Remember...

[Guest ajc]

 

Price/sales

 

 

(Late '98 and '99)

 

@Home    158x

eBay        117x

Yahoo      111x

Priceline    52x

Cnet          40x

AOL          33x

Lycos        28x

Amazon    23x

Etrade      23x

Microsoft    23x

Cisco        16x

Netscape  14x

 

 

(Today)

 

Facebook  15x

Nvidia        10x

Netflix        8x

Alphabet    7x

Zillow        7x

Grubhub    6x

Tesla          6x

Box            5x

Twitter      4x

Yelp          4x

Square      4x

Amazon      3x

 

 

 

[Jurgis]

Please God, Just One More Bubble!  8)

[AzCactus]

Please God, Just One More Bubble!  8)

 

Jurgis, unless you are kicking the bucket soon you will see more than one :)

[rb]

Please God, Just One More Bubble!  8)

LOL!!! :)

[vox]

 

Price/sales

 

 

(Late '98 and '99)

 

@Home    158x

eBay        117x

Yahoo      111x

Priceline    52x

Cnet          40x

AOL          33x

Lycos        28x

Amazon    23x

Etrade      23x

Microsoft    23x

Cisco        16x

Netscape  14x

 

 

(Today)

 

Facebook  15x

Nvidia        10x

Netflix        8x

Alphabet    7x

Zillow        7x

Grubhub    6x

Tesla          6x

Box            5x

Twitter      4x

Yelp          4x

Square      4x

Amazon      3x

 

I'm not making the case that today's valuations are at or near the highs from the peak of the tech bubble, but this is an unfair comparison. Whereas the m.o. back in the day was to IPO as soon as possible, today's tech companies have access to a wealth of VC funding and have the capacity and desire to stay private for much longer. SNAP is currently trading at 67x ltm sales and a number of private companies have mind boggling valuations: https://www.cbinsights.com/blog/sales-multiples-30-unicorns/

[ScottHall]

You're all welcome to ignore me if you'd like, but the fact is that my topics are often hotbeds of activity. A topic about my own life of all things is 11 pages long.

 

Maybe someone should think about the applications of that.

 

Can I be your agent and sell ScottHall Brand?  8)

 

 

We gonna make multi-BUHLLIIOOONS!

 

I want ScottHall Brand listed on the NYSE this time next year. It is a high-margin platform compounder that licenses the ScottHall brand name and other acquired names for use on private label clothing. The numbers totally aren't made up.

 

You're all welcome to ignore me if you'd like, but the fact is that my topics are often hotbeds of activity. A topic about my own life of all things is 11 pages long.

 

Maybe someone should think about the applications of that.

 

The funny part here is, that you are already - for my part - on my ignore list. I'm just nosy about what you are posting, reading it all. The board technicaly alows me.

 

Widening your mental state of thinking using pot etc. is to me not the way move forward. Cardboard has posted about it earlier on this board, based on personal experiences related to persons close to cardboard earlier, and personally I agree with cardboard.

To me, most likely, you'll end up as a train wreck of a person - the same as investor - if you do not get a hold on your self with regard to this.

 

- - - o 0 o - - -

 

The first person to treat you as deserved is your self! : Never forget that!.

 

- Good luck, Scott.

 

So you're ignoring me to keep up appearances, you're not really ignoring me. That works for me if it works for you.

 

It's funny you use those words... because I described myself as a train wreck in an article I wrote not too long ago. The only difference is I was talking about myself last year, before I started using marijuana. I don't think you really know much about me, but it doesn't offend me. I think it's kind of funny.

 

I appreciate that you care about me enough to share that advice, but I think I'll look at what's happened in my own life since I started smoking pot instead of worrying about other people's failures.

[Jurgis]

You're all welcome to ignore me if you'd like, but the fact is that my topics are often hotbeds of activity. A topic about my own life of all things is 11 pages long.

 

Maybe someone should think about the applications of that.

 

Can I be your agent and sell ScottHall Brand?  8)

 

 

We gonna make multi-BUHLLIIOOONS!

 

I want ScottHall Brand listed on the NYSE this time next year. It is a high-margin platform compounder that licenses the ScottHall brand name and other acquired names for use on private label clothing. The numbers totally aren't made up.

 

We'll start with bespoke T-shirts and pret-a-porter ad enabled ultimate fighting leisure suits.

 

We can always add makeup to make up the numbers.

 

Initial investment options of $2 billllion dollars minimum

available on request. Hyper qualified investors only. Usual two and twenty twenty fees apply.

[Guest ajc]

 

 

I'm not making the case that today's valuations are at or near the highs from the peak of the tech bubble, but this is an unfair comparison. Whereas the m.o. back in the day was to IPO as soon as possible, today's tech companies have access to a wealth of VC funding and have the capacity and desire to stay private for much longer. SNAP is currently trading at 67x ltm sales and a number of private companies have mind boggling valuations: https://www.cbinsights.com/blog/sales-multiples-30-unicorns/

 

 

 

I'm trying to prioritize for relevance, not fairness. Not exactly sure why I'd want to do otherwise.

 

A few points....

 

Your information is substantially out of date. Significant private market corrections started in early 2016. Uber now trades at 13x sales ($5.5B vs $70B), Square had a 35x P/S ratio in that slide and now has one of 4x, and Airbnb is valued at 15x ($2.0B est. vs $31B). There are 1 or 2 outliers like Slack and Wework (at 35x), but these companies are still growing revenues quickly and are completely in the minority.

 

The reason I put those numbers up is exactly because companies were going public too early in 1999. One job the private markets, VCs, and tech ecosystem have is to absorb significant amounts of early volatility and to thin out the herd. That way, fewer companies go public and those who do tend to at least function like some kind of real business.

 

In 2.5 years of the Nasdaq's 40 year history, that didn't happen. From mid-1998 to the end of 2000, folks were just getting seeded then going public before even taking their series A.

 

That's not normal.

 

Instead of disliking the comparison, you should see it for what it is which is an indicator that the system is out of whack, either because company development isn't being regulated properly, or because people are simply overpaying, or both. Either way, it really doesn't matter. It's a clear sign not to be an idiot, because the tech market is overvalued. Even your run-of-the-mill, old-school value investor can see the difference in the data.

 

The problem with most people's thinking on here is they're basically saying the Nasdaq was completely erratic for 2.5 years of it's 40 year history, so we should hate it forever and not even try develop an intellectual framework for valuing tech companies. You might as well say the DJIA went crazy between 1927 and 1934, so no-one should ever try figuring out what a stock is worth and they sure as hell shouldn't buy any.

 

It's a bunch of fearful, irrational bullshit and it deserves to be called out. That's all there really is to say on that issue.

 

Snap's an unusual case. Spiegel is as much a stubborn, selfish S.O.B, as he is a design genius. I think he likely pushed for too high a price on the IPO. Initially, $17B or $18B was the number that did the rounds, and that seemed more reasonable to my mind. Assuming of course, you think the company will make a good long-term investment. I currently don't.

 

Snap's forward price/sales ratio for year-end 2017 at today's price is 10x. The problem with your statement is a lack of any company-specific context. Snap intentionally under-monetized while growing their userbase, so there wouldn't be too many adverts. As a result, their adload is currently insignificant. They can (and will) ramp up advertising dramatically before users start to switch off. This is more about the need to understand enough about each company individually, than it is about any broader valuation issues.

 

Snap's current multiple reflects their current revenue growth rate which is still around 300%, I think. Like I said, I passed on them so I might be a little off. I think management is very smart, but also too arrogant for my liking.

 

Anyway.... the fact is if you look at the numbers, we're around where valuations were in the early 90's or early 00's for most popular big, new tech companies.

Doesn't mean a recession can't happen, or you don't have to be discerning, but that's what the data is saying.

Beyond that, I can't really help it if other people love their dogma more than they love the facts.

 

 

 

[LongTermView]

Scott,

 

I think you said FB led you to GOOG. In my case GOOG led me to FB. Either way, why question successful cigar butt strategies? Isn't it a reasonable bet that certain cigar butts, GOOG, and FB will all outperform the S&P 500 over the next three years?

[ScottHall]

Scott,

 

I think you said FB led you to GOOG. In my case GOOG led me to FB. Either way, why question successful cigar butt strategies? Isn't it a reasonable bet that certain cigar butts, GOOG, and FB will all outperform the S&P 500 over the next three years?

 

Yes.

[JayGatsby]

The problem with most people's thinking on here is they're basically saying the Nasdaq was completely erratic for 2.5 years of it's 40 year history, so we should hate it forever and not even try develop an intellectual framework for valuing tech companies. You might as well say the DJIA went crazy between 1927 and 1934, so no-one should ever try figuring out what a stock is worth and they sure as hell shouldn't buy any.

 

It's a bunch of fearful, irrational bullshit and it deserves to be called out. That's all there really is to say on that issue.

+1. I've always been impressed with the breadth of what Icahn invests in. Reportedly made ~$2B profit buying NFLX at the bottom.

 

Thiel's book, Zero to One, is a really interesting look at what he looks at. Basically he looks for micro-monopolies that have a strategy for replicating that micro-monopoly, rather than the typical "it's a massive industry and if we get 1% we'll all make a fortune". 

[Spekulatius]

Don't we have a bubble right now? Bonds, stocks, real estate...

 

But  then again, bubbles are only hubbles in hindsight after they popped. Before they pop, they re called secular trends, peak X, Outsiders companies etc.

[rukawa]

It's funny you use those words... because I described myself as a train wreck in an article I wrote not too long ago. The only difference is I was talking about myself last year, before I started using marijuana. I don't think you really know much about me, but it doesn't offend me. I think it's kind of funny.

 

I appreciate that you care about me enough to share that advice, but I think I'll look at what's happened in my own life since I started smoking pot instead of worrying about other people's failures.

 

I think this board needs people like you. I actually think its a great board because there are a lot of intelligent people and the views are pretty diverse. Its kind of funny because I have a friend something pretty similar to what you are doing with marijuana. I pretty sure it won't end well for you or for him. But I am often wrong. Anyways if it doesn't, don't beat yourself up about it...if your life isn't working it makes sense to experiment with things even if it doesn't work out. Good luck to you!

[Guest ajc]

 

 

I've always been impressed with the breadth of what Icahn invests in. Reportedly made ~$2B profit buying NFLX at the bottom.

 

Thiel's book, Zero to One, is a really interesting look at what he looks at. Basically he looks for micro-monopolies that have a strategy for replicating that micro-monopoly, rather than the typical "it's a massive industry and if we get 1% we'll all make a fortune".

 

 

 

I think it was Brett Icahn who initiated that, but yeah it was definitely a smart buy.

 

I haven't read Zero to One, but at some point I'll have to. It's funny because I've read probably 50 other books on tech investing, management, and history, so you'd think I would've. A lot of what Thiel says in his online lectures is basically what Munger has already said about moats, pricing power, and competitive advantages though, so I did find that interesting.

 

One of the things about value investing is that I've found almost all of the major qualitative lessons from Buffett can be successfully applied in a slightly altered form when investing in technology companies. I especially like a YouTube video of Buffett speaking to the Omaha Press Club in 1992. That has a lot of valuable insights about what's worth looking for.

 

 

 

[Guest ajc]

 

 

Don't we have a bubble right now? Bonds, stocks, real estate...

 

But  then again, bubbles are only hubbles in hindsight after they popped. Before they pop, they re called secular trends, peak X, Outsiders companies etc.

 

 

 

For US stocks, that depends on whether tax reform gets done in 2017 like they're aiming for.

 

Assuming rates continue to slowly rise, then if the tax cuts are deep the market is not expensive.

If they pass something mediocre, I'd say the market is somewhere between stretched and very expensive.

If they can't pass anything, then bubble's the right word.

Right now, the market seems to be betting something big will happen on tax reform before the end of the year. Time will tell.

 

As for large cap US tech growth stocks, they're still between cheap and fairly priced. From what I've read, mid-caps are the most overvalued stocks.

 

 

 

[mrholty]

Although I am an owner of Alphabet, I believe Facebook has much better targeting capabilities.  I welcome the ads on my facebook mini-feed because they are almost always products or articles which interest me.  I cannot say that the advertisements on Google or Youtube are welcome, I view them as a nuisance.

 

I'm very excited to see how Youtube progresses, but the search engine is under a lot of competitive pressure IMO.  Bing has been steadily gaining share and I view Apple is a long-term threat as well.

 

I'd love to own facebook, however, I have never been able to become comfortable with valuation given the huge stock based comp expense.  It deserves a lot of thought.

 

I agree with you completely on FB ad targeting capabilities.  I doubt very few of you on here have ever used either AdSense or FB ads.  I was a bear on FB when it IPOed and yet I ignored it when my friend who had a small website making him a little side hustle money told me that he was dabbling in Facebook ads and his ROI was tremendous.  I watched him kill it and was envious for him and yet still couldn't make the leap to buy FB stock. 

 

His cost of ads double annually and yet still have a positive ROI due to the segmenting that he does.  His business almost did $10M in sales this last year up from $5M the year before and he grows the majority of his sales via FB and less so Intragram.  He still advertises on Goog and its ok but he is interested in a new Youtube sales channel that is supposed to be coming.  GOOG has been slow on this.

[Jurgis]

I never click on ads. Yet I clicked on one FB ad. So, yeah, likely way more clickthrough than elsewhere...  8)

 

 

 

 

(The ad I clicked was advertising ScottHallofFame of course.  8) )

[rishig]

Although I am an owner of Alphabet, I believe Facebook has much better targeting capabilities.  I welcome the ads on my facebook mini-feed because they are almost always products or articles which interest me.  I cannot say that the advertisements on Google or Youtube are welcome, I view them as a nuisance.

 

I'm very excited to see how Youtube progresses, but the search engine is under a lot of competitive pressure IMO.  Bing has been steadily gaining share and I view Apple is a long-term threat as well.

 

I'd love to own facebook, however, I have never been able to become comfortable with valuation given the huge stock based comp expense.  It deserves a lot of thought.

 

I agree with you completely on FB ad targeting capabilities.  I doubt very few of you on here have ever used either AdSense or FB ads.  I was a bear on FB when it IPOed and yet I ignored it when my friend who had a small website making him a little side hustle money told me that he was dabbling in Facebook ads and his ROI was tremendous.  I watched him kill it and was envious for him and yet still couldn't make the leap to buy FB stock. 

 

His cost of ads double annually and yet still have a positive ROI due to the segmenting that he does.  His business almost did $10M in sales this last year up from $5M the year before and he grows the majority of his sales via FB and less so Intragram.  He still advertises on Goog and its ok but he is interested in a new Youtube sales channel that is supposed to be coming.  GOOG has been slow on this.

 

Along these lines, I have been watching SharkTank (on ABC) since Season 1. It is pretty amazing how many small business can jump start to millions in sales simply through FB advertising.

[fareastwarriors]

Although I am an owner of Alphabet, I believe Facebook has much better targeting capabilities.  I welcome the ads on my facebook mini-feed because they are almost always products or articles which interest me.  I cannot say that the advertisements on Google or Youtube are welcome, I view them as a nuisance.

 

I'm very excited to see how Youtube progresses, but the search engine is under a lot of competitive pressure IMO.  Bing has been steadily gaining share and I view Apple is a long-term threat as well.

 

I'd love to own facebook, however, I have never been able to become comfortable with valuation given the huge stock based comp expense.  It deserves a lot of thought.

 

What kind of business?

 

I agree with you completely on FB ad targeting capabilities.  I doubt very few of you on here have ever used either AdSense or FB ads.  I was a bear on FB when it IPOed and yet I ignored it when my friend who had a small website making him a little side hustle money told me that he was dabbling in Facebook ads and his ROI was tremendous.  I watched him kill it and was envious for him and yet still couldn't make the leap to buy FB stock. 

 

His cost of ads double annually and yet still have a positive ROI due to the segmenting that he does.  His business almost did $10M in sales this last year up from $5M the year before and he grows the majority of his sales via FB and less so Intragram.  He still advertises on Goog and its ok but he is interested in a new Youtube sales channel that is supposed to be coming.  GOOG has been slow on this.

[mrholty]

 

 

Along these lines, I have been watching SharkTank (on ABC) since Season 1. It is pretty amazing how many small business can jump start to millions in sales simply through FB advertising.

 

The targeting capabilities are amazing.  Here is an example.  Starting 2 weeks before fathers day he will start an ad campaign that hits women whose parents like any sort of baseball (from a little league team fan page to any MLB team).  He then starts the ads 4 days before for men with the same.  The entire time he is tweaking additional keywords.  The campaign I mention above is the master group but he runs probably 30 slightly different ad sets and pictures and kills them after 2 days if they do not have an ROI+.  Then he throws money at the successful ones and its purely a numbers game.

[mrholty]

 

 

What kind of business?

 

 

 

Not going to say but personal goods that are accessory items to a leisure activity.  Like batting gloves or say life preservers for boating enthusiasts.

[writser]

FB targetting is good, yeah. A couple of years ago they offered me to drive around in a forest somewhere in Eastern Europe in a nazi WWII tank. Best ad I had ever seen. I was proud to be selected. Now I have an adblocker though.

[Spekulatius]

I never click on ads. Yet I clicked on one FB ad. So, yeah, likely way more clickthrough than elsewhere...  8)

 

 

 

 

(The ad I clicked was advertising ScottHallofFame of course.  8) )

 

I have yet to click on a FB ad as well. I don't do much FB either, I have used it more about 2-3 years ago, but found it a waste of time and now use it only occasionally. I am obviously in the minority based on FB business prospects.

[Jurgis]

FB targetting is good, yeah. A couple of years ago they offered me to drive around in a forest somewhere in Eastern Europe in a nazi WWII tank. Best ad I had ever seen. I was proud to be selected. Now I have an adblocker though.

 

Hmm, I also have AdBlocker (ABP). But I still get ads inside FB. How did you set it up to kill the ads/promotions there? (We could take it out of this thread).

 

I have yet to click on a FB ad as well. I don't do much FB either, I have used it more about 2-3 years ago, but found it a waste of time and now use it only occasionally. I am obviously in the minority based on FB business prospects.

 

I read FB once two weeks.

Like Zuck said, it's not a social network, it is a (curated) newspaper. What I mostly get is not friend life stories, but their links to newspaper/etc. articles. Lots of fun/interesting stuff. Although for some subset of friends their life stories or just tidbit comments are interesting too.

So let's say I've warmed up to FB a bit. I don't post there at all though.

 

(OTOH, the fact that I warmed up to FB is a definite death knell for it.  8) )

[LC]

Interesting: most people in the digital marketing industry that I have spoken to (digital agencies, programmatic buyers, DMPs/DSPs) - they have all said that facebook is pretty much the worst. Poor results on all metrics and they are the worst company to work with.