
Internet stocks Predictions for 2020 (GOOG, AMZN, maybe FCBK?) - foobar2k
http://www.immadsnewworld.com/2010/01/internet-stocks-predictions-for-2020.html
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mattmcknight
AMZN is currently trading at 79 times earnings. It's ridiculous to make an
investment without considering whether the market has already priced in the
growth (in this case a quadrupling or quintupling of profit is already priced
into the stock, assuming 15-20 as a standard P/E range, which might be too
high for the current conditions). I bought AMZN at $35 and sold at various
points on its rise this year. I think it's currently overvalued, not like
Salesforce (CRM) at 125 times earnings which is worth a short, but still high.
As a shareholder in AMZN, you don't even get dividends. Therefore you are
depending on the company not just quadrupling their profits to earn their
current valuation, but once they have quadrupled, they must still be on a high
growth trajectory in order for the stock to be trading at high multiple to
earnings.

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smakz
P/E is just one indicator of the value of a stock, and one that really doesn't
make a whole lot of sense given how accounting works. Personally if I'm going
to invest in a company I look at free cash flow and the growth of the free
cash flow way more closely then the more arbitrary P/E. Amazon is phenomenal
in this regard.

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mattmcknight
For companies that have stable capital expenditures, free cash flow will (over
the long term) be roughly equal to earnings. For companies that don't have
stable capex, the FCF will be more lumpy, because it doesn't allow for
depreciation. In Amazon's particular case, FCF is exaggerated because of their
delayed A/P cycle where items are purchased in one quarter which shows up in
cash and paid for by Amazon the next quarter. If short term cash is growing
while their bills are getting higher, but this is not reflected in FCF, Net
Income is a better metric because it avoids this temporal distortion.

Of course, if you think the hype is going to continue for a while, there is no
reason not to buy into the momentum and make a short term buck, it's just not
a good basis for a 10 year buy and hold as recommended by the original post.

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simm
NOTE: IMMAD Deleted this from his blog. It seems he cannot accept criticism,
just comments.

Ignoring the obvious laughable fallacies (" Since I live and breathe the
Internet, I’m more adept to make better judgements of companies than the
market."), I'm suprised you and your business partner both read and reviewed
this and still felt comfortable posting this.

At first I wonder, how much research could you have possibly done if you put a
company on your list that was acquired last year? Then I saw your response to
someone suggesting Skype "I love Skype. Adding it now." A clear example of the
amount of research and methodology you've employed to come up with these weak
sublists. You've simply chosen companies with products you like and have
listed them, arriving at conclusions no different than that of a casual user
of the internet.

In the end, you finish up with a facile paragraph: "I am very optimistic about
the Internet." Amazing!

"I am certain that at least 100 other companies will be on this list in 10
years time " Really? You are certain that in 10 years at least 100 more
companies will fall within your classifications of winners, neutral, unstable,
or failures? That's quite a bet you are making!

"and most likely even my favorites will disappear." What? You just gave a list
of companies you project to be successes (great job on noting that rising star
"google" by the way) and now you are telling us some of them may disappear?
Have you even read what you wrote?

"The Internet is still in its infancy, and there is still room for tremendous
growth. It certainly is an exciting time to be in the industry!" Tell me less.

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immad
You really had to create a HN account just to say that?

The reason I did not respond is because of your overall trollish comment with
very little content. Everyone is having a good discussion on the article so
the content was at least interesting to the community.

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psranga
Really surprised to see Netflix listed as neutral. If anybody agrees with the
original parent, I would love to hear your thoughts.

I see Netflix grabbing huge market share from the overpriced cable-TV
companies and become the standard way to watch paid video content.

~~~
javery
I like Netflix as well but they are definitely a long-term risk as their
current business model is going to dwindle and on-demand is going to rise. Now
they are doing some good stuff in the on-demand space, but they are going to
be competing against all the cable providers (some of which are going to be
buying movie companies like Comcast). They could also end up competing against
Apple or anyone else who decided to get into streaming, they might have first
mover but will it be enough? I think Hulu is a sign of how the studios want it
to work, they want to own the deliver network so when they have a choice they
might start their own and block out netflix.

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ams6110
Mostly agree, though I think physical media rentals are going to be around a
lot longer than many people think. Though perhaps not the Netflix (i.e. mail
delivery) model, maybe more likely the RedBox (vending machine) model.

A lot of folks who like to watch movies don't even have computers... it's
easier on the budget to spend a buck or two on a movie rental vs. $500+ on a
computer plus broadband internet.

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dpapathanasiou
Predictions like this are a waste of time; it's impossible to know where any
of these stocks are going to be _next_ year, let alone ten years from now.

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icefox
Not only that, but many of the predication are based on little more then
feeling. How much did diablo3 cost to make? How much could you expect them to
make off it? Is this even where the company makes its money? It is surprising
how company after company when you go through their numbers to discover that
while they might be all talk about product X they make 90%+ of their money
from B. Discussing how cool X is going to be might have just about nothing to
do with how much they earn.

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bdr
This post is best read as predictions about how the companies are going to do,
rather than how the stock is going to do.

Stock performance means predicted price in 2020 vs price now, and this post
mentions neither of those.

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brown9-2
What's the point of predictions like this?

In 2000 you could have never predicted what "Internet stocks" would be
"winners" in 2010 since a number of these companies either didn't even exist
yet or were not public.

I would imagine that by 2020 the rules of the game will have changed and the
business landscape will not be recognizable from what it is today, just as
with the 2010/2000 comparison.

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pyre
Just because the Internet has changed drastically over the past decade does
not necessarily mean it _has_ to change drastically over the next decade. The
Internet (and software/computer science in general) will eventually come to a
stage where they become 'stable' and don't necessarily change a whole lot.

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jacquesm
Twitter going public would be a sure sign of the beginning of the next bubble.

And Yahoo could easily go down as in 'delisted' or broken, especially over a
10 year window.

Long term stock predictions are like predicting the weather 3 months from now.
And with the weather you have at least the seasons to guide you.

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ivankirigin
Twitter is likely profitable

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jacquesm
Being profitable is not enough reason to go public.

Plenty of businesses are profitable, and plenty of them more so than twitter,
and they're definitely not all going to be public companies, in fact that
makes sense for only a very small percentage of them.

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Retric
There are 3 reasons to go public. You either need a lot of liquidity, a lot of
capital, or you want to maximize the sales price at the peak of your hype.
IMO, twitter going public without dramatically expanding what they do would be
a great indicator of a bubble on the way.

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javery
I would disagree on comScore I think new forms of analytics and places like
quantcast are going to eat away at their current lead.

I am not saying it will die off by any means, but I am not sure it can sustain
the growth it will need to be a hot stock.

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axod
comScore doesn't even measure anything outside the US do they? I agree @
quantcast.

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immad
<http://www.comscore.com/International_Solutions>

Comscore has a few more products than its consumer facing analytics.

