* 75% of CRM's float is sold short, market clearly agrees with you
* AMZN has big FCF numbers, 2012 being an anomaly because of the big fixed capex expenditures. They grow the business without regard to engineering their GAAP earnings, which is admirable, and means the EV/FCF is probably a big, though somewhat reasonable 25-50.
* FB analysis requires a DCF because they're growing earnings so fast. They're only 40 x estimated 2014 earnings
* TSLA is not the same business model as F or GM, though they all nominally sell cars. Look at the leverage around licensing revenue that ARMH or QCOM showed.
I haven't read Twitter's S-1 and can't comment on it (50 x revenue makes it feel closer to CRM than any of the others), but I generally agree with your opinion that equities are near a peak because it is literally impossible for fixed income to be less attractive as an alternative and the Fed is clearly letting us know it's closer to the end of QE than the beginning. (disclaimer: nobody should make investment decisions based on my advice, I'm not a professional and you could lose all your money if you do, etc)
EDIT: after perusing the S-1 the revenue growth rate is incredible, so it may end up more like FB (which has only surpassed it's ipo price in the last month or so...)
EDIT 2: Yahoo!'s short data was laughably wrong, CRM's percent of float sold short is 10%
Salesforce, Amazon, Facebook and Tesla may all be great companies that deserve aggressive valuations based on any number of factors. But if you truly believe that you can determine what a reasonable premium is in a market that is so influenced by central bank action, I tip my hat to you because you're much smarter than many of the people who do this for a living.
> I generally agree with your opinion that equities are near a peak because it is literally impossible for fixed income to be less attractive as an alternative and the Fed is clearly letting us know it's closer to the end of QE than the beginning
Just to be clear: I didn't state any opinion as to whether we're close to a peak or not, and based on what we've seen in the past month, I wouldn't use the word "clearly" in any sentence referencing the Fed's plans to end QE. The Fed is between a rock and a hard place, and while I think certain scenarios are more likely than others, I'll just say this: the only thing that would surprise me is if there are no more surprises.
I don't ignore fundamentals, but for non-dividend paying issues, I trade primarily on technicals. As such, I have no interest in Twitter shares and almost certainly won't any time soon, if ever.
would you mind walking back through that and explaining the acronyms and the meanings. I can google things like FCF is Free cash flow, but understanding that? much harder
Free Cash Flow, conceptually, is the total amount of cash you would have from the company's operations as a single owner of the company in a given year.
The importance of free cash flow lies in how capital investment (buying buildings, factories, or other companies, among other things) is treated.
When a company invests money, it doesn't count against the company's profit. It is just treated as one asset turning into another asset.
/BUT/, if a company is essentially /required/ to invest money in new capital to keep the business going (think capital intensive businesses like oil exploration), as an owner you have to budget that you'll need cash to invest in new things, reducing the amount that actually comes to you.
That hit doesn't show up in profit or revenue, but it does show up in free cash flow.
A quick note (since I'm on my phone) until someone posts a better reply: ev/fcf is a financial ratio you can use to compare how much you are paying for various companies (idea being that similar companies should sell for roughly similar ratios). DCF takes all the cash a company will ever make and tells you how much you should pay for that now. Basically, there are a lot of ways to value a company and some methods are better suited for a given stage in a company's life than others (for example, many methods fall apart when a company has no earnings or has negative cash flows).
Sorry, most of those are ticker symbols (AMZN, FB, CRM, TSLA, F, GM, ARMH, and QCOM).
Other than that, QE is quantitative easing; EV/FCF is enterprise value divided by free cash flow, which can be a useful ratio sometimes (company has a lot of cash/equivalents or lots of non-cash charges lowering earnings); and DCF is discounted cash flow, which the sibling comment explains well.
* 75% of CRM's float is sold short, market clearly agrees with you * AMZN has big FCF numbers, 2012 being an anomaly because of the big fixed capex expenditures. They grow the business without regard to engineering their GAAP earnings, which is admirable, and means the EV/FCF is probably a big, though somewhat reasonable 25-50. * FB analysis requires a DCF because they're growing earnings so fast. They're only 40 x estimated 2014 earnings * TSLA is not the same business model as F or GM, though they all nominally sell cars. Look at the leverage around licensing revenue that ARMH or QCOM showed.
I haven't read Twitter's S-1 and can't comment on it (50 x revenue makes it feel closer to CRM than any of the others), but I generally agree with your opinion that equities are near a peak because it is literally impossible for fixed income to be less attractive as an alternative and the Fed is clearly letting us know it's closer to the end of QE than the beginning. (disclaimer: nobody should make investment decisions based on my advice, I'm not a professional and you could lose all your money if you do, etc)
EDIT: after perusing the S-1 the revenue growth rate is incredible, so it may end up more like FB (which has only surpassed it's ipo price in the last month or so...)
EDIT 2: Yahoo!'s short data was laughably wrong, CRM's percent of float sold short is 10%