#99 - Is $FB the Most Undervalued in FAANG? BuzzFeed Goes Public to Buy Complex + Whoop, EightSleep and HRV
In this week's episode of Reformed Millennials, Broc and Joel discuss Facebook and all the recent news around the now trillion dollar platform - everything from the recent ruling on their antitrust lawsuit, to the launch of their newsletter platform. We also chat about the slide deck that Buzzfeed released as part of the upcoming transaction to go public and acquire the Complex Network
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👉 For specific investment questions or advice contact Joel @ Gold Investment Management.
65% of people think its a bad time to buy a house lol
The major US Stock Market Indexes can't go down unless the stocks in those indexes drag them down.
It's just math.
Take a look at the spike in 21-day lows last week. You can see an expansion all the way down the cap scale, from large-caps to small-caps:
Where we're NOT seeing this is in the 63-day lows.
It's an absolute ghost town.
💸Reformed Millennials - Post of The Week
FB Screams Up After Big Court Dismissal:
Sometimes expected outcomes are still a big deal, and sometimes the seeds of a potential defeat are buried in a victory.
As a Facebook Shareholder, yesterday's outcome was a welcome surprise and did a lot to squash the companies biggest performance headwind. Antitrust
A federal judge dismissed antitrust lawsuits against Facebook Inc. filed by the U.S. government and most states, a major win for the company before the cases even got off the ground.
U.S. District Judge James Boasberg in Washington on Monday granted the social-media giant’s requests to dismiss lawsuits filed by the Federal Trade Commission and state attorneys general in December. The dismissals, which came in a pair of rulings, came before any pretrial proceedings had progressed.
Judge Boasberg said the FTC’s lawsuit was “legally insufficient” because it didn’t plead enough allegations to support monopolization claims against Facebook. The judge, however, said the commission can try again and gave it 30 days to attempt to file an amended lawsuit.
However, not everything was roses for Facebook in the case.
WHERE FACEBOOK LOST
The mergers and acquisitions bit is the biggest reason why Facebook isn’t completely out of the woods.
First, the FTC can re-file their complaint with a more precise market definition. I think that is far more difficult than it appears, but presuming they succeed, Judge Boasberg did do a precursory examination of the FTC’s two primary claims about Facebook’s alleged anticompetitive behavior.
The FTC argued that Facebook illegally withdrew API access to competitors; Judge Boasberg said this argument failed for three reasons:
Facebook has no duty to deal with competitors (I covered “duty to deal” extensively in the context of Apple v. Epic).
While companies can be held liable for “changing the rules” (which I also covered), Facebook limited API access in 2013, which at a minimum means there is no need for an injunction.
There is insufficient evidence that Facebook engaged in “conditional dealing”, i.e. limiting access to its platform based on whether or not independent apps also accessed Facebook competitors.
This entire line of argument appears dead in the water and this is not surprising given current Supreme Court precedent.
This was the big loss for Facebook: while Judge Boasberg said it was too late for the states to challenge Facebook’s acquisition of Instagram and WhatsApp, he did say that the FTC could do just that indefinitely...
This will pose a continued potential problem for Zuck and the team as they continue to grow the business.
While I remain in the FB corner, the near-term (remainder of summer) upside seems limited at current prices and would hold off adding.
A 30% run-up in price is damn good and I truly see the stock as a double from here in the coming 5 years.
Instagram continued growth in Emerging Markets
Big Blues Shift into Groups (Moms groups, Interests and Neighborhood groups)
Buzzfeed goes public at $1.5bn
Buzzfeed was one of the hottest of the wave of new online publishing companies that emerged 5-10 years ago, and it's come through the subsequent bloodbath better than most, even as Facebook distribution twisted and turned, ad deflation accelerated and the 'pivot to video' turned out to be a dead end. Now it's going public via a SPAC acquisition at a $1.5bn valuation. $521m 2021e revenue and just barely breaking even. Link to the deck
Shopify removes all revenue share on first $1M over partner platform
LORD of the Roths
In 1997 Peter Thiel bought a million shares of PayPal at 1/100th of a penny in his ROTH IRA.
Which since that time, the stock has traded to 293$/share. This has exposed a glaring loophole in their Roth IRA system.
If Peter sold his position in Paypal and moved it into Enbridge Stock, his Roth IRA would yield > $300m/year USD
🌊Best Links of The Week🔮
F1 is one of the most entertaining sports in the world and one of the best case studies on product promotion - from Join Colossus
Convert visitors into shoppers on every channel. Flexible APIs and pre-built integrations to major platforms like Shopify, Instagram, and Snap mean that you can unlock eCommerce everywhere your audience lives.
Hedging the Financial Tsunami of Higher Rates and Inflation - Real Vision
Cryptocurrencies remain something of a separate world to the rest of tech, and after a decade we still have very few use cases outside of crypto itself. But the developer energy and investment have a reality quite apart from the froth, and Andreessen Horowitz has raised a new $2.2bn dedicated crypto fund.
Supreme Court Justice Clarence Thomas suggested yesterday that U.S cannabis prohibition may be unconstitutional and even went so far as to label the federal policy ‘contradictory’ and ‘unstable.’
Canadian startup mentioned - Bonsai - The only end-to-end commerce platform for publishers