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Will the leaders ($AAPL $BIDU $NFLX) continue to lead this week? I think we might be due for a short rest before heading higher. Feb 14, 2011
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AAPL A look at Apple's next leg of growth. What will push this stock to $400: http://bit.ly/b0c4fQ Oct 24, 2010
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Introducing Google Games!
Flying under the radar is the fact that Google is about to enter the social gaming market in a big way. Google Games will be similar to the social gaming on Facebook and should include advanced mobile features as well.
In 2010 Google invested at least $100 million in social gaming giant Zynga. This could be viewed as a defensive move to profit indirectly from Facebook's platform but I think there was a lot of offense being played as well. I would not be surprised to see Zynga standing side by side with Google when Google Games is officially announced and I would expect that the most popular Zynga games (FarmVille etc.) would be ready to go for Google+ users. There could also be some games exclusive to Google Games as a carrot to lure away Facebook users.
Google Games will also be a new front in the war against PayPal, with the currency in Google Games running through Google Checkout.
This aspect of the Google+ story is being missed by most tech reporters worldwide but I imagine that will change soon. I don't know when the official announcement about Google Games will take place but it could be as soon as next month, or whenever the full Google+ launch takes place.
Disclosure: No Positions
Source: iPad 3 Coming This Fall
A source with knowledge of the situation has revealed that a new generation of iPad (iPad 3) will be released this Fall, not next Spring. This info is, of course, not confirmed and with Apple being so tight lipped about upcoming product releases it will likely not be confirmed until the official product announcement takes place.
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Disclosure: Long AAPL
Facebook Is Undervalued At $60 Billion, IPO Coming
Research firm EMarketer Inc. estimates that Ad spending on Facebook will reach $4.05 billion this year, more than doubling year over year. I expect that top line growth will continue to grow rapidly for at least the next five years and perhaps well beyond that. With a valuation of 60 billion, Facebook would be valued at less than 15 times 2011 revenue. This would be expensive for most companies but Facebook deserves a premium valuation.
For comparison sake, Chinese search engine Baidu, which also deserves a premium valuation, is trading at about 37 times revenue. If Facebook was valued at 37 times 2011 sales it would be a $150 billion company! If the company can double sales again in 2012 to $8 billion, a 15 multiple would give it a $120 billion valuation.
It is not yet clear what the margins are for Facebook but I would guess that a lot of the revenue falls to the bottom line. As Facebook's financials become better known I'd expect the valuation will continue to rise.
Today Facebook has more than 500k users but we will likely see a day when Facebook has over 1 billion users. In fact, the 1 billion user mark might not be too far off as the emerging market countries come online and democratic reforms sweep through many regions of the world. Imagine what the numbers would be if China stopped blocking Facebook. Speaking of China, it is rumored that executives from Baidu recently held meetings with Facebook management about partnering on a social product for the Chinese market. Stay tuned.
Looking ahead it is likely that a Facebook branded phone will hit the market in late 2011 or 2012. It is too early to predict what kind of reception this, as of yet unannounced product will receive, but it could show Facebook's interest in expanding it's business beyond Facebook.com. With a huge audience to advertise to a phone from Facebook could gain traction. Already HTC has implemented a Facebook button into a new line of phones which links users directly into their Facebook accounts. As Facebook makes a push into mobile, the competition with Apple and Google will intensify.
With a likely IPO coming in 2012, Facebook's days as a private company are limited. The company has already announced that it will disclose financials by April of 2012 but it is unclear if this will happen before or after Facebook goes public.
If the IPO values Facebook at less than $100 billion I'll be buying shares.
Disclosures: Long AAPL, BIDU, GOOG