Internet stocks Predictions for 2020 (GOOG, AMZN, maybe FCBK?) | Hacker News Reader

Internet stocks Predictions for 2020 (GOOG, AMZN, maybe FCBK?)

immadsnewworld.com

33 pointsfoobar2k26 comments

AMZN is currently trading at 79 times earnings. It's ridiculous to make an investment without considering whether the market has already priced in the growth (in this case a quadrupling or quintupling of profit is already priced into the stock, assuming 15-20 as a standard P/E range, which might be too high for the current conditions). I bought AMZN at $35 and sold at various points on its rise this year. I think it's currently overvalued, not like Salesforce (CRM) at 125 times earnings which is worth a short, but still high. As a shareholder in AMZN, you don't even get dividends. Therefore you are depending on the company not just quadrupling their profits to earn their current valuation, but once they have quadrupled, they must still be on a high growth trajectory in order for the stock to be trading at high multiple to earnings.

P/E is just one indicator of the value of a stock, and one that really doesn't make a whole lot of sense given how accounting works. Personally if I'm going to invest in a company I look at free cash flow and the growth of the free cash flow way more closely then the more arbitrary P/E. Amazon is phenomenal in this regard.

For companies that have stable capital expenditures, free cash flow will (over the long term) be roughly equal to earnings. For companies that don't have stable capex, the FCF will be more lumpy, because it doesn't allow for depreciation. In Amazon's particular case, FCF is exaggerated because of their delayed A/P cycle where items are purchased in one quarter which shows up in cash and paid for by Amazon the next quarter. If short term cash is growing while their bills are getting higher, but this is not reflected in FCF, Net Income is a better metric because it avoids this temporal distortion.

Of course, if you think the hype is going to continue for a while, there is no reason not to buy into the momentum and make a short term buck, it's just not a good basis for a 10 year buy and hold as recommended by the original post.

NOTE: IMMAD Deleted this from his blog. It seems he cannot accept criticism, just comments.

Ignoring the obvious laughable fallacies (" Since I live and breathe the Internet, I’m more adept to make better judgements of companies than the market."), I'm suprised you and your business partner both read and reviewed this and still felt comfortable posting this.

At first I wonder, how much research could you have possibly done if you put a company on your list that was acquired last year? Then I saw your response to someone suggesting Skype "I love Skype. Adding it now." A clear example of the amount of research and methodology you've employed to come up with these weak sublists. You've simply chosen companies with products you like and have listed them, arriving at conclusions no different than that of a casual user of the internet.

In the end, you finish up with a facile paragraph: "I am very optimistic about the Internet." Amazing!

"I am certain that at least 100 other companies will be on this list in 10 years time " Really? You are certain that in 10 years at least 100 more companies will fall within your classifications of winners, neutral, unstable, or failures? That's quite a bet you are making!

"and most likely even my favorites will disappear." What? You just gave a list of companies you project to be successes (great job on noting that rising star "google" by the way) and now you are telling us some of them may disappear? Have you even read what you wrote?

"The Internet is still in its infancy, and there is still room for tremendous growth. It certainly is an exciting time to be in the industry!" Tell me less.

You really had to create a HN account just to say that?

The reason I did not respond is because of your overall trollish comment with very little content. Everyone is having a good discussion on the article so the content was at least interesting to the community.

Really surprised to see Netflix listed as neutral. If anybody agrees with the original parent, I would love to hear your thoughts.

I see Netflix grabbing huge market share from the overpriced cable-TV companies and become the standard way to watch paid video content.

yeah my friend and I recently cancelled a $80/mo cable bill to switch to a $9/mo Netflix account / We get 1 dvd out at a time and use our PS3 to stream a ton of history channel and other stuff ~ so far its not too bad :)

I love my Netflix account, and haven't done any research, but here are some questions:

How big is the paid video content market? What are their other existing and potential markets and sources of revenue? Can they expand their existing service to the rest of the world?

I like Netflix as well but they are definitely a long-term risk as their current business model is going to dwindle and on-demand is going to rise. Now they are doing some good stuff in the on-demand space, but they are going to be competing against all the cable providers (some of which are going to be buying movie companies like Comcast). They could also end up competing against Apple or anyone else who decided to get into streaming, they might have first mover but will it be enough? I think Hulu is a sign of how the studios want it to work, they want to own the deliver network so when they have a choice they might start their own and block out netflix.

Completely agree with you. That is why I didn't put Netflix on the list. I just think they cant own online streaming like they have owned "rentable" DVD subscriptions.

Google is also positioned to compete, either through a payments for streaming copyrighted content and especially through targeted advertisements.

Mostly agree, though I think physical media rentals are going to be around a lot longer than many people think. Though perhaps not the Netflix (i.e. mail delivery) model, maybe more likely the RedBox (vending machine) model.

A lot of folks who like to watch movies don't even have computers... it's easier on the budget to spend a buck or two on a movie rental vs. $500+ on a computer plus broadband internet.

Predictions like this are a waste of time; it's impossible to know where any of these stocks are going to be next year, let alone ten years from now.

Not only that, but many of the predication are based on little more then feeling. How much did diablo3 cost to make? How much could you expect them to make off it? Is this even where the company makes its money? It is surprising how company after company when you go through their numbers to discover that while they might be all talk about product X they make 90%+ of their money from B. Discussing how cool X is going to be might have just about nothing to do with how much they earn.

This post is best read as predictions about how the companies are going to do, rather than how the stock is going to do.

Stock performance means predicted price in 2020 vs price now, and this post mentions neither of those.

What's the point of predictions like this?

In 2000 you could have never predicted what "Internet stocks" would be "winners" in 2010 since a number of these companies either didn't even exist yet or were not public.

I would imagine that by 2020 the rules of the game will have changed and the business landscape will not be recognizable from what it is today, just as with the 2010/2000 comparison.

Just because the Internet has changed drastically over the past decade does not necessarily mean it has to change drastically over the next decade. The Internet (and software/computer science in general) will eventually come to a stage where they become 'stable' and don't necessarily change a whole lot.

Twitter going public would be a sure sign of the beginning of the next bubble.

And Yahoo could easily go down as in 'delisted' or broken, especially over a 10 year window.

Long term stock predictions are like predicting the weather 3 months from now. And with the weather you have at least the seasons to guide you.

Twitter is likely profitable

Being profitable is not enough reason to go public.

Plenty of businesses are profitable, and plenty of them more so than twitter, and they're definitely not all going to be public companies, in fact that makes sense for only a very small percentage of them.

There are 3 reasons to go public. You either need a lot of liquidity, a lot of capital, or you want to maximize the sales price at the peak of your hype. IMO, twitter going public without dramatically expanding what they do would be a great indicator of a bubble on the way.

profitable != immune to hype/overvaluation

Having 'deals' with microsoft and google isn't safe profitability IMHO.

I would disagree on comScore I think new forms of analytics and places like quantcast are going to eat away at their current lead.

I am not saying it will die off by any means, but I am not sure it can sustain the growth it will need to be a hot stock.

comScore doesn't even measure anything outside the US do they? I agree @ quantcast.

http://www.comscore.com/International_Solutions

Comscore has a few more products than its consumer facing analytics.

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