Most of my readers know that I’ve been critical of Uber and Lyft since before either went public. I have a decent repertoire of analysis on these companies dating back to March 14th (see below at end of this update for quick reference). This was at the height of the IPO exuberance when many Wall Street experts predicted these IPOs would be a success.
I updated my thoughts in a new article published today on MarketWatch. I’m writing some additional analysis for my premium readers, including why I think Uber is the weaker company due to it’s contribution margin and a few other key metrics. Knox is going to publish some TA on where he thinks these companies will ultimately end up.
I’d like to point out that during the cloud software sell-off, we were working hard to provide our readers with a few good ideas. We published on Workday, Zoom, Slack and Okta. Three of these we nailed on what support would be (Zoom, Slack and Okta), and continue to believe Workday will come back to the levels in our scenarios. We were pumping out the information as we wanted to give our readers a few stocks we thought would hold support and warn on the one stock we were concerned about (Okta). Keep in mind, we wrote on Okta before anyone could have predicted the cloud software pullback.
We are not financial advisors, rather we work hard to pick the right stocks through tech industry analysis, and to follow this with the right entry. Nobody is right 100% of the time, and we won’t be either. But, it doesn’t hurt to point out when our hard work pays off. Knox especially hit a few home runs on TA this month.
To summarize:
- Our chart for Zoom on Sept 5th called for a 61.8% retrace to $78.00 – the stock hit exactly this number on Sep 9th and bounced back. We stated we’d love get the stock at this price in the PDF and chatted with some readers on the forum about entry here.
- On Slack, which was a blog update on Sept 4th, we called for a $25 support range or a $10-$12 billion valuation when Slack was priced at $31. On Sept 9th, we hit $24.92, and even this volatile stock that has negative market sentiment, has held support for about 10 days.
- On Okta, we published a technical chart showing a retrace to $104 when the stock was priced between $127-$133. This was a bold call at the time. Alternatively, Knox suggested any Okta bulls to wait until the stock broke $142 as buying pressure was slowing down and there was higher probability the stock would go through a pullback.
- Workday hit the $172 support that Knox wrote out in the scenarios on August 28th. We are still waiting to see if we can get the $190, although this is taking longer than expected due to the cloud software pullback. Workday has a financial analyst day planned for October 15th. I am curious to see if they will debrief the financial analysts on their machine learning strategy and progress there. I’m not sure the financial markets are fully aware of Workday’s strategy with ML. I’ve been seeing this at tech conference keynotes over the past few months and feel I am ahead of momentum here.
- Regarding Roku, we had quite a few readers ask us about Roku when momentum pushed the price into the $160s. We encouraged them (frequently!) to wait for a better entry. I like $120 but Knox has other ideas in the $100-$111 area. He’s working on this update. In short, with the recent shift in momentum names, we want to see how price reacts in September. Anyone who has followed Roku longer than a year knows that a %10 up/down day is very normal. Stay tuned. p.s. You’re also aware this is one of my favorite trends in tech in the short-term (connected TV ads), and why I like Roku over a few of the others in the space, so keep that in mind. This is available under the PDFs for anyone new to the site.
Of course, this is anyone’s game. It could all change tomorrow. Stay nimble! We do put trailing stops on our positions right now in the event there is a sudden reversal. Nvidia at $290 is a perfect example. We were able to ride this up and take gains when we hit our stop and re-evaluate and re-enter at new support a month or so later. Note: We haven’t built our full position in this stock just yet.
I typically will lean towards a stop of 20-25% in this market environment. After that, I re-evaluate before I enter again. However, high conviction stocks like, Roku, which we’ve owned with a cost basis of $29 for over a year, we will hold with no stops, as long as the story remains unchanged.
I’m headed to a few tech conferences: AdvertisingWeek in NYC and Strata Data Conference this week and TechCrunch Disrupt the following week. AdvertisingWeek should help me understand where we are in ads, especially with connected TV ads (don’t want to miss any small caps) and programmatic. Strata Data Conference is all about machine learning and big data. Lastly, TechCrunch is second to none for the startup ecosystem, which eventually grow into successful IPOs.
I’ll drop the Uber and Lyft PDF by Monday at the latest. We are working on a new Roku chart too.
Have a great weekend!
Previous analysis on ride-sharing:
Lyft: Risky Valuation and No IP
Uber IPO: Record-Breaking for All the Wrong Reasons