Pinterest Valuation!

Dear Sir or Madam,


Pinterest, Inc., the social media company characterized with pinning your interests, went public with an IPO last week under the ticker PINS. Pinterest's stock went up 28.42% on its first day of trading to 24.40 USD currently boasting a market capitalization of 12.92 billion USD.

Is Pinterest Inc., overvalued, undervalued or fairly valued?

I think Pinterest is overvalued. The intrinsic worth of Pinterest, according to my opinion, is about 8 billion USD. Why? Because Pinterest currently trades at about 15 times Price/Sales(trailing year revenue) ratio. Facebook, also showing robust growth, trades at about 9 times Price/Sales ratio. Pinterest revenue grew in 2018 by circa 57% compared with 2017. Actually, Pinterest is close to profitability by losing minor 63 mln. USD in 2018. Apparently, this is what investors like, which caused the pop in Pinterest's stock market price. Facebook, however, exhibited a net profit marging of circa 34% in 2018.

Basically, all signs point to the fact that we are in the latest stages of an Information Technology bubble much like  the dot com boom and bust in 2001. Yes, I know this time the technology stocks do have revenue, but they are overvalued by approximately 30% on average. And when the tide stops, many  "investors will be caught swimming naked" as my idol Warren Buffett says.

Yes, soon in 1-3 years, there will be a US and global stock market crash, caused by the bursting of the current technology bubble. But as Joseph Schumpeter says creative destruction is the engine of capitalism. From the ashes of the crash, several large information technology companies will survive, rise like a phoenix and remain the new leaders of tomorrow, much like Google and Amazon did in the last dot com boom and bust. I think Facebook, Twitter, Snapchat and LinkedIn will survive, because social media is here to stay. Pinterest could also survive. After the crash, capital flows will again go primarily to emerging markets, because emerging markets stocks are way undervalued as they are.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

Uber Valuation!

Dear Reader,


Uber, the ride-hailing company, filed its IPO prospectus as it indends to go public in May. Currently, news flow suggests Uber will receive a public markets valuation of about 100 bln. USD, lower than its last private funds raising round valuation of 120 bln. USD.

Is Uber worth 100 bln. USD? What is the intrinsic worth of the company? I think Uber is currently worth about 70 bln. USD.

Why? First, because Uber lost 1.8 bln. USD on revenue of 11.3 billion USD in 2018 excluding certain items according to its prospectus. Second, its revenue growth is slowing significantly. Basically, Uber's current valuation is a classic technology bubble.

As Warren Buffett said, when you do not see who the fool is, the fool is probably you. Apparently, too much private Venture Capital money is chasing too few opportunities, That is why the value of companies like Uber gets inflated so much. It is very reminiscent of the late stages of the 2001 dot com bubble. Yes, now the IT bubble companies at least have revenue, but their valuations are still unrealistic and many investors will get burnt.

Actually, there are technology companies listed on public markets in the USA and elsewhere, which are reasonably valued. I think some examples are Microsoft, Spotify, Lending Tree, Dropbox, Box, Intel, Oracle etc. Actually, many technology bubbles like GroupOn, Zynga, GoPro, DDD, FitBit have quietly popped. This is an interesting development, as it suggests the market could actually weed out the underperformers without crashing too much. Will it turn out this way? No. The major US stock indices and other global stock markets will fall circa 30-40% from their highs. This will be a healthy correction, the creative destruction of capitalism, which will give birth to the new Googles, Amazons, Facebooks and Apples of this world. This creative destruction is what keeps the world moving forward. The most efficient allocation of resources. Economics. Free market capitalism!

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

Lyft Valuation.

Dear Reader,


Lyft Inc., the car sharing company, went public two weeks ago and its stock slumped about 6% since then.

Is Lyft fairly valued?

No. According to my opinion, Lyft's fair valuation is about 15 bln. USD. Lyft's current market capitalization is 21.28 bln. USD. So Lyft is about 50% overvalued.

Why? First, because it is hugely unprofitable. Lyft lost 911 mln. USD on 2.157 bln. USD of sales or negative net profit margin of -40%. Wall Street research analysts seem to be counting that Lyft's year on year sales growth of about 50% will lift the company to profitability. But sales grew even faster two years ago and the company only expanded its losses. Lyft employs a classic dumping strategy - keeps low prices until it conquers a large market share and then Lyft will raise prices, much like Netflix did. The problem with such a strategy is that someone has to finance Lyft's revenue growth until the market share is deemed large enough to start raising prices and reach profitability. Now public shareholders are financing Lyft's growth. Many former star technology companies like Groupon, Zynga, Snapchat, GoPro,Fitbit etc. went public at high valuations and high hopes, but later failed to live up to those high aspirations and their stock prices fell significantly from the IPO public prices. Wall Street research analysts and Wall Street as a whole again sold the story that the aforementioned companies will be the next big IT disruptors, but things did not turn out so well.

Basically, I think we are in the final stages of the 10 year bull market we have been witnessing. Typically, the end of bull markets is characterised by high number of IPOs at lofty valuations. Slack, Uber, Pinterest, Palantir are waiting in the wings to go public. Lyft currently trades at an unsustainable valuation, since it is loosing a lot of money. I think companies like Lyft and Uber will survive the coming stock market fall, if they find a path to profitability in the next 4-5 years. Yes, I know Amazon Inc. was unprofitable for a long time, but it eventually makes money and its stock did fell a lot!

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

The Price of Oil.

Dear Reader,


Currently West Texas Intermediate(WTI) and Brent Crude Oil trade at 60.14 USD and 67.58 USD. Global oil prices, along with the rest of the stock markets, have staged a remarkable recovery since 24 December 2018.

How high will the price of oil go? I forecast the price of WTI will reach 80-82 USD and the price of Brent will touch 90 USD by the end of 2019?

Why? Because, global growth as average as it may seem, can support WTI Oil price of 80 USD and Brent oil of 90 USD. What is more, OPEC is intent on keeping to the announced production cuts which will further support prices. Sanctions on Venezuela, Iran and likely future sanctions on Russia will keep a firm lid on oil supply in the world.

Global oil majors like Exxon Mobil, Chevron, BP, Shell, Total, Rosneft stand to benefit from the continuing rise of the price of oil. But, the biggest beneficiaries will be companies that extract oil through hydraulic fracturing in the United States like Marathon Oil Corporation and Chesapeake energy corporation. Emerging markets oil giants like Petroleo Brasileiro and Rosneft will also see their market capitalization swell significantly. Actually, the pending further rise of the price of oil will drive higher global stock markets by supporting petrol and chemical producing companies.

The stock markets of Russia, Brazil and Mexico will rise significantly driven by higher oil prices. All in all, if oil prices remain below 90 USD, which they will, barring a supply shock, the global economy will benefit significantly.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

The US Yield Curve Inverted. When Will the Next Recession and Large Stock Market Fall Come?

Dear Reader,


The US Treasury yield curve inverted, that is the yield on 3 month bills become larger than the yield on 10 year Treasury notes.

Many economists and financial market participants consider the US treasury yield curve inversion as a harbinger of an upcoming recession. The problem is that the yield curve inversion is an accurate indicator, but its timing is not so great. In the past US yield curve recession has predicted correctly that there has been a recession 6 months ago or a recession will come in the next 2 years.

So when will the next recession and large stock market fall come? I stick with my prognosis that the US and global economy will lapse into a recession and a stock bear market, a fall of more than 20% for the major stock market indices, will come in 2021.

Why? First, because Donald Trump, The President of the United States  and his administration will make every effort to support the economy until the US Presidential elections in 2020. Once the Donald Trump Administration is reelected the stimuli for the US and as proximity the global economy will be tapered.

Second, historically we have had a recession after 5-7 years. The recovery that started in 2009 is one of the longest on record, so it is time we had an economic downturn. The credit expansion has gathered speed and soon fear will overcome greed.

Third, China's economic growth which has largely supported the global economy is about to fall below 6% which could cause social unrest and China could lapse into a severe recession, which will drag down with it Asia and the world's economy into a recession. Combined, US and China are responsible for circa 40% of world's GDP or global economic output produced every year.

What about stocks? The coming recession will be mild and prolonged, just like the recovery. So the cumulative loss of global GDP could well turn out to be larger than the Great Recession in 2008-2009. Stocks will fall into a prolonged bear market or the main stock indices will lose 20% or more of their value. How to navigate the coming stock market fall? By actively trading defensive, high devidiend stocks like healthcare, consumer staples, partly real estate. I also expect during the coming economic downturn large and midsized global emerging countries and their stock markets like India, Russia, Brazil, Indonesia, Mexico and Turkey to outperform their major developed Western peers and China.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

US Technology Stocks. Is it Time to Invest Intensively Again? Snapchat. Snap Inc.

Dear Reader,


There are signals that the time is ripe to invest again in US technology stocks.

US technology stocks, those with the largest capitalization(Microsoft, Apple, Alphabet, Amazon and Facebook) and those with smaller market capitalization have corrected quite a bit. The recovery that started on 24 December 2018 has erased some of the losses in market capitalization these companies suffered.

The largest US technology companies are still gowing their revenue with double digits, which is nothing short of remarkable given the size of these companies, both in market capitalization, revenue and profits in most cases. Some of the smaller technology stocks like Snapchat, GroupOn, Zynga, GoPro, FitBit are actually trading as value stocks by Price/Sales Ratios. This, however, does not mean that all of them will recover.

I actually like Snapchat. Snap Inc., its owner, is the only social network that has the largest chance of challenging Facebook. Why? Just look at what Facebook does? Facebook looks quite scared it could drive off users, if it does not offer more security and privacy. It literally copied the story feature of Snapchat and now even Mark Zuckerberg is openly betting  Facebook's future on the stories feature and more privacy, which are... milestones of Snapchat, the ephemeral, disappearing messaging conmpany. What is more, Facebook in the not so distant future tried to buy Snapchat for 3 billion USD. So if Mark Zuckerberg tacitly acknowledges Snapchat is the biggest existential threat to Facebook, there is certainly something special in Snap Inc. Snap Inc., Snapchat's owner, is growing its revenue in excess of 30% year on year, even though its user growth has stalled. But there is certainly place for a third major player in the internet advertising market. It is true that Amazon seems to have occupied the third place in internet advertising with 10 bln. USD from advertisements revenue, but Snap Inc. has all the ingredients to become the fourth large player in the internet advertisement market.

Zynga seems to be another not so bad technology value play in the gaming market, given its valuation.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

Emerging Countries Stock Markets. Will the Capital Inflows Return?

Dear Reader,


Many of the major emerging markets like Brazil, Russia, India, China and South Africa are below their 2008 peaks when the capital inflows were mainly directed at emerging and frontier markets, not so much in information technology as they are nowadays.

Are emerging markets ready to take the baton and lead the world to growth again? Are their stock markets going to grow strongly again?

Yes, but only partly. What do I mean? China has reached peak growth. I think the gowth of the GDP of China will fall below 5% in the coming 2-3 years which would easily cause social unrest and China's stock market could tank even more heavily than in recent months.

Brazil, Russia and India, however, are another story. Their stock markets, Russia's especially are grossly undervalued. India is going to be the next China, so to say. India's human capital and technological advancement potential is enormous. What is more, India's economy starts from a very low GDP per capita and with the base effect as tailwind the potential is for even double digit GDP growth in the next 5-10 years.

Russia's economy and its stockmarket, due to the fall in oil prices and the US sanctions are grossly undervalued. Oil majors like Gazprom and Lukoil trade at ridiculous Price/Earnings ratios of 5-6 as well as the other major Russian companies listed on the Moscow Stock Exchange. The Russian economy has huge base effects, starts from a lower base, and its population is highly educated and technologically advanced even by Western standards. Now, as the price of oil rises, Russia's major listed companies stand to benefit to a large extent.

Brazil is also a case in point of undervalued emerging market. Brazil has issues with political and corporate mismanagement, but the country is rich in natural resources and starts also from a low GDP per capita base. But Brazil is already a regional power in South America and sooner rather than later the major Brazilian stocks listed in Brazil and the USA will reach their full valuation potential.

Mexico, Indonesia and Nigeria are already economic growth stars which will inevitably benefit their local stock markets. Mexico, Indonesia and Nigeria benefit from their growing population and rising sophistication.

All in all, I think in the next 5 to 10 years capital will return massively to the major emerging and frontier markets.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

The Federal Reserve. What Next? End of the Balance Sheet Reduction?

Dear Reader,


The Federal Reserve recently announced it may curtail its Balance sheet reduction program.

Many analysts state the Federal Reserve Balance Sheet Reduction actions as the main reason for the end of 2018 fall in stock markets.

I disagree. I think stocks were temporarily overvalued and they needed a correction.

The Federal Reserve is important, though.

I think that at its pending March meeting or later in 2019 the Federal Reserve will announce that its balance sheet reduction program will proceed at a slower pace. What is more, I believe the Federal Reserve will hike the Federal Funds Rate once more in 2019.

I thnk the Federal Reserve, the Central Bank of the United States, will take the decisions above to show SOME independence from the President of the United States of America Donald Trump. The Federal Reserve will not end entirely its balance sheet reduction program, precisely to show it retains at least operational independence. With one more hike the Federal Funds rate will reach 2.75% which is close to the long-run neutral rate of 3.00% envisaged by the Federal Reserve's Board itself.

I think such policy will provide some support to the US stock market and the main indices DJIA, S&P 500 and Nasdaq will finish the year with gains of about 20% or more, which are quite healthy results, indeed.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

How to Value Technology Stocks?

Dear Reader,


Technology stocks have been notoriously difficult to value as the 2000-2001 dot com boom clearly showed.

In 2000 and 2001 technology stocks, which had no revenue, let alone profits were worth billions. After that their value just evaporated - they were worth  0(zero) USD. Pets.com and others are a good example. Yahoo's main business lost circa 90% of its value since 2000. But the dot com bubble gave the world companies like Amazon.com Inc.

Now some analysts also say we are in the late stages of a technology bubble. "This time is different". The technology companies have revenues, most Wall Street analysts say. Is it?

Let's have a look. High-growth, exciting technology stocks like Google Inc.(now Alphabet) and Facebook went public at a Market Capitalization to Revenue(Price/Sales) ratio of around 20. I am using Price/Sales ratio for comparison, since many of the exciting technology companies of today barely eke out profits.

After companies like Facebook and Alphabet mature they trade at price to sales ratios of around 7, reflecting their lower growth prospects due mainly to the size effect, since they cannot subsume the global economy. They can enter different industries, however, but that is another matter.

Now, this year there is  a huge line up of technology companies preparing to go public - Lyft, Uber, Pinterest, Palantir, Air BNB. Since these companies stayed much longer private they are quite bigger and the money raised could surpass the money raised in the late stages of the dot com bubble.

The companies above seem again about to be valued at Price/Sales of 20. Are they overvalued? Basically, yes. If the companies above do not turn out to be the next Facebook, Apple, Amazon or Google the will not grow into these lofty valuations. Many of the about to be listed technology unicorns(technology companies valued at more than 1 bln. USD) are still unprofitable after a decade of existence. Wall Street analysts will say - look at Amazon. But Amazon was growing at 20% + a year. And finally they make a profit. I still think Amazon is worth about 2/3 of its current market capitalization of 801.43 billion USD.

In short, I think several of the most hyped technology unicorn companies of today will not be around in 20 years. Just like in the 2000-2001 dot com boom and subsequent bust. If these moonshot companies do not land on the moon, which most of them will not, they will loose 90% to 100% of their value in five  to seven years. Just look at Zynga, GoPro,GroupOn etc. Yes, I do think we are in the late stages of a technology bubble, which will soon burst.

But some excellent technology companies will survive. As the boss of the largest fashion goods company LVMH said: "I know champagne is forever. I am not so sure about Facebook".

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

What is Amazon's Intrinsic Worth? Growth Slowdown. Amazon Web Services. AWS.

Dear Reader,


Amazon has long been described as a growth stock. Recently, however, its growth slowed down, mainly in its main electronic commerce business.

Amazon executives have  implied the sowdown of growth in the e-commerce business should be disregarded. Should it?

Amazon Web Services(AWS), the cloud computing business of Amazon is growing strongly with around 25.7 bln. USD yearly revenue run rate. The electronic commerce business exhibited a marked growth slowdown. I think this is logical. It is unlikely that all commerce would become internet commerce. Going into a store, checking out things in a physical way and being advised by staff has its value. Shopping for groceries is hardly ever going to go online. Amazon is quickly becoming the number three player in internet advertising breaking up Google and Facebook's duopoly in internet advertising.

Amazon, however, still exhibits very low margins - 4% and this is even considered high by historical standards. Amazon is trading at a trailing Price/Earnings ratio of 78. In my opinion, this is too high even measured by the recent growth of Amazon. Now, that Amazon's revenue is not growing so fast this is stratospheric. Amazon should be trading at a Price/Earnings Ratio of 40, which would imply Amazon's intrinsic worth is around 400 bln. USD or half its current market capitalization of 780 bln. USD.

Why is Amazon's intrinsic worth half its current market capitalization? Because, in short, its revenue growth slowed down from 40% to 20% on a year on year quarterly basis. This means the path to a reasonable net profit margin of let's say 10% gets extended indefintely. Amazon does not distribute dividends. Wall street equity research analysts have long said that with the growth the net profit margin will improve and Amazon will start distributing dividends and shareholders will benefit. But that has not happened for a decade now.

When will Amazon reach its intrinsic worth, which is around 800 USD, or half its current stock price of 1588.22 USD. When the next economic downturn comes, which I forecast will be in 2021, Amazon market capitalization will be cut in half to around to 400 bln. USD from its current 780.14 billion market capitalization.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

When is the Next Huge Stock Market Fall Coming?

Dear Reader,


US stocks and also global stocks bounced up after 24 December 2018. I think DJIA, S&P 500 and Nasdaq Composite will get close to their previous peaks. The process will go ahead in 2019 and 2020.

In 2021 a large stock market fall will come, according to my humble opinion. The fall will be much greater than the 19.8% recent fall of the S&P 500 which started in the third quarter of 2018. I think the US stock and global markets will crash by around 35-50% starting in 2021.

Why? Because the global financial and monetary system will have too much leverage by then, i.e. too much debt! Even now their is excessive debt burden in the leveraged loans and energy sector markets. What will cause the crash? I think it will be like the butterfly effect in chaos theory. There will be some smaller and some larger triggers like in 2007-2008 -> BNP Paribas Credit Funds, Bear Stearns, Lehman Brothers, Merryll Lynch, AIG etc.

There will be simply too much leverage(debt) in the system. Just look at China - the total debt to GDP of China is above 250%. And China's economy along with USA, Mexico, Indonesia, Nigeria and Turkey has been the main driver of global GDP growth in recent years.

What will the next crisis look like? I think the fall in global GDP will be flatter, but more prolonged than  that of the Great Recession in 2008. Basically it would be like through a milder version of the Great Depression that started in October 1929 and lasted through 1939. This time around, however, the fall in global GDP will last 4-7 years.

Who will benefit from the coming crash? The countries with low debt - Central and Eastern Europe should benefit in the long run, because global firms will look to cut costs. Other countires with low total debt to GDP should also benefit. China could suffer immensely in the next global recession, but it will still remain the second largest economy in the world and will emerge stronger after the economic difficulties it is going to encounter, if my forecast comes true.

Here is the place where my humble person must praise the The Federal Reserve Board of Governors in Washington DC, the Central Bank of the United States. Only the Federal Reserve was brave enough to start decreasing the money base, that is to shrink its balance sheet. The Federal Reserve was brave enough to raise the Federal Funds Rate numerous time. And when the hext crisis comes, only the Federal Reserve will have enough means and ammunition to fight the next downturn of the ecomomic cycle.

I must say, that the strategy of my guru Warren Buffett to stay always invested in the stock market will not work in the coming stock amrket fall. Actually, he never lived through a real Economic Depression. Just to inform people that SOFIX, the main stock market index of the Bulgarian Stock Exchange has recovered only to around 40% of its previous 2007 peak. And Bulgarian GDP has long recovered and surpassed its previous peak. Yes I know, the stock of Berkshire Hathaway fell four times more than 40%, but it relatively quickly recovered.

When the leading global central banks start printing money en masse again, gold, oil and other commodities should turn out to be a good investment and the related stocks, or at least they will not fall as much as the overall stock market indices. High dividiend yield stocks should also fall less in the coming crash. The likes of retailers like Walmart and pharmaceutical companies should provide some form of the proverbial margin of safety.         

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

Tesla Lays off Staff. Will it Survive?

Dear Reader,


Tesla announced last Friday it is cutting around 7% of its staff after recently having cut staff again.

https://www.cnbc.com/2019/01/18/tesla-to-cut-its-workforce-by-around-7-percent.html

Also, the subsidies Tesla is receiving are about to be phased out. Will Tesla, the electric car manufacturer, survive? For the next 1-2 years Tesla will survive because the momentum(inertia) of the enterprise is strong. After that, I think there is real danger that Tesla is in danger of ceasing to function as a going concern.

Currently, I think Tesla Inc. is worth around 34% less than its current market capitalization of around 52 bln. USD and stock price of 302.26 USD. In other words, I think Tesla's stock should be trading at 200 USD and this price could be reached in circa 1 year.

Why? Because as Elon Musk states clearly in his letter announcing the layoffs in order Tesla to remain a viable automobile manufacturer it has to be able to produce mass, not expensive cars at scale. He even openly admits what I have stated in posts on Tesla before - that Tesla is a very young car producer and has much to learn. Basically, he tacitly admits Tesla currently lacks the know-how to produce mass cars at scale efficiently - that is with profit. Musk says that in Q4 2018 and Q1 2019 Tesla is about to show a tiny profit with its GAAP results. But as I have read some sites state that Tesla is recognizing advance orders in the current period...

It is worth noting that this is Tesla's second round of job cuts in a year. Truth be told, according to Musk Tesla's full-time employee headcount number grew by 30%. An important fact is that the subsisdies Tesla receives for producing electric cars are about to be phased out. According to Musk the Model 3 price has to fall from 44 000 USD to 35 000 USD and Tesla is supposed to still be a viable(profitable) company. Is it really possible? I will write something I have already written many times - without a technological breakthrough slashing the Tesla model 3 price from 44 000 to 35 000 USD or circa 20% is not possible.

Because of the ferrous metals inputs and other technological impediments the current technology of producing electric cars is simply not profitable.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

Microsoft. What Drives Microsoft's Stock?

Dear Reader,


Microsoft recently became the world's most valuable company for a short while.

Microsoft's stock did not fall as much as Amazon's and Apple Inc's stocks in the recent stock market correction. Why the remarkable resilience or to put it poetically margin of safety of Microsoft's stock?

I see several reasons. First, Microsoft's past, present and future is still intertwined with the personal computer. Champagne may be forever, but personal computers are not going away either. Second, Microsoft is the second largest cloud computing provider after Amazon. The cloud computing market seems to be exploding and Microsoft is even increasing its market share. Third, clients are embracing Office 365 offerings which are also basically a cloud computing service. The Microsoft Office suite along with Azure are the main drivers of Microsoft's future growth, while the Windows franchise provides the needed safety net.

Satya Nadella turns out to be quite a skillful manager who puts to work his software as a service and infrastructure knowledge to good use. To round it all up, Microsoft's hardware efforts seem to be getting traction as well.

In short, I believe Microsoft's stock is currently about 20% underpriced from its current level of 102.80 USD.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

Apple Warns on IPhone Sales. What Next?

Dear Reader,


Apple Inc., the manufacturer of IPhones, Mac computers, Ipads and various other gadgets and services last week issued a warning about lower expected IPhone sales, predominantly in China which caused Apple's stock to crash by nearly 10%.

So after the fall, is Apple fairly valued? I would say now the company is 10% undervalued. Why? Because it is too early to announce a coming recession in the global economy. I think global GDP will start shrinking somewhere in 2022. Yes, China is decelarating, but the fall in China's GDP growth will be gradual. I forecast China's GDP year on year growth will fall to 3-4 percent in the coming 3-4 years.

Apple, however, still faces an unexploitred niche. Apple's smartphone market share is quite low, actually - around 15.6%. The telecommunication operators are subsidizing IPhone models, so actually some of the models are not that expensive. I forecast that Apple will increase its market share in the smartphone market in the coming years. I used to own an Android smartphone, now I own an IPhone XR with IOS. Actually, IPhones are quite good, Android phones too. But the largest Android phone markers like Samsung and LG have been rasing prices, so the price/quality ratio of IPhones is getting better, although they are still expensive smartphones.

What is more, Apple Inc. is moving into services with the AppStore. Apple Inc. is almost giving away the lowest priced 9.7 Ipads with which you can enter the AppStore and enjoy its benefits. Slowly, but surely Apple's services revenue will increase both as a nominal number and as a share of Apple's sales altogether.

So Apple's stock is trading at 148.26 USD currently. I think Apple's intrinsic value is higher and its stock price will rise by 10-15% from the current levels in the next 1-2 years.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

Facebook Equity Research and Analysis!

Dear Reader,

Here I am going to make an attempt to value Facebook.

Facebook's stock fell precipitously on Q2 earnings announcement. Facebook's stock has been falling ever since driven by negative news about how Facebook was allegedly used to meddle in the 2016 US Presidential Elections. What is more, more negative news appeared related to privacy concerns in using Facebook and whether Facebook was selling off data about its users to third parties.
Facebook's stock is trading at around 128 USD today.

Facebook's market value fell from around 550 bln, USD to around 366 bln. USD today. This is a staggering loss of nearly 200 bln. USD.

So what is Facebook worth at the moment?

I believe Facebook is worth 30% more than its current stock market capitalization. I believe that the 30% higher value will be realized in the next 1-2 years. Basically, Facebook's stock has been oversold and too severely punished for recent company's missteps. So Facebook should be worth around 490 bln. USD.

In the last reported quarter Facebook's revenue grew by 32.91% and Facebook's net profit margin is a staggering 37.42%.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

Snapchat, Snap Inc. Equity Research and Analysis!

Dear Reader,

I personally think Snap Inc., the mother company of the eponymous social network Snapchat is worth more than 50% than its current stock price of 5.92 USD and market capitalization of around 7.67 bln. USD.

Why? Because Snapchat has a loyal user base of young people who are yet to be fully monetized by Snap Inc. What is more Snapchat has proven its ability to innovate which is easily proven by the fact that Facebook Inc. is betting its future on clones of the Snapchat version of stories. In addition, I think there is place for one more general social network, aside from the dominant player Facebook and the more niche players like Twitter and LinkedIn.

And Snapchat is a perfect candidate to fill that void. Facebook boasts a market capitalization of more than 400 bln. USD even after its steep fall from above 550 bln. USD of market capitalization. And if Snapchat turns out to be a real social network competitor to Facebook, Snapchat could actually rise more than 5 times in the next 3 to 5 years.

Yes. Snapchat is loss making and will most likely loose more than 1 bln. USD in 2018. But Snap Inc. was trading at 27 USD before falling back to the current 5.92 USD, so there has been a valuation reset. I do think there is a much higher brand equity and innovation and revenue and earnings potential than the current Snap stock price and market capitalization suggests.

In short, I think in the next 1-2 years Snap Inc.'s stock could rise more than 50% and in the next 3 to 5 years Snap's stock price could more than triple.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich