FB Crisis, Creeping inflation, Crypto crash catalysts, Cannabis craze to crash and more
Here’s the transcript from this week’s Live Q&A Chat where we cover things like my playbook for trying to find the Amazon of Cannabis, what to do with our Facebook stock, whether Twitter insider selling matters, some crypto talk and much more.
Q. Cody – you put an article out regarding inflation alert into year end and 2019….does that mean gold will start to get bullish and squeeze shorts into year end and next year ?
A. I expect so, but there’s more to gold price swings than just inflation trends.
Q. Cody, we need cannabis stocks. Cody, what do you think of XYZ stock that’s in the pot business? Cody, mary jane baby, where’s the stock picks? Etc.
A. The answer to all of your cannabis questions is: I don’t think this current momentum/bubble driven cannabis stock market will end well for investors or traders. There will be GREAT opportunities to invest in cannabis-related stocks. Q4 2018 isn’t one them.
Q. Will cannabis crash and burn and rise just like dotcoms did? I assume you will be on lookout for AMZN or AAPL of cannabis stocks sometime next year or so?
A. Yes, well-phrased.
Q. In the cannabis sector, when all is said and done and bottomed out, which one can emerge as the AMZN of cannabis?
A. Not sure the future Amazon of cannabis is public yet. Maybe it’ll be Amazon itself anyway!
Q. Good morning Cody, there are recently quite a lot of insider sales at TWTR even at recent lows. Is it another bad signal for us? How do you evaluate insider sales and purchases?
A. I don’t use insider buying or selling as much more than an anecdote in my stock analysis for Twitter or any others. I’m thinking about buying some more TWTR shares soon, just as I’m thinking about selling some more if not not all of my FB stock. Twitter is a long-term winner, I do believe.
Q. Isn’t SEDG screaming buy at current lows?
A. I can think of worse ideas than buying SEDG around $37 here. That said, remember that my cost basis is around $14 or so. Also, right now, analysts are expecting SEDG’s topline growth to slow from nearly 50% this year to just about 13% next year. Earnings are supposed to grow about 10% too, going to nearly $3.50 per share. The stock’s trading at 10x earnings, which in this market is quite cheap. But SEDG is going to need to deliver more than 13% growth next year for the stock to get back to its highs. I like SEDG as a pure play on the solar industry long-term, but I’m not personally about to buy more at these current levels.
Q. Hi Cody, I hope all is well with you and your family. My question to you is with regards to the outlook of FB, obviously FB is not just FB, but Instagram, and What’s App, and Oculus. FB is one of 5 stocks that I have overweight in my portfolio, together with smaller positions that you have in your recommendations. I am wondering if FB with the latest breach is fundamentally broken, or is this a matter of a redistribution in the performance drivers from being Facebook to Instagram and WhatsApp. Is this still a long term buy and hold, and at those prices, to buy back some of the shares that we sold at much higher prices previously. Thanks.
A. I’m torn about what to do with Facebook. On the bullish side, you’re exactly right that there’s still so much value to be unlocked in Instagram and Whatsapp. On the bearish side, I’m just not sure I trust Mark Zuckerberg anymore. I’m not sure I’m ever going to log back into Facebook again, and I haven’t, since I found out that they’d let my account get hacked there. I’m not sure if there’s millions of other hacks already accomplished by nefarious forces at Facebook — actually, I’m increasingly sure that there are. I don’t sell completely out of my long-term Revolution Investing holdings that have gone up 500% (or much more) often, and I might just end up selling like 1/3 or 1/2 of my FB stock to just sort of split the difference. I’ll send out a Trade Alert if I do.
Q. Cody- I know you have been touting VZ because of the 5G rev expectations. But, just wondering what you think of it seemingly is slow to be recognized by others?
A. Verizon’s been a boring dormant dividend stock for a long time. They’ll have to prove they can start leveraging 5G into revenue and earnings growth for others/the market to recognize it.
Q. Any thoughts on the new IPO Survey Monkey? Thanks.
A. Without looking at it, I’ll bet you a quarter (or a stellar lumen) that it’s not profitable, growing 30-40% topline per year and is trading at 8-10x sales and I’ll say it’s too expensive. Now I’ll look. Yup, SVMK isn’t profitable, growing revenues fast, trading at 8x this year’s revenues. “We have a history of delivering revenue growth. For 2016 and 2017, and for the six months ended June 30, 2017 and 2018, our revenue was $207.3 million, $218.8 million, $106.5 million and $121.2 million, respectively. For 2016 and 2017, our core revenue was $192.1 million and $214.0 million, respectively, representing year-over-year growth of 11.4%, and for the six months ended June 30, 2017 and 2018, our core revenue was $102.1 million and $121.2 million, respectively, representing period-over-period growth of 18.7%. We have also delivered strong cash flow from operations. For 2016 and 2017, and for the six months ended June 30, 2017 and 2018, we generated cash flow from operations of $35.8 million, $45.0 million, $14.8 million and $22.0 million, respectively. For 2016 and 2017, and for the six months ended June 30, 2017 and 2018, our free cash flow was $(4.9) million, $5.6 million, $(6.7) million and $11.8 million, respectively, which included cash payments for interest on our long-term debt of $19.8 million, $19.9 million, $10.0 million and $10.8 million, respectively, a one-time deferred payment of $7.7 million in the first quarter of 2017 related to our acquisition of TechValidate and $4.3 million in third-party fees related to the refinancing of our credit facilities in the second quarter of 2017.”
Q. Hi Cody, I’m wondering if you still feel the same way about the transparency with Musks tweet about going private. Can you address that next week? I didn’t agree then and it’s not working out very well, especially since it was another lie. Just more BS from Musk like Zuck and Facebook? Both costs people a lot of money. I guess the difference is Gacebook wasn’t transparent. Thanks.
A. Ouch, harsh a bit. But point taken. I’ll tell you a few things — I was wrong for saying that Musk was being transparent when it turned out I was right that there was no way he could have found the funds to take Tesla private. And of course the SEC settlement with Elon Musk (still CEO, out as Chair for 3 years and $20MM) after making a big hullaballoo over their charges and investigation are Wall Street’s version to College Football’s storyline with OSU pretending to punish Urban Meyer by suspending him 3 games. The whole shebang is yet another reason why I would never invest in Tesla.
Q. Cody – any thoughts on cryptos….seem to be in a range right now…when do u see the next crash that takes BTC below 5k?
A. No idea when the next catalyst for another leg down in the major cryptos will hit, but there are hundreds of the crappy cryptocurrencies that have also bounced a bit and I’d expect there’s another whoosh down in those coming before the end of the year. Remember the Dragonchain coin that I warned about? Watch that one, I’d bet it’ll be cut in half by year end.
Q. Any thoughts on GOLEM…hear it can go alliance with GOOGL and potentially in AI spectrum.
A. You’ll hear that every cryptocurrency can go into an alliance with Google and potentially in the AI spectrum if you ask someone who’s invested in that particular cryptocurrency. Maybe Golem will be a winner…I suggest being skeptical though!
