Investing in Tech Stocks (Podcast)
June 11, 2020
Lead Tech Analyst
The average cloud software company reported 10% growth during the 2008-2009 recession. Meanwhile, we’ve seen the market react harshly towards companies guiding for 25% growth (such as Elastic). We know the winners from shelter-in-place but we are still sorting out what growth should look like in the middle of the category. My guess is that 25% is going to be higher than average by the time we exit this year.
I spoke about this and other topics this week on a podcast with Simon Erickson from 7 Investing. Simon Erickson is the CEO and Founder of 7 Investing, a company that releases stock tips for long-term investing. The monthly recommendations come from a team of four advisors with a track record of beating the market.
We discussed how cloud software is hot right now but that there are issues boiling beneath the surface. For instance, the upcoming renewal of large annual contracts that may be negotiated down in price or term, which payment model will be more resilient (usage based or per employee), and whether a cloud software company appeals to new subscribers or existing subscribers for upgrades (the latter may be stronger this year). We also discuss how to look for key metrics to help maintain conviction, such as Slack’s engagement 90 minutes per user.
Simon and I cover another topic around IPOs and why a buy and hold investor has different goals than a venture capitalist who is bringing the company public. In many ways, we are in the middle of a grand experiment where VC firms grow the top line at the expense of the bottom line with hopes the revenue growth will drive the public market interest. Over the last ten years, growth hacking has become a popular way of mechanically pumping the numbers through marketing rather than R&D. Uber was a supreme example of this as venture capital dollars were used to subsidize the rides rather than focus on achieving product-market fit, which is often determined by an equilibrium between supply and demand in the pricing.
We also discuss what’s next in tech investing with a discussion on connectivity. In order for most emerging technologies to become a reality, we need a better network layer. I believe we will be lay the groundwork for faster speeds and lower latency this year and next year to prepare for artificial intelligence and machine-to-machine communications. While some will call this 5G, I believe it also includes last mile connectivity and virtualizing infrastructure with software to lower capex.
Lastly, we talk about Roku, a stock that I covered very early after the company IPO’d and well before the market saw the potential. I explain why my conviction on Roku remains steady. Although Roku is an excellent operating system, a full tech stack, and an option for cord cutters, I see the real sticking point being the influx of pay TV advertising dollar over to Connected TV advertising.
View the full 30 minute video here.
Download the podcast here:
0:00 – Introduction: Beth’s “micro trend” investing philosophy
3:00 – Valuation for cloud computing companies
7:56 – Net Retention Rate metrics and Slack
9:28 – Product-Market Fit and Investing Internationally
11:07 – Venture Capital and the Current IPO Market
16:17 – The Importance of Developers: “Bottoms Up” Investing
18:50 – Roku and the Shift to Digital Advertising
24:36 – Trends Investors Should be Watching: Connectivity and Chipmakers
Please Subscribe and Leave a Review for the Podcast Here
Gains of up to 403% from our Free Newsletter.
Here are sample stock gains from the I/O Fund’s newsletter --- produced weekly and all for free!
+344% on Nvidia
+403% on Bitcoin
+218% on Roku
*as of March 15, 2022
Our newsletter provides an edge in the world’s most valuable industry – technology. Due to the enormous gains from this particular industry, we think it’s essential that every stock investor have a credible source who specializes in tech. Subscribe for Free Weekly Analysis on the Best Tech Stocks.
If you are a more serious investor, we have a premium service that offers lower entries and real-time trade alerts. Sample returns on the premium site include 324% on Zoom, 601% on Nvidia, 445% on Bitcoin, and 4-digits on an alt-coin. The I/O Fund is audited annually to prove it’s one of the best performing Funds on the market with returns that beat Wall Street funds.
More To Explore
Nvidia Will “Still” Surpass Apple’s Valuation
My coverage on Nvidia as an AI leader began in 2018 (yes, really – five years ago). Since then, I’ve covered the AI microtrend for this specific stock 27 times on my research site, which is the equiva
FAAMG Stocks Trading At Precarious Valuations
The mega-cap stocks that are known as FAAMG reported earnings recently. These names are driving the market higher, especially Microsoft and Apple. In fact, the percentage of Microsoft and Apple’s comb
Apple’s Stock In Focus: More Profitable Than Banks
Investors looking for the “next big thing” will point toward companies like Stripe, Sofi or Square as the leading fintech stocks. Meanwhile, the next big thing to disrupt the financial sector may be s
This Stock Price For Netflix Is A “Buy” For 2023
In April of 2022, Netflix surprised the markets by reporting its first subscriber loss in nearly 10 years. The stock tumbled 35% the following day, as investors panicked. Famed hedge fund manager, Bil
Where the I/O Fund Holds Cash When Banks Keeps Failing
Amidst the growing skepticism in our banking sector, we thought it would be helpful to introduce an alternative way to both protect and diversify one’s assets. The information below discusses a method
Tesla Stock: What You Need To Know About Q1 Earnings
Two months ago, we wrote that after realizing gains of 31%, it was time to take a time out on Tesla at the $208.31 price when our firm stated: “Right now, our technical analysis is at odds with our fu
Bitcoin Vs Banks: Here's Where the Price Goes Next
The recent decoupling of Bitcoin from equities, we believe, is the start of a new uptrend that appears to be inversely correlated to the financial sector. The financial media would have us believe tha
Official Press Release: I/O Fund’s Cumulative Returns Double the Nasdaq Following a Tough 2022
Actively managed portfolio and research site announces its largest cumulative lead over institutional all-tech portfolios. The I/O Fund defies a challenging market, outperforming peers and providing i
Slowdown In Cloud Stocks On Thin Ice Following Q1 Guides
Following last quarter’s earnings, we published an analysis on cloud that showed hyperscalers were slowing (5%) sequentially and best-of-breed was slowing (12%) sequentially, based on Q4 guides.
NVIDIA Showcases AI Breakthroughs, Omniverse Platform, and New Partnerships at GTC 2023
The tech giant reveals cutting-edge AI advancements, a powerful cloud based Omniverse platform, and strategic collaborations in the automotive industry.