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Friday, November 22, 2019
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Is Twitter An Investment Opportunity?

Is Twitter An Investment Opportunity?

Just as website designers tend to stick with development software that they know and understand, social media users rarely change their communication platform unless forced into it by closure, but thankfully, those events are rare.

Geocities, the company that Yahoo purchased for $3.6 billion in 1999 has finally been given the last rites with the closure of its Japanese operation in March this year, and Myspace still exists on life support, dreaming of what could have been and seemingly always entertaining hopes of a comeback.

So what is a potential investor to make of Twitter in the face of a declining user base and plunging financials? Is it headed for the rocks or will it shoot for the stars and finally put some big boy pants on? Twitter is currently $36.15 off its July high of $46.65 – worth a punt?

Twitter is a mess. It's a difficult platform to do research on (although the advanced search has improved massively) and the signal to noise ratio is so high that it can put off all but the most determined. If you persevere beyond the apparent flaws of having a sprawling content network with very little substance control and a soapbox for anyone with an opinion you might, just might find some golden nuggets of information.

There are Twitter accounts that are worth following for news, particularly if you enjoy following the 24-hour political news story as it unravels or football transfer gossip, for example. But the value of this information is low unless you are a betting man and even if you are, trying to avoid the lemons is worse than merely doing the original research yourself.

As a serious news platform, Twitter is severely flawed, the abundance of trolls, bots, have a go conspiracy theorists and hate speech run riot unchecked.

However, the power of Twitter to direct the critical narrative of TV drama, soaps and live events are untapped. There is a small but quickly growing army of Twitter users that love nothing more than to critique and comment on their favourite shows in real time. All that's needed is a real-time Twitter feed to display on the TV and anyone can become famous with a well-timed barb.

Paid for followed accounts is a potential revenue source, which is being trialled. Those users that have access to the inside information can offer a subscription service directly on the Twitter platform rather than redirecting people to their website and losing sales in the process.

Premium Tweets will rub shoulders with the generally available public riff-raff so you'll have to do a lot of unfollowing or make some sense of the “lists” feature to make it work, but it has potential.

Is the potential enough to make up for the lowly share price? It's doubtful, in my opinion, because trying to find things Twitter is good at is such an exacting science. Twitter may gain back its recent losses, but beyond that, it will ultimately join Geocities and Myspace in the social media graveyard when other platforms add Twitter-like functionality to their offering.

Will Netcall Ever Get Out Of First Gear?

Netcall is a fallen Angel

Netcall plc (AIM: NET) is a leading provider of Low-code and customer engagement software, primarily a bespoke omnichannel solution that claims to transform contact centre performance and the provision of MATS low-code development platform that lets you develop your digital services and applications using fewer resources.

Looking at the website, you can see why they have lost their way, its a prime example of corporate speak clouding the product offering, what does this mean?

Flexibly manage contact centre resources using workforce optimisation

And this paragraph from their "low code" page:

Time to start thinking outside-in

In an era when newly-empowered customers rule supreme, process professionals find themselves struggling against a tide of new challenges. Shaving a few seconds off back-office processes now pales into insignificance compared to the urgent need to give customers what they want. Not next year – right now.

What are they thinking? Anyway, the website aside, the recent trading update gives cause for optimism although any business that has the NHS as a major client is going to be up against it in this political climate.

Trading Statement May 29 2019

Cloud bookings continue their strong performance with year over year growth of 160% to £6.5m, reflecting strong Low-code cross sales to customers and the signing of new names. As a result, Low-code ACV has continued its growth and is up 36% year over year to £4.4m. ACV from Support Contracts has also continued to grow, and as a result, total ACV is up 10% year over year to £15.6m.

Product sales, while improved over the first half of the year, have been impacted by purchasing delays within the NHS coupled with public sector customers ordering the Group’s newly launched Low-code cloud offerings. As a result, Product revenues for the year will be lower than expected.

As a consequence, adjusted EBITDA(3) for the year is now expected to be approximately £3.4m. Cash generation has been strong, and at 30 April 2019, the Group’s cash position was £6.5m offsetting the existing debt of £6.6m.

The Board remains very optimistic about the prospects for Netcall, as evidenced by the strong growth in Cloud bookings and ACV. The Group continues its transition from a traditional software business to a digital cloud operation, and the Board looks forward to giving a further update at the time of its final results to be published in September 2019.

Today's share price is £39.50, so it is trading well below the 2014 flotation price of £60.00. The lack of Twitter engagement and awful corporate doublespeak indicate that this is a company that could do with some fresh thinking in its customer approach. 

Netcall is one to watch, but it doesn't currently scream "dynamic", and until then even at this bargain basement price, I'm not tempted.

And if anyone from Netcall reads this - let your IT department know that Google+ no longer exists.

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Can Square Continue Its Meteoric Growth?

Can Square Continue Its Meteoric Growth?

Mobile payment solutions are beginning to take over the credit card payment industry, and Square, Inc. (NYSE: SQ) is at the vanguard of the attack with its impressive range of mobile credit card processing technology. Square was founded by Jack Dorsey, who also founded Twitter (NYSE: TWTR). In its short ten year life, Square has transformed internet merchant services and mobile payments, making it a market leader in the industry.

The Square app has been downloaded more than 33.5 million times, and individuals use Square technology to send and receive payments, exchanging funds with friends and family in addition to making payments to businesses.

Businesses of every size can use Square to accept credit cards by either processing customer credit cards manually or using the swipe card reader that plugs into mobile devices. The reader is compatible with other mobile payment solutions, such as ApplePay by Apple (NASDAQ: AAPL) and in the UK costs £29, although a lot of deals see it given away free.

Square has a complete arsenal of other products and services to help small businesses compete with larger organisations, including financing, tracking sales, and monitoring inventory. Square Payroll manages the task of calculating employee pay, and if that wasn't diverse enough for you, the company recently purchased a mobile food delivery site and Square for Restaurants launched in May 2018.

'Square's strategic plan is to expand by acquisition, and its recent purchase of Weebly gives it a whole new platform of processing revenue. For the moment that seems like a sound ploy but the rapid development of Wix as a competitor could mean that Weebly will struggle in the future and my money would be on Wix to stay the course. I'm also not a fan of Squares' dalliance with bitcoin technology, and I would be wary of any significant investments in that area.

In November 2016, Square traded at $12 per share. Six months later, it had doubled to $24. By September 2018, it was just shy of $100 per share, so growth was meteoric but then slipped back to a low of $52 in December 2018.

With such a vast market to go at there is going to be no slowing of growth for Square and the only question you can have as an investor is how quickly the stock will double again in value. There may not be the stratospheric growth of the past two years, but with more acquisition and mergers, it could be an exciting ride. Today's price of $66 is an opportunity to get on board.

 

Shopify Analysis - Just Stretching Its Legs?

SHOP stock has gained almost 90% in the year to date. As of Friday 17th May, the stock was just off its peak at $273.48 with a market cap of around $28 billion.

The Shopify formula is working, even though the stock has its fair share of doubters with around 7% of the stock held by shorters. Those short positions are beginning to look a bit precarious, and losses could potentially be horrendous.

Retail Operating System

“What Shopify is, is we’re this retail operating system,” COO Harley Finkelstein said in a post-earnings interview with Jim Cramer on April 30. He went on to explain “You can come with us and build an online store, but you can also use our products on a brick-and-mortar store. You can cross-sell on Instagram, or Facebook, or Amazon, or eBay or anywhere, but it all feeds back into one simple and centralised back office.”

Shopify’s platform allows entrepreneurs of any size to establish an online shop and turn a new business idea into a reality in just a few short hours. The Shopify platform is incredibly simple to use but also extremely powerful. 

Shopify’s director of product Michael Perry explained “We remove the complexity to help get products out there as quickly and easily as possible. We have an ecosystem with thousands of apps that help our merchants with marketing. Part of the strength of Shopify is that ecosystem.”

Perry’s comment underscores an idea Finkelstein articulated in a CNBC post-earnings interview. “If you think about it if you aggregate all those [820,000] merchants … we’re the third-largest online retailer in the United States,” he said. The fundamental reason is, we’re able to take those incredible economies of scale …, and we can trickle them down to entrepreneurs.”

“The most important thing for entrepreneurs is to establish that direct relationship with their customers,” Perry said, adding “I don’t know why anyone would want someone else to own their customer relationship. Unfortunately, that’s the exchange that takes place with a digital marketplace.”

Finkelstein adds colour to the idea, explaining “When you go to a big marketplace (such as Amazon) you rent customers from that marketplace. When you build your online store, your physical store, you own the entire customer relationship. That customer is your customer. You can remarket to them.”

Shopify Progress

Last month the company unveiled three new POS devices — The Shopify Tap & Chip Reader, Dock, and Retail Stand as it moves into helping people with real brick and mortar stores use online technology to help build their business.

Is Shopify the silver bullet for online entrepreneurs? Shopify is a great system, but it shares an Achilles heel with Wix.com (NASDAQ: WIX) in that their blogging solutions are minimal and until they come up to the level of features that Wordpress offers there will be a large portion of the market that they can't break into. Bigcommerce has addressed that issue with its plugin for Wordpress.

However, there is no doubt in my mind that this WILL happen and both Shopify and Wix are at the cutting edge of what can be achieved with cloud-based software. Once they both get the blogging features correct, there will be no stopping them, and Wordpress users will have a viable alternative along with the ability to set up shop quickly and easily if they want to. 

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Doubling Down On Wix

Wix share price keeps rising

Doubling Down On Wix

Since I first tipped Wix back in September 2016 the stock has steadily risen from its then tipped price of $44.39 to $143.36 as of 12/05/2019.

The shares are up over 50% in the year to date and 700% in the last five years. 

The reason for the rise is that Wix paid attention to what the experts were saying - without decent SEO tools you can build the best-looking website in the world but if it doesn't get found then the investment has been wasted. because without being found in search engine results, websites are at the mercy of paid advertising which in most new business cases and particularly for the small business owner is a prohibitive expense.

The improvement in Wix SEO features is just part of a suite of upgrades that have seen Wix begin to be taken seriously by the website design community and it is quickly becoming a serious rival to open source solutions like Wordpress and Joomla.

The impressive growth and innovation efforts show no sign of slowing down and I predict that Wix will continue to make massive inroads into the website designer community once people realise how easy it is to produce a stunning website with Wix compared to Wordpress.

Not only does Wix excel in its drag and drop feature set but also the eCommerce integration is exceptionally well thought out and the inbuilt booking system is far superior to anything Wordpress plugins can offer.

Wix will publish first-quarter results on May 16th and is targeting sales growth of around 25% to reach revenue of just over $170 million. Whilst that growth is a deceleration on previous years growth of 40% the business is still growing at a rapid rate and once they show evidence that users are sticking with the platform and taking out more services I expect the share price to quickly jump ahead.

Wix Share Price Keeps Rising For Good Reason

Wix share price keeps rising

Wix.com Is A Classic Market First Mover

If you've been looking around the expanding software as a service market (SaaS) and wondering where you can invest in this market then I have the perfect stock for you.

Wix.com is clearly the market leader in this fledgling market and it's product is far superior to all the other website builders on the market. I should know because I built a website comparing all the leading online website builders.

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Analysis - Tesla Motors Have Spectacular Upside

Driver less cars are coming before you know it and their arrival will herald the death of dirty fossil fuel cars and replace them with clean electric motors.

If this electric can be successfully generated by natural forces, for example wind and water turbines and new solar energy then electric driver less cars are the immediate future.

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Analysis – ProtoLabs (PRLB:NYSE) 3D Printing & CNC Machining

Protolabs pioneers 3D printing

Protolabs is the world’s fastest digital manufacturing source for custom prototypes and low-volume production parts. Its advanced 3D printing, CNC machining and injection moulding services provide an unprecedented speed to market value for product designers and engineers during development.

They are a Fortune 100 fastest growing company and what brought them to my attention was the recent announcement that they are fast filling up space at their new warehouse premises here in Telford.

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