NOT SO THRILLING RANDOM THOUGHTS
“If Space X was selling pipes, the IPO would have come out at $13.50!” That has been our quote before the IPO and after and that would still give it a $177 billion market cap which would have been almost 10x sales. 10x sales is still very expensive. We said this knowing or at least thinking their growth would be very strong going forward. But the current valuation gave us pause and continues to give us pause based not only on valuation but based on the horrible job done by the investment bankers over the past couple of years. Numerous IPOs were opened hot…and most have crumbled. What did they think would happen with this valuation? But they are not 100% to blame. In order to come out with a price, someone had to pay that price. The fact is upon open at $150, within a couple of days, the stock traded over $225. Since it was new, we had no edge up or down…until it broke $150. At a break below $150, every investor/trader who bought in the after market was losing money. This most certainly invites selling. But even more, the break of the IPO price at $135 doubly invited selling…now currently at $115 as we write this. WE HAVE NO IDEA WHERE THIS LANDS IN THE NEAR TERM. It certainly can bounce as it is very oversold but it gives pause that the bankers were a gigantic failure at trying to stabilize the IPO price. It’s just another IPO brought out at redwood trees valuations coming down to earth We just know that currently, it still has a $1.5+ trillion market cap with current sales of the last year of $18 billion, a loss of $5 billion, negative cash flow and the raise of $25 billion in the bond market. Again, the chalk is that this company will grow leaps and bounds but the current? We will keep you apprised as it moves. We do believe this company will eventually do some sort of merge with Tesla.
Do not. We repeat do not go look how META, ORACLE, AMAZON, MICROSOFT and ALPHABET have $1.65 trillion…that’s trillion of OFF BALANCE SHEET debt. This is on top of $1.35 trillion of debt on the books. These are approximate numbers brought to you by our infamous rusty abacus. We have been worried about how anyone is going to make $1 off of all this spend and debt but also worried about Oracle’s stock price. This is one big, gigantic sore thumb. We have always thought the market is very smart and wonder why this stock has crashed. What can possibly come out for this kind of drop for this software stalwart? Not saying there is anything but we are big believers in the market talking.
Speaking of market talking, most SOFTWARE stocks remain nightmarish. On top of ORACLE, some of the drops in big names like SAP, MICROSOFT, SALESFORCE, ADOBE and others leave us scratching the forehead because some still have some decent sales and revenue growth. Just what is the market factoring in? Recently, SOFTWARE SECURITY names have been the outlier, very strong but even they are now coming in.
The 10 year yield crossing the yearly high today. The 30 year on the way. OIL PRICES spiking again. To those that keep telling us they are in control, we do know there are things that are more important than market moves but we also believe the market has a voice and it is certainly saying out loud that we are not in control. Hoping for the best.
We cannot leave without a positive. The Knicks are still the NBA champions. Onward and upward. Just keeping it real with facts.