I will admit that I was surprised to see the market so friendly on a day when Apple warned about sales because of the Corona Virus.
I won’t complain.
I figured Apple would be down at least 5 percent and that the semiconductor stocks would be smashed. I also figured Nike would feel the China news pain.
Nope.
It is not the news that matters, but the reaction to the news.
Meanwhile, Amazon has been sneaky strong despite all the negativity surrounding Mr. Bezos…printing more all-time highs…
It is impossible to value Amazon so while the mood is good, the stock continues to run.
Jeff seems a lot more serious about content and media right now. He has the thick skin, the money and the platform to take Hollywood by force and Scott Galloway has a great post on that subject. Have a read. This riff was my fave:
In the streaming wars, everyone offers great content. If you were on a deserted island with nothing to do except watch streaming video on demand, any of the players would keep you occupied. The value of the services is incredible, offering $1 billion of content for less than $1 per month.
My colleague Sonia Marciano teaches that to achieve success, the best strategy is to find the dimension with the greatest variance — the biggest delta between best and worst. In the streaming wars, both flywheel and distribution offer the greatest variance, and monopolies dominate those categories. Most of the above terms are self-explanatory, except flywheel.
A flywheel is a disk that stores kinetic energy and then spins it out to a nearby engine. In the context of business, as the flywheel rotates it increases output or revenue without increasing input or cost. The ultimate flywheel is Amazon. Amazon Prime attracts shoppers who want a wide assortment of products with rapid fulfillment. These subscribers also enjoy the benefits of services like Amazon Prime Video, which increase the stickiness of Prime and time spent on the platform.
My colleague Aswath Damodaran says Amazon isn’t an ecommerce company or a cloud company, but a disruption platform that through great execution and unparallelled access to cheap capital, uses the flywheel effect to spin into completely different industries.
The sheer volume of people on Amazon (82% of households in the US) makes the platform more appealing to advertisers. Amazon Media Group is now a $15 billion business, the third-largest advertiser in the world behind Facebook and Google. More advertising results in more products, which leads to more purchases, which leads to greater investment in Amazon Prime Video to continue to increase the stickiness … and the wheel flies.
This flywheel is now the mother of all chainsaws wielded by a bald 56-year-old in a hockey mask.
With respect to the space bubble, Virgin Galactic ($SPCE) was up another 34 percent this morning before closing up JUST 10 percent. Boo.
I call these moments, fevers and I have not seen one this hot…at least on Stocktwits. The ticker today had more messages than Tesla on their earnings day. The ticker has been a hot one for weeks and a lot of smart people I follow have been long for this ride, but the noise is too loud to ignore.
Of course, this surge in Stocktwits messages can also just mean a massive shift is still to come. Just maybe as I have been half joking…’space is the new cloud’.
Way back in 2017, I remember when messages for Bitcoin on Stocktwits surged past messages for the $SPY (S&P). Bitcoin had already gone on a big run but still went on to quickly add 500 percent and is still one of the most popular tickers on Stocktwits.
Have a great day.