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BigRedRage

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I'm not seeing the appeal with SHOP. Sure, revenue growth has been outstanding, but analysts don't seem confident it will continue past a couple years. Gross margins look good, consistently 50-55%, but they haven't been able to translate that to the bottom line. They first turned a small profit in 2020 that was about 10% of revenue. They did post a huge net profit in 2021, but a closer look shows it was an anomaly as it was all from an investment gain not related to their business operations. Let's assume they can maintain a 10% cash flow to revenue margin, and I use analyst revenue estimates for 2022 and 2023 and then 30% year after that. I'm still getting a target price of less than $200 and that's using very aggressive estimates.

So in order to grow into their valuation revenue growth likely won't be enough, they'll have to cut costs and become more efficient to increase their net profit margin.

Something else to consider is that they have been diluting shareholders as they have increased their outstanding shares by 25% over the last 5 years. It's a smart move by management when the company is so richly valued, but it does decrease your ownership and your percentage of profits and cash flow.

It's probably wise to put the past pandemic highs of every stock out of your mind, especially the stocks that skyrocketed during that time.
I didn't buy. I had a slight temptation but that's why I posted so you could pee on it for me.
 

elindholm

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E-commerce is obviously the now and the future
That seems to be a polarizing comment. I think AMZN is on solid footing, but with the more niche competitors, it's really hard to say.

SHOP down 78% from its peak (was 1763, now 392)
ETSY down 72% (was 308, now 86)
OSTK down 75% (was 128, now 32)
W down 83% (was 340, now 57)

Obviously there's something of a trend here. As Folster says, it looks as though the euphoric shift to e-commerce during the pandemic didn't stick. So what happens to this space now?
 

Devilmaycare

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That seems to be a polarizing comment. I think AMZN is on solid footing, but with the more niche competitors, it's really hard to say.

SHOP down 78% from its peak (was 1763, now 392)
ETSY down 72% (was 308, now 86)
OSTK down 75% (was 128, now 32)
W down 83% (was 340, now 57)

Obviously there's something of a trend here. As Folster says, it looks as though the euphoric shift to e-commerce during the pandemic didn't stick. So what happens to this space now?

The drop in those stocks doesn't necessarily mean there isn't a shift to e-commerce. I see it more as the market rebalancing due to the changes in the economy. Those companies were trading at way too high of a multiple before in part to investor money flowing in with interest rates making in almost free money. With rates going up the VC money is getting tougher to get. I've seen this with my day job. We've pivoted a bit the over the last month because it's going to take longer to get our series c funding now than what it looked like at the start of the year.

I think retail investors are also playing a part here in those bubbles bursting. We don't have people blindly YOLOing their stimi checks anymore. There was also a lot of green retail investors that got burned and ended up bag holders due to it and they're going to be a bit more gun shy now.
 
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The drop in those stocks doesn't necessarily mean there isn't a shift to e-commerce. I see it more as the market rebalancing due to the changes in the economy. Those companies were trading at way too high of a multiple before in part to investor money flowing in with interest rates making in almost free money. With rates going up the VC money is getting tougher to get. I've seen this with my day job. We've pivoted a bit the over the last month because it's going to take longer to get our series c funding now than what it looked like at the start of the year.

I think retail investors are also playing a part here in those bubbles bursting. We don't have people blindly YOLOing their stimi checks anymore. There was also a lot of green retail investors that got burned and ended up bag holders due to it and they're going to be a bit more gun shy now.

Also we have a market and investors that are really sensitive to numbers, valuations, and guidance right now. I don't see that changing with the current monetary policy, inflation concerns, and geopolitical issues. I read a while back that the stocks and industries that lead the last bull/bubble rarely lead the next one.
 

Devilmaycare

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Also we have a market and investors that are really sensitive to numbers, valuations, and guidance right now. I don't see that changing with the current monetary policy, inflation concerns, and geopolitical issues. I read a while back that the stocks and industries that lead the last bull/bubble rarely lead the next one.

That axiom might not hold anymore or at least need to be revised due lines being blurred. Yellow Cab Co is a transportation company. Now for Uber and Lyft are they tech or transportation companies? They could bubble or crash with multiple industries. So for a lot of these tech companies we might have to look at sub-categories and not just the tech sector.
 
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I just increased my smallish position in WBD by 50%. The numbers say it's a bargain but bearish sentiment in the streaming segment after the NFLX crash is weighing it down in my opinion. They definitely feel unloved right now, but they are well diversified with streaming, linear tv, and the box office. I'm shooting for a 2.5% position in WBD (almost there), and if I have an opportunity to snag DIS under $100, I'd love to have a combined 5% between the two.
 

BigRedRage

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I just increased my smallish position in WBD by 50%. The numbers say it's a bargain but bearish sentiment in the streaming segment after the NFLX crash is weighing it down in my opinion. They definitely feel unloved right now, but they are well diversified with streaming, linear tv, and the box office. I'm shooting for a 2.5% position in WBD (almost there), and if I have an opportunity to snag DIS under $100, I'd love to have a combined 5% between the two.
shouldnt be long on DIS going below $100. If you would instantly buy at $99, why not buy at $103?

Looking at their long term charts, returning to $150 once the economy bounces back you would think is a no brainer for them. They own friggin everything and the parks are not going away.
 
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shouldnt be long on DIS going below $100. If you would instantly buy at $99, why not buy at $103?

Looking at their long term charts, returning to $150 once the economy bounces back you would think is a no brainer for them. They own friggin everything and the parks are not going away.

If I would buy at $103, why not $107? You have a point though, but I am just trying to adhere to my process. I actually would need to review it again if it drops below $100, just to make sure. I like DIS, but I'm not quite ready to hit the Cramer buy button automatically.
 

elindholm

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I just increased my smallish position in WBD by 50%. The numbers say it's a bargain but bearish sentiment in the streaming segment after the NFLX crash is weighing it down in my opinion. They definitely feel unloved right now, but they are well diversified with streaming, linear tv, and the box office. I'm shooting for a 2.5% position in WBD (almost there), and if I have an opportunity to snag DIS under $100, I'd love to have a combined 5% between the two.

It's odd to me that you are trying to load up on WBD right as I'm trying to get out from under PARA. They feel very similar to me.
 

elindholm

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shouldnt be long on DIS going below $100. If you would instantly buy at $99, why not buy at $103?

Because that's between four and six months of long-term growth that you're sacrificing. A 4% price difference is a lot.
 
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It's odd to me that you are trying to load up on WBD right as I'm trying to get out from under PARA. They feel very similar to me.

Yeah. It was a bad call timing-wise, but I like the company long term. I'll probably add more if I can get to it, but there a few new positions that will be more appealing as well as some current holdings that I'd like to average down on.
 
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I looked at DIS again this morning and updated my projections with recent analyst forecasts. I've lowered my target price to sub $85 before I take another serious look. I think the negative sentiment surrounding streaming and a possible/likely recession is impacting growth forecasts. I may miss out on a good opportunity at its current price, but their numbers have been all over the place these past several years with huge acquisitions and Covid. It's hard to get a baseline to get confident cash flow estimates for the next 5 years. I'll continue to watch it though.
 

BigRedRage

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I looked at DIS again this morning and updated my projections with recent analyst forecasts. I've lowered my target price to sub $85 before I take another serious look. I think the negative sentiment surrounding streaming and a possible/likely recession is impacting growth forecasts. I may miss out on a good opportunity at its current price, but their numbers have been all over the place these past several years with huge acquisitions and Covid. It's hard to get a baseline to get confident cash flow estimates for the next 5 years. I'll continue to watch it though.
side note, just dropped a huge chunk of money on a disneyworld trip for fall 2022 :)

Probably my last visit. Want to go while my youngest will still find it magical (she'll be 8, I was going in 2020 but...covid lockdowns)
 
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