Yesterday (6/11) Apple made an announcement regarding security and privacy functionality to be incorporated to the next roll of their OS (or the following roll - but that’s not important). Among the revisions will be a user accessible software “switch” providing the ability to turn ad-blocking on/off.
The immediate impact of this announcement was to drive Criteo’s stock price down about 10%. My first reaction was dismay. After having performed pretty thorough due diligence on CRTO in which I examined the business (which has always been my approach in the past) and the important financial information (which I often disregarded in the past), I decided that CRTO was a good investment and bought enough to make it a healthy percentage of my portfolio. This all took place in the very recent past, only a few months.
I’m now looking at one of my major positions getting beaten up pretty badly. And to be honest, I’m somewhat disheartened. I’m thinking, that was a screw-up. What should I do? Take the loss and get out before it get’s hit any harder?
I read the posts here on this board which is incredibly real-time responsive to events of this nature. This helped me get a a better perspective on ad blockers - and I remind myself that in fact I have an ad blocker installed on chrome, my primary browser. I’m sure I’m not the only person out there with an ad blocker. It doesn’t seem to impair Criteo’s business.
The reality is that Safari is just one of several browsers. And the fact is that the number of Windows machines far out-weigh iOS machines In order for this new functionality to negatively impact Criteo I surmised that nearly 100% of Mac users will have to upgrade to the newest iOS version when it becomes available and then all of them will have to elect to turn ad blocking on. All in all, I think there will be snowball fights in hell sooner. Even if the aforementioned happens, it’s debateable as to how much of an impact it might have on CRTO’s earnings. The Apple announcement will not impact CRTO. I expect another stellar quarterly report in August, and the quarter after that, and so on for many quarters to come.
So what at first blush that which was cause for dismay and disappointment now becomes realization the CRTO is on sale and a pretty hefty discount.
But, where does the money come from?
So happens that I recently sold my SBUX and KMX and had not fully deployed the money. The day before CRTO went on sale, there was a discussion on this board about Solar Edge. Without too much analysis (OK, really without any analysis) this looked like a promising place to place my money, so I bought up a bunch with the idle cash.
But then this situation with CRTO came up - a company I had devoted time and energy to. I had employed my newly acquired investment knowledge. I had to decide if I truly had confidence in the analysis or not. I sold the Solar Edge I bought the day before. I put in a limit buy order for CRTO at $45.50 which executed yesterday afternoon. As I write this (10AM PDT) CRTO is at $47.40, it’s been over $48 earlier this morning.
Solar Edge might turn out to be a good investment, the difference is that I have confidence in my CRTO investment. I know exactly why I bought it. Solar Edge was not an investment, it was a tip. OK, the tip came from Saul, an unusually reliable source, but he didn’t actually say go buy it, he said it’s worthy of consideration. I hadn’t done that. I impulsively bought it.
So the rubber and road meet.