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Tesla Inc Will Report A Record Quarter, Will The Stock Follow?

Palo Alto, California, based electric car and renewable energy company Tesla Inc (NASDAQ:TSLA) is scheduled to report its Q1 2017 earnings on Wednesday, May 3rd. The earnings report will cap a record quarter for Tesla which is entering a crucial operational phase. It has been quite a good quarter for Tesla's shareholders who have seen the stock rally to record levels. On the other hand, the shorts are feeling the pain. In his recently released letter to shareholders, Greenlight Capital's David Einhorn said that "It was a difficult quarter to be short the bubble basket, and TSLA in particular,". He further added, "With holders reluctant to sell, the stocks can only go up - seemingly to infinity and beyond. We have seen this before. It's painful for the shorts, as the TSLA CEO has been happy to remind everyone via Twitter". Mr. Einhorn expects this stock bubble burst sooner or later. However, given the recent momentum and strong quarterly results, shorts may have to wait for some more time.

Check out our top stock picks from the auto sector, which have beaten the S&P 500 by over 180%. You can also check out our top stock picks, from technology sector which have beaten the NASDAQ by around 130%.

Tesla Inc to post record revenues.

Analysts expect Tesla Inc to report a non-GAAP EPS of -$0.81 against the revenues of $2.6 billion. Both the figures represent a strong improvement from the comparable quarter last year. The expected non-GAAP EPS loss of $0.81 represents more than 44% improvement from the last year's comparable quarter EPS of -$1.45. On a GAAP basis, analysts expect Tesla to report an EPS of -$1.15, compared to an EPS of -$2.13. Tesla's margins may get a boost from its enhanced autopilot option if the company decides to record a portion of revenue from autopilot update this quarter. Tesla did not record any revenues from the autopilot update in the previous quarter as the software updates were delayed, which had an adverse impact on its gross margins. The delay in the autopilot update has resulted in a class action suit against Tesla Inc. On the top line front, the expected revenue of $2.6 billion represents a YoY growth of more than 125%. The revenue growth will be driven by SolarCity acquisition and record deliveries.

Tesla Inc reported record production in first quarter.

At the beginning of the month, Tesla Inc had reported that it had delivered a record number of cars in the first-quarter. Tesla (NASDAQ: TSLA) delivered just over 25,000 cars in Q1 2017, which represents a 69% YoY growth, up from 50% growth in deliveries it had registered in Q1 of last year. A large part of the growth was driven by higher Model X deliveries which grew almost 4.8x, from 2400 deliveries in Q1 2016 to 11,550 deliveries in Q1 2017. Tesla also reported a record production in the current quarter. Tesla produced 25,418 vehicles in the current quarter, up from 24882 vehicles it produced in Q4 2016.

Apart from the revenue and EPS figures, investors will also be looking out for commentary on its capital requirements. In its 2016 10-K filing, the company had stated that it will increase its capital spending this year as it races to produce over 500,000 vehicles in 2018, up from 84,000 in 2016. Tesla also faces heavy capital requirements for the production of Model 3. Tesla had said that it will be spending around $2-$2.5 billion in the first half of the year. Tesla had already raised $1.15 billion through a mix of debt and equity issue. It remains to be seen whether Tesla will go for another round of fundraising this quarter as many analysts expect it to do. The heavy capital expenditure is likely to be a big drag on the company's bottom line.

Model 3 will remain in the focus.

Model 3 is likely to remain the main focus during the Q1 earnings. Model 3 is critical to Tesla's growth as well as its profitability. With Tesla Inc planning to launch the vehicle in July, investors should look out for any updates about Model 3 itself, as well as the production plans for the vehicle. During the Q4 earnings call, Tesla has said it expects to see limited vehicle production in July. The company then aims to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018. Apart from the Model 3, investors should look out for any updates on the recently announced planned to launch newer vehicles including semi-autonomous trucks.

Tesla stock hits new all-time high going into the earnings.

Shares of Tesla motors hit a new all-time high of $327.66 on Tuesday before closing the day at $318.89. Tesla stock is in a bull run and has continued to trend up in spite of valuation concerns and some negative news. The post-earnings movement in the stock will be majorly determined by the progress on the Model 3 front and its plans regarding capital requirements.

This article was originally published on amigobulls.com on 1st May 2017.

By- Kumar Abhishek

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A Built In Chrome Ad-Blocker Could Actually Help Google

Google's rumored plan to develop its own ad-blocker will only help itself, and its ad-business. Here's why.

Rumors have emerged, which suggest that Mountain View, California-based Alphabet Inc's (NASDAQ:GOOGL) is now planning to add a built in ad-blocker for its massively popular Chrome web browser. And the rumor has left a lot of folks scratching their heads to figure out why exactly, Google, which earns nearly all of its money from digital advertising, would do such a thing. Is Google crazy enough to do something that could kill its ad-business, and dent GOOGL stock? The short answer is, no, it isn't. In fact, a deeper look suggests that, if Google is indeed working on a built in ad-blocker, the move could be a great one for the online search giant. As a matter of fact, you'd wonder why the company didn't think of doing so much earlier. Either way, the rumored move could be part of a smartly woven strategy. Here's why.

A few quick facts about ad-blockers.

Over the last few years, ad-blockers have emerged as possibly the single largest disruptors of the digital advertising industry. With the burgeoning growth of digital media, publishers have, over the years, become increasingly dependent on online advertising as a source of income. And by virtue of its position as the gateway to the internet, Google, sits at the top of the pyramid, as the biggest enabler of digital advertising. Ad-blockers, which have grown in popularity, have quietly chipped away at this source of income for publishers and ad-networks alike. And statistics suggest that these ad-killers have become hugely popular, with some sources suggesting that as many as a third of internet users on desktops (PCs and laptops) and about 15% of mobile internet users have ad-blockers enabled.

We've seen industry experts and media houses cry themselves hoarse about the unfairness of it all. Should users be allowed to consume content for free? How are publishers expected to doll out content without being compensated for it? Obviously, somebody's going to have to pay for it. On the other hand, those who advocate the use of ad-blockers have their argument as well. Low quality publishers who abused their ability to make money off digital advertising have in part created the need for such a tool, and have themselves to blame for it. Either way, with over 615 million devices reportedly blocking ads all over the world, there's just one clear takeaway. No matter what anyone has to say, ad-blockers are here to stay.

Google's move to launch a built in ad-blocker could be a great move.

A post by Shone Ghosh on Business Insider brings to light some very important points. For starters, ad-blockers aren't running a charity. Why do we say this? Let's quickly ask a very basic question. In the absence of ads, who pays for the online content that's being consumed? The answer is still the same - advertisers. Wondering how? Popular ad-blockers use their leverage as the gatekeepers to your time on web browsers, by charging advertisers to let their ads through. Quoting from the post:

Adblock Plus doesn’t actually block all ads, but charges companies like Google to allow some ads through, a process called “whitelisting”. It does this to make money.

It's actually pretty simple. By simply blocking ads, nobody makes money. By charging an entry fee of sorts, ad-blockers get to leverage their position and make money off advertisers and publishers who need digital advertising, to survive. So, what some ad-blockers are looking to do, is to evolve from complete blockers, into tools that selectively only block annoying ads that most commonly crop up on low quality sites. How do they differentiate between what goes through and what doesn't? They add advertisers to a whitelist of sorts, like Adblock Plus' “Acceptable Ads” committee. However, even after paying to enter, advertisers don't have too much control over what gets blocked and what doesn't. Quoting Lee Mathews, a contributor on Forbes:

"Google doesn't much of a say (if any) in what ads get blocked by those tools, though it does pay to be part of AdBlock Plus' acceptable ads program."

Sounds like a raw deal? it probably is. So why shouldn't Google do what these ad-blockers are doing anyway? If rumors are to be believed, the search giant is planning to do exactly that. Google's ad-blocker, which is expected to be built into its Chrome web browser, won't block all ads. According to Mathews, "It would target only certain types of ads -- like pop-ups, pre-load landing pages, and auto-playing ads with audio -- that are deemed to be bothersome to users."

What's more, Google might have yet another ace up its sleeve - its Google Contributor program, which allowed users to contribute a sum of money that would enable them to enjoy an ad free experience on partner sites that enrolled for the program. The program would compensate publishers using the funds collected from users. Google recently pulled the plug on this program, and the site now reads "We’re launching a new and improved Contributor in early 2017!" Now, this is pure speculation, but operating such a platform in combination with an ad-blocker seems like a good way to circumvent the threat from the ad-blockers that are rampant and growing in popularity. And as you'd imagine, the move will definitely help Google stock.

Google Has The Muscle To Do It.

According to reports, Google's Chrome has a billion plus users on smartphones and tablets alone, and if you look at the overall browsing market as a whole, Chrome reportedly has about 53% market share. So, clearly, Google has the muscle to effect a change. What's more, some of Google's major competition comes from Asian web browsers, most of which come with in-built ad-blockers. That could also be one of the factors pushing Google's hand. Either way, why Google waited all this while, and allowed ad-blockers to squeeze Dollars out from the search giant, is still a mystery. You'd think Google would've entered the fray sooner. Like we said, ad-blockers are here to stay, and there's no changing that. So, it's actually great that Google isn't going to sit by the sidelines and let ad-blockers call the shots in an industry it has virtually built single handedly.

- By Vikram Nagarkar

Looking for great tech stocks? Check out Amigobulls' top stock picks, which have beaten the NASDAQ consistently.

This article was originally published on Amigobulls.com.

Want a quick look at Alphabet Inc’s fundamentals? Check out Amigobulls’ 2 minute GOOGL stock analysis video.

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Did The Snapchat IPO Narrative Just Get Scarier?

Snap Inc, the company that owns the popular ephemeral messaging service Snapchat, has occupied centerstage lately as the company seems headed for what could be one of the biggest tech IPOs of our times. And as you'd expect, with Snap Inc's management team meeting the investor community in New York, more information is coming under the scanner. While Snapchat's growing success over the years has made the Snapchat IPO as interesting as it has become, there's still much debate about whether you should buy into the IPO at all. Fresh news has emerged since our previous coverage of the Snap Inc IPO, which evaluated Snap stock following its toned down valuations. And now the question is, did the narrative just get scarier? Let's find out.

What's hurting Snapchat's user growth?

Well, there are at least two different theories, and there's no easy way to tell which of the two is scarier. First, let's look at the one that's probably being spoken about much more - the one that attributes the decline in user growth to Facebook's (NASDAQ:FB) Instagram. Instagram, the popular photo sharing app, got its very own version of the "Snapchatty" Stories feature in August last year. For all practical purposes, Instagram basically copied the concept, name included, from Snapchat. And, at least partly by virtue of its significantly larger user base, Instagram turned the feature into a roaring success on its platform. So much so, that its engagement numbers dwarf those of Snapchat's.

Very recently, Facebook CEO Mark Zuckerberg announced that Instagram had taken its Daily Active User (DAU) tally to 400 million. That compares with Snapchat's significantly smaller DAU base of 158 million. Clearly, Instagram, with its much larger user base, was in a better position to promote the Stories feature, and that's exactly what it did, apparently. As per recent estimates, about 150 million DAUs on Instagram used its adapted 'Stories' feature, which compares with Snapchat's tally of ~40 million DAUs. And possibly because the launch of Stories on Instagram coincides with the decline in user growth on Snapchat, observers like Josh Costine of TechCrunch, have opined that "Instagram Stories is stealing Snapchat’s users". Well, he's not alone. A lot of prominent voices seem to concur with Costine's opinion. Besides, it's not the least bit surprising or hard to believe.

Coming to the other theory that we were talking about - it's the one that Snap Inc's management offered in response to questions pertaining to slowing user growth. Reportedly, Snapchat blamed its Android app for the decline in user addition, and frankly, that's pretty scary:

"When asked about a slowdown in new users on its Snapchat photo-sharing mobile app in the fourth quarter, the company blamed a product issue with its Android version, according to investors who attended the company’s initial public offering roadshow presentation Tuesday in New York."

There are two parts to why this is a little disconcerting. The first is well explained by an analyst who attended the event:

“Pointing to problems with Android is not addressing the elephant in the room, which is Instagram,” said Sean Stiefel, a portfolio manager at Navy Capital, who attended the presentation. “They sort of danced around the issues with user growth.” Secondly, that's not the kind of explanation you want to hear from a company that has set itself the ambitious target of going public via the biggest tech IPO in many years. It's not the kind of excuse you want to be making if you're gunning for a valuation in excess of $20 billion. More so because that's Snap Inc's primary business - running an app. And if it can't do that as well as it should, a prospective investor might find that unnerving. It's not something businesses can afford to do in this day and age,  much less social media businesses that rely so heavily on user acquisition, experience, and the network effect.

Facebook is mounting even more pressure on Snapchat

Further, the explanation only holds for the fourth quarter, suggesting that the 7% sequential growth in Q3 wasn't because of any such glitches. So, is 7% the kind of DAU expansion investors should expect after buying a stock that's valued at 47 times trailing twelve months sales? Besides, the fact that this growth rate declined from as high as 17% during the first half of the year brings us back to the growing concern around competition from the likes of Instagram. And as it appears, Facebook won't cut Snapchat any slack. The social media giant is now set to launch its latest salvo via WhatsApp, introducing a 'Stories' like feature on the messaging platform. In fact, Facebook has also reportedly been testing a 'direct' private messaging equivalent of the same on its core app, which allows users to send photos and videos straight from the camera interface. And again, like in Snapchat, these photos and videos can be viewed twice before they vanish forever.

The good part for Snapchat is that reportedly, the company is closing in on a big advertising deal, worth about $200 million. And Snapchat needs many such deals to bump up its revenue per user, to offset the close ties between its revenue and cost of revenue. With its current business model, growing engagement, which translates to higher revenue, also means growing payouts to partners like Google Cloud and Amazon. Quoting from a post on Fortune:

"Chief Strategy Officer Imran Khan asked investors to gauge how much users engaged by looking at Snap's cost of revenue. Traditionally, investors focus on metrics such as daily active users or minutes spent on the app. Snap's cost of revenue is primarily driven by how much the company has to pay to partners such as Alphabet's Google and Amazon.com to support data and bandwidth. This is based on how often users engage with the app and the types of features they use."

Be that as it may, not everybody seems entirely convinced after Snapchat's roadshow: 'There was so much hubris there it scared me away... This felt like the late technology bubble roadshows,' one of the investors said, referring to the IPO bonanza of the dot-com boom in 2000. 

Among the few positives for Snap Inc is that reportedly, the company has started selling its "Spectacles" online for $130 a piece. What that does well is to de-link Snap Inc's revenue to some extent from its cost of revenue. What Snapchat has going for it is stellar top-line growth, and if the company is to grow into its mammoth valuations, it'll need a lot of those big ad deals, and hardware sales to bump up its revenue per user. For now, the Snapchat IPO looks fraught with risks, making it a very high risk reward bet. As things stand, it seems that Facebook could gain the most from the Snapchat IPO, with a little bit in it for Twitter as well.

By Vikram Nagarkar

Check out Amigobulls' top stock picks, which have beaten the NASDAQ by over 120%.

This article originally appeared on Amigobulls.com.

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Is the Snapchat IPO a dream come true for Twitter and Facebook?

- By Vikram Nagarkar

Shares of San Francisco, California-based Twitter Inc (NYSE:TWTR) have suddenly shot up over the last week or so. And surprisingly, there's no talk or speculation about a buyout this time around. As it appears, a combination of technical triggers and news about the upcoming Snapchat IPO seem to have sparked off the rally in TWTR stock. The consistent decline in short interest might also have contributed to the surge in positive sentiment, albeit in a small way. And by the looks of it, Twitter may well be headed even higher in the coming days, if Snapchat does manage to snap up a $25 billion valuation. Investors might also want to keep an eye on shares of Menlo Park-based Facebook Inc (NASDAQ:FB), which could be the biggest beneficiary of the Snapchat IPO.

Snapchat IPO valuations make Twitter look dirt cheap

Much before news emerged that Snapchat's parent company Snap Inc had actually filed for its IPO, there were several credible sources like The Economist, which reported that the company would complete its filing soon. Understandably, the sentiment seems to have turned positive for Twitter. Now, here's a company that makes a fraction of Twitter's revenue, and by its own admission, may never be profitable. Yet, Snap Inc could end up being valued at as much as $25 billion. Coincidentally, that's exactly twice as much as Twitter's market cap of $12.4 billion, which makes Twitter look ridiculously cheap.

Snapchat IPO: The Pros And Cons Of Buying Into Snap Stock Right Now

Facebook Could Gain The Most From A Snapchat IPO

Now we do understand that some of this is just common language used by a lot of companies in their IPO filings, to ensure that nobody gets to blame them for incinerating the spoils (funds raised) from their outlandishly valued IPOs. However, As Shira Ovide of Bloomberg Gadfly recently highlighted in her post, Snapchat does have a genuine and unique problem. And the company’s risk disclosure may not be one to take lightly, when they say:

"We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability,"

The problem with Snapchat is that, it's not the operating costs that outweigh the revenue. It's the cost of revenue. Snapchat's cost of revenue exceeded the company's revenue for 2016. And while Snapchat's gross margin did turn positive in the second half of 2016, it did so only marginally. Snapchat's gross margin of 7.4% is dwarfed by Twitter's 65.4%. Ovide highlights some important points with reference to Snapchat's business model, which could eventually prevent it from turning a serious profit:

"Snapchat is unique in this regard compared with other internet companies. It pays for server costs from Google's cloud-computing operation, which makes the financial burden of every snap and story hit the company's expense line even before the company can generate ad revenue from them."

Even if we were to keep that aside for a moment, the valuations just don't make sense. Snapchat raked in about $404 million in 2016. Given that the company could be valued at as much as $25 billion, that translates to a Price to Sales ratio of about 62, which is just insane. Even if you look at the one year forward P/S, assuming Snapchat does meet estimates of $1 billion in revenue for 2017, the forward P/S comes in at 25 times 1 year forward sales. If that is indeed the price investors are willing to pay for Snapchat shares, then Twitter deserves better valuations without a doubt. Twitter made over $2.5 billion over the last twelve months, and currently trades at a P/S ratio of under 5.

Snapchat has relatively impressive user numbers, but for how long?

What Snapchat does have going for it, is it's reasonably sized (compared to Twitter) base of Daily Active Users or DAUs. Snapchat has 158 million DAUs, and while Twitter doesn't divulge its DAU count, given that it has just over 300 million Monthly Active Users (MAUs), it doesn't really matter how many DAUs the platform attracts. Even based on these numbers, it's pretty evident that Snapchat's DAU base is quite impressive on a relative basis.

While Snapchat does have that advantage, the question is, for how long? Reports suggest that Snapchat's DAU growth slowed significantly after Facebook launched Instagram Stories, a feature that apes one of Snapchat's hitherto unique selling propositions. And given Instagram's significantly larger user base, it might not take the platform too much of an effort to at least partially eat into Snapchat's existing user base if it starts to ape other features offered by the service.

To illustrate, Instagram Stories reportedly has about 150 million DAUs, and that's primarily because it has 400 million DAUs, all of whom they can expose to features they copy from Snapchat, which on the other hand, has to accumulate new users in the first place. For those who justify Snapchat's valuations using it's current growth rate, it might be worth noting that Twitter had a similar narrative, which eventually went awry in the absence of user growth. And there's no guarantee that the same won't happen with Snapchat, or any other companies in this space.

Summing it up, Twitter and Facebook could ride this unicorn. Keep an eye on how the Snapchat IPO unfolds. If the company is indeed valued at $25 billion, you might want to buy into stocks like Facebook and Twitter. Clearly, they offer much more value. While Facebook is in a different league, and we think FB stock is headed higher, apparently, Twitter isn't all that bad either. It has plateaued, in terms of user growth, and arguably in terms of top line growth as well. However, Twitter's metrics probably won't get too much worse. At its current valuations, it offers way better (relatively) fundamentals at a fraction of the price. The upcoming Snapchat IPO could well be a dream come true for Jack Dorsey and Twitter.

Looking for great tech stocks, check out Amigobulls' top stock picks, which have beaten the NASDAQ by over 120%.

This article originally appeared on Amigobulls.com.

Also Read: Facebook Could Gain Big From Instagram's Growing Engagement

Disclosure/Disclaimer: Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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Will Nvidia’s Cloud Gaming Push Hurt Its Core Gaming Revenue?

The gaming industry is huge, and if current forecasts turn out to be accurate, the industry is on the verge of crossing over $100 billion in sales in 2017, with a healthy 6.6% CAGR outlook between 2015 and 2019. Interestingly, PC gaming, which holds 27% of the market now is expected to decline to 25% by 2019.

Though the drop in market share does look a bit disheartening, PC-based gaming has shown a lot of resilience in the face of declining PC sales. Worldwide PC shipments have been declining for the last five years and nobody knows where the bottom is. Apple’s Mac sales, which stood its ground when PC sales of other companies crumbled, also saw its number nosedive in 2016, declining by 10% compared to the 6% growth it posted in 2015.

NVIDIA Is Bucking The PC Trend

But NVIDIA's (NASDAQ:NVDA) gaming revenue has gone from strength to strength over the last several years instead of following the PC decline. In the last eight quarters, NVIDIA’s revenue from gaming nearly doubled from $646 million to $1244 million, accounting for more than half of NVIDIA’s top line during Q3-2017.

This Could Hurt Nvidia (NVDA) And Advanced Micro Devices Inc (AMD)

Why Nvidia Corporation (NVDA) Stock Won't Stay Above $100 A Share

Don't Buy NVIDIA Corporation (NVDA) Stock Just Yet

One of the main reasons for the sustained growth in gaming revenue was the sustained surge in the high-performance gaming segment, which depends on NVIDIA’s products. NVIDIA’s gaming products continue to set the benchmarks when it comes to high-performance gaming systems and their leadership position in the segment is firmly cemented.

Gamers are always looking for ways to upgrade their systems and thereby the performance of their games, and NVIDIA’s products are always in demand, keeping the company’s revenue on a healthy upward trend. It’s a niche market that thrives on constant upgrades, and NVIDIA is serving that market well.

An Emerging Threat To PC Gaming

On the downside, the growth of cloud is threatening to put a spanner in NVIDIA’s works, with the potential to upend the industry. Cloud gaming itself is not a new segment, but it has been growing lockstep with the double-digit growth in the cloud computing industry and has all the qualities to disrupt the current status quo in a gaming market driven by PCs and consoles.

The biggest advantage of cloud gaming, of course, is the portability. An internet connection to a strong cloud platform is essentially all a gamer needs. No more spending thousands of dollars on upgrading systems or buying new gaming consoles on a regular basis. One decently specced laptop with a high-speed broadband connection is all that’s required, and the SaaS model of delivery means nothing more than a monthly payment to enjoy the latest and best games on practically any connected device.

Of course, cloud gaming is currently limited by several factors as well. The gaming experience depends heavily on framerates and other performance optimizations, which is why gaming hardware is generally high-end and more expensive than mainstream components. Cloud gaming is heavily dependent on the compute power of the cloud being accessed, as well as the reliability and speed of the internet connection.

“Latency – There’s no getting around it — games can react to your actions much more quickly when they’re running on your local computer. Reaction time is faster when your mouse movement just has to reach your computer than when it has to travel over an Internet connection, be rendered and compressed, and then travel back to you. Cloud-gaming services will always have more latency than powerful local hardware.” - Howtogeek

There are efforts underway to address the latency and bandwidth issues that are critical to the gaming experience, and these gaps will eventually be closed, bringing cloud gaming even closer to a native gaming experience.

NVIDIA’s Proactive Approach To Cloud Gaming

NVIDIA is not the kind of company to sit around and wait for that to happen. It’s always been a forward-thinking organization, and is now moving into the Gaming-as-a-Service space in a big way. The company recently launched its cloud gaming offering Geforce Now with a starting price of $7.99 a month.

It might be too early to call this a success, but NVIDIA is already transitioning into a position where any hit in gaming revenues can eventually be offset by gains in cloud gaming.

On the surface, it might seem that NVIDIA is cannibalizing its own gaming hardware sales, but if the company doesn’t establish its presence in cloud gaming now, it will follow in Oracle’s footsteps.

Oracle is now scrambling to ramp up its IaaS, PaaS and SaaS offerings even though it had the opportunity to get into the cloud computing segment early on. It had the technology and the resources to be where AWS is now, but unfortunately, a lack of foresight subsequently brought Oracle to a level where stable growth itself was a big question mark.

Also Read: Why Nvidia Corporation (NVDA) Stock Won't Stay Above $100 A Share

That’s not NVIDIA. The chipmaker continues to enjoy strong growth in most segments and will continue to post record-breaking quarterlies. It is a proven performer in an industry that requires constant innovation.

But looking at it from an investor’s viewpoint, a 9 times sales valuation leaves absolutely no margin for error. NVDA is a stock that needs careful handling. Buy on dips or when the stock takes a hit on bad news. That is the inevitable companion of high valuation, and that’s where the opportunity lies. Your patience will be rewarded handsomely if you do this over a long period of time.

Looking for great tech stocks? Check our Amigobulls' top stock picks, which have beaten the NASDAQ by over 120%.

This article originally appeared on Amigobulls.com

Citron Says Nvidia Stock Belongs At $90, Does It Really?

By - Shudeep Chandrasekhar, a guest author at Amigobulls.

Author's Disclosures & Disclaimers:

I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 hours

I am not an investment advisor, and my opinion should not be treated as investment advice.

I am not being compensated for this post (except possibly by Amigobulls).

I do not have any business relationship with the companies mentioned in this post.

Amigobulls Disclosures & Disclaimers:

This post has been submitted by an independent external contributor. This author may or may not hold any positions in the stocks discussed. Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. Amigobulls has not verified the author’s positions in the stocks discussed, and does not provide any guarantees in this regard. The author may be paid by Amigobulls for this contribution, under the paid contributors program. However, Amigobulls does not guarantee the authenticity or accuracy of the information provided by the author in this post.

The author may not be a qualified investment advisor. The opinions stated in the post should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

Amigobulls does not have any business relationship with any of the companies covered in this post. This post represents the views of the author/contributor and may not reflect the views of Amigobulls.

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Apple Cuts iPhone Production, Time To Sell The Stock?

- By Virendra Singh Chauhan

A recent report from Nikkei claims that Cupertino-based Apple (AAPL) is cutting iPhone production in the Jan-Mar 2017 quarter. The report has been the talk of the Apple camp even though it hasn't lead to any immediate impact on the stock. AAPL stock gained 0.2% in the first trading session of the new year, on January 3. Should investors be worried about the production cuts? Is it time to sell AAPL stock? Let's dig a little deeper here.

Is Apple's iPhone Segment Running Into Trouble?

Multiple media sources have lately claimed that iPhone 7 sales are slowing down. Nikkei was the latest to join the growing chorus of concerns around iPhone sales, stating that Apple is cutting iPhone production by 10% YoY in the first quarter of calendar year 2017.

The Nikkei report was preceded by a report from Localytics, which stated that iPhone 7 activations were down during the latest Christmas week as compared to Christmas 2015 week. According to Localytics, "The iPhone 6S saw a 52% lift during Christmas weekend 2015 compared the average of the three prior weekends, while the iPhone 7 saw a 25% lift during the same period in 2016. Additionally, the iPhone 6S Plus yielded a 21% increase of activations during the Christmas 2015 weekend versus 8% for the iPhone 7 Plus in 2016." Now, let's look at this a little bit closer at these numbers before jumping to conclusions.

The percentage change (for Christmas week) is based on the preceding 3-week sales and therefore, arriving at conclusions without a knowledge of the base (3-week sales preceding Christmas) could lead to erroneous conclusions, to say the least. What if iPhone 7 was off to a better start, as compared to the iPhone 6S? So, should investors be worried over these latest reports? Let's go a year back to answer this question.

An Option Strategy To Play Apple Inc. (AAPL) Earnings

Apple Services: A Giant Is Growing Within Apple Inc.

Should AAPL Investors Be Worried?

Back in January 2016, Nikkei had reported that Apple was cutting iPhone 6S/6s Plus production by a much higher 30% during the first quarter of the calendar year 2016. Hence, the 10% production cut is much lower than what had occurred in the year earlier. This could also be a result of Apple's eagerness and constant progress towards a Just-in-time inventory management system. Tim Cook is famously associated with this move and in this context, production cuts coming out of the strong holiday quarter is more along expected lines.

Also, Localytics had claimed that iPhone 6S/6S plus adoption rates were coming in slower than the iPhone 6 numbers. But, what happened when Apple reported Q1 2016 numbers? The company reported YoY gains in its iPhone segment, which drove the company to its highest ever quarterly revenue.

A Silver Lining For Apple

However, not all is gloom and doom as far Apple's iPhone segment is concerned. In a recent report by Flurry analytics, the research firm highlighted that Apple was still the top device (smartphone/tablet) manufacturer measured by activations during the holiday season. Apple accounted for 44% of the device activations, outdoing Samsung by more than 2:1. More interestingly, Flurry's data also showed that smartphone buyers during the 2016 holiday season gravitated towards phablets, a segment which includes Apple's plus models. The phablet segment accounted for 37% of holiday device activations, up from 27% in the year-ago period. This trend of phablets increasing their share of the smartphone market will be positive for Apple's iPhone ASPs as well as overall profit margins.

Putting It All Together

Selling AAPL stock on the recent spate of negatives is not a very smart idea, in our opinion. Why? Investors should take a little bit longer term view of Apple. While the recent negatives might lead to a temporary pullback in Apple stock price, we believe that the iPhone 8 Super Cycle and the emergence of Apple's Services segment as a clear growth driver make Apple stock a good buy for 2017. We believe that AAPL stock could rise to $135 this year. Hence, any pullbacks in the short term would present an opportunity to buy the stock on the cheap.

Every financial metric that matters, in a minute long video - check out our AAPL stock analysis video.

Looking to invest in technology companies? Here are our latest Top Stock Picks which have outperformed the NASDAQ by over 110%.

This article first appeared on Amigobulls.com

[amigobulls-com-blog]

Facebook has trust issues, but then, who doesn’t?

- By Vikram Nagarkar

Life seems to be getting tougher by the day for California-based Facebook (FB). According to recent reports, politicians in Germany are now calling for stricter action to tackle fake news, suggesting that Facebook be slapped with hefty fines for every fake news item. Even as that storm rages on, in late December, the social media giant reported a measurement issue for the fourth time in as many months, under-counting traffic on Instant Articles this time around.

Worse still, a slew of recent reports suggest that advertisers, who are growing more wary of Facebook, could potentially take their ad budgets elsewhere, like Google, for instance. So should you sell FB stock and buy GOOGL stock? The issue at hand is much more complicated than it seems, demanding a deeper look before you take any decisions on where you put your money.

Does Everybody Trust Google?

This Bloomberg report is just one of the many recent reports which put together suggest that advertisers could take their ad Dollars elsewhere, or bargain hard to bring down ad prices on Facebook. With advertisers growing more wary of Facebook, it won't come as a surprise if Alphabet's (GOOGL) Google, with its massive reach and scale, emerges as a natural alternative for advertisers. However, a deeper look suggests that even Google might not have as much of a squeaky clean image as many believe it does. Quoting from the same Bloomberg post:

"Ad buyers said these types of measurement errors existed before, including with Google's YouTube. But Facebook has opted -- or been pressured into -- disclosing them."

If you dig a little deeper, you will probably unearth some more evidence to suggest that Google's track record hasn't been error free either, like this piece of news:

"AdWords advertisers have won their appeal of a ruling that denied them class-action status in their suit against Google over ads appearing on error pages and parked domains."

It’s worth noting that Twitter (TWTR) has had its share of trouble too. Even as 2016 drew to a close, the micro-blogging site announced that it had initiated refunds to advertisers, after it discovered technical errors which "affected some video ad campaigns". Unlike in Facebook’s case, this error actually impacted billings. 

That’s not to say that errors, like Facebook’s, which don’t impact billings are okay. However, what’s very evident here is that the problem goes beyond Facebook, and today, the need for third party measurement in digital advertising, is probably greater than ever before, which brings us to the next important question. 

Could Facebook's Growth Slow More Than Anticipated?

Could Instagram Power Facebook's Next Growth Cycle?

Does Everybody Trust These Third Parties?

You might have guessed the answer - it's a plain and simple 'no'. While everybody agrees that third party measurement tools are good for the industry at large, the problem lies in identifying these unanimously accepted 'third parties'. Facebook recently listed down some big names, which will help the social media giant with third party verification. One of those names is comScore, and a recent report by CNBC highlights some facts that are worth taking note of:

"agencies and brands use numbers published by comScore to determine which  companies are getting the most eyeballs to determine their advertising budgets. A drastic drop in traffic for a couple of months could potentially mean that they decide to move their money elsewhere.

Some outlets had issues with comScore numbers, saying that the company has reported bad numbers in the past. One publisher disputed the company's numbers because they don't take into account other kinds content, including Facebook video views which are a growing area of interest for consumers."

The post, titled "It's not just Facebook: Publishers say internet metrics are often wrong", brings to light what is possibly the important facet of the digital advertising industry at the moment - there's probably no platform or body which advertisers trust 100%. While the role of third party measurement and verification is indisputably important, what's probably more important is a better, more defined framework, many more guidelines, and well thought out rules. And that's precisely what Mark Bergen has to say in his post on Bloomberg.

"Facebook's partners and competitors see its disclosures as further proof that additional parties are needed for these audits and uniform rules for how ads are counted, bought and sold across the web."

But there's more to this. Simply putting in place 'unanimously accepted' third party verification may not solve the problem for big platforms like Facebook and Google. Like we've highlighted in earlier articles, a good number of advertisers on these platforms are small businesses, who can't afford the luxury of third party measurement tools. And as Motley Fool's Adam Levy puts it, specifically with respect to Facebook, "While none of them individually spend a lot of money on Facebook ads, don't underestimate the aggregate value of the long tail of small advertisers to Facebook."

Platforms like Google and Facebook might have to put advertisers first and absorb any costs involved in making these tools available, or at least viewable, to advertisers. After all, it is the ad platform which needs these metrics, to establish and protect its credibility, so that advertisers bring their ad-Dollars.

Summing It Up

All of this put together suggests that the problem is not with Facebook alone. The unreliable nature of online advertising metrics and numbers is an industry-wide problem. Like we highlighted earlier in the post, there's probably no platform or body which advertisers trust 100%, suggesting that a complete, industry-wide overhaul may be called for, to bring better defined rules for how ads are measured, bought and sold across the internet.

Coming back to the question we started with, should you sell FB stock and buy GOOGL stock? The recent turn of events is likely to favor Google. There are several reports which suggest that ad-prices, if not spends themselves, could come under pressure on Facebook. With each passing day, the risk that Facebook's growth could slow more than anticipated is increasingly becoming a very real one. In the near term, it might be prudent to allocate more investment Dollars to GOOGL stock, over FB stock.

However, we don't think you should exit your FB position completely. As we've highlighted in this post, it seems very likely that there will be a widespread consolidation of the industry as a whole, which will provide investors with opportunities to buy into these stocks again, possibly at lower prices. The future is digital, and there's no going back from this evolution. Being at the forefront of this transition, both Google and Facebook are well placed to gain in the long term.

Every financial metric that matters, in a minute long video - check out our FB stock analysis video.

Evaluating tech stocks? Check out our top stock picks, which have beaten the NASDAQ by over 110%. This article first appeared on Amigobulls.com.

[amigobulls-com-blog]

Facebook has trust issues, but then, who doesn’t?

- By Vikram Nagarkar

Life seems to be getting tougher by the day for California-based Facebook Inc (NSDQ:FB). According to a recent report, politicians in Germany are now calling for stricter action to tackle fake news, suggesting that Facebook be slapped with hefty fines for every fake news item. Even as that storm rages on, on Friday, the social media giant reported a measurement issue for the fourth time in as many months, under-counting traffic on Instant Articles this time around.

A slew of recent reports suggest that advertisers, who are growing more wary of Facebook, could potentially take their ad budgets elsewhere, like Google, for instance. So should you sell FB stock and buy GOOGL stock? The issue at hand is much more complicated than it seems, demanding a deeper look before you take any decisions on where you put your money.

Does Everybody Trust Google?

This Bloomberg report is just one of the many recent reports which put together suggest that advertisers could take their ad Dollars elsewhere, or bargain hard to bring down ad prices on Facebook. With advertisers growing more wary of Facebook, it won't come as a surprise if Alphabet Inc's (NSDQ:GOOGL) Google, with its massive reach and scale, emerges as a natural alternative for advertisers. However, a deeper look suggests that even Google might not have as much of a squeaky clean image as many believe it does. Quoting from the same Bloomberg post:

"Ad buyers said these types of measurement errors existed before, including with Google's YouTube. But Facebook has opted -- or been pressured into -- disclosing them."

If you dig a little deeper, you will probably unearth some more evidence to suggest that Google's track record hasn't been error free either, like this piece of news:

"AdWords advertisers have won their appeal of a ruling that denied them class-action status in their suit against Google over ads appearing on error pages and parked domains."

Clearly, the problem goes beyond Facebook, and today, the need for third party measurement in digital advertising, is probably greater than ever before, which brings us to the next important question. (Also Read: Could Facebook's Growth Slow More Than Anticipated?)

Does Everybody Trust These Third Parties?

You might have guessed the answer - it's a plain and simple 'no'. While everybody agrees that third party measurement tools are good for the industry at large, the problem lies in identifying these unanimously accepted 'third parties'. Facebook recently listed down some big names, which will help the social media giant with third party verification. One of those names is comScore, and a recent report by CNBC highlights some facts that are worth taking note of:

"agencies and brands use numbers published by comScore to determine which companies are getting the most eyeballs to determine their advertising budgets. A drastic drop in traffic for a couple of months could potentially mean that they decide to move their money elsewhere.

Some outlets had issues with comScore numbers, saying that the company has reported bad numbers in the past. One publisher disputed the company's numbers because they don't take into account other kinds content, including Facebook video views which are a growing area of interest for consumers."

The post, titled "It's not just Facebook: Publishers say internet metrics are often wrong", brings to light what is possibly the important facet of the digital advertising industry at the moment - there's probably no platform or body which advertisers trust 100%. While the role of third party measurement and verification is indisputably important, what's probably more important is a better, more defined framework, many more guidelines, and well thought out rules. And that's precisely what Mark Bergen has to say in his post on Bloomberg.

"Facebook's partners and competitors see its disclosures as further proof that additional parties are needed for these audits and uniform rules for how ads are counted, bought and sold across the web."

But there's more to this. Simply putting in place 'unanimously accepted' third party verification may not solve the problem for big platforms like Facebook and Google. Like we've highlighted in earlier articles, a good number of advertisers on these platforms are small businesses, who can't afford the luxury of third party measurement tools. And as Motley Fool's Adam Levy puts it, specifically with respect to Facebook, "While none of them individually spend a lot of money on Facebook ads, don't underestimate the aggregate value of the long tail of small advertisers to Facebook."

Platforms like Google and Facebook might have to put advertisers first and absorb any costs involved in making these tools available, or at least viewable, to advertisers. After all, it is the ad platform which needs these metrics, to establish and protect its credibility, so that advertisers bring their ad-Dollars. (Also See: Could Instagram Power Facebook's Next Growth Cycle?)

Summing It Up

All of this put together suggests that the problem is not with Facebook alone. The unreliable nature of online advertising metrics and numbers is an industry-wide problem. Like we highlighted earlier in the post, there's probably no platform or body which advertisers trust 100%, suggesting that a complete, industry-wide overhaul may be called for, to bring better defined rules for how ads are measured, bought and sold across the internet.

Coming back to the question we started with, should you sell FB stock and buy GOOGL stock? The recent turn of events is likely to favor Google. There are several reports which suggest that ad-prices, if not spends themselves, could come under pressure on Facebook. With each passing day, the risk that Facebook's growth could slow more than anticipated is increasingly becoming a very real one. In the near term, it might be prudent to allocate more investment Dollars to GOOGL stock, over FB stock.

However, we don't think you should exit your FB position completely. As we've highlighted in this post, it seems very likely that there will be a widespread consolidation of the industry as a whole, which will provide investors with opportunities to buy into these stocks again, possibly at lower prices. The future is digital, and there's no going back from this evolution. Being at the forefront of this transition, both Google and Facebook are well placed to gain in the long term.

Evaluating tech stocks? Check out our top stock picks, which have beaten the NASDAQ by over 110%. This article first appeared on Amigobulls.com.