tag:blogger.com,1999:blog-1527840491496268397.post3367547854452029998..comments2024-03-08T11:20:30.095-07:00Comments on Credit Bubble Stocks: 2016 Begins with Ultra Distressed Energy Companies on the BrinkUnknownnoreply@blogger.comBlogger4125tag:blogger.com,1999:blog-1527840491496268397.post-22158227583355083532016-01-11T13:00:32.726-07:002016-01-11T13:00:32.726-07:00Arch Coal filed for bankruptcy this morning.Arch Coal filed for bankruptcy this morning.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-18166033524572958972016-01-03T20:40:05.160-07:002016-01-03T20:40:05.160-07:00James, good point about the stock comp as well. Ca...James, good point about the stock comp as well. Can't imagine owning any of this stuff except at liquidation value prices.CPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-40367574447370806912016-01-02T19:00:20.644-07:002016-01-02T19:00:20.644-07:00What if FB ad revenue that is funded by VC equity ...<i>What if FB ad revenue that is funded by VC equity contracts, and the multiple contracts, and much of that $300 billion market cap is revealed as illusory? </i><br /><br />It's like a legal Ponzi scheme: The success of FB and TWTR encourages VCs to throw money at web startups, the startups spend a lot of it on FB/TWTR mobile ads, which makes FB and TWTR even more successful, which encourages even more startups that blow money on ads, etc. I don't know how much longer it will last, but when it ends these stocks will get a much lower multiple on lower earnings.<br /><br />And FB and TWTR both hand out tons of stock compensation. IIRC, TWTR's stock comp exceeds its EBITDA. At Facebook, according to WSJ, "earnings on the basis of generally accepted accounting principles, which include stock compensation, were only 43% of its adjusted net income."<br /><br />I get the impression people are ignoring stock comp at FB and TWTR because they're excited about the growth story, but if sentiment changes on these stocks, then people will start caring about compensation, and that will push the stocks down even further.Jamesnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-18024496219588816712016-01-02T16:54:31.981-07:002016-01-02T16:54:31.981-07:00I've got a friend who is pretty senior at AWS,...I've got a friend who is pretty senior at AWS, and when I saw her this summer she said AWS is absolutely kicking the crap out of everybody. At that time all of FB's US videos were being hosted by AWS, though FB swore AMZN to silence on that fact. I'm not going to say AMZN can't crash, but I will say that in my 25 years of tech investing experience rule #1 is that valuation doesn't matter as long as business is improving. Anyone who disagrees, enjoy your LXK and HPQ - they're only 7x forward earnings!!!<br /><br />(Disclosure: long FB, no position in AMZN.)Lurkernoreply@blogger.com