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The growing short case on Facebook and Google

119 points by oska 6y ago

onetimemanytime 6y ago
I thought Google was a good short in 2010 as they filled the page up with ads. But look what happened to the stock price since then. The "Market Can Remain Irrational Longer Than You Can Remain Solvent" comes to mind, no doubt one day they'll crash but until then...
- drunkpotato 6y ago
  That was my immediate first thought. Sure, they'll crash some day, and who knows how many ups and downs there will be before then? Trying to time the market to take advantage of that is not going to be easy.
- chillacy 6y ago
  I mean, the other way of looking at it is that the market is always "right" for mysterious reasons and we mere mortals (often) get our predictions wrong.
artsyca 6y ago
-- Incumbency’s biggest drawbacks are lack of creativity, sloth, internecine politics and waste. And an utter disregard for traditional business mores
dannyw 6y ago
I don't see much merit in this thesis. Google and Facebook are the gatekeepers to attention. Taxes, regulation and antitrust action may reduce their gross margins, but where else is the value going to go? As TikTok and other companies become more popular, you'll see the US government more protective of FB and Google. An abusive duopoly with Western alignment is better than a social media monopoly from China. The continued rise of TikTok actually simultaneously reduces government's will to act on big US tech. Neither FB or Google are in China; so the Chinese government's ability to hurt those companies are limited.
- appleflaxen 6y ago
  How is that analysis different than myspace 15 years ago (or whenever)? social media platforms are extremely durable until the next hot new thing comes along. There is a new generation you need to engage every ~5 years or so, and they see facebook as the platform to talk with grandma. FB made some genius acquisitions with instagram and whatsapp, but eventually they are going to fail to acquire the challenger, and when that happens the fall can be swift.
  - enitihas 6y ago
    Myspace never had this much cash in the bank. And Facebook has shown they are willing to copy anything that works (Stories)
  - moron4hire 6y ago
    To say that Facebook replaced MySpace (and therefore, it could also happen to Facebook) is not exactly accurate. Or rather, not the full picture. https://ourworldindata.org/rise-of-social-media https://ourworldindata.org/rise-of-social-media Facebook surpassed MySpace in monthly user count by April 2008. MySpace hit its peak in December 2008. This wasn't a "migration" from MySpace to Facebook. It was Facebook out growing MySpace. But that doesn't necessarily mean it could happen again. "The percentage of US adults who use social media increased from 5% in 2005 to 79% in 2019." Facebook grew at a time when social media usage was also growing. We don't have a huge, untapped pool of users from which to fuel a "Facebook killer". There was also a significant difference in how the sites we originally used, so there was interest from a lot of early users in using both. My feeling is that any site that might eventually supplant Facebook as the dominant social media force would need to grow in an underserved market before expanding into the general market, and do it in such a way that Facebook doesn't notice and come crush them first. What strikes me is that the peak year for MySpace and the year Facebook surpassed it was also the year that smartphones started to take off. Facebook, being the far "simpler" site, would have been much more usable in early smartphone browsers. And smartphones were a huge part of the growth of social media. So it suggests that not only does a Facebook competitor need an untapped market to serve, it needs a platform on which it can create a significantly better experience than what Facebook can do. Unfortunately, Facebook is ahead of the game on this issue. Why do you think they spend so much money on Oculus and VR? There are leaked memos from Zuckerberg that explicitly spell out this strategy. They are taking over the platform early to avoid ceding the space to a future competitor.
vmception 6y ago
Weak argument as this is America's Saudi Aramco. Wait Saudi Aramco is America's Saudi Aramco, this analogy has limits. My point is that digital data is a commodity that has been found and being excavated at high margins and will be protected by their countries, just because some other countries are trying to do the same thing. So while California and the European Union are making it more expensive to do this, DC and Beijing are only protecting the golden goose. Legislative changes and protections that raise the cost around monetizing user data can debilitate them heavily. Just watch for those. But on autopilot these companies will be fine as they convert quarterly revenue into a big cash warchest instead of reinvestment fuel.
- adventured 6y ago
  > Weak argument as this is America's Saudi Aramco. Microsoft (or Apple) is America's Saudi Aramco, if we're speaking of important & highly profitable corporations. They're vastly more profitable than Google or Facebook, and far more sustainable (in terms of market position, regulation, anti-trust, etc). In fact, Microsoft ($52b) will soon have as much operating income as Google ($35b) and Facebook ($26b) combined, and will soon surpass Apple ($65b; which has barely grown its operating income in four years and has weak prospects for income growth). To make matters worse, Google is stagnating and losing their hold on the ad market (while being pursued for anti-trust). Google also suddenly lost their leadership, Larry & Sergey cast Alphabet adrift after creating that mess, said good luck and adieu (to run & hide from the legal tsunami). Microsoft by contrast is booming, has a solid regulatory context, and has one of the world's best CEOs at the helm. Here is Microsoft's income growth: $22b -> $35b -> $43b -> $52b If I were a nation, I'd rather own Microsoft than Aramco, much less Google & Facebook. Easy choice. Aramco has a collapsed future and they're trapped in low oil price hell indefinitely. Microsoft is probably going to $75-$80 billion per year in operating income in five years, on their way to $100 billion this decade. As far as individual corporate entities goes, nothing like the Microsoft profit machine has ever existed before (Apple comes the closest, and they're stuck in a zero growth smartphone market). Apple's cost of revenue is 61.8% of sales; Microsoft's cost of revenue is 31.7% of sales, their operating income margin is a wild 37.4% (given their scale it's something beyond extraordinary).
quelsolaar 6y ago
I wouldn’t short Google or Facebook, but out of the big tech companies (FB, Google, MS, Apple, Amazon, And Netflix) I would bet on the others. The exception being Netflix, given their very high debt they could get in a serious squeeze if intrests go up. All other companies are essentially debt free.
- moksly 6y ago
  I’d never short anything, but I really don’t see the value of google. I used to love their services, but now the only one I use is maps, and that’s not because of privacy concerns, it’s because their competition is just better. I used to have gsuite for my personal e-mail, file/photo and office stuff. I’ve been using the cheapest office365 business plan for a year and a couple of months now. Not because I was concerned about privacy, but because google made it harder for me to use their services as a private consumer on a business plan. On the flip side of this is my job in the public sector of Europe, where we’re using more and more cloud solutions, but don’t use google cloud or gsuite because of their poor business-to-business support and failure to work with EU legislation. Privately google search used to be the best in my native language, but these days I find myself doing !g less and less on DuckDuckGo, again not really because of privacy concerns but because the whole first page of my google search results are commercials for places that I’m not going to use. Just try searching for something baby related on google and see what happens. We have some very good public health sites with tons of info, run by our government, first results on DDG but burrowed deep below a heap of advertisements on google. Professionally we’re moving to the new Edge rather than Chrome because it’s easier for IT operations and support to control it, even though the google enterprise tools aren’t bad, they are just not as good. All of this is completely anecdotal of course, but I’m always worried about investments into companies that don’t make stuff I’d personally or professionally want to use. Then again, most of my investments like in green energy companies, so I’m probably just too conservative for tech investments and you likely shouldn’t take my advice.
  - rorykoehler 6y ago
    What do you use instead of Google Suite?
nojito 6y ago
Google is headed for choppy waters starting in 2021, however shorting now would be a terrible idea. They still have some growth left as they optimize their workforce for WFH and cut costs elsewhere. Worst case they can still push their ad delivery in more “annoying” ways, but that’s more of a break glass in case of emergency situation. It’s also unclear how damaging their antitrust result will be.
jefftk 6y ago
I'm not seeing anywhere in the linked thread where they describe why they don't think these arguments are already priced in? If these companies had no risks, their stock of course would be much higher. (Disclosure: I work for Google speaking only for myself)
- deleted 6y ago
  [deleted]
- marketgod 6y ago
  This is a hit piece against GOOGL to get the price under resistance for Mondays open. The idea is to try to stop the GOOGL break out this week.
scarface74 6y ago
I keep seeing the argument is full of talented and “smart people” (tm) as a competitive advantage. While I don’t doubt that the actual engineers are some of the smartest people in the world, their leadership and product managers are so rudderless, it seems like it’s wasted. Despite years of trying, they are still a one trick pony - advertising - where 90% of their revenue comes from.
- umanwizard 6y ago
  I was at FB for four years. Some of FB’s engineers are incredibly intelligent, but most are just normal.
  - TulliusCicero 6y ago
    Same thing at Google. I think the biggest difference between the prestigious/high-paying tech companies and programmers at more conventional companies, is that at the former you find basically no dead weight engineers. At least, I never saw any at Amazon or Google.
    - scarface74 6y ago
      Isn’t a engineer “dead weight” if they work on a project that ends of getting canned a year later? I would say that any engineer that worked on one of the many messaging apps that Google has created was dead weight.
      - oh_sigh 6y ago
        That's more of a failure of leadership. If the engineers are in the galley rowing, they can all be great contributors to the forward motion of the boat, but it may still crash into rocks nonetheless. You can redeploy "deadweight" engineers who are good engineers but the project fails for business/political/leadership reasons. You can't redeploy actual deadweight engineers who don't contribute anything on an individual basis(or rather, you can, but you wouldn't want to).
tzury 6y ago
If the tweet was: Here is why I shorted Facebook and Google at the amount of $$$ that was a story worth considering reading. A series of tweets telling me why I should short... Yeh, right! Calling my banker on a Sunday.
- shmageggy 6y ago
  Exactly. As if investors hadn't already thought about things like regulation etc and they aren't already reflected in the market value
rmrfstar 6y ago
Here's a reasonable, though unsystematic take on what happens to monopoly shares after a break up [1]. A systematic analysis would probably get published in a prestige finance journal, whatever it concluded. [1] https://mattstoller.substack.com/p/break-ups-and-stock-prices https://mattstoller.substack.com/p/break-ups-and-stock-price...
ramoz 6y ago
That's an optimistic short. Especially for companies like Google who are prime to take over the internet of corporate function. Imagine how those premises apply in covid-remote-enterprise world and any existing major player built on the foundations of on-prem corporate function and real estate ... especially the inner-city & inner-building support businesses (food/beverage, commute, telecom, hotel). Im more inclined to think large tech companies are prone to further growth here.
paulsutter 6y ago
A better recent tweet by Chamath[1]: > BigTech has a huge yearly R&D budget. In fact, with two years’ worth of R&D, BigTech could recreate the Apollo program. But they haven’t. Why? Incumbency’s biggest drawbacks are lack of creativity, sloth, internecine politics and waste. [1] https://twitter.com/chamath/status/1281630459286286336 https://twitter.com/chamath/status/1281630459286286336
- SpicyLemonZest 6y ago
  They haven't because they don't want to compete with Jeff Bezos and Elon Musk, who are both working on it. (It's been longer than two years, granted, but they also have more involved goals than just landing and flying away.)
- nabla9 6y ago
  Big Tech buys innovation and shuts it down or absorbs it. Think for example all Alphabet products that came from acquisitions: Youtube, Picasa, Android, DoubleClick, reCAPTCHA, ITA Software, SageTV, Meebo, Waze,DeepMind, Fitbit... They have also bought something like 50 ad tech companies and 20-30 web search companies.
  - derwiki 6y ago
    Wasn’t Gmail developed in house by Paul Buchheit?
    - nabla9 6y ago
      Good point, corrected.
- jeswin 6y ago
  > BigTech has a huge yearly R&D budget. In fact, with two years’ worth of R&D, BigTech could recreate the Apollo program. Why? One could argue that advances in AI and Quantum Computing are at least as significant as landing on the moon, and of more value. Big tech investment has pushed the field forward significantly.
- 6y ago
deleted 6y ago
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roenxi 6y ago
Say, from India's perspective it is possible that they will be at war with the United States at some point in the next 50 years. If that happens then the US will have a detailed social graph of the country through Facebook and who-knows-what information about their manufacturing, commercial and geospatial situation through Google. Geopolitically, there is an argument there for, say, Europe or Asian countries to ban Google/Facebook/whatever and choke off the revenue leaving their country. That is a pretty decent short-term nationalist argue to try and avoid large amounts of money leaving the country for foreign climes. The Chinese wall-off-the-internet strategy hasn't obviously failed them, and it gave them a bunch of serious technology contenders. It isn't a problem for this week, but that perspective raises longer-term questions about what the risks are to Google's and Facebook's business models of government intervention.
- oblio 6y ago
  It makes no sense for India to be at war with the US, I'd say. Not that these things are always logical. From a strategic point of view, India should be allied with the US as India is quite naturally at odds with China.
  - balladeer 6y ago
    I am sure OP meant it hypothetically. Besides geopolitics might shift quite fast. If, and that's a gigantic if, China lets go of is habit of looking at a map and declaring "yeah, that region is ours!", or Pakistan gets rid of its shadow deep state (that'd be ISI + military) India could have way better cooperation with them than it had ever had with USA, or will ever have. This again, obviously, is hypothetical.
    - oblio 6y ago
      Neighbors are extremely rarely friends, if they have the same clout.
    - perl4ever 6y ago
      Historically, wasn't there a period where the US was considerably more friendly with Pakistan than India? I think it was when India was more Soviet-sympathizing. I remember reading about an incident when the US sold a lot of fighter jets to Pakistan, and decided after collecting payment not to deliver. Probably that was about when the relationship went sour?
mathgenius 6y ago
If someone really wanted to do this, you would short GOOG or FB and long the nasdaq (QQQ) by a proportional amount. This position insulates you against the market bulls, which could go on pumping the market for several more years. It's a bet that GOOG & FB will underperform the tech sector more widely. Maintaining a short position also costs money, so this is a further complication. As a retail investor, I don't know if there are any instruments for shorting these big tech co's. I'm guessing that you can do it on interactive brokers (for example) if you post enough margin. DYOR.
- oh_sigh 6y ago
  How would you do it if you were working for Microsoft and weren't legally allowed to transact with Microsoft stock because of a trading blackout period?
  - mathgenius 6y ago
    Yikes.. If buying QQQ is counted as "transacting with microsoft stock" then you could try finding a basket that didnt have microsoft. I'm not an expert in this stuff, but for example the Russell 2000 fits. It would be better if it was a tech/internet related basket. EDIT: here's a better idea. Just buy apple and/or half a dozen other big tech stocks that you like!
    - esrauch 6y ago
      Generally the "quiet period" while employed at big tech cos doesn't include index/mutual funds even though they technically include the company.
setzeus 6y ago
The fundamentals in the thesis/tweet thread mainly (sorta) hold up. Fighting the fed in this environment though? Not a chance.
bronzeage 6y ago
The brilliant engineers argument is pretty blind to the way these corporations might not make the most potential of some people. I know brilliant person which moved to work for Google because of the pay, and he was spending time there doing mundane testing. It's pretty known issue that Google easily hires brilliant people, it becomes so crowded they don't really use their potential. At least Google is desperately trying to diversify away from ads only. Facebook doesn't. And Facebook has even bigger problem: their ads are a distraction, and younger people are getting more and more adapt at subconsciously ignoring this distraction. I've seen young kids automatically reaching for the the skip ad button in YouTube. I would argue that in 10 to 20 years, most of humanity will be immune to forced advertisements.
- nojito 6y ago
  Hiring the smartest people to do the "simplest" tasks is how you reduce errors and variance.
  - fennecfoxen 6y ago
    At some point there's a problem of comparative advantage. You could hire a top tier genius computer programmer to check out groceries at the supermarket, and he could become the best supermarket checkout clerk in the world — but it's more efficient for him to be programming computers and leaving the grocery job to someone else, who isn't even particularly good at it, just as an entry level job. Google's simplest tasks may be more important than many other companies' complex tasks, but in the long term, wasting capital (including human capital) by using it at a fraction of its potential is generally a losing game, for society and for the capitalist.
    - ghaff 6y ago
      Google has certainly moved the needle on things like SRE--both for themselves and for the industry as a whole--because they can and do hire much of what their interview process determines is the "best" into roles that many other companies will staff with more or less whatever resume comes along. That said, it really hasn't helped Google much to expand their business. GSuite is probably the clearest mostly organic new area--and it's pretty good. Google Cloud somewhat although, like Java for Sun, Kubernetes will probably end up making other companies a lot more money than it will for Google. Hence the current spat over Istio. Certainly lots of things haven't gone anywhere. Anyone want to lay long odds on Waymo being around in 10 years? And it's probably not healthy for the tech industry. Yes, some will go for the startup lottery ticket for reasons of passion or naivete. And others are just less driven by money. But having many of the notionally best and brightest spending years at Google mostly because they'll pay such large wads of cash to even fresh grads means a lot of companies won't even try to compete for them.
Ozzie_osman 6y ago
IC at BigTechCo: "There's another team building the exact same product as my team. It's frustrating and wasteful." Director at BigTechCo, when asked why that happens: "That's actually by design. We want internal competition. We can afford to spend 2 or 3x on building that product. We can't afford to have a competitor build it better."
- sshumaker 6y ago
  In practice, “internal competition” isn’t competing in the way the free market does. The most politically connected product tends to win, not the one that has the best odds of success. And if you let these all go to market, you risk eroding user trust (think Google and messaging products). Confusing your users is not a good thing.
  - koheripbal 6y ago
    This is a half truth. Politics counts - but so does getting functionality out the door and gaining adoption. People aren't stupid. If one team is simply failing to deliver, then the internal competition is a hedge on that.
  - 86J8oyZv 6y ago
    Do you mean "most politically connected" or "best marketed at the right time?" Outside of products being used by state agencies, I don't think political connections have much bearing...
    - Ozzie_osman 6y ago
      I think he means politically connected internally. Ie the VP or Director of your group convinces the higher-ups that theyve won the internal competition even if they don't have the better product. This definitely happens.
  - Ozzie_osman 6y ago
    Very true about the politically-connected team winning. That said, the high level point is even without the M&A lever, these companies can still succeed by doing things that seem wasteful. FB is a good example with Snap. They didn't have the M&A lever (for different reasons in that case), but they just built Stories into Instagram, WhatsApp, and Messenger. If you were willing to spend billions on M&A you can just spend them internally. And you don't even need to build a free-market best product, because you have a brand and user base that startups don't. In any case, I do hope that alone isn't enough to keep big companies entrenched. Also hi Scott!
aaron695 6y ago
Can someone explain how you would actually do this? Assume their thesis is true. How would you short it? What's some real figures and returns if true. I'm not sure I even understand the bet/prediction. Is the bet it will drop in the next 5 years and drop lower than now and then stay lower until the 5 year mark, then we profit? How much do we profit to investment? Saying there will be a substantial fall sometime in the next 5 years seems to me still hard to profit from, but I don't know the numbers.
- chillacy 6y ago
  Hmm, I assumed the author implied literally short selling the underlying stock but I think that's a bad idea: potentially unlimited losses. The author may even be correct but the market can be particularly irrational around growth stocks... Another method might be to sell calls or call spreads, date it out a few years and hope the underlying doesn't rise too much.
dreamcompiler 6y ago
Offtopic: Why is TikTok growing faster than IG or Youtube? What features make it more compelling for users? I don't use TikTok and don't plan to, but I'm curious about the TikTok phenomenon.
- Miner49er 6y ago
  It's more memetic than either of those, by design. You can easily incorporate other videos, sounds, and ideas (memes) into your own videos. The videos are also very short compared to YouTube and to have a new video play is as simple as a swipe down. I don't have much experience with Instagram, but Instagram doesn't seem to have the memetic component. It's more just traditional social media. Users don't really build off of other users content as much.
- jpalomaki 6y ago
  One things is that it makes it easy for anybody to be a content producer. Kids make their own version of short video somebody else did. Just some dance moves, music is provided. You can be creative, but don’t need to think too much what to do or say. The format also makes the content universal. Since there’s just music, there’s no language barrier for consuming the content. Certainly this helped to get traction on smaller markets. Also it is addictive. Short videos, visual and aural stimuli which you control by clicking to next or liking. Checking who liked your videos. Very much like slot machines in casino.
jliptzin 6y ago
Even if you agree with him in principal I don’t see how anyone could stomach shorting a growth stock for 5+ years like he suggests. How much would you lose just on interest paid to borrow the shares for that long? So maybe he’s talking about buying puts? Can you buy puts 5 years out? The premium would be insane. Is there another instrument I’m missing to make this trade?
soared 6y ago
You can’t possibly evaluate stock prices by blatantly ignoring every single financial metric, knowing nothing about the product, and posting your analysis on Twitter.
knorker 6y ago
I wish people would stop using twitter for article/blog sized content. Maybe I'm holding it wrong, but I find retweets of threads extremely an extremely unreliable way to find my way back to the actual thread. This particular link works, but it's still very a very annoying form to read it. That said: Shorting these companies, that OP admits have huge R&D budgets, is a bet that they won't invent something new. Or that they will be taken over by something that does. With a 10 digit R&D budget you can afford to be second mover. In the last 20 years, has GOOG invented? Wow, yes. Question is do you think the past 2 years (or whatever) is a better predictor of next 5 years than the last 20 years was? I dunno. And saying you do (especially when shorting) is saying you know better than the market, which is not always wrong, but it does have some arrogance in it.
- 6a74 6y ago
  I agree that Twitter is the wrong medium for essays. Not that it's a great fix, but Twitter threads can be consolidated with Thread reader, which makes them much easier to read. For example, this article: https://threadreaderapp.com/thread/1281630456807452677.html https://threadreaderapp.com/thread/1281630456807452677.html
- gavribirnbaum 6y ago
  I think the major question is not whether they will invent something else. they are reliant on Ads and will remain so as far as I can tell. the real question is: is the ad model overvalued? I think so for the following reasons: ad blockers, users getting desensitized to ads, diminishing returns of the amount of data one needs on a user to sell. I think OP has the right conclusion but the wrong reasons. what do you think?
  - knorker 6y ago
    I think the ads market risk is offset by the market potential of self-driving, cloud, AI (deepmind), and maybe other things, long term. Shorting GOOG is betting not only that ads will decrease long term, but also that the other fields won't increase. Yes, I realize even cloud has a long way to go, revenue wise, compared to ads. But on the other hands ads has a long way to fall. And public cloud (including Google's cloud) is still growing exponentially. In other words: I have no reason to think I know better than the invisible hand of the market. That's GOOG. FB I've not looked into as much.
bob1029 6y ago
I disagree with shorting stock, but I agree with some of the sentiment behind that choice. I am not sure the best way to articulate the specific names for these, but I generally categorize our tech companies into 2 buckets when viewing this through the lens of an investor: Bucket A: Facebook, Google, Twitter, Snap, Pinterest, Netflix, et. al. Bucket B: Microsoft, Amazon, Apple, Intel, AMD, et. al. Bucket A seems to be the riskiest to me because there are virtually no barriers to entry on the markets and products these companies target. Sure, Google & Facebook have some hardware/cloud hosting angles, but the companies in Bucket B make those revenue streams pale in comparison. E.g. AWS/Azure vs GCP, Microsoft Surface vs Oculus Rift, Macbook vs Pixelbook, iPhone vs anything, etc. Bucket B contains all of the companies that I would feel comfortable buying and holding long. These companies have a deep pool of products, IP and larger barriers to entry for their markets. For instance, if someone came along and made some change to the world where Microsoft no longer makes any money off of advertising, they would be able to proceed without much difficulty. If someone chopped Google's ad revenue stream, I think there would be a serious problem for the company.
leoh 6y ago
Google isn't fundamentally in the entertainment business. They are in the search/ad business, which breaks the fundamental assumption here ("users need to be entertained or they leave"). Moreover, Facebook has shown an ability to capture attention, in spite of an incumbent TikTok; their decision to acquire Instagram when they did was canny and their ability to continue to foster it was skillful. With respect to the "Apollo Program" metaphor — Google's X projects and other projects (like Waymo) are formidable, and may lead to serious breakthroughs and changes to society. The narrative that FB/Google are inefficient is questionable and is offered without coherent context; it would be helpful to compare them, say, to Genentech, Merck, Lockheed Martin and other large companies with serious R&D budgets, which have survived and are doing okay, despite not being as nimble as, say, the occasional dark horse like SpaceX (with respect to Lockheed Martin). Yes, Google and Facebook may not loom like the giants they were. But there is a good chance they will continue to thrive. Another example: Microsoft is doing fine, despite not being the giant it was in the 90s.
marketgod 6y ago
These short sellers are timing this leak because of the break out on GOOGL. GOOGL is breaking out and it's going toward $1,800. This is where the market has to stop it, if it can't it's going to pop. TSLA/AMZN/NFLX just broke out this week and GOOGL is following through. If you are short right now, you are hurting and need this trade to fail. These sorts of reports always come out and break outs, even though I don't watch the news frequently, these stories pop-up across message boards when I get into breakout trades. Disclaimer: I am in GOOGL 2020-Jul-17 1580 Calls @ 8.20 and it is currently at $12.00 and I am looking for $1620 targets.
mindfulplay 6y ago
This person seems to generate a lot of noise disproportional to his talent/skills. He has a pinned tweet that is absurdly positioning himself to the likes of Berkshire Hathaway: sort of a megalomaniac complex. Reading his Annual Letter (which directly quotes/'competes' with Warren buffett) gives me a cringe feeling. He got out of FB claiming the company is shit ( no arguments). But his new ventures and Twitter commentary is at odds with his position: Social Capital seems like a farcical take compared with the likes of Gates, Buffett who have actually proven with their actions not empty egocentric Twitter threads. Classic VC turned Savior mentality: except underneath it all these people are regular 'get lucky' hedge fund greedy hacks.
- valuearb 6y ago
  Recommending a five year short position is about as anti-Buffett methodology as possible. Buffett has been pretty explicit that the risk reward ratio of shifting doesn’t make sense. And options have a huge time expense over five years.
- valuearb 6y ago
  Wow, he’s chairman of Virgin Galactic. Now that’s a short target.
- logicslave 6y ago
  He recently posted a video on youtube where he was pumping Bitcoin. In 2020, no serious investor thinks bitcoin is going to sky rocket
  - thedudeabides5 6y ago
    Well, pretty sure Novagratz is a still a big bull, and he’s more “serious” than anyone replying to this thread (including me!).
- icelancer 6y ago
  This guy is taking his 15 minutes of fame to seize the message currently popular. Spot on.
- 6y ago
Lasher 6y ago
Everything written in this article would have made perfect sense 5 years ago too, now look at the stock charts over the last 5 years. I don't disagree with it, possibly even want it to be right, but I sure would have hated to hold a short on either of those stocks over the last 5 years.

119 points by oska 6y ago

I thought Google was a good short in 2010 as they filled the page up with ads. But look what happened to the stock price since then. The "Market Can Remain Irrational Longer Than You Can Remain Solvent" comes to mind, no doubt one day they'll crash but until then...

drunkpotato 6y ago
That was my immediate first thought. Sure, they'll crash some day, and who knows how many ups and downs there will be before then? Trying to time the market to take advantage of that is not going to be easy.
chillacy 6y ago
I mean, the other way of looking at it is that the market is always "right" for mysterious reasons and we mere mortals (often) get our predictions wrong.

artsyca 6y ago

-- Incumbency’s biggest drawbacks are lack of creativity, sloth, internecine politics and waste. And an utter disregard for traditional business mores

dannyw 6y ago

I don't see much merit in this thesis. Google and Facebook are the gatekeepers to attention. Taxes, regulation and antitrust action may reduce their gross margins, but where else is the value going to go? As TikTok and other companies become more popular, you'll see the US government more protective of FB and Google. An abusive duopoly with Western alignment is better than a social media monopoly from China. The continued rise of TikTok actually simultaneously reduces government's will to act on big US tech. Neither FB or Google are in China; so the Chinese government's ability to hurt those companies are limited.

appleflaxen 6y ago
How is that analysis different than myspace 15 years ago (or whenever)? social media platforms are extremely durable until the next hot new thing comes along. There is a new generation you need to engage every ~5 years or so, and they see facebook as the platform to talk with grandma. FB made some genius acquisitions with instagram and whatsapp, but eventually they are going to fail to acquire the challenger, and when that happens the fall can be swift.
- enitihas 6y ago
  Myspace never had this much cash in the bank. And Facebook has shown they are willing to copy anything that works (Stories)
- moron4hire 6y ago
  To say that Facebook replaced MySpace (and therefore, it could also happen to Facebook) is not exactly accurate. Or rather, not the full picture. https://ourworldindata.org/rise-of-social-media https://ourworldindata.org/rise-of-social-media Facebook surpassed MySpace in monthly user count by April 2008. MySpace hit its peak in December 2008. This wasn't a "migration" from MySpace to Facebook. It was Facebook out growing MySpace. But that doesn't necessarily mean it could happen again. "The percentage of US adults who use social media increased from 5% in 2005 to 79% in 2019." Facebook grew at a time when social media usage was also growing. We don't have a huge, untapped pool of users from which to fuel a "Facebook killer". There was also a significant difference in how the sites we originally used, so there was interest from a lot of early users in using both. My feeling is that any site that might eventually supplant Facebook as the dominant social media force would need to grow in an underserved market before expanding into the general market, and do it in such a way that Facebook doesn't notice and come crush them first. What strikes me is that the peak year for MySpace and the year Facebook surpassed it was also the year that smartphones started to take off. Facebook, being the far "simpler" site, would have been much more usable in early smartphone browsers. And smartphones were a huge part of the growth of social media. So it suggests that not only does a Facebook competitor need an untapped market to serve, it needs a platform on which it can create a significantly better experience than what Facebook can do. Unfortunately, Facebook is ahead of the game on this issue. Why do you think they spend so much money on Oculus and VR? There are leaked memos from Zuckerberg that explicitly spell out this strategy. They are taking over the platform early to avoid ceding the space to a future competitor.

vmception 6y ago

Weak argument as this is America's Saudi Aramco. Wait Saudi Aramco is America's Saudi Aramco, this analogy has limits. My point is that digital data is a commodity that has been found and being excavated at high margins and will be protected by their countries, just because some other countries are trying to do the same thing. So while California and the European Union are making it more expensive to do this, DC and Beijing are only protecting the golden goose. Legislative changes and protections that raise the cost around monetizing user data can debilitate them heavily. Just watch for those. But on autopilot these companies will be fine as they convert quarterly revenue into a big cash warchest instead of reinvestment fuel.

adventured 6y ago
> Weak argument as this is America's Saudi Aramco. Microsoft (or Apple) is America's Saudi Aramco, if we're speaking of important & highly profitable corporations. They're vastly more profitable than Google or Facebook, and far more sustainable (in terms of market position, regulation, anti-trust, etc). In fact, Microsoft ($52b) will soon have as much operating income as Google ($35b) and Facebook ($26b) combined, and will soon surpass Apple ($65b; which has barely grown its operating income in four years and has weak prospects for income growth). To make matters worse, Google is stagnating and losing their hold on the ad market (while being pursued for anti-trust). Google also suddenly lost their leadership, Larry & Sergey cast Alphabet adrift after creating that mess, said good luck and adieu (to run & hide from the legal tsunami). Microsoft by contrast is booming, has a solid regulatory context, and has one of the world's best CEOs at the helm. Here is Microsoft's income growth: $22b -> $35b -> $43b -> $52b If I were a nation, I'd rather own Microsoft than Aramco, much less Google & Facebook. Easy choice. Aramco has a collapsed future and they're trapped in low oil price hell indefinitely. Microsoft is probably going to $75-$80 billion per year in operating income in five years, on their way to $100 billion this decade. As far as individual corporate entities goes, nothing like the Microsoft profit machine has ever existed before (Apple comes the closest, and they're stuck in a zero growth smartphone market). Apple's cost of revenue is 61.8% of sales; Microsoft's cost of revenue is 31.7% of sales, their operating income margin is a wild 37.4% (given their scale it's something beyond extraordinary).

quelsolaar 6y ago

I wouldn’t short Google or Facebook, but out of the big tech companies (FB, Google, MS, Apple, Amazon, And Netflix) I would bet on the others. The exception being Netflix, given their very high debt they could get in a serious squeeze if intrests go up. All other companies are essentially debt free.

moksly 6y ago
I’d never short anything, but I really don’t see the value of google. I used to love their services, but now the only one I use is maps, and that’s not because of privacy concerns, it’s because their competition is just better. I used to have gsuite for my personal e-mail, file/photo and office stuff. I’ve been using the cheapest office365 business plan for a year and a couple of months now. Not because I was concerned about privacy, but because google made it harder for me to use their services as a private consumer on a business plan. On the flip side of this is my job in the public sector of Europe, where we’re using more and more cloud solutions, but don’t use google cloud or gsuite because of their poor business-to-business support and failure to work with EU legislation. Privately google search used to be the best in my native language, but these days I find myself doing !g less and less on DuckDuckGo, again not really because of privacy concerns but because the whole first page of my google search results are commercials for places that I’m not going to use. Just try searching for something baby related on google and see what happens. We have some very good public health sites with tons of info, run by our government, first results on DDG but burrowed deep below a heap of advertisements on google. Professionally we’re moving to the new Edge rather than Chrome because it’s easier for IT operations and support to control it, even though the google enterprise tools aren’t bad, they are just not as good. All of this is completely anecdotal of course, but I’m always worried about investments into companies that don’t make stuff I’d personally or professionally want to use. Then again, most of my investments like in green energy companies, so I’m probably just too conservative for tech investments and you likely shouldn’t take my advice.
- rorykoehler 6y ago
  What do you use instead of Google Suite?

nojito 6y ago

Google is headed for choppy waters starting in 2021, however shorting now would be a terrible idea. They still have some growth left as they optimize their workforce for WFH and cut costs elsewhere. Worst case they can still push their ad delivery in more “annoying” ways, but that’s more of a break glass in case of emergency situation. It’s also unclear how damaging their antitrust result will be.

jefftk 6y ago

I'm not seeing anywhere in the linked thread where they describe why they don't think these arguments are already priced in? If these companies had no risks, their stock of course would be much higher. (Disclosure: I work for Google speaking only for myself)

deleted 6y ago
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marketgod 6y ago
This is a hit piece against GOOGL to get the price under resistance for Mondays open. The idea is to try to stop the GOOGL break out this week.

scarface74 6y ago

I keep seeing the argument is full of talented and “smart people” (tm) as a competitive advantage. While I don’t doubt that the actual engineers are some of the smartest people in the world, their leadership and product managers are so rudderless, it seems like it’s wasted. Despite years of trying, they are still a one trick pony - advertising - where 90% of their revenue comes from.

umanwizard 6y ago
I was at FB for four years. Some of FB’s engineers are incredibly intelligent, but most are just normal.
- TulliusCicero 6y ago
  Same thing at Google. I think the biggest difference between the prestigious/high-paying tech companies and programmers at more conventional companies, is that at the former you find basically no dead weight engineers. At least, I never saw any at Amazon or Google.
  - scarface74 6y ago
    Isn’t a engineer “dead weight” if they work on a project that ends of getting canned a year later? I would say that any engineer that worked on one of the many messaging apps that Google has created was dead weight.
    - oh_sigh 6y ago
      That's more of a failure of leadership. If the engineers are in the galley rowing, they can all be great contributors to the forward motion of the boat, but it may still crash into rocks nonetheless. You can redeploy "deadweight" engineers who are good engineers but the project fails for business/political/leadership reasons. You can't redeploy actual deadweight engineers who don't contribute anything on an individual basis(or rather, you can, but you wouldn't want to).

tzury 6y ago

If the tweet was: Here is why I shorted Facebook and Google at the amount of $$$ that was a story worth considering reading. A series of tweets telling me why I should short... Yeh, right! Calling my banker on a Sunday.

shmageggy 6y ago
Exactly. As if investors hadn't already thought about things like regulation etc and they aren't already reflected in the market value

rmrfstar 6y ago

Here's a reasonable, though unsystematic take on what happens to monopoly shares after a break up [1]. A systematic analysis would probably get published in a prestige finance journal, whatever it concluded. [1] https://mattstoller.substack.com/p/break-ups-and-stock-prices https://mattstoller.substack.com/p/break-ups-and-stock-price...

ramoz 6y ago

That's an optimistic short. Especially for companies like Google who are prime to take over the internet of corporate function. Imagine how those premises apply in covid-remote-enterprise world and any existing major player built on the foundations of on-prem corporate function and real estate ... especially the inner-city & inner-building support businesses (food/beverage, commute, telecom, hotel). Im more inclined to think large tech companies are prone to further growth here.

paulsutter 6y ago

A better recent tweet by Chamath[1]: > BigTech has a huge yearly R&D budget. In fact, with two years’ worth of R&D, BigTech could recreate the Apollo program. But they haven’t. Why? Incumbency’s biggest drawbacks are lack of creativity, sloth, internecine politics and waste. [1] https://twitter.com/chamath/status/1281630459286286336 https://twitter.com/chamath/status/1281630459286286336

SpicyLemonZest 6y ago
They haven't because they don't want to compete with Jeff Bezos and Elon Musk, who are both working on it. (It's been longer than two years, granted, but they also have more involved goals than just landing and flying away.)
nabla9 6y ago
Big Tech buys innovation and shuts it down or absorbs it. Think for example all Alphabet products that came from acquisitions: Youtube, Picasa, Android, DoubleClick, reCAPTCHA, ITA Software, SageTV, Meebo, Waze,DeepMind, Fitbit... They have also bought something like 50 ad tech companies and 20-30 web search companies.
- derwiki 6y ago
  Wasn’t Gmail developed in house by Paul Buchheit?
  - nabla9 6y ago
    Good point, corrected.
jeswin 6y ago
> BigTech has a huge yearly R&D budget. In fact, with two years’ worth of R&D, BigTech could recreate the Apollo program. Why? One could argue that advances in AI and Quantum Computing are at least as significant as landing on the moon, and of more value. Big tech investment has pushed the field forward significantly.
6y ago

deleted 6y ago

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roenxi 6y ago

Say, from India's perspective it is possible that they will be at war with the United States at some point in the next 50 years. If that happens then the US will have a detailed social graph of the country through Facebook and who-knows-what information about their manufacturing, commercial and geospatial situation through Google. Geopolitically, there is an argument there for, say, Europe or Asian countries to ban Google/Facebook/whatever and choke off the revenue leaving their country. That is a pretty decent short-term nationalist argue to try and avoid large amounts of money leaving the country for foreign climes. The Chinese wall-off-the-internet strategy hasn't obviously failed them, and it gave them a bunch of serious technology contenders. It isn't a problem for this week, but that perspective raises longer-term questions about what the risks are to Google's and Facebook's business models of government intervention.

oblio 6y ago
It makes no sense for India to be at war with the US, I'd say. Not that these things are always logical. From a strategic point of view, India should be allied with the US as India is quite naturally at odds with China.
- balladeer 6y ago
  I am sure OP meant it hypothetically. Besides geopolitics might shift quite fast. If, and that's a gigantic if, China lets go of is habit of looking at a map and declaring "yeah, that region is ours!", or Pakistan gets rid of its shadow deep state (that'd be ISI + military) India could have way better cooperation with them than it had ever had with USA, or will ever have. This again, obviously, is hypothetical.
  - oblio 6y ago
    Neighbors are extremely rarely friends, if they have the same clout.
  - perl4ever 6y ago
    Historically, wasn't there a period where the US was considerably more friendly with Pakistan than India? I think it was when India was more Soviet-sympathizing. I remember reading about an incident when the US sold a lot of fighter jets to Pakistan, and decided after collecting payment not to deliver. Probably that was about when the relationship went sour?

mathgenius 6y ago

If someone really wanted to do this, you would short GOOG or FB and long the nasdaq (QQQ) by a proportional amount. This position insulates you against the market bulls, which could go on pumping the market for several more years. It's a bet that GOOG & FB will underperform the tech sector more widely. Maintaining a short position also costs money, so this is a further complication. As a retail investor, I don't know if there are any instruments for shorting these big tech co's. I'm guessing that you can do it on interactive brokers (for example) if you post enough margin. DYOR.

oh_sigh 6y ago
How would you do it if you were working for Microsoft and weren't legally allowed to transact with Microsoft stock because of a trading blackout period?
- mathgenius 6y ago
  Yikes.. If buying QQQ is counted as "transacting with microsoft stock" then you could try finding a basket that didnt have microsoft. I'm not an expert in this stuff, but for example the Russell 2000 fits. It would be better if it was a tech/internet related basket. EDIT: here's a better idea. Just buy apple and/or half a dozen other big tech stocks that you like!
  - esrauch 6y ago
    Generally the "quiet period" while employed at big tech cos doesn't include index/mutual funds even though they technically include the company.

setzeus 6y ago

The fundamentals in the thesis/tweet thread mainly (sorta) hold up. Fighting the fed in this environment though? Not a chance.

bronzeage 6y ago

The brilliant engineers argument is pretty blind to the way these corporations might not make the most potential of some people. I know brilliant person which moved to work for Google because of the pay, and he was spending time there doing mundane testing. It's pretty known issue that Google easily hires brilliant people, it becomes so crowded they don't really use their potential. At least Google is desperately trying to diversify away from ads only. Facebook doesn't. And Facebook has even bigger problem: their ads are a distraction, and younger people are getting more and more adapt at subconsciously ignoring this distraction. I've seen young kids automatically reaching for the the skip ad button in YouTube. I would argue that in 10 to 20 years, most of humanity will be immune to forced advertisements.

nojito 6y ago
Hiring the smartest people to do the "simplest" tasks is how you reduce errors and variance.
- fennecfoxen 6y ago
  At some point there's a problem of comparative advantage. You could hire a top tier genius computer programmer to check out groceries at the supermarket, and he could become the best supermarket checkout clerk in the world — but it's more efficient for him to be programming computers and leaving the grocery job to someone else, who isn't even particularly good at it, just as an entry level job. Google's simplest tasks may be more important than many other companies' complex tasks, but in the long term, wasting capital (including human capital) by using it at a fraction of its potential is generally a losing game, for society and for the capitalist.
  - ghaff 6y ago
    Google has certainly moved the needle on things like SRE--both for themselves and for the industry as a whole--because they can and do hire much of what their interview process determines is the "best" into roles that many other companies will staff with more or less whatever resume comes along. That said, it really hasn't helped Google much to expand their business. GSuite is probably the clearest mostly organic new area--and it's pretty good. Google Cloud somewhat although, like Java for Sun, Kubernetes will probably end up making other companies a lot more money than it will for Google. Hence the current spat over Istio. Certainly lots of things haven't gone anywhere. Anyone want to lay long odds on Waymo being around in 10 years? And it's probably not healthy for the tech industry. Yes, some will go for the startup lottery ticket for reasons of passion or naivete. And others are just less driven by money. But having many of the notionally best and brightest spending years at Google mostly because they'll pay such large wads of cash to even fresh grads means a lot of companies won't even try to compete for them.

Ozzie_osman 6y ago

IC at BigTechCo: "There's another team building the exact same product as my team. It's frustrating and wasteful." Director at BigTechCo, when asked why that happens: "That's actually by design. We want internal competition. We can afford to spend 2 or 3x on building that product. We can't afford to have a competitor build it better."

sshumaker 6y ago
In practice, “internal competition” isn’t competing in the way the free market does. The most politically connected product tends to win, not the one that has the best odds of success. And if you let these all go to market, you risk eroding user trust (think Google and messaging products). Confusing your users is not a good thing.
- koheripbal 6y ago
  This is a half truth. Politics counts - but so does getting functionality out the door and gaining adoption. People aren't stupid. If one team is simply failing to deliver, then the internal competition is a hedge on that.
- 86J8oyZv 6y ago
  Do you mean "most politically connected" or "best marketed at the right time?" Outside of products being used by state agencies, I don't think political connections have much bearing...
  - Ozzie_osman 6y ago
    I think he means politically connected internally. Ie the VP or Director of your group convinces the higher-ups that theyve won the internal competition even if they don't have the better product. This definitely happens.
- Ozzie_osman 6y ago
  Very true about the politically-connected team winning. That said, the high level point is even without the M&A lever, these companies can still succeed by doing things that seem wasteful. FB is a good example with Snap. They didn't have the M&A lever (for different reasons in that case), but they just built Stories into Instagram, WhatsApp, and Messenger. If you were willing to spend billions on M&A you can just spend them internally. And you don't even need to build a free-market best product, because you have a brand and user base that startups don't. In any case, I do hope that alone isn't enough to keep big companies entrenched. Also hi Scott!

aaron695 6y ago

Can someone explain how you would actually do this? Assume their thesis is true. How would you short it? What's some real figures and returns if true. I'm not sure I even understand the bet/prediction. Is the bet it will drop in the next 5 years and drop lower than now and then stay lower until the 5 year mark, then we profit? How much do we profit to investment? Saying there will be a substantial fall sometime in the next 5 years seems to me still hard to profit from, but I don't know the numbers.

chillacy 6y ago
Hmm, I assumed the author implied literally short selling the underlying stock but I think that's a bad idea: potentially unlimited losses. The author may even be correct but the market can be particularly irrational around growth stocks... Another method might be to sell calls or call spreads, date it out a few years and hope the underlying doesn't rise too much.

dreamcompiler 6y ago

Offtopic: Why is TikTok growing faster than IG or Youtube? What features make it more compelling for users? I don't use TikTok and don't plan to, but I'm curious about the TikTok phenomenon.

Miner49er 6y ago
It's more memetic than either of those, by design. You can easily incorporate other videos, sounds, and ideas (memes) into your own videos. The videos are also very short compared to YouTube and to have a new video play is as simple as a swipe down. I don't have much experience with Instagram, but Instagram doesn't seem to have the memetic component. It's more just traditional social media. Users don't really build off of other users content as much.
jpalomaki 6y ago
One things is that it makes it easy for anybody to be a content producer. Kids make their own version of short video somebody else did. Just some dance moves, music is provided. You can be creative, but don’t need to think too much what to do or say. The format also makes the content universal. Since there’s just music, there’s no language barrier for consuming the content. Certainly this helped to get traction on smaller markets. Also it is addictive. Short videos, visual and aural stimuli which you control by clicking to next or liking. Checking who liked your videos. Very much like slot machines in casino.

jliptzin 6y ago

Even if you agree with him in principal I don’t see how anyone could stomach shorting a growth stock for 5+ years like he suggests. How much would you lose just on interest paid to borrow the shares for that long? So maybe he’s talking about buying puts? Can you buy puts 5 years out? The premium would be insane. Is there another instrument I’m missing to make this trade?

soared 6y ago

You can’t possibly evaluate stock prices by blatantly ignoring every single financial metric, knowing nothing about the product, and posting your analysis on Twitter.

knorker 6y ago

I wish people would stop using twitter for article/blog sized content. Maybe I'm holding it wrong, but I find retweets of threads extremely an extremely unreliable way to find my way back to the actual thread. This particular link works, but it's still very a very annoying form to read it. That said: Shorting these companies, that OP admits have huge R&D budgets, is a bet that they won't invent something new. Or that they will be taken over by something that does. With a 10 digit R&D budget you can afford to be second mover. In the last 20 years, has GOOG invented? Wow, yes. Question is do you think the past 2 years (or whatever) is a better predictor of next 5 years than the last 20 years was? I dunno. And saying you do (especially when shorting) is saying you know better than the market, which is not always wrong, but it does have some arrogance in it.

6a74 6y ago
I agree that Twitter is the wrong medium for essays. Not that it's a great fix, but Twitter threads can be consolidated with Thread reader, which makes them much easier to read. For example, this article: https://threadreaderapp.com/thread/1281630456807452677.html https://threadreaderapp.com/thread/1281630456807452677.html
gavribirnbaum 6y ago
I think the major question is not whether they will invent something else. they are reliant on Ads and will remain so as far as I can tell. the real question is: is the ad model overvalued? I think so for the following reasons: ad blockers, users getting desensitized to ads, diminishing returns of the amount of data one needs on a user to sell. I think OP has the right conclusion but the wrong reasons. what do you think?
- knorker 6y ago
  I think the ads market risk is offset by the market potential of self-driving, cloud, AI (deepmind), and maybe other things, long term. Shorting GOOG is betting not only that ads will decrease long term, but also that the other fields won't increase. Yes, I realize even cloud has a long way to go, revenue wise, compared to ads. But on the other hands ads has a long way to fall. And public cloud (including Google's cloud) is still growing exponentially. In other words: I have no reason to think I know better than the invisible hand of the market. That's GOOG. FB I've not looked into as much.

bob1029 6y ago

I disagree with shorting stock, but I agree with some of the sentiment behind that choice. I am not sure the best way to articulate the specific names for these, but I generally categorize our tech companies into 2 buckets when viewing this through the lens of an investor: Bucket A: Facebook, Google, Twitter, Snap, Pinterest, Netflix, et. al. Bucket B: Microsoft, Amazon, Apple, Intel, AMD, et. al. Bucket A seems to be the riskiest to me because there are virtually no barriers to entry on the markets and products these companies target. Sure, Google & Facebook have some hardware/cloud hosting angles, but the companies in Bucket B make those revenue streams pale in comparison. E.g. AWS/Azure vs GCP, Microsoft Surface vs Oculus Rift, Macbook vs Pixelbook, iPhone vs anything, etc. Bucket B contains all of the companies that I would feel comfortable buying and holding long. These companies have a deep pool of products, IP and larger barriers to entry for their markets. For instance, if someone came along and made some change to the world where Microsoft no longer makes any money off of advertising, they would be able to proceed without much difficulty. If someone chopped Google's ad revenue stream, I think there would be a serious problem for the company.

leoh 6y ago

Google isn't fundamentally in the entertainment business. They are in the search/ad business, which breaks the fundamental assumption here ("users need to be entertained or they leave"). Moreover, Facebook has shown an ability to capture attention, in spite of an incumbent TikTok; their decision to acquire Instagram when they did was canny and their ability to continue to foster it was skillful. With respect to the "Apollo Program" metaphor — Google's X projects and other projects (like Waymo) are formidable, and may lead to serious breakthroughs and changes to society. The narrative that FB/Google are inefficient is questionable and is offered without coherent context; it would be helpful to compare them, say, to Genentech, Merck, Lockheed Martin and other large companies with serious R&D budgets, which have survived and are doing okay, despite not being as nimble as, say, the occasional dark horse like SpaceX (with respect to Lockheed Martin). Yes, Google and Facebook may not loom like the giants they were. But there is a good chance they will continue to thrive. Another example: Microsoft is doing fine, despite not being the giant it was in the 90s.

marketgod 6y ago

These short sellers are timing this leak because of the break out on GOOGL. GOOGL is breaking out and it's going toward $1,800. This is where the market has to stop it, if it can't it's going to pop. TSLA/AMZN/NFLX just broke out this week and GOOGL is following through. If you are short right now, you are hurting and need this trade to fail. These sorts of reports always come out and break outs, even though I don't watch the news frequently, these stories pop-up across message boards when I get into breakout trades. Disclaimer: I am in GOOGL 2020-Jul-17 1580 Calls @ 8.20 and it is currently at $12.00 and I am looking for $1620 targets.

mindfulplay 6y ago

This person seems to generate a lot of noise disproportional to his talent/skills. He has a pinned tweet that is absurdly positioning himself to the likes of Berkshire Hathaway: sort of a megalomaniac complex. Reading his Annual Letter (which directly quotes/'competes' with Warren buffett) gives me a cringe feeling. He got out of FB claiming the company is shit ( no arguments). But his new ventures and Twitter commentary is at odds with his position: Social Capital seems like a farcical take compared with the likes of Gates, Buffett who have actually proven with their actions not empty egocentric Twitter threads. Classic VC turned Savior mentality: except underneath it all these people are regular 'get lucky' hedge fund greedy hacks.

valuearb 6y ago
Recommending a five year short position is about as anti-Buffett methodology as possible. Buffett has been pretty explicit that the risk reward ratio of shifting doesn’t make sense. And options have a huge time expense over five years.
valuearb 6y ago
Wow, he’s chairman of Virgin Galactic. Now that’s a short target.
logicslave 6y ago
He recently posted a video on youtube where he was pumping Bitcoin. In 2020, no serious investor thinks bitcoin is going to sky rocket
- thedudeabides5 6y ago
  Well, pretty sure Novagratz is a still a big bull, and he’s more “serious” than anyone replying to this thread (including me!).
icelancer 6y ago
This guy is taking his 15 minutes of fame to seize the message currently popular. Spot on.
6y ago

Lasher 6y ago

Everything written in this article would have made perfect sense 5 years ago too, now look at the stock charts over the last 5 years. I don't disagree with it, possibly even want it to be right, but I sure would have hated to hold a short on either of those stocks over the last 5 years.