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Stocks – ZM, TWLO
Macro – SPY
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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN TSLA
Stocks were higher today, probably the Friday run-up in anticipation of miracle Monday. Miracle Monday is when some unexpected piece of news suddenly comes out late Sunday night or Monday morning, to pump the futures higher. This has been a common occurrence since April. I think Moderna is up for vaccine data, what better day than Monday.
S&P 500 (SPY)
Anyway, the S&P 500 was up nearly 1.4% to close at a record high of 3,585. The consolidation pattern has been nice, and stronger than expected. It will probably lead to pop high on Monday. The pattern vaguely resembles a flag, maybe a pennant, samething I guess. I’ll let you know on Sunday where I think it goes.
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Zoom (ZM)
Zoom didn’t perform so well today in an up-market, probably not a great sign for what’s to come after options expiration next week. I wrote an article this week talk about how overvalued this stock was, and people don’t want to hear it. I’m sorry, but the facts are the facts, the stock is grossly overvalued and would need some crazy growth over the next 2 years to make its current valuation make any sense. I just don’t see it. Anyway, I still think it sees $325.
Think what you want, but the facts are — it trades at 94 times free cash flow estimates in 2023, 29 times sales, 102 times EV/EBITDA, and 124 times earnings. It has a market cap of $115 billion. And don’t tell me about how it is a bet on the future, I’m the guy that held Tesla for the past 6 years, and bought Netflix before international growth even started, I’m well aware of how it works.
It doesn’t have anything to do with my view on the market either, after all, I think the SPX is going to 4,000 before the end of 2021.
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Twilio (TWLO)
But believe it or not, Twilio makes Zoom look cheap. Twilio, trades for 305 times 2022 cash flow, 725 times earnings, 15 times EV/EBITDA, and almost 16 times sales. And earnings are expected to fall this year and next year, before rising in 2022. Revenue growth is reasonable in the high 20s to low 30% range. But it is hard to digest the $44 billion market cap. I know valuations aren’t supposed to matter, but one day they will. Just hope it doesn’t break the lower bound of the megaphone that has formed. It will probably result in a gap fill to around $122.
Anyway, that’s enough for Friday.
-Mike
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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