Musical.ly app, Alibaba vs Amazon, Trump anti-trust (not) and more

First off, I have a question — are any of you using the Musical.ly App? My nieces, 10-13 years old, are abandoning Snapchat for Musically. (PS. I found this on Musical.ly’s terms & conditions: How do I report a child under the age of 13 on musical.ly? musical.ly’s terms prohibits use of the app by anyone under the age of 13. Please do not allow your child under the age of 13 to use our apps.) Hit reply and let me know if you’re heard of Musical.ly and/or if you’ve used it. And let me know if you use Snapchat while you’re at it, please.

Here’s the transcript to this week’s Live Q&A Chat.

Okay, everybody, ask your questions, what’s up? Here to answer anything you want.

Q: Okay, I will throw one more your way if there is time. Do you follow VEEV?
A: $VEEV looks interesting and it’s one of the Cloud Revolution stocks we’re analyzing right now. Topline growth isn’t as good as it might be as it’s only 20% ish this year and expected for next.

Q: I am a newcomer and really appreciate your advice and your unique perspective. Your thoughts on folks like DFA (Dimensional Fund Advisors)
A: I’m not really familiar with DFA, sorry. Thanks for joining and for the kind words!

Q: Is BABA a better buy with lower risk then Amazon?
A: Hi and thanks for asking. The simple answer to your question is, No, I don’t think BABA is a better buy with lower risk than Amazon (or I’d sell my Amazon and buy Alibaba!). I’ve long liked BABA, but I don’t want to invest in it for two main reasons — 1. it’s based in China where the government can crack down and/or not enforce laws and threaten the business at any time. 2. Baba’s based their corporation in the Bahamas and I don’t like the long-term risk/reward that implies. Now all that said I do like $BABA and have considered just breaking down and buying it several times despite my cautiousness about China/Bahamas. But $BABA‘s trading at 10x next year’s revenues vs. $AMZN trading at 3x next year’s revenues and I still would rather bet on Jeff Bezos than Jack Ma too.

Q: You do not have any position out side of US. Is it because most of the high growth companies are in the US. The Overall US is more expensive than emerging market.
A: I do own $SNE (Japan) and $SEDG (Israel)

Q: Well, since I don’t think I’ve seen your Latest Holdings report yet . . . tell me about SNAP. I got out of the calls, in a couple of caches, just about even . . . and you indicated you were getting out “in the next day or two.” You ultimately didn’t, and I believe are still holding. And it basically hasn’t budged. What next for you? Waiting for next ER? (Personally, all I read is about people/kids/users abandoning it.) (Actually, it’s sunk a bit.)
A: Some of my $SNAP call options are just about worthless and the others aren’t much better. As I’d said I was likely to from the beginning of the trade, I’m likely just going to let them die or miraculously work out at this point.

Q: You view on Shopify. I know you had options at one time. Is it too high? should at this price hold or sell?
Q: Do you have any thoughts on SHOP? It has had a great run.
A: On the one hand, $SHOP has been on fire and the fundamentals have been very strong and the growth, which should exceed 60% y/y this year is incredible too. The company might turn profitable this year and next year should start to be profitable. But that might actually make the stock get hit, as the valuation will likely come under higher scrutiny when the profitability starts. The valuation is already stretched here at 12x sales, though the high growth will shrink that multiple. I’d like to buy $SHOP at a lower valuation, and am not going to chase it right now. The fact that I’ve been asked about $SHOP five or six times in the last week by people who are considering buying it is not a bullish sign either.

Q:  I suspect we’re holding on to HLF not believing in the recent strong ER. You still doubting the viability of the change in business structure?
A: Yes, I just wrote up an HLF update in a Latest Positions piece we’re about to send out this morning. I’m keeping short

Q: Hi, Cody. Do you mind letting us know what % of cash you have in your portfolio? Thanks
A: I haven’t put any new cash in the portfolio in several years now and I’ve done quite a bit of trimming, selling and a little bit of covering shorts, so let’s say I’m near or have more cash on the sidelines than I’ve had in many years.

Q: Is there a risk with $amzn with antitrust with the current administrations and retailers losing market share and jobs.
A: Always a risk that one of our dominant Revolution companies gets in trouble with anti-trust regulators. That said, I don’t think Obama enforced anti-trust laws (beer and food consolidation, for example!) and I don’t think Trump’s administration has any interest in even being perceived as being anti-trust. So no, I don’t really think $AMZN would be an anti-trust target under the current administration.

Q: Is Revenue / Price a better indication vs EPS? It looks like on $SHOP, $AMZN, $BABA your response was more with multiple of revenue?
A: Is Revenue / Price a better indication vs EPS?” The answer is….it depends. Especially in an early-stage company like $SHOP or $PI, for example. And for $BABA and $AMZN since they’re so focused on growing instead of just earnings, I mentioned Revenue instead of earnings in that valuation discussion too. Sometimes, I use P/E though!

Q:Bought AAOI NFLX and BABA this morning about an hour after the open. These are a few I had been eyeing and waiting for better entry points.
A: I can think of worse ideas than nibbling on some favorites you’ve been waiting for…but consider giving yourself some space and spread it out over a few tranches, even if it’s partial-partial tranches of like 1/10th instead of 1/3rd.

Q: OK, when does it become ominous? If you think that it is ominous how much (if any) do we sell. You can chose between the following options (1) everything (2) a lot, 1/3 or 1/2 (3) 0, i.e. ride it out. Feel free to add your own choices.
A: I’ve been telling everyone and have been trimming/selling stocks for the last few weeks. I’m more inclined to start nibbling on the next leg down than I am to start selling in anticipation of it.

Q: Time for IWM puts?
A: Probably nibbling some $IWM puts is a good idea here, if only to build the hedge.

Q: Cody, I would request having a more lead time about the weekly Q&A ‘s each schedule and am getting confused with now what is my Scutify sign in ..? though I appreciate the spontaneity of your lifestyle as you need to respond to multi- levels of shared reality, work family, travel, rest… Hey how about this TSLA trajectory..I jumped in last december and when it my target 280..got out..it continues to defy gravity? thanks. sudesh the sun revolution…
A: The Weekly Live Q&A Chat (and/or the Call-In) is usually at 2pm ET each Wednesday. I do have to change it on occasion, as travel or Amaris or life needs get in the way. And you guys can always email us at any time and I always answer your questions there. As for $TSLA, I recently sent out a mea culpa for not having owned it for the last few years. It’s been a juggernaut. I still don’t own it and am not planning to, as we have plenty of high growth tech stocks, including a $TSLA supplier $NVDA which has done even better than $TSLA since we’ve owned it. 🙂

Okay folks, that’s a wrap. Thanks!