By: Chris Tell at: http://capitalistexploits.at/ [5]
I've been thinking about pets a lot lately. We have a couple of them. We've managed to have cats for years, and always found someone to watch them while we country hopped. Dogs are much tougher, so we held off for quite some time.
Our travel/expat lifestyle hasn't exactly been conducive to looking after pets in general, and dogs in particular. That being said, we have recently introduced one into our household for a number of reasons, not the least of which is because, hey, he's cute, fluffy, the kids love him and all their friends have one.
Pets are a great way to introduce kids to responsibility. They require feeding, love and attention, yet you don't get anything "tangible" back. I mean nobody can point to an "object" and say, "I got that from my poodle." Well, maybe you can point to your chewed up slipper or the vomit on the carpet...
Instead of the tangibles there is the intangible that they hold a special place in our heart which can't been seen by others. They are like another member of the family. Eventually, since the traditional pets, namely cats and dogs don't outlive us, we will find ourselves grieving as they pass on, or we have to put them down in their old age.
So, why have I been thinking so much about pets lately? Well, they remind me very much of the companies I'm going to present to you in a moment.
Like your pet, these companies require constant feeding in order to stay alive.
Like your pet they will probably vomit on your portfolio, and like your pet you'll be grieving when they're eventually put down and they disappear into the vortex of used up, run out of puff companies who's shareholder base finally gives up and buries the once loved.
Let's proceed, shall we...
Twitter, Inc. (NASDAQ: TWTR)
Twitter provides real-time short messaging and multimedia messaging services that work over multiple networks and devices. The Company offers users the ability to write short text messages (Tweets) and to follow other users' activity. A Tweet is up to 140 characters long and can include photos and videos.
How we all lived without this (or any of the below) life-saving technology is one of the greatest mysteries of modern times!
Here are the stats on this 3,000 employee strong company:
- Market capitalization: $22.61 Billion
- Stock price: $38.33
- 52-week range: $29.51 - $74.73 - Yes indeed, a high of $74/share. It sure is cheap now!
- Price to Book: 7.44
- Price to Sales: 28.23 (cheap, really cheap)
- ROA: -0.346
- ROE: -0.542
- P/L 2013: -$645.32 Million
- P/L 2012: -$79.4 Million
- P/L 2011: -$128.3 Million
Yelp, Inc (NASDAQ: YELP)
Yelp Inc. operates a social networking, user review, and local search web site. The Company provides the site as a guide for online search capabilities for its visitors to find reviews and details about local businesses. Yelp provides listings for businesses throughout the United States and Canada.
Vital stats on this 2,145 employee company:
- Market capitalization: $5.06 Billion
- Stock price: $70.62
- 52-week range: $37 - $101.75
- Price to Book: 10.06
- Price to Sales: 19.22
- ROA: -0.021
- ROE: -0.023
- P/L 2013: -$10.07 Million
- P/L 2012: -$19.11 Million
- P/L 2011: -$16.67 Million
Groupon Inc, (NASDAQ: GRPN)
Groupon, Inc. operates a shopping website that shares information on local goods, services, and cultural events for businesses and consumers across the World. The Company provides information on attractions to see, do, eat and shop.
Here are the stats from this 11,283 employee juggernaut:
- Market Capitalization: $4.49 Billion
- Stock price: $6.58
- 52-week range: $5.18 - $12.76
- Price to Book: 5.44
- Price to Sales: 1.64
- ROA: -0.063
- ROE: -0.165
- P/L 2013: -$95.39 Million
- P/L 2012: -$67.38 Million
- P/L 2011: -$373.5 Million
Bankrate Inc, (NASDAQ: RATE)
Bankrate Inc. is a publisher, aggregator and distributor of personal finance content on the Internet. The Company provides consumers independent and objective personal finance editorial content across multiple vertical categories including mortgages, deposits, insurance, credit cards, and other categories, such as retirement, automobile loans, and taxes.
The stats on this relatively "lean" 488 employee organization:
- Market capitalization: $1.86 Billion
- Stock price: $17.76
- 52-week range: $14.44 - $23.14
- Price to Book: 2.96
- Price to Sales: 3.83
- ROA: -0.011
- ROE: -0.016
- P/L 2013: -$10 Million
- P/L 2012: $29.33 Million
- P/L 2011: -$13.42 Million
Web.com Group Inc, (NASDAQ: WWWW)
Web.com Group Inc. provides full-service web site solutions to small businesses. The Company offers marketing, e-commerce, and various other services.
Employing 2,000 people and here's the rest of the vitals::
- Market Capitalization: $1.41 Billion
- Stock price: $27.32
- 52-week range: $25.21 - $37.72
- Price to Book: 7.9
- Price to Sales: 2.77
- ROA: -0.015
- ROE: -0.119
- P/L 2013: -$65.66 Million
- P/L 2012: -$122.22 Million
- P/L 2011: -$12.31 Million
Taken as a whole, the 5 companies above collectively threw off a whopping -$826.4 million in cash flow last year! Despite that horrifying number, with any luck, and the increased competition in all things "social media", they will sport ever higher market capitalizations this time next year.
We strongly recommend mortgaging the house, your cars and possibly selling a kidney in order to get positioned NOW! Of course that's sarcasm, for those that might think us serious.
I have no particular insights into these companies beyond the fairly cursory, numbers-based look presented above. Does anything else really matter anyway, in the long run? Recently however, as I mentioned in "A Bull Market in PR" [6] when discussing Snapchat and the VC world's infatuation with social media, the overall zeitgeist of this market is eerily similar to the Dot.com years, pre-Dot bomb!
Whether this ends in the same way or not, we have yet to see. One thing is certain, the CEOs and early investors in these companies have certainly benefited in a very tangible way from their "pets", aka retail investors.
- Chris
"There's a danger in the internet and social media. The notion that information is enough, that more and more information is enough, that you don't have to think, you just have to get more information - gets very dangerous." - Edward de Bono