We are now in a Magical Season, that special time of year…when everyone get’s excited about what gifts they may recieve…
….No i’m not talking about CHRSITMAS!
I’m talking about the SEASON of SPAC’s or IPO’s.
For those which don’t know SPAC stand for SPECIAL PURPOSE ACQUSITION COMPANY
and these are basically a “BLANK CHECK COMPANY”, they are a Public
company which a heap load of cash & the SOLE purpose to acquire a Private company
& help them to go public FAST!
SO in this video i’m going to cover…my top 3 IPO stocks which i think have the most long term potential!
Firstly, let me just say…investing into companies during an IPO or pre IPO via a
SPAC is statistically EXTREMELY RISKY.
As stocks tend to have high valuation’s before crashing downwards.
So this is NOT FINANCIAL ADVICE & be sure to judge the risk when investing into these companies.
3. Butterfly Network
Kicking things off at stock number 3 is Butterfly Network.
(Clip from butterfly network video)
This IPO has had both Bill Gates & Ark Invest into the company!
For those which don’t know ARK invest is an investment firm which
specialises in distruptive & innovative technology.
This company Manufactures these portable ultrasound units which you can literally
plug into your phone.
So traditional Ultrasound units have high upfront cost, limited access & are
not very convenient.
So for those which don’t know what
Ultrasound is?
Ultrasound uses high frequency sound waves to image inside the body, & this makes complete sense.
If your car breaks down the mechanic will want to look inside the vehicle to see what the problem may be.
—CLIP
The Opportunity the business solves:
2/3 of the world has no Access to medical imaging…due to the expensive & complexity of the equipment.
(This is most likely why we have seen an investment from bill gates.
Diving into the numbers:
Strong Balance sheet
65% projected Revenue growth (Generally I say a growth stock is one which is growing between 15-20%)
Recurring revenue for the software & the Butterfly Iq users generally will require an
upgrade every 3 to 5 years.
(Like getting a new iphone.
RISKS:
Company is priced for perfection
with extrmely optimisitic revenue growth & a high valuatio one slip up & the stock could crash.
Competitors – I could see competitors enter this market from China or even Teladoc & LInvongo
check out my full video on those goes.
Customer adoption
– Also I spoke to a few friends who work in the medical profession…& they have stated
that the doctors are very specific about which equipment they use inside a hospital, in her words “they like the toshiba….
SO any medical professional’s watching as always get in touch.
In the comments below!
I have a FULL DEEP DIVE INTO THIS STOCK, & how to invest via the acqusition company & the details involved as you only get a percent of the company…so i will link to that
on my other video here. Be sure to watch after this.
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If you guys are finding value in this video so far, go ahead & give it a big thumbs up
& if you haven’t subscribed yet, what are you waiting for…
2. Avepoint
Onto stock 2, is Avepoint…This is not a new start up, they are an established company & has been a microsoft partner for nearly 20 years.
They are a key player in the Microsoft 365 Cloud Data Management space and has actual revenue.
APXT(Avepoint) focuses on transforming and managing data, not to be confused with Snowflake (SNOW).
The company has a
Highly Diversifed portfolio of Blue Chip Clients:
16,000 account, 25% of the fortune 500.
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Of 212 public companies Avepoint joins a select group that
has revenu of $150 million in 2020.
Year over year revenue growth of 25%or more. EBIT margins of 10% or more.
The five companies in the group are:
Atlassian, Ring central, Service now, Zoominfo technologies, zoom
video communities.
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As with the other companies on this LIST I did a full deep dive into the company with details on
how to invest via the acquisition company.
1.Airbnb
Finally we have what I believe will be the Biggest IPO of the year!! AIRBNB
Airbnb is the popular rental online Marketplace founded in 2008 & widely known for distrupting the Hotels industry.
With people being able to rent their homes they can earn extra cash, and those staying can
rent a full house, apartment or even treehouse for at sometimes a lower cost than hotel rooms.
Airbnb has been a Fantastic company for many years and NOW it has been confirmed to be going PUblic before the end of the
YEAR!
–Now there are some risks I see with companies which go public:
The first is to gain extra capital to expand the business.
(Lets say a company has a successful product or service & wants to access the capital markets to
expand the business rapidly & gain market share)
However, the second reason why a business goes public….IS TO SURVIVE??
and in Airbnb’s case it seems it’s the later!
—
This January, guests made a net 33.3 million bookings on Airbnb for rooms and “experiences” such as city tours,
cookery classes and stand-up comedy workshops. In March, they made a net 4.1 million cancellations.
Like the rest of the travel industry, Airbnb was in crisis.
—
Although I do believe the company will recover it is a long term play & I also spotted 3 MAJOR red flags in the
accounting…
SO i will link to that VIDEO in the description & the link here.
Thus you can find out more about the companies financials, especially their balance sheet.
UPDATE: Airbnb IPO’d at $100 Billion! CRAZY VALUATION I personally will wait for a pull back more details on the Youtube channel.
——With that being said I HOPE YOU GUYS HAVE AN INCREDIBLE DAY & I’ll see you in my next video invest safe.
Great Britain, a country known for tea drinking & former empires but the real question, Is Great Britain still Great?
More Specifically, Is it a Great Place to Invest!?
With a Government of Poor Communicators, Brexit looking like a mirage and now the global health crisis.
Economic forecasters expect UK GDP to contract by around 10 per cent in 2020 following a tightening of restrictions.
This is worse than many other countries in the G7 , there are mnay reasons for this. Such as a Government of poor comunicators, but also due to the way the UK economy is made up.
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Consumer spending in areas such as cinema, restaurants, hotels and live entertainment accounts for 13% of the economy in the UK, compared with 11% in the US and 10% in the eurozone, according to Goldman Sachs.
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Then we have the night-time economy which is the UK’s fifth-biggest industry, accounting for at least 8% of the UK’s employment and annual revenues of £66bn.
And With increasing restrictions such as 10pm closures for restaurants and Nightclubs closed completely it’s no wonder the UK economy has taken a hit.
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Then we have the FTSE 100 which has been going sideways since it’s plummet during the health crisis despite stimulus.
Wheras the S&P 500 in the US has recovered to Pre Crash levels.
WHat is the reason for this?
Well, that’s mainly due to the lack of tech in the FTSE 100.
As you can see looking at the top 10 holding it mostly includes Oil Companies, such as Shell & BP in addition to financials.
The only companies which seem to be benefiting from this crisis are the pharmaceutical giants such as Astra zeneca which is working on a V shot.
SO I HAVE A CONFESSION TO MAKE TO ALL YOU GUYS, I recently sold off my Entire Holdings in my Vanguard FTSE 100 Index fund!
Now I sold this off at a small profit as Invested into it during the crisis, the original plan was to hold the fund until recovery.
But now my strategy has develop rather than waiting potentially many years for a small upside on the FTSE 100
I could benefit more from re allocated these funds into variety of tech stocks in the US & China.
China will actually see it’s GDP increase in 2020, as it has recovered best from the global health crisis which is extremely ironic.
The Chinese economy advanced 4.9% yoy in Q3 2020, faster than a 3.2% expansion in Q2 but below forecasts of a 5.2% growth.
With a Growing Middle class population China has many tailwinds behind it’s businesses.
However, their are risks such as US china trade tensions & political issues. Also, Chinese stocks have a history of using accounting trickery to inflate their numbers, so that is something to be careful of.
(I have many videos on my favourite Chinese tech stocks you can check out the link below)
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But I’ve not lost Faith Completely in the UK, there are some stocks I still hold individually, so in this video i’m going to outline 3 of my favourites!
Stock Number 3. Rightmove
Stock Number 2. AO
Stock Number 1. Boohoo
(Be sure to check out the FULL STOCK ANALYSIS & DETAILS IN THE VIDEO)
Are we in an Electric Vehicle Stock bubble or boom??
With EV stocks on a RAMPAGE UPWARDS from
Tesla & NIO, to workhorse & even all the hot new IPO’s such as Arrival.
Now this may seem like it’s just a major hype train & to be honest is does remind
me of the tech bubble in the late 90’s.
Where lots of new companies with no previous revenues wen’t public with nothing but a dream
& the word “internet” in there business plans!
Young startup companies such as Pets.com, went out of business just nine months after its much-hyped share sale.
& Many other tech companies followed suit & crashed massively
even AMAZON lost over 90% of it’s value!
Now it was that the “internet” wasn’t going to be EVERYWHERE, as we in know….in fact Jeff Bezos
stated he started Amazon after viewing a crazy statistic about the growth of the internet.
(INTERVIEW CLIP)
————-
(COMparing
SO WHY DID THE CRASH OCCUR??
Well Warren Buffett states: “Price is what you PAY & Value is What you get”
ANd even a Great company is a BAD INVESTMENT IF THE PRICE IS TOO HIGH.
So the further the disparity between Price & Value the greater the risk of a bubble.
(DIVING INTO THE CHART OF A BUBBLE)
(Explain)
(Where do you think we are now in this cycle?(
————
So when we have stocks which are priced for perfection any earnings miss or bad news
may cause the stock to plummet.
In the Words of the Great Investor Howard Marks, “The Key to investing success is buying
things for less than they are worth”
and Then being patient enough to let value & price ALIGN. This is the essence of VALUE INVESTING.
—
Now you may say “Ben, what about value investing?”
Well as Warren Buffetts business partner, the
LEGENDARY Investors Charlie Munger stated when asked about Growth investing.
He stated “All investing is Value investing” ….As the more you pay over a companies
value the higher the risk.
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(IF your enjoying this content so far…Give the video a big thumbs up & subscribe)
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SO ARE WE IN AN EV BUBBLE?
Well Similar the internet statistics in the late 90’s, EV’s also have some impressive economic growth
forecasts.
(MARKETS & MARKETS Research)
So far, Tesla has Definitely Led the CHARGE…. (Bad dum chi)
As the first-mover and leader in mass production.
While Chinese manufacturers are also growing sales, production volumes are much lower.
NIO (NYSE:NIO) reported July sales increased by 322% year over year, and followed
that up with record August deliveries that more than doubled versus 2019.
At almost 4,000 vehicles, however, that’s only about 10% of Tesla’s volume.
And newly public XPeng (NYSE:XPEV) has delivered barely
over 20,000 units of its electric crossover and sedan as of July 31.
There are several more companies which haven’t even started production yet:
“In the U.S., there are several more that plan to begin production in the near future.
These include Rivian, Fisker, Workhorse Group (NASDAQ:WKHS), Nikola (NASDAQ:NKLA), and Lordstown Motors. ”
VALUATIONS ARE MOST SHOCKING FOR EV STARTUPS:
As some don’t even have sales, let alone earnings.
Using those metrics for the companies that do shows price-to-earnings and price-to-sales ratios beyond what make sense
with the business fundamentals.
(GRAPH)
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So the prospects for the company are all based upon FUTURE POTENTIAL, now that doesn’t mean
these companies won’t succeed.
But as stated previously the HIGHER the DISPARITY between Price & Value, the GREATER THE RISK FOR INVESTORS.
Future Growth is hard to define & is categorised as more risky. This is why most value investors
just avoid companies with high valuations, despite future growth potential.
However, Growth investors aim to predict the future prospects of a company now this is a higher risk
strategy but with MUCH GREATER REWARDS.
—We saw this with TESLA Stock in 2018. Growth investors saw the future potential in Tesla as a
technology company & invested
despite Elon Musk even stating recently that Tesla was just one month away from Bankruptcy.
(DIVING INTO THE SHARE PRICE)
Ironically now alot of the FUTURE POTENTIAL FOR Tesla as a Technology company with autonomous vehicles is
baked into their share price.
So Investors are looking to new EV startups in niche areas such as Delivery in order to ACHIEVE MAJOR
RETURNS.
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FINAL THOUGHTS?
Overall, I think there is alot of froth right now in EV stocks & the tech space….does this mean
it’s a bubble that’s hard to define.
I would say there is alot of Bubble like investments in many EV startups…but only time will tell.
SO WHAT AM I DOING?
I am personally doing what I have have always DONE I have a diversified Investment portfolio across a range
of sectors including EV stocks.
I am even invested into a few speculative acqusitions but these make up less than 0.5% of my 6 figure portfolio.
So the KEY REALLY IS SELF AWARENESS….As long as you are aware of the speculative nature of certain
stocks such as the multitude of EV startups then you can allocate you capital accordingly.
Whats up Guys, Ben here & Welcome to Motivation 2 invest
Airbnb is an Online Accomodation booking platform which disrupted the hotel industry!
Why rent a hotel room? When you can rent an entire house, apartment or even treehouse that is Airbnb’s USP. Unique selling proposition.
Airbnb on the 9th December 2020 via a Direct listing they are expected to raise around $2 billlion at $30 billlion valuation.
Should you buy AIRBNB? Well in this video i’m going to reveal my Bull Case vs Bear Case for Airbnb & then I’M going to do a FORENSIC deep dive into the financials to reveal My Price target, which where I think the company is fairly valued (This has been a heavily requested video, so let’s dive in)
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Airbnb had 54 million active booking and 247 million guest arrivals in 2019.
Airbnb’s customers are very “sticky” with 69% of their revenue in 2019 generated from repeat guests.
Now this makes complete sense once you have booked a full apartment with airbnb why would you go back to renting a small hotel room for similar cost.
1. Revenue:
Now Airbnb’s Revenue grew at a massive 32% between 2018 and 2019.
However, due to the health crisis & Global lockdown’s Airbnb’s revenue unsurprisingly fell off a cliff!
They had a -32% decline year over year for the first 9 months of 2020. (Show screenshot from income statement)
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Now the we could say that once the gloal issue is solved Airbnb should recover to pre pandemic levels.
Now for my valuation model, I will believe that Airbnb will recover but there will be some scarring & thus I will give the company a conservative 20% growth rate on average over the next 5 years which is still very good & what i consider as a growth stock.
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However, Airbnb’s overall growth has been declining as a business over the past few years.
For example, in 2014 the company experienced a massive 69% growth rate, 112% , 66%, 73% and before dropping to the 30% region.
Now those are INCREDIBLY high growth rates in the past & no company can be expected to keep those as it grows in size
This could be due to three factors,
market penetration, competition & also due to political headwinds we saw Airbnb being banned in Many major cities such as BARCELONA.
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This is why I personally see Airbnb Investing heavily into growing their experiences business where you can have everything cookery classes to Airbnb Adventures around the world!
So this should be a great Catalyst for Airbnb which is why I’ll assume a 20-25% growth rate once the global issue is over.
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Now diving into Airbnb’s income statement we can it has been operating at a net loss for a number of years now.
Now this does make sense for a growth company has the company was reinvesting heavily into Sales * Marketing.
In addition to Product Development.
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3. Profitable EBITA Quarter
However, this quarter Airbnb has gone through a rigourous cost cutting program.
The Lockdown slump forced it to lay off 25% of its workforce in May, suspend marketing activities for the year and seek $2 billion (£1.5 billion) in debt emergency funding from investors, including Silver Lake and Sixth Street Partners, at a valuation of $18 billion.
The company also revealed it faces a hefty tax bill. It said that the U.S. Internal Revenue Service informed it in September it owed $1.35 billion, plus penalties and interest, over the sale of international intellectual property to a subsidiary in 2013. Airbnb said it would “vigorously contest” the tax adjustment.
The company also slashed marketing & thus their is light at the end of the tunnel!
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As Airbnb managed to turn their first ever Profitable EBIDTA Quarter of 24%! which is great considering the global issue is an achievement.
Airbnb also saw a surge of rentals in rural areas as many people escaped pandemic hit cities.
and with
90% of the firm’s visitors come through organic search engine traffic or direct, Airbnb strong BRAND has proven to be adept at avoiding the high and increasing acquisition costs associated with paid online marketing.
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Thus Sales and Marketing expenses as a percentage of total revenue has been dropping as revenues have fluctuated.
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Another Positive is the Online Travel market is expected to rebound past 2023 & Continue growing at a compound annual growth rate of compound annual growth rate (CAGR) of 13.16%.
So at the very least we could expect Airbnb’s growth to track the online travel market.
With airbnb actually growing much faster than their competitiors:
For Example between the years of 2017-2019
Airbnb grew at 86%
whereas Expedia & Booking holding only grew at approximately 20% each.
And as the travel market consolidates between the major players we could expect this to benefit airbnb & it’s unique offering.
Years 2017 -2019
Airbnb: 86%
Expedia: 20%
Booking holdings: 20%
So there is some tailwinds behind a recovery for Airbnb.
HOWEVER, What about the balance sheet??
Now i did a previous video on this & I did highlight 3 red flags so if you guys haven’t watched that video….then check it out.
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Diving into the balance sheet:
We can see Airbnb has $2.6 Billion in cash.
$1.83 billlion in Marketable securities
(these are short term assets which can be turned into cash quickly)
However, here is a red flag I noticed previously
FUNDS Receivable & Held on behalf of customers.
Now according to Airbnb,
We have $2.4 billion held for booking in advance of guests completing check ins.
Now the issue is if a customer cancels or I believe this also might include customer deposits which can be claimed.
Then a percentage of this is not actually airbnb’s cash.
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So for my calculation of the current ratio i’m only going to include half of that as an estimate to be conservative.
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Thus if we calculate the current ratio:
Total current assets -= 7, 212,208
Minus $1, billlion.
= Current Assets = $6,212,208
Curretn Liabilities = $4,384,056
= 1.4
(Thus Airbnb has 1.4 times enough current assets to cover their
short term liabilities which is those due within 12 months.
SO that is just about ok, usually I look for between 1.5 and 2.
0—-
However, Airbnb also has long term debt of
1,811,302 + 380,079
of over $2 billlion , $2,191,381
So that does need to be taken into account.
———–
What is a fair value for Airbnb’s stock?
Well, the value of the company is
“todays VALUE OF A COMPANIES EXPECTED FUTURE CASH FLOW”
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Now Airbnb has a Trailing 12 months revenue of
$3,625 x 1.20^5 = $9,020
(our 20% growth rate for the next 5 years)
Thus earlier we discovered Airbnb can produce a free cash flow margin of 24% when it’s cuts costs on sales & marketing.
Thus applying
$9,020 x 0.24 (cash flow margin) = $2,164 in free cash flow.
—-The company is expected to go public at a valution of $35 billion.
$35,000/$2,164 = 16 (Price to Free Cash flow)
So you would be paying 16 times the companies FREE CASH FLOW IN 5 years.
Now that is still quite a high valuation which would put the share price at
between: $44 to $50.
I personally would like to see a share price of around $30 per share which would value airbnb at approximately $25 billlion.
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However, As we are in a booming IPO i expect that Airbnb price will spike when it IPO’s but if it does drop to this level then i may open a small speculative position.
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Now i have recieved many comments from you guys asking how best to identify Suitable Buy points during this very volatile week
So in this video i’m going DEEP DIVE into the Technical Charts for THREE STOCKS.
STOCK Number 3. TELADOC
The Leader in Virtual Healthcare
(Now I mentioned this stock on My Previous video as the stock has recently plummeted by at least 10% and ARK invest has been buying.
