First off, due to the fact that I am a man of sportsmanship, I would like to give the bears their moment of recognition.
Now that you fools have had your moment to gloat, lets look at the reality of the situation the facts. I have heard it now for over 2 days, the masses spitting on social media, treating it like the dirt on their shoes and at this point I am fed up. Not fed up with investors analysis, everyone is entitled to their opinion, I am fed up with the lackluster understanding of the innate details of the social media story.
Do you know what happened with JCP stock on Wednesday? A tweet moved the stock price nearly 10%. That’s right, a tweet manipulated the stock price of a publicly traded company. Now to say social media has no potential, has no place in the modern world, has no merit to any individuals, is to say that you are oblivious to the inner workings of the current world we live in. Possibly your reality differs from mine, I tend to live in the real world while many of those around me are out of touch with it, though in both settings, we check our twitter to get updates about the goings-on around us. Many of you are obviously shocked how a tweet can move a stock price, more likely you are infuriated about the situation, being that you cannot make sense of it. That is correct, your naivety forces you to misunderstand the magnitude of the simple tweet. Your naivety also makes you unable to grasp the potential of social media. So let your naivety do your stock picking, while I sit here knowing that the influence of Nina Garcia will get many talking and shopping about That one tweet reached millions and that in turn will drive traffic into the store, if not at least raise interest of many about JCP new line of products.
Again, I believe that many don’t understand the grandeur of social media in all its forms. Social media allows the people of the world to connect with each other. Facebook for younger generation can be compared to the rotary phone of the past generations. That example was a simple to ensure you got the overall theme, obviously social media has a greater impact than the rotary phone and continues to change the way in which we interact with each other. Investors fail to grasp the earnings potential of social media time and time again. When it comes to browsing the internet, an individual may spend a few minutes on a website, reading an article, or scrolling through a sites info. If you put that same individual on a site dedicated to social media, like Facebook or Twitter, they spend much more time on the site throughout the day, because that information is routinely updated and new information added every moment. This difference in behavior of the individual I am referencing makes the revenue and profit potential of social media unprecedented. Let me put it in number terms, so that you investors understand it better. Facebook comes in first when discussing time spent on a webpage, Google sites including YouTube come in second. Do you know how many times your page changes when you check your email or watch a YouTube video? The ads change minimally, while in the Facebook setting the interface is designed for you to view many pages in a short matter of minutes. Social media lends itself to push ads in your face again and again, ads targeted to your spending habits or interest. This version of advertisement can be described as nothing more than a revolution.
I find solace in the bears analysis, many suggesting that the they knew all along, nice thoughts. Luckily for us bullish on the sector, time remains on our side. As the numbers out of many of the social media companies suggest, growth is still in play. Look at the mobile space for example, Facebook had a %67 jump in mobile access, with 543 million people accessing their platform via a phone. Zynga had both an MAU and DAU increase. Mobile was also a big avenue for Zynga as well with 33 million DAU. You can attempt to cut down the above companies statistics, but that is undoubtedly a lot of people. Mobile is unquestionably on the move and a territory where no precedents are set. Did anyone think that Facebook could manipulate their free products profiteering from the masses in the matter of one-quarter? Facebook has proven itself a leader in its industry, but impossible expectations are just that, impossible. Zynga, still the social gaming giants still firmly rests its laurels on social gaming, but sees the real growth over all platforms (in particular mobile). All these numbers and stats merely suggest that the growth exist, users are still using, the making money without destroying your user base still remains challenging. But look, just sponsored stories in the news feed made a million dollars a day, and that my good sir is just the tip of the iceberg.
The growth sits there, slapping you in the face. The revenues are growing just like I wanted, just like you wanted, but obviously not up to Wall Street standards. Why does Wall Street have these ridiculous standards? Simple, investors still don’t understand the business and think it’s merely a fad, so for them to believe in these new tech companies they need to have Enron earnings. So I will sit here believing in the story, knowing that these are the companies are the future, that they have been true to their investors, that the manipulations that many are implying are something of the past. Yes many of the CEO’s and early investors have sold out, but most are still tied to the future of the company. Many of them see the potential, just look at the growth numbers. So no these leaders of the tech are not walking away, they are losing sleeping at night looking for ways to make money off mobile. Just as we stay up late analyzing their actions. No these companies are not crap, not ceasing to exist, though they are trading as so. Perception is everything and the perception still remains negative, but just because a company has a negative perception does not mean it is not a business. I can take off the blinders and see the future, see the story, see the growth, see where the profit will come from. So yes the bears have been vindicated, but the story is far from over.
I am usually right, but more often than not I am way too early to the race.
Photo by birgerking