Why Apple should buy Blackberry, Did Instagram kill Snap AND Did Alexa just kill the App Revolution?

Here’s a 46-minute podcast version of this entire Trading With Cody Live Q&A Conference Call. You can also listen to my podcast on iTunes too.

Here’s the part 3 of 3 of this week’s Trading With Cody Live Q&A Conference Call transcript.

Q: Blackberry? You don’t normally make earnings trades but we did this time. With that said, what is the plan with Blackberry? Do you want to sit tight for a while? We have some options that expire in September.

A: Yeah, I expect we are going to lose money on the options at this point. They were an earnings play. I think I gave myself at least one more earnings report and maybe we will end up getting lucky and the company ends up getting bought before they expire. I am just going to let them ride.

As you guys know, when I do buy options, I never go crazy on it anyway. Especially on something like that one which was a near term-ish kind of play.

I did buy common stock in Blackberry too and I do expect to make money on that over the next 2-5 years. My plan is over the next 6-9 months to hopefully see those guys catch traction in their car business, their IOT business and/or get bought. I just think if Apple wants to get into the brains of cars (ss you guys know, I’ve long said, they are not going to make Apple cars for any time soon, years out at least) and be a platform for cars, why wouldn’t Apple by Blackberry. It would cost them 3 months of cash flow or less even. I don’t know, I am doing it off the top of my head. What does Apple do, $10 billion per quarter in earnings? What is the market cap of Blackberry, $5 billion? So, 6 weeks of cash flow/operating income is equivalent to this market cap. You give them a 30% premium and you’re paying 10 weeks of operating income from Apple for the entire shebang and you own cars and in every car business on the planet. Not every but Ford, GM, Volvo — I can’t remember all the ones that use Blackberry QNX technology, but it’s most of them. QNX is already in tens of millions of cars.

So that just seems no brainer to me that Apple should buy Blackberry just for QNX, but as you know, I don’t want to buy a stock hoping someone will buy the company. There needs to be some fundamental terms there, so over the next 6 months, two to three quarters, I want to see some traction. The risk is they don’t get traction, get squeezed and end up losing the car business entirely and IOT doesn’t go anywhere, etc. Then the stock will be at $8 or $7 and that is our downside risk. The upside potential is if they do get bought it will probably be for $15-$20 if it is anytime soon. If they don’t get bought but do end up catching traction in cars, IOT and growth, we will hold it and see how it rolls. It should be $20, $30, $40 stock eventually, if they really turn this thing around.

Q: Cody, what about $SNAP at $15? Is it still too risky to invest into this company at this time? Do you think they are ever going to be profitable someday? Even with Facebook copying their products?

A: I think one of those things I look back and realize I was wrong about — that I saw so many kids using Snapchat two or months ago and that there was no stopping Snap’s user growth. I saw Facebook with Instagram copying Snapchat and it just seemed silly that they were doing that. I just didn’t believe that they would be able to successfully take that momentum away from Snapchat.

Now, for the last month, I get the impression that Instagram truly has taken the momentum out of Snapchat.

You guys know, I do this IAm App company for a living too. We make apps for celebrities. Download the IAm 50 Cent App that just hit stores a couple weeks ago. We have 150 Apps for celebrities in the store at this point. The reason I bring it up is because 60 days ago most of those celebrities actively wanted their Snapchat integrated in their IAm App. But I don’t know if I’ve heard any questions about Snapchat in the last month. Every kid I see is using Instagram right now, not Snapchat, or not as much at least.

So, I looked at that Snap today and thought if I hadn’t already bought some call options and lost money on that (on a trade), it probably wouldn’t be bad throw a little bit of that right now but I’m once bitten, twice shy. With that being said, feet to fire, I would rather buy Snap at $15ish than sell it at $15ish. I’m probably not going to do it myself right now. Maybe at $14 I will buy some more call options and give it a shot. The risk is that the quarter is a disaster. What if they have a Twitter 2% growth or even a negative growth in users? The stock would just be hit 25%-30%.

So let’s wrap up now with more Amazon Alexa analysis.

Amazon Prime Day revenue is up 60% over last year. I read this morning that they added more Prime users today than they have ever done in any other Prime Day history. Prime is already at what, I think 80 million in the US. They don’t release the numbers themselves but that is the ballpark that I’ve seen recently. Also the average Prime member spent 50% more than they did last year. So if you do the math then revenues are indeed up 60% from last year’s Prime Day sounds about right.

No numbers on this either, but the Echo Dot was by far the most popular product sold on Amazon Prime day.

I will tell you, I have bought two Amazon Alexa Shows for myself. One for my wife and I at home and one for my office. I am going to get another one for my other office. I sent an Echo Show to two of the team members at The IAm App. We are going to work on enabling Alexa “Skills” for our IAm Apps. (Maybe they are going to have to be called “IAm Skills” now?!)

My wife also bought one for her office. She is an attorney and her company got one or two for her. That is at least four or five Amazon Alexa shows that I personally bought in the last two weeks since they have released them. Clearly I love this technology thought it’s still far from perfect.

The Echo Show, with its screen makes the Alexa Voice Interaction just that much more awesome — and the the Echo Dot and Echo devices without screens are great already.

What is so amazing is that Amazon/Jeff Bezos did this classic Steve Jobs/Apple thing from years ago, when Apple would create products that nobody even knew they wanted and that is what Alexa is. You just didn’t know you wanted that interface until it was there.

I gave a speech introducing Steve Wozniak at the Apple Investment Summit, which was an honor, probably 5 years ago in LA I think it was. Steve talked for 30-45 minutes and he gave a great speech. One of the things he talked about was as revolutionary as the iPhone was that it was a device that took you to where you didn’t even know you wanted to go. And he pulled out his iPhone 4 or 5 at the time, and said I want to be able to talk to it like “iPhone, open up the movie I was watching last night.”

Everybody oohed in the crowd, “Oh that would be so cool!”

That was 5 years ago. Apple didn’t get us there. Steve Wozniak doesn’t work at Apple anymore, but if he did, he would have gotten Apple there first.

Instead though, it was Jeff Bezos who took us there.

Now I am telling you guys, whether you know it or not you want Amazon Alexa Show, Alexa Dot, anything Alexa related because the interface is getting better all the time. It is already establishing itself as the de facto standard for this Voice Revolution.

[Alexa, play channel 18 from Sirius XM. Music playing.]

[Alexa, show me Beetles videos on Youtube. Beetles video playing.]

[Alexa, play number one.]

And now I am watching Sargent Pepper’s Lonely Hearts Club Band on a screen. Oh sorry, it is Strawberry Fields Forever, I couldn’t see it from back here.

I will wrap up today with Strawberry Fields in the background and this thought, is the Alexa App on my iPhone going to get to the point where I am going to be able to talk to it and bypass Siri?

Is The IAm App developing for Apple or Google? Well yes, we make apps for their smartphones and tablets so we develop on the Apple and Google operating systems…

But we are getting ahead of the train and are starting to develop for Alexa and guess what, we are not the only ones!

Talk about disruptive perhaps Alexa is the Killer App of all-time. How disruptive would it be for me to be able to say “Alexa, open the IAm Neil Patrick Harris App” not just to the Echo Show, but if I could say that to my iPhone and the Alexa App hears it and opens up the IAm Skills set that we built for the Alexa operating system and it pops up on my iPhone screen just like it does on my Echo Show screen.

Is the App Revolution dead? Do we need to change the name to the Skill Revolution? That is what Alexa calls it. It allows you to enable “skills.” You don’t have to download an app to the Alexa, you just turn on the skill and start listening to Sirius XM, watching Youtube, jamming out to The Beetles, etc.

Oh come on, the Beatles Strawberry Fields video just ended just as I got up. Oh, it is going to the next one, and it’s them performing “Don’t Let Me Down” on top of the building there in NYC.

And with that people, I will do my best not to let you down.

Wise words from Johnny Boy Lennon. Peace, Love and Happiness. Thanks for being a member of Trading With Cody.