCorp, Cloudflare, Docusign and many other cloud computing stocks are undervalued on the long-term potential of cloud computing, which will essentially become computing.

Actually, young, small and midsize market capitalisation which are still unprofitable companies offer the greatest reward potential with opportunity for multiple fold rise in their stock price over the next  7-10 years, commensurate with a significantly higher risk.

Bavarian Nordic and Moderna Vaccine Producers Comparison

Monkeypox looks like it is probable that it might become the next global pandemic.

Bavarian Nordic is the only company with approved vaccine for monkeypox.

Moderna, the leading Covid vaccine producer with BioNTech is currently valued at approximately 67 billion USD. Earlier, at its stock price peak Moderna was valued at around 164 billion USD.

According to my estimates, Bavarian Nordic can reach a valuation of 77 billion USD at its peak compared to 3.4 billion USD current market capitalisation for Bavarian Nordic.

And yes, monkeypox does seem to be transmitted aerially, not only by touch or sexual intercourse.

Actually, monkeypox vaccines investing could well turn out to be a play on the female population, contrary to the current understanding. Monkeypox, when it develops causes lesions, swellings which actually look terrible. for women, the skin outlook is very important. And if monkeypox becomes widespread and easily transmitted women will be very worried.

So, Bavarian Nordic could well be on the cusp of huge value creation.

Bavarian Nordic Monkeypox Vaccine Producer Valuation

Bavarian Nordic A/S, the only producer of an approved vaccine for monkeypox is currently valued at circa 3.4 billion USD.

I estimate the intrinsic value of Bavarian Nordic is 45 billion USD.

Actually, it is quite possible that monkeypox is transmitted by air, not only via physical contact.

And if the coronavirus is to be an example, the monkeypox could show remarkable resiliency, agility, adaptability and ability to change, mutate to survive.

Since Bavarian Nordic is the only producer of an approved monkeypox vaccine, if monkeypox becomes a global pandemic, which the World health Organization said it actually is the demand for Bavarian Nordic's monkey pox vaccine, namely Jynneos could prove huge.

Which naturally would accrue substantial wealth in the next 3 to 5 years to Bavarian Nordic.

Bitcoin, Cryptocurrencies and Investment Banking

First, according to my calculations, the intrinsic value of Bitcoin in the next 7 years is 200 000 USD.

Yes, value investing, Benjamin Graham and Warren Buffett would beg to differ with the aforementioned assumption, but history has witnessed many economic and financial technology, fintech miracles.

Bitcoin and cryptocurrencies are the epitome of financial technology or fintech for short.

Holders of the key to investments are still the Wall Street banks, especially the big 5 Wall Street giants Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup and Bank of America, which are leaders in terms of investment banking revenue with its verticals trading, mergers and acquisitions advisory, fixed income and equity underwriting. 

In 2015 many young, fledgling technology companies partially circumvented venture capital funds mainly and less investment banks due to their infancy by raising funds via issuing cryptocurrencies.

Bitcoin in the future can easily take market share from the trading business of Wall Street investment banks. And the issuing of new cryptocurrencies already showed it can partially replace equity underwriting.

Wall Street is still highbrow about cryptocurrencies. But as Loyd Blankefein said in an interview  I watched: "People also thought cell phones would not take off, because who would want to carry the cumbersome device around". Blankfein was asked about Bitcoin and cryptocurrencies, of course.

As in the book the "Innovator's Dilemma" Clayton Christensen shows many established companies were reduced to also rans when they underestimated young, niche, emerging technologies. Like the fintech cryptocurrencies. Blackberry is a case in point, Kodak also.

But the big Wall Street investment banks are showing agility because many of them are trading and clearing Bitcoin futures, which the Securities and Exchange Commission considers commodities, actually. By failing to embrace innovation, one is destined to fall behind. By embracing innovation, a firm or individual can possibly fulfil their dreams. Whether the Bitcoin and cryptocurrencies's dream will live up to its potential, it remains to be seen. 

I personally think fintech and Bitcoin in particular will change our world. Crypto will enhance humanity's value creating possibilities and create many new employment opportunities.

Successful Cloud Computing Business Strategy

 

The clear dominant companies in cloud computing are Amazon, Microsoft and Alphabet with Google Cloud.

These three companies have scale and huge computing resources which enables them to offer cloud computing services very profitably - with more than 20 % net profit margin.

In order to win significant market share or to disrupt them young technology startups have to be very fast in developing and offering a unique technology for cloud computing.

Two startups GitLab and HashiCorp offer a cloud code production, collaboration and teamwork and modular cloud offering respectively.

Both approaches are promising. GitLab is counting on open source code production and cooperation to internalise cloud code generation. The modular cloud offering of HashiCorp saves companies time, money and effort.

Speed is of the essence for GitLab, HashiCorp and all other young technology companies that are trying to win market share against Amazon, Microsoft and Alphabet.

It must be said, that the incumbents, especially Amazon are employing aggressive business tactics to a absorb new products and introduce them the cloud.

So GitLab, for example really has to offer a unique technology edge which cannot be copied easily. And constantly innovate around its core product, so as to keep carving out a niche, which could later grow exponentially on the back of recurring cash flows coming from clients.

The cloud computing market in terms of yearly revenue could reach 700 billion USD in 10 years.

So there is room for many successful companies in cloud computing.

Apple and Taiwan

The greatest risk facing Apple Inc, producer of iPhone, Mac and iPad is China invading Taiwan.

Since most computer processing chips installed in the Mac and many components for iPhones and iPads are produced in Taiwan, Apple's production chain is heavily concentrated in Taiwan. Apple relies on Foxconn, the Taiwanese company to assemble iPhones, Macs and iPads.

So any disruption due to a possible China military incursion in Taiwan will severely disrupt Apple Inc. 

If China tries to retake Taiwan, I forecast Apple's stock market capitalisation can fall 70 % from current levels.

Hopefully, a conflict will be avoided and peace will prevail!

Various Popular Assets Valuation

Bitcoin's intrinsic worth is 200 000 USD, which could be surpassed in 7 years.

Tesla's intrinsic worth is 120 billion USD, which is the value of electric vehicles production technology.

Robinhood Markets's intrinsic worth is 30 billion USD. Multiple times its current market capitalisation.

Apple is worth 1.4 trillion USD. Microsoft 1.1 trillion USD. Alphabet 1.0 trillion USD. Much less than their current respective market capitalisations.

Gold is worth 2.5 billion  USD.

Most cloud stocks will recover.

Bumble Valuation

Bumble Inc, the Bumble dating application owner is worth 21 billion USD, according to my estimates.

This compares to Bumble's current market capitalisation of approximately 7.7 billion USD.

I think Bumble is undervalued, because dating is where the next social media explosion will take place.

Bumble has chosen the women niche, because when a match candidate is shown between a male and a female, only the female can make the first move. A classical niche strategy.

Bumble seems to also have capable management in place and Bumble's technology is excellent.

And social media is still the future, despite the recently falling revenues and troubles at Meta, Snap Inc. and Pinterest.

And dating, which will most certainly be forever popular is the next vertical where social media will grow into.

Cloud Computing Investments

The obvious leaders in market share in cloud computing are Amazon(AWS), Microsoft(Azure) and Alphabet(Google Cloud).

Their stock market prices and respectively market capitalisations have done exceptionally well since 2013 when actually cloud computing took off, slowly became mainstream and the community en masse gradually saw the cloud computing efficiencies and realised that cloud computing is the future of computing and productivity.

Other smaller cloud companies's market capitalisations GitLab, HashiCorp, Cloudera, Docusign have risen tremendously in the last 5 years, before falling mostly more than 70 % from their most recent stock prices' peaks approximately one year ago.

Amazon, Microsoft and Alphabet's market capitalisations have declined by around 30 % on average from their most recent peak. The above developments are logical since Amazon, Microsoft and Alphabet's huge cloud revenues, the associated scale and profitability provide a cushion for the institutional investors, which predominantly hold their stocks. This  coupled with the unwillingness of pension funds and large asset management companies to sell their holdings abruptly and thus realise real losses helps explains the relative stability of the large cloud companies.

In my personal opinion, two or three companies like GitLab and HashiCorp can make waves in cloud computing, take a large market share and raise their market capitalisations more than times from current levels.

The rising interest rate levels globally have turned investing in companies active in cloud computing into a binary outcome. "Either you fly or you die". Which translated means the market thinks only several companies will survive and be long-term successful in the cloud computing market.

Actually, I beg to differ. The cloud computing market's annual revenue is projected to surpass 600 billion USD a year after 7 years. When the inherent profitability of cloud computing is taken into account, one can apply a reasonable Price/Sales revenue of 7 to cloud computing long term, which means the whole market capitalisation potential of cloud computing will be 4.2 trillion USD.

Many new established, young entrants and future companies to start in the cloud will be able to benefit from this lucrative opportunity, in my humble opinion.

How to Marry Bitcoin, Crypto And the Cloud?

Bitcoin, cryptocurrencies and cloud computing are arguably the most important information technologies of our time.

How to combine them?

Actually, crypto and the cloud are already together, since Bitcoin production and the generation of other cryptocurrencies is done in the cloud via powerful could computing.

Yes, Bitcoin mining is usually produced with on premise powerful computers and servers, but the validation and the actual creation of the Bitcoin currency is done via cloud computing collaboration of hundreds of millions of users which have to approve, validate and accept the small bits that create one Bitcoin.

In fact, since Bitcoin mining requires such huge computing resources, cloud computing seems to be made for crypto mining. Crypto and cloud looks like a marriage made in haven. Individuals and firms will need very powerful computing to mine Bitcoin and process cryptocurrency transactions. And the current leaders in cloud computing like Amazon AWS, Microsoft Azure and Alphabet Google Cloud can provide these immense resources, which small and medium enterprises currently do not have the scale for.

However, smaller, young, technology startups like GitLab, HashiCorp could provide an even cheaper way for small and medium enterprises to access cloud computing and mine, create Bitcoin and handle other cryptocurrencies transactions.

The integration of Bitcoin, cryptocurrencies and cloud computing is actually one of the most exciting technology verticals of our time.

I am a libertarian and a firm believer of financial technology and Bitcoin is the best manifestation of financial technology since centuries arguably. And cloud computing is promising to democratise large scale, super computers servers's power for small and medium enterprises. 

The oligopoly structure of cloud computing with the dominations of Amazon AWS, Microsoft Azure and Alphabet Google Cloud is threatening the possible huge efficiencies that the cloud provides. 

Bitcoin and cloud computing will see further integration and the technology startups that find the ingenuity, agility, and cooperative ability to ride this wave will make huge waves.

Tesla Is Grossly Overvalued

Tesla, the electric vehicle manufacturer is trading at a market capitalisation of 845 billion USD.

Only until recently Tesla was valued at 1 trillion USD by public markets.

According to my estimates, Tesla's intrinsic value is 120 billion USD.

Tesla is unprofitable if one takes out government subsidies and current accounting of future orders.

The electric vehicle technology is simply unprofitable at the current state of science.

Tesla is not likely to turn profitable in the next 5-7 years. But its electric vehicle production technology has value, which I estimate at 120 billion USD.

Can Bitcoin Replace the USD?

In the short-term, no.

In the mid-term, to a small extent.

In the long-term, 10-12 years from now, to about 5 % - 7 %.

Why?

Because using and producing Bitcoin is cheaper. It might not seem that way given the price volatility of Bitcoin and the enormous computing resources required to produce Bitcoin, but the Bitcoin's production process will get only more efficient and the volatility functions to the upside, as well.

The US government has done a lot to undermine the confidence the public has in publicly elected officials. Bitcoin is almost untraceable and is difficult to be expropriated by a government.

First, the world's richest are experimenting, diversifying 2 % to 5 % of their assets by investing in Bitcoin. But this process gathers pace, becomes more popular, the percentages will increase, trust will slowly build and the general public will start to invest in crypto.

Cryptocurrencies are here to stay, barring a concerted effort to stifle them by the world's governments.

But Bitcoin is a manifestation of freedom. And history has proven so far it is very difficult to choke off freedom. Because freedom has no physical form, just like Bitcoin.

How Can Young Cloud Computing Technology Companies Become Profitable and Reach Scale?

Cloud computing is the hottest business currently. 

Cloud computing's yearly revenue run rate is already at more than 100 billion USD. I forecast cloud computing's calendar year revenue will reach 370 billion USD in 7 years.

What is more, cloud computing is very profitable with the leading Amazon AWS, Microsoft Azure and Alphabet's Google Cloud making more or around 20 % net profit margins.

The "problem" with the cloud computing business is that around 60 % of the cloud business is held by Amazon, Microsoft and Alphabet's Google with 34 %, 19 % and 9 % approximately market shares. The excellent technology of Amazon, Microsoft and Alphabet's Google ensured these technology giants quickly reached the required scale, were able to leverage their entire businesses to support cloud computing which even in 2013 was regarded as the future of computing. Amazon reportedly even engaged in questionable business practices by allegedly copying small technology companies' businesses, products, ideas and knowhow and turning back and employing the copied knowhow into its AWS so that Amazon remains the leader in cloud computing.

This quasi oligopoly that the cloud market has turned into can be broken up in two ways. Either hot, innovative technology startups like GitLab and HashiCorp find an ingenious way to skirt  Amazon, Microsoft and Alphabet's Google's power and disrupt the cloud or the US government has to get involved and curtail Amazon, Microsoft and Alphabet's Google's power much like it did with the Bell Companies, IBM, Microsoft, Alphabet, Google and now Facebook, now called Meta which helped create IBM, Microsoft, Google and Facebook respectively. Or it could be a bit of both.

If GitLab or HashiCorp want to break into cloud computing they have to be very fast. In an interview a high ranking Facebook Inc, now Meta Inc employee informs that Mark Zuckerberg, Facebook's founder has said that Facebook overpowered the competition and became the dominant social network because "we", by we Mark Zuckerberg apparently meant Facebook's  founders and employees "wanted it more". Yes, I have heard many stories when young founders went "all in" and lost almost everything, their apartments, houses, dropped out of college with no degree and still could not develop a successful business. But risking everything does not always mean you are going "all in" really, according to my humble opinion. One has to be prepared to put in extraordinary both physical and mental effort, be also smart much above average, have a lot of patience, good health and also the proverbial luck. Developing a successful business, especially in the technology area involves many moving parts, many unknowns, many things out of the founder's control. One just has to be flexible and adapt.

Cloud computing, in particular is successful because it provides small and medium sized companies(SMEs) with powerful computing resources which enables SME's to quickly scale their business, become bigger, more profitable and powerful and actually avoid being taken over or overpowered by stronger, bigger incumbent corporations. In short, the cloud saves SME time, effort and especially money. 

So if GitLab, HashiCorp and other young technology cloud startups want to succeed, they "have to move fast and break things" as the proverbial Facebook Moto states, which got discredited a bit lately. And actually young technology companies must be profitable form day one, in my opinion. Or they at least must have a clear path to profitability, a net income road map.

An underestimated detail in tech startup's success stories is the hiring of brilliant software engineers or at least vast amount of computer code writing professionals. Yes, legacy code, different coding languages, egos, different personalities will hamper progress, but the sheer number of coders will ensure the  cloud computing startup moves fast without breaking too many things. The startups that are quickest will quickly get some revenue and higher future funding multiples, which will enable them to scale their businesses even more quickly.

Actually, part of Facebook success was choosing the right technology, namely the PHP programming language which is translated in C++ to make it faster and more powerful. Other powerful languages like Erlang came with successful acquisitions like WhatsApp, Instagram, Oculus Rift.

So, as is obvious by now, for young cloud computing technology startups having the right team is hugely important. Because, when you are attacking randomness by trying to build a business from scratch and taking on incumbent companies with trillion USDs in market capitalisations you have to adapt quickly and have staying power. Good quality employees ensure both the right culture and technology for a young nascent tech startup to have a fighting chance in this game, which not to a negligible extent is influenced by luck.

Cloud Computing Profitability

Cloud computing as a business is very profitable as Amazon, Microsoft and Alphabet's cloud businesses have net profit margins often exceeding 20 %.

Why is cloud computing so profitable?

Because having all servers at one company, Amazon's AWS for example, enables Amazon to exponentially service the whole world with relatively fixed or slowly growing number of software developers, computer servers and support. That is, Amazon's AWS fixed cost base is growing quite slowly, while its cloud business scales exponentially.

I forecast cloud computing will have 300 billion USD yearly revenue run rate in 7 years.

Robinhood Valuation After the Recent Robinhood's Stock Price Fall

Robinhood Markets Inc, the stocks and crypto brokerage company is valued at the Nasdaq bourse at 7.35 billion USD, which is approximately the cash on hand Robinhood Markets possesses in its balance sheet.

Yes, Robinhood Markets quickly burned through cash as evidenced in recent years, The market, however seems to be pricing a binary scenario that Robinhood Markets either goes bankrupt or explodes in value.

In my humble opinion, when the stock prices and Bitcoin and other cryptocurrencies' prices begin to recover Robinhood Markets value will increase exponentially. I would say Robinhood Market's market capitalisation could increase 5 to 7 times in the next 7-10 years.

Apple Risk. The Greatest Risk Apple Inc Is Facing

 

The greatest risk Apple Inc, the Mac, iPhone, iPad, Appstore etc. producer is China invading and annexing Taiwan.

It is exactly in Taiwan that all three main chips of Apple A, M and S are produced. And if China is sanctioned, which will most certainly happen if China invades Taiwan, the whole production chain for Apple's hardware will be disrupted.

Simply because the predominant share of Macs, iPhones, iPads Apple Inc, the Cupertino based company sells are assembled in mainland China.

I forecast, if China invades Taiwan and engages in military action against Taiwan that Apple's stock price could fall by 70 % in the space of one calendar week or five trading days. 

Will Cloud Companies' Stocks Prices Recover?

About 17 % of the only until recently hot cloud technology companies' stocks prices will recover or surpass previous levels.

The cheap capital, provided by central banks' money creation funded many obviously long-term unviable cloud computing technology startups.

Cloud computing as a business, however is here not only to stay, but to thrive.

Simply because cloud computing applies a piecemeal approach to sell powerful computing resources to companies, which allows companies to plan and save on their costs exceedingly better.

Elon Musk Reneging On the Twitter Buyout Offer

Elon Musk, Tesla's founder decided not to buy Twitter.

Apparently, Musk does not think Twitter offers excessive long-term value.

Twitter's user base is not growing very quickly and Twitter is not very profitable.

After the close of trading yesterday, Twitter's valuation stood at 28.129 billion USD.

In my opinion, Twitter's intrinsic value is 170 billion USD.

Why?

For in the moment news consumption, media campaigns, journalism, active blogging and quickly distributing information like wildfire Twitter is number 1.

All media people, investors, bloggers, avid news readers know this very well.

Twitter just has no "cool" factor, but this will change and Twitter's value will accrete exponentially.

Bitcoin Risk

Bitcoin's risk is higher than that of even technology stocks measured by its standard deviation or volatility.

Is Bitcoin's risk well compensated? Even as things stand, I would say yes.

In November 2016, Bitcoin's price was 327 USD compared to approximately 21 740 USD now. So even after the near 70 % fall from its recent peak, if one went in early in Bitcoin, he or she could have made more than 50 times on the initial investment in little more than 5 years.

I forecast than in the short-term, mid-term and long-term future Bitcoin and most other sound cryptocurrencies will continue to be a quite good investment opportunity. 

Simply because Bitcoin, its underlying blockchain and crypto provide too many value enhancing opportunities for both people and corporations.

Is Cloud Computing Efficient As Oligopoly?

 

Cloud computing, the most promising market of our time is dominated by three major participants - Amazon AWS, Microsoft Azure and Google Cloud, part of the parent company Alphabet.

In short, it is way too dangerous and inefficient to leave the cloud to be an oligopoly.

Everybody is doing computing, computes and all computing will sooner, rather than later be done in the cloud.

I am a free marketeer, but here is where the US government mainly must get involved, as they did when they took apart Bell Labs, pushed aside IBM, pressed Gates's Microsoft and now are tackling Alphabet and Meta so as to foster competition.

GitLab and HashiCorp are interesting opens source git code repository and modular cloud offerings which are steps in the right direction to promote competition.

Sooner, rather than later many new promising cloud startups will sprout. The US government must make sure, however, that the technology giants, Amazon especially do not stifle the new entrants.

The free market, as introduced by Adam Smith will do the rest.

 

Can Bitcoin Rival the USD?

Yes, Bitcoin is, as far as I am concerned and according to many analysts, USD 2.0 in electronic form and after more than 12 year from now.

Why? Because paying via USD paper format and even the electronic form is still expensive and is imbued with way too many inefficiencies, which Bitcoin will solve. Other cryptocurrencies will ride the wave.

Blockchain will change everything. Innovation is like water, it will find its way into finance again, sooner, rather than later.

Traditional, banking, corporate and retail, investment banking and fin-tech will all be upended/ disrupted/transformed/changed/made more efficient by Bitcoin and crypto. It will just take time.

In my humble opinion.

Open Source Code Production Could Eventually Disrupt Everything

Since the time of Linus Torvalds, open source code production or the opportunity for other software developers to see the code of "your" software and be able to improve it has been predicted to become a multi-trillion USD business opportunity.

Microsoft and other tech behemoths have helped this not to happen, according to many analysts.

Actually, I think open source code production's intrinsic value could reach 10 trillion USD in the next 20 years on smart companies like GitLab, Alphabet, Google creator developing next generation applications based on open source.

The cloud where GitLab and Alphabet both see their future is a hugely interesting open source code production application. Simply because cloud computing is the future of computing.

GitLab's innovative code repository could provide the answer to many questions. While Alphabet is Google, which democratised information. But dark clouds seem to have entered search engine's paradise as of late.

GitLab's Valuation In a Huge Cloud Success Case

GitLab, the code repository and collaboration software producer could end up being worth more than 170 billion USD in the long run, more than 14 years from now.

Provided that GitLab's open source approach to IaaS cloud computing proves successful.

GitLab's open source approach to the cloud just could prove extremely nimble, flexible and value creating.

And the current incumbents Amazon AWS, Microsoft Azure and Google Cloud look slow and presumptuous to say the least.