OT: Stock and Investment Talk

[RU-05]

There is definitely different dynamics going on (and have been for the past 3-6 months). Tech that is making money and established are rocking it. However, spec plays continue to be flat or lose ground (not making profit or not even selling yet). I assume this will stay the same in early 2022.

Big question, any good buys in the later category yet?

SNAP has been a name that has popped up on CNBC lately. Down 40ish% off it's highs, currently at $47.71. But a company that has turned that corner from being consistently in the red to now 4 out of 5 qtr's in the black(the only non black was a break even). They've also beaten expectations in each of those 5.

EPS over the last 4 qtr's of .36 cents per share, so you're looking at a current P/E of I dunno, 130(ish)x. So still way up there, but projections see EPS of 1.22 in 2023 and 2.19 in 2024. So love that growth, and the projected rev growth is just as impressive. $4b in 2021, expected to be $10.9b in 2024. Need to meet those expectations, but trying to predict the future is what this game is all about.

Also factor in that one of the CNBC mentions had SNAP as a metaverse play. Which I know will cause some to say "who isn't a metaverse play these days"' but this commentator obviously thought SNAP was a better play than other options. (side note, that commentator, forget who it was also liked ADBE as a metaverse play as well).

I'm not in it yet. Think it's still fighting the market trend of moving away from high P/E's, the head winds of higher interest rates, and Tom Lee's prediction of a difficult 1st half of the year(which is based of those first 2 I think). But come spring? Perhaps after NLY pays out that 1st qtr dividend, then might be when I look to buy.

 

[phs73rc77gsm83]

I'll be creating a low-vol dividend focused portfolio once those 2 CDs mature next week (yesterday posts). I may throw in a few dividend stocks for fun. :)

Also, with the S&P beating the Daq again, it's probably a done deal that my entire 2021 returns won't beat it. I will come up a little short!

I think you and I are more or less philosophically aligned in investment strategies. While I was working, I chose to limit dividend and what I might classify as “less tax efficient” investments, at least for taxable accounts. Total after tax return is key and the tax equation can be particularly important, depending on your context. I think you’re in pharmaceuticals professionally and I think you probably have high W2 income. Might you be better off holding your dividend stocks in tax deferred rather than taxable? Or maybe you already are….? If you don’t need the income, I’d consider asset “location” issues, which you probably are.

 

[RU-05]

Guy Adami noting that, while he had beenwatching the 10 yr, the 2 yr has jumped from .2% to .75% in a couple months time.

Thinks the 2 year rising is in reaction to the current inflation, but the 10 yr's inability to stay above 1.5% is due to concerns of a slowing economy longer term.

 

[T2Kplus20]

SNAP has been a name that has popped up on CNBC lately. Down 40ish% off it's highs, currently at $47.71. But a company that has turned that corner from being consistently in the red to now 4 out of 5 qtr's in the black(the only non black was a break even). They've also beaten expectations in each of those 5.

EPS over the last 4 qtr's of .36 cents per share, so you're looking at a current P/E of I dunno, 130(ish)x. So still way up there, but projections see EPS of 1.22 in 2023 and 2.19 in 2024. So love that growth, and the projected rev growth is just as impressive. $4b in 2021, expected to be $10.9b in 2024. Need to meet those expectations, but trying to predict the future is what this game is all about.

Also factor in that one of the CNBC mentions had SNAP as a metaverse play. Which I know will cause some to say "who isn't a metaverse play these days"' but this commentator obviously thought SNAP was a better play than other options. (side note, that commentator, forget who it was also liked ADBE as a metaverse play as well).

I'm not in it yet. Think it's still fighting the market trend of moving away from high P/E's, the head winds of higher interest rates, and Tom Lee's prediction of a difficult 1st half of the year(which is based of those first 2 I think). But come spring? Perhaps after NLY pays out that 1st qtr dividend, then might be when I look to buy.

Morningstar seems positive with a FMV of $70, but sounds like a lot needs to happen right to achieve this value:

Fair Value and Profit Drivers | Updated Oct 21, 2021
Our fair value estimate for Snap is $70 per share, which represents an enterprise value/sales multiple of 20 in 2022. We project tremendous revenue growth for Snap at a 10-year average rate of 30%. Within our discounted cash flow model’s initial 10-year projection, we have assumed that Snap will become profitable in 2023 and will improve its current operating loss to an operating margin of 40% by 2030.

Snap’s revenue growth will be driven primarily by growth in the firm’s daily active users, or DAUs, user engagement, overall online advertising spending, more adoption of the augmented reality ad format, and an increasing allocation of online ad dollars toward mobile and social network ads, in addition to the firm’s more aggressive monetization of Snap Map, Communication (chat, minis, and games), and camera. We expect recovery from COVID-19 to further boost top-line growth and result in a 62% increase in 2021 (from 46% in 2020) and 46% year-over-year growth in 2022, representing total revenue of $4.1 billion and $5.9 billion, respectively. We have anticipated some impact of Apple’s changes to its iOS on Snap revenue during the next two years.

We have modeled improving gross margins going forward as costs related to hosting are generally fixed in nature. We expect the ratio of revenue-to-ad revenue share payments and costs of content creation and data analysis to increase slightly as Snap may attain some pricing leverage over time. We look for continuing growth in operating expenses as more investments in R&D plus higher sales and marketing expenses, which are necessary for Snap to differentiate itself and attract more users. We project that such costs will keep Snap in the red in the near-term, but ongoing revenue growth and gross margin expansion, will lead to operating leverage and help Snap become profitable in 2023, with further expansion thereafter. Our fair value uncertainty rating for Snap is very high, based upon uncertainty around the company’s ability to capture digital advertising dollars in the online advertising space, which is virtually Snap’s sole source of revenue today.

 

[T2Kplus20]

I think you and I are more or less philosophically aligned in investment strategies. While I was working, I chose to limit dividend and what I might classify as “less tax efficient” investments, at least for taxable accounts. Total after tax return is key and the tax equation can be particularly important, depending on your context. I think you’re in pharmaceuticals professionally and I think you probably have high W2 income. Might you be better off holding your dividend stocks in tax deferred rather than taxable? Or maybe you already are….? If you don’t need the income, I’d consider asset “location” issues, which you probably are.

That all makes sense, but our tax deferred options are maxed every year. For this money, here are our choices:

1. Re-up the CDs at 0.5 or 0.6% (these were 2-year CDs at 2.1%)
2. Dump the money into our online savings account (also at 0.5%)
3. Move the money to our existing taxable account (E-Trade - invested with a modest lean to growth, this is where we dump our monthly excess funds)
4. Move the money to a new taxable account and put it in a few low-vol indexes like VIG (Vanguard Dividend Appreciation ETF). VIG only has a 1.6% yield, but the stocks that make up the ETF bounce around less than the S&P 500 index itself.

Love to hear your thoughts!

 

[T2Kplus20]

Guy Adami noting that, while he had beenwatching the 10 yr, the 2 yr has jumped from .2% to .75% in a couple months time.

Thinks the 2 year rising is in reaction to the current inflation, but the 10 yr's inability to stay above 1.5% is due to concerns of a slowing economy longer term.

I watched a CNBC clip yesterday or over the weekend that essentially said the current various bond yields make no f'ing sense right now. LOL!

 

[RU-05]

Morningstar seems positive with a FMV of $70, but sounds like a lot needs to happen right to achieve this value:

Fair Value and Profit Drivers | Updated Oct 21, 2021
Our fair value estimate for Snap is $70 per share, which represents an enterprise value/sales multiple of 20 in 2022. We project tremendous revenue growth for Snap at a 10-year average rate of 30%. Within our discounted cash flow model’s initial 10-year projection, we have assumed that Snap will become profitable in 2023 and will improve its current operating loss to an operating margin of 40% by 2030.

Snap’s revenue growth will be driven primarily by growth in the firm’s daily active users, or DAUs, user engagement, overall online advertising spending, more adoption of the augmented reality ad format, and an increasing allocation of online ad dollars toward mobile and social network ads, in addition to the firm’s more aggressive monetization of Snap Map, Communication (chat, minis, and games), and camera. We expect recovery from COVID-19 to further boost top-line growth and result in a 62% increase in 2021 (from 46% in 2020) and 46% year-over-year growth in 2022, representing total revenue of $4.1 billion and $5.9 billion, respectively. We have anticipated some impact of Apple’s changes to its iOS on Snap revenue during the next two years.

We have modeled improving gross margins going forward as costs related to hosting are generally fixed in nature. We expect the ratio of revenue-to-ad revenue share payments and costs of content creation and data analysis to increase slightly as Snap may attain some pricing leverage over time. We look for continuing growth in operating expenses as more investments in R&D plus higher sales and marketing expenses, which are necessary for Snap to differentiate itself and attract more users. We project that such costs will keep Snap in the red in the near-term, but ongoing revenue growth and gross margin expansion, will lead to operating leverage and help Snap become profitable in 2023, with further expansion thereafter. Our fair value uncertainty rating for Snap is very high, based upon uncertainty around the company’s ability to capture digital advertising dollars in the online advertising space, which is virtually Snap’s sole source of revenue today.

Morgan Stanley has a price target of $75, but it's from an April report.

I do notice Morning Star states they expect SNAP to become profitable in 2023. Which leads me back my confusion on EPS and P/E. I think I'm seeing one accounting measure in one place, and a different accounting measure in another.

 

[jtung230]

I never got the impression Noto was scum? West Point (Army Ranger School), Wharton, positions with Goldman, Twitter, NFL. I’ve seen him speak and sounded way more qualified than other execs. Why don’t you like him?

Chamath

 

[T2Kplus20]

Morgan Stanley has a price target of $75, but it's from an April report.

I do notice Morning Star states they expect SNAP to become profitable in 2023. Which leads me back my confusion on EPS and P/E. I think I'm seeing one accounting measure in one place, and a different accounting measure in another.

Yeah, Morningstar shows negative earnings through Q3 2021. By the way, the company's revenue is only about $4B (last 12 months). Even after the pullback its cap is $78B. Still seems rich, doesn't it?

 

[phs73rc77gsm83]

That all makes sense, but our tax deferred options are maxed every year. For this money, here are our choices:

1. Re-up the CDs at 0.5 or 0.6% (these were 2-year CDs at 2.1%)
2. Dump the money into our online savings account (also at 0.5%)
3. Move the money to our existing taxable account (E-Trade - invested with a modest lean to growth, this is where we dump our monthly excess funds)
4. Move the money to a new taxable account and put it in a few low-vol indexes like VIG (Vanguard Dividend Appreciation ETF). VIG only has a 1.6% yield, but the stocks that make up the ETF bounce around less than the S&P 500 index itself.

Love to hear your thoughts!

Personally, I like your option #4. It’s very tax efficient especially for a high income earner and to me, it’s a good place to park some more conservative parts of your portfolio in this low interest rate environment.

 

[RU-05]

Yeah, Morningstar shows negative earnings through Q3 2021. By the way, the company's revenue is only about $4B (last 12 months). Even after the pullback its cap is $78B. Still seems rich, doesn't it?

Price to revs of 19.5x. So yeah, pretty rich.

But if expectations are accurate those rev's double by 2023.

Not it in yet, but keeping an eye on it for sure.

 

[T2Kplus20]

Price to revs of 19.5x. So yeah, pretty rich.

But if expectations are accurate those rev's double by 2023.

Not it in yet, but keeping an eye on it for sure.

With that value, it may drop some more in Jan. I just looked at TDOC and its Price to Rev is under 8 now.

 

[RUAldo]

Chamath

Sorry, my bad, I thought you meant Noto. Agree on Chamath. A snake like Chamath worth billions is why it’s hard to take religion seriously.

 

[T2Kplus20]

Personally, I like your option #4. It’s very tax efficient especially for a high income earner and to me, it’s a good place to park some more conservative parts of your portfolio in this low interest rate environment.

Agreed. That idea popped for me as well. We are going to keep it separated and still consider it in our "cash" column. The VIG ETF is very tax efficient.

Personally, I would love the put it in my PRWCX from T Rowe. I love this fund, but it throws off too much in cap gains for a taxable account.

 

[RU-05]

With that value, it may drop some more in Jan. I just looked at TDOC and its Price to Rev is under 8 now.

Snap expecting better rev growth, and is closer to earnings.

TDOC does have a price to book under 1. Which is super value territory. Though I can't say I'm very good at weighing different measures against one another.

SNAP with a price to book of 22x.

 

[T2Kplus20]

Snap expecting better rev growth, and is closer to earnings.

TDOC does have a price to book under 1. Which is super value territory. Though I can't say I'm very good at weighing different measures against one another.

SNAP with a price to book of 22x.

Yeah, timeline to become profitable is a big one.

 

[RU-05]

I did recently start a position in AI, WAY off it's highs, and it's IPO price. Company recently announced a stock buy back program, as well as a $500m deal with the gov't.

Price to rev's of 16.4x. Price to book of 3.39x.

 

[RU-05]

So Tdoc's pre covid high was right around $90 from back in 2018.

Might find some support here.

Slight caveat is Jan 2020 it started to takeoff, before Covid really became a thing. It was $120 in early March 2020. People in the know getting that ball rolling?

Pretty interesting though that, post covid, we are back to those 2018 level's despite rev's being more then 5x what they were at that time.

 

[phs73rc77gsm83]

Agreed. That idea popped for me as well. We are going to keep it separated and still consider it in our "cash" column. The VIG ETF is very tax efficient.

Personally, I would love the put it in my PRWCX from T Rowe. I love this fund, but it throws off too much in cap gains for a taxable account.

Totally agree, I’d put PRWCX in a tax deferred account rather than taxable. I do the same with Vanguard Primecap Admiral, which is all in tIRA and Roth.

 

[T2Kplus20]

Totally agree, I’d put PRWCX in a tax deferred account rather than taxable. I do the same with Vanguard Primecap Admiral, which is all in tIRA and Roth.

I was thrilled to finally get access to PRWCX this year (my account hit the threshold to gain access to T Rowe's closed funds and I-share options). So I'm in it's TRAIX class. I will use this fund more and more as retirement time gets closed. Super low-vol, but still with great returns, including in down markets.

But you are correct, all my mutual funds are in tax deferred accounts. Only ETFs or stocks in taxable accounts.

 

[phs73rc77gsm83]

I was thrilled to finally get access to PRWCX this year (my account hit the threshold to gain access to T Rowe's closed funds and I-share options). So I'm in it's TRAIX class. I will use this fund more and more as retirement time gets closed. Super low-vol, but still with great returns, including in down markets.

But you are correct, all my mutual funds are in tax deferred accounts. Only ETFs or stocks in taxable accounts.

Good stuff! For those that.may not be aware, Vanguard Index Mutual Funds are essentially as tax efficient as their ETFs due to a patented share class structure at Vanguard. Believe me, as you accumulate assets it makes a difference!

 

[T2Kplus20]

Good stuff! For those that.may not be aware, Vanguard Index Mutual Funds are essentially as tax efficient as their ETFs due to a patented share class structure at Vanguard. Believe me, as you accumulate assets it makes a difference!

Great to know about Vanguard funds! We have a ton of their ETFs in our accounts - VOO, VIG, VTV, VB, VO, VONE, VHT, and VTWO.

 

[T2Kplus20]

Some basic reminders for the last few days of the year:

There’s still time to slash your 2021 tax bill with these last-minute moves

It’s not too late to boost your tax refund or slash your bill for 2021. Here’s what to know before the Dec. 31, 2021, deadline.

www.cnbc.com

 

[RU-05]

Some basic reminders for the last few days of the year:

There’s still time to slash your 2021 tax bill with these last-minute moves

It’s not too late to boost your tax refund or slash your bill for 2021. Here’s what to know before the Dec. 31, 2021, deadline.

www.cnbc.com

I was going to sell some of my SOFI for this purpose, but at this level I couldn't get myself to do it. Sold some short dated calls against it instead.

 

[jtung230]

I was going to sell some of my SOFI for this purpose, but at this level I couldn't get myself to do it. Sold some short dated calls against it instead.

Did you run the numbers? Tax harvesting might be the better economic option.

 

[T2Kplus20]

Is HOOD a buy yet? :)
Getting cheaper.

Robinhood Markets Inc Class A (HOOD)

See the latest HOOD stock price for Robinhood plus see the NASDAQ: HOOD stock rating, related news, valuation, dividends and more to help you make your investing decisions.

www.morningstar.com

 

[RUAldo]

Is HOOD a buy yet? :)
Getting cheaper.

Robinhood Markets Inc Class A (HOOD)

See the latest HOOD stock price for Robinhood plus see the NASDAQ: HOOD stock rating, related news, valuation, dividends and more to help you make your investing decisions.

www.morningstar.com

I’m starting to think HOOD is a broken company that can’t survive without meme or crypto mania. They don’t do anything that other competitors, big or small, can’t do.

 

[RUAldo]

Snap expecting better rev growth, and is closer to earnings.

TDOC does have a price to book under 1. Which is super value territory. Though I can't say I'm very good at weighing different measures against one another.

SNAP with a price to book of 22x.

I never liked TDOC b/c it has no moat. But what I found interesting is that apparently a lot of doctors will simply use FaceTime instead of paying for a telemedicine service. It does make sense to FaceTime especially if you are a solo or smaller doctors office (assuming patient has Apple device).

 

[T2Kplus20]

I’m starting to think HOOD is a broken company that can’t survive without meme or crypto mania. They don’t do anything that other competitors, big or small, can’t do.

^^^^^ Agreed.

It's interesting to go through the small cap spec rubble of the past few months. Gotta be some gems in there!

 

[RUAldo]

I was going to sell some of my SOFI for this purpose, but at this level I couldn't get myself to do it. Sold some short dated calls against it instead.

CNBC talking heads loving SOFI at current levels and think it’s a likely acquisition target for big bank.

 

[RUDead]

This is criminal negligence. This could have been redeemed with a small loss.

A 91% Asset Plunge Hits a BlackRock Fund of Sustainable EM Stocks

A 91% Asset Plunge Hits a BlackRock Fund of Sustainable EM Stocks

www.bloombergquint.com

 

[T2Kplus20]

2021 review video - 2/3 of IPO companies are underwater:

.....https://www.youtube.com/watch?v=oB0yvmuHoso&list=WL&index=1

 

[RUAldo]

This is criminal negligence. This could have been redeemed with a small loss.

A 91% Asset Plunge Hits a BlackRock Fund of Sustainable EM Stocks

A 91% Asset Plunge Hits a BlackRock Fund of Sustainable EM Stocks

www.bloombergquint.com

That’s crazy…bad look for BlackRock

 

[RUDead]

That’s crazy…bad look for BlackRock

Sure is but even worse for that Pension Fund. They lost a lot of $$ for their fund for no reason. Wouldn't be surprised if Blackrock tries to figure out a way to fix it.

Edit: Just looked at the ticker and the price didn't move much so I guess it was handled properly after all. Would have been nice if the article mentioned that!

 

[Rutgers Chris]

I was going to sell some of my SOFI for this purpose, but at this level I couldn't get myself to do it. Sold some short dated calls against it instead.

I swear, every time you mention SoFi it jumps! 😂

 

[rurahrah000]

I was going to sell some of my SOFI for this purpose, but at this level I couldn't get myself to do it. Sold some short dated calls against it instead.

You should be selling put options in SOFI instead. Major support at $14-15. Recognizing the double top at $22-24, I sold 80% of my position as it was going down. I bought back my position at $14-15 and now my cost basis sits at $15-15.5. I also sold my entire LCID position at $45 and am now moving the proceeds to companies with high dividends and high cash flow.

 

[RUAldo]

companies with high dividends and high cash flow.

Which ones do you like?

 

[RU-05]

You should be selling put options in SOFI instead. Major support at $14-15. Recognizing the double top at $22-24, I sold 80% of my position as it was going down. I bought back my position at $14-15 and now my cost basis sits at $15-15.5. I also sold my entire LCID position at $45 and am now moving the proceeds to companies with high dividends and high cash flow.

I know, I've been talking about this support level, but being frustrated with the stock and looking at the potential for tax harvesting had me itchy.

 

[RU-05]

You should be selling put options in SOFI instead. Major support at $14-15. Recognizing the double top at $22-24, I sold 80% of my position as it was going down. I bought back my position at $14-15 and now my cost basis sits at $15-15.5. I also sold my entire LCID position at $45 and am now moving the proceeds to companies with high dividends and high cash flow.

I know, I've been talking about this support level, but being frustrated with the stock and looking at the potential for tax harvesting had me itchy.

I do wonder about saturation. Just so many fintech options.

 

[RU-05]

You should be selling put options in SOFI instead. Major support at $14-15. Recognizing the double top at $22-24, I sold 80% of my position as it was going down. I bought back my position at $14-15 and now my cost basis sits at $15-15.5. I also sold my entire LCID position at $45 and am now moving the proceeds to companies with high dividends and high cash flow.

I know, I've been talking about this support level, but being frustrated with the stock and looking at the potential for tax harvesting had me itchy.

I do wonder about saturation. Just so many fintech options.