The Lemon Fool

The global market appears to have less than 9%, so not a correction yet. Just a blip.

How about the impact on a portfolio? Vanguard LifeStrategy 60 down less than 5% at Monday's valuation point. I think we can all sleep through that.

GeoffF100 wrote:The global market appears to have less than 9%, so not a correction yet. Just a blip.

I realise the expression 'correction' is widely used for a fall in the market. Does anyone know why? Its use suggests that the market is always otherwise incorrect which in itself is not correct I am sure.

Dod

I'm looking at some of these tech/growth/lockdown blowouts and starting to wonder if there is a case that can be made for the fall being overdone.

PTON - 86% fall from peak

Market cap $8bn USD
Now trading below its Q3 IPO price, which logically makes absolutely no sense where, in an alternative reality where covid didn't exist, they would have surpassed all expectation by growing as quickly as they have done since IPO.

Trading on just x2 revenue. Yet to make any profit.

People will say that they have no barriers to entry, but perhaps we will see a similar network scale effect as we see with tech stocks where the more subscribers the platform has the more cross activity and selling they can do..

ZM - 80% fall from peak

Market cap $40bn USD

Is the best internet-based meeting platform worth $40bn? Still expensive on a p/s of x10 revenue, but they have the ability to grow at a frightening rate. The product is good. My employer, who are a software company so should know a thing or two about other tech, recently switched from Webex to Zoom for example. I can see them growing quickly for the next 5 years.

vand wrote:I'm looking at some of these tech/growth/lockdown blowouts and starting to wonder if there is a case that can be made for the fall being overdone.

PTON - 86% fall from peak

Market cap $8bn USD
Now trading below its Q3 IPO price, which logically makes absolutely no sense where, in an alternative reality where covid didn't exist, they would have surpassed all expectation by growing as quickly as they have done since IPO.

Trading on just x2 revenue. Yet to make any profit.

People will say that they have no barriers to entry, but perhaps we will see a similar network scale effect as we see with tech stocks where the more subscribers the platform has the more cross activity and selling they can do..

ZM - 80% fall from peak

Market cap $40bn USD

Is the best internet-based meeting platform worth $40bn? Still expensive on a p/s of x10 revenue, but they have the ability to grow at a frightening rate. The product is good. My employer, who are a software company so should know a thing or two about other tech, recently switched from Webex to Zoom for example. I can see them growing quickly for the next 5 years.

No and doubtful.

Microsoft will squeeze any competitor out of the corporate work from home market. I am rather surprised it already hasn't happened. But it will.

BullDog wrote:

vand wrote:I'm looking at some of these tech/growth/lockdown blowouts and starting to wonder if there is a case that can be made for the fall being overdone.

PTON - 86% fall from peak

Market cap $8bn USD
Now trading below its Q3 IPO price, which logically makes absolutely no sense where, in an alternative reality where covid didn't exist, they would have surpassed all expectation by growing as quickly as they have done since IPO.

Trading on just x2 revenue. Yet to make any profit.

People will say that they have no barriers to entry, but perhaps we will see a similar network scale effect as we see with tech stocks where the more subscribers the platform has the more cross activity and selling they can do..

ZM - 80% fall from peak

Market cap $40bn USD

Is the best internet-based meeting platform worth $40bn? Still expensive on a p/s of x10 revenue, but they have the ability to grow at a frightening rate. The product is good. My employer, who are a software company so should know a thing or two about other tech, recently switched from Webex to Zoom for example. I can see them growing quickly for the next 5 years.

No and doubtful.

Microsoft will squeeze any competitor out of the corporate work from home market. I am rather surprised it already hasn't happened. But it will.

Why so sure about that? Microsoft tend to be behind the curve. MS Teams is a far inferior product to both Webex and Zoom. If anything, I suspect businesses are more likely to drop MS Teams and move over the more specialised software such as Zoom.

vand wrote:

BullDog wrote:

vand wrote:I'm looking at some of these tech/growth/lockdown blowouts and starting to wonder if there is a case that can be made for the fall being overdone.

PTON - 86% fall from peak

Market cap $8bn USD
Now trading below its Q3 IPO price, which logically makes absolutely no sense where, in an alternative reality where covid didn't exist, they would have surpassed all expectation by growing as quickly as they have done since IPO.

Trading on just x2 revenue. Yet to make any profit.

People will say that they have no barriers to entry, but perhaps we will see a similar network scale effect as we see with tech stocks where the more subscribers the platform has the more cross activity and selling they can do..

ZM - 80% fall from peak

Market cap $40bn USD

Is the best internet-based meeting platform worth $40bn? Still expensive on a p/s of x10 revenue, but they have the ability to grow at a frightening rate. The product is good. My employer, who are a software company so should know a thing or two about other tech, recently switched from Webex to Zoom for example. I can see them growing quickly for the next 5 years.

No and doubtful.

Microsoft will squeeze any competitor out of the corporate work from home market. I am rather surprised it already hasn't happened. But it will.

Why so sure about that? Microsoft tend to be behind the curve. MS Teams is a far inferior product to both Webex and Zoom. If anything, I suspect businesses are more likely to drop MS Teams and move over the more specialised software such as Zoom.

Nope. MS Teams costs it's users effectively nothing and is fully embedded into the majority of big companies systems. Of course, it's only my view. For what it's worth, I can't think of a single big (energy industry) company I have worked with since the pandemic started where MS Teams isn't the default WFH and corporate meetings tool.

BullDog wrote:Nope. MS Teams costs it's users effectively nothing and is fully embedded into the majority of big companies systems. Of course, it's only my view. For what it's worth, I can't think of a single big (energy industry) company I have worked with since the pandemic started where MS Teams isn't the default WFH and corporate meetings tool.

We use Teams, as do all our customers and consultants etc - free, fully integrated with Outlook etc, seems to do the job perfectly well. It's also replaced Slack for us, which we used to use pre-Covid.

You say ZM trades at 10x sales? What sort of growth are you predicting, bearing in mind we've just had two years of Covid to stimulate its business?

vand wrote:Microsoft tend to be behind the curve. MS Teams is a far inferior product to both Webex and Zoom. If anything, I suspect businesses are more likely to drop MS Teams and move over the more specialised software such as Zoom.

Hmmm ... I dunno about that. I guess it depends on what you're using Teams/Zoom for and how you use them.

Zoom is better (less faff) for informal online meetings and "stand alone" webinars, but Teams has some things that Zoom doesn't that makes it better for more formal structures, in particular the integration with Office. Some of the things I like about Teams are the ability to scroll back (what did he just say? flick back a few seconds/minutes and watch again), the ability when a Powerpoint presentation is being shown for (just me) to flick back to previous slides (while still listening to the ongoing talk), and the fact that recordings go straight into the "class" folders without any further faff. Also, of course, with Teams integrated with Office, everything else that might be related is also present in the same space; documents that have been uploaded, comments, links, calendar items, etc, etc.

OTOH Teams has a much more limited number of participants it shows than Zoom, and I do like the ability with Zoom to put all the participants onto my second screen.

NotSure wrote:

BullDog wrote:Nope. MS Teams costs it's users effectively nothing and is fully embedded into the majority of big companies systems. Of course, it's only my view. For what it's worth, I can't think of a single big (energy industry) company I have worked with since the pandemic started where MS Teams isn't the default WFH and corporate meetings tool.

We use Teams, as do all our customers and consultants etc - free, fully integrated with Outlook etc, seems to do the job perfectly well. It's also replaced Slack for us, which we used to use pre-Covid.

You say ZM trades at 10x sales? What sort of growth are you predicting, bearing in mind we've just had two years of Covid to stimulate its business?

It is usually a mistake to think that the best technical solution will become dominant in mainstream business. It's critical mass and cost which determines the dominant IT solution. Of course, it's actually in MS's interest to show it has some competition. The biggest threat to MS's business is not from other IT tech companies, it's from government regulatory departments.

NotSure wrote:

BullDog wrote:Nope. MS Teams costs it's users effectively nothing and is fully embedded into the majority of big companies systems. Of course, it's only my view. For what it's worth, I can't think of a single big (energy industry) company I have worked with since the pandemic started where MS Teams isn't the default WFH and corporate meetings tool.

We use Teams, as do all our customers and consultants etc - free, fully integrated with Outlook etc, seems to do the job perfectly well. It's also replaced Slack for us, which we used to use pre-Covid.

You say ZM trades at 10x sales? What sort of growth are you predicting, bearing in mind we've just had two years of Covid to stimulate its business?

It's not that outrageous for a software/tech company, at least in today's market. The likes of Microsoft, Apple, Google etc all trade at those sort of multiples, and Zoom is growing much faster than any of them, though admittedly it received a massive lockdown tailwind. But unlike other lockdown stocks its product has ongoing benefits to its customers that will persist far beyond lockdown.

vand wrote:

NotSure wrote:

BullDog wrote:Nope. MS Teams costs it's users effectively nothing and is fully embedded into the majority of big companies systems. Of course, it's only my view. For what it's worth, I can't think of a single big (energy industry) company I have worked with since the pandemic started where MS Teams isn't the default WFH and corporate meetings tool.

We use Teams, as do all our customers and consultants etc - free, fully integrated with Outlook etc, seems to do the job perfectly well. It's also replaced Slack for us, which we used to use pre-Covid.

You say ZM trades at 10x sales? What sort of growth are you predicting, bearing in mind we've just had two years of Covid to stimulate its business?

It's not that outrageous for a software/tech company, at least in today's market. The likes of Microsoft, Apple, Google etc all trade at those sort of multiples, and Zoom is growing much faster than any of them, though admittedly it received a massive lockdown tailwind. But unlike other lockdown stocks its product has ongoing benefits to its customers that will persist far beyond lockdown.

Maybe. But don't fall into the trap of thinking that the best solution is what companies will use. It's seldom the case. Critical mass and cost come first in decision making. Perhaps you are right about Zoom. But myself, I wouldn't bet against MS in this space.

vand wrote:I'm looking at some of these tech/growth/lockdown blowouts and starting to wonder if there is a case that can be made for the fall being overdone.

PTON - 86% fall from peak

Market cap $8bn USD
Now trading below its Q3 IPO price, which logically makes absolutely no sense where, in an alternative reality where covid didn't exist, they would have surpassed all expectation by growing as quickly as they have done since IPO.

Trading on just x2 revenue. Yet to make any profit.

People will say that they have no barriers to entry, but perhaps we will see a similar network scale effect as we see with tech stocks where the more subscribers the platform has the more cross activity and selling they can do..

ZM - 80% fall from peak

Market cap $40bn USD

Is the best internet-based meeting platform worth $40bn? Still expensive on a p/s of x10 revenue, but they have the ability to grow at a frightening rate. The product is good. My employer, who are a software company so should know a thing or two about other tech, recently switched from Webex to Zoom for example. I can see them growing quickly for the next 5 years.

I would say these are still both overvalued. All you are doing is anchoring to past share prices which is not usually a good starting point for investment.

Peloton is forecast to be loss making beyond FY 2024 and even then has gross margins of only 34%. That's not attractive IMO at any price. Zoom you can probably make a weak case for because it is at least profitable and has a strong gross margin of ~72%, however earnings are not forecast to grow the next couple of years and it's still on a FY22 PER of 28. FCF of 4% looks good though. However, I'm in the camp that says MS Teams will eat its lunch.

There is some good value appearing now outside of the highly speculative story stocks. I'll leave others to speculate but look at Qualcomm on a FWD PER of 15. One of the best semiconductor plays IMHO with its vast 5G technology patent portfolio. Even pays a 1.7% dividend. I also like Amgen on FY22 PER of 12.5, FCF yield of 6% and dividend yield 3.5%.

All the best, Si

mc2fool wrote:Zoom is better (less faff) for informal online meetings and "stand alone" webinars, but Teams has some things that Zoom doesn't that makes it better for more formal structures, in particular the integration with Office.

So you're saying Zoom is great for people who don't want to pay for it, but Teams is worth paying for. That doesn't inspire me to buy Zoom shares.

Personally I see Zoom as much more of a direct rival to Cisco's webex platform than MS Teams.

But FWIW, Microsoft's track record in this space is not very impressive.. anyone still use Lync or MS Messenger?

Does anyone use Bing? What happened to MS Encarta? See? MS aren't exactly infallable..

I think MS would do well to just buy Zoom.

vand wrote:Personally I see Zoom as much more of a direct rival to Cisco's webex platform than MS Teams.

But FWIW, Microsoft's track record in this space is not very impressive.. anyone still use Lync or MS Messenger?

Does anyone use Bing? What happened to MS Encarta? See? MS aren't exactly infallable..

I think MS would do well to just buy Zoom.

This doesn't matter in the grand scheme of things though, does it? You forgot to mention buying Nokia! Stick to the fundamentals because trying to forecast things in this way is a mugs game. The fact is all MS customers can use Teams for free and so that's a large proportion of business customers who will never switch to Zoom. Why should they if Teams works? Zoom should start paying a dividend because it's ex-growth but still highly rated. People need a reason to hold a low/no growth company at this stage. That's what the market is telling you.

simoan wrote:

vand wrote:Personally I see Zoom as much more of a direct rival to Cisco's webex platform than MS Teams.

But FWIW, Microsoft's track record in this space is not very impressive.. anyone still use Lync or MS Messenger?

Does anyone use Bing? What happened to MS Encarta? See? MS aren't exactly infallable..

I think MS would do well to just buy Zoom.

This doesn't matter in the grand scheme of things though, does it? You forgot to mention buying Nokia! Stick to the fundamentals because trying to forecast things in this way is a mugs game. The fact is all MS customers can use Teams for free and so that's a large proportion of business customers who will never switch to Zoom. Why should they if Teams works? Zoom should start paying a dividend because it's ex-growth but still highly rated. People need a reason to hold a low/no growth company at this stage. That's what the market is telling you.

The market is also telling us that MS is the world's second most valuable company by market capitalisation. Well in excess of $2 trillion dollars. No company can be perfect all the time. Apple is the world's most valuable company. Nobody talks about the Apple Newton, do they they?

simoan wrote:

vand wrote:Personally I see Zoom as much more of a direct rival to Cisco's webex platform than MS Teams.

But FWIW, Microsoft's track record in this space is not very impressive.. anyone still use Lync or MS Messenger?

Does anyone use Bing? What happened to MS Encarta? See? MS aren't exactly infallable..

I think MS would do well to just buy Zoom.

This doesn't matter in the grand scheme of things though, does it? You forgot to mention buying Nokia! Stick to the fundamentals because trying to forecast things in this way is a mugs game. The fact is all MS customers can use Teams for free and so that's a large proportion of business customers who will never switch to Zoom. Why should they if Teams works? Zoom should start paying a dividend because it's ex-growth but still highly rated. People need a reason to hold a low/no growth company at this stage. That's what the market is telling you.

Clearly you haven't even bothered looking at the numbers - Zoom is hard a low/no growth company. It only floated less than 3 years ago and revenue has gone from 150m to 4bn in that time. To suggest that it's a mature stock that should start paying out a divdend is ludicrous.

vand wrote:

simoan wrote:

vand wrote:Personally I see Zoom as much more of a direct rival to Cisco's webex platform than MS Teams.

But FWIW, Microsoft's track record in this space is not very impressive.. anyone still use Lync or MS Messenger?

Does anyone use Bing? What happened to MS Encarta? See? MS aren't exactly infallable..

I think MS would do well to just buy Zoom.

This doesn't matter in the grand scheme of things though, does it? You forgot to mention buying Nokia! Stick to the fundamentals because trying to forecast things in this way is a mugs game. The fact is all MS customers can use Teams for free and so that's a large proportion of business customers who will never switch to Zoom. Why should they if Teams works? Zoom should start paying a dividend because it's ex-growth but still highly rated. People need a reason to hold a low/no growth company at this stage. That's what the market is telling you.

Clearly you haven't even bothered looking at the numbers - Zoom is hard a low/no growth company. It only floated less than 3 years ago and revenue has gone from 150m to 4bn in that time. To suggest that it's a mature stock that should start paying out a divdend is ludicrous.

Investing is about the future not the past. Look at the EPS forecasts for the next three years - flat to down, no/low growth. It profited greatly from a unique set of circumstances that may never happen again in our lifetime. There are lots of stocks that benefitted from the pandemic that will never see that kind of growth again, especially as people return to the office this year. I think it will make a terrible investment going forwards and far too risky. Good news is it is sitting on $5Bn in cash so can maybe make an acquisition to drive future growth. Way too speculative for me. Good luck with it! I wouldn't bet your house on it

Dod101 wrote:

GeoffF100 wrote:The global market appears to have less than 9%, so not a correction yet. Just a blip.

I realise the expression 'correction' is widely used for a fall in the market. Does anyone know why? Its use suggests that the market is always otherwise incorrect which in itself is not correct I am sure.

Dod

I have a copy of Galbraith's excellent 'The Great Crash 1929' and I suspect that expression is quoted there, I'll have a look to see if I can find it.

RC