Daily Advice Thread - All basic help or advice questions must be posted here. Investing |
- Daily Advice Thread - All basic help or advice questions must be posted here.
- Elon Musk warns employees Tesla's stock could 'get crushed like a soufflé under a sledgehammer'
- Up to 40 states plan to sue Facebook for antitrust next week - CNBC
- S&P Dow Jones Indices to launch cryptocurrency indexes in 2021
- DraftKings (NASDAQ: DKNG) - Deep Dive Research - Part 2
- I found my portfolio with "insights" from 2007 (12/28/2007 to be exact)
- DraftKings (NASDAQ: DKNG) - Deep Dive Research - Part 1
- Why sell Tesla before S&P 500 Inclusion?
- PLTR or not
- Has anyone tried buying very in the money and long dated call options like this article suggests? How did it work out for you?
- Undervalued Companies Generator
- What is the best place to look for REITs?
- Can someone explain why my DCF model is off when valuing a company?
- Expert network for retail investors?
- What do y’all think about me selling out my position in the S&P500 early, missing long term cap gains, and putting it all in a spread of airlines, cruises, entertainment, amusement parks, etc.?
- Snowflake ($SNOW) FY21Q3 report - EPS misses by $0.64, beats on revenue
- Defensive Intelligent Investor
- Should I choose greed or fear?
- The end of Index Investing - Bogle 2018. Wood & Burry | looking for comments
- Question about SPAC's. New territory for me.
- While businesses recover from COVID-19, how likely is it that an over-inflated market crashes, yielding another crisis?
- Profit off of flash crash/darkpool orders?
- Did you short NKLA and why not?
- Seems likely that we are at the start of a longer bull run on Virgin Galactic SPCE
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 03 Dec 2020 04:09 AM PST If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions. If you are going to ask how to invest you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! [link] [comments]  |
| Elon Musk warns employees Tesla's stock could 'get crushed like a soufflé under a sledgehammer' Posted: 02 Dec 2020 10:51 AM PST
https://www.cnn.com/2020/12/02/business/elon-musk-tesla-stock-price/index.html [link] [comments]  |
| Up to 40 states plan to sue Facebook for antitrust next week - CNBC Posted: 02 Dec 2020 04:37 PM PST Personally, I think this is a nothingburger. From what I can see, the most likely outcome is settlement, which will make investors happy. [link] [comments]  |
| S&P Dow Jones Indices to launch cryptocurrency indexes in 2021 Posted: 03 Dec 2020 06:28 AM PST
So, what are the implications for bitcoin and the nascent cryptocurrency industry? [link] [comments]  |
| DraftKings (NASDAQ: DKNG) - Deep Dive Research - Part 2 Posted: 03 Dec 2020 06:25 AM PST Deep Dive #1 (Part 2 of 2) – DraftKings, bringing sports to life (Is it a 10 TL:DR
Hi everyone, thanks for coming back for Part 2. If you missed Part 1, you can read it here. I'm excited to bring you the rest of my research on DraftKings (NASDAQ: DKNG). Let's dive in. Can we 10X from here? For someone like me that is on the younger side and with a longer investment time horizon, and probably you if you are reading this, an important question to ask yourself is "Do I think this investment could 10x from here?". In other words, could this investment one day be 10 times what it is worth today? To try to answer this question, I will work through a pre-determined framework that I believe gives us the best path to find out. The framework includes:
1. Leadership – Desire, Purpose, Ownership For a company to do something as spectacular as 10x, we are going to need to see really strong and talented leadership. In Chris Mayer's excellent book "100 Baggers", he dedicates a part of the book to talk about the importance of what he calls "Owner Operators". By this he means that the CEO of the company owns a substantial amount of stock in the company themselves. Why is this important? If the CEO has their own personal wealth at stake in the company's stock (just like we do as shareholders) their interests are more aligned with shareholders and maximizing returns for shareholders than they would be if that CEO had no skin in the game. It's also better in my opinion if the CEO of the company was also the founder of the company. For these founder-CEO's that have money invested in their own company, it really is like their baby. Would you rather have your money invested with someone who views the company as their baby or with someone who was just hired to watch this kid (the company)? Having one founder in leadership is good, but how about three? You have to love that. These guys worked together to start this company 8 years ago, and today they hold the three highest positions within the company. Jason, Matt, and Paul were all co-workers at Vistaprint in 2012. Vistaprint is a global e-commerce company that produces physical and digital marketing products for small and micro businesses. All three of them studied computer science/engineering in college with Matt and Jason picking up an additional majors in business/economics. This makes sense as Matt and Jason are CEO and President while Paul is head of Global Technology and Product. At Vistaprint, they worked in various analytics and marketing roles and became good friends. They had a passion for fantasy sports. They liked season long fantasy sports, but saw a big opportunity in daily fantasy sports. They went to work right away on building a digital platform for daily fantasy sports from a spare bedroom in Paul's Watertown, Massachusetts apartment. Talk about humble beginnings. I think that Founder/CEO Jason Robins has really shown that he can take care of his baby and lead it to big wins. Over the past 8 years, he has successfully lobbied in multiple US states for legalization of DFS and sports betting. He has helped DK obtain key partnerships with major sports leagues including becoming the official DFS partner of the NFL in 2019. At the time of the deal, Jason was quoted in an article in the Legal Sports Report by Eric Ramsey as saying: "Throughout our discussions with the League, it was evident we share a common vision around the future of fan engagement, and we are excited to continue on this unique journey with the NFL as our 'Official Daily Fantasy Partner" and calling it "a defining moment" for the industry. It's very important that the CEO of a company like this, trying to essentially create a new industry in the United States, is tactful at getting deals done with key business partners and lobbying for change with the government. I believe this bodes well for DK's future. Also, Jason is very respected and admired by his employees. On Glassdoor, he has a 99% approval rate. I've honestly never seen a CEO with an approval rating that high. I think this strongly corroborates my thesis that he is a great leader. Also, DraftKings has very happy customers. Using Net Promoter Score (NPS) which is one of the most reliable and unbiased ways to find out what a customers true experience with a business is and how likely they would be to recommend it to a friend. For DK, their NPS is extremely high and is substantially better than their main competitor – FanDuel. On a scale of -100 to 100, DK has a 71 NPS, while FanDuel has a 54. This is a testament to leadership's commitment to creating a great user experience. It really shows that company leadership can follow up on their word and deliver what they promise. In terms of leadership, owning their company, Jason owns about 4.3% of the company worth about $880 million at the time of this writing. Fellow co-founders Matthew Kalish and Paul Liberman both own about 1.8% of the company, with their stakes each worth about $350 million. I think it's fair to say that these guys are invested in the success of the company that they started and are motivated to grow their company's worth for themselves and shareholders. 2. Risk Considerations My investing strategy is to buy companies of high quality, that are growing at a rapid pace, and then hold my position in those companies for a long time (5, 10, 15 years or longer) as long as I continue to stay satisfied with that companies' ability to execute their business plan and have productive quarters that meet or exceed expectations. It's not "Buy and Hold". It's "Buy and Continuously Verify". If you are going to take this strategy, you have to understand the difference between risk and volatility. To me, risk is the possibility that I can lose my entire investment. As long as I am not trading on margin (I don't) or short selling (I don't) the most I can possibly lose when I buy stock in a company is 100% of my money. The risk I'm taking on is 100%. But what is my upside? Is my upside limited to 100%? Of course not. I can invest $10,000 into a company and it can grow to $100,000 (1,000%) or it can grow to $1,000,000 (10,000%). There's really no limit. Volatility is a natural side effect of being a rapidly growing, disruptive company, that at times the public may struggle throwing a valuation on. It's your ability to sit through these wild price swings while maintaining conviction in the company's long term prospects that will allow you to possibly experience a 10x or maybe even a 100 Bagger. Can we completely eliminate risk? No. But I do think there's ways we can go about reducing it with our investments. Before considering a company for investment, I have a list of a few questions I go through to see if there's any red flags that I think could make the investment too risky for me. Question 1: Is the market cap under $1B? No. DK's market cap is $20.5B. Companies under $1B market cap are small/micro cap companies. Penny stocks fall in this category. To me, companies this small are riskier because they haven't built up enough credibility to get big time financial backing, they're less known by the public, and less scrutinized by the public than larger companies. Question 2: Is there one customer that accounts for over 10% of revenue? No. DK had 1,021,000 Monthly Unique Players ("MUPs") during Q3 2020, which is up 64% YoY compared to Q3 2019. I seek to avoid customer concentration because if something goes wrong with that one customer or they lose them, it could have a materially negative impact on the business. Luckily, with DK we don't have to worry about this. Question 3: Is the company a turnaround story that was recently struggling? No. DK was founded 8 years ago (2012) and has been on an upward trajectory ever since. As a matter of fact, DK was founded 3 years after FanDuel (2009) and did a great job of not only catching up to them but surpassing them on many metrics. I've used both and can honestly say I enjoy DK a lot more. Since they were listed on the NASDAQ on April 24, 2020 the stock is already up 160% from around $19. Question 4: Is the company in an industry that is set to decline? No. I don't think I need to write too much about this. Ultimately, DK is a digital entertainment platform. Common sense should tell you that's a good industry to be in right now. 3. Price Considerations to 10x In this part of the framework, I want to focus on the price and the path to 10x from the current price. As of this writing (11/30/20), the market capitalization (market cap) of DK is $20.5B. For those of you that are new investors, I'll give you a quick breakdown of what this means. Market cap = Shares outstanding * Price per share So if Company X has issued 1,000,000 shares, and each share is trading at $50, the Market cap of Company X would be $50M. For reference, this would be a very small company (a micro-cap) that you or I have probably never heard of. The market cap tells you the total value of the company as a whole on the stock market today. To achieve 10x in 10 years, a stock will need to have a Compound Annual Growth Rate (CAGR) of approximately 26% per year on average for each of those 10 years. This would obliterate the S&P 500 which has averaged roughly 13.5% per year the past 10 years. Now back to DK. In order for DK to 10x in 10 years from this current point ($20.5B) it will have to reach a market cap of roughly $205B by the year 2030. For reference, Disney (DIS), has a market cap of $268B as of today. Disney might be a good investment, but they're not going to be worth $2.68 trillion dollars in the next 10 years. Size of the company matters when trying to 10x. For reference, the highest valued company in the world right now is Apple (AAPL) at $2 trillion. Disney is considered the gold standard of the entertainment industry. But keep in mind, Disney's position in entertainment is well established and if anything, would really be declining in the current macro environment if not for their Disney+ streaming service. Even one of the oldest leaders in entertainment like Disney realizes the value of having a digital entertainment platform. However, with the Disney story being very mature and in it's golden years, the DK story is in the early innings. Better yet, to quote DK CEO, Jason Robbins from the Q3 earnings call, the sports betting part of DK's business is "in spring training". For those of you who don't follow baseball, "spring training" means that the season has not even started yet. The entire premise of DK as a company in my mind is that they are a digital entertainment platform. With the current world macro environment including the immediate and long term impacts of the COVID-19 pandemic, I believe digital entertainment platforms (especially ones where you can win money) are primed for success. I know it's a bold prediction to say a stock is going to 10x in 10 years but I believe DK does have a long enough runway for that type of growth to occur. Speaking of growth, let's talk about that a little more. 4. Explosive Business Growth We've talked about the path for the stock price to 10x, but a necessary ingredient for that to possibly happen is explosive growth. I like to see that top-line revenue is expected to grow at least 20% for the next five years. It's this type of growth that makes companies that appear very expensive today, actually not as expensive as they look. Personally, when I'm evaluating a growth stock, the first thing I look at is the Price to Sales ratio (P/S). The formula for this is simple: Price to Sales Ratio (P/S) = Market cap / Last 12 months of Revenue For DK, the current P/S ratio is $20.5B / $550M* = 37* *To get $550M, I took Pro Forma Jan 1 – Sep 30 Revenue of $320M and added projected Q4 revenue of $230M from the Q3 earnings call. To be fair, a P/S ratio of 37 is quite high. It means that as a shareholder, you are paying $37 for every $1 of revenue the company generates. And that's before considering expenses. You might be saying, "Mark, that's outrageous, why the heck would I pay $37 just to make $1 of sales?". The answer is one word – growth. By taking a stake in DK today for the long term, you're essentially banking on two things.
In terms of explosive growth, it has been so far, so good for DK. In the most recent quarter (Q3) ending 9/30/20, revenue was $133M which is up 42% from the same quarter in the prior year. Analysts are expecting a similar trend to continue over the next five years, they forecast at least 20% growth each of the next 5 years. If the market cap stays exactly the same as it is today ($20.5B), then the P/S ratio by the end of 2025 will be roughly 7. That is a lot more reasonable than what you see today at 37. However, the market cap is not going to be exactly $20.5B by the end of 2025. Too many things will have happened by then (hopefully mostly good things) for the company's worth to be exactly what it is today. With all the runway for growth here, if management can execute, and actualize these impressive projected growth rates (or maybe exceed them?) I think investors will still be paying a high premium to have a stake in a company like DK. Will investors still be paying a 37 P/S ratio five years from now? Probably not, but it's interesting to look at what the company's value would be if that were the case. 37 * $2.8B sales = $104B. I don't think it's realistic to think investors will still be paying that high of a premium, but maybe the premium will be somewhere between what it is today (37), and what it would be with no price change (7). This is me just speculating and guessing for fun, but lets take the mid-point of that range (22) and see where it gets us. 22 * $2.8B sales = $62B. This would be roughly a 300% return in 5 years under these assumptions with a CAGR of 25% per year. Not too bad! Again, take this part of the write up with a grain of salt as I am making a lot of assumptions and doing a lot of speculation here. This concludes Part 2 of my DraftKings deep dive. Hope you enjoyed and be sure to stay tuned for the next pick and for any updates about this one! Disclosure: I am/we are long DKNG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. [link] [comments]  |
| I found my portfolio with "insights" from 2007 (12/28/2007 to be exact) Posted: 02 Dec 2020 05:28 AM PST So I was going through my files and found this list of stocks and "predictions" that I was investing in back in 2007. I think i had planned to post it but never did. I am not sure what the 2 or 3 prices are but I am adding the current 2020 price at the end. This is all unedited other than the current price add. If I put N/A I can't find current price and don't really have time to research what happened to the company. If someone else wants to I will edit it later. I also didn't factor in any splits, dividends or anything. "My 2007 portfolio (original Purchase price and market close as of 12/28/2007) The Blackstone Group L.P. -BX ..........22.40..........21.94..........20.27 (2020 $60.42) I don't normally buy recommendations I see in magazines. By that time the stock has normally reached its potential. I think that Blackstone may be a safe bet due to crashing of almost every major company. This selection was pretty much a dart thrown blindfolded. CombinatoRx, Inc. - CRXX ..........7.63..........4.41..........1.33 (2020 N/A) With America's obsessions with pills to cure everything and anything and our demand for better health coverage, I think medical stocks will see a rise this year. Starbucks Corporation - SBUX ..........20.21..........20.13..........59.39 (2020 $98.82) I actually build Starbucks retail centers for a living. I built a ton of them in Southern California during 2006-2007. When they stop building the stock will go up. Even with a crashing economy. Why? Because even though other shops may sell coffee for less or people may be out of money, the rich love Starbucks and those who will be hurt by the economy will need a cheap "pick-me-up". So instead of the $2000 plasma TV, they will buy the 4 dollar coffee. Of course, all of this rest on the hope that they will STOP building more. Because that is what is killing their profit margin. Ford Motor Company - F ..........6.72..........6.70..........13.36 (2020 $9.24) I like underdogs. I think Ford still has potential it just needs a kick in the head. I think they will shape up and realize that America no longer desires gas guzzling SUV. Or the "eco-friendly" hype will fade and people will start buying gas guzzlers again. Either way, Ford has been losing for a long time. They only have two choices now, go bankrupt or get their act together and excel. Flextronics International Ltd. - FLEX ..........11.04.........12.12..........6.82 (2020 $16.71) This one relates to magazines picks. Money magazine picked Pemco Aviation Group, Inc. - PAGI - as a winner back in early 2007. I took a look at the stock and saw that they were already running on high times. Did some research and found one of their competitors, FLEX, which hadn't had a winning stride in awhile. Pemco has since tanked. Flex has held it's ground and is slowly going up. Ferro Corporation - FOE ..........21.58.........21.17..........7.05 (2020 $14.56) Over a ten year period of past performance, I felt that now was the time for Ferro to regain its formal potential. It's a nice game of wait and see. General Electric Company - GE ..........35.80(37.21).........37.34..........21.50 (2020 $10.15) All you ever hear about these days is the success of GE. With our obsession with alternative energy and GE's willingness to explore, I can't see how they can lose. Insite Vision, Inc. - ISV ..........1.44........0.88..........0.32 (2020 N/A) This is my million dollar stock. I'm counting on it skyrocketing around 2009. That or bankrupting tomorrow. Sun Microsystems, Inc. - JAVA ..........6.28..........18.21 (2020 N/A) I will probably be selling Sun Micro very soon. It has done well for me. I need to research some more on it. Northgate Minerals Corporation - NXG ......... 3.08(3.23).........3.08..........3.49 (2020 N/A) All other companies in this sector seemed to be rising. Except Northgate. I don't really understand why, but I am hoping it gets with the program soon. I'd like to sell this one soon. I don't see much long term potential in it. Origin Agritech Ltd. - SEED ..........7.20..........7.17..........1.75 (2020 $9.55) I just found this stock recently and am hoping it may be a short affair that I can get out of on the top. According to research, it seems they like to pick up every other year. 2008 will be that year. T. Rowe Price Group, Inc. - TROW .......... 46.61.........60.18..........76.29 (2020 $145.50) We are all becoming more investment savvy. And with the destruction of social security we are seeing more people relying on their own means to retire. This is one of the trusted companies that doesn't seem to be engaged in any scandals nor mortage woes. But it is also at the peak. Gonna be time to get out soon. American Express Company - AXP ..........63.04.........50.84..........67.45 (2020 $119.93) American Express is one of those companies that doesn't rely so much on APR but more on annual charges. With all of the debt woes and defaults on credit cards and mortgages more people will flow to their cards. They also have more financial savvy customers who can and will pay their bills on time. Boston Scientific Corp. - BSX ........... 16.15.........11.72..........7.35 (2020 $33.65) Pharma stocks will be king in 2008. And every four years this stock rises. 2008 is the fourth year. Citigroup Inc. - C ..........33.96 ............29.29..........46.46 (2020 $55.47) Don't buy them now. They have a LOOOOOOONG way to go to the bottom. But once they hit, I think this company has the greatest potential to get through the muck and mess to rise again. I'll be there waiting when the time comes. Late 2008/early 2009. DepoMed, Inc. - DEPO .......... 4.30 .......... 3.26..........5.45 (2020 N/A) Over a ten year period this stock has its perks and its lows. The perks have been low and the lows have been lowest. I am counting on the next 5 years to be extra perky and full of higher lows. Genentech, Inc. - DNA .......... 76.97 .......... 67.51..........??? (2020 $94.97) This one is a tough call. It's an expensive pharma stock that seems to be at its peak. But they seem to understand success and what makes it. Can they continue the success rate in 2008? I hope so. International Paper Company - IP ..........32.55..........32.55..........47.69 (2020 price $49.85) The past three years have been awful for International Paper. Good news for us is that this company is cheap to buy. And of ten years they actually do pretty good. Here's hoping. Pfizer Inc. - PFE ..........22.90 ..........22.90..........31.08 (2020 $39.47) Once again, the worst years have been the recent ones. Everything changes and the weak will rise again. This one will be a soon purcahse. Sprint Nextel Corp - S ..........13.16..........13.16..........7.10 (2020 N/A) No one likes Sprint/Nextel right now. They suck. They stink. But they want to be at top. They want it more than the others do. And I'm sure they will do whatever it takes to get to the top. It won't be soon, but eventually, they are gonna hit the top spot. And I'll be selling like hot cakes when they do. So that's my prediction for 2008. I would love any advice, news or comments you can send my way. Remember, the stockmarket is a gamble. I'm not always right. But I'm not always wrong either. You just got to do your research and hope for the best. It sure beats paying some other guy to do it for me." Looking back at this, I sold everything in the housing market crash, not because of the crash but because I desperately needed the money as my business I had started went under and I was going to lose my house. I didn't have a lot invested as I was still new to it at the time. I remember T Row I could barely afford. I invested no where near $20,000 but I am curious about an accurate value of what a $1,000 in each stock would now be worth. A quick spreadsheet not accounting for compound interest, dividends, or splits with $1,000 in each stock above I would currently be sitting on $25,990. I thought some people might find my naive speculation entertaining. [link] [comments]  |
| DraftKings (NASDAQ: DKNG) - Deep Dive Research - Part 1 Posted: 02 Dec 2020 11:37 AM PST TL:DR
Hello, welcome to my first deep dive write up. My name's Mark and I'm an accountant with a passion for investing. About two years ago, I used to work as an auditor at a public accounting firm and have been behind the scenes at many different publicly traded and privately held companies in the U.S. My goal is to bring my unique perspective from that past experience, my current experience working in a new role at a large corporation, and my understanding of accounting to help break down some of the most exciting growth stocks on the market today. I'm a long-term investor. I am focused on finding great companies and holding them for a long time. I'm willing to endure volatility, crazy price drops, and everything that comes with this approach as long as the facts that led me to originally invest and believe in that company have not changed. If you want to learn more about this approach. I recommend reading the book "100 Baggers" by Chris Mayer. Introduction I think it's fitting that my first stock pick has to do with sports. Sports has been a part of my life since I could walk at the age of 2. First with baseball and soccer, and then later in my childhood with golf. I've always played American football and basketball for fun as well and have always been an avid fan of all the major sports in the US. I started playing fantasy sports (mostly just fantasy football) about 6 years ago and have always enjoyed it. Traditionally, with fantasy football you draft a team at the beginning of the year and those are your players for the rest of the season. If you have a bad draft, oh well. You can try to improve your team with trades and free agent additions but it is tough. Leagues usually consist of 10-14 teams (each managed by an individual) and there's obviously only one winner at the end of the season (about 4 months after the draft). This can lead to the managers of the lower performing teams losing interest as the season wanes on. I believe DraftKings' (DK) founders saw this issue and saw an opportunity. Enter, daily fantasy sports. Now, with the DK platform you can draft a new team every week. Or if you want, every day. This allows fans of fantasy sports to engage at whichever point of the season they want and at varying financial stakes. The Thesis Statement For every stock pick I make, I want to provide a quick thesis statement that can serve as a reminder for why I'm buying and holding that stock for the long term. I'll always aim to make it just a few sentences long so it can easily be remembered and internalized. This helps during times when the price may sporadically drop and you need to remember why you're holding this position. The thesis statement I have come up with for DK is as follows: "DraftKings: The leader in allowing fans to engage financially with their favorite sports, teams, and players. Having money at stake makes the game a lot more interesting to watch. The era of daily fantasy sports games, online sports betting, and online betting (outside of sports), is just getting started and DK is as well positioned (or better positioned) than anyone to capitalize off of this trend." Notice how I said "allowing fans to engage financially" as the first sentence and not necessarily "allowing fans to gamble". There's a reason for that. According to US Federal Law, Daily Fantasy Sports (DFS) contests have specifically been exempted from the prohibitions of the Unlawful Internet Gambling Enforcement Act (UIGEA). DK has always been, and I believe will continue to be DFS contests 1st, sports betting 2nd, and other forms of gambling/entertainment 3rd. It is noteworthy that states at an individual level can still deem DFS contests illegal if they so wish, but as of this writing (11/26/20), 43 of the 50 US States allow DFS contests and DK, accordingly, is offering DFS contests in all 43 of those US States. I'll try to clarify the difference between DFS contests and sports betting real quick: DFS Contest – Pay a pre-set entry fee to enter a contest. All entry fees go towards "The Pot". "Draft" 9 players to be on your "Team" for 1 week. Enter your "Roster" into a contest with other players (could range from 1 other person to 1,000s of people, the DK user can choose). Whichever "Roster" amasses the most points for that week out of all contestants wins. The winner will get the highest payout, and depending on the nature of the contest, other top finishers will receive smaller payouts as well. Sports Gambling – Team A is considered a 10 point favorite to defeat Team B. This means that Team A is expected, by the professional gambling line setters, to outscore Team B by 10 points. This is known as a point spread. You can bet on the underdog or the favorite. If you bet on the favorite, they have to win by more than 10 points for you to win the bet. If you bet on the underdog, you will win the bet as long as the underdog keeps the game within less than a 10 point defeat. These are just a couple simple examples to help you see the difference. Sports Gambling (the 2nd priority of DK) is a very lucrative market just as the DFS contests are. However, in the US, Federal Laws and regulations are a lot stricter on Sports Gambling than they are on DFS. As of this writing (11/27/20), 22 states (including the District of Columbia) out of 51 possible allow sports gambling. DK is still in the infancy stages of getting their sports gambling business going. In the 22 states where they could potentially operate, they currently have a sports gambling offering in 11 of those states. The sports gambling business model for DK can be broken into two main offerings – mobile sports betting, and retail sports betting. Mobile sports betting means you can place a sports bet online from the comfort of your own home, while retail sports betting means you must go to a casino and place a bet with the sportsbook in person. I personally believe mobile sports betting is the real potential cash cow for DK out of the two types of sports betting offerings due to the convenience and ease of access. DK is currently working on and encouraging customers to lobby their state lawmakers to legalize sports gambling in more states. How DK makes money At the very least, before you invest in a company, you better understand how they make money. In Chris Mayers' excellent book, 100 Baggers, that I mentioned above, he continually references top line revenue growth as one of the main common indicators of a possible 100 Bagger. This isn't to tell you that any stock I pick will be a 100 Bagger just because it has great top line revenue growth, but if I am looking at a growth stock to hold for the long term, revenue growth is one of the first things I look at. For DK, their means of making money is quite simple. I already went into detail above about DFS Contests and Sports Gambling. In DK's latest 10-Q filing with the SEC (filed 11/13/20), revenue is broken out into two main streams: Online Gaming and Gaming Software. Online Gaming (82% of Total Revenue for 9 months ended 9/30/20): Online gaming is the true core business of DK and includes the aforementioned DFS Contests, Sports Gambling and additional gambling (non-sports) opportunities. DK refers to their additional gambling (non-sports) as "iGaming" or "online casino". For the 9 months ended 9/30/20, Online Gaming revenue totaled $239M, up 30% YoY from $184M in the same prior year period. Keep in mind, that this is an increase that happened during a COVID-19 global pandemic that delayed and shortened many professional sports seasons. Online gaming revenue is earned in a few ways that are slightly different, but very similar overall. In order to enter a DFS contest, a customer must pay an entry fee. DFS revenue is generated from these entry fees collected, net of prize payouts and customer incentives awarded to users. In order to place a sports bet (sports gambling), a customer places a wager with a DK Sportsbook. The DK Sportsbook sets odds for each wager that builds in a theoretical margin allowing DK to profit. Sports gambling revenue is generated from wagers collected from customers, net of payouts and incentives awarded to winning customers. The last form of online gaming revenue is earned in similar fashion to a land-based casino, offering online versions of casino games such as blackjack, roulette, and slot machines. Gaming Software (18% of Total Revenue for 9 months ended 9/30/20): While the Online Gaming revenue stream mentioned above is a Business to Consumer (B2C) model, the Gaming Software revenue stream is a Business to Business (B2B) model. The Gaming Software side of the business was born out of the acquisition of SBTech, a company from the Isle of Man (near the UK) founded in 2007 that has 12+ years of experience providing online sports betting platforms to clients all over the world. The acquisition occurred as part of the SPAC driven IPO in April of 2020 that combined "the old DK company" with SBTech so that they now are "the new DK company" listed as DKNG on the NASDAQ. SBTech is a far more important part of the story than just being 18% of today's revenue. The reason for this is because DK will eventually (planned mid-late 2021) be migrating all of their DFS and gambling offerings onto SBTech's online platforms. Currently, for DFS, DK uses their own proprietary platform but that will move to SBTech with the migration. Currently, for online gambling, DK uses Kambi, the same online gambling platform that services Penn Gaming (PENN), a DK rival. But that's enough about the software migration for now, back to the Gaming Software revenue. The Gaming Software revenue stream for DK is essentially a continuation of SBTechs' B2B business model. DK contracts with business customers to provide sports and casino betting software solutions. DK typically enters two different type of arrangements with B2B customers when selling the gaming software:
As mentioned above, SBTech was an international company based in the Isle of Man before being acquired by DK. Thus, the majority of their business in their first 12 years of operating independently has always been international and outside of the United States. This has helped DK, which has historically been US focused, expand it's international reach. A perfect example of expanding this international reach occurred recently during October (technically Q4) in which DK's B2B technology (powered by SBTech) helped enable the launch of "PalaceBet", a new mobile and online sportsbook offering from Peermont, a South Africa based resort and casino company. The deal was headed by DK's new Chief International Officer, Shay Berka, who previously spent 10 years working for SBTech as CFO and General Manager. Mr. Berka took on the role of DK's Chief International Officer upon the merger in April earlier this year. I think this deal shows that DK has integrated SBTech and it's business very well into the larger business as a whole. They are not wasting any time using their newly acquired resources to expand their reach and bring in new sources of revenue. This is the end of my first article about DK. My goal is to drop Part 2 later this week. The focus of Part 2 will be an in depth answer of the question – "Can we 10x from here?" Disclosure: I am/we are long DKNG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. [link] [comments]  |
| Why sell Tesla before S&P 500 Inclusion? Posted: 03 Dec 2020 06:03 AM PST I've been seeing a lot of posts here about taking profits or selling out of Tesla stock. I am wondering why anyone would sell out at this point when we know tens of millions of shares have to be bought up on December 21st? "...After the close of trading on Monday, Nov. 16, the S&P committee at last announced that TSLA will be added to the S&P 500 index on Dec. 21. Approximately 120 million shares will have to be bought by passive S&P 500 index funds...." [link] [comments]  |
| Posted: 03 Dec 2020 06:03 AM PST Hi guys, im completly torn between investing in PLTR now or not. Since i believe in big data and this company anyhow but i'm unsure about the low price targets between 10$ to 14$. What are your thoughts? I would invest 3k. Everything i have now. My Portfolios value is 28k and gained 25% with nearly only defensive Stocks except two H2. I can save 2k every month. Just to let you know 3k is all i have for now but its regained quit fast [link] [comments]  |
| Posted: 02 Dec 2020 08:42 PM PST The article in question is this, it's a life cycle strategy that recommends young people buy very in the money - around 90-95 delta options 1-2 years out and roll them every quarter as a way to leverage up on stocks while young. Is this even a viable strategy? I don't know a whole lot about options but the one option I bought for 6 months out on SMTX 7.5C 6/18 dropped to 1.00 today and I still don't know why. I like the idea of leveraging myself while still fairly young but debt seems like a better way than using options. But I guess I just don't know enough about options. [link] [comments]  |
| Undervalued Companies Generator Posted: 02 Dec 2020 11:47 AM PST Howdy! I've been trading since March and investing for a few years, so up to you to completely ignore this post - also first time posting here I think. Anyways I've found some success finding undervalued companies by searching random companies onto Yahoo Finance and seeking the analyst ratings (Undervalued to Overvalued, with a % Estimate Return), and maybe this can help a few traders out by skipping on the FOMO stocks and looking for long term investments that have expected returns that can outperform the market. The Game Plan to Start So I firstly start off by going to https://www.randomstock.net/ and looking for NASDAQ or NYSE stocks, and then I go to Yahoo Finance and enter the ticker and try and determine if the company is undervalued based off the analyst ratings and I also look at their EPS, PE, Dividend Yield. Then I look into the statistics of the company - Profitability (Profit margin + Operating Margin, also to determine growth after dividends). I also take a look at the financials, if they beat their earnings, annual and quarterly revenues/earnings, total revenue, gross profit and net expenses. Additional Platforms for confirmation After you look on Yahoo Finances, you should also then go onto other brokers and platforms to find other analyst ratings and results, I personally go to Webull for my Undervalued Watchlist. On Webull you can also take a look at the recommendation ratings, analyst target prices and then the support/resistance and overall trend for the company (as well as short, mid and long trends that are forming). You can also use Schwab and Morningstar to get additional ratings, you can use the ratings on Schwab as well as Schwab's grading, based on the companies Growth, Quality, Stability, Valuation as well as Sentiment. Fundamentals after Technicals After all of this and I see that the company can be sustainable, I then take a look at the brief and sector the company is in, I'd personally check out their website, what products they have, company origins, average volume, growth potential and how it would react to market reactions, this kind of indicates how it performs compared to competition. Macro news is essential for this type of investing, could either make or break the growth of the company - but as this is a much longer investment you can create very lose trailing stop losses, whatever your exit plan is. Advantages of this 'strat' Honestly I've found great success with this, it's a fast and efficient way of analyzing professional forecasts on the companies growth, and by using multiple platforms it helps as a confirmation that the company has room to grow. This is a pretty straight forward way of getting companies to watch on the side when you're bored, or to actually implement yourself. It's also great for traders not looking to get into FOMO stocks, it could potentially even land you a safer position in a future FOMO stock and get a great entry price. Active Positions I've been using this for a little over a few months (not as my main strategy, I'm more of a swing trader), $ECPG (+15.79%) 77% est. Return, 5.25 PE, 6.87 EPS $RTLR (+2.53%), 90% est. Return, 12.15 PE, 0.72 EPS, 9.73% Div $CPRI (+249.24%, entered during the crash, still has a little more growth on the table), -14% est. Return, -2.66 EPS $STNE (+191.72%, entered before an earnings and got lucky with a nice 24% gain and then held since because fundamentals look amazing), -1% est. Return, 376.09 PE, 0.19 EPS Stocks I'm watching with this $PAA - 55% est. Return, 7.68 PE, 4.88 EPS, 1.75% Div Crude Oil Transportation and Preservation $AL - 81% est. Return, -3.37 EPS, 8.34% Div, Commercial + Private Aircraft Leasing $RTLR, 90% est. Return, 12.15 PE, 0.72 EPS, 9.73% Div TL:DR - Type random symbols into yahoo finance until you find a great deal :) Takes you like 5-10 minutes to find a nice one. Obviously not for experienced traders, but it's a nice boost to help new guys! Thanks for reading! [link] [comments]  |
| What is the best place to look for REITs? Posted: 02 Dec 2020 11:20 PM PST I'm having a hard time finding real estate investment trusts (REIT). I'm not looking do do the whole ETF route. Where do you guys usually look when trying to find REITs? (I'm looking for some that deal with Mesa, Az or Seattle, Wa. Those places are growing. Plus, I'm looking for dividends and REITs look like a good possibility) [link] [comments]  |
| Can someone explain why my DCF model is off when valuing a company? Posted: 02 Dec 2020 08:54 PM PST Hello, I am trying to get a better understanding and practice of different models, and I'm currently tying to build an excel model that matches the online DCF model calculator that is walked through in this video: https://www.youtube.com/watch?v=nHnEU6ZZ0QE (and here's a direct link to the page with the calculator: https://www.buffettsbooks.com/how-to-invest-in-stocks/advanced-course/lesson-35/) And Here is a link to the Google Spreadsheet of the model I'm working on. You can see in my spreadsheet that although a few of my numbers differ from what's in the video (caused by rounding errors perhaps? I'm not sure), for the most part the model in the spreadsheet is fairly consistent with the video. That is until you get to the last box, which is cell N30 in the spreadsheet. For some reason this calculation is way off (by almost $3,000) compared to the video, and I cannot seem to figure out how to get the calculation to produce the same number as what's in the video (despite testing a variety of various calculations, formulas, and excel functions). If someone can help provide me a a correct formula/function that fixes this (and ideally an explanation for what I did wrong as well), that would mean the world to me. Thank you P.S. You will need to make a copy of the spreadsheet file if you wish to make edits to it. [link] [comments]  |
| Expert network for retail investors? Posted: 02 Dec 2020 11:46 PM PST Hey all — there seems to be a huge lack of access to expert networks (GLG, AlphaSights) for the retail investor community. I know I would love to read about some in-depth company/market deep dives but there's no way I'm dropping $1,000 for a 1hr call do diligence my <$20,000k position in FSLY, for example. Wondering what the appetite for something like this is. I'm thinking about what shape this could take, whether it is a newsletter or a podcast. Lmk if any of you guys share this interest. [link] [comments]  |
| Posted: 03 Dec 2020 07:02 AM PST I keep having this sinking feeling that I will miss out on massively higher gains over the next 1-3 years vs staying in the S&P500. It has done good for me since I bought in in Mar/Apr but I also think it will see slower growth in the next 6 months than we did in the last 6. While travel etc. I can see doubling in the next few years. Even if one or two of them go bankrupt I still think I would come out ahead. Thoughts? [link] [comments]  |
| Snowflake ($SNOW) FY21Q3 report - EPS misses by $0.64, beats on revenue Posted: 02 Dec 2020 01:51 PM PST https://www.cnbc.com/2020/12/02/snowflake-snow-earnings-q3-2021.html
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| Defensive Intelligent Investor Posted: 02 Dec 2020 11:07 PM PST I've been reading the Intelligent Investor by Ben Graham and it's been great so far. I'm really learning a lot about myself which I didn't expect to happen. I thought I was going to learn how to pick stocks. Now, I think I'm going to change up my portfolio to this: 50% High Grade Bonds: SCHQ 34% US Stocks: IVV 16% Foreign Stocks: VXUS Rebalance every 6 months. Do you think Ben Graham would approve of this for a defensive Investor? [link] [comments]  |
| Should I choose greed or fear? Posted: 02 Dec 2020 10:57 PM PST I came across a company in August this year (I wont state the name to keep the view unbiased). The company is coming out of a long downward cycle and was at an extremely attractive valuation in August as the company has a stable business and a very positive future outlook. Even at a reserved estimation, the company stock could be a five-bagger. I had the money to invest then, but I delayed to go all in as I was not sure how the market was going to turn out. I just invested about 5% of the maximum I can invest in the company. Till October the stock price had risen about 25% from the prices in August and I got a feeling that the market also seems to agree with me on the company's future prospects. This is when greed took over. Considering my estimates, the October prices would still give me a 4-4.5 bagger stock. However, I thought that if I could wait till the next correction event (US election, second wave of the pandemic etc), I could still get the stock at the 5-bagger levels. Alas, as you all know how the stock market turned out since the start of November, I missed that opportunity as well. The company stock has risen another 25% and has reduced my prospective returns to 3.5-4 bagger range. The question I have is this: should I wait for another correction event (greed) or should I just buy the stock at the current price and be done with it (fear), accepting that I made a blunder and lost a prospective 1.5x of my investment income? I know I have made a huge mistake and in hindsight should have bought the stock any time between August to October (or at least done a DCA). An answer to put me out my misery will really be appreciated. I encourage a blunt and no-filter reply. [link] [comments]  |
| The end of Index Investing - Bogle 2018. Wood & Burry | looking for comments Posted: 03 Dec 2020 05:56 AM PST Dear Experts (cough) Index investing has been a successful strategy so far for the average Joe like me. However, people with some reputation such as Bogle, Wood and Burry have all raised some concerns moving forward. Let me quickly recap this 3 folks position on index investing
Is there anyone here, with enough experience and knowledge to give some good advice on this topic for the next 5-10 years? Are index going to be returning very low from 0 to 3% or can we assume a steady 5-7% for next 10 years again? Thanks. [link] [comments]  |
| Question about SPAC's. New territory for me. Posted: 02 Dec 2020 06:42 PM PST Recently I bought APXT and NGA and am wondering about the merger process. I'm interested in the companies these spacs are merging with but I'm a little confused about what happens once the merge goes through. Do I have to do anything or will the ticker just change and I'll own stock in the companies I'm interested in? [link] [comments]  |
| Posted: 03 Dec 2020 05:15 AM PST In recent years there was a lot of talk about a possible financial crash/crisis being imminent. My guess is that no one had the foresight for what is happening now due to COVID-19. My assumption is that people were thinking about a crash/crisis more akin to the dot-com bubble or the housing bubble. With that in mind, is it not quite likely that while businesses recover from COVID-19 we get hit by another crash/crisis due to an over-inflated market? For example, tech has been skyrocketing in recent years and (aside from a short dip) it has been going further up rather than down during the pandemic? My focus is not at all on a tech crash, but rather more generally a crash of any over-inflated market during the period that businesses are still recovering from COVID-19. What are your thoughts? [link] [comments]  |
| Profit off of flash crash/darkpool orders? Posted: 02 Dec 2020 10:55 PM PST Hello, I can't find information for this anywhere online. I notice very often, stocks will have long extended wicks that drop anywhere from 5-50%. It seems these are known as "darkpool" trades. Its different, but in 2017 Ethereum crashed from 300$ to 0.1$ and immediately stabilized (there is a video on youtube). I'm curious if there are trading strategies that involve setting extremely low limit buys on stocks with highly volatile wicking, with the hopes of grabbing up that stock in a 0 risk scenario, to sell it at normal price. [link] [comments]  |
| Did you short NKLA and why not? Posted: 03 Dec 2020 04:40 AM PST Current prices of all the worth-investing stocks are quite high and no one really knows what we can expect going further. Although prices can go even higher, there could also come a correction. I do not expect any sort of terrible market crash, however a 10% correction could happen, which actually would be a good buying opportunity. Waiting for that, what do you think of shorting NKLA? [link] [comments]  |
| Seems likely that we are at the start of a longer bull run on Virgin Galactic SPCE Posted: 02 Dec 2020 12:17 PM PST https://www.entrepreneur.com/article/360809 Seems likely that we are at the start of a longer bull run on this. Test flight will result in full FAA certification to fly passengers to space! Next they will do a rehearsal flight with crew members to make sure it's all good. Then the will fly Richard Branson to space - which will be the event of the century! Following that they are flying all the reserved ticket holders - many of whom are Hollywood celebrities. A lot of selfie Instagram photos will be uploaded Next, they will reveal their full plans for worldwide operations with multiple spaceports each generating 1 billion in revenue. And ramping up production of their fleet of spaceships. Also they have signed agreements for NASA training and sending research payloads to space. All of this within 6 months. Even on forward revenue snd a 15-30x PE this is easy a 50 billion market cap or $250 a share, but let's be conservative and say $125 a share or $25 billion market cap. Assuming they can deliver with the next space test flight next week. Always risks [link] [comments]  |
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