Guest 50centdollars Posted August 12, 2015 Share Posted August 12, 2015 We are due for a correction in the tech sector and I believe it will crash soon. I am well aware of how hard it is to predict these crashes, but I think we are due for one. LNKD, TWTR, NFLX, AMZN, & FB all trade at insane valuations and most barely make any money to justify their market caps. If LNKD & TWTR can't find a way by now to make money, I doubt they ever will. All of these companies are shorts in my opinion. If you are buying these companies at today's prices, you are gambling. The first "dot com" collapse occurred about 1.5 decades ago, when things like Pets.com went bust and in a big way. We all thought that these "websites" were a big deal, but it turned out, no one was making any money at them, and the stocks were highly over-valued. Fast forward another decade, and now online companies are the "next big thing!" with Social Media leading the way. We are a Facebook and Twitter generation we are told, but oddly enough, most of these new era companies are either losing money, not making much money, or not making enough to justify their sky-high stock prices. AMZN has a stock price of $527 and is losing money every year, about $1 (P/E =N/A) And this is one of the more successful online companies out there. In order to justify this stock price, Amazon would have to from losing $1 to making $25/share. Not gonna happen anytime soon. And why is this company only valued based on revenues? Shareholders don't care how much profit the company make? Sure makes no sense to me. Now, I think AMZN is a good company but its stock price is insanely overpriced. Next lets take the facebook for professional adults' LNKD. Again, losing about $0.38/share and the stock last traded for $190. (P/E:N/A) For them to justify their current market cap, they will need to earn about $8-10 in the future. If LNKD by now can't find a way to make money, I doubt they ever will. Also, I think their user base will start to fall off and their site will become irrelevant. It's facebook for professionals, thats all it is. Next, FB, the only one that actually makes money. The stock is presently about $93 a share, and with profits of approx. $1/share, P/E ratio of 93. This is the cream of the crop for social media stocks but shareholders won't make any money going forward as FB doesn't pay any dividends. Again in order for them to justify their mkt cap, they will need to increase profits 4-5 times and the more they try to increase profits, the more users they lose. FB is a fad in my opinion. Hardcore users will stay on it but the average person will get bored and move on. I shut my account 3 years ago and would never go back on. TWTR - stock price $30, losing about $1/share. Would need to make about $1.50/share to justify mkt cap. This falls into the LNKD camp. If they can't find a way to make money now, I doubt they will. Ads on twitter make it uncool. They just had a CEO change because they are not increasing users fast enough. How many people actually use twitter and I'm not talking about all the millions of accounts that are opened but never used? Whatever Twitter says is their user count, cut the number in half. Twitter is great for society but bad for shareholders. NFLX - stock price $123, EPS 0.44, P/E 276. To justify their market cap they will need to make about $12/share. Market conditions could really bring down NFLX as studios and content creators come out with their own websites. Cable TV will be dead in a decade and you can now start streaming movies on youtube for a couple of dollars. Further, why get netflix when you can pay a one time fee of $90 for mygica like I did and you can stream any movie or tv show for free. I even found a way to stream live tv. Anyway, like in most industries, first to market is often last in the marketplace AAPL - Stock price $113, P/E 13 Now, I don't think Apple is overpriced but what would happen to Apple if they could no longer get these wild prices for what is quickly becoming a commodity item? Will consumers continue to pay 2x to 3x for a smart phone, just to have the Apple logo on it? Bad things could happen, and very quickly, if the cache of the Apple logo wore off anytime soon. Apple likes to increase the size or add some new gimmick to their phone and everyone goes mental for it. This is the Apple customer in a nutshell: And what product would Apple introduce to re-ignite the fire? Apple Watch doesn't appear to selling very good or else the company would have announced sales last quarter not hide them. Samsung has already come out with three smart phone watches, and people have responded by, well, yawning. While a nice toy, they are very expensive and have limited functions as the screens are so small and there is little room inside for hardware. Why would people buy Samsung phones and not watches but would BUY iphones AND apple watches? http://www.idc.com/prodserv/smartphone-os-market-share.jsp Apple Pay is a neat idea, but the retail industry abhors a monopoly, and already the largest retailers in the country has taken a pass on the idea of handing over huge sums of money to Apple. What the retailers want is something cheaper than Visa and Mastercard, not more expensive. And since Apple only has a minority share of the overall market, places like Wal-Mart can afford to say "no" to Apple pay. In other words, despite this good news for Apple, the company is still highly leveraged as a one-trick pony, like most tech companies. So long as they can keep selling overpriced phones to an already saturated smart phone market, they can keep succeeding. But as conquest sales become harder and harder to come by, this may be a difficult chore. With a P/E ratio of 13.34 it is not an overpriced stock - based on current earnings. But again, we have to hope this one product continues to sell, and continues to sell at a price far higher than the competition, in a market saturated with smart phones. Of course, Apple will stick around, but I don't see a lot of headroom here for the stock to go up much further. Flashy headlines about "record profits" are fine and all, but they don't address the underlying weaknesses in the company. Record sales today are fine - does that mean there will be record sales tomorrow? Or does everyone who has one, already have one. That and I doubt Samsung and the rest of the Android market will sit idly by in the meantime. The cell phone business is murder in terms of competition. Ask Nokia, Motorola, Ericsson, and Blackberry. They'll tell you all about it - and each at one time was at the top of the heap. But I think long-term, in the electronics business, devices start out hot and end up as commodity items. Televisions, stereos computers, telephones, laptops, video games - you name it. They were all once "hot" products in the market, and then they come down radically in price as they become more like commodity items. We've seen this in every other electronic device, and there is no reason cell phones should be any exception to the rule. Eventually the market becomes saturated with the devices, and then you can compete only on price, for the replacement market. Long-term, this does not bode well for Apple. Anyway, a tech crash is coming! Link to comment Share on other sites More sharing options...
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