In a discussion I had last evening, there was the usual back and forth banter of each giving their defense or assailing of the other’s argument. It’s also these types of open, honest and opinionated discussions that are becoming increasing rare, because every one is now far too guarded to say anything that may be misinterpreted. Emphasis on “anything.” They’re becoming far too rare even among what were once thought to be, good friends. i.e., How many friendships, marriages, families and more have been scarred by politics alone, of late?
One of the discussions was, of course: the markets. And it was during this I made a few points that really seemed to stun when I brought them up. So in that light, I’ll note two or three for your perusal. As I always like to say, “Do with it what you wish.”
Facebook™ reported blowout earnings, and they were precisely that. It was against this backdrop that I was asked, “So, do you still think Facebook is and will meet the same fate as AOL™?” My answer:
“Yes I do. All they are, currently, is just the recipient of a consolidation of advertising dollars that have moved from other platforms such as radio, television, etc. However, advertisers are going to be squeezed themselves in the coming months and only ads that are working, as in driving sales, will continue.”
“When that shift comes I’m not quite sure, however, you can see it happening in others. Twitter™ is said to now be the champion of eyeballs and engagement, I mean the entire news industry now bases its survival and output on it. And yet, they lowered their guidance for ads in their latest report. That’s a clue. It’s also vindication for my “eyeballs for ads” call. i.e. It’s not worth a penny if it doesn’t generate sales. This is what happened to AOL in the end, as everyone else was losing, they were gaining via attrition. Then, in just one earnings report – it was over, as in over over. Time will tell.”
Basically the same as above. Google and Facebook are the twin pillars currently of advertising on the web. All ad dollars are consolidating and flowing to them. It’s both a blessing and a curse. Why? Once the precedent is set and the numbers tabulated for earnings… sliding backwards in any revenue projection is a death knell. See AOL of yesteryear for clues.
Apple™, Tesla™, Bitcoin™…
I was asked how I could have any negative connotations regarding anything about these three with such blowout earnings and price appreciation in them. My answer may surprise you, as it did him.
“Have you looked at a chart of Apple recently? Or, better yet, if you’re a stock holder answer this little perplexing issue that I believe you’ll notice when you open your next statement.”
“Why is Apple’s share price not only not back to higher highs with such an earnings report, but is in fact, in the red for the year as we speak? I was watching the price movement during the session and not only did it not get back to it’s old highs, it couldn’t even remain green on the year. That’s a glaring warning sign and possible confirmation about the process I’ve been warning about now since the beginning of the year. Remember: we are also at month end along with the end of all the meaningful earnings reporting. I’d be very watchful over the coming months, but that’s just me.”
“Just like Apple, complete blowout earnings meeting and surpassing Wall Streets’ expectations and more. Yet, not only can it not get back to its former glory highs – it’s down where its sporting a six handle, and, it seems to having a hard time trying to stay there. It’s one thing to be down a bit like Apple and maybe it’s just a pause that will be overcome. But, Tesla has recently lost almost 40% and never fully recovered. And this was a blowout report, supposedly.”
“Say what you want about Elon and being a “genius” and such. I have no issue with that either way. As a matter of fact, I originally had and still do to some point, hold very high regard for him when he was first bringing these cars to market and the whole space thing. Ballsy type stuff.”
“But as for a CEO that runs a public company with share holders and the need to provide steady management and supply products? Utter and complete f’n disgrace and a joke. And I think, in the end, he’s going to go from ‘Boy genius’ to worse than just plain ‘boy’ should this charade of a company meet with any market upheavals. And I haven’t even mentioned his sudden fall from grace in the eyes of China. Currently, he’s already, stock price wise, on that shaky territory. Look for more twit tweets is all I’ll say.”
“I receive calls from friends asking me about Bitcoin saying ‘You know Mark, this thing is up nearly $7K just from last night!’ Then I ask, you know it’s up $7K because it was down over $15K in the last few days, so you’re celebrating getting back half? That’s when I have to ask ‘are you still there?’ That’s an over dramatization, of course, but the fact of it being down and up is not. I’m still standing by call from the first of the year, we’ll see in Dec.”
And, as always, we’ll see to the entirety of the above as time rolls along.
© 2021 Mark St.Cyr
Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.