As IF Times

Source: Shares of Twitter Are Hitting New Lows – Bloomberg Business

Almost 2 years ago, we discussed the valuation of what we described as ‘gossip stocks‘, which referred to publicly listed businesses capitalizing on people’s insatiable appetite for social media applications. This included Facebook, Linked In, Zynga and of course Twitter.   Over the past  year, many other newly minted stocks in the new technology space have been dubbed “unicorn” stocks. This is a reference to the fact that while commanding laughable valuations in the private market and creating gobs of paper millionaires, actual revenues fall woefully short of expectations once they are publicly traded. So while the bankers and venture guys talk about future earnings gushers; like unicorns, no one ever sees them.

This great deflation of expectations on  social concept stocks has been masked by the general buoyancy of the overall markets in the past year.  Market nerds will point out that even as markets ratcheted higher and higher, there were fewer and fewer stocks making the move up.  Now, all of a sudden as the general market looks creakier, the enormity of the losses incurred by holders of these unicorn issues are coming to light. Here is a short list of market capitalizations of some selective unicorn stocks as of the close today:

Issue                          Market cap Jan 2014      Market cap Jan 2016       Peak market cap

Twitter                      $48 billion                         $13 billion                        $ 51 billion

Facebook                  $122 billion                       $215 billion                      $ 250 billion

Zynga                        $n/a                                    $2.2 billion                       $ 4.8 billion

Linked In                 $23 billion                          $23 billion                        $ 30 billion

GoPro                       $n/a                                     $2 billion                          $ 10 billion

Tesla                         $ 20 billion                        $ 26 billion                        $ 35.3 billion

Alibaba                     $ n/a                                   $ 17.5 billion                     $ 30 billion

As we note, Twitter has been one of the major losers in the valuation shrinkage metric, but other established technology stalwarts have also turned sharply lower, such as:

Apple                        $430 billion                        $ 537 billion                     $ 742 billion

Yahoo                       $ 38 billion                          $ 28 billion                       $ 49 billion

While this list is selective, they represent some pretty big write downs from their respective peak valuations. In the case of stalwarts Apple and Yahoo, they are considered bellweathers even though they are well past concept stage.

Once stocks become public, there is a lot more scrutiny on the enterprise’s viability.  There’s only the hard reality of  the next quarter’s earnings to justify valuation, not the extrapolation into infinity used by MBA whiz kids during the initial private to IPO stage.

Inexperienced market players may attribute the collapse in valuation as a function of an inability to execute on the part of the companies. The truth is actually much simpler.  In the case of newly minted issues, they may be surprised to find out that the original valuation and extrapolated cash flows were simply made up out of thin air.   That’s right, completely fabricated.  As long as backers are willing to fund the companies and the bankers agree to subsequently float at an agreed upon valuation, virtually any valuation can be had; especially with new concept companies having no history.  Makes sense. If you’re going to make up a number, make it a big one.  Who needs Powerball, when you can just write your own ticket?

The basic premise of most unicorns is that novelty and market share are more important than profitability…which will come…eventually…they hope.   In fairness, that actually did work for Amazon, a survivor of the last dot com bubble.  Amazon however, actually does have a business model and it’s not entirely based on selling ads.  As in all market cycles, the excesses and fluff eventually disappear, to be replaced by different versions of fluff in the next cycle.  As the general market begins what looks to be a longer term retracement, there may be more than just unicorns that people should be leery of.  The creature that people should really be afraid of…is the bear.

Update: Uber

Update 2: Crash of Tech Stocks

link Canada warns not to buy fresh semen online.

As we all know, Amazon started this whole process years ago when they pioneered the idea of buying things online, initially books.  Buying books seems so quaint these days as the availability of buying things online has exploded to include, well,  everything.  That’s just new stuff.  If you really want to plumb the depths of what people will buy online, you’d have to check Ebay or perhaps Craig’s list. The world has become a gigantic garage sale accessible from your computer chair.  Just by doing a quick search, we can find such treasures as canned silkworms, belly button fluff and hair clippings from celebrities.  You can go the other way and buy army surplus tanks.

But Semen?

Really?  Assuming that people would want it for its intended use, why would anyone want to procreate a human being via semen bought through the Internet?  How difficult would it be to get local, fresh product? Can someone really be that ugly that they can only get insemination by mail?  Most people won’t eat day old fish, but flash frozen man juice is ok?

The proliferation of web based stores has forced many retail stores to adjust to the new cost reality since web based ones don’t require the quantity of staff found in real brick and mortar shops.  But this has taken the concept of cutting out the middle man too far…literally.  It’s easy to project where this is all going.  Obviously it’s a long term plan to get rid of men.  Makes sense.  Society has been harping on the uselessness of men for much of the past 30 years.  They smell, they drink copiously, they leave messes wherever they go, they’re insensitive to women’s needs, etc etc.  Popular culture has even played down the idea of masculine men since the modern ideals are Justin Bieber, Ashton Kutcher and other girly-men.  Clearly, it would be easier to extract all the product from these types and do away with the rest of pesky men.

The only problem is, who will kill the spiders?