I love SaaS as much as anyone but let’s look at how some of my other stocks have done recently. There’s a strong case to diversify a bit, especially as some of our SaaS valuations have become stretched (as Bear noted) and expectations are sky high for some (think Zoom, as Saul noted). Another reason is the annual/bi-annual sector rotation out of SaaS. E-commerce has a wide moat and by all accounts e-commerce adoption has been pulled ahead by about 5 years along with digital wallets/payments.
Roku - up 270% since 6/1
-accounts up 43%, player sales up 57%, ad revenue up 78%
-closed deal with Peacock and HBO Max, HBO Max to release movies same time as theaters, IMDb deal 1/26
-45% growth is the guidance Q4
PTON -up 210% since 6/1
-Fitness subscriptions up 137%
-12/21 acquired Precor $420B, expands mfg footprint and gains a foothold in commercial market
-Q4 outlook 114% revenue growth
SE - up 171% since 6/1
-3 headed monster - Garena users up 78%, Shoppee revenue 131%, More than 30% of Shopee orders used mobile wallet, gross profit up 100%
-12/4 signed deal to become a digital bank
-Q4 Guidance is 75% growth
-“Our CTV spend grew more than 100% year-over-year in the third quarter, as advertisers follow consumers to streaming platforms. That consumer shift has created a tipping point. The number of U.S. households with traditional cable TV subscription is dropping to below 80 million this year. According to eMarketer, 77.6 million U.S. households will have cable TV packages this year, down about 7.5% year-over-year. That is a rapid acceleration from the 3% decline that they had been predicting at the beginning of the year.” - Jeff Green, earnings call for Q3
-Q4 35% growth is the guidance
-Streaming currently accounts for over a third of U.S. TV viewing, but only ~3% of TV ad budgets.
MELI - up 112% since 6/1
-Net Revenues up 148.5% year-over-year on an FX neutral basis, TPV up 161%, GMV up 117%
-Q3 Revenue up 85%
-Q4 70%-90% revenue growth – Jeff (citing SE revenue growth guidance)
Good post, Jeff. I would just say that for most tech companies (including ALL of the ones you mention), guidance is pretty much just an amusing fiction. For SE, they have been showing ~100% growth for a while and the guidance seems designed to cause investors to accidentally snort soda up their nose in derision.
But, you’re absolutely right that “expectations are sky high”… that’s because many of these companies actually deliver.
OT: I didn’t do a year end summary of my portfolio because I contracted COVID on January 1st… eventually resulting in a hospital stay. I had a rare symptom: passing out without warning… and they wanted to be sure my heart was OK. As it turns out, all is well although I continue to fatigue quickly as a residual virus symptom. That excuse is pretty good and I have hopes it will continue to work as summer projects approach.
Rob
Rule Breaker Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
