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The End of Tech Stocks? – FAAG at riskThe house of representatives has published a 450-page long report that big tech companies (specifically FAAG), are disrupting innovation. In this post, I will be summarizing the most important points to take away from the report, and factors to consider when investing in Facebook (FB), Apple (AAPL), Amazon (AMZN), and Google (GOOG). Background Information America’s antitrust laws date back to the 1890s. Standard Oil, an American company founded by John D. Rockefeller, secured 88% of America’s oil market share within 20 years, through aggressive acquisitions of fuel and railway companies. They’ve been criticized for using their monopolistic status to impose higher costs of transportation for their counterparts. Rockefeller took over railway companies, which were essential in transporting goods throughout the country. Without transportation, no business could be done. What these mega tech companies are doing today is very similar to what Rockefeller did back then. Applications cannot reach the general public without being registered on Android and Apple’s app store. People looking to sell goods online must go through Amazon at some point. As a result, in 1911, the US Supreme Court ruled that Standard Oil Trust must be dissolved under the Sherman Antitrust Act and split into 34 companies. What has been suggested in this report is the probability of having to split FAAG, just like they did with Standard Oil in the 1910s, as both cases demonstrate similarities in the essence of their business models and strategies. House Judiciary Antitrust Report - It took 16 months to investigate and finalize the 450 page long report - Targeted companies in this report are: Facebook, Google, Amazon, and Apple - They have analyzed 1.3m documents and interviewed 250 players, dissecting these businesses in every detail possible Amazon (AMZN) The report claims that Amazon wields monopolistic power over third-party sellers. E-commerce sites such as Amazon offer two types of products: products that they source themselves and sell online, and products that are registered on their online marketplace by a third party seller. What’s suggested in the report is that the third party sellers using Amazon’s sales platform are at a disadvantaged position, as Amazon exposes more of their own products (which have much lucrative margins), rather than products listed on their marketplace. Apple (AAPL) In the case of Apple, the report states that there is an unfair monopoly over software distribution. Apple not only takes a huge amount of fees from the apps that are listed on their app store, but also from in-app purchases. They can also refuse to distribute the apps that they dislike, because all the apps that get listed on the app store go through a process of authorization. For instance, if Apple were to launch a new music app, and decide to get rid of all other music streaming related apps on their app store, consumers would have no choice but to use Apple’s new app. Facebook (FB) The report suggests that Facebook possesses dominance in social networking. In a chart that demonstrates the number of monthly active persons (MAP) of social media companies, the order goes as follows: Youtube, Whatsapp, Facebook, Facebook Messenger, and Instagram. Notice that except for Youtube, which is owned by Google, the top 2-5 applications with the most users all belong to Facebook. What’s even scarier is that Facebook is extremely good at either copying new and prominent services, or simply acquiring them. Facebook can make a copy app of an existing application that possesses innovative services. Facebook can then use their platform to support traffic into their copy app (the cross promotion between Facebook and Instagram is one of the major reasons that the company grew exponentially). When Facebook offered to acquire Snapchat (SNAP), they also mentioned that they were not only capable, but willing to make an app that offers the exact same service, which would ultimately do better, as Facebook possesses a bigger and smarter team, and more capital to invest in advertising. Google (GOOG) Google possesses monopoly over online search and search advertising. Thus, they can lead users into services that Google is supporting, or expose more results of companies that have paid Google for advertising (outside sponsored links). They can cherry-pick which results to show people, and essentially lead people into search results that Google wants them to see. The report also demonstrates a list of all the companies that FAAG acquired, which reflects these companies’ strategy of ‘join us or die’. Solutions The report states that splitting these companies is a probable case. There could be different ways in splitting a company. For instance, in the case of Amazon, it could be split into two different companies, each focusing on e-commerce, and cloud services. Another solution is to strengthen antitrust laws to prohibit big mergers and acquisition contracts. The last solution is related to the significant amounts of data that these companies collect. The data they collect are used to expand into their next business, and the government’s solution to stop FAAG’s dominance is to limit their data collection. Essentially, the government’s goal is to restore competition in the digital economy, as there aren’t any more companies that can challenge FAAG. Conclusion There is a lack of consensus between the democrats and republicans, making it difficult to settle on a clear solution. This report dominantly reflects a democratic stance on the issue. The irony is; the more earnings these tech stocks generate, and the more market share they take, the worse it could be for the stock’s price. Wall Street is betting on Biden’s victory, and if that becomes the case, these tech stocks will take a huge hit for the short term. From another perspective, however, this means that it’ll also be an opportunity for the smaller tech stocks, which have been under FAAG’s shadow, to shine. If you like this analysis, please make sure to like the post, and follow for more quality content! I would also appreciate it if you could leave a comment below with some original insight.
NASDAQ:AMZN
by Michael_Wang_Official
48
FB Facebook - buy in play, sell worked great (was posted here!)Facebook - Buy now valid The entry price, SL and multiple TPs are shown on the chart. Our back testing and money management strategy itself is holding until a reverse signal to ride a big trend, but as you will not see the next signal - manage the trade as you wish should you decide to enter. What is our strategy? Our strategy is a trend following strategy, can be used on any instrument and time frame. However, we have hard coded specific parameters for when trading the H1 time frame, so we can back up over 4200 previous trades to confirm our edge from previous data. This gives us confidence in execution and belief in our trading strategy for the long term. The strategy simply sits in your trading view, so you will see exactly what we see - the trade, entry price, SL and multiple TPs (although we hold until opposite trade as this is the most profitable longer term plan), lot size, etc. This could be on your phone trading view app, or laptop of course. The hard work is done, so we have zero chart work time, no analysis, no time front of the chart doing technical analysis - technical analysis is very subjective - you may see different things at different times - how do you have a rigid trading plan on a H&S shoulder pattern? Your daily routine, diet, sleep, exercise can affect what you 'see' and your decision making, this doesn't happen when a strategy is coded like this; what we do have is a mechanical trading strategy... What does this mean? It means, we are very clear on our entry and our exit and use strict risk management (this is built in - put in your account size, set your risk in % or fixed amount and it will tell you what lot size to trade!) so we have no ego with our position and we are comfortable with all outcomes - its simply just another trade. This free's our mindset from worry and anxiety as we take confidence from knowing our edge is there and also that we have used sensible risk management. The strategy itself can be used as a live trading journal too - how cool is that? The strategy will confirm and support every open and closed position - so its quite easy to follow. We just have to do what Percy does. Please see our related ideas below for more information to explain what we do and how it can help you.
NASDAQ:METALong
by pow_removetheguesswork
BUY on FACEBOOK STILL RUNNING!BUY NOW RUNNING +2.2% IN PROFIT AFTER THE SELL WE CLOSED BANKED OVER 3%! Our strategy caters for all traders, any pair, anytime frame! What is our strategy? Our strategy is a trend following strategy - that is coded in pine script to use with the trading view platform - the entries are shown automatically! NOTHING is done manually, it can be used on any instrument and time frame. However, we have hard coded specific parameters for when trading the H1 time frame, so we can back up over 4200 previous trades to confirm our edge from previous data. This gives us confidence in execution and belief in our trading strategy for the long term. The strategy simply sits in your trading view, so you will see exactly what we see - the trade, entry price, SL and multiple TPs (although we hold until opposite trade as this is the most profitable longer term plan), lot size, etc. This could be on your phone trading view app, or laptop of course. The hard work is done, so we have zero chart work time, no analysis, no time front of the chart doing technical analysis - technical analysis is very subjective - you may see different things at different times - how do you have a rigid trading plan on a H&S shoulder pattern? Your daily routine, diet, sleep, exercise can affect what you 'see' and your decision making, this doesn't happen when a strategy is coded like this; what we do have is a mechanical trading strategy... What does this mean? It means, we are very clear on our entry and our exit and use strict risk management (this is built in - put in your account size, set your risk in % or fixed amount and it will tell you what lot size to trade!) so we have no ego with our position and we are comfortable with all outcomes - its simply just another trade. This free's our mindset from worry and anxiety as we take confidence from knowing our edge is there and also that we have used sensible risk management. The strategy itself can be used as a live trading journal too!
NASDAQ:META
by congibb
2
Facebook (FB): An In-depth Analysis of an Undervalued CompanyIn this post, I’ll be providing an in-depth analysis of Facebook (FB), which was part of FAANG (Facebook, Amazon (AMZN), Apple (AAPL), and Google (GOOGL)), leading the stock market since the financial crash up to 2019, before it was replaced by MAGA (Microsoft (MSFT), Amazon, Google, and Apple). I'll be exploring its business models, financials, weaknesses and threats, the technical analysis of the stock, and my final outlook on the company. Facebook has been under scrutiny for a while, due to issues regarding: fake news scandal regarding the US presidential elections, the violation of data protection laws in Europe, and advertisement boycotts. However, it seems that Facebook is ready for another run as a high-potential growth stock, through its diversification in business models and streams of revenue. Business Models 1. Target Advertisements Based on its tremendous number of users, Facebook has its strength in targeted ads. The ads provided through facebook are optimized through their algorithms, allowing Facebook to receive more money for ads compared to its counterparts. There was a time when Facebook’s ad revenue went up by 50% every year, but growth has slowed down to 10% a year. Nevertheless, based on the recent increase in users, there is huge growth potential as Facebook seeks to advertise in the field of gaming and e-commerce. 2. Increase in users Facebook is another company that benefited from the Corona Virus (COVID-19) pandemic. Its user base increased significantly; FB’s daily active users (DAU) increased by 13%, and monthly active users (MAU) by 12% compared to those of last year. Considering the fact that Facebook’s user growth rate was at a single digit, the increase in number of users demonstrates strong growth potential. With the number of advertisers at 9 million, despite the boycott, Facebook will be able to capitalize on ad demand from mid-small sized companies. 3. Family Applications Facebook owns other family apps such as: Instagram, Facebook Messenger, and Whatsapp. The monthly active people (MAP) for all these applications combined is at 3.14 billion, which makes Facebook the most used social application excluding China. The DAU and MAU for the family applications have also increased by 15.4% and 13.8% each compared to those of last year. 4. E-commerce In August 25, Facebook added a ‘Facebook Shops’ tab on the explore page, allowing users to directly purchase goods. This feature is also available on Instagram as well. This indicates significant growth for Facebook, as it incentivizes users not to open their own shops on Shopify or Amazon, but to open a shop directly on Facebook, which can provide a products page that is optimized for a mobile experience. Considering that the e-commerce landscape is changing to a D2c (directly to customer) format, Facebook and Instagram can easily be the largest market share holder. Also through the use of Facebook messenger, communication between the buyer and the seller is much easy, and live shopping, in the form we have seen in Instagram, is being tested as well. 5. Mobile Payments Whatsapp is launching a service in Brazil, offering payments that could be made to purchase goods, or wire someone money. Consumers can use this service for free, but companies have to pay a 3.99% fee. In the near future, we’ll see people purchase goods directly from Instagram and Facebook, and as such, Facebook has partnered up with e-commerce corporations such as Shopify (SHOP) and Big Commerce (BIGC). 6. Gaming Facbook’s market share in live game streaming has been showing a steady increase, and creating a creator community. They also have strength in the AR/VR gaming industry, as they have acquired the VR headset company oculus in 2014. The growth in revenue of these gaming devices mark a 40% yoy growth. Facebook’s diversification in the gaming industry will also provide them an opportunity for growth. Financials - Facebook generates 98% of its revenue from advertisements - Their ad revenue was less than $20 billion in 2015, but has since grown exponentially to about $70 billion in 2019. - While their gross margin percentage has been declining since 2017 due to traffic acquisition costs, it’s still close to 82%. - Facebook’s cash generation from operations demonstrates phenomenal numbers. - FB is a cash generating machine, and heavily reinvests that capital back into R&D, marketing, and infrastructure. - FB is free cash flow positive, with over $20 billion in 2019. - This means that the company has enough cash on hand to repay creditors and issue dividends to shareholders. - 71.6% comes from Facebook ads, 25.2% comes from Instagram ads - Facebook’s 2020 Q2 ad revenue exceeded expectations. While the cost of advertisement reduced by 21%, with the increase in user traffic, ad revenue increased by 10.2% compared to last year’s quarter, marking $18.32 Billion. - Overall, Facebook demonstrates extremely healthy financials with a mix of steady and exponential growth in their earnings Technical Analysis - To begin with, we can first see that the daily chart is testing the 20 Simple Moving Average (SMA) and the 0.236 Fibonacci retracement resistance - The SMAs are aligned in the order of – 20, 60, and 100 – indicating that the overall trend is an uptrend - Prices have entered, and bounced on the Ichimoku Cloud support - Counting Elliott Waves, we can see that an Impulse Wave Count (12345) has played out since the drop caused by the pandemic, and that we are going through a small phase of correction, potentially counting an Elliott Corrective Wave (ABC). - While a corrective move down to $220 levels around the 0.5 Fibonacci retracement support is possible, it’s not yet probable as significant support levels have not been broken yet. Weakness/Threats - Facebook is exposed to the threat of regulation risks regarding laws of personal information protection. - While Facbook aims to combine all its family apps for synergy, measures will the taken by the government to regulate such efforts, to prevent monopoly. - Apple’s new IOS 14 policy made it difficult for app developers to advertise their product on Facebook, and it’s expected that Facebook’s 2020 Q4 earnings will be affected by it. Final Outlook Overall, Facebook is a big corporation that still has huge growth potential by diversifying its business model. Facebook’s strategy to lock up users within their platform, install shops, and ultimately grow into a payment platform is extremely ambitious yet totally possible. While most people know this company, they are overlooking the growth potential it can achieve, and thus, this stock would be a gem for the long term outlook. If you like this analysis, please make sure to like the post, and follow for more quality content! I would also appreciate it if you could leave a comment below with some original insight.
NASDAQ:METALong
by Michael_Wang_Official
6