The eSports Revolution and much more
Here’s the transcript from yesterday’s full day of Live Q&A in the Trading With Cody Chat Room.
Q: Hi Cody, I have my 2 sons and all their friends talking all the time esports (and videogames). I know we have $SNE but any other name on your radar or any idea on investing in esports related shares? thanks in advance.
A: Great question and great timing on the question. During the ten or so meetings with entertainment industry agents/managers/executives while I was in LA this week, esports came up in several times in several meetings. There’s clearly a lot of growth in esports and while Sony$SNE is a great way to invest in it (especially, since I always like to invest in PLATFORMS (Read this and click here for more on my writings about platforms)). So, I’d love to hear some under-the-radar potential Revolutionary esports plays from you guys if you have any you want me to start on.
Q: $AMZN acquired the company Twitch in 2014. Twitch is a live streaming platform for gamers. Amazon could become one of the larger players in eSports.
A: Yes, almost mentioned Amazon Twitch in my initial esports commentary earlier in the chat: “$AMZN acquired the company Twitch in 2014. Twitch is a live streaming platform for gamers. Amazon could become one of the larger players in eSports.”
Q: AMZN could be a big player in eSports. The revenue from this area would be minuscule compared to the company as a whole. A lot of TWC stocks are in the eSports space. Nvidia with their graphics cards and Intel with theit high end processors. Amazon, Google, and Facebook with platforms and partnerships for live broadcasts. Lion’s Gate owns a eSports franchise. Then you have Sony and I’m sure I left out someone. As eSports grow many of the companies of the TWC stocks will benefit.
A: Love this analysis, thank you. Agreed! “AMZN could be a big player in eSports. The Revenue from this area would be minuscule compared to the company as a whole. A lot of TWC stocks are in the eSports space. Nvidia with their graphics cards and Intel with the high end processors. Amazon, Google, and Facebook with platforms and partnerships for live broadcasts. Lions Gate owns a eSports franchise. Then you have Sony and I’m sure I left out someone. As eSports grow many of the companies of the TWC stocks will benefit.”
Q: Thanks! yeah, also very interested in eSports. Robert Kraft and others investing in OverWatch leagues. $ATVI. Not sure how under-the-radar they are but popular at the moment.
Q: Thanks Cody, only 2 names I can come up with and are both videogames company I hear often from my boys: $ATVI (activision blizzard) and $EA (electronic arts) (also Tencent but it’s a chinese company). Thanks again and looking forward to hear your view on esports related companies.
Q: Thanks Cody, last name on games from my son Take-Two Interactive ($TTWO) still a known name but much smaller cap than other two. Thanks again, looking forward to see if you find anything revolutionary for us in this eSport industry.
A: Thanks guys, I know the $ATVI and $EA plays, of course…not sure they excite me as much as $SNE does, but maybe I’m wrong. I’ll take a fresh look at them.
Q: It would seem with video game companies, they are only as good as their latest game. Wouldn’t it be difficult to maintain a lead with so much competition? Seems like platform investing would be better in comparison. But if these eSport leagues/franchises become more like, I don’t know, a Disneyland in a sense, where people can watch, play, interact, eat, bet?, buy stuff, as well as other things, maybe the entertainment factor and how the innovate their brand and customer loyalty programs allow them to keep profits moving higher? Geez, I have no idea, just throwing things out there.
A: Yes, this is what I’m thinking, but let’s step back and analyze afresh: “It would seem with video game companies, they are only as good as their latest game. Wouldn’t it be difficult to maintain a lead with so much competition? Seems like platform investing would be better in comparison. But if these eSport leagues/franchises become more like, I don’t know, a Disneyland in a sense, where people can watch, play, interact, eat, bet?, buy stuff, as well as other things, maybe the entertainment factor and how the innovate their brand and customer loyalty programs allow them to keep profits moving higher? Geez, I have no idea, just throwing things out there.
Q: Allergan (AGN) is straight down from $250. Under $190 today. We all know the present issues. Most analysts still projecting stock price to rebound anywhere from $250 to $400!!! Your thoughts? Thanks again, Frank.
A: I don’t like companies that sell into a taxpayer-funded and government-price-controlled industry at 90% gross margins. Those margins have nowhere to go but down over the next ten to twenty years. $AGN and most other health care-related companies that have 90% gross margins are not stocks I will probably ever own.
Q: I too would like to know about AGN. Jim Cramer is pushing it hard. Then again, he’s been pushing it hard since $250 and it’s now at $190. I’m thinking this might be a nice little trade for a bounce? What do you think? A: Please see $AGN answer below.
Q: “I also would like to know about AGN! Way to go on VZ
A: Well, seeing all this interest in people wanting to buy $AGN is maybe another bearish bullet point!
Q: Cody: I have been holding ACLS for a number of years; recently stock has moved up significantly; company makes chip gear. What are your thoughts ? Hold? Sell? Thanks for your advice! (VZ!)
A: I don’t know $ACLS very well, but it: “designs, manufactures, and services ion implantation and other processing equipment used in the fabrication of semiconductor chips ” and it’s been around and been a publicly-traded stock for many years, since back in the dot-com bubble. The stock, currently, at $30 came public back in July 2000, right at the top of the dot-com bubble, at $18. It’s traded at $30 a decade ago. Is it finally a long-term growth company? I doubt it.
Q: My friend is an electronics exec that lives in SF and has been in this sector his whole life. He has been dead right on MU calling its rise from $12 to $42. He has said for sometime that they will make $8 next year. He sees no let up in demand. He predicts $50 by year end. Cody, your thoughts on MU. Thanks, Frank.
A: Micron is going to benefit from the car revolution, because of the demand for memory and DRAM. Specifically, the different memories that Micron makes. Short answer is that you should read everything you can about Micron but be sceptical about everything you read. Be cynical about everything. And then go look at the company’s balance sheet and read their quarterly conference call transcripts. Fact is, Micron is a terrific example of the benefits for corporations and their shareholders when the Republican Democrat Regime allows oligilopical rollups. For many years Micron, Samsung, and all those other ones that were making those memory chips were slugging it out with really low margins and over time they’ve rolled each other up to the point they don’t have such bad margins because there’s not enough competition to drive the margins lower. So, they’re able to squeeze out extra margins and extra profits. And your phone is more expensive than it would be in a competitive component marketplace.I don’t own Micron and I don’t want to own it. Mainly because I don’t like the management very much and I don’t like their balance sheet when I’ve looked at it in years past. Part of it is probably just a biasness on my part because for years it was just sort of a pig of a stock. Bill Fleckenstein used to call Micron“The pig that flies.” Of course he was calling it that at 50 cents a share back in 2002 and he still calls it that. So, that goes to your question Norman of why and how hard it is to believe analysis. I like Bill. I know he’s well intentioned but he’s been bearish and wrong about most of the technology for the last twenty years. And if you read his stuff today he’s probably really bearish on Micron. And look, I can’t own all of them and I don’t own Micron. I think I did own it in the past when it was trading the single digits and I sold it for a slight gain. It’s a fine company. It’s not really one I’m about to buy though. It’s not on my buying radar anytime soon. Maybe if the stock had another crashing or for some cyclical reason it got destroyed and was back in single digits, it might be time to look at it at that point. But at the current levels, no.
Q: Cody and Company …! So this is your old mentor Cramer speaking today below…. Time will tell…And can following in your footsteps by buying FB at 22 ..how many years ago now and buying into Snap weeks ago..how would you integrate this post ??? Facebook’s TBH Buy Is a Bet Against Snap: Cramer Worth a Billion in Just a Few Months? According to a TBH blog post, the app has been downloaded by 5 million people who have sent 1 billion messages on the platform. Cramer calls the acquisition something of a “pincer move” by Facebook to divert younger users away from Snap and to Instagram for a “rounding error” of a price. “Do I want to buy the stock of Facebook because of this? Let me give you a really odd answer: es. Yes, because if this rate of adoption continues, then the price tag would have been $1 billion a few months from now, not $100 million, and Snap would have gotten massive publicity about how it intended to blunt anything Facebook does to move younger if Snap had made the purchase first,” said Cramer. Read more: Facebook’s TBH Buy Is a Bet Against Snap: Cramer | Investopedia http://www.investopediA:com/ne…
A: There’s plenty of skepticism out there about $SNAP. No doubt Facebook has been and will continue to try to destroy the upstate competitor. Facebook’s purchase of $TBH is another part of that battle, but not a war-winner.
Q: “I am wondering your thoughts on automation/robotics companies other than $TSLA and $IRBT. Maybe some industrial cos like $ROK, $ABB, $EMR that have I’ve seen mentioned recently. Any interest in this sector?”
A: Here’s a book I wrote a few years ago that mentions a bunch of robotics stocks and outlines what I expect in The Robotics Revolution for the next decade. Now looking at each of the the stocks you asked about — $ROK: Topline growing at 5-7% per year, not fast enough for now though the 2% dividend ain’t bad. $ABB: Topline growing at 1-3% per year, not fast enough for now though the 3% dividend ain’t bad. $EMR has always seemed like a mess to me, but the 3% dividend ain’t bad. None of these three companies seemed poised to be Revolutionary Investments in my humble opinion.
Q: And how about $SIEGY as a robotics play? I need to research. Not sure which has the best growth story or if there is/will be a clear leader.
A: Slow topline growth, 3% dividend. Siemens is a great company, but not something I think is Revolutionary.
