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Suggestions for a speculative punt?
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There is another discussion on CNBC about the possible impact on Apple Stock split 4-for-1Thrugelmir said:
Split merely makes for more liquidity in the stock. Given investors can buy fractional shares unlikely to make significant difference either way.adindas said:Apple Stock Split August 24, 2020 . the company will execute a 4-for-1 stock split. Buying or Sell oportunity ??. There are a lof of info on the internet.
https://www.youtube.com/watch?v=Gvmo8eQ3qcQ
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He doesn't disagree with Thrugelmir then, in saying that it will not make any real difference to long term fundamentals and so won't change long term outcomes. In the short term there might be a little bit of excitement as people remember the share prices was at a higher number in the past, or can now buy a whole share per month instead of every two months, or auto-reinvest dividends on a platform that doesn't allow fractional shares - but it's not like it's going to make hundreds of billions of dollars difference to a 1-2 trillion dollar stock.adindas said:
There is another discussion on CNBC about the possible impact on Apple Stock split 4-for-1Thrugelmir said:
Split merely makes for more liquidity in the stock. Given investors can buy fractional shares unlikely to make significant difference either way.adindas said:Apple Stock Split August 24, 2020 . the company will execute a 4-for-1 stock split. Buying or Sell oportunity ??. There are a lof of info on the internet.https://www.youtube.com/watch?v=Gvmo8eQ3qcQ
Many of the retail investors who want to invest in AAPL will be using low-commission or no-commission platforms that allow fractional shares anyway (to help them make token investments in AMZN without needing $2-3000 on hand) and the big institutions that understand fundamentals are not going to care if they get 1500 shares at $600 or 6000 shares at $150 when they deploy the next $900k.
I am down to my last AMZN share in my pension now (having had rather more than that when they were only a few hundred dollars each) and it would be neat if they were smaller denominations - my pension doesn't allow fractional shares (which is fine with me). However, changing the pricing is just a way of keeping score and likely to affect small retail investors more than it affects Jeff Bezos or the institutions who hold a trillion-worth.
While retail investors like smaller denominations, some of the fuel for millions of RobinHood investors diving in to companies like Amazon is that people can see $3000 as some massive accomplishment compared to the sub-$100 price of just over a decade ago, and that gives them faith that Amazon is some unstoppable train. In the US for historical reasons and stock exchange rules there is stigma about having a low price than we have over here. If AMZN had a $20 share price, even if it was still a huge percentage more than what it was a decade ago, the millennials may not be moved to think 'wow that's a monster company taking over the world, fomo, I must get aboard'. So too much of a split to get back to a mundane price might counteract the extra liquidity it offers - AMZN and AAPL are hardly illiquid, with 500 million and 4 billion shares in issue respectively.3 -
There may be some administrative benefits of a stock-split that offset the initial meddle but it won’t impact the value of an investor’s holding at all.0 -
bowlhead99 said:
He doesn't disagree with Thrugelmir then, in saying that it will not make any real difference to long term fundamentals and so won't change long term outcomes. In the short term there might be a little bit of excitement as people remember the share prices was at a higher number in the past, or can now buy a whole share per month instead of every two months, or auto-reinvest dividends on a platform that doesn't allow fractional shares - but it's not like it's going to make hundreds of billions of dollars difference to a 1-2 trillion dollar stock.adindas said:
There is another discussion on CNBC about the possible impact on Apple Stock split 4-for-1Thrugelmir said:
Split merely makes for more liquidity in the stock. Given investors can buy fractional shares unlikely to make significant difference either way.adindas said:Apple Stock Split August 24, 2020 . the company will execute a 4-for-1 stock split. Buying or Sell oportunity ??. There are a lof of info on the internet.https://www.youtube.com/watch?v=Gvmo8eQ3qcQ
Many of the retail investors who want to invest in AAPL will be using low-commission or no-commission platforms that allow fractional shares anyway (to help them make token investments in AMZN without needing $2-3000 on hand) and the big institutions that understand fundamentals are not going to care if they get 1500 shares at $600 or 6000 shares at $150 when they deploy the next $900k.In my previous post I was talking about the short termn impact to retail investor."Fundamentally no change. But there is Psychological difference Some people see the share price is lower, especially those who do not like fractional share."Some people do not like fractional share.0 -
US stock. US day traders.adindas said:bowlhead99 said:
He doesn't disagree with Thrugelmir then, in saying that it will not make any real difference to long term fundamentals and so won't change long term outcomes. In the short term there might be a little bit of excitement as people remember the share prices was at a higher number in the past, or can now buy a whole share per month instead of every two months, or auto-reinvest dividends on a platform that doesn't allow fractional shares - but it's not like it's going to make hundreds of billions of dollars difference to a 1-2 trillion dollar stock.adindas said:
There is another discussion on CNBC about the possible impact on Apple Stock split 4-for-1Thrugelmir said:
Split merely makes for more liquidity in the stock. Given investors can buy fractional shares unlikely to make significant difference either way.adindas said:Apple Stock Split August 24, 2020 . the company will execute a 4-for-1 stock split. Buying or Sell oportunity ??. There are a lof of info on the internet.https://www.youtube.com/watch?v=Gvmo8eQ3qcQ
Many of the retail investors who want to invest in AAPL will be using low-commission or no-commission platforms that allow fractional shares anyway (to help them make token investments in AMZN without needing $2-3000 on hand) and the big institutions that understand fundamentals are not going to care if they get 1500 shares at $600 or 6000 shares at $150 when they deploy the next $900k.Some people do not like fractional share.0 -
Sure, but large volumes of retail punters can use them (a few millions of investors at a few hundred or few thousand dollars each is billions of dollars of demand), and corporate/ institutional investors are completely fine with buying in increments of 'whole shares' whether the published price is a few dollars or a few hundred dollars or the low thousands of dollars; those investors account for over a trillion dollars of market cap.adindas said:bowlhead99 said:
He doesn't disagree with Thrugelmir then, in saying that it will not make any real difference to long term fundamentals and so won't change long term outcomes. In the short term there might be a little bit of excitement as people remember the share prices was at a higher number in the past, or can now buy a whole share per month instead of every two months, or auto-reinvest dividends on a platform that doesn't allow fractional shares - but it's not like it's going to make hundreds of billions of dollars difference to a 1-2 trillion dollar stock.adindas said:
There is another discussion on CNBC about the possible impact on Apple Stock split 4-for-1Thrugelmir said:
Split merely makes for more liquidity in the stock. Given investors can buy fractional shares unlikely to make significant difference either way.adindas said:Apple Stock Split August 24, 2020 . the company will execute a 4-for-1 stock split. Buying or Sell oportunity ??. There are a lof of info on the internet.https://www.youtube.com/watch?v=Gvmo8eQ3qcQ
Many of the retail investors who want to invest in AAPL will be using low-commission or no-commission platforms that allow fractional shares anyway (to help them make token investments in AMZN without needing $2-3000 on hand) and the big institutions that understand fundamentals are not going to care if they get 1500 shares at $600 or 6000 shares at $150 when they deploy the next $900k.In my previous post I was talking about the short termn impact to retail investor."Fundamentally no change. But there is Psychological difference Some people see the share price is lower, especially those who do not like fractional share."Some people do not like fractional share.
If the price of a $600 shares is split to 4x $150, the fact that you will now be able to invest in five shares for $750 or three for $450 where previously you might have only bought one share for £600 or nothing at all, creates a little extra demand for AAPL - but at the same time, other investors will now just buy seven shares for £1050 when they would previously have begrudgingly splashed $1200 to get two shares, and now they don't need to do that to buy a grand's worth of Apple.
So there will be some swings and roundabouts but in the US huge numbers of small investors will already use fractional shares and huge numbers of larger investors already won't mind higher values. So the split is a really a very minor effect in terms of creating net demand, as it only really affects the tiniest investors who previously had no shares and now they have one or two, offset by some people like me who might prefer to trim back my Amazon holding if I could deal in $500 chunks instead of $3000.
The psychological effect is not a big stimulant of demand in the grand scheme of things, which is why the guy in your video says it doesn't make a difference long term. It's simply that conforming to 'expectations' about what a sensible share price looks like is something where Apple are happy to oblige - 'give the public what they want' is part of what they are in business to do. Buffet didn't bother to launch the cheaper B class share for BRK until the mid 90s when the A shares were trading at over $30k. The fact that Berkshire Hathaway's A shares are now worth over $300k each is a powerful reminder of the long term value created by the firm, and that 'psychological effect' could help to explain why Amazon don't think they should go back to 100 x $30 or 10x $300, instead of leaving it at 1x $3000.0 -
Been lurking on this thread for a while and appreciate reading people's views and ideas on speculative punts.
I just invested ~£6k in Fastly yesterday and would like to hear your thoughts. Let me tell you my rationale and then you can critique it.
You might have heard about Fastly already as it was one of the hottest tech stocks of the 2nd quarter. It went from ~$20 to ~$100 in the span of 2 months (early May to early July) after they released their Q1 earnings.. I've been watching the stock these last couple of months and finally decided to pull the trigger yesterday after the price pulled back ~1/3 from its ATH at $117 in the span of 3 days!
Fastly is a content delivery network (CDN) vendor harnessing the power of cloud edge computing to deliver improved performance of web services for its customers. Instead of having a handful of huge data centers like the "traditional" CDN providers, Fastly has a larger network of smaller but strategically-placed next-gen data centers, physically located much closer to the end users actually accessing those web services. I'm not going to pretend I understand everything about content delivery infrastructure / software, page load times, cache hit ratios, latency etc.. but I've done enough research to know that combining the geographical distribution aspect of their data center network along with (as yet) unmatched technology deployment provides Fastly with a superior value proposition.
I suggest you do more research if it sounds interesting (lots of articles out there better explain what they do), but for me the 2 things which stood out were the cloud edge concept and Fastly's technology. I read a lot of comments from developers / engineers who understand the technical aspects, and one quote which resonates with me is "The future of IT is the cloud, and the future of the cloud is the edge". While "the cloud" has been around for a while now, this concept of "cloud edge" is still relatively new and this part of the industry is in its nascent stage with lots of further growth in the years ahead. Many developers / engineers were also praising Fastly's product offering, comparing their technology to the latest iPhone/Android (or whichever latest phone you think is best!), whereas their closest competitor Cloudflare is probably more like a 3-5 year old iPhone, and the major legacy CDN providers like Akamai is the equivalent of 90's Nokia... Fastly was created by developers for developers, and they hands-down provide the best performance in terms of speed, stability, reliability for web services for companies which truly care about these things. Granted, it seems their product is not the most user-friendly (it's not meant to be used for mom & pop websites!) and their fees command a premium vs alternative offerings, so I think they will struggle to attract smaller companies who might not have the IT resources & knowhow to deploy and maintain such technology, which is why Fastly seems to be focusing more on large enterprise customers.
For now, they still have a very small share of their overall addressable market. They're competing with the big cloud boys (Amazon AWS, Microsoft Azure, Google Cloud who are all also ramping up their cloud edge capabilities), the legacy CDN vendors (Akamai, Limelight Networks...), and their closest competitor Cloudflare which is also a fast-growing tech company in the cloud edge CDN space and currently has a much bigger market share than Fastly.
Cloud edge CDN applications are numerous and fast-growing; think streaming (music, tv/films, live sports...), social media, e-commerce, online gaming, digital media (news outlets, videoconferencing...). I think Cloudflare also has great potential and will do very well, but the reason I chose Fastly instead was because I like the idea of investing in the best technology offering and betting on their customers doing well. A notable difference is that Fastly charges fees based on their customer's traffic volumes whereas Cloudflare mainly charges flat-fees for their products / services. So Cloudflare is more interested in signing-up more customers whereas Fastly has an incentive to drive up traffic for their existing clients, which they do by providing the best-available speed & performance. If their customers do well, then so does Fastly, which is why they have excellent customer service, and also why the stock has seen a surge during the Covid stay-at-home period. Look at Fastly's client list (some notable ones are Shopify, Tik Tok, Reddit, Spotify, Slack, Deliveroo, Rakuten, Twitter, New York Times, Financial Times, Buzzfeed, Vimeo...), most of them will have done well during the pandemic, but they will still continue to grow even if / when we all go back to the office and life goes back to "normal". Lots of tech stocks have seen huge ramp-ups in the last few months, and some might well come back down once life goes back to normal, but I don't think internet usage in the applications I've listed above are going to take a hit in a post-Covid world.
Now, why did I finally pull the trigger yesterday? Obviously I would have loved to jump in 3 months ago when the stock was at $20 but I missed that boat and watched the stock skyrocket. The valuation quickly became ridiculous and I couldn't justify parking money there. I was also waiting for the Q2 earnings call on Wednesday night to confirm they were the real deal, and the huge drops on Thursday and Friday provided the entry point I was looking for. There were 2 reasons why the stock dropped these last couple of days:
1- Expectations were huge for their Q2 results, and even though Fastly delivered higher revenue (62% y-o-y increase) and higher EPS (actually delivering a small operating income vs expected loss) than consensus analyst expectations, the "beat" wasn't as large as some were hoping for. The company actually improved on profitability metrics and management also raised their guidance for Q3 outlook, but again, apparently not as much as analysts were hoping for with their sky-high expectations.
2- Trump issued an executive order to ban Tik Tok from operating in the US, as long as they are owned by a Chinese company. On the Q2 call, Fastly disclosed that Tik Tok was their largest customer, accounting for 12% of their revenue in 1H20, with 50% of that coming from the US. Now, Microsoft is in talks to buy Tik Tok, which would remove the ban threat, but that wouldn't really help Fastly either since in all likelihood Microsoft would move Tik Tok over to their own Azure cloud (they wouldn't stay in business with a competitor, albeit an indirect and much smaller one). So it's a lose-lose situation for Fastly, unless another US company emerges as the buyer for Tik Tok US, which seems unlikely at this point.
With the stock price falling down to the $75-80 range I jumped in with my investment. I'm comfortable with the 1st reason; for me that's just a short-term correction with people taking profits from an insane (and unjustifiable) valuation when the stock was trading close to $120, with a much higher price/sales ratio than any of their peers. The 2nd reason is more worrying, but again this is a short-term issue. I don't think the potential of Fastly losing 6% of their revenue warrants such a big correction. I'm confident the company will offset the loss with their many other fast-growing customers.
The stock is now trading close to the rest of the hyped-up tech stocks in terms of financial metrics, so would not be considered "overvalued" compared to other companies in this sector.. Of course, you could argue the whole tech industry, in particular cloud / SaaS / e-commerce, is in a bubble and it could all come crashing down some day, but I feel long-term it will continue to do well. At the current price, Fastly has an ~$8B market cap, and I think they will close the gap and eventually surpass Cloudflare's ~12B value as they have more growth potential and will grab more market share, though as I said before I think both companies will grow quickly in the coming years.
The other reason which prompted my decision was that the stock seems to have technical support in the mid-70's, so entering in the $75-80 range where it was trading yesterday makes sense to me. If it breaks that support, it could take a big jump down, in which case I would double-down on my investment, but I would be very surprised to see it break below $70, which limits the downside risk (famous last words!).
I will stay with Fastly for at least 3 years, at which point I will reassess and decide whether to stay invested longer or move my money somewhere else (if I think there is a better opportunity at that time). My price target is 400$ (i.e. 5x today's price) which I think is a stretch but a $40B valuation in 3 years is not ridiculous in my opinion considering their potential. No matter what, I will hold for at least 3 years, even if the stock skyrockets again. You don't want to be the guy who invested in AMZN at $200 in 2012 and thinks he's a genius for selling at $1,000 in 2017 (when the stock is now $3,000+...) or TSLA from $200 to $1600 in 2 years!
So, if you've read this far, please tell me why I'm wrong, why this stock will not do well and why I just threw my £6k down the drain.1 -
If we all knew which companies would eventually do well. We'd all be extremely rich with very little effort. Perhaps a share to trade rather than hold.GMNN said:
So, if you've read this far, please tell me why I'm wrong, why this stock will not do well and why I just threw my £6k down the drain.1 -
Really sorry, but faced with that wall of text, I skipped straight toGMNN said:Been lurking on this thread for a while and appreciate reading people's views and ideas on speculative punts.
I just invested ~£6k in Fastly yesterday and would like to hear your thoughts. Let me tell you my rationale and then you can critique it.
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but I wish you well with your puntGMNN said:..................
So, if you've read this far, please tell me why I'm wrong, why this stock will not do well and why I just threw my £6k down the drain.3
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