Mario Kart
Footballguy
If there is a coming recession, what bubble bursts and what are the ripples behind it?
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Stock Thread (33 Viewers)
- Thread starter St. Louis Bob
- Start date
Sand
Footballguy
Completely IMO, but I believe out will be corporate debt. Right now it is quite high with respect to GDP. If this bursts junk bonds, high yield preferred stocks, etc will get huge haircuts. BDCs will collapse as a sector. Any company that has a high debt load will greatly struggle (yes, T, I'm looking at you).
That will precipitate consumer debt issues, particularly vehicles.
culdeus
Footballguy
At some point the weekly billion dollar catastrophe will start to eat at the underwriters.
There's not just an inexhaustible supply of cash to soak up the next flood/hurricane/drought.
In this case if the underwriting costs go up you are looking at bank risk going up and they have to spread their notes up and down industry sectors.
The risk is greatest in Texas and Florida, where these two states account for 35% of the risk.
Last year was an outlier with 111B paid out, but the trend is up with the expectation for 40B as a baseline annually with a 10% YoY increase.
I think already FEMA and COE are starting to flex in places you wouldn't expect. They know we are ####ed, (We being SE states) and need to start laying the groundwork to put the burden on the homeowner.
To give an anecdotal example. Down the street there is a creek. With climate change and habitat loss the creek is stressed and starting to erode. FEMA/COE are coming in and deed restricting homes to do remediation approved by COE only or they won't bless the flood plain waivers. Not fill some sandbags and call it good, they want the land owner to pick up 150k in remediation.
Similar stories are starting in lake home communities in texas.
This is a tiny neighborhood in Dallas. What happens when they start pulling that line on every costal home from Padre to Hilton Head? The ripple effect will be huge here.
siffoin
Footballguy
Really enjoyed this take. Thank you for the insight. Kind of what my thoughts are. You may not believe in climate change. But the people who insure and finance you do.
Bob Sacamano
Footballguy
CA right there, too. Carriers who aren't pulling out are all taking tons of rate actions.
culdeus
Footballguy
I mean to ELI5 it. When a hurricane takes your house one of four things happen
- Your insurance writes you for the policy
- Your insurance doesn't (because you don't have any) 70B of damage like this last year BTW
You dump the keys in the mailbox and walk away and leave the bank with the note
- You suck it up and take it out of pocket
[*]FEMA comes in and gives you pennies on the dollar for your damage and maybe condemns you, if lucky.
There is no magic money fairy at the end of the rainbow here. Something has to give.
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From what I know about the company which isn’t a lot, I’d want to short it hard. But I don’t have a margin account nor the stones to actually do it.
Capella
Footballguy
Christ so what is uber going to come in at? Don’t they have 2/3 of the market share? Not what I was expecting at all.
Capella
Footballguy
Lyft raised more than $2 billion Thursday afternoon after pricing its shares at $72 apiece, the top of the expected range of $70 to $72 per share. This gives Lyft a fully diluted market value of $24 billion
UBER is looking for a market value in the neighborhood of $120 billion.
UBER is looking for a market value in the neighborhood of $120 billion.
Carnival (CCL) got crushed earlier this week mostly due to higher fuel and other costs.
They are currently trading at $50.62/shr, which I think is a steal. Revenues are still projected to rise and advanced bookings are ahead of prior years pace. Plus the almost 4% dividend is a nice perk.
Get on the boat, son.
They are currently trading at $50.62/shr, which I think is a steal. Revenues are still projected to rise and advanced bookings are ahead of prior years pace. Plus the almost 4% dividend is a nice perk.
Get on the boat, son.
The price isn't really important, it's the market cap that matters (price X # of shares). Uber is likely going to be valued 4-5 times the amount of Lyft, but the price will depend on how many shares they issue.
Bob Sacamano
Footballguy
I can't imagine buying either at those valuations. Lyft before Uber with a gun to my head, I guess.
$120 bil @ IPO is nuts. How many publicly traded companies in the world are north of that?
SBUX is at $92 bil. Not a growth company anymore, you say.
Salesforce JUST hit $120b.
With a corporate culture that's cringeworthy, burning through cash, behind in autonomous, and what path to profitability? pass
$120 bil @ IPO is nuts. How many publicly traded companies in the world are north of that?
SBUX is at $92 bil. Not a growth company anymore, you say.
Salesforce JUST hit $120b.
With a corporate culture that's cringeworthy, burning through cash, behind in autonomous, and what path to profitability? pass
Agree with you 100%. When cars are really autonomous, it seems like a pretty easy logistics solution to kill Uber. I’d think any of the big players in cars could handle that part.
Bob Sacamano
Footballguy
I don't know about killing them. They'll get to autonomous, too, eliminate one of their biggest costs (people), and have a headstart in the space itself. But they'll have to partner with whoever is making the cars/tech for it if they're not there themselves. And it doesn't seem they're likely to be. Which will come at a cost itself.
If they can't find profitability with their current market share and a massive jump on the competition, what's going to make that happen? What's the ceiling for all of this? Is the overall market big enough to just maintain market share and scale up? Maybe, but I can't see it.
Counterpoints:
Those sub-autonomus cars aren't going to be cheap. Uber is a pretty neat model. Their employees are investing in the capital to run and expand their business. Often the employee is working at a loss and the company still makes money. They have the ability to instantly lay off employees without unemployment issues or hard feeling and can hire on the spot.
Getting autonomous cars to interact with customers isn't going to be cheap. Often in the city someone is flagging down the uber while it briefly parks an an active lane. Until someone solves the problem of the car identifying exactly where the customer is at and who they are it's going to be hard to have autonomous unique routes.
Only 36% of the population has used this type of service. 64% of US households have Amazon prime. Still room for growth IMO.
$50-100 billion is a lot of coin to eliminate the drivers and that’s looking at their current market share and no maintenance.Actually, once it's all autonomous, Uber will own the fleet, eliminate the drivers (their biggest cost) and be positioned to own the market. Buying Uber is the futureology-nerd entry point into the self-driving car market.
Well which is it? If you are arguing that autonomous won’t really work then how do they get the costs down to be profitable enough for that valuation. If autonomous works then how hard is it for Google, Ford, Tesla, etc. to put in a Taxi program where Google or Apple funnel users to pay and just take a cut with the rest going to the car owners.
Maybe they’ll do amazing but they’re already valued at a huge market cap and it’s a taxi service. If they are worth 15% of Apple, shouldn’t they have revenue potential 15% as much? How much does the average person spend on Apple products compared to Uber?
Bob Sacamano
Footballguy
Does the other 64% have a need for this type of service? Everybody needs stuff. Not everybody needs someone else to chauffeur them.
I don't doubt there's room for growth. I wonder if there's room for enough growth. And I do doubt there's room for enough growth quickly enough to justify that lofty valuation.
ftr: I am not in the Uber is doomed camp. I've used Uber and Lyft. I see a future for ride hailing. I also see a competitive future that's likely to leave little pricing power. Maybe Uber is the eventual winner. I might even find an entry point I like for either of them. IPO isn't it. Not for me, right or wrong.
I agree. Wasn't arguing that they weren't overvalued, just that it's not a doomed industry.
They are overvalued. I was just responding to autonomous cars killing uber. Once you finally get an autonomous car that won't follow lines into a barrier, run over pedestrians, and can handle snow, you then have to find a way for it to identify a customer it's never seen before. I could see the autonomous car making runs from the airport to the hotel and back or over predetermined routes where parking and users aren't an issue.
Bob Sacamano
Footballguy
Which seems to me like the issue with autonomous cars in general. To me, infrastructure almost has be a bigger challenge than the tech itself. You might be able to easily settle on some early long-haul trucking uses for autonomous, where interstates are well-marked and weather is known to not be a concern. When you get onto surface streets and a need to define unmarked lanes and considerably more variables, it gets much trickier.
I think autonomous is the potential path forward for ride hailing services, though. I don't think it's the death knell.
I think autonomous is the potential path forward for ride hailing services, though. I don't think it's the death knell.
LYFT back below IPO price. And for reasons I'm not sure, bank stocks are soaring today (well, at least the one's I own). I'm super duper skittish on these, and I just sold off my GS position for a nice profit (it will probably double now). I own much too much C and teetering on whether to sell at least half my position or all of it now.
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Sand
Footballguy
Don't Noonan
Footballguy
Sand
Footballguy
culdeus
Footballguy
I mean at some point it's a hardware company. Hardware has to have factories and they don't have the factories to support that valuation. Unless they start buying up all the mothballed GM plants the top line growth is going to stall out.Just heard an analyst on CNBC say she had a 5 year price target of TSLA at $4,000.00
I swear, TSLA is the most fascinating story on Wall Street. Visionary leader. Outstanding product. Innovative battery manufacturer. Yet, totally unbelievably narrative.
They delivered about 50,000 vehicles, Q1 2019. This coming on the heels of 63,000 and 55,000 the previous two quarters. Okay, some issues getting cars to market I get in China, ok. But, they re-affirm guidance that they are set to delivery 360,000 - 400,000 vehicles in 2019? I'm not super sharp, but that means they need to average 100,000+ vehicles the next three quarters? And people believe this still? Every quarter there is a different debacle, a different issue, yet they seem convinced they will work out all the kinks in a seamless manner and start overproducing?
Stock getting hammered this a.m. I really like TSLA and Musk, and autonomous vehicles, autonomous plants, very small environmental footprint all sound unbelievably great to me. But we are getting to the point where this seems a fantasy and the company will run out of cash or access to cash years before fruition. And competition will almost certainly lap them here, or maybe i'm the one that's nuts.
They delivered about 50,000 vehicles, Q1 2019. This coming on the heels of 63,000 and 55,000 the previous two quarters. Okay, some issues getting cars to market I get in China, ok. But, they re-affirm guidance that they are set to delivery 360,000 - 400,000 vehicles in 2019? I'm not super sharp, but that means they need to average 100,000+ vehicles the next three quarters? And people believe this still? Every quarter there is a different debacle, a different issue, yet they seem convinced they will work out all the kinks in a seamless manner and start overproducing?
Stock getting hammered this a.m. I really like TSLA and Musk, and autonomous vehicles, autonomous plants, very small environmental footprint all sound unbelievably great to me. But we are getting to the point where this seems a fantasy and the company will run out of cash or access to cash years before fruition. And competition will almost certainly lap them here, or maybe i'm the one that's nuts.
Bob Sacamano
Footballguy
They're not really going to be one of the leaders in autonomous either, so that's not really much of a selling point imo. And I still believe infrastructure is going to be a bigger hurdle for these companies to overcome than the the tech itself.
They're counting on the lower priced model 3 making their cars more accessible, driving those delivery numbers higher. You wouldn't have seen any of that in the Q1 number. Yes, that still seems really unlikely, especially for a company that was choking (and in delivery logistics hell) on delivery of half that many cars.
They're counting on the lower priced model 3 making their cars more accessible, driving those delivery numbers higher. You wouldn't have seen any of that in the Q1 number. Yes, that still seems really unlikely, especially for a company that was choking (and in delivery logistics hell) on delivery of half that many cars.
Don't Noonan
Footballguy
Both of these IPOs on fire this morning. TW priced at $27 and is currently trading at $34.84 up 29%. SILK priced at $20 and is currently trading at $35.82 up 79%!
Sand
Footballguy
JPM Guide to the Markets.
Seriously, if you read nothing else on stocks this quarter, read this. It is an unparalleled set of charts that is just packed with great info on the markets, economy, etc.
Seriously, if you read nothing else on stocks this quarter, read this. It is an unparalleled set of charts that is just packed with great info on the markets, economy, etc.
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CR69
Footballguy
I got to take a few rides in an autonomous vehicle in Las Vegas. Can't remember the company or class of autonomous vehicle it was though. The engineer sitting in the passenger seat said that the lights on the strip had been upgraded so that they could communicate with the car. He seemed to think fully autonomous vehicles were a bit off due to the infrastructure upgrades needed like you mentioned. I'm looking forward to that day though. Human drivers are the worst.
culdeus
Footballguy
Sand
Footballguy
Sand
Footballguy
First 19 pages + pg. 31 + pg. 33 are pretty good. I agree there is a lot of bulk there.
Bob Sacamano
Footballguy
Can't help but feel like there's not a ton of upside for AAPL from here in the near term.
Bob Sacamano
Footballguy
Also can't pull the trigger on selling AAPL.
GoBirds
Footballguy
Sand
Footballguy
Yep - not selling AAPL (it will be a dividend cash cow for a long, long time) and AMZN, for that matter.
I'm hoping the kids get them with a (huge) basis reset.
Bob Sacamano
Footballguy
Planning the same. Just that sinking feeling when you're pretty sure there's going to be s-t pain but you want to be holding l-t.
I had some buying power in my 401k so I bought 100 shares of AAPL which I plan to hold long term but also bought another 100 shares on a dip. That second batch can be sold and re-bought if I think a downturn is coming, then I can buy back in at a lower cost basis. It’s the best of both worlds.
